EXECUTION COPY
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BEAR XXXXXXX ASSET BACKED SECURITIES, INC.,
Depositor
EMC MORTGAGE CORPORATION,
Seller and Master Servicer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1999
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ASSET-BACKED CERTIFICATES, SERIES 1999-2
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Table of Contents
Page
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ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms...............................................................................1
Section 1.02. Certain REMIC-Related Defined Terms........................................................37
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans...............................................................40
Section 2.02. Acceptance by Trustee of the Mortgage Loans................................................42
Section 2.03. Representations, Warranties and Covenants of the Master Servicer and the Seller............44
Section 2.04. Representations and Warranties of the Depositor............................................54
Section 2.05. Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases............55
Section 2.06. Authentication and Delivery of Certificates................................................56
Section 2.07. Covenants of the Master Servicer...........................................................56
ARTICLE III.
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Master Servicer to Service Mortgage Loans..................................................57
Section 3.02. Subservicing; Enforcement of the Obligations of Master Servicer............................58
Section 3.03. Rights of the Depositor, the Trustee in Respect of the Master Servicer.....................58
Section 3.04. Trustee to Act as Master Servicer..........................................................59
Section 3.05. Collection of Mortgage Loan Payments; Certificate Account; Distribution Account............59
Section 3.06. Collection of Taxes, Assessments and Similar Items; Escrow Accounts........................62
Section 3.07. Access to Certain Documentation and Information Regarding the Mortgage Loans...............63
Section 3.08. Permitted Withdrawals from the Certificate Account, Distribution Account,
the Fixed Rate Carryover Reserve Fund and the Adjustable Rate Carryover
Reserve Fund............................................................................63
Section 3.09. [Reserved.]................................................................................65
Section 3.10. Maintenance of Hazard Insurance............................................................65
Section 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements..................................66
Section 3.12. Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds
and Realized Losses; Repurchase of Certain Mortgage Loans...............................67
Section 3.13. Trustee to Cooperate; Release of Mortgage Files............................................70
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Section 3.14. Documents, Records and Funds in Possession of Master Servicer to be Held for the Trustee...71
Section 3.15. Servicing Compensation.....................................................................71
Section 3.16. Access to Certain Documentation............................................................72
Section 3.17. Annual Statement as to Compliance..........................................................72
Section 3.18. Annual Independent Public Accountants' Servicing Statement; Financial Statements...........72
ARTICLE IV.
DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER
Section 4.01. Advances...................................................................................73
Section 4.02. Reduction of Servicing Compensation in Connection with Prepayment Interest Shortfalls......73
Section 4.03. REMIC Distributions........................................................................74
Section 4.04. Distributions..............................................................................74
Section 4.05. Monthly Statements to Certificateholders...................................................80
Section 4.06. REMIC 1F, REMIC 1V and REMIC 2 Allocations.................................................82
Section 4.07. Reserved...................................................................................83
Section 4.08. Adjustable Rate Carryover Reserve Fund.....................................................84
ARTICLE V.
THE CERTIFICATES
Section 5.01. The Certificates...........................................................................85
Section 5.02. Certificate Register; Registration of Transfer and Exchange of Certificates................86
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates..........................................89
Section 5.04. Persons Deemed Owners......................................................................89
Section 5.05. Access to List of Certificateholders' Names and Addresses..................................90
Section 5.06. Book-Entry Certificates....................................................................90
Section 5.07. Notices to Depository......................................................................91
Section 5.08. Definitive Certificates....................................................................91
Section 5.09. Maintenance of Office or Agency............................................................92
ARTICLE VI.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
Section 6.01. Respective Liabilities of the Depositor, the Master Servicer and the Seller................92
Section 6.02. Merger or Consolidation of the Depositor, the Master Servicer or the Seller................92
Section 6.03. Limitation on Liability of the Depositor, the Seller, the Master Servicer and others.......93
Section 6.04. Limitation on Resignation of Master Servicer...............................................93
Section 6.05. Errors and Omissions Insurance; Fidelity Bonds.............................................94
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ARTICLE VII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 7.01. Events of Default..........................................................................95
Section 7.02. Trustee to Act; Appointment of Successor...................................................96
Section 7.03. Notification to Certificateholders.........................................................97
ARTICLE VIII.
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee..........................................................................98
Section 8.02. Certain Matters Affecting the Trustee......................................................99
Section 8.03. Trustee Not Liable for Mortgage Loans.....................................................100
Section 8.04. Trustee May Own Certificates..............................................................100
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses........................................100
Section 8.06. Eligibility Requirements for Trustee......................................................101
Section 8.07. Resignation and Removal of Trustee........................................................101
Section 8.08. Successor Trustee.........................................................................102
Section 8.09. Merger or Consolidation of Trustee........................................................102
Section 8.10. Appointment of Co-Trustee or Separate Trustee.............................................103
Section 8.11. Tax Matters...............................................................................104
ARTICLE IX.
TERMINATION
Section 9.01. Termination upon Liquidation or Repurchase of all Mortgage Loans..........................107
Section 9.02. Final Distribution on the Certificates....................................................107
Section 9.03. Additional Termination Requirements.......................................................108
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.................................................................................110
Section 10.02. Recordation of Agreement; Counterparts....................................................111
Section 10.03. Governing Law.............................................................................111
Section 10.04. Intention of Parties......................................................................111
Section 10.05. Notices...................................................................................112
Section 10.06. Severability of Provisions................................................................113
Section 10.07. Assignment................................................................................113
Section 10.08. Limitation on Rights of Certificateholders................................................113
Section 10.09. Inspection and Audit Rights...............................................................114
Section 10.10. Certificates Nonassessable and Fully Paid.................................................114
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POOLING AND SERVICING AGREEMENT, dated as of September 1,
1999, among BEAR XXXXXXX ASSET BACKED SECURITIES, INC., a Delaware corporation,
as depositor (the "Depositor"), EMC MORTGAGE CORPORATION, a Delaware
corporation, as seller (in such capacity, the "Seller") and as master servicer
(in such capacity, the "Master Servicer"), and BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., a national banking association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates. As provided herein, the
Trustee shall elect that the Trust Fund be treated for Federal income tax
purposes as three separate real estate mortgage investment conduits (each a
"REMIC").
The Trust Fund shall be named, and may be referred to as, the
"Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed Certificates 1999-2"
(including for purposes of any endorsement or assignment of a Mortgage Note or
Mortgage).
In consideration of the mutual agreements herein contained,
the Depositor, the Master Servicer, the Seller and the Trustee agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms.
In addition to those defined terms defined in Section 1.02,
whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Accrual Period: With respect to the Fixed Rate Certificates
and any Distribution Date, the calendar month immediately preceding such
Distribution Date. With respect to the Adjustable Rate Certificates and any
Distribution Date, the period commencing on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date) and ending on the day immediately preceding such Distribution Date. All
calculations of interest on the Fixed Rate Certificates will be made on the
basis of a 360-day year consisting of twelve 30-day months, and all calculations
of interest on the Adjustable Rate Certificates will be made on the basis of the
actual number of days elapsed in the related Accrual Period and in a 360 day
year.
Adjustable Net Rate: The weighted average Adjusted Net
Mortgage Rate for Adjustable Rate Mortgage Loans. For purposes of the definition
of Adjustable Net Rate, all calculations of interest in respect of a Mortgage
Loan at the Mortgage Rate less the related Servicing Fee Rate will be made on
the basis of the actual number of days in the related Accrual Period and a 360
day year. The Adjustable Net Rate in respect of the first Distribution Date
shall be 9.342%.
Adjustable Rate Carryover Reserve Fund: The separate Eligible
Account created and initially maintained by the Trustee pursuant to Section 4.09
in the name of the Trustee for the benefit of the Adjustable Rate
Certificateholders and designated "Bankers Trust Company of California, N.A. in
trust for registered holders of Bear Xxxxxxx Asset Backed Securities, Inc.,
Asset-Backed Certificates, Series 1999-2". Funds in the Adjustable Rate
Carryover Reserve Fund shall be held in trust for the Adjustable Rate
Certificateholders for the uses and purposes set forth in this Agreement.
Adjustable Rate Certificate Carryover: With respect to any
Distribution Date, an amount equal to the sum of (i) the Class AV-1 Interest
Carryover Amount for such Distribution Date (if any), (ii) the Class AV-2
Interest Carryover Amount for such Distribution Date (if any), (iii) the Class
MV-1 Interest Carryover Amount for such Distribution Date (if any), (iv) the
Class MV-2 Interest Carryover Amount for such Distribution Date (if any) and (v)
the Class BV Interest Carryover Amount for such Distribution Date (if any);
provided that when the term Adjustable Rate Certificate Carryover is used with
respect to one Class of Adjustable Rate Certificates, it shall mean such
carryover amount listed in clauses (i), (ii), (iii), (iv) or (v), as applicable,
with the same Class designation.
Adjustable Rate Certificateholder: A holder of an Adjustable
Rate Certificate.
Adjustable Rate Certificate Principal Balance: The sum of the
Class AV-1 Certificate Principal Balance, the Class AV-2 Certificate Principal
Balance, the Class MV-1
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Certificate Principal Balance, the Class MV-2 Certificate Principal Balance, the
Class PV Certificate Principal Balance and the Class BV Certificate Principal
Balance.
Adjustable Rate Certificates: Any of the Class AV-1, Class
AV-2, Class MV-1, Class MV-2, Class PV, Class BV and/or Class BV-IO
Certificates.
Adjustable Rate Class A Certificate Principal Balance: The sum
of the Class AV-1 Certificate Principal Balance and the Class AV-2 Certificate
Principal Balance.
Adjustable Rate Class A Principal Distribution Amount: With
respect to any Distribution Date, the excess of (A) the Adjustable Rate Class A
Certificate Principal Balance immediately prior to such Distribution Date over
(B) the lesser of (I) 47.00% of the Stated Principal Balance of the Adjustable
Rate Mortgage Loans as of the last day of the related Due Period and (II) the
Stated Principal Balance of the Adjustable Rate Mortgage Loans as of the last
day of the related Due Period less the OC Floor for the Adjustable Rate Mortgage
Loans.
Adjustable Rate Class B Principal Distribution Amount: With
respect to any Distribution Date, the excess of (i) the sum of (A) the
Adjustable Rate Class A Certificate Principal Balance (after taking into account
distribution of the Adjustable Rate Class A Principal Distribution Amount on
such Distribution Date), (B) the Class MV-1 Certificate Principal Balance (after
taking into account distribution of the Class MV-1 Principal Distribution Amount
on such Distribution Date), (C) the Class MV-2 Certificate Principal Balance
(after taking into account distribution of the Class MV-2 Principal Distribution
Amount for such Distribution Date), and (D) the Class BV Certificate Principal
Balance immediately prior to such Distribution Date over (ii) the lesser of (A)
90.50% of the Stated Principal Balance of the Adjustable Rate Mortgage Loans as
of the last day of the related Due Period and (B) the Stated Principal Balance
of the Adjustable Rate Mortgage Loans as of the last day of the related Due
Period less the OC Floor for the Adjustable Rate Mortgage Loans provided that
after the Adjustable Rate Class A Certificate Principal Balance, the Class MV-1
Certificate Principal Balance and the Class MV-2 Certificate Principal Balance
has been reduced to zero, the Adjustable Rate Class B Principal Distribution
Amount for such Distribution Date will equal 100% of the Adjustable Rate
Principal Distribution Amount for such Distribution Date.
Adjustable Rate Excess Cashflow: With respect to any
Distribution Date, the aggregate of the amounts constituting Adjustable Rate
Excess Cashflow for such Distribution Date pursuant to Sections 4.04(b)(v) and
4.04(e)(A)(v) or 4.04(e)(B)(v), as applicable.
Adjustable Rate Extra Principal Distribution Amount: With
respect to any Distribution Date, the lesser of (i) the excess, if any, of the
Adjustable Rate Specified Overcollateralization Amount for such Distribution
Date over the Adjustable Rate Overcollateralization Amount for such Distribution
Date (after giving effect to distributions of principal on the Adjustable Rate
Certificates other than any Adjustable Rate Extra Principal Distribution Amount)
and (ii) the sum of the Adjustable Rate Excess Cashflow and Fixed Rate Remainder
Excess Cashflow for such Distribution Date available therefor in the priority
set forth in Section 4.04.
Adjustable Rate Interest Funds: With respect to Adjustable
Rate Mortgage Loans and any Master Servicer Advance Date, the sum, without
duplication, of (i) all scheduled interest
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collected during the related Due Period with respect to the Adjustable Rate
Mortgage Loans less the related Servicing Fee, (ii) all Advances relating to
interest with respect to the Adjustable Rate Mortgage Loans, (iii) all
Compensating Interest with respect to the Adjustable Rate Mortgage Loans and
(iv) Liquidation Proceeds with respect to the Adjustable Rate Mortgage Loans
collected during the related Prepayment Period (to the extent such Liquidation
Proceeds relate to interest) less all Nonrecoverable Advances relating to
interest reimbursed with respect to the related Due Period.
Adjustable Rate Mortgage Loans: The group of Mortgage Loans
identified in the related Mortgage Loan Schedule as having a Mortgage Rate which
is adjustable from time to time, including any Mortgage Loans delivered in
replacement thereof.
Adjustable Rate Overcollateralization Amount: With respect to
any Distribution Date, the excess, if any, of the Stated Principal Balance of
the Adjustable Rate Mortgage Loans as of the last day of the related Due Period
over the Certificate Principal Balances of all Adjustable Rate Certificates on
such date (after taking into account the payment of principal other than any
Adjustable Rate Extra Principal Distribution Amount, on such Certificates on
such Distribution Date).
Adjustable Rate Principal Distribution Amount: With respect to
each Distribution Date, the sum of (i) the Adjustable Rate Principal Funds for
such Distribution Date and (ii) any Adjustable Rate Extra Principal Distribution
Amount for such Distribution Date.
Adjustable Rate Principal Funds: With respect to any
Distribution Date and the Adjustable Rate Mortgage Loans, the sum, without
duplication, of (i) the scheduled principal collected during the related Due
Period or Advanced on or before the related Master Servicer Advance Date, (ii)
prepayments collected during the related Prepayment Period, (iii) the Stated
Principal Balance of each Adjustable Rate Mortgage Loan that was repurchased by
the Seller or the Master Servicer with respect to the related Prepayment Period,
(iv) the aggregate of all Substitution Adjustment Amounts for the related
Determination Date in connection with the substitution of Adjustable Rate
Mortgage Loans pursuant to Section 2.03(c) and (v) all Liquidation Proceeds
collected during the related Prepayment Period (to the extent such Liquidation
Proceeds relate to principal) less all Nonrecoverable Advances relating to
principal reimbursed with respect to the related Due Period.
Adjustable Rate Remainder Excess Cashflow: With respect to any
Distribution Date, the Adjustable Rate Excess Cashflow for such Distribution
Date remaining after the applications set forth in Section 4.04(g)(i) through
(vii).
Adjustable Rate Senior Enhancement Percentage: As to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the sum of (i) the aggregate Certificate Principal Balance of the
Adjustable Rate Subordinated Certificates and the Class PV Certificates and (ii)
the Adjustable Rate Overcollateralization Amount, in each case, taking into
account distributions in respect of principal on the Adjustable Rate Mortgage
Loans on such Distribution Date but prior to any application of Adjustable Rate
Principal Funds on such Distribution Date, and the denominator of which is the
aggregate Stated Principal Balance of the Adjustable Rate Mortgage Loans as of
the last day of the related Due Period.
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Adjustable Rate Specified Overcollateralization Amount: Prior
to the Adjustable Rate Stepdown Date, 4.75% of the Stated Principal Balance of
the Adjustable Rate Mortgage Loans as of the Cut-off Date, and on and after the
Adjustable Rate Stepdown Date, 9.50% of the Stated Principal Balance of the
Adjustable Rate Mortgage Loans as of the last day of the related Due Period,
subject to a minimum amount equal to the OC Floor for the Adjustable Rate
Mortgage Loans; provided that, if on any Distribution Date an Adjustable Rate
Trigger Event has occurred, the Adjustable Rate Specified Overcollateralization
Amount shall not be reduced to the applicable percentage of the then current
Stated Principal Balance of the Adjustable Rate Mortgage Loans until the
Distribution Date on which an Adjustable Rate Trigger Event no longer exists.
Adjustable Rate Stepdown Date: With respect to Adjustable Rate
Certificates, the later to occur of (i) the Distribution Date in October 2002 or
(ii) the first Distribution Date on which the Adjustable Rate Senior Enhancement
Percentage is greater than or equal to 53.00%.
Adjustable Rate Subordinated Certificates: The Class MV-1,
Class MV-2 and Class BV Certificates.
Adjustable Rate Trigger Event: With respect to any
Distribution Date after the Adjustable Rate Stepdown Date, (1) the product of
(i) 2.5 times (ii) the quotient of (A) the Stated Principal Balance as of the
last day of the related Due Period of all Adjustable Rate Mortgage Loans 60 or
more days delinquent (including all Adjustable Rate Mortgage Loans in
foreclosure and REO Properties without regard to delinquency) and (B) the Stated
Principal Balance of the Adjustable Rate Mortgage Loans as of the last day of
the related Due Period (2) equals or exceeds the Required Percentage.
Adjusted Net Mortgage Rate: As to any Mortgage Loan, the
Mortgage Rate thereon minus the Expense Rate.
Adjustment Date: As to each Adjustable Rate Mortgage Loan,
each date on which the related Mortgage Rate is subject to adjustment, as
provided in the related Mortgage Note.
Advance: The aggregate of the advances required to be made by
the Master Servicer with respect to any Distribution Date pursuant to Section
4.01, the amount of any such advances being equal to the aggregate of payments
of principal and interest (net of the Servicing Fees) on the Mortgage Loans that
were due during the related Due Period and not received as of the close of
business on the related Determination Date less the aggregate amount of any such
delinquent payments that the Master Servicer has determined would constitute a
Nonrecoverable Advance were an advance to be made with respect thereto. For
purposes of this definition, an REO Property shall continue to be a Mortgage
Loan with an amortization schedule and periodic adjustments to the Mortgage Rate
thereon, if applicable, in accordance with the Mortgage Note until it becomes a
Liquidated Mortgage Loan.
Agreement: This Pooling and Servicing Agreement and any and
all amendments or supplements hereto made in accordance with the terms herein.
Amount Held for Future Distribution: As to any Distribution
Date, the aggregate amount held in the Certificate Account at the close of
business on the immediately preceding Determination Date on account of (i) all
Scheduled Payments or portions thereof received in respect
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of the Mortgage Loans due after the related Due Period and (ii) Principal
Prepayments and Liquidation Proceeds received in respect of such Mortgage Loans
after the last day of the related Prepayment Period.
Applied Realized Loss Amount: With respect to any Distribution
Date, the sum of the Realized Losses with respect to the Mortgage Loans which
are to be applied in reduction of the Certificate Principal Balance of the
Certificates pursuant to this Agreement, which shall on any such Distribution
Date equal the amount, if any, by which, (i) with respect to the Fixed Rate
Certificates, the Fixed Rate Certificate Principal Balance (after all
distributions of principal on such Distribution Date) exceeds the Stated
Principal Balance of the Fixed Rate Mortgage Loans as of the last day of the
related Due Period, and (ii) with respect to the Adjustable Rate Certificates,
the Adjustable Rate Certificate Principal Balance (after all distributions of
principal on such Distribution Date) exceeds the Stated Principal Balance of the
Adjustable Rate Mortgage Loans as of the last day of the related Due Period.
Appraised Value: With respect to any Mortgage Loan originated
in connection with a refinancing, the appraised value of the Mortgaged Property
based upon the appraisal made at the time of such refinancing or, with respect
to any other Mortgage Loan, the lesser of (x) the appraised value of the
Mortgaged Property based upon the appraisal made by a fee appraiser at the time
of the origination of the related Mortgage Loan, and (y) the sales price of the
Mortgaged Property at the time of such origination.
Available Funds Cap: As of any Distribution Date with respect
to the Adjustable Rate Certificates, a per annum rate equal to the quotient of
(x) the total scheduled interest collected or Advanced on the Adjustable Rate
Mortgage Loans based on the Adjusted Net Mortgage Rates in effect on the related
Due Dates for such Distribution Date multiplied by 360 over the actual number of
days in the Accrual Period, divided by (y) the Certificate Principal Balance of
the Adjustable Rate Certificates.
Bankruptcy Code: Title 11 of the United States Code.
Book-Entry Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06). As of the Closing
Date, each Class of Regular Certificates (other than the Class B-IO and Class P
Certificates) constitutes a Class of Book-Entry Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday,
or (ii) a day on which banking institutions in the City of New York, New York or
the city in which the Corporate Trust Office of the Trustee is located are
authorized or obligated by law or executive order to be closed.
Certificate: Any one of the certificates of any Class executed
and authenticated by the Trustee in substantially the forms attached hereto as
exhibits.
Certificate Account: The separate Eligible Account created and
initially maintained by the Master Servicer pursuant to Section 3.05(b) with a
depository institution in the name of the Master Servicer for the benefit of the
Trustee on behalf of the Certificateholders and designated
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"EMC Mortgage Corporation in trust for registered holders of Bear Xxxxxxx Asset
Backed Securities, Inc., Asset-Backed Certificates, Series 1999-2". Funds in the
Certificate Account shall be held in trust for the Certificateholders for the
uses and purposes set forth in this Agreement.
Certificate Group: Either of the Fixed Rate Certificates or
the Adjustable Rate Certificates.
Certificate Owner: With respect to a Book-Entry Certificate,
the Person that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other
than any Class B-IO Certificates) and as of any Distribution Date, the Initial
Certificate Principal Balance of such Certificate less the sum of (i) all
amounts distributed with respect to such Certificate in reduction of the
Certificate Principal Balance thereof on previous Distribution Dates pursuant to
Section 4.04, and (ii) any Applied Realized Loss Amounts allocated to such
Certificate on previous Distribution Dates pursuant to (i) Section 4.04(l) for
the Fixed Rate Certificates and (ii) Section 4.04(m) for the Adjustable Rate
Certificates. References herein to the Certificate Principal Balance of a Class
of Certificates or a Certificate Group shall mean the Certificate Principal
Balances of all Certificates in such Class or all Certificates in such
Certificate Group, as the case may be.
Certificate Register: The register maintained pursuant to
Section 5.02 hereof.
Certificateholder or Holder: The person in whose name a
Certificate is registered in the Certificate Register (initially, Cede & Co., as
nominee for the Depository, in the case of any Book-Entry Certificates, except
that solely for the purpose of giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor or any affiliate of the
Depositor shall be deemed not to be Outstanding and the Voting Interest
evidenced thereby shall not be taken into account in determining whether the
requisite amount of Voting Interests necessary to effect such consent has been
obtained; provided that if any such Person (including the Depositor) owns 100%
of the Voting Interests evidenced by a Class of Certificates, such Certificates
shall be deemed to be Outstanding for purposes of any provision hereof that
requires the consent of the Holders of Certificates of a particular Class as a
condition to the taking of any action hereunder. The Trustee is entitled to rely
conclusively on a certification of the Depositor or any affiliate of the
Depositor in determining which Certificates are registered in the name of an
affiliate of the Depositor.
Class: All Certificates bearing the same Class designation as
set forth in Section 5.01 hereof.
Class AF-1 Certificate: Any Certificate designated as a "Class
AF-1 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to distributions as set forth herein.
Class AF-1 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class AF-1 Certificates.
Class AF-1 Current Interest: As of any Distribution Date, the
interest accrued on the Class AF-1 Certificate Principal Balance during the
related Accrual Period at the Class AF-1 Pass-
6
Through Rate plus any amount previously distributed with respect to interest for
such Class that has been recovered as a voidable preference by a trustee in
bankruptcy.
Class AF-1 Interest Carryforward Amount: As of any
Distribution Date, the sum of (i) the excess of (a) the Class AF-1 Current
Interest with respect to prior Distribution Dates over (b) the amount actually
distributed to the Class AF-1 Certificates with respect to interest and (ii)
interest thereon (to the extent permitted by applicable law) at the Class AF-1
Pass-Through Rate for the related Accrual Period.
Class AF-1 Pass-Through Rate: On any Distribution Date on or
prior to the related Optional Termination Date, the lesser of (i) 7.68% per
annum and (ii) the Fixed Net Rate Cap, and on any Distribution Date after such
Optional Termination Date, the lesser of (i) 8.18% per annum and (ii) the Fixed
Net Rate Cap.
Class AF-2 Certificate: Any Certificate designated as a "Class
AF-2 Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to distributions as set forth herein.
Class AF-2 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class AF-2 Certificates.
Class AF-2 Current Interest: As of any Distribution Date, the
interest accrued on the Class AF-2 Certificate Principal Balance during the
related Accrual Period at the Class AF-2 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that has been
recovered as a voidable preference by a trustee in bankruptcy.
Class AF-2 Interest Carryforward Amount: As of any
Distribution Date, the sum of (i) the excess of (a) the Class AF-2 Current
Interest with respect to prior Distribution Dates over (b) the amount actually
distributed to the Class AF-2 Certificates with respect to interest and (ii)
interest thereon (to the extent permitted by applicable law) at the Class AF-2
Pass-Through Rate for the related Accrual Period.
Class AF-2 Pass-Through Rate: On any Distribution Date on or
prior to the related Optional Termination Date, the lesser of (i) 7.91% per
annum and (ii) the Fixed Net Rate Cap, and on any Distribution Date after such
Optional Termination Date, the lesser of (i) 8.41% per annum and (ii) the Fixed
Net Rate Cap.
Class AV-1 Certificate: Any Certificate designated as a "Class
AV-1 Certificate" on the face thereof, in the form of Exhibit A-8 hereto,
representing the right to distributions as set forth herein.
Class AV-1 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class AV-1 Certificates.
Class AV-1 Interest Carryover Amount: As of any Distribution
Date, the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class AV-1 Certificates is based upon the Available Funds Cap, the excess of (i)
the amount of interest the Class AV-1 Certificates would otherwise be entitled
to receive on such Distribution Date had such rate been calculated as the sum
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of One-Month LIBOR and the applicable Class AV-1 Margin for such Distribution
Date, up to the Maximum Rate Cap, over (ii) the amount of interest payable on
the Class AV-1 Certificates at the Available Funds Cap for such Distribution
Date and (B) the Class AV-1 Interest Carryover Amount for all previous
Distribution Dates not previously paid pursuant to Section 4.04(i), together
with interest thereon at a rate equal to the sum of One-Month LIBOR and the
applicable Class AV-1 Margin for such Distribution Date.
Class AV-1 Current Interest: As of any Distribution Date, the
interest accrued on the Class AV-1 Certificate Principal Balance during the
related Accrual Period at the Class AV-1 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that has been
recovered as a voidable preference by a trustee in bankruptcy.
Class AV-1 Interest Carryforward Amount: As of any
Distribution Date, the sum of (i) the excess of (a) the Class AV-1 Current
Interest with respect to prior Distribution Dates (excluding any Class AV-1
Interest Carryover Amount) over (b) the amount actually distributed to the Class
AV-1 Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class AV-1 Pass-Through Rate for the
related Accrual Period.
Class AV-1 Margin: As of any Distribution Date on or prior to
the Optional Termination Date for the Adjustable Rate Certificates, 0.35% per
annum and, as of any Distribution Date after such Optional Termination Date,
0.70% per annum.
Class AV-1 Pass-Through Rate: For the first Distribution Date,
5.7725% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class AV-1 Margin, (ii) the Maximum Rate Cap and (iii)
the Available Funds Cap for such Distribution Date.
Class AV-2 Certificate: Any Certificate designated as a "Class
AV-2 Certificate" on the face thereof, in the form of Exhibit A-9 hereto,
representing the right to distributions as set forth herein.
Class AV-2 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class AV-2 Certificates.
Class AV-2 Interest Carryover Amount: As of any Distribution
Date, the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class AV-2 Certificates is based upon the Available Funds Cap, the excess of (i)
the amount of interest the Class AV-2 Certificates would otherwise be entitled
to receive on such Distribution Date had such rate been calculated as the sum of
One-Month LIBOR and the applicable Class AV-2 Margin for such Distribution Date,
up to the Maximum Rate Cap, over (ii) the amount of interest payable on the
Class AV-2 Certificates at the Available Funds Cap for such Distribution Date
and (B) the Class AV-2 Interest Carryover Amount for all previous Distribution
Dates not previously paid pursuant to Section 4.04(i), together with interest
thereon at a rate equal to the sum of One-Month LIBOR and the applicable Class
AV-2 Margin for such Distribution Date.
Class AV-2 Current Interest: As of any Distribution Date, the
interest accrued on the Class AV-2 Certificate Principal Balance during the
related Accrual Period at the Class AV-2 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that has been
recovered as a voidable preference by a trustee in bankruptcy.
8
Class AV-2 Interest Carryforward Amount: As of any
Distribution Date, the sum of (i) the excess of (a) the Class AV-2 Current
Interest with respect to prior Distribution Dates (excluding any Class AV-2
Interest Carryover Amount) over (b) the amount actually distributed to the Class
AV-2 Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class AV-2 Pass-Through Rate for the
related Accrual Period.
Class AV-2 Margin: As of any Distribution Date on or prior to
the Optional Termination Date for the Adjustable Rate Certificates, 0.50% per
annum and, as of any Distribution Date after such Optional Termination Date,
1.00% per annum.
Class AV-2 Pass-Through Rate: For the first Distribution Date,
5.9225% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class AV-2 Margin, (ii) the Maximum Rate Cap and (iii)
the Available Funds Cap for such Distribution Date.
Class B-IO Certificates: Either or both of the Class BF-IO
Certificates and the Class BV-IO Certificates, as the context may require.
Class BF Applied Realized Loss Amount: As of any Distribution
Date, the sum of all Applied Realized Loss Amounts with respect to the Fixed
Rate Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class BF Certificates.
Class BF Certificate: Any Certificate designated as a "Class
BF Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to distributions as set forth herein.
Class BF Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class BF Certificates.
Class BF Current Interest: As of any Distribution Date, the
interest accrued on the Class BF Certificate Principal Balance during the
related Accrual Period at the Class BF Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that has been
recovered as a voidable preference by a trustee in bankruptcy.
Class BF Interest Carryforward Amount: As of any Distribution
Date, the sum of (i) the excess of (a) the Class BF Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed to
the Class BF Certificates with respect to interest and (ii) interest thereon (to
the extent permitted by applicable law) at the Class BF Pass-Through Rate for
the related Accrual Period.
Class BF Pass-Through Rate: On any Distribution Date on or
prior to the related Optional Termination Date, the lesser of (i) 8.50% per
annum and (ii) the Fixed Net Rate Cap and, on any Distribution Date after the
related Optional Termination Date, the lesser of (i) 9.00% per annum and (ii)
the Fixed Net Rate Cap.
Class BF Unpaid Realized Loss Amount: As of any Distribution
Date, the excess of (i) the Class BF Applied Realized Loss Amount over (ii) the
sum of all distributions in reduction of the Class BF Applied Realized Loss
Amount on all previous Distribution Dates.
9
Class BF-IO Certificates: Any Certificate designated as a
"Class BF-IO Certificate" on the face thereof, in the form of Exhibit A-6
hereto.
Class BF-IO Distributable Amount: With respect to any
Distribution Date, the sum of the principal balances of the Class TF1, Class
TF2, Class TF3, Class TF4, Class TF5 and Class MF Interests multiplied by the
excess of (1) the weighted average Adjusted Net Mortgage Rate of the Fixed Rate
Mortgage Loans over (2) 100 times the Fixed Rate Marker Rate.
Class BV Applied Realized Loss Amount: As of any Distribution
Date, the sum of all Applied Realized Loss Amounts with respect to the
Adjustable Rate Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class BV Certificates.
Class BV Certificate: Any Certificate designated as a "Class
BV Certificate" on the face thereof, in the form of Exhibit A-12 hereto,
representing the right to distributions as set forth herein.
Class BV Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class BV Certificates.
Class BV Current Interest: As of any Distribution Date, the
interest accrued on the Class BV Certificate Principal Balance during the
related Accrual Period at the Class BV Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that has been
recovered as a voidable preference by a trustee in bankruptcy.
Class BV Interest Carryforward Amount: As of any Distribution
Date, the sum of (i) the excess of (a) the Class BV Current Interest with
respect to prior Distribution Dates (excluding any Class BV Interest Carryover
Amount) over (b) the amount actually distributed to the Class BV Certificates
with respect to interest and (ii) interest thereon (to the extent permitted by
applicable law) at the Class BV Pass-Through Rate for the related Accrual
Period.
Class BV Interest Carryover Amount: As of any Distribution
Date, the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class BV Certificates is based upon the Available Funds Cap, the excess of (i)
the amount of interest the Class BV Certificates would otherwise be entitled to
receive on such Distribution Date had such rate been calculated as the sum of
One-Month LIBOR and the applicable Class BV Margin for such Distribution Date,
up to the Maximum Rate Cap, over (ii) the amount of interest payable on the
Class BV Certificates at the Available Funds Cap for such Distribution Date and
(B) the Class BV Interest Carryover Amount for all previous Distribution Dates
not previously paid pursuant to Section 4.04(i), together with interest thereon
at a rate equal to the sum of One-Month LIBOR and the applicable Class BV Margin
for such Distribution Date.
Class BV Margin: For any Distribution Date on or prior to the
related Optional Termination Date for the Adjustable Rate Certificates, 3.50%
per annum and, as of any Distribution Date after such Optional Termination Date,
5.25% per annum.
Class BV Pass-Through Rate: For the first Distribution Date,
8.9225% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class BV Margin, (ii) the Maximum Rate Cap and (iii)
the Available Funds Cap for such Distribution Date.
10
Class BV Unpaid Realized Loss Amount: As of any Distribution
Date, the excess of (i) the Class BV Applied Realized Loss Amount over (ii) the
sum of all distributions in reduction of the Class BV Applied Realized Loss
Amounts on all previous Distribution Dates.
Class BV-IO Certificates: Any Certificate designated as a
"Class BV-IO Certificate" on the face thereof, in the form of Exhibit A-13
hereto.
Class BV-IO Distributable Amount: With respect to any
Distribution Date, the sum of the principal balances of the Class TV1, Class
TV2, Class TV3, Class TV4, Class TV5 and Class MV Interests, multiplied by the
excess of (1) the weighted average Adjusted Net Mortgage Rate of the Adjustable
Rate Mortgage Loans over (2) 100 times the Adjustable Rate Marker Rate.
Class MF-1 Applied Realized Loss Amount: As of any
Distribution Date, the sum of all Applied Realized Loss Amounts with respect to
the Fixed Rate Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class MF-1 Certificates.
Class MF-1 Certificate: Any Certificate designated as a "Class
MF-1 Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to distributions as set forth herein.
Class MF-1 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class MF-1 Certificates.
Class MF-1 Current Interest: As of any Distribution Date, the
interest accrued on the Class MF-1 Certificate Principal Balance during the
related Accrual Period at the Class MF-1 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that is recovered
as a voidable preference by a trustee in bankruptcy.
Class MF-1 Interest Carryforward Amount: As of any
Distribution Date, the sum of (i) the excess of (a) the Class MF-1 Current
Interest with respect to prior Distribution Dates over (b) the amount actually
distributed to the Class MF-1 Certificates with respect to interest and (ii)
interest thereon (to the extent permitted by applicable law) at the Class MF-1
Pass-Through Rate for the related Accrual Period.
Class MF-1 Pass-Through Rate: On any Distribution Date on or
prior to the related Optional Termination Date, the lesser of (i) 8.22% per
annum and (ii) the Fixed Net Rate Cap and, on any Distribution Date after such
Optional Termination Date, the lesser of (i) 8.72% per annum and (ii) the Fixed
Net Rate Cap.
Class MF-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the Fixed Rate Class A
Certificate Principal Balance (after taking into account distributions of the
Fixed Rate Class A Principal Distribution Amount on such Distribution Date) and
(B) the Class MF-1 Certificate Principal Balance immediately prior to such
Distribution Date over (ii) the lesser of (A) 71.00% of the Stated Principal
Balance of the Fixed Rate Mortgage Loans as of the last day of the related Due
Period and (B) the Stated Principal Balance of the Fixed Rate Mortgage Loans as
of the last day of the related Due Period less the OC Floor for the Fixed Rate
Mortgage Loans.
11
Class MF-1 Unpaid Realized Loss Amount: As of any Distribution
Date, the excess of (i) the Class MF-1 Applied Realized Loss Amount over (ii)
the sum of all distributions in reduction of the Class MF-1 Applied Realized
Loss Amount on all previous Distribution Dates.
Class MF-2 Applied Realized Loss Amount: As of any
Distribution Date, the sum of all Applied Realized Loss Amounts with respect to
the Fixed Rate Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class MF-2 Certificates.
Class MF-2 Certificate: Any Certificate designated as a "Class
MF-2 Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to distributions as set forth herein.
Class MF-2 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class MF-2 Certificates.
Class MF-2 Current Interest: As of any Distribution Date, the
interest accrued on the Class MF-2 Certificate Principal Balance during the
related Accrual Period at the Class MF-2 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that has been
recovered as a voidable preference by a trustee in bankruptcy.
Class MF-2 Interest Carryforward Amount: As of any
Distribution Date, the sum of (i) the excess of (a) the Class MF-2 Current
Interest with respect to prior Distribution Dates over (b) the amount actually
distributed to the Class MF-2 Certificates with respect to interest and (ii)
interest thereon (to the extent permitted by applicable law) at the Class MF-2
Pass-Through Rate for the related Accrual Period.
Class MF-2 Pass-Through Rate: On any Distribution Date on or
prior to the related Optional Termination Date, the lesser of (i) 8.50% per
annum and (ii) the Fixed Net Rate Cap and, on any Distribution Date after such
Optional Termination Date, the lesser of (i) 9.00% per annum and (ii) the Fixed
Net Rate Cap.
Class MF-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the Fixed Rate Class A
Certificate Principal Balance (after taking into account distributions of the
Fixed Rate Class A Principal Distribution Amount on such Distribution Date), (B)
the Class MF-1 Certificate Principal Balance (after taking into account
distributions of the Class MF-1 Principal Distribution Amount on such
Distribution Date) and (C) the Class MF-2 Certificate Principal Balance
immediately prior to such Distribution Date over (ii) the lesser of (A) 81.00%
of the Stated Principal Balance of the Fixed Rate Mortgage Loans as of the last
day of the related Due Period and (B) the Stated Principal Balance of the Fixed
Rate Mortgage Loans as of the last day of the related Due Period less the OC
Floor for the Fixed Rate Mortgage Loans.
Class MF-2 Unpaid Realized Loss Amount: As of any Distribution
Date, the excess of (i) the Class MF-2 Applied Realized Loss Amount over (ii)
the sum of all distributions in reduction of the Class MF-2 Applied Realized
Loss Amount on all previous Distribution Dates.
12
Class MV-1 Applied Realized Loss Amount: As of any
Distribution Date, the sum of all Realized Losses with respect to the Adjustable
Rate Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class MV-1 Certificates.
Class MV-1 Certificate: Any Certificate designated as a "Class
MV-1 Certificate" on the face thereof, in the form of Exhibit A-10 hereto,
representing the right to distributions as set forth herein.
Class MV-1 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class MV-1 Certificates.
Class MV-1 Current Interest: As of any Distribution Date, the
interest accrued on the Class MV Certificate Principal Balance during the
related Accrual Period at the Class MV Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that has been
recovered as a voidable preference by a trustee in bankruptcy.
Class MV-1 Interest Carryforward Amount: As of any
Distribution Date, the sum of (i) the excess of (a) the Class MV-1 Current
Interest with respect to prior Distribution Dates (excluding any Class MV-1
Interest Carryover Amount) over (b) the amount actually distributed to the Class
MV-1 Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class MV-1 Pass-Through Rate for the
related Accrual Period.
Class MV-1 Interest Carryover Amount: As of any Distribution
Date, the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class MV-1 Certificates is based upon the Available Funds Cap, the excess of (i)
the amount of interest the Class MV-1 Certificates would otherwise be entitled
to receive on such Distribution Date had such rate been calculated as the sum of
One-Month LIBOR and the applicable Class MV-1 Margin for such Distribution Date,
up to the Maximum Rate Cap, over (ii) the amount of interest payable on the
Class MV-1 Certificates at the Available Funds Cap for such Distribution Date
and (B) the Class MV-1 Interest Carryover Amount for all previous Distribution
Dates not previously paid pursuant to Section 4.04(i), together with interest
thereon at a rate equal to the sum of One-Month LIBOR and the applicable Class
MV-1 Margin for such Distribution Date.
Class MV-1 Margin: As of any Distribution Date on or prior to
the related Optional Termination Date for the Adjustable Rate Certificates,
0.70% per annum and, as of any Distribution Date after such Optional Termination
Date, 1.05% per annum.
Class MV-1 Pass-Through Rate: For the first Distribution Date,
6.1225% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class MV-1 Margin, (ii) the Maximum Rate Cap and (iii)
the Available Funds Cap for such Distribution Date.
Class MV-1 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the Adjustable Rate Class A
Certificate Principal Balance (after taking into account distributions of the
Adjustable Rate Class A Principal Distribution Amount on such Distribution Date)
and (B) the Class MV-1 Certificate Principal Balance immediately prior to such
Distribution Date over (ii) the lesser of (A) 63.00% of the Stated Principal
Balance of the Adjustable Rate Mortgage Loans as of the last day of the related
Due Period and (B) the Stated
13
Principal Balance of the Adjustable Rate Mortgage Loans as of the last day of
the related Due Period less the OC Floor for the Adjustable Rate Mortgage Loans.
Class MV-1 Unpaid Realized Loss Amount: As of any Distribution
Date, the excess of (i) the Class MV-1 Applied Realized Loss Amount over (ii)
the sum of all distributions in reduction of the Class MV-1 Applied Realized
Loss Amounts on all previous Distribution Dates.
Class MV-2 Applied Realized Loss Amount: As of any
Distribution Date, the sum of all Realized Losses with respect to the Adjustable
Rate Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class MV-2 Certificates.
Class MV-2 Certificate: Any Certificate designated as a "Class
MV-2 Certificate" on the face thereof, in the form of Exhibit A-11 hereto,
representing the right to distributions as set forth herein.
Class MV-2 Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class MV-2 Certificates.
Class MV-2 Current Interest: As of any Distribution Date, the
interest accrued on the Class MV-2 Certificate Principal Balance during the
related Accrual Period at the Class MV-2 Pass-Through Rate plus any amount
previously distributed with respect to interest for such Class that has been
recovered as a voidable preference by a trustee in bankruptcy.
Class MV-2 Interest Carryforward Amount: As of any
Distribution Date, the sum of (i) the excess of (a) the Class MV-2 Current
Interest with respect to prior Distribution Dates (excluding any Class MV-2
Interest Carryover Amount) over (b) the amount actually distributed to the Class
MV-2 Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class MV-2 Pass-Through Rate for the
related Accrual Period.
Class MV-2 Interest Carryover Amount: As of any Distribution
Date, the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class MV-2 Certificates is based upon the Available Funds Cap, the excess of (i)
the amount of interest the Class MV-2 Certificates would otherwise be entitled
to receive on such Distribution Date had such rate been calculated as the sum of
One-Month LIBOR and the applicable Class MV-2 Margin for such Distribution Date,
up to the Maximum Rate Cap, over (ii) the amount of interest payable on the
Class MV-2 Certificates at the Available Funds Cap for such Distribution Date
and (B) the Class MV-2 Interest Carryover Amount for all previous Distribution
Dates not previously paid pursuant to Section 4.04(i), together with interest
thereon at a rate equal to the sum of One-Month LIBOR and the applicable Class
MV-2 Margin for such Distribution Date.
Class MV-2 Margin: As of any Distribution Date on or prior to
the related Optional Termination Date for the Adjustable Rate Certificates,
1.35% per annum and, as of any Distribution Date after such Optional Termination
Date, 2.025% per annum.
Class MV-2 Pass-Through Rate: For the first Distribution Date,
6.7725% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class MV-2 Margin, (ii) the Maximum Rate Cap and (iii)
the Available Funds Cap for such Distribution Date.
14
Class MV-2 Principal Distribution Amount: With respect to any
Distribution Date, the excess of (i) the sum of (A) the Adjustable Rate Class A
Certificate Principal Balance (after taking into account distributions of the
Adjustable Rate Class A Principal Distribution Amount on such Distribution
Date), (B) the Class MV-1 Certificate Principal Balance (after taking into
account distributions of the Class MV-1 Principal Distribution Amount on such
Distribution Date) and (C) the Class MV-2 Certificate Principal Balance
immediately prior to such Distribution Date over (ii) the lesser of (A) 75.50%
of the Stated Principal Balance of the Adjustable Rate Mortgage Loans as of the
last day of the related Due Period and (B) the Stated Principal Balance of the
Adjustable Rate Mortgage Loans as of the last day of the related Due Period less
the OC Floor for the Adjustable Rate Mortgage Loans.
Class MV-2 Unpaid Realized Loss Amount: As of any Distribution
Date, the excess of (i) the Class MV-2 Applied Realized Loss Amount over (ii)
the sum of all distributions in reduction of the Class MV-2 Applied Realized
Loss Amounts on all previous Distribution Dates.
Class P Certificate: Any of the Class PF Certificates or Class
PV Certificates as the context requires.
Class PF Certificate: Any Certificate designated as a "Class
PF Certificate" on the face thereof, in the form of Exhibit A-7 hereto,
representing the right to distributions as set forth herein.
Class PF Certificates Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class PF Certificates.
Class PV Certificate: Any Certificate designated as a "Class
PV Certificate" on the face thereof, in the form of Exhibit A-14 hereto,
representing the right to distributions as set forth herein.
Class PV Certificate Principal Balance: As of any date of
determination, the Certificate Principal Balance of the Class PV Certificates.
Class R Certificate: Any one of the Class R Certificates
executed and authenticated by the Trustee in substantially the form set forth in
Exhibits D and E hereto, and evidencing ownership of the Class R-1F, R-1V and
Class R-2 Interests. The holder of a Class R Certificate can, on request, cause
the Trust to issue in its place separate Class R-1F, R-1V and R-2 Certificates.
Closing Date: October 19, 1999.
Code: The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
Combined Loan-to-Value Ratio: The fraction, expressed as a
percentage, the numerator of which is the sum of (x) the original principal
balance of the related Mortgage Loan and (y) the outstanding principal balance
at the date of origination of the Mortgage Loan of any senior mortgage loan, or
in the case of an open-ended senior mortgage loan (if any), the maximum
available line of credit with respect to such mortgage loan, regardless of any
lesser amount actually
15
outstanding at the date of origination of the Mortgage Loan, and the denominator
of which is the Appraised Value of the related Mortgaged Property.
Compensating Interest: With respect to any Mortgage Loan, an
amount not to exceed the monthly Servicing Fee, to be applied to the interest
portion of a Prepayment Interest Shortfall on such Mortgage Loan pursuant to
Section 4.02 hereof.
Corporate Trust Office: The designated office of the Trustee
in the State of California where at any particular time its corporate trust
business with respect to this Agreement shall be administered, which office at
the date of the execution of this Agreement is located at 0000 Xxxx Xx. Xxxxxx
Xxxxx, Xxxxx Xxx, Xxxxxxxxxx 00000 (Attention: Bear Xxxxxxx Asset Backed
Securities, Inc., Series 1999-2), telephone: (000) 000-0000, facsimile: (714)
247-6009.
Cut-off Date: September 1, 1999.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
unpaid principal balance thereof as of the close of business on the Cut-off Date
after application of all Principal Prepayments received prior to the Cut-off
Date and scheduled payments of principal due on or before the Cut-off Date,
whether or not received, but without giving effect to any installments of
principal received in respect of Due Dates after the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan that became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any other reduction that results in a permanent forgiveness of
principal.
Deficient Valuation: With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under such Mortgage Loan, or
any reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court that is final and
non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be
replaced by a Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due
thereon is not made pursuant to the terms of such Mortgage Loan by the close of
business on the day such payment is scheduled to be due. A Mortgage Loan is "30
days delinquent" if such payment has not been received by the close of business
on the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
16
Denomination: With respect to each Certificate, the amount set
forth on the face thereof as the "Initial Principal Balance of this
Certificate".
Depositor: Bear Xxxxxxx Asset Backed Securities, Inc., a
Delaware corporation, or its successor in interest.
Depository: The initial Depository shall be The Depository
Trust Company ("DTC"), the nominee of which is Cede & Co., or any other
organization registered as a "clearing agency" pursuant to Section 17A of the
Securities Exchange Act of 1934, as amended. The Depository shall initially be
the registered Holder of the Book-Entry Certificates. The Depository shall at
all times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.
Depository Agreement: With respect to the Class of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of Exhibit
O.
Depository Participant: A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
Determination Date: With respect to any Distribution Date, the
15th day of the month of such Distribution Date or, if such 15th day is not a
Business Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created
and maintained by the Trustee pursuant to Section 3.05 in the name of the
Trustee for the benefit of the Certificateholders and designated "Bankers Trust
Company of California, N.A., in trust for registered holders of Bear Xxxxxxx
Asset Backed Securities, Inc., Asset-Backed Certificates, Series 1999-2". Funds
in the Distribution Account shall be held in trust for the Certificateholders
for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution
Date, 1:00 p.m. Pacific time on the Business Day immediately preceding such
Distribution Date.
Distribution Date: The 25th day of each calendar month after
the initial issuance of the Certificates, or if such 25th day is not a Business
Day, the next succeeding Business Day, commencing in October 1999.
Due Date: As to any Mortgage Loan, the date in each month on
which the related Scheduled Payment is due, as set forth in the related Mortgage
Note.
Due Period: With respect to any Distribution Date, the period
from the second day of the calendar month preceding the calendar month in which
such Distribution Date occurs through the first day of the calendar month in
which such Distribution Date occurs..
Eligible Account: Any of (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which (or, in the case of a depository institution or trust
17
company that is the principal subsidiary of a holding company, the debt
obligations of such holding company, so long as Xxxxx'x is not a Rating Agency)
are rated by each Rating Agency (or, if Fitch does not provide such a rating, by
S&P in lieu of Fitch) in one of its two highest long-term and its highest
short-term rating categories respectively, at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the corporate trust department of a federal or state chartered depository
institution or trust company having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity or (iv) any other account
acceptable to the Rating Agencies. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with
the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Restricted Certificate: Each of the Class MF-1, Class
MF-2, Class BF, Class MV-1, Class MV-2, Class BV, Class B-IO, Class P and Class
R Certificates.
Event of Default: As defined in Section 7.01 hereof.
Excess Proceeds: With respect to any Liquidated Loan, any
Liquidation Proceeds that are in excess of the sum of (i) the unpaid principal
balance of such Liquidated Loan as of the date of such liquidation plus (ii)
interest at the Net Mortgage Rate from the Due Date as to which interest was
last paid or advanced to Certificateholders (and not reimbursed to the Master
Servicer) up to the first day of the month in which such Liquidation Proceeds
are required to be distributed on the Stated Principal Balance of such
Liquidated Loan outstanding during each Due Period as to which such interest was
not paid or advanced.
Expense Fee Rate: 0.51% per annum.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.
Fitch: Fitch IBCA, Inc.
5/25 Mortgage Loan: A Mortgage Loan having a Mortgage Rate
that is fixed for 60 months after origination thereof before such Mortgage Rate
becomes subject to adjustment.
18
Fixed Net Rate: The weighted average Adjusted Net Mortgage
Rate for Fixed Rate Mortgage Loans. The Fixed Net Rate in respect of the first
Distribution Date shall be 9.254%.
Fixed Net Rate Cap: As of any Distribution Date with respect
to the Fixed Rate Certificates, a per annum rate equal to the weighted average
Adjusted Net Mortgage Rate on the Fixed Rate Mortgage Loans for such
Distribution Date.
Fixed Rate Certificateholder: A holder of a Fixed Rate
Certificate.
Fixed Rate Certificate Principal Balance: The sum of the Class
AF-1 Certificate Principal Balance, the Class AF-2 Certificate Principal
Balance, the Class MF-1 Certificate Principal Balance, the Class MF-2
Certificate Principal Balance, the Class PF Certificate Principal Balance and
the Class BF Certificate Principal Balances.
Fixed Rate Certificates: Any of the Class AF-1, Class AF-2,
Class MF-1, Class MF-2, Class PF, Class BF and/or Class BF-IO Certificates.
Fixed Rate Class A Certificate Principal Balance: The sum of
the Class AF-1 Certificate Principal Balance and the Class AF-2 Certificate
Principal Balance.
Fixed Rate Class A Certificates: Any of the Class AF-1 or
Class AF-2 Certificates.
Fixed Rate Class A Current Interest: Any one or more of the
following (as the context requires): Class AF-1 Current Interest and Class AF-2
Current Interest.
Fixed Rate Class A Interest Carryforward Amount: Any one or
more of the following (as the context requires): Class AF-1 Interest
Carryforward Amount and Class AF-2 Interest Carryforward Amount.
Fixed Rate Class A Principal Distribution Amount: With respect
to any Distribution Date, the excess of (A) the Fixed Rate Class A Certificate
Principal Balance immediately prior to such Distribution Date over (B) the
lesser of (I) 60.00% of the Stated Principal Balance of the Fixed Rate Mortgage
Loans as of the last day of the related Due Period and (II) the Stated Principal
Balance of the Fixed Rate Mortgage Loans as of the last day of the related Due
Period less the OC Floor for the Fixed Rate Mortgage Loans.
Fixed Rate Class B Principal Distribution Amount: With respect
to any Distribution Date, the excess of (i) the sum of (A) the Fixed Rate Class
A Certificate Principal Balance (after taking into account distribution of the
Fixed Rate Class A Principal Distribution Amount on such Distribution Date), (B)
the Class MF-1 Certificate Principal Balance (after taking into account
distribution of the Class MF-1 Distribution Amount on such Distribution Date),
(C) the Class MF-2 Certificate Principal Balance (after taking into account
distribution of the Class MF-2 Principal Distribution Amount for such
Distribution Date), and (D) the Class BF Certificate Principal Balance
immediately prior to such Distribution Date over (ii) the lesser of (A) 92.50%
of the Stated Principal Balance of the Fixed Rate Mortgage Loans as of the last
day of the related Due Period and (B) the Stated Principal Balance of the Fixed
Rate Mortgage Loans as of the last day of the related Due Period less the OC
Floor for the Fixed Rate Mortgage Loans; provided that after the Fixed Rate
Class A Certificate Principal Balance, the Class MF-1 Certificate Principal
Balance and the
19
Class MF-2 Certificate Principal Balance has been reduced to zero, the Fixed
Rate Class B Principal Distribution Amount for such Distribution Date will equal
100% of the Fixed Rate Principal Distribution Amount for such Distribution Date.
Fixed Rate Excess Cashflow: With respect to any Distribution
Date, the aggregate remaining amounts constituting Fixed Rate Excess Cashflow
for such Distribution Date pursuant to Sections 4.04(a)(v) and 4.04(c)(A)(v) or
4.04(c)(B)(v), as applicable.
Fixed Rate Extra Principal Distribution Amount: With respect
to any Distribution Date, the lesser of (i) the excess, if any, of the Fixed
Rate Specified Overcollateralization Amount for such Distribution Date over the
Fixed Rate Overcollateralization Amount for such Distribution Date (after giving
effect to distributions of principal on the Fixed Rate Certificates other than
any Fixed Rate Extra Principal Distribution Amount) and (ii) the sum of the
Fixed Rate Excess Cashflow and Adjustable Rate Remainder Excess Cashflow for
such Distribution Date available therefor in the priority set forth in Section
4.04.
Fixed Rate Interest Funds: With respect to Fixed Rate Mortgage
Loans and any Master Servicer Advance Date, the sum, without duplication, of (i)
all scheduled interest collected during the related Due Period with respect to
the Fixed Rate Mortgage Loans less the Servicing Fee, (ii) all Advances relating
to interest with respect to the Fixed Rate Mortgage Loans, (iii) all
Compensating Interest with respect to the Fixed Rate Mortgage Loans and (iv)
Liquidation Proceeds with respect to the Fixed Rate Mortgage Loans collected
during the related Prepayment Period (to the extent such Liquidation Proceeds
relate to interest) less all Nonrecoverable Advances relating to interest
reimbursed with respect to the related Due Period.
Fixed Rate Mortgage Loans: The group of Mortgage Loans
identified in the related Mortgage Loan Schedule as having a Mortgage Rate which
is fixed for the life of the related Mortgage, including any Mortgage Loans
delivered in replacement thereof.
Fixed Rate Overcollateralization Amount: With respect to any
Distribution Date, the excess, if any, of the Stated Principal Balance of the
Fixed Rate Mortgage Loans as of the last day of the related Due Period over the
Certificate Principal Balances of all Fixed Rate Certificates on such date
(after taking into account the payment of principal other than any Fixed Rate
Extra Principal Distribution Amount, on such Certificates on such Distribution
Date).
Fixed Rate Principal Distribution Amount: With respect to each
Distribution Date, the sum of (i) the Fixed Rate Principal Funds for such
Distribution Date and (ii) any Fixed Rate Extra Principal Distribution Amount
for such Distribution Date.
Fixed Rate Principal Funds: With respect to any Distribution
Date and the Fixed Rate Mortgage Loans, the sum, without duplication, of (i) the
scheduled principal collected during the related Due Period or Advanced on or
before the related Master Servicer Advance Date, (ii) prepayments collected
during the related Prepayment Period, (iii) the Stated Principal Balance of each
Fixed Rate Mortgage Loan that was repurchased by the Seller or the Master
Servicer with respect to the related Prepayment Period, (iv) the aggregate of
all Substitution Adjustment Amounts for the related Determination Date in
connection with the substitution of Fixed Rate Mortgage Loans pursuant to
Section 2.03(c) and (v) all Liquidation Proceeds collected during the related
Prepayment
20
Period (to the extent such Liquidation Proceeds relate to principal) less all
Nonrecoverable Advances relating to principal reimbursed with respect to the
related Due Period.
Fixed Rate Remainder Excess Cashflow: With respect to any
Distribution Date, the Fixed Rate Excess Cashflow for such Distribution Date
remaining after the applications set forth in Section 4.04(f)(i) through (vii).
Fixed Rate Senior Enhancement Percentage: As to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the sum of (i) the aggregate Certificate Principal Balance of the Fixed
Rate Subordinated Certificates and the Class PF Certificates and (ii) the Fixed
Rate Overcollateralization Amount, in each case taking into account
distributions in respect of principal on the Fixed Rate Mortgage Loans on such
Distribution Date but prior to any applications of Fixed Rate Principal Funds on
such Distribution Date, and the denominator of which is the aggregate Stated
Principal Balance of the Fixed Rate Mortgage Loans as of the last day of the
related Due Period.
Fixed Rate Specified Overcollateralization Amount: Prior to
the Fixed Rate Stepdown Date, 3.75% of the Stated Principal Balance of the Fixed
Rate Mortgage Loans as of the Cut-off Date, and on and after the Fixed Rate
Stepdown Date, 7.50% of the Stated Principal Balance of the Fixed Rate Mortgage
Loans as of the last day of the related Due Period, subject to a minimum amount
equal to the applicable OC Floor; provided that, if on any Distribution Date a
Fixed Rate Trigger Event has occurred, the Fixed Rate Specified
Overcollateralization Amount shall not be reduced to the applicable percentage
of the then current Stated Principal Balance of the Fixed Rate Mortgage Loans
until the Distribution Date on which a Fixed Rate Trigger Event no longer
exists.
Fixed Rate Stepdown Date: With respect to the Fixed Rate
Certificates, the later to occur of (i) the Distribution Date in October 2002 or
(ii) the first Distribution Date on which the Fixed Rate Senior Enhancement
Percentage is greater than or equal to 40.00%.
Fixed Rate Subordinated Certificates: The Class MF-1, MF-2 and
Class BF Certificates.
Fixed Rate Trigger Event: With respect to any Distribution
Date after the Fixed Rate Stepdown Date, (1) the product of (i) 2.0 times (ii)
the quotient of (A) the Stated Principal Balance as of the last day of the
related Due Period of all Fixed Rate Mortgage Loans 60 or more days delinquent
(including all Fixed Rate Mortgage Loans in foreclosure and REO Properties
without regard to delinquency) and (B) the Stated Principal Balance of the Fixed
Rate Mortgage Loans as of the last day of the related Due Period (2) equals or
exceeds the Required Percentage.
FNMA: The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
Gross Margin: The percentage set forth in the related Mortgage
Note for the Adjustable Rate Mortgage Loans to be added to the Index for use in
determining the Mortgage Rate on each Adjustment Date, and which is set forth in
the Mortgage Loan Schedule for the Adjustable Rate Mortgage Loans.
21
Index: As to any Adjustable Rate Mortgage Loan on any
Adjustment Date related thereto, the index for the adjustment of the Mortgage
Rate set forth as such in the related Mortgage Note, such index in general being
the average of the London interbank offered rates for six-month U.S. dollar
deposits in the London market, as set forth in The Wall Street Journal, or, if
the Index ceases to be published in The Wall Street Journal or becomes
unavailable for any reason, then the Index shall be a new index selected by the
Trustee, as holder of the Mortgage Note, based on comparable information as most
recently announced as of a date 45 days prior to such Adjustment Date. The
Master Servicer hereby agrees that should the Index become unavailable, the
Master Servicer, on behalf of the Trustee, will select a new index that is based
upon comparable information.
Initial Adjustment Date: As to any Adjustable Rate Mortgage
Loan, the first Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Account Deposit: An amount equal to the
aggregate of all amounts in respect of (i) principal of the Mortgage Loans due
after the Cut-off Date and received by the Master Servicer before the Closing
Date and not applied in computing the Cut-off Date Principal Balance thereof and
(ii) interest on the Mortgage Loans accruing after the Cut-off Date and received
by the Master Servicer before the Closing Date.
Initial Certificate Principal Balance: With respect to any
Certificate, the Certificate Principal Balance of such Certificate or any
predecessor Certificate on the Closing Date.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage
Rate in effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included
in the Trust Fund, any insurance policy, including all riders and endorsements
thereto in effect with respect to such Mortgage Loan, including any replacement
policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage
Loans pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Master Servicer or the trustee under the deed of trust and are
not applied to the restoration of the related Mortgaged Property or released to
the Mortgagor in accordance with the procedures that the Master Servicer would
follow in servicing mortgage loans held for its own account, in each case other
than any amount included in such Insurance Proceeds in respect of Insured
Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or
any other insurance policy with respect to the Mortgage Loans.
Interest Determination Date: With respect to the Adjustable
Rate Certificates for the first Accrual Period, October 15, 1999. With respect
to the Adjustable Rate Certificates and any Accrual Period thereafter, the
second LIBOR Business Day preceding the commencement of such Accrual Period.
Interest Rate Cap Agreement: The interest rate cap contract
referred to in the last paragraph of Section 8.11 and all related provisions of
this Agreement.
22
Latest Possible Maturity Date: The Distribution Date following
the third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date. For
purposes of the Treasury Regulations under Code section 860A through 860G, the
latest possible maturity date of each regular interest issued by REMIC 1F, REMIC
1V and REMIC 2 shall be the Latest Possible Maturity Date.
LIBOR Business Day: Any day on which banks in the City of
London, England and New York City, U.S.A. are open and conducting transactions
in foreign currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan that has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization as provided
by applicable law governing the real property subject to the related Mortgage
and any security agreements and as to which the Master Servicer has certified
(in accordance with Section 3.12) in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
received in connection with the partial or complete liquidation of Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property,
less the sum of related unreimbursed Advances, Servicing Fees and Servicing
Advances.
Loan Group: Either of the Fixed Rate Mortgage Loans or the
Adjustable Rate Mortgage Loans.
Loan-to-Value Ratio: The fraction, expressed as a percentage,
the numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Master Servicer Advance Date: As to any Distribution Date,
1:00 p.m. Pacific time on the Business Day immediately preceding such
Distribution Date.
Master Servicer: EMC Mortgage Corporation, a Delaware
corporation, and its successors and assigns, in its capacity as master servicer
hereunder.
Maximum Mortgage Rate: With respect to each Adjustable Rate
Mortgage Loan, the maximum rate of interest set forth as such in the related
Mortgage Note.
Maximum Rate Cap: 15.82% per annum.
Minimum Mortgage Rate: With respect to each Adjustable Rate
Mortgage Loan, the minimum rate of interest set forth as such in the related
Mortgage Note.
Monthly Statement: The statement delivered to the
Certificateholders pursuant to Section 4.05.
Moody's: Xxxxx'x Investors Service, Inc.
23
Mortgage: The mortgage, deed of trust or other instrument
creating a first lien on or first priority ownership interest, or creating a
second lien on or second priority ownership interest, as applicable, in an
estate in fee simple in real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
hereof pertaining to a particular Mortgage Loan and any additional documents
delivered to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Loans: Such of the Fixed Rate Mortgage Loans and
Adjustable Rate Mortgage Loans transferred and assigned to the Trustee pursuant
to the provisions hereof as from time to time are held as a part of the Trust
Fund (including any REO Property), the mortgage loans so held being identified
in the Mortgage Loan Schedule, notwithstanding foreclosure or other acquisition
of title of the related Mortgaged Property. Any mortgage loan that was intended
by the parties hereto to be transferred to the Trust Fund as indicated by such
Mortgage Loan Schedule which is in fact not so transferred for any reason
including, without limitation, a breach of the representation contained in
Section 2.03(b)(v) hereof, shall continue to be a Mortgage Loan hereunder until
the Purchase Price with respect thereto has been paid to the Trust Fund.
Mortgage Loan Repurchase Price: The price, calculated as set
forth in Section 9.01, to be paid in connection with the repurchase of the
Mortgage Loans pursuant to Section 9.01.
Mortgage Loan Schedule: The list of Mortgage Loans (as from
time to time amended by the Master Servicer to reflect the deletion of Deleted
Mortgage Loans and the addition of Replacement Mortgage Loans pursuant to the
provisions of this Agreement) transferred to the Trustee as part of the Trust
Fund and from time to time subject to this Agreement, attached hereto as Exhibit
F-1, setting forth the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) [Reserved];
(iii) the Appraised Value;
(iv) the Initial Mortgage Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage Loan;
(ix) the Scheduled Payment in effect as of the
Cut-off Date;
(x) the Loan-to-Value Ratio or Combined Loan-to-
Value Ratio, as applicable, at origination;
24
(xi) a code indicating whether the residential
dwelling at the time of origination was represented
to be owner-occupied;
(xii) a code indicating whether the residential
dwelling is either (a) a detached single family
dwelling (b) a condominium unit or (c) a two- to
four-unit residential property;
(xiii) with respect to each Adjustable Rate
Mortgage Loan;
(a) the frequency of each Adjustment
Date;
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate;
(e) the Mortgage Rate as of the Cut-off
Date;
(f) the related Periodic Rate Cap;
(g) the Gross Margin;
(h) the purpose of the Mortgage Loan;
and
(i) the Subgroup to which such
Adjustable Rate Mortgage Loan
belongs.
Such schedule shall also set forth the total of the amounts described under
(vii) above for all of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Pool: The aggregate of the Mortgage Loans identified
in the Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage
Note from time to time.
Mortgaged Property: The underlying property securing a
Mortgage Loan.
Mortgagor: The obligors on a Mortgage Note.
Net Adjustable Rate Interest Funds: As to any Distribution
Date, Adjustable Rate Interest Funds minus the Trustee Fee for the Adjustable
Rate Loan Group.
Net Fixed Rate Interest Funds: As to any Distribution Date,
Fixed Rate Interest Funds minus the Trustee Fee for the Fixed Rate Loan Group.
25
Net Mortgage Rate: As to each Mortgage Loan, and at any time,
the per annum rate equal to the Mortgage Rate less the Servicing Fee Rate.
Non-Book-Entry Certificate: Any Certificate other than a
Book-Entry Certificate.
Nonrecoverable Advance: Any portion of a Servicing Advance or
an Advance previously made or proposed to be made by the Master Servicer that,
in the good faith judgment of the Master Servicer, will not or, in the case of a
proposed advance, would not, be ultimately recoverable by the Master Servicer
from the related Mortgagor, related Liquidation Proceeds or otherwise.
OC Floor: For (i) the Adjustable Rate Mortgage Loans, 1.00% of
the Stated Principal Balance of the Adjustable Rate Mortgage Loans as of the
Cut-off Date and (ii) the Fixed Rate Mortgage Loans, 0.50% of the Stated
Principal Balance of the Fixed Rate Mortgage Loans as of the Cut-off Date.
Officer's Certificate: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a Vice
President (however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the assistant treasurers or assistant secretaries of the
Depositor or the Master Servicer (or any other officer customarily performing
functions similar to those performed by any of the above designated officers and
also to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with a particular
subject) or (ii), if provided for in this Agreement, signed by a Servicing
Officer, as the case may be, and delivered to the Depositor, the Seller and the
Trustee, as the case may be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
determined by the Trustee on the related Interest Determination Date on the
basis of the rate for U.S. dollar deposits for one month that appears on
Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such Interest
Determination Date; provided that the parties hereto acknowledge that One-Month
LIBOR calculated for the first Accrual Period shall equal 5.4225% per annum. If
such rate does not appear on such page (or such other page as may replace that
page on that service, or if such service is no longer offered, such other
service for displaying One-Month LIBOR or comparable rates as may be reasonably
selected by the Trustee), One-Month LIBOR for the applicable Accrual Period will
be the Reference Bank Rate. If no such quotations can be obtained by the Trustee
and no Reference Bank Rate is available, One-Month LIBOR will be One-Month LIBOR
applicable to the preceding Accrual Period.
Opinion of Counsel: A written opinion of counsel, who may be
counsel for the Depositor or the Master Servicer, reasonably acceptable to each
addressee of such opinion; provided that with respect to Section 6.04 or 10.01,
or the interpretation or application of the REMIC Provisions, such counsel must
(i) in fact be independent of the Depositor and the Master Servicer, (ii) not
have any direct financial interest in the Depositor or the Master Servicer or in
any affiliate of either, and (iii) not be connected with the Depositor or the
Master Servicer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
26
Optional Termination: The termination of either Loan Group
created hereunder pursuant to the purchase of the related Mortgage Loans
pursuant to the last sentence of Section 9.01 hereof.
Optional Termination Date: With respect to either Loan Group,
the Distribution Date on which the Stated Principal Balance of the Mortgage
Loans in such Loan Group is equal to or less than 10% of the Stated Principal
Balance of the Mortgage Loans in such Loan Group as of the Cut-off Date.
Original Mortgage Loan: The mortgage loan refinanced in
connection with the origination of a Refinancing Mortgage Loan.
Original Value: The value of the property underlying a
Mortgage Loan based, in the case of the purchase of the underlying Mortgaged
Property, on the lower of an appraisal satisfactory to the Master Servicer or
the sales price of such property or, in the case of a refinancing, on an
appraisal satisfactory to the Master Servicer.
Originator: Any of ContiMortgage Corporation, Amresco
Residential Mortgage Corporation, Long Beach Mortgage Corp., Provident Funding
Associates, L.P., Option One Mortgage Corp., Accubanc Mortgage Corp. and Impac
Companies.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date
of determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the
Trustee or delivered to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in
lieu of which other Certificates have been executed and
delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a
Mortgage Loan with a Stated Principal Balance greater than zero that was not the
subject of a Principal Prepayment in full, and that did not become a Liquidated
Loan, prior to the end of the related Prepayment Period.
Ownership Interest: As to any Certificate, any ownership
interest in such Certificate including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial.
Pass-Through Rate: With respect to the Class AF-1
Certificates, the Class AF-1 Pass-Through Rate; with respect to the Class AF-2
Certificates, the Class AF-2 Pass-Through Rate; with respect to the Class AV-1
Certificates, the Class AV-1 Pass-Through Rate; with respect to the Class AV-2
Certificates, the Class AV-2 Pass-Through Rate; with respect to the Class MF-1
Certificates, the Class MF-1 Pass-Through Rate; with respect to the Class MF-2
Certificates, the Class MF-2 Pass-Through Rate; with respect to the Class MV-1
Certificates, the Class MV-1 Pass-Through Rate; with respect to the Class MV-2
Certificates, the Class MV-2 Pass-Through Rate; with respect to the
27
Class BF Certificates, the Class BF Pass-Through Rate; and with respect to the
Class BV Certificates, the Class BV Pass-Through Rate. The Class P Certificates
have no Pass-Through Rate.
Percentage Interest: With respect to:
(i) any Class, the percentage interest in the
undivided beneficial ownership interest in the related
Certificate Group evidenced by such Class which shall be equal
to the Certificate Principal Balance of such Class divided by
the Certificate Principal Balance of all Classes in such
Certificate Group; and
(ii) any Certificate, the Percentage Interest
evidenced thereby of the related Class shall equal the
Percentage Interest set forth on the face thereof or the
percentage obtained by dividing the Denomination of such
Certificate by the aggregate of the Denominations of all
Certificates of such Class.
Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan
and the related Mortgage Note, the provision therein that limits permissible
increases and decreases in the Mortgage Rate on any Adjustment Date to not more
than one and one-half percentage points, except that the Initial Adjustment
Dates for certain of the 2/28 Mortgage Loans, 3/27 Mortgage Loans and 5/25
Mortgage Loans are subject to a provision that limits permissible increases and
decreases in the Mortgage Rates as provided in the related Mortgage Notes.
Permitted Investments: At any time, any one or more of the
following obligations and securities:
(i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) general obligations of or obligations guaranteed
by any state of the United States or the District of Columbia
receiving the highest long-term debt rating of each Rating
Agency (or, if Fitch does not provide such a rating, by S&P in
lieu of Fitch), or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency;
(iii) [Reserved];
(iv) commercial or finance company paper which is
then receiving the highest commercial or finance company paper
rating of each Rating Agency (or, if Fitch does not provide
such a rating, by S&P in lieu of Fitch), or such lower rating
as will not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by each Rating
Agency;
(v) certificates of deposit, demand or time deposits,
or bankers' acceptances issued by any depository institution
or trust company incorporated under the laws of the United
States or of any state thereof and subject to supervision and
examination by federal and/or state banking authorities,
provided that the commercial paper and/or long term unsecured
debt obligations of such depository institution or trust
company (or in the case of the principal depository
institution in a
28
holding company system, the commercial paper or long-term
unsecured debt obligations of such holding company, but only
if Xxxxx'x is not a Rating Agency) are then rated one of the
two highest long-term and the highest short-term ratings of
each such Rating Agency for such securities (or, if Fitch does
not provide such a rating, by S&P in lieu of Fitch), or such
lower ratings as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by
any Rating Agency;
(vi) demand or time deposits or certificates of
deposit issued by any bank or trust company or savings
institution to the extent that such deposits are fully insured
by the FDIC;
(vii) guaranteed reinvestment agreements issued by
any bank, insurance company or other corporation containing,
at the time of the issuance of such agreements, such terms and
conditions as will not result in the downgrading or withdrawal
of the rating then assigned to the Certificates by any such
Rating Agency;
(viii) repurchase obligations with respect to any
security described in clauses (i) and (ii) above, in either
case entered into with a depository institution or trust
company (acting as principal) described in clause (v) above;
(ix) securities (other than stripped bonds, stripped
coupons or instruments sold at a purchase price in excess of
115% of the face amount thereof) bearing interest or sold at a
discount issued by any corporation incorporated under the laws
of the United States or any state thereof which, at the time
of such investment, have one of the two highest long term
ratings of each Rating Agency (except (x) if the Rating Agency
is Moody's, such rating shall be the highest commercial paper
rating of Moody's for any such securities any (y) if Fitch
does not provide such a rating, of S&P in lieu of Fitch), or
such lower rating as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by
any Rating Agency, as evidenced by a signed writing delivered
by each Rating Agency;
(x) interests in any money market fund which at the
date of acquisition of the interests in such fund and
throughout the time such interests are held in such fund has
the highest applicable long term rating by each Rating Agency
(or, if Fitch does not provide such a rating, by S&P in lieu
of Fitch) or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency;
(xi) short term investment funds sponsored by any
trust company or national banking association incorporated
under the laws of the United States or any state thereof which
on the date of acquisition has been rated by each Rating
Agency (or, if Fitch does not provide such a rating, by S&P in
lieu of Fitch) in their respective highest applicable rating
category or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each Rating Agency; and
(xii) such other investments having a specified
stated maturity and bearing interest or sold at a discount
acceptable to each Rating Agency as will not result in
29
the downgrading or withdrawal of the rating then assigned to
the Certificates by any Rating Agency, as evidenced by a
signed writing delivered by each Rating Agency;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no such
instrument shall be a Permitted Investment (A) if such instrument evidences
principal and interest payments derived from obligations underlying such
instrument and the interest payments with respect to such instrument provide a
yield to maturity of greater than 120% of the yield to maturity at par of such
underlying obligations, or (B) if it may be redeemed at a price below the
purchase price (the foregoing clause (B) not to apply to investments in units of
money market funds pursuant to clause (vii) above); provided further that no
amount beneficially owned by any REMIC (including, without limitation, any
amounts collected by the Master Servicer but not yet deposited in the
Certificate Account) may be invested in investments (other than money market
funds) treated as equity interests for Federal income tax purposes, unless the
Master Servicer shall receive an Opinion of Counsel, at the expense of Master
Servicer, to the effect that such investment will not adversely affect the
status of any such REMIC as a REMIC under the Code or result in imposition of a
tax on any such REMIC. Permitted Investments that are subject to prepayment or
call may not be purchased at a price in excess of par.
Permitted Transferee: Any person other than (i) the United
States, any State or political subdivision thereof, or any agency or
instrumentality of any of the foregoing, (ii) a foreign government,
International Organization or any agency or instrumentality of either of the
foregoing, (iii) an organization (except certain farmers' cooperatives described
in section 521 of the Code) that is exempt from tax imposed by Chapter 1 of the
Code (including the tax imposed by section 511 of the Code on unrelated business
taxable income) on any excess inclusions (as defined in section 860E(c)(1) of
the Code) with respect to any Class R Certificate, (iv) rural electric and
telephone cooperatives described in section 1381(a)(2)(C) of the Code, (v) an
"electing large partnership" as defined in Section 775 of the Code, (vi) a
Person that is not a citizen or resident of the United States, a corporation,
partnership, or other entity (treated as a corporation or a partnership for
federal income tax purposes) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, or an estate whose
income from sources without the United States is includible in gross income for
United States federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States, or a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have authority
to control all substantial decisions of the trustor unless such Person has
furnished the transferor and the Trustee with a duly completed Internal Revenue
Service Form 4224, and (vii) any other Person so designated by the Trustee based
upon an Opinion of Counsel that the Transfer of an Ownership Interest in a Class
R Certificate to such Person may cause the Trust Fund to fail to qualify as a
REMIC at any time that any Certificates are Outstanding. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code or successor provisions. A corporation will
not be treated as an instrumentality of the United States or of any State or
political subdivision thereof for these purposes if all of its activities are
subject to tax and, with the exception of the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by such
government unit.
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Person: Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
Prepayment Assumption: The applicable rate of prepayment, as
described in the Prospectus Supplement relating to the Certificates in a
Certificate Group.
Prepayment Charge: Any prepayment premium, penalty or charge
payable by a Mortgagor in connection with any Principal Prepayment on a Mortgage
Loan pursuant to the terms of the related Mortgage Note.
Prepayment Interest Shortfall: With respect to any
Distribution Date, for each Mortgage Loan that was the subject of a partial
Principal Prepayment, a Principal Prepayment in full, or that became a
Liquidated Loan during the related Prepayment Period, (other than a Principal
Prepayment in full resulting from the purchase of a Mortgage Loan pursuant to
Section 2.02, 2.03, 2.04, 3.12 or 9.01 hereof), the amount, if any, by which (i)
one month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such Mortgage Loan immediately prior to such prepayment (or
liquidation) or in the case of a partial Principal Prepayment on the amount of
such prepayment (or liquidation proceeds) exceeds (ii) the amount of interest
paid or collected in connection with such Principal Prepayment or such
liquidation proceeds.
Prepayment Period: As to any Distribution Date, the calendar
month preceding the month in which such Distribution Date occurs.
Principal Percentage: As to any Distribution Date and either
Class of Class A Adjustable Rate Certificates, the percentage equivalent of a
fraction, the numerator of which is the Adjustable Rate Principal Funds for the
related Subgroup for such Distribution Date and the denominator of which is the
aggregate Adjustable Rate Principal Funds for both Subgroups for such
Distribution Date.
Principal Prepayment: Any Mortgagor payment or other recovery
of (or proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 2.04, 3.12 and 9.01 hereof)
that is received in advance of its scheduled Due Date and is not accompanied by
an amount as to interest representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment. Partial
Principal Prepayments shall be applied by the Master Servicer in accordance with
the terms of the related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement dated October
15, 1999 relating to the public offering of the Fixed Rate Certificates and the
Adjustable Rate Certificates offered thereby.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan (x) required
to be repurchased by the Seller or purchased by (1) the Master Servicer, as
applicable, pursuant to Section 2.02, 2.03 or 3.12 hereof or (2) the Depositor
pursuant to Section 2.04 hereof or (y) that the Master Servicer has a right to
purchase pursuant to Section 3.12 hereof, an amount equal to the sum of (i) 100%
of the
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unpaid principal balance (or, if such purchase or repurchase, as the case may
be, is effected by the Seller (and the Seller is the Master Servicer) or by the
Master Servicer, the Stated Principal Balance) of the Mortgage Loan as of the
date of such purchase and (ii) accrued interest thereon at the applicable
Mortgage Rate (or, if such purchase or repurchase, as the case may be, is
effected by the Seller (and the Seller is the Master Servicer) or by the Master
Servicer, at the Net Mortgage Rate) from (a) the date through which interest was
last paid by the Mortgagor (or, if such purchase or repurchase, as the case may
be, is effected by the Seller (and the Seller is the Master Servicer) or by the
Master Servicer, the date through which interest was last advanced and not
reimbursed by the Master Servicer) to (b) the first day of the month in which
the Purchase Price is to be distributed to Certificateholders.
Rating Agency: Xxxxx'x and Fitch. If any such organization or
its successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to each Liquidated Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of such Liquidated Loan as of the date of such liquidation, minus (ii)
the Liquidation Proceeds, if any, received in connection with such liquidation
during the month in which such liquidation occurs, to the extent applied as
recoveries of principal of the Liquidated Loan. With respect to each Mortgage
Loan that has become the subject of a Deficient Valuation, (i) if the value of
the related Mortgaged Property was reduced below the principal balance of the
related Mortgage Note, the amount by which the value of the Mortgaged Property
was reduced below the principal balance of the related Mortgage Note, and (ii)
if the principal amount due under the related Mortgage Note has been reduced,
the difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation plus any reduction in the
interest component of the Scheduled Payments. With respect to each Mortgage Loan
that has become the subject of a Debt Service Reduction and any Distribution
Date, the amount, if any, by which the related Scheduled Payment was reduced.
Record Date: With respect to the Fixed Rate Certificates and
(a) the first Distribution Date, the Closing Date; and (b) with respect to any
other Distribution Date the close of business on the last Business Day of the
month preceding the month in which the applicable Distribution Date occurs .
With respect to any Distribution Date and the Adjustable Rate Certificates that
are (x) Book-Entry Certificates, the Business Day preceding such Distribution
Date and (y) Definitive Certificates, the date specified in clause (b).
Reference Bank Rate: With respect to any Accrual Period, the
arithmetic mean (rounded upwards, if necessary, to the nearest whole multiple of
0.03125%) of the offered rates for United States dollar deposits for one month
that are quoted by the Reference Banks as of 11:00 a.m., New York City time, on
the related Interest Determination Date to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the
outstanding balance of the Adjustable Rate Certificates on such Interest
Determination Date, provided that at least two such Reference Banks provide such
rate. If fewer than two offered rates appear, the Reference Bank Rate will be
the arithmetic mean (rounded upwards, if necessary, to the nearest
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whole multiple of 0.03125%) of the rates quoted by one or more major banks in
New York City, selected by the Trustee, as of 11:00 a.m., New York City time, on
such date for loans in U.S. dollars to leading European banks for a period of
one month in amounts approximately equal to the outstanding balance of the
Adjustable Rate Certificates on such Interest Determination Date.
Reference Banks: Barclays Bank PLC, Bankers Trust and NatWest,
N.A., provided that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Trustee which are engaged
in transactions in Eurodollar deposits in the international Eurocurrency market
(i) with an established place of business in London, England, (ii) not
controlling, under the control of or under common control with the Depositor or
any affiliate thereof and (iii) which have been designated as such by the
Trustee.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.
Regular Certificate: Any one of the Fixed Rate Certificates
and the Adjustable Rate Certificates.
Remittance Report: As defined in Section 4.04(n).
REO Property: A Mortgaged Property acquired by the Master
Servicer through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Deleted Mortgage Loan, which must, on the date of such
substitution, as confirmed in a Request for Release, substantially in the form
of Exhibit N, (i) have a Stated Principal Balance, after deduction of the
principal portion of the Scheduled Payment due in the month of substitution, not
in excess of, and not less than 90% of the Stated Principal Balance of the
Deleted Mortgage Loan; (ii) with respect to any Fixed Rate Mortgage Loan, have a
Mortgage Rate not less than or no more than 1% per annum higher than the
Mortgage Rate of the Deleted Mortgage Loan and, with respect to any Adjustable
Rate Mortgage Loan: (a) have a Maximum Mortgage Rate no more than 1% per annum
higher or 1% per annum lower than the Maximum Mortgage Rate of the Deleted
Mortgage Loan; (b) have a Minimum Mortgage Rate no more than 1% per annum higher
or 1% per annum lower than the Minimum Mortgage Rate of the Deleted Mortgage
Loan; (c) have the same Index and Periodic Rate Cap as that of the Deleted
Mortgage Loan and a Gross Margin not more than 1% per annum higher or 1% per
annum lower than that of the Deleted Mortgage Loan; and (d) not permit
conversion of the related Mortgage Rate to a fixed Mortgage Rate; (iii) have the
same or higher credit quality characteristics than that of the Deleted Mortgage
Loan; (iv) be accruing interest at a rate not more than 1% per annum higher or
1% per annum lower than that of the Deleted Mortgage Loan; (v) have a
Loan-to-Value Ratio or Combined Loan-to-Value Ratio, as applicable, no higher
than that of the Deleted Mortgage Loan; (vi) have a remaining term to maturity
no greater than (and not more than one year less than) that of the Deleted
Mortgage Loan; (vii) not permit conversion of the Mortgage Rate from a fixed
rate to a variable rate or visa versa; (viii) provide for a prepayment charge on
terms substantially similar to those of the prepayment charge, if any, of the
Deleted Mortgage Loan; (ix) have the same lien priority as the Deleted Mortgage
Loan; (x) constitute the same occupancy type as the Deleted Mortgage Loan; and
(xi) comply with each representation and warranty set forth in Section 2.03
hereof.
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Request for Release: The Request for Release submitted by the
Master Servicer to the Trustee, substantially in the form of Exhibits M and N,
as appropriate.
Required Adjustable Rate Carryover Reserve Fund Deposit: With
respect to any Distribution Date on which the Net Excess Spread is less than
0.25%, the excess of (i) the product of 0.50% and the aggregate Stated Principal
Balance of the Adjustable Rate Mortgage Loans over (ii) the amount of funds on
deposit in the Adjustable Rate Carryover Reserve Fund prior to deposits thereto
on such Distribution Date. With respect to any Distribution Date on which the
Net Excess Spread is equal to or greater than 0.25%, the excess of (i) $5,000
over (ii) the amount of funds on deposit in the Adjustable Rate Carryover
Reserve Fund prior to deposits thereto on such Distribution Date.
Required Percentage: With respect to: (i) the Fixed Rate
Trigger Event and any Distribution Date after the Fixed Rate Stepdown Date, the
percentage equivalent of a fraction, the numerator of which is (x) the excess of
(I) the Stated Principal Balance of the Fixed Rate Mortgage Loans as of the last
day of the related Due Period over (II) the Certificate Principal Balance of the
most senior Class of the Fixed Rate Certificates Outstanding (provided that the
Certificate Principal Balance of the most senior Class of Fixed Rate
Certificates shall mean the Fixed Rate Class A Certificate Principal Balance
until such principal balance is reduced to zero) and the denominator of which is
(y) the Stated Principal Balance of the Fixed Rate Mortgage Loans as of the last
day of the related Due Period; and (ii) the Adjustable Rate Trigger Event and
any Distribution Date after the Adjustable Rate Stepdown Date, the percentage
equivalent of a fraction, the numerator of which is (x) the excess of (I) the
Stated Principal Balance of the Adjustable Rate Mortgage Loans as of as of the
last day of the related Due Period over (II) the Certificate Principal Balance
of the most senior Class of the Adjustable Rate Certificates outstanding as of
the preceding Master Servicer Advance Date and the denominator of which is (y)
the Stated Principal Balance of the Adjustable Rate Mortgage Loans as of the
last day of the related Due Period.
Required Insurance Policy: With respect to any Mortgage Loan,
any insurance policy that is required to be maintained from time to time under
this Agreement.
Responsible Officer: When used with respect to the Trustee,
any Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also to whom, with respect to a particular matter, such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
Scheduled Payment: The scheduled monthly payment on a Mortgage
Loan due on any Due Date allocable to principal and/or interest on such Mortgage
Loan.
Securities Act: The Securities Act of 1933, as amended.
Seller: EMC Mortgage Corporation, a Delaware corporation, and
its successors and assigns, in its capacity as seller of the Mortgage Loans to
the Depositor.
Servicing Advances: All customary, reasonable and necessary
"out of pocket" costs and expenses (including reasonable legal fees) incurred in
the performance by the Master Servicer of its servicing obligations hereunder,
including, but not limited to, the cost of (i) the preservation,
34
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of any REO Property (including, without limitation, realtors'
commissions) and (iv) compliance with the obligations under Section 3.10
(including advances made because of the existence of any deductible clause on
any forced place insurance).
Servicing Fee: As to each Mortgage Loan and any Distribution
Date, an amount equal to one month's interest at the Servicing Fee Rate on the
Stated Principal Balance of such Mortgage Loan or, in the event of any payment
of interest that accompanies a Principal Prepayment in full made by the
Mortgagor, interest at the Servicing Fee Rate on the Stated Principal Balance of
such Mortgage Loan for the period covered by such payment of interest.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50%
per annum.
Servicing Officer: Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and facsimile signature appear on a list of servicing officers
furnished to the Trustee by the Master Servicer on the Closing Date pursuant to
this Agreement, as such list may from time to time be amended.
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc.
Startup Day: The Startup Day for each REMIC formed hereunder
shall be the Closing Date.
Stated Principal Balance: With respect to any Mortgage Loan or
related REO Property and any Distribution Date, the Cut-off Date Principal
Balance thereof minus the sum of (a) the principal portion of the Scheduled
Payments (x) due with respect to such Mortgage Loan during each Due Period
ending prior to such Distribution Date and (y) that were received by the Master
Servicer as of the close of business on the Determination Date related to such
Distribution Date or with respect to which Advances were made prior to such
Distribution Date and (b) all Principal Prepayments with respect to such
Mortgage Loan received prior to or during the related Prepayment Period, and all
Liquidation Proceeds to the extent applied by the Master Servicer as recoveries
of principal in accordance with Section 3.12 with respect to such Mortgage Loan,
that were received by the Master Servicer as of the close of business on the
last day of the Prepayment Period related to such Distribution Date. The Stated
Principal Balance of any Mortgage Loan that becomes a Liquidated Loan will be
zero immediately following the Prepayment Period in which such Mortgage Loan
becomes a Liquidated Loan. References herein to the Stated Principal Balance of
a Loan Group at any time shall mean the aggregate Stated Principal Balance of
all Mortgage Loans in such Loan Group at such time.
Subgroup: Either Subgroup 1 or Subgroup 2, as the context
requires.
Subgroup 1: The Adjustable Rate Mortgage Loans identified on
the Mortgage Loan Schedule as belonging to Subgroup 1.
Subgroup 2: The Adjustable Rate Mortgage Loans identified on
the Mortgage Loan Schedule as belonging to Subgroup 2.
35
Subservicer: As defined in Section 3.02(a).
Subservicing Agreement: As defined in Section 3.02(c).
Substitution Adjustment Amount: The meaning ascribed to such
term pursuant to Section 2.03(c).
Substitution Amount: With respect to any Mortgage Loan
substituted pursuant to Section 2.03(c), the excess of (x) the principal balance
of the Mortgage Loan that is substituted for, over (y) the principal balance of
the related substitute Mortgage Loan, each balance being determined as of the
date of substitution.
Tax Matters Person: The person designated as "tax matters
person" in the manner provided under Treasury regulation ss. 1.860F-4(d) and
temporary Treasury regulation ss. 301.6231(a)(7)-1T. Initially, this person
shall be the Trustee.
Tax Matters Person Class R Certificate: A Class R Certificate
designated as the Tax Matters Person Class R Certificate and evidencing 0.001%
Percentage Interest of the Class R Certificates.
3/27 Mortgage Loan: A Mortgage Loan having a Mortgage Rate
that is fixed for 36 months after origination thereof before such Mortgage Rate
becomes subject to adjustment.
Transfer: Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate.
Transfer Affidavit: As defined in Section 5.02(c).
Trust Fund: The corpus of the trust created hereunder
consisting of (i) the Mortgage Loans and all interest accruing and principal due
with respect thereto after the Cut-off Date to the extent not applied in
computing the Cut-off Date Principal Balance thereof, exclusive of interest not
required to be deposited in the Certificate Account pursuant to Section
3.05(b)(ii); (ii) the Certificate Account, the Distribution Account, and the
Adjustable Rate Carryover Reserve Fund and all amounts deposited therein
pursuant to the applicable provisions of this Agreement; (iii) property that
secured a Mortgage Loan and has been acquired by foreclosure, deed in lieu of
foreclosure or otherwise; (iv) the mortgagee's rights under the Insurance
Policies with respect to the Mortgage Loan; and (v) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid property.
Trustee: Bankers Trust Company of California, N.A., a national
banking association, not in its individual capacity, but solely in its capacity
as trustee for the benefit of the Certificateholders under this Agreement, and
any successor thereto, and any corporation or national banking association
resulting from or surviving any consolidation or merger to which it or its
successors may be a party and any successor trustee as may from time to time be
serving as successor trustee hereunder.
Trustee Fee: As to any Distribution Date and Loan Group, an
amount equal to the product of 1/12th of the Trustee Fee Rate and the aggregate
Stated Principal Balance of the Mortgage Loans in such Loan Group as of the
first day of the related Due Period.
36
Trustee Fee Rate: 0.01% per annum.
2/28 Mortgage Loan: A Mortgage Loan having a Mortgage Rate
that is fixed for 24 months after origination thereof before such Mortgage Rate
becomes subject to adjustment.
Voting Rights: The portion of the voting rights of all the
Certificates that is allocated to any Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 95% to the Fixed Rate Certificates and Adjustable Rate
Certificates (other than the Class B-IO Certificates), and 5% to the Class B-IO
Certificates and the Class R Certificates, with the allocation among the Fixed
Rate Certificates and Adjustable Rate Certificates to be in proportion to the
Certificate Principal Balance of each Class relative to the Certificate
Principal Balance of all other such Classes, and with the allocation among the
Class BF-IO, Class BV-IO and Class R Certificates being two-fifths, two-fifths
and one-fifth, respectively. Voting Rights will be allocated among the
Certificates of each such Class in accordance with their respective Percentage
Interests.
Section 1.02. Certain REMIC-Related Defined Terms.
In addition to those defined terms defined in Section 1.01,
whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
Adjustable Rate Markers: The Class TV1, Class TV2, Class TV3,
Class TV4 and Class TV5 Interests.
Adjustable Rate Marker Rate: The weighted average of the
interest rates on the Adjustable Rate Markers and the Class MV Interests holding
the interest rate on the Class MV Interest to 0% and the interest rates on the
Adjustable Rate Markers to a cap and floor equal to the interests rates on their
corresponding classes.
Class R-1F Interest: The uncertificated residual interest in
REMIC 1F.
Class R-1V Interest: The uncertificated residual interest in
REMIC 1V.
Class R-2 Interest: The uncertificated residual interest in
REMIC 2.
Class XX0 Xxxxxxxx: A regular interest in REMIC 1F that is
held as an asset of REMIC 2, that bears interest at a per annum rate equal to
the Fixed Rate Net Rate, and that has an initial principal balance and such
other terms as are described in Section 4.06.
Class XX0 Xxxxxxxx: A regular interest in REMIC 1F that is
held as an asset of REMIC 2, that bears interest at a per annum rate equal to
the Fixed Rate Net Rate, and that has an initial principal balance and such
other terms as are described in Section 4.06.
Class XX0 Xxxxxxxx: A regular interest in REMIC 1F that is
held as an asset of REMIC 2, that bears interest at a per annum rate equal to
the Fixed Rate Net Rate, and that has an initial principal balance and such
other terms as are described in Section 4.06.
37
Class XX0 Xxxxxxxx: A regular interest in REMIC 1F that is
held as an asset of REMIC 2 that bears interest at a per annum rate equal to the
Fixed Rate Net Rate, and has an initial principal balance and such other terms
as are described in Section 4.06.
Class XX0 Xxxxxxxx: A regular interest in REMIC 1F that is
held as an asset of REMIC 2, that bears interest at a per annum rate equal to
the Fixed Rate Net Rate, and has an initial principal balance and such other
terms as are described in Section 4.06.
Class TV1 Interest: A regular interest in REMIC 1V that is
held as an asset of REMIC 2, that bears interest at a per annum rate equal to
the Adjustable Net Rate, and that has an initial principal balance and such
other terms as are described in Section 4.06.
Class TV2 Interest: A regular interest in REMIC 1V that is
held as an asset of REMIC 2, that bears interest at a per annum rate equal to
the Adjustable Net Rate, and that has an initial principal balance and such
other terms as are described in Section 4.06.
Class TV3 Interest: A regular interest in REMIC 1V that is
held as an asset of REMIC 2, that bears interest at a per annum rate equal to
the Adjustable Net Rate, and that has an initial principal balance and such
other terms as are described in Section 4.06.
Class TV4 Interest: A regular interest in REMIC 1V that is
held as an asset of REMIC 2, that bears interest at a per annum rate equal to
the Adjustable Net Rate, and that has an initial principal balance and such
other terms as are described in Section 4.06.
Class TV5 Interest: A regular interest in REMIC 1V that is
held as an asset of REMIC 2, that bears interest at a per annum rate equal to
the Adjustable Net Rate, and that has an initial principal balance and such
other terms as are described in Section 4.06.
Class MF Interest: A regular interest in REMIC 1F that is held
as an asset of REMIC 2, that has an initial principal balance equal to the
Stated Principal Balance of the Fixed Rate Mortgage Loans as of the Cut-off Date
in excess of the initial principal balance of the Fixed Rate Markers, that bears
interest at a per annum rate equal to the Fixed Rate Net Rate, and has such
other terms as are described in Section 4.06.
Class MV Interest: A regular interest in REMIC 1V that is held
as an asset of REMIC 2, that has an initial principal balance equal to the
Stated Principal Balance of the Adjustable Rate Mortgage Loans as of the Cut-Off
Date in excess of the initial principal balance of the Adjustable Rate Markers,
that bears interest at a per annum rate equal to the Adjustable Rate Net Rate,
and has such other terms as are described in Section 4.06.
Class PF Interest: A regular interest in REMIC 1F that is held
as an asset of REMIC 2, that has an initial principal balance equal to $100,
that bears interest at 0%, and has such other terms as are described in Section
4.06.
Class PV Interest: A regular interest in REMIC 1V that is held
as an asset of REMIC 2, that has an initial principal balance equal to $100,
that bears interest at 0%, and has such other terms as are described in Section
4.06.
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Class BF-IO Remainder Amount: An amount equal to the interest
on the Adjustable Rate Mortgage Loans that was applied pursuant to Section
4.04(f).
Class BV-IO Remainder Amount: An amount equal to the interest
on the Fixed Rate Mortgage Loans that was applied pursuant to Section 4.04(g).
Fixed Rate Markers: The Class TF1, Class TF2, Class TF3, Class
TF4 and Class XX0 Xxxxxxxxx.
Fixed Rate Marker Rate: The weighted average of the interest
rates on the Fixed Rate Markers and the Class MF Interests holding the interest
rate on the Class MF Interest to 0% and the interest rates on the Fixed Rate
Markers to a cap and floor equal to the interest rates on their corresponding
classes.
REMIC: A "real estate mortgage investment conduit" within the
meaning of section 860D of the Code.
REMIC 1F: The segregated pool of assets consisting of the
Fixed Rate Mortgage Loans and all products and proceeds thereof.
REMIC 1V: The segregate pool of assets consisting of the
Adjustable Rate Mortgage Loans and all products and proceeds thereof.
REMIC 2: The segregated pool of assets consisting of the REMIC
1F Regular Interests and the REMIC 1V Regular Interests.
REMIC 1F Regular Interests: The Class TF1, Class TF2, Class
TF3, Class TF4, Class TF5, Class MF and Class PF Interests.
REMIC 1V Regular Interests: The Class TV1, Class TV2, Class
TV3, Class TV4, Class TV5, Class MV and Class BV Interests.
REMIC 2 Regular Interests: The Regular Certificates.
REMIC Provisions: Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and proposed, temporary and final regulations and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time as well as provisions of applicable state laws.
Upper Tier REMIC: REMIC 2.
39
ARTICLE II.
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
Section 2.01. Conveyance of Mortgage Loans.
The Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the right, title and
interest of the Seller in and to the Mortgage Loans, including all interest and
principal received and receivable by the Seller on or with respect to the
Mortgage Loans after the Cut-off Date, other than interest and principal due on
or before the Cut-off Date, or deposited into the Certificate Account by the
Seller as an Initial Certificate Account Deposit as provided in this Agreement.
The Seller confirms that, concurrently with such transfer and assignment, it has
deposited into the Certificate Account the Initial Certificate Account Deposit.
The Seller has entered into this Agreement in consideration
for the purchase of the Mortgage Loans by the Depositor and has agreed to take
the actions specified herein.
The Depositor, concurrently with the execution and delivery
hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the use and benefit of the Certificateholders, without recourse, all
the right, title and interest of the Depositor in and to the Trust Fund.
In connection with any such transfer and assignment, the
Depositor has delivered to, and deposited with, the Trustee (except as provided
in clause (vi) below) for the benefit of the Certificateholders, the following
documents or instruments with respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse, in the following
form: "Pay to the order of ____________________ without recourse" or
"Pay to the order of Bankers Trust Company of California, N.A., as
trustee under the Pooling and Servicing Agreement dated as of September
1, 1999, Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed
Certificates 1999-2, without recourse", with all intervening
endorsements that show a complete chain of endorsement from the
originator to the Seller; provided, however, that with respect to not
more than 10 Mortgage Loans, the Seller may deliver a lost note
affidavit;
(ii) original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage to "Bankers
Trust Company of California, N.A., as trustee under the Pooling and
Servicing Agreement dated as of September 1, 1999, Bear Xxxxxxx Asset
Backed Securities, Inc. Asset-Backed Certificates 1999-2, without
recourse" (each such assignment, when duly and validly completed, to be
in recordable form and sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which such
assignment relates);
(iv) all interim recorded assignments of the Mortgage showing
a complete chain of title from the originator thereof to the Seller;
40
(v) [Reserved]; and
(vi) the original or duplicate original lender's title policy
or, in the event such original title policy has not been received from
the insurer, such original or duplicate original lender's title policy
shall be delivered within one year of the Closing Date.
In the event that in connection with any Mortgage Loan the
Seller cannot deliver the original recorded Mortgage or all interim recorded
assignments of the Mortgage satisfying the requirements of clause (ii), (iii) or
(iv) concurrently with the execution and delivery hereof, the Seller shall
deliver or cause to be delivered to the Trustee a true copy of such Mortgage and
of each such undelivered interim assignment of the Mortgage each certified by
the Seller, the applicable title company, escrow agent or attorney, or the
originator of such Mortgage, as the case may be, to be a true and complete copy
of the original Mortgage or assignment of Mortgage submitted for recording. The
copies of the assignments referred to in clause (iii) delivered on the Closing
Date may be imaged versions showing "/s/" in the signature block. The Seller
shall promptly deliver or cause to be delivered to the Trustee such original
Mortgage and such assignment or assignments with evidence of recording indicated
thereon upon receipt thereof from the public recording official, or a copy
thereof, certified, if appropriate, by the relevant recording office, but in no
event shall any such delivery be made later than 270 days following the Closing
Date; provided that in the event that by such date the Seller is unable to
deliver or cause to be delivered each Mortgage and each interim assignment by
reason of the fact that any such documents have not been returned by the
appropriate recording office, or, in the case of each interim assignment,
because the related Mortgage has not been returned by the appropriate recording
office, the Seller shall deliver or cause to be delivered such documents to the
Trustee as promptly as possible upon receipt thereof. If the public recording
office in which a Mortgage or interim assignment thereof is recorded retains the
original of such Mortgage or assignment, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be true
and complete by such recording office, shall satisfy the Seller's obligations in
this Section 2.01. If any document submitted for recording pursuant to this
Agreement is (a) lost prior to recording or rejected by the applicable recording
office, the Seller shall immediately prepare or cause to be prepared a
substitute and submit it for recording, and shall deliver copies and originals
thereof in accordance with the foregoing or (b) lost after recording, the Seller
shall deliver to the Trustee a copy of such document certified by the applicable
public recording office to be a true and complete copy of the original recorded
document. The Seller shall promptly forward or cause to be forwarded to the
Trustee (a) from time to time additional original documents evidencing an
assumption or modification of a Mortgage Loan and (b) any other documents
required to be delivered by the Depositor or the Master Servicer to the Trustee
within the time periods specified in this Section 2.01.
With respect to each Mortgage Loan as to which the related
Mortgaged Property and Mortgage File are located in (a) the State of California
or (b) any other jurisdiction under the laws of which the recordation of the
assignment specified in clause (iii) above is not necessary to protect the
Trustee's and the Certificateholders, interest in the related Mortgage Loan, as
evidenced by an Opinion of Counsel, delivered by the Seller to the Trustee and a
copy to the Rating Agencies, in lieu of recording the assignment specified in
clause (iii) above, the Seller may deliver an unrecorded assignment in blank, in
form otherwise suitable for recording to the Trustee; provided that if the
related Mortgage has not been returned from the applicable public recording
office, such assignment, or any copy thereof, of the Mortgage may exclude the
information to be provided by the recording office. As to any Mortgage Loan, the
procedures of the preceding sentence shall be applicable only
41
so long as the related Mortgage File is maintained in the possession of the
Trustee in the State or jurisdiction described in such sentence. In the event
that (i) the Seller, the Depositor or the Master Servicer gives written notice
to the Trustee that recording is required to protect the right, title and
interest of the Trustee on behalf of the Certificateholders in and to any
Mortgage Loan, (ii) a court recharacterizes the sale of the Mortgage Loans as a
financing, or (iii) as a result of any change in or amendment to the laws of the
State or jurisdiction described in the first sentence of this paragraph or any
applicable political subdivision thereof, or any change in official position
regarding application or interpretation of such laws, including a holding by a
court of competent jurisdiction, such recording is so required, the Trustee
shall complete the assignment in the manner specified in clause (iii) of the
second paragraph of this Section 2.01 and the Seller shall submit or cause to be
submitted for recording as specified above or, should the Seller fail to perform
such obligations, the Trustee shall cause the Master Servicer, at the Master
Servicer's expense, to cause each such previously unrecorded assignment to be
submitted for recording as specified above. In the event a Mortgage File is
released to the Master Servicer as a result of the Master Servicer's having
completed a Request for Release in the form of Exhibit M, the Trustee shall
complete the assignment of the related Mortgage in the manner specified in
clause (iii) of the second paragraph of this Section 2.01.
So long as the Trustee maintains an office in the State of
California, the Trustee shall maintain possession of and not remove or attempt
to remove from the State of California any of the Mortgage Files as to which the
related Mortgaged Property is located in such State. In the event that the
Seller fails to record an assignment of a Mortgage Loan as herein provided
within 90 days of notice of an event set forth in clause (i), (ii) or (iii) of
the above paragraph, the Master Servicer shall prepare and, if required
hereunder, file such assignments for recordation in the appropriate real
property or other records office. The Seller hereby appoints the Master Servicer
(and any successor servicer hereunder) as its attorney-in-fact with full power
and authority acting in its stead for the purpose of such preparation, execution
and filing.
In the case of Mortgage Loans that become the subject of a
Principal Prepayment between the Closing Date and the Cut-off Date, the Seller
shall deposit or cause to be deposited in the Certificate Account the amount
required to be deposited therein with respect to such payment pursuant to
Section 3.05 hereof.
Section 2.02. Acceptance by Trustee of the Mortgage Loans.
The Trustee acknowledges receipt, subject to the limitations
contained in and any exceptions noted in the Initial Certification in the form
annexed hereto as Exhibit G-1 and in the list of exceptions attached thereto, of
the documents referred to in clauses (i) and (iii) of Section 2.01 above and all
other assets included in the Trust Fund and declares that it holds and will hold
such documents and the other documents delivered to it constituting the Mortgage
Files, and that it holds or will hold such other assets included in the Trust
Fund, in trust for the exclusive use and benefit of all present and future
Certificateholders.
The Trustee agrees to execute and deliver on the Closing Date
to the Depositor, the Master Servicer and the Seller an Initial Certification in
the form annexed hereto as Exhibit G-1 to the effect that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in such certification as not
covered by such certification), the documents described in Section 2.01(i) and
(iii) with respect to such Mortgage Loan are in its possession, and based on its
review and examination and only as to the
42
foregoing documents, such documents appear regular on their face and relate to
such Mortgage Loan. The Trustee agrees to execute and deliver within 30 days
after the Closing Date to the Depositor, the Master Servicer and the Seller an
Interim Certification in the form annexed hereto as Exhibit G-2 to the effect
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
such certification as not covered by such certification), all documents required
to be delivered to it pursuant to this Agreement with respect to such Mortgage
Loan are in its possession (except those described in Section 2.01(v)) and based
on its review and examination and only as to the foregoing documents, (i) such
documents appear regular on their face and relate to such Mortgage Loan, and
(ii) the information set forth in items (i), (iv), (v), (vi) and (viii) of the
definition of the "Mortgage Loan Schedule" accurately reflects information set
forth in the Mortgage File. The Trustee shall be under no duty or obligation to
inspect, review or examine such documents, instruments, certificates or other
papers to determine that the same are genuine, enforceable or appropriate for
the represented purpose or that they have actually been recorded in the real
estate records or that they are other than what they purport to be on their
face.
Not later than 180 days after the Closing Date, the Trustee
shall deliver to the Depositor, the Master Servicer and the Seller (and to any
Certificateholder that so requests) a Final Certification in the form annexed
hereto as Exhibit H, with any applicable exceptions noted thereon.
In connection with the Trustee's completion and delivery of
such Final Certification, the Trustee shall review each Mortgage File to
determine that it contains the documents listed in Section 2.01(i)-(vi).
If, in the course of such review, the Trustee finds any
document or documents constituting a part of such Mortgage File that do not meet
the requirements of clauses (i)-(iv) and (vi) of Section 2.01, the Trustee shall
include such exceptions in such Final Certification (and Trustee shall state in
such Final Certification whether any Mortgage File does not then include the
original or duplicate original lender's title policy and all riders thereto). If
the public recording office in which a Mortgage or assignment thereof is
recorded retains the original of such Mortgage or assignment, a copy of the
original Mortgage or assignment so retained, with evidence of recording thereon,
certified to be true and complete by such recording office, shall be deemed to
satisfy the requirements of clause (ii), (iii) or (iv) above, as applicable. The
Seller shall promptly correct or cure such defect referred to above within 90
days from the date it was so notified of such defect and, if the Seller does not
correct or cure such defect within such period, the Seller shall either (a) if
the time to cure such defect expires prior to the end of the second anniversary
of the Closing Date, substitute for the related Mortgage Loan a Replacement
Mortgage Loan, which substitution shall be accomplished in the manner and
subject to the conditions set forth in Section 2.03, or (b) purchase such
Mortgage Loan from the Trustee within 90 days from the date the Seller was
notified of such defect in writing at the Purchase Price of such Mortgage Loan;
provided that any such substitution pursuant to (a) above or repurchase pursuant
to (b) above shall not be effected prior to the delivery to the Trustee of the
Opinion of Counsel required by Section 2.05 hereof and any substitution pursuant
to (a) above shall not be effected prior to the additional delivery to the
Trustee of a Request for Release substantially in the form of Exhibit N. No
substitution will be made in any calendar month after the Determination Date for
such month. The Purchase Price for any such Mortgage Loan shall be deposited by
the Seller in the Certificate Account and, upon receipt of such deposit and
certification with respect thereto in the form of Exhibit N hereto, the Trustee
shall release the related Mortgage File to the Seller and shall execute and
deliver at the Seller's request such instruments of
43
transfer or assignment as the Seller has prepared, in each case without
recourse, as shall be necessary to vest in the Seller, or a designee, the
Trustee's interest in any Mortgage Loan released pursuant hereto.
The Trustee shall retain possession and custody of each
Mortgage File in accordance with and subject to the terms and conditions set
forth herein. The Seller shall promptly deliver to the Trustee, upon the
execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File that come into the possession of the
Seller from time to time.
It is understood and agreed that the obligation of the Seller
to substitute for or to purchase any Mortgage Loan that does not meet the
requirements of Section 2.01(i)-(vi) above shall constitute the sole remedy
respecting such defect available to the Trustee, the Depositor, and any
Certificateholder against the Seller.
Section 2.03. Representations, Warranties and Covenants of the
Master Servicer and the Seller.
(a) The Master Servicer hereby represents and warrants to
the Depositor and the Trustee as follows, as of the date hereof and as of the
Closing Date:
(i) The Master Servicer is duly organized as a Delaware
corporation and is validly existing and in good standing under the laws
of the State of Delaware and is duly authorized and qualified to
transact any and all business contemplated by this Agreement to be
conducted by the Master Servicer in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law
to effect such qualification and, in any event, is in compliance with
the doing business laws of any such state, to the extent necessary to
ensure its ability to enforce each Mortgage Loan, to service the
Mortgage Loans in accordance with the terms of this Agreement and to
perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(ii) The Master Servicer has the full corporate power and
authority to service each Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions contemplated
by this Agreement and has duly authorized by all necessary corporate
action on the part of the Master Servicer the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the Master
Servicer, enforceable against the Master Servicer in accordance with
its terms, except that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the
Master Servicer, the servicing of the Mortgage Loans by the Master
Servicer under this Agreement, the consummation of any other of the
transactions contemplated by this Agreement, and the fulfillment of or
compliance with the terms hereof are in the ordinary course of business
of the Master Servicer and will not (A) result in a material breach of
any term or provision of
44
the charter or by-laws of the Master Servicer or (B) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which the Master Servicer is a
party or by which it may be bound, or (C) constitute a material
violation of any statute, order or regulation applicable to the Master
Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Master Servicer; and
the Master Servicer is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation
of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may materially impair the Master Servicer's
ability to perform or meet any of its obligations under this
Agreement.
(iv) The Master Servicer is an approved servicer of
conventional mortgage loans for FNMA or FHLMC and is a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to
sections 203 and 211 of the National Housing Act.
(v) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened, against the Master Servicer that
would materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Master Servicer
to service the Mortgage Loans or to perform any of its other
obligations under this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Master Servicer of, or compliance by the Master
Servicer with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Master Servicer has obtained the same.
(b) The Seller hereby represents and warrants to the
Depositor and the Trustee as follows, as of the date hereof and as of the
Closing Date:
(i) The Seller is duly organized as a Delaware corporation and
is validly existing and in good standing under the laws of the State of
Delaware and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Seller
in any state in which a Mortgaged Property is located or is otherwise
not required under applicable law to effect such qualification and, in
any event, is in compliance with the doing business laws of any such
state, to the extent necessary to ensure its ability to enforce each
Mortgage Loan, to sell the Mortgage Loans in accordance with the terms
of this Agreement and to perform any of its other obligations under
this Agreement in accordance with the terms hereof.
(ii) The Seller has the full corporate power and authority to
sell each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action on
the part of the Seller the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto, constitutes
a legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except that (a) the
enforceability hereof may
45
be limited by bankruptcy, insolvency, moratorium, receivership and
other similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(iii) The execution and delivery of this Agreement by the
Seller, the sale of the Mortgage Loans by the Seller under this
Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of the
Seller and will not (A) result in a material breach of any term or
provision of the charter or by-laws of the Seller or (B) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which the Seller is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to the Seller of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Seller; and the Seller is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over it which breach or violation may materially
impair the Seller's ability to perform or meet any of its obligations
under this Agreement.
(iv) The Seller is an approved seller of conventional mortgage
loans for FNMA or FHLMC and is a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to sections 203 and 211 of the
National Housing Act.
(v) No litigation is pending or, to the best of the Seller's
knowledge, threatened, against the Seller that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Seller to sell the Mortgage Loans or to
perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Seller of, or compliance by the Seller with,
this Agreement or the consummation of the transactions contemplated
hereby, or if any such consent, approval, authorization or order is
required, the Seller has obtained the same.
(vii) With respect to each Mortgage Loan, as of the Cut-off
Date (unless otherwise expressly provided):
(A) The information set forth in the Mortgage Loan
Schedule on the Closing Date and in each Mortgage File is complete, true and
correct.
(B) Except for approximately 10.35% of the Adjustable
Rate Mortgage Loans (by Stated Principal Balance as of the Cut-off Date) and
approximately 11.36% of the Fixed Rate Mortgage Loans (by Stated Principal
Balance as of the Cut-off Date), all payments required to be made prior to the
Cut-off Date have been made and no Mortgage Loan is delinquent thirty (30) or
more days; and the Seller has not advanced funds, or induced, solicited or
knowingly received any
46
advance of funds from a party other than the owner of the Mortgaged Property
subject to the Mortgage, directly or indirectly, for the payment of any amount
required under the Mortgage Loan.
(C) There are no delinquent taxes, water charges, sewer
rents, assessments, insurance premiums, leasehold payments, including
assessments payable in future installments, or other outstanding charges
affecting the related Mortgaged Property.
(D) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by written
instruments which are in the Mortgage File and have been or will be recorded, if
necessary to protect the interests of the Trustee, and which have been or will
be delivered to the Trustee, all in accordance with this Agreement. The
substance of any such waiver, alteration or modification has been approved by
the title insurer, to the extent required by the related policy. No Mortgagor
has been released, in whole or in part, except in connection with an assumption
agreement approved by the title insurer, to the extent required by the policy,
and which assumption agreement is part of the Mortgage File.
(E) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto.
(F) All buildings upon, or comprising part of, the Mortgaged
Property are insured by an insurer acceptable to FNMA and FHLMC against loss by
fire, hazards of extended coverage and such other hazards as are customary in
the area where the Mortgaged Property is located, and such insurer is licensed
to do business in the state where the Mortgaged Property is located. All such
insurance policies contain a standard mortgagee clause naming the Originator,
its successors and assigns as mortgagee and Seller has received no notice that
all premiums thereon have not been paid. If upon origination of the Mortgage
Loan, the Mortgaged Property was, or was subsequently deemed to be, in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available),
which require under applicable law that a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
(or any successor thereto) be obtained, such flood insurance policy is in effect
which policy is with a generally acceptable carrier in an amount representing
coverage not less than the least of (A) the Stated Principal Balance of the
related Mortgage Loan (together, in the case of a Mortgage Loan that is not a
first priority lien, with the outstanding principal balance of any liens that
are prior to the related Mortgage Loan lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis, or (C) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973. The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at Mortgagor's cost and expense and, on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to maintain such insurance at
Mortgagor's cost and expense and to obtain reimbursement therefor from the
Mortgagor. Each Mortgage Loan has in place a fully-paid life of loan flood
certification from a FNMA- or FHLMC-approved vendor, assigned in care of the
Master Servicer or its designee, which provides for notification to the Master
Servicer or its designee, of changes in designated flood areas which would
affect such Mortgage Loan.
47
(G) Any and all requirements of any federal, state or local
law including, usury, truth in lending, real estate settlement procedures
including, the Real Estate Settlement Procedures Act of 1974, as amended,
consumer credit protection, equal credit opportunity or disclosure laws
applicable to the Mortgage Loan have been complied with in all material
respects.
(H) The Mortgage has not been satisfied, canceled,
subordinated, or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such release, cancellation,
subordination or rescission.
(I) The Mortgage is a valid, existing and enforceable first or
second lien on the Mortgaged Property, including all improvements on the
Mortgaged Property, if any, subject only to (1) the lien of current real
property taxes and assessments not yet due and payable, (2) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording being acceptable to mortgage lending
institutions generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan and which do
not adversely affect the Appraised Value of the Mortgaged Property, (3) in the
case of a Mortgage that is not a first priority lien, the first lien on the
Mortgaged Property identified in the related Mortgage File, and (4) other
matters to which like properties are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by the
Mortgage. The Seller has full right to sell and assign the Mortgage to the
Depositor.
(J) The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency or reorganization or general principles
of equity.
(K) All parties to the Mortgage Note and the Mortgage had the
legal capacity to enter into the Mortgage Loan transaction and to execute and
deliver the Mortgage Note and the Mortgage, and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties.
(L) The proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances thereunder and any and
all requirements as to completion of any on-site or off-site improvement and as
to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage.
(M) Immediately prior to the conveyance of the Mortgage Loans
by the Seller to the Depositor hereunder, the Seller was the sole owner and
holder of the Mortgage Loan and the related servicing rights and the related
Originator or the Seller was the custodian of the related escrow account, if
applicable; the Mortgage Loan had neither been assigned nor pledged, and the
Seller had good and marketable title thereto, and had full right to transfer and
sell the Mortgage Loan and the related servicing rights to the Depositor free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest and had full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign the
Mortgage Loan and the related servicing rights to the Depositor pursuant to the
terms of this Agreement.
48
(N) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
the Mortgaged Property is located, and (2) organized under the laws of such
state, qualified to do business in such state, a federal savings and loan
association or national bank having principal offices in such state or not
deemed to be doing business in such state under applicable law.
(O) The Mortgage Loan is covered by an ALTA lender's title
insurance policy or equivalent form acceptable to the Department of Housing and
Urban Development, or any successor thereto, and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to the
exceptions contained in (I)(1) and (2) above) the Seller (as assignee), its
successors and assigns as to the first priority lien of the Mortgage, if
applicable, in the original principal amount of the Mortgage Loan and against
any loss by reason of the invalidity or unenforceability of the lien resulting
from the provisions of the Mortgage Note and/or Mortgage providing for
adjustment in the Mortgage Rate and monthly payment. Additionally, such lender's
title insurance policy affirmatively insures ingress and egress, and against
encroachments by or upon the Mortgaged Property or any interest therein. The
Seller (as assignee) is the sole insured of such lender's title insurance
policy, and such lender's title insurance policy is in full force and effect. No
claims have been made under such lender's title insurance policy, and no prior
holder of the related Mortgage, including the Seller, has done, by act or
omission, anything which would impair the coverage of such lender's title
insurance policy.
(P) Except as provided in clause (B), immediately prior to the
Cut-off Date, there was no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and there was no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration,
and the Seller has not waived any default, breach, violation or event of
acceleration.
(Q) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such lien) affecting the related Mortgaged Property
which are or may be liens prior to or equal with, the lien of the related
Mortgage.
(R) All improvements which were considered in any appraisal
which was used in determining the Appraised Value of the related Mortgaged
Property lay wholly within the boundaries and building restriction lines of the
Mortgaged Property, and no improvements on adjoining properties encroach upon
the Mortgaged Property.
(S) The Mortgage Loan was originated in compliance with all
state and federal licensing and consumer loan laws and regulations.
(T) The origination, servicing and collection practices with
respect to each Mortgage Note and Mortgage including, the establishment,
maintenance and servicing of the escrow accounts and escrow payments, if any,
since origination, have been conducted in all respects in accordance with the
terms of Mortgage Note and in compliance with all applicable laws and
regulations and, unless otherwise required by law or FNMA/FHLMC standard, in
accordance with the proper, prudent and customary practices in the mortgage
origination and servicing business.
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With respect to the escrow accounts and escrow payments, if any, all such
payments are in the possession or under the control of the Seller and there
exists no deficiencies in connection therewith for which customary arrangements
for repayment thereof have not been made. No escrow deposits or escrow payments
or other charges or payments due the Seller have been capitalized under any
Mortgage or the related Mortgage Note. All Mortgage Rate adjustments have been
made in strict compliance with state and federal law and the terms of the
related Mortgage Note. Any interest required to be paid pursuant to state and
local law has been properly paid and credited.
(U) The Mortgaged Property is free of material damage and
waste and there is no proceeding pending for the total or partial condemnation
thereof.
(V) The Mortgage contains customary and enforceable provisions
to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
intended to be provided thereby, including, (1) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (2) otherwise by judicial
foreclosure. There is no other exemption available to the Mortgagor which would
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage. The Mortgagor has not notified the Seller
and the Seller has no knowledge of any relief requested or allowed to the
Mortgagor under the Soldiers and Sailors Civil Relief Act of 1940.
(W) The Mortgage Note is not and has not been secured by any
collateral except the lien of the applicable Mortgage.
(X) The Mortgage File contains an appraisal of the Mortgaged
Property signed prior to the approval of the Mortgage Loan application by an
appraiser who meets the minimum requisite qualifications of FNMA and FHLMC for
appraisers, duly appointed by the Originator, who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security thereof,
and whose compensation is not affected by the approval or disapproval of the
Mortgage Loan; the appraisal is in a form acceptable to FNMA and FHLMC, with
such riders as are acceptable to FNMA and FHLMC.
(Y) In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Certificateholders to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor.
(Z) No Mortgage Loan contains a permanent or temporary
"buydown" provision. The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation or other contingent
interest feature.
(AA) The Mortgagor has received all disclosure materials
required by applicable law with respect to the making of the Mortgage Loan. The
Seller has maintained or caused to be maintained all such statements in the
Mortgage File.
(BB) No Mortgage Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property.
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(CC) To the best of Seller's knowledge, the Mortgaged Property
is lawfully occupied under applicable law and all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities.
(DD) The assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located.
(EE) Any future advances made to the Mortgagor prior to the
Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured as having first
or second lien priority, as applicable, by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest or by
other title evidence acceptable to FNMA and FHLMC. The consolidated principal
amount does not exceed the original principal amount of the Mortgage Loan.
(FF) [Reserved].
(GG) The Mortgaged Property consists of a single parcel of
real property with a detached single family residence erected thereon, or an
individual condominium unit, or a 2-4 family dwelling or an individual unit in a
planned unit development as defined by FNMA, none of which is a mobile home, or
if a manufactured dwelling such manufactured dwelling conforms with FNMA and
FHLMC requirements regarding such dwellings, is permanently affixed to the
Mortgaged Property, and is legally classified as real estate.
(HH) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder.
(II) With respect to the Adjustable Rate Mortgage Loans, on
each Adjustment Date, the Mortgage Rate shall be adjusted to equal the Index
plus the Gross Margin (rounded up or down to the nearest 0.125%), subject to the
Periodic Rate Cap and the Maximum Mortgage Rate as set forth in the respective
Mortgage Note. None of the Mortgage Loans contain a provision allowing the
Mortgagor to convert the Mortgage Note from an adjustable rate mortgage loan to
a fixed rate mortgage loan. The principal and interest due on each Mortgage Loan
is calculated pursuant to the standard amortization method (30/360 day interest
accrual).
(JJ) Each Mortgage Loan at the time of origination was
underwritten in accordance with the guidelines as set forth in the Prospectus
Supplement, and to the extent not inconsistent therewith, generally accepted
sub-prime credit underwriting guidelines.
(KK) No error, omission, misrepresentation, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part of the
Seller or the related Originator.
(c) Except as otherwise provided in Section 2.03(e), upon
discovery by any of the parties hereto of a breach of a representation or
warranty set forth in Section 2.03(a) or (b) that
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materially and adversely affects the interests of the Certificateholders in any
Mortgage Loan, the party discovering such breach shall give prompt notice
thereof to the other parties. Each of the Master Servicer and the Seller (each,
a "Representing Party") hereby covenants with respect to the representations and
warranties set forth in Sections 2.03(a) and (b), respectively, that within 90
days of the earlier of the discovery by such Representing Party or receipt of
written notice by such Representing Party from any party of a breach of any
representation or warranty set forth herein made that materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan, it shall
cure such breach in all material respects and, if such breach is not so cured,
shall, (i) if such 90-day period expires prior to the second anniversary of the
Closing Date, remove such Mortgage Loan (a "Deleted Mortgage Loan") from the
Trust Fund and substitute in its place a Replacement Mortgage Loan, in the
manner and subject to the conditions set forth in this Section; or (ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the Trustee at the
Purchase Price in the manner set forth below; provided that any such
substitution pursuant to (i) above or repurchase pursuant to (ii) above shall
not be effected prior to the delivery to the Trustee of the Opinion of Counsel
required by Section 2.05 hereof and any such substitution pursuant to (i) above
shall not be effected prior to the additional delivery to the Trustee of a
Request for Release substantially in the form of Exhibit N. Any Representing
Party liable for a breach under this Section 2.03 shall promptly reimburse the
Master Servicer and the Trustee for any expenses reasonably incurred by the
Master Servicer or the Trustee in respect of enforcing the remedies for such
breach. To enable the Master Servicer to amend the Mortgage Loan Schedule, any
Representing Party liable for a breach under this Section 2.03 shall, unless it
cures such breach in a timely fashion pursuant to this Section 2.03, promptly
notify the Master Servicer whether such Representing Party intends either to
repurchase, or to substitute for, the Mortgage Loan affected by such breach.
With respect to the representations and warranties described in this Section
that are made to the best of the Representing Party's knowledge, if it is
discovered by any of the Depositor, the Master Servicer, the Seller or the
Trustee that the substance of such representation and warranty is inaccurate and
such inaccuracy materially and adversely affects the value of the related
Mortgage Loan, notwithstanding the Representing Party's lack of knowledge with
respect to the substance of such representation or warranty, such inaccuracy
shall be deemed a breach of the applicable representation or warranty.
With respect to any Replacement Mortgage Loan or Loans, the
Seller delivering such Replacement Mortgage Loan shall deliver to the Trustee
for the benefit of the Certificateholders the related Mortgage Note, Mortgage
and assignment of the Mortgage, and such other documents and agreements as are
required by Section 2.01, with the Mortgage Note endorsed and the Mortgage
assigned as required by Section 2.01. No substitution will be made in any
calendar month after the Determination Date for such month. Scheduled Payments
due with respect to Replacement Mortgage Loans in the Due Period related to the
Distribution Date on which such proceeds are to be distributed shall not be part
of the Trust Fund and will be retained by the Seller delivering such Replacement
Loan on such Distribution Date. For the month of substitution, distributions to
Certificateholders will include the Scheduled Payment due on any Deleted
Mortgage Loan for the related Due Period and thereafter the Seller shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The Master Servicer shall amend the Mortgage Loan Schedule for the benefit
of the Certificateholders to reflect the removal of such Deleted Mortgage Loan
and the substitution of the Replacement Mortgage Loan or Loans and the Master
Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee. Upon
such substitution, the Replacement Mortgage Loan or Loans shall be subject to
the terms of this Agreement in all respects, and the Seller
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delivering such Replacement Mortgage Loan shall be deemed to have made with
respect to such Replacement Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties set forth in Section 2.03(b)
with respect to such Mortgage Loan. Upon any such substitution and the deposit
to the Certificate Account of the amount required to be deposited therein in
connection with such substitution as described in the following paragraph, the
Trustee shall release to the Representing Party the Mortgage File relating to
such Deleted Mortgage Loan and held for the benefit of the Certificateholders
and shall execute and deliver at the Master Servicer's direction such
instruments of transfer or assignment as have been prepared by the Master
Servicer, in each case without recourse, as shall be necessary to vest in the
Seller, or its respective designee, title to the Trustee's interest in any
Deleted Mortgage Loan substituted for pursuant to this Section 2.03.
For any month in which the Seller substitutes one or more
Replacement Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Replacement Mortgage Loans as of the date of substitution is
less than the Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) of all such
Deleted Mortgage Loans. An amount equal to the aggregate of the deficiencies
described in the preceding sentence (such amount, the "Substitution Adjustment
Amount") shall be deposited into the Certificate Account by the Seller
delivering such Replacement Mortgage Loan on the Determination Date for the
Distribution Date relating to the Prepayment Period during which the related
Mortgage Loan became required to be purchased or replaced hereunder.
In the event that a Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited in the Certificate Account
pursuant to Section 3.08 on the Determination Date for the Distribution Date in
the month following the month during which such Seller became obligated to
repurchase or replace such Mortgage Loan and upon such deposit of the Purchase
Price, the delivery of the Opinion of Counsel required by Section 2.05, if any,
and the receipt of a Request for Release in the form of Exhibit N hereto, the
Trustee shall release the related Mortgage File held for the benefit of the
Certificateholders to such Seller, and the Trustee shall execute and deliver at
such Person's direction the related instruments of transfer or assignment
prepared by such Seller, in each case without recourse, as shall be necessary to
transfer title from the Trustee for the benefit of the Certificateholders and
transfer the Trustee's interest to such Seller to any Mortgage Loan purchased
pursuant to this Section 2.03. It is understood and agreed that the obligation
under this Agreement of the Seller to cure, repurchase or replace any Mortgage
Loan as to which a breach has occurred and is continuing shall constitute the
sole remedy against the Seller respecting such breach available to
Certificateholders, the Depositor or the Trustee.
(d) The representations and warranties set forth in
Section 2.03 hereof shall survive delivery of the respective Mortgage Files to
the Trustee for the benefit of the Certificateholders.
Section 2.04. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Master
Servicer and the Trustee as follows, as of the date hereof and as of the Closing
Date:
(i) The Depositor is duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware
and has full power and authority
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(corporate and other) necessary to own or hold its properties and to
conduct its business as now conducted by it and to enter into and
perform its obligations under this Agreement.
(ii) The Depositor has the full corporate power and authority
to execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and has duly authorized,
by all necessary corporate action on its part, the execution, delivery
and performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its
terms, subject, as to enforceability, to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (ii) general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement by the
Depositor, the consummation of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Depositor and will not
(A) result in a material breach of any term or provision of the charter
or by-laws of the Depositor or (B) materially conflict with, result in
a material breach, violation or acceleration of, or result in a
material default under, the terms of any other material agreement or
instrument to which the Depositor is a party or by which it may be
bound or (C) constitute a material violation of any statute, order or
regulation applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Depositor's
ability to perform or meet any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Depositor to
perform its obligations under this Agreement in accordance with the
terms hereof.
(v) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee
with respect to each Mortgage Loan as of the Closing Date, and following the
transfer of the Mortgage Loans to it by the Seller, the Depositor had good title
to the Mortgage Loans and the Mortgage Notes were subject to no offsets, claims,
defenses or counterclaims.
It is understood and agreed that the representations and
warranties set forth in the two immediately preceding paragraphs shall survive
delivery of the Mortgage Files to the Trustee. Upon discovery by the Depositor
or the Trustee of a breach of any of the foregoing representations and
54
warranties set forth in the immediately preceding paragraph (referred to herein
as a "breach"), which breach materially and adversely affects the interest of
the Certificateholders, the party discovering such breach shall give prompt
written notice to the others and to each Rating Agency. The Depositor hereby
covenants with respect to the representations and warranties made by it in this
Section 2.04 that within 90 days of the earlier of the discovery it or receipt
of written notice by it from any party of a breach of any representation or
warranty set forth herein made that materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, it shall cure such
breach in all material respects and, if such breach is not so cured, shall
repurchase or replace the affected Mortgage Loan or Loans in accordance with the
procedure set forth in Section 2.03(c).
Section 2.05. Delivery of Opinion of Counsel in Connection
with Substitutions and Repurchases.
(a) Notwithstanding any contrary provision of this
Agreement, with respect to any Mortgage Loan that is not in default or as to
which default is not imminent, no repurchase or substitution pursuant to
Sections 2.02, 2.03 or 2.04 shall be made unless the Representing Party making
such repurchase or substitution delivers to the Trustee an Opinion of Counsel,
addressed to the Trustee, to the effect that such repurchase or substitution
would not (i) result in the imposition of the tax on "prohibited transactions"
of the Trust Fund or contributions after the Closing Date, as defined in
sections 860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the
Trust Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding. Any Mortgage Loan as to which repurchase or substitution was
delayed pursuant to this paragraph shall be repurchased or the substitution
therefor shall occur (subject to compliance with Sections 2.02, 2.03 or 2.04)
upon the earlier of (a) the occurrence of a default or imminent default with
respect to such loan and (b) receipt by the Trustee of an Opinion of Counsel to
the effect that such repurchase or substitution, as applicable, will not result
in the events described in clause (i) or clause (ii) of the preceding sentence.
(b) Upon discovery by the Depositor, the Seller, the
Master Servicer or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of section 86OG(a)(3) of the Code, the
party discovering such fact shall promptly (and in any event within 5 Business
Days of discovery) give written notice thereof to the other parties. In
connection therewith, the Trustee shall require the Seller, at the Seller's
option, to either (i) substitute, if the conditions in Section 2.03(b) with
respect to substitutions are satisfied, a Replacement Mortgage Loan for the
affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90
days of such discovery in the same manner as it would a Mortgage Loan for a
breach of representation or warranty contained in Section 2.03. The Trustee
shall reconvey to the Seller the Mortgage Loan to be released pursuant hereto in
the same manner, and on the same terms and conditions, as it would a Mortgage
Loan repurchased for breach of a representation or warranty contained in Section
2.03.
Section 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of
the Trust Fund and, concurrently with such transfer and assignment, has
executed, authenticated and delivered, to or upon the order of the Depositor,
the Certificates in authorized denominations evidencing the entire ownership of
the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and to perform
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the duties set forth in this Agreement to the best of its ability, to the end
that the interests of the Holders of the Certificates may be adequately and
effectively protected.
Section 2.07. Covenants of the Master Servicer.
The Master Servicer hereby covenants to the Depositor, the
Trustee as follows:
(a) the Master Servicer shall comply in the performance of its
obligations under this Agreement with all reasonable rules and
requirements of the insurer under each Required Insurance Policy; and
(b) no written information, certificate of an officer,
statement furnished in writing or written report delivered to the
Depositor, any affiliate of the Depositor or the Trustee and prepared
by the Master Servicer pursuant to this Agreement will contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the information, certificate, statement or report not
misleading.
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ARTICLE III.
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Master
Servicer shall service and administer the Mortgage Loans in accordance with
customary and usual standards of practice of prudent mortgage loan lenders in
the respective states in which the Mortgaged Properties are located. In
connection with such servicing and administration, the Master Servicer shall
have full power and authority, acting alone and/or through subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds, and (iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan; provided that the Master Servicer shall
take no action that is inconsistent with or prejudices the interests of the
Trust Fund or the Certificateholders in any Mortgage Loan or the rights and
interests of the Depositor and the Trustee under this Agreement. The Master
Servicer shall represent and protect the interest of the Trust Fund in the same
manner as it currently protects its own interest in mortgage loans in its own
portfolio in any claim, proceeding or litigation regarding a Mortgage Loan and
shall not make or permit any modification, waiver or amendment of any term of
any Mortgage Loan which would cause the Trust Fund to fail to qualify as a REMIC
or result in the imposition of any tax under Section 860(a) or 860(d) of the
Code, but in any case not in any manner that is a lesser standard than that
provided in the first sentence of this Section 3.01. Without limiting the
generality of the foregoing, the Master Servicer, in its own name or in the name
of the Depositor and the Trustee, is hereby authorized and empowered by the
Depositor and the Trustee, when the Master Servicer believes it appropriate in
its reasonable judgment, to execute and deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, with respect to the Mortgage Loans, and with
respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Master Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery by
any or all of them as are necessary or appropriate to enable the Master Servicer
to service and administer the Mortgage Loans. Upon receipt of such documents,
the Depositor and/or the Trustee shall execute such documents and deliver them
to the Master Servicer.
In accordance with the standards of the preceding paragraph,
the Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. All costs incurred by the Master Servicer, if any, in
effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to
57
the Stated Principal Balance under the related Mortgage Loans, notwithstanding
that the terms of such Mortgage Loans so permit.
The Master Servicer shall deliver a list of Servicing Officers
to the Trustee by the Closing Date.
Section 3.02. Subservicing; Enforcement of the Obligations of
Master Servicer.
(a) The Master Servicer may arrange for the subservicing
of any Mortgage Loan by a subservicer (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided that such
subservicing arrangement and the terms of the related subservicing agreement
must provide for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Notwithstanding the
provisions of any subservicing agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer or
a subservicer or reference to actions taken through a Master Servicer or
otherwise, the Master Servicer shall remain obligated and liable to the
Depositor, the Trustee and the Certificateholders for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from the
subservicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Mortgage Loans.
Every subservicing agreement entered into by the Master Servicer shall contain a
provision giving the successor Master Servicer the option to terminate such
agreement in the event a successor Master Servicer is appointed. All actions of
each subservicer performed pursuant to the related subservicing agreement shall
be performed as an agent of the Master Servicer with the same force and effect
as if performed directly by the Master Servicer.
(b) For purposes of this Agreement, the Master Servicer
shall be deemed to have received any collections, recoveries or payments with
respect to the Mortgage Loans that are received by a subservicer regardless of
whether such payments are remitted by the subservicer to the Master Servicer.
Section 3.03. Rights of the Depositor, the Trustee in Respect
of the Master Servicer.
Neither the Trustee nor the Depositor shall have any
responsibility or liability for any action or failure to act by the Master
Servicer, and none of them is obligated to supervise the performance of the
Master Servicer hereunder or otherwise.
Section 3.04. Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any reason no
longer be the Master Servicer hereunder (including by reason of an Event of
Default), the Trustee or its designee shall thereupon assume all of the rights
and obligations of the Master Servicer hereunder arising thereafter (except that
the Trustee shall not be (i) liable for losses of the Master Servicer pursuant
to Section 3.10 hereof or any acts or omissions of the predecessor Master
Servicer hereunder, (ii) obligated to make Advances if it is prohibited from
doing so by applicable law, (iii) obligated to effectuate repurchases or
substitutions of Mortgage Loans hereunder, including pursuant to Section 2.02 or
2.03 hereof, (iv) responsible for expenses of the Master Servicer pursuant to
58
Section 2.03, (v) deemed to have made any representations and warranties
hereunder, including pursuant to Section 2.03 or the first paragraph of Section
6.02 hereof or (vi) obligated with respect to waived Prepayment Charges pursuant
to Section 2.03 or 3.01). If the Master Servicer shall for any reason no longer
be the Master Servicer (including by reason of any Event of Default), the
Trustee (or any other successor servicer) may, at its option, succeed to any
rights and obligations of the Master Servicer under any subservicing agreement
in accordance with the terms thereof; provided that the Trustee (or any other
successor servicer) shall not incur any liability or have any obligations in its
capacity as servicer under a subservicing agreement arising prior to the date of
such succession unless it expressly elects to succeed to the rights and
obligations of the Master Servicer thereunder; and the Master Servicer shall not
thereby be relieved of any liability or obligations under the subservicing
agreement arising prior to the date of such succession.
The Master Servicer shall, upon request of the Trustee, but at
the expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each subservicing agreement and the Mortgage Loans then
being serviced thereunder and an accounting of amounts collected held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.
Section 3.05. Collection of Mortgage Loan Payments;
Certificate Account; Distribution Account.
(a) The Master Servicer shall make reasonable efforts in
accordance with customary and usual standards of practice of prudent mortgage
lenders in the respective states in which the Mortgaged Properties are located
to collect all payments called for under the terms and provisions of the
Mortgage Loans to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any related Required Insurance Policy.
Consistent with the foregoing, the Master Servicer may in its discretion (i)
waive any late payment charge or penalty interest (other than a Prepayment
Charge) in connection with the prepayment of a Mortgage Loan and (ii) extend the
due dates for payments due on a Mortgage Note for a period not greater than 125
days. In the event of any such arrangement, the Master Servicer shall make
Advances on the related Mortgage Loan during the scheduled period in accordance
with the amortization schedule of such Mortgage Loan without modification
thereof by reason of such arrangements, and shall be entitled to reimbursement
therefor in accordance with Section 4.01. The Master Servicer shall not be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note or otherwise or against any
public or governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law. In addition, if (x) the Mortgage Loan is in default or default
is imminent or (y) the Master Servicer delivers to the Trustee a certification,
based on the advice of counsel or certified public accountants, in either case,
that have a national reputation with respect to taxation of REMICs, that a
modification of a Mortgage Loan will not result in the imposition of taxes on or
disqualify, any REMIC formed hereunder, the Master Servicer may, (A) amend any
Mortgage Note to reduce the Mortgage Rate applicable thereto, provided that,
such reduced Mortgage Rate shall always be greater than the weighted average
Pass-Through Rate and Expense Fee Rate for the related Classes of Certificates
and no more than 2.0% of aggregate Cut-off Date Principal Balance of the
Mortgage Loans shall have Mortgage Rates less than the Mortgage Rates thereon as
of the Cut-off Date as result of amendments by the Master Servicer (excluding
reductions to the Mortgage Rates of Adjustable Rate Mortgage Loans in accordance
with the terms of the related Mortgage Notes) and (B) amend any
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Mortgage Note to extend to the maturity thereof, provided that, no maturity
shall be extended beyond the maturity date of the Mortgage Loan in the related
Loan Group with the latest maturity date and that no more than 5.0% of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans shall have a
maturity date which has been extended by the Master Servicer beyond the maturity
date thereof as the Cut-off Date.
(b) The Master Servicer shall establish and maintain a
Certificate Account into which the Master Servicer shall deposit or cause to be
deposited on a daily basis within one Business Day of receipt, except as
otherwise specifically provided herein, the following payments and collections
remitted by Subservicers or received by it in respect of Mortgage Loans
subsequent to the Cut-off Date (other than in respect of principal and interest
due on the Mortgage Loans on or before the Cut-off Date) and the following
amounts required to be deposited hereunder:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
net of the related Servicing Fee permitted under Section 3.15, and the
Initial Certificate Account Deposit;
(iii) all Liquidation Proceeds, other than proceeds to be
applied to the restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with the Master Servicer's
normal servicing procedures;
(iv) all Compensating Interest;
(v) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(e) in connection with any losses on
Permitted Investments;
(vi) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.10 hereof;
(vii) the Purchase Price and any Substitution Adjustment
Amount;
(viii) all Advances made by the Master Servicer pursuant to
Section 4.01;
(ix) all Prepayment Charges collected by the Master
Servicer; and
(x) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Master
Servicer into the Certificate Account shall be exclusive, it being understood
and agreed that, without limiting the generality of the foregoing, payments in
the nature of late payment charges or assumption fees, if collected, need not be
remitted by the Master Servicer. In the event that the Master Servicer shall
remit any amount not required to be remitted and not otherwise subject to
withdrawal pursuant to Section 3.08 hereof, it may at any time withdraw or
direct the institution maintaining the Certificate Account, to withdraw such
amount from the Certificate Account, any provision herein to the contrary
notwithstanding. Such withdrawal or direction may be accomplished by delivering
written notice thereof to the institution maintaining the Certificate Account,
that describes the amounts deposited in error in the Certificate Account. The
Master Servicer shall maintain adequate records with respect to
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all withdrawals made pursuant to this Section. All funds deposited in the
Certificate Account shall be held in trust for the Certificateholders until
withdrawn in accordance with Section 3.08.
(c) The Trustee shall establish and maintain, on behalf
of the Certificateholders, the Distribution Account. The Trustee shall, promptly
upon receipt, deposit in the Distribution Account and retain therein the
following:
(i) the aggregate amount remitted by the Master Servicer
pursuant to the second paragraph of Section 3.08(a); and
(ii) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(e) in connection with any losses on
Permitted Investments.
The foregoing requirements for remittance by the Master
Servicer and deposit by the Trustee into the Distribution Account shall be
exclusive. In the event that the Master Servicer shall remit any amount not
required to be remitted and not otherwise subject to withdrawal pursuant to
Section 3.08 hereof, it may at any time direct the Trustee to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering a written
notice to the Trustee that describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall be
held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.08. In
no event shall the Trustee incur liability for withdrawals from the Distribution
Account at the direction of the Master Servicer.
(d) [Reserved.]
(e) Each institution that maintains the Certificate
Account, the Distribution Account or the Adjustable Rate Carryover Reserve Fund
shall invest the funds in each such account, as directed by the Master Servicer,
in Permitted Investments, which shall mature not later than (i) in the case of
the Certificate Account, the second Business Day next preceding the related
Distribution Account Deposit Date (except that if such Permitted Investment is
an obligation of the institution that maintains such Certificate Account, then
such Permitted Investment shall mature not later than the Business Day next
preceding such Distribution Account Deposit Date) and (ii) in the case of the
Distribution Account and the Adjustable Rate Carryover Reserve Fund, the
Business Day immediately preceding the first Distribution Date that follows the
date of such investment (except that if such Permitted Investment is an
obligation of the institution that maintains such Distribution Account or
Adjustable Rate Carryover Reserve Fund, then such Permitted Investment shall
mature not later than such Distribution Date) and, in each case, shall not be
sold or disposed of prior to its maturity. All such Permitted Investments shall
be made in the name of the Trustee, for the benefit of the Certificateholders,
except in connection with Permitted Investments made with respect to funds in
the Adjustable Rate Carryover Reserve Fund which shall be made in the name of
the Trustee, for the benefit of the Class BV-IO Certificateholders. In the case
of (x) the Certificate Account and the Distribution Account, all income and gain
net of any losses realized from any such investment shall be for the benefit of
the Master Servicer as servicing compensation and shall be remitted to it
monthly as provided herein, and (y) the Adjustable Rate Carryover Reserve Fund,
all income and gain net of any losses realized from any such investment shall be
for the benefit of the Class BV-IO Certificateholders and shall be remitted to
the Class BV-IO Certificateholders monthly as provided herein. The amount of any
losses incurred in the Certificate Account or the Distribution Account in
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respect of any such investments shall be deposited by the Master Servicer in the
Certificate Account or paid to the Trustee for deposit into the Distribution
Account, as applicable, out of the Master Servicer's own funds immediately as
realized. Any losses incurred in the Adjustable Rate Carryover Reserve Fund in
respect of any such investments shall be charged against amounts on deposit in
the Adjustable Rate Carryover Fund (or such investments) immediately as
realized. The Trustee shall not be liable for the amount of any loss incurred in
respect of any investment or lack of investment of funds held in the Certificate
Account, the Distribution Account or the Adjustable Rate Carryover Reserve Fund
and made in accordance with this Section 3.05.
(f) The Master Servicer shall give at least 30 days
advance notice to the Trustee, the Seller, each Rating Agency and the Depositor
of any proposed change of location of the Certificate Account prior to any
change thereof. The Trustee shall give at least 30 days advance notice to the
Master Servicer, the Seller, each Rating Agency and the Depositor of any
proposed change of the location of the Distribution Account or the Adjustable
Rate Carryover Reserve Fund prior to any change thereof.
Section 3.06. Collection of Taxes, Assessments and Similar
Items; Escrow Accounts.
To the extent required by the related Mortgage Note, the
Master Servicer shall establish and maintain one or more accounts (each, an
"Escrow Account") and deposit and retain therein all collections from the
Mortgagors (or advances by the Master Servicer) for the payment of taxes,
assessments, hazard insurance premiums or comparable items for the account of
the Mortgagors. Nothing herein shall require the Master Servicer to compel a
Mortgagor to establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts
may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, condominium or PUD association dues, or comparable items, to
reimburse the Master Servicer out of related collections for any payments made
pursuant to Sections 3.01 hereof (with respect to taxes and assessments and
insurance premiums) and 3.10 hereof (with respect to hazard insurance), to
refund to any Mortgagors any sums as may be determined to be overages, to pay
interest, if required by law or the terms of the related Mortgage or Mortgage
Note, to Mortgagors on balances in the Escrow Account or to clear and terminate
the Escrow Account at the termination of this Agreement in accordance with
Section 9.01 hereof. The Escrow Accounts shall not be a part of the Trust Fund.
Section 3.07. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Master Servicer shall afford the Depositor and the Trustee
reasonable access to all records and documentation regarding the Mortgage Loans
and all accounts, insurance policies and other matters relating to this
Agreement, such access being afforded without charge, but only upon reasonable
request and during normal business hours at the offices of the Master Servicer
designated by it.
Section 3.08. Permitted Withdrawals from the Certificate
Account, Distribution Account, and the
Adjustable Rate Carryover Reserve Fund.
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(a) The Master Servicer may from time to time make withdrawals
from the Certificate Account for the following purposes:
(i) to pay to the Master Servicer (to the extent not
previously paid to or withheld by the Master Servicer), as servicing
compensation in accordance with Section 3.15, that portion of any
payment of interest that equals the Servicing Fee for the period with
respect to which such interest payment was made, and, as additional
servicing compensation, those other amounts set forth in Section 3.15;
(ii) to reimburse the Master Servicer for Advances made by it
with respect to the Mortgage Loans, such right of reimbursement
pursuant to this subclause (ii) being limited to amounts received on
particular Mortgage Loan(s) (including, for this purpose, Liquidation
Proceeds) that represent late recoveries of payments of principal
and/or interest on such particular Mortgage Loan(s) in respect of which
any such Advance was made;
(iii) to reimburse the Master Servicer for any Nonrecoverable
Advance previously made;
(iv) to reimburse the Master Servicer from Insurance Proceeds
for Insured Expenses covered by the related Insurance Policy;
(v) to pay the Master Servicer any unpaid Servicing Fees and
to reimburse it for any unreimbursed Servicing Advances, the Master
Servicer's right to reimbursement of Servicing Advances pursuant to
this subclause (v) with respect to any Mortgage Loan being limited to
amounts received on particular Mortgage Loan(s) (including, for this
purpose, Liquidation Proceeds and purchase and repurchase proceeds)
that represent late recoveries of the payments for which such advances
were made pursuant to Section 3.01 or Section 3.06;
(vi) to pay to the Seller, the Depositor or the Master
Servicer, as applicable, with respect to each Mortgage Loan or property
acquired in respect thereof that has been purchased pursuant to Section
2.02, 2.03 or 3.12, all amounts received thereon and not taken into
account in determining the related Stated Principal Balance of such
repurchased Mortgage Loan;
(vii) to reimburse the Seller, the Master Servicer or the
Depositor for expenses incurred by any of them in connection with the
Mortgage Loans or Certificates and reimbursable pursuant to Section
6.03 hereof provided that such amount shall only be withdrawn following
the withdrawal from the Certificate Account for deposit into the
Distribution Account pursuant to the following paragraph;
(viii) to withdraw pursuant to Section 3.05 any amount
deposited in the Certificate Account and not required to be deposited
therein; and
(ix) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 1:00 p.m. Pacific time on the
Distribution Account Deposit Date, the Master Servicer shall withdraw from the
Certificate Account and remit to the Trustee the
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amount of Fixed Rate Interest Funds, Fixed Rate Principal Funds, Adjustable Rate
Interest Funds, Adjustable Rate Principal Funds and the Prepayment Charges
collected, to the extent on deposit, and the Trustee shall deposit such amount
in the Distribution Account.
The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Certificate Account pursuant to subclauses
(i), (ii), (iv), (v) and (vi) above. Prior to making any withdrawal from the
Certificate Account pursuant to subclause (iii), the Master Servicer shall
deliver to the Trustee an Officer's Certificate of a Servicing Officer
indicating the amount of any previous Advance determined by the Master Servicer
to be a Nonrecoverable Advance and identifying the related Mortgage Loan(s), and
their respective portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the
Distribution Account for distribution to the Certificateholders in the manner
specified in this Agreement (and to withhold from the amounts so withdrawn, the
amount of any taxes that it is authorized to retain pursuant to the last
paragraph of Section 8.11). In addition, the Trustee may from time to time make
withdrawals from the Distribution Account for the following purposes:
(i) to pay itself the Trustee Fee for the related Distribution
Date;
(ii) to pay to the Master Servicer, as additional servicing
compensation, earnings on or investment income with respect to funds in
or credited to the Distribution Account;
(iii) to withdraw pursuant to Section 3.05 any amount
deposited in the Distribution Account and not required to be deposited
therein; and
(iv) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
(c) [Reserved]
(d) The Trustee shall withdraw funds from the Adjustable
Rate Carryover Reserve Fund for distribution to the Adjustable Rate
Certificateholders in the manner specified in this Agreement (and to withhold
from the amounts so withdrawn, the amount of any taxes that it is authorized to
retain pursuant to the last paragraph of Section 8.11). In addition, the Trustee
may from time to time make withdrawals from the Adjustable Rate Carryover
Reserve Fund for the following purposes:
(i) to withdraw pursuant to Section 3.05 any amount deposited
in the Adjustable Rate Carryover Reserve Fund and not required to be
deposited therein; and
(ii) to clear and terminate the Adjustable Rate Carryover
Reserve Fund upon termination of the Agreement pursuant to Section 9.01
hereof.
Section 3.09. [Reserved.]
Section 3.10. Maintenance of Hazard Insurance.
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The Master Servicer shall cause to be maintained, for each
Mortgage Loan, hazard insurance on buildings upon, or comprising part of, the
Mortgaged Property against loss by fire, hazards of extended coverage and such
other hazards as are customary in the area where the Mortgaged Property is
located with an insurer which is licensed to do business in the state where the
Mortgaged Property is located. Each such policy of standard hazard insurance
shall contain, or have an accompanying endorsement that contains, a standard
mortgagee clause. The Master Servicer shall also cause flood insurance to be
maintained on property acquired upon foreclosure or deed in lieu of foreclosure
of any Mortgage Loan, to the extent described below. Pursuant to Section 3.05
hereof, any amounts collected by the Master Servicer under any such policies
(other than the amounts to be applied to the restoration or repair of the
related Mortgaged Property or property thus acquired or amounts released to the
Mortgagor in accordance with the Master Servicer's normal servicing procedures)
shall be deposited in the Certificate Account. Any cost incurred by the Master
Servicer in maintaining any such insurance shall not, for the purpose of
calculating monthly distributions to the Certificateholders or remittances to
the Trustee for their benefit, be added to the principal balance of the Mortgage
Loan, notwithstanding that the terms of the Mortgage Loan so permit. Such costs
shall be recoverable by the Master Servicer out of late payments by the related
Mortgagor or out of Liquidation Proceeds to the extent permitted by Section 3.08
hereof. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area and such area is participating in the national flood insurance program, the
Master Servicer shall cause flood insurance to be maintained with respect to
such Mortgage Loan. Such flood insurance shall be in an amount equal to the
lesser of (i) the Stated Principal Balance of the related Mortgage Loan, (ii)
minimum amount required to compensate for damage or loss on a replacement cost
basis, or (iii) the maximum amount of such insurance available for the related
Mortgaged Property under the Flood Disaster Protection Act of 1973, as amended.
In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against hazard losses on all of the Mortgage
Loans, it shall conclusively be deemed to have satisfied its obligations as set
forth in the first sentence of this Section 3.10, it being understood and agreed
that such policy may contain a deductible clause on terms substantially
equivalent to those commercially available and maintained by comparable
servicers. If such policy contains a deductible clause, the Master Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with the first sentence of this Section
3.10, and there shall have been a loss that would have been covered by such
policy, deposit in the Certificate Account the amount not otherwise payable
under the blanket policy because of such deductible clause. Such deposit shall
constitute a Servicing Advance. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
present, on behalf of itself, the Depositor and the Trustee for the benefit of
the Certificateholders, claims under any such blanket policy.
Section 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.11(a),
when any property subject to a Mortgage has been or is about to be conveyed by
the Mortgagor, the Master Servicer shall to the extent that it has knowledge of
such conveyance, enforce any due-on-sale clause contained in any Mortgage Note
or Mortgage, to the extent permitted under applicable law and
65
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Master Servicer is not required to exercise
such rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Master Servicer is prohibited by law from
enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Master Servicer is authorized, subject to Section
3.11(b), to take or enter into an assumption and modification agreement from or
with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Mortgage Note and, unless
prohibited by applicable state law, the Mortgagor remains liable thereon,
provided that the Mortgage Loan shall continue to be covered (if so covered
before the Master Servicer enters such agreement) by the applicable Required
Insurance Policies. The Master Servicer, subject to Section 3.11(b), is also
authorized with the prior approval of the insurers under any Required Insurance
Policies to enter into a substitution of liability agreement with such Person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the foregoing, the Master Servicer shall not be deemed to be in
default under this Section 3.11(a) by reason of any transfer or assumption that
the Master Servicer reasonably believes it is restricted by law from preventing.
(b) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.11(a) hereof, in any
case in which a Mortgaged Property has been conveyed to a Person by a Mortgagor,
and such Person is to enter into an assumption agreement or modification
agreement or supplement to the Mortgage Note or Mortgage that requires the
signature of the Trustee, or if an instrument of release signed by the Trustee
is required releasing the Mortgagor from liability on the Mortgage Loan, the
Master Servicer shall prepare and deliver or cause to be prepared and delivered
to the Trustee for signature and shall direct, in writing, the Trustee to
execute the assumption agreement with the Person to whom the Mortgaged Property
is to be conveyed and such modification agreement or supplement to the Mortgage
Note or Mortgage or other instruments as are reasonable or necessary to carry
out the terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person. In connection with any such assumption, no material term of the
Mortgage Note (including, but not limited to, the Mortgage Rate, the amount of
the Scheduled Payment, the Maximum Rate, the Minimum Rate, the Gross Margin, the
Periodic Rate Cap, the Adjustment Date and any other term affecting the amount
or timing of payment on the Mortgage Loan) may be changed. In addition, the
substitute Mortgagor and the Mortgaged Property must be acceptable to the Master
Servicer in accordance with its servicing standards as then in effect. The
Master Servicer shall notify the Trustee that any such substitution or
assumption agreement has been completed by forwarding to the Trustee the
original of such substitution or assumption agreement, which in the case of the
original shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. Any fee collected
by the Master Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Master Servicer as additional
servicing compensation.
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Section 3.12. Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds and Realized
Losses; Repurchase of Certain Mortgage Loans.
(a) The Master Servicer shall use reasonable efforts to
foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Mortgage Loans as come into and continue in default and as
to which no satisfactory arrangements can be made for collection of delinquent
payments. In connection with such foreclosure or other conversion, the Master
Servicer shall follow such practices and procedures as it shall deem necessary
or advisable and as shall be normal and usual in its general mortgage servicing
activities and the requirements of the insurer under any Required Insurance
Policy; provided that the Master Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the restoration of any
property unless it shall determine (i) that such restoration and/or foreclosure
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Certificate Account pursuant to
Section 3.08 hereof). If the Master Servicer reasonably believes that Net
Liquidation Proceeds with respect to any such Mortgage Loan would not be
increased as a result of such foreclosure or other action, such Mortgage Loan
will be charged-off and will become a Liquidated Mortgage Loan. The Master
Servicer will give notice of any such charge-off to the Trustee. The Master
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; provided that such costs and expenses shall be Servicing
Advances and that it shall be entitled to reimbursement thereof from the
proceeds of liquidation of the related Mortgaged Property, as contemplated in
Section 3.08 hereof. If the Master Servicer has knowledge that a Mortgaged
Property that the Master Servicer is contemplating acquiring in foreclosure or
by deed-in-lieu of foreclosure is located within a one-mile radius of any site
with environmental or hazardous waste risks known to the Master Servicer, the
Master Servicer will, prior to acquiring the Mortgaged Property, consider such
risks and only take action in accordance with its established environmental
review procedures.
With respect to any REO Property, the deed or certificate of
sale shall be taken in the name of the Trustee for the benefit of the
Certificateholders (or the Trustee's nominee on behalf of the
Certificateholders). The Trustee's name shall be placed on the title to such REO
Property solely as the Trustee hereunder and not in its individual capacity. The
Master Servicer shall ensure that the title to such REO Property references this
Agreement and the Trustee's capacity thereunder. Pursuant to its efforts to sell
such REO Property, the Master Servicer shall either itself or through an agent
selected by the Master Servicer protect and conserve such REO Property in the
same manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or any part thereof, as the
Master Servicer deems to be in the best interest of the Master Servicer and the
Certificateholders for the period prior to the sale of such REO Property. The
Master Servicer shall prepare for and deliver to the Trustee a statement with
respect to each REO Property that has been rented showing the aggregate rental
income received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Trustee to comply with the reporting requirements of the REMIC Provisions. The
net monthly rental income, if any, from such REO Property shall be deposited in
the Certificate Account no later than the close of business on each
Determination Date. The Master Servicer shall perform the tax reporting and
withholding related to foreclosures, abandonments and cancellation of
indebtedness
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income as specified by Sections 1445, 6050J and 6050P of the Code by preparing
and filing such tax and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or imminent
default on a Mortgage Loan, the Master Servicer shall dispose of such Mortgaged
Property prior to three years after its acquisition by the Trust Fund or, at the
expense of the Trust Fund, request more than 60 days prior to the day on which
such three-year period would otherwise expire, an extension of the three-year
grace period unless the Trustee shall have been supplied with an Opinion of
Counsel (such opinion not to be an expense of the Trustee) to the effect that
the holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in section 860F of the Code or cause
the Trust Fund to fail to qualify as a REMIC at any time that any Certificates
are outstanding, in which case the Trust Fund may continue to hold such
Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel). Notwithstanding any other provision of this Agreement, no Mortgaged
Property acquired by the Trust Fund shall be rented (or allowed to continue to
be rented) or otherwise used for the production of income by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of section 860G(a)(8) of the Code or (ii) subject the Trust Fund to the
imposition of any federal, state or local income taxes on the income earned from
such Mortgaged Property under section 860G(c) of the Code or otherwise, unless
the Master Servicer has agreed to indemnify and hold harmless the Trust Fund
with respect to the imposition of any such taxes.
The decision of the Master Servicer to foreclose on a
defaulted Mortgage Loan shall be subject to a determination by the Master
Servicer that the proceeds of such foreclosure would exceed the costs and
expenses of bringing such a proceeding. The income earned from the management of
any Mortgaged Properties acquired through foreclosure or other judicial
proceeding, net of reimbursement to the Master Servicer for expenses incurred
(including any property or other taxes) in connection with such management and
net of unreimbursed Servicing Fees, Advances, Servicing Advances and any
management fee paid or to be paid with respect to the management of such
Mortgaged Property, shall be applied to the payment of principal of, and
interest on, the related defaulted Mortgage Loans (with interest accruing as
though such Mortgage Loans were still current) and all such income shall be
deemed, for all purposes in this Agreement, to be payments on account of
principal and interest on the related Mortgage Notes and shall be deposited into
the Certificate Account. To the extent the income received during a Prepayment
Period is in excess of the amount attributable to amortizing principal and
accrued interest at the related Mortgage Rate on the related Mortgage Loan, such
excess shall be considered to be a partial Principal Prepayment for all purposes
hereof.
The Liquidation Proceeds from any liquidation of a Mortgage
Loan, net of any payment to the Master Servicer as provided above, shall be
deposited in the Certificate Account on the next succeeding Determination Date
following receipt thereof for distribution on the related Distribution Date,
except that any Excess Proceeds shall be retained by the Master Servicer as
additional servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery
resulting from a partial collection of Liquidation Proceeds or any income from
an REO Property, will be applied in the following order of priority: first, to
reimburse the Master Servicer for any related unreimbursed
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Servicing Advances and Servicing Fees, pursuant to Section 3.08(a)(v) or this
Section 3.12; second, to reimburse the Master Servicer for any unreimbursed
Advances, pursuant to Section 3.08(a)(ii) or this Section 3.12; third, to
accrued and unpaid interest (to the extent no Advance has been made for such
amount) on the Mortgage Loan or related REO Property, at the Net Mortgage Rate
to the first day of the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan.
(b) On each Determination Date, the Master Servicer shall
determine the respective aggregate amounts of Excess Proceeds and Realized
Losses, if any, for the related Prepayment Period.
(c) The Master Servicer, in its sole discretion, shall
have the right to elect (by written notice sent to the Trustee) to purchase for
its own account from the Trust Fund any Mortgage Loan that is 91 days or more
delinquent at a price equal to the Purchase Price. The Purchase Price for any
Mortgage Loan purchased hereunder shall be delivered to the Trustee for deposit
in the Certificate Account and the Trustee, upon receipt of such deposit and a
Request for Release from the Master Servicer in the form of Exhibit N hereto,
shall release or cause to be released to the purchaser of such Mortgage Loan the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment prepared by the purchaser of such Mortgage Loan, in each case
without recourse, as shall be necessary to vest in the purchaser of such
Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser of
such Mortgage Loan shall succeed to all the Trustee's right, title and interest
in and to such Mortgage Loan and all security and documents related thereto.
Such assignment shall be an assignment outright and not for security. The
purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and all
security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
(d) The Master Servicer has no intent to foreclose on any
Mortgage Loan based on the delinquency characteristics as of the Closing Date;
provided, that the foregoing does not prevent the Master Servicer from
initiating foreclosure proceedings on any date hereafter if the facts and
circumstances of such Mortgage Loans including delinquency characteristics in
the Master Servicer's discretion so warrant such action.
Section 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Master Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Master Servicer will promptly
notify the Trustee by delivering a Request for Release substantially in the form
of Exhibit N. Upon receipt of such request, the Trustee shall promptly release
the related Mortgage File to the Master Servicer, and the Trustee shall at the
Master Servicer's direction execute and deliver to the Master Servicer the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage in each case
provided by the Master Servicer, together with the Mortgage Note with written
evidence of cancellation thereon. No expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Certificate Account, the Distribution Account, the Adjustable Rate Carryover
Reserve Fund or the related subservicing account. From time to time and as shall
be appropriate for the servicing or foreclosure of any Mortgage Loan, including
for such purpose, collection under any policy of flood insurance any fidelity
bond or errors or omissions policy, or for the purposes of effecting a partial
release of any Mortgaged Property from the lien of
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the Mortgage or the making of any corrections to the Mortgage Note or the
Mortgage or any of the other documents included in the Mortgage File, the
Trustee shall, upon delivery to the Trustee of a Request for Release in the form
of Exhibit M signed by a Servicing Officer, release the Mortgage File to the
Master Servicer. Subject to the further limitations set forth below, the Master
Servicer shall cause the Mortgage File or documents so released to be returned
to the Trustee when the need therefor by the Master Servicer no longer exists,
unless the Mortgage Loan is liquidated and the proceeds thereof are deposited in
the Certificate Account, in which case the Trustee shall deliver the Request for
Release to the Master Servicer.
If the Master Servicer at any time seeks to initiate a
foreclosure proceeding in respect of any Mortgaged Property as authorized by
this Agreement, the Master Servicer shall deliver or cause to be delivered to
the Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity. Notwithstanding the foregoing, the
Master Servicer shall cause possession of any Mortgage File or of the documents
therein that shall have been released by the Trustee to be returned to the
Trustee within 21 calendar days after possession thereof shall have been
released by the Trustee unless (i) the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Certificate Account, and the Master Servicer shall have delivered to the Trustee
a Request for Release in the form of Exhibit N or (ii) the Mortgage File or
document shall have been delivered to an attorney or to a public trustee or
other public official as required by law for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure of the Mortgaged Property
and the Master Servicer shall have delivered to the Trustee an Officer's
Certificate of a Servicing Officer certifying as to the name and address of the
Person to which the Mortgage File or the documents therein were delivered and
the purpose or purposes of such delivery.
Section 3.14. Documents, Records and Funds in Possession of
Master Servicer to be Held for the Trustee.
Notwithstanding any other provisions of this Agreement, the
Master Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully to
the Trustee for any funds received by the Master Servicer or that otherwise are
collected by the Master Servicer as Liquidation Proceeds or Insurance Proceeds
in respect of any Mortgage Loan. All Mortgage Files and funds collected or held
by, or under the control of, the Master Servicer in respect of any Mortgage
Loans, whether from the collection of principal and interest payments or from
Liquidation Proceeds, including but not limited to, any funds on deposit in the
Certificate Account, shall be held by the Master Servicer for and on behalf of
the Trustee and shall be and remain the sole and exclusive property of the
Trustee, subject to the applicable provisions of this Agreement. The Master
Servicer also agrees that it shall not create, incur or subject any Mortgage
File or any funds that are deposited in the Certificate Account, Distribution
Account or Adjustable Rate Carryover Reserve Fund or in any Escrow Account (as
defined in Section 3.06), or any funds that otherwise are or may become due or
payable to the Trustee for the benefit of the Certificateholders, to any claim,
lien, security interest, judgment, levy, writ of attachment or other
encumbrance, or assert by legal action or otherwise any claim or right of set
off against any Mortgage File or any funds collected on, or in connection with,
a Mortgage Loan, except,
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however, that the Master Servicer shall be entitled to set off against and
deduct from any such funds any amounts that are properly due and payable to the
Master Servicer under this Agreement.
Section 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Master
Servicer shall be entitled to retain or withdraw from the Certificate Account
out of each payment of interest on a Mortgage Loan included in the Trust Fund an
amount equal to interest at the applicable Servicing Fee Rate on the Stated
Principal Balance of the related Mortgage Loan for the period covered by such
interest payment.
Additional servicing compensation in the form of any Excess
Proceeds, assumption fees, late payment charges, Prepayment Interest Excess, and
all income and gain net of any losses realized from Permitted Investments shall
be retained by the Master Servicer to the extent not required to be deposited in
the Certificate Account pursuant to Section 3.05 or 3.12(a) hereof. The Master
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (including payment of any premiums for hazard
insurance, as required by Section 3.10 hereof and maintenance of the other forms
of insurance coverage required by Section 3.10 hereof) and shall not be entitled
to reimbursement therefor except as specifically provided in Sections 3.08 and
3.12 hereof.
Section 3.16. Access to Certain Documentation.
The Master Servicer shall provide to the OTS and the FDIC and
to comparable regulatory authorities supervising Holders of the Certificates and
the examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the Mortgage Loans required
by applicable regulations of the OTS and the FDIC. Such access shall be afforded
without charge, but only upon reasonable and prior written request and during
normal business hours at the offices of the Master Servicer designated by it.
Nothing in this Section shall limit the obligation of the Master Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Master Servicer to provide access as provided
in this Section as a result of such obligation shall not constitute a breach of
this Section.
Section 3.17. Annual Statement as to Compliance.
The Master Servicer shall deliver to the Depositor and the
Trustee on or before August 31 of each year commencing August 31, 2000, an
Officer's Certificate stating, as to the signer thereof, that (i) a review of
the activities of the Master Servicer during the preceding calendar year and of
the performance of the Master Servicer under this Agreement has been made under
such officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Master Servicer has fulfilled all its obligations
under this Agreement throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof and (iii) to the best of such
officer's knowledge, each Subservicer has fulfilled all its obligations under
its Subservicing Agreement throughout such year, or, if there has been a default
in the fulfillment of any such obligation specifying each such default known to
such officer and the nature and status thereof. The Trustee shall forward a copy
of each such statement to each Rating Agency. Copies of such statement shall be
provided by the Trustee to
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any Certificateholder upon request at the Master Servicer's expense, provided
such statement is delivered by the Master Servicer to the Trustee.
Section 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before August 31 of each year, beginning with August 31,
2000, the Master Servicer at its expense shall cause a nationally recognized
firm of independent public accountants (who may also render other services to
the Master Servicer, the Seller or any affiliate thereof) that is a member of
the American Institute of Certified Public Accountants to furnish a report to
the Trustee, Depositor and the Seller in compliance with the Uniform Single
Attestation Program for Mortgage Bankers. Copies of such report shall be
provided by the Trustee to any Certificateholder upon request at the Master
Servicer's expense, provided such report is delivered by the Master Servicer to
the Trustee.
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ARTICLE IV.
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
Section 4.01. Advances.
Subject to the conditions of this Article IV, the Master
Servicer, as required below, shall make an Advance and deposit such Advance in
the Certificate Account. Each such Advance shall be remitted to the Certificate
Account no later than 1:00 p.m. Pacific time on the Master Servicer Advance Date
in immediately available funds. The Master Servicer shall be obligated to make
any such Advance only to the extent that such advance would not be a
Nonrecoverable Advance. If the Master Servicer shall have determined that it has
made a Nonrecoverable Advance or that a proposed Advance or a lesser portion of
such Advance would constitute a Nonrecoverable Advance, the Master Servicer
shall deliver (i) to the Trustee for the benefit of the Certificateholders funds
constituting the remaining portion of such Advance, if applicable, and (ii) to
the Depositor, each Rating Agency and the Trustee an Officer's Certificate
setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its
own funds, the Master Servicer may (i) cause to be made an appropriate entry in
its records relating to the Certificate Account that any Amount Held for Future
Distributions has been used by the Master Servicer in discharge of its
obligation to make any such Advance and (ii) transfer such funds from the
Certificate Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Master Servicer by deposit in the
Certificate Account no later than the close of business on the Business Day
immediately preceding the Distribution Date on which such funds are required to
be distributed pursuant to this Agreement. The Master Servicer shall be entitled
to be reimbursed from the Certificate Account for all Advances of its own funds
made pursuant to this Section as provided in Section 3.08. The obligation to
make Advances with respect to any Mortgage Loan shall continue until such
Mortgage Loan is paid in full or the related Mortgaged Property or related REO
Property has been liquidated or until the purchase or repurchase thereof (or
substitution therefor) from the Trust Fund pursuant to any applicable provision
of this Agreement, except as otherwise provided in this Section 4.01.
Section 4.02. Reduction of Servicing Compensation in
Connection with Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a
Prepayment Interest Shortfall arising from a voluntary Principal Prepayment in
full by the Mortgagor, the Master Servicer shall, to the extent of the Servicing
Fee for such Distribution Date, deposit into the Certificate Account, as a
reduction of the Servicing Fee for such Distribution Date, no later than the
close of business on the Business Day immediately preceding such Distribution
Date, an amount equal to the Prepayment Interest Shortfall; and in case of such
deposit, the Master Servicer shall not be entitled to any recovery or
reimbursement from the Depositor, the Trustee, the Trust Fund or the
Certificateholders.
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Section 4.03. REMIC Distributions.
On each Distribution Date the Trustee shall allocate
distributions to the REMIC 1F Regular Interests, the REMIC 1V Regular Interests,
and the REMIC 2 Regular Interests, in accordance with Section 4.06 hereof.
Section 4.04. Distributions.
(a) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Net Fixed Rate Interest Funds in the following order of priority (unless
otherwise specified):
(i) to each Class of the Fixed Rate Class A Certificates,
the Fixed Rate Class A Current Interest and any Fixed Rate Class A
Interest Carryforward Amount; provided that if the Net Fixed Rate
Interest Funds are not sufficient to make a full distribution of all
Fixed Rate Class A Current Interest and any Fixed Rate Class A Interest
Carryforward Amount for all Classes of Fixed Rate Class A Certificates,
the Net Fixed Rate Interest Funds will be distributed pro rata among
each Class of the Fixed Rate Class A Certificates based on the ratio of
(x) the Fixed Rate Class A Current Interest and any Fixed Rate Class A
Interest Carryforward Amount for such Class of the Fixed Rate Class A
Certificates to (y) the total amount of Fixed Rate Class A Current
Interest and any Fixed Rate Class A Interest Carryforward Amount for
all Classes of Fixed Rate Class A Certificates;
(ii) to the Class MF-1 Certificates, the Class MF-1 Current
Interest;
(iii) to the Class MF-2 Certificates, the Class MF-2 Current
Interest;
(iv) to the Class BF Certificates, the Class BF Current
Interest; and
(v) any remainder shall constitute part of the Fixed Rate
Excess Cashflow for such Distribution Date.
(b) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Net Adjustable Rate Interest Funds in the following order of priority:
(i) to each Class of the Adjustable Rate Class A
Certificates, the Adjustable Rate Class A Current Interest and any
Adjustable Rate Class A Interest Carryforward Amount; provided that if
the Net Adjustable Rate Interest Funds are not sufficient to make a
full distribution of all Adjustable Rate Class A Current Interest and
any Adjustable Rate Class A Interest Carryforward Amount for all
Classes of Adjustable Rate Class A Certificates, the Net Adjustable
Rate Interest Funds will be distributed pro rata among each Class of
the Adjustable Rate Class A Certificates based on the ratio of (x) the
Adjustable Rate Class A Current Interest and any Adjustable Rate Class
A Interest Carryforward Amount for such Class of the Adjustable Rate
Class A Certificates to (y) the total amount of Adjustable Rate Class A
Current Interest and any Adjustable Rate Class A Interest Carryforward
Amount for all Classes of Adjustable Rate Class A Certificates;
(ii) to the Class MV-1 Certificates, the Class MV-1 Current
Interest;
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(iii) to the Class MV-2 Certificates, the Class MV-2 Current
Interest;
(iv) to the Class BV Certificates, the Class BV Current
Interest; and
(v) any remainder shall constitute part of the Adjustable
Rate Excess Cashflow for such Distribution Date.
(c) On each Distribution Date, the Trustee shall make the
following allocation from the Distribution Account of an amount equal to the
Fixed Rate Principal Distribution Amount in the following order of priority:
(A) For each Distribution Date prior to the Fixed Rate
Stepdown Date or on which a Fixed Rate Trigger Event is in effect:
(i) to the Fixed Rate Class A Certificates, until the
Certificate Principal Balances thereof are reduced to zero, as provided
in Section 4.04(d);
(ii) to the Class MF-1 Certificates, until the Certificate
Principal Balance thereof is reduced to zero;
(iii) to the Class MF-2 Certificates, until the Certificate
Principal Balance thereof is reduced to zero;
(iv) to the Class BF Certificates, until the Certificate
Principal Balance thereof is reduced to zero; and
(v) any remainder shall constitute part of the Fixed Rate
Excess Cashflow for such Distribution Date.
(B) For each Distribution Date on or after the Fixed Rate
Stepdown Date and so long as a Fixed Rate Trigger Event is not in
effect:
(i) to the Fixed Rate Class A Certificates, the Fixed Rate
Class A Principal Distribution Amount to be distributed in the priority
and as provided in Section 4.04(d);
(ii) to the Class MF-1 Certificates, the Class MF-1
Principal Distribution Amount;
(iii) to the Class MF-2 Certificates, the Class MF-2
Principal Distribution Amount;
(iv) to the Class BF Certificates, the Class BF Principal
Distribution Amount; and
(v) any remainder shall constitute part of the Fixed Rate
Excess Cashflow for such Distribution Date.
(d) On each Distribution Date, the Fixed Rate Principal
Distribution Amount or the Fixed Rate Class A Principal Distribution Amount, as
applicable, allocated under Section 4.04(c) to the Fixed Rate Class A
Certificates is required to be further allocated by the Trustee concurrently
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to the Class AF-1 Certificates and the Class AF-2 Certificates pro rata on the
basis of their respective Certificate Principal Balances.
(e) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Adjustable Rate Principal Distribution Amount in the following order of
priority:
(A) For each Distribution Date prior to the Adjustable Rate
Stepdown Date or on which an Adjustable Rate Trigger Event is in
effect:
(i) to the Adjustable Rate Class A Certificates, until the
Certificate Principal Balances thereof are reduced to zero, as provided
in Section 4.04(e)(C) below;
(ii) to the Class MV-1 Certificates, until the Certificate
Principal Balance thereof is reduced to zero;
(iii) to the Class MV-2 Certificates, until the Certificate
Principal Balance thereof is reduced to zero;
(iv) to the Class BV Certificates, until the Certificate
Principal Balance thereof is reduced to zero; and
(v) any remainder shall constitute part of the Adjustable
Rate Excess Cashflow for such Distribution Date.
(B) For each Distribution Date on or after the Adjustable
Rate Stepdown Date and so long as an Adjustable Rate Trigger Event is
not in effect:
(i) to the Class AV-1 Certificates, the Adjustable Rate
Class A Principal Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1
Principal Distribution Amount;
(iii) to the Class MV-2 Certificates, the Class MV-2
Principal Distribution Amount;
(iv) to the Class BV Certificates, the Class BV Principal
Distribution Amount; and
(v) any remainder shall constitute part of the
Adjustable Rate Excess Cashflow for such Distribution Date.
(C) On each Distribution Date, the Adjustable Rate
Principal Distribution Amount or the Adjustable Rate Class A Principal
Distribution Amount, as applicable, allocated under Section 4.04(e)(A)
or (B) to the Adjustable Rate Class A Certificates is required to be
further allocated by the Trustee concurrently to the Class AV-1
Certificates and the Class AV-2 Certificates based on their respective
Principal Percentages until the Certificate Principal Balance of
either such Class is reduced to zero and thereafter solely to
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the remaining Class of Adjustable Rate Class A Certificates until the
Certificate Principal Balance thereof is reduced to zero.
(f) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of, first, the Fixed Rate
Excess Cashflow and, second, of the Adjustable Rate Remainder Excess Cashflow,
in the following order of priority:
(i) for distribution as part of the Fixed Rate Principal
Distribution Amount, the Fixed Rate Extra Principal Distribution
Amount;
(ii) to the Class MF-1 Certificates, the Class MF-1 Interest
Carryforward Amount;
(iii) to the Class MF-1 Certificates, the Class MF-1 Unpaid
Realized Loss Amount;
(iv) to the Class MF-2 Certificates, the Class MF-2 Interest
Carryforward Amount;
(v) to the Class MF-2 Certificates, the Class MF-2 Unpaid
Realized Loss Amount;
(vi) to the Class BF Certificates, the Class BF Interest
Carryforward Amount;
(vii) to the Class BF Certificates, the Class BF Unpaid
Realized Loss Amount; and
(viii) the remainder (except for amounts representing
Adjustable Rate Remainder Excess Cashflow) shall constitute Fixed Rate
Remainder Excess Cashflow and shall be allocated as provided in Section
4.04(g).
(g) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of, first, the Adjustable
Rate Excess Cashflow and, second, of the Fixed Rate Remainder Excess Cashflow,
in the following order of priority:
(i) for distribution as part of the Adjustable Rate
Principal Distribution Amount, the Adjustable Rate Extra Principal
Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1
Interest Carryforward Amount;
(iii) to the Class MV-1 Certificates, the Class MV-1 Unpaid
Realized Loss Amount;
(iv) to the Class MV-2 Certificates, the Class MV-2 Interest
Carryforward Amount;
(v) to the Class MV-2 Certificates, the Class MV-2 Unpaid
Realized Loss Amount;
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(vi) to the Class BV Certificates, the Class BV Interest
Carryforward Amount;
(vii) to the Class BV Certificates, the Class BV Unpaid
Realized Loss Amount; and
(viii) the remainder (except for amounts representing Fixed
Rate Remainder Excess Cashflow) shall constitute Adjustable Rate
Remainder Excess Cashflow and shall be allocated as provided in Section
4.04(f).
(h) On each Distribution Date the Trustee shall make the
following allocations from the Distribution Account of the Fixed Rate Remainder
Excess Cashflow in the following order of priority:
(i) for allocation pursuant to Section 4.04(g);
(ii) to the Class BF-IO Certificates, the unpaid Class BF-IO
Distributable Amount;
(iii) to the Class BV-IO Certificates, the unpaid Class BV-IO
Remainder Amount; and
(iv) any remainder to the Class R Certificates; provided,
however, that if such Distribution Date is the Distribution Date
immediately following the expiration of the latest Prepayment Charge
term for a Fixed Rate Mortgage Loan or any Distribution Date
thereafter, then any such remaining amounts will be distributed first
to the Class PF Certificates, until the Certificate Principal Balance
thereof is reduced to zero and second to the Class R Certificates.
(i) On each Distribution Date the Trustee shall make the
following allocations from the Distribution Account of the Adjustable Rate
Remainder Excess Cashflow in the following order of priority:
(i) for allocation pursuant to Section 4.04(f);
(ii) to the Adjustable Rate Carryover Reserve Fund and then
pro rata to the holders of the Adjustable Rate Certificates in an
amount equal to any Adjustable Rate Certificate Carryover for such
Class;
(iii) to the Adjustable Rate Carryover Reserve Fund, an
amount equal to the Required Adjustable Rate Carryover Reserve Fund
Deposit;
(iv) to the Class BV-IO Certificates, the unpaid Class BV-IO
Distributable Amount; together with any amounts withdrawn from the
Adjustable Rate Carryover Reserve Fund for distribution to the Class
BV-IO Certificates pursuant to Section 4.08(c) and (d) on such date;
(v) to the Class BF-IO Certificates, the unpaid Class BF-IO
Remainder Amount;
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(vi) any remainder to the Class R Certificates; provided,
however, that if such Distribution Date is the Distribution Date
immediately following the expiration of the latest Prepayment Charge
term for an Adjustable Rate Mortgage Loan or any Distribution Date
thereafter, then any such remaining amounts will be distributed first
to the Class PV Certificates, until the Certificate Principal Balance
thereof is reduced to zero and second to the Class R Certificates.
(j) [reserved]
(k) To the extent that a Class of Adjustable Rate
Certificates receives interest in excess of the Maximum Rate Cap, such interest
shall be treated as having been paid to the Adjustable Rate Carryover Reserve
Fund and then paid by the Adjustable Rate Carryover Reserve Fund to such
Certificateholders. Amounts deposited to the Adjustable Rate Carryover Reserve
Fund pursuant to this clause and the preceding clauses (i)(ii) and (iii) shall
be deemed to have been distributed first to the Class BV-IO Certificateholders
for applicable tax purposes.
(l) On each Distribution Date, the Trustee shall allocate
the Applied Realized Loss Amount for the Fixed Rate Certificates to reduce the
Certificate Principal Balances of the Fixed Rate Subordinated Certificates in
the following order of priority:
(i) to the Class BF Certificates until the Class BF
Certificate Principal Balance is reduced to zero;
(ii) to the Class MF-2 Certificates until the Class MF-2
Certificate Principal Balance is reduced to zero; and
(iii) to the Class MF-1 Certificates until the Class MF-1
Certificate Principal Balance is reduced to zero.
(m) On each Distribution Date, the Trustee shall allocate
the Applied Realized Loss Amount for the Adjustable Rate Certificates to reduce
the Certificate Principal Balances of the Adjustable Rate Subordinated
Certificates in the following order of priority:
(i) to the Class BV Certificates until the Class BV
Certificate Principal Balance is reduced to zero;
(ii) to the Class MV-2 Certificates until the Class MV-2
Certificate Principal Balance is reduced to zero; and
(iii) to the Class MV-1 Certificates until the Class MV-1
Certificate Principal Balance is reduced to zero.
(n) On each Distribution Date, the Trustee shall
distribute to the Holders of each Class of Class P Certificates, the Prepayment
Charges on deposit on the Distribution Account and attributable to the related
Loan Group.
(o) Subject to Section 9.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either by wire
transfer in immediately available funds to the account of such
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holder at a bank or other entity having appropriate facilities therefor, if (i)
such Holder has so notified the Trustee at least 5 Business Days prior to the
related Record Date and (ii) such Holder shall hold Regular Certificates with
aggregate principal denominations of not less than $1,000,000 or evidencing a
Percentage Interest aggregating 10% or more with respect to such Class or, if
not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.
On or before 5:00 p.m. Pacific time on the 18th day of each
month or, if such 18th day is not a Business Day, on the next preceding Business
Day, the Master Servicer shall deliver a report to the Trustee in the form of a
computer readable magnetic tape (or by such other means as the Master Servicer
and the Trustee may agree from time to time) containing such data and
information as agreed to by the Master Servicer and the Trustee such as to
permit the Trustee to prepare the Monthly Statement to Certificateholders and
make the required distributions for the related Distribution Date (the
"Remittance Report"). The Trustee shall, provide to the Master Servicer a
monthly Statement of the account activity in the Distribution Account by the
15th day of the month following the Distribution Date.
Section 4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee
shall prepare and cause to be forwarded by first class mail to each Holder of a
Class of Certificates of the Trust Fund, the Master Servicer and the Depositor a
statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of
each Class allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein, (B) the
aggregate of all scheduled payments of principal included therein and
(C) the Fixed Rate Extra Principal Distribution Amount (if any) and the
Adjustable Rate Extra Principal Distribution Amount (if any);
(ii) the amount of such distribution to Holders of each
Class allocable to interest;
(iii) the Class Certificate Principal Balance of each Class
after giving effect (i) to all distributions allocable to principal on
such Distribution Date and (ii) the allocation of any Applied Realized
Loss Amounts for such Distribution Date;
(iv) the aggregate of the Stated Principal Balance of the
Mortgage Loans for each Loan Group for the following Distribution Date;
(v) the related amount of the Servicing Fees paid to or
retained by the Master Servicer;
(vi) the Pass-Through Rate for each Class of Certificates
with respect to the current Accrual Period;
(vii) any interest carryforward amount for each such Class;
(viii) [reserved];
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(ix) the amount of Advances for each Certificate Group
included in the distribution on such Distribution Date;
(x) the cumulative amount of Applied Realized Loss Amounts
for each Certificate Group to date;
(xi) the number and aggregate principal amounts of Mortgage
Loans in each Loan Group (A) delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 30 to 59 days, (2) 60 to 89 days, (3) 90 or more days
and (4) in bankruptcy, and (B) in foreclosure and delinquent (1) 30 to
59 days, (2) 60 to 89 days, (3) 90 or more days and (4) in bankruptcy,
in each case as of the close of business on the last day of the
calendar month preceding such Distribution Date;
(xii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month in each Loan Group, the
loan number and Stated Principal Balance of such Mortgage Loan as of
the close of business on the Determination Date preceding such
Distribution Date and the date of acquisition thereof;
(xiii) the total number and principal balance of any REO
Properties in each Loan Group as of the close of business on the
Determination Date preceding such Distribution Date;
(xiv) the Stated Principal Balance of all Liquidated Loans in
each Loan Group and the cumulative Realized Losses for each Loan Group
through the end of the preceding month;
(xv) with respect to any Liquidated Loan in each Loan Group,
the loan number and Stated Principal Balance relating thereto;
(xvi) with respect to each Loan Group, whether a Trigger
Event has occurred; and
(xvii) any Adjustable Rate Certificate Carryover paid and any
remaining Adjustable Rate Certificate Carryover remaining on each Class
of Adjustable Rate Certificates on such Distribution Date.
(b) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability, timeliness
and accuracy of the information derived from the Master Servicer. The Trustee
will send a copy of each statement provided pursuant to this Section 4.05 to
each Rating Agency.
(c) Within a reasonable period of time after the end of
each calendar year, the Trustee shall cause to be furnished to each Person who
at any time during the calendar year was a Certificateholder, a statement
containing the information set forth in clauses (a)(i), (a)(ii) and (a)(vi) of
this Section 4.05 aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in effect.
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(d) Upon filing with the Internal Revenue Service, the
Trustee shall furnish to the Holders of the Class R Certificates the Form 1066
and each Form 1066Q and shall respond promptly to written requests made not more
frequently than quarterly by any Holder of Class R Certificates with respect to
the following matters:
(i) The original projected principal and interest cash
flows on the Closing Date on each Class of regular and residual
interests created hereunder and on the Mortgage Loans, based on the
Prepayment Assumption;
(ii) The projected remaining principal and interest cash
flows as of the end of any calendar quarter with respect to each Class
of regular and residual interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
(iii) The applicable Prepayment Assumption and any interest
rate assumptions used in determining the projected principal and
interest cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each Class of
regular or residual interests created hereunder and to the Mortgage
Loans, together with each constant yield to maturity used in computing
the same;
(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of the
REMIC with respect to such regular interests or bad debt deductions
claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of
the REMIC; and
(vii) Any taxes (including penalties and interest) imposed on
the REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv)
above shall be provided by the Depositor pursuant to Section 8.11.
Section 4.06. REMIC 1F, REMIC 1V and REMIC 2 Allocations.
(a) The initial principal balances of each of the
Adjustable Rate Markers shall equal 1% of the initial Certificate Principal
Balances of the Class AF-1, Class AF-2, Class MF-1, Class MF-2 and Class BF
Certificates (their "corresponding classes"). The initial principal balance of
the Class MF Interest shall equal the Stated Principal Balance of the Fixed Rate
Mortgage Loans as of the Cut-off Date minus the initial principal balances of
the Fixed Rate Markers. On each Distribution Date, 99% of all Fixed Rate
Principal Funds (100% of Fixed Rate Excess Subordination Amounts) for the
related Due Period shall be allocated to the Class MF Interest. Remaining
amounts of Fixed Rate Principal Funds for the related Due Period shall be
allocated to the Fixed Rate Markers in the same proportion as the Fixed Rate
Principal Funds are allocated to their corresponding classes. Interest accruing
on the Class MF Interest in respect of each Distribution Date in an amount equal
to
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1% of the amounts distributed to the Fixed Rate Certificates pursuant to
Sections 4.04(f) and 4.04(g) (the "Fixed Rate Turbo") shall be deferred and
added to the principal balance of the Class MF Interest. The amount of interest
accrued and deferred on the Class MF Interest in accordance with the preceding
sentence in respect of each Distribution Date shall be distributed as principal
on such date to the Fixed Rate Markers in the same proportion that such Fixed
Rate Turbo is paid to their corresponding classes.
(b) On each Distribution Date, Realized Losses with
respect to the Fixed Rate Mortgage Loans for such date shall be allocated 99% to
the Class MF Interest. The remaining 1% of such Realized Losses shall be
allocated to the Fixed Rate Markers so that the Fixed Rate Markers have
principal balances equal to 1% of the respective principal balances of their
corresponding classes.
(c) The initial principal balances of each Class of
Adjustable Rate Markers shall equal 1% of the initial Certificate Principal
Balances of the Class AV-1, Class AV-2, Class MV-1, Class MV-2 and Class BV
Certificates (their "corresponding classes"). The initial principal balance of
the Class MV Interest shall equal the Stated Principal Balance of the Adjustable
Rate Mortgage Loans as of the Cut-off Date minus the initial principal balances
of the Adjustable Rate Markers. On each Distribution Date, 99% of all Adjustable
Rate Principal Funds (100% of Adjustable Rate Excess Subordination Amounts) for
the related Due Period shall be allocated to the Class MV Interest. Remaining
amounts of Adjustable Rate Principal Funds for the related Due Period shall be
allocated to the Adjustable Rate Markers in the same proportion as the
Adjustable Rate Principal Funds are allocated to their corresponding classes.
Interest accruing on the Class MV Interest in respect of each Distribution Date
in an amount equal to 1% of the amounts distributed to the Adjustable Rate
Certificates pursuant to Sections 4.04(f) and 4.04(g) (the "Adjustable Rate
Turbo") shall be deferred and added to the principal balance of the Class MV
Interest. The amount of interest accrued and deferred on the Class MV Interest
in accordance with the preceding sentence in respect of each Distribution Date
shall be distributed as principal on such date to the Adjustable Rate Markers in
the same proportion that such Adjustable Rate Turbo is paid to their
corresponding classes.
(d) On each Distribution Date, Realized Losses with
respect to the Adjustable Rate Mortgage Loans for such date shall be allocated
99% to the Class MV Interest. The remaining 1% of such Realized Losses shall be
allocated to the Adjustable Rate Markers so that the Adjustable Rate Markers
have principal balances equal to 1% of the respective principal balances of
their corresponding classes.
Section 4.07. Reserved.
Section 4.08. Adjustable Rate Carryover Reserve Fund.
(a) On the Closing Date, the Trustee shall establish and
maintain in its name, in trust for the benefit of the Holders of the Adjustable
Rate Certificates, the Adjustable Rate Carryover Reserve Fund. The Adjustable
Rate Carryover Reserve Fund shall be an Eligible Account, and funds on deposit
therein shall be held separate and apart from, and shall not be commingled with,
any other moneys, including without limitation, other moneys held by the Trustee
pursuant to this Agreement.
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(b) On each Distribution Date on which the Net Excess
Spread is less than 0.25%, the Trustee shall transfer from the Distribution
Account to the Adjustable Rate Carryover Reserve Fund pursuant to Sections
4.04(i)(ii) the Required Adjustable Rate Carryover Reserve Fund Deposit.
(c) The Trustee shall make withdrawals from the
Adjustable Rate Carryover Reserve Fund to make distributions pursuant to Section
4.04(i) hereof, and shall withdraw from the Adjustable Rate Carryover Reserve
Fund on any Distribution Date on which the Net Excess Spread is equal to or
greater than 0.25% an amount equal to the amount of funds on deposit in the
Adjustable Rate Carryover Reserve Fund in excess of $10,000 and distribute such
excess to the Class BV-IO Certificateholders pro rata in accordance with their
respective Percentage Interests. Funds withdrawn from the Adjustable Rate
Carryover Reserve Fund may not be applied pursuant to any other subsection of
Section 4.04 other than as expressly provided for in this Section 4.08(c).
(d) Funds in the Adjustable Rate Carryover Reserve Fund
may be invested in Permitted Investments. Any earnings on such amounts shall be
payable to the Class BV-IO Certificates. The Class BV-IO Certificates shall
evidence ownership of the Adjustable Rate Carryover Reserve Fund for federal tax
purposes and shall direct the Trustee in writing as to the investment of amounts
therein.
(e) Upon termination of the Trust Fund, any amounts
remaining in the Adjustable Rate Carryover Reserve Fund shall be distributed to
the Holders of the Class BV-IO Certificates in the same manner as if distributed
pursuant to Section 4.04(i) hereof.
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ARTICLE V.
THE CERTIFICATES
Section 5.01. The Certificates.
The Certificates shall be substantially in the forms attached
hereto as exhibits. The Certificates shall be issuable in registered form, in
the minimum dollar denominations, integral dollar multiples in excess thereof
(except that one Certificate of each Class may be issued in a different amount
which must be in excess of the applicable minimum dollar denomination) and
aggregate dollar denominations as set forth in the following table:
Class Minimum Integral Original
Denomination Multiples Certificate
in Excess of Principal
Minimum Balance
------------------ ---------------------- -------------------------------- --------------------------------
AF-1 $25,000 $1,000 $80,584,000
AF-2 $25,000 $1,000 $30,000,000
MF-1 $25,000 $1,000 $7,417,000
MF-2 $25,000 $1,000 $6,743,000
BF $25,000 $1,000 $7,754,000
PF $100 NA $100
BF-IO N/A N/A N/A
AV-1 $25,000 $1,000 $49,598,000
AV-2 $25,000 $1,000 $12,258,000
MV-1 $25,000 $1,000 $6,426,000
MV-2 $25,000 $1,000 $5,021,000
BV $25,000 $1,000 $6,025,000
PV $100 NA $100
BV-IO N/A N/A N/A
R-1 0.001% N/A N/A
R-2 99.999% N/A N/A
The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures were affixed, authorized to sign on behalf of the Trustee
shall bind the Trustee, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form set forth in the
Exhibits attached hereto executed by the Trustee by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication. On the Closing Date, the Trustee shall authenticate the
Certificates to be issued at the written direction of the Depositor, or any
affiliate thereof.
The Depositor shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
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Section 5.02. Certificate Register; Registration of Transfer
and Exchange of Certificates.
(a) The Trustee shall maintain, or cause to be maintained
in accordance with the provisions of Section 5.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to the Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for
any registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by the Trustee in
accordance with the Trustee's customary procedures.
(b) No Transfer of a Class P, Class B-IO or Class R
Certificate shall be made unless such Transfer is made pursuant to an effective
registration statement under the Securities Act and any applicable state
securities laws or is exempt from the registration requirements under the
Securities Act and such state securities laws. In the event that a Transfer is
to be made in reliance upon an exemption from the Securities Act and such laws,
in order to assure compliance with the Securities Act and such laws, the
Certificateholder desiring to effect such Transfer and such Certificateholder's
prospective transferee shall each certify to the Trustee in writing the facts
surrounding the Transfer in substantially the forms set forth in Exhibit J (the
"Transferor Certificate") and (x) deliver a letter in substantially the form of
either Exhibit K (the "Investment Letter") or Exhibit L (the "Rule 144A Letter")
or (y) there shall be delivered to the Trustee an Opinion of Counsel that such
Transfer may be made pursuant to an exemption from the Securities Act, which
Opinion of Counsel shall not be an expense of the Depositor, the Seller, the
Master Servicer or the Trustee. The Depositor shall provide to any Holder of a
Class P, Class B-IO or Class R Certificate and any prospective transferee
designated by any such Holder, information regarding the related Certificates
and the Mortgage Loans and such other information as shall be necessary to
satisfy the condition to eligibility set forth in Rule 144A(d)(4) for Transfer
of any such Certificate without registration thereof under the Securities Act
pursuant to the registration exemption provided by Rule 144A. The Trustee and
the Master Servicer shall cooperate with the Depositor in providing the Rule
144A information referenced in the preceding sentence, including providing to
the Depositor such information regarding the Certificates, the Mortgage Loans
and other
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matters regarding the Trust Fund as the Depositor shall reasonably request
to meet its obligation under the preceding sentence. Each Holder of a
Class P, Class B-IO or Class R Certificate desiring to effect such Transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Seller and the Master Servicer against any liability that may result if the
Transfer is not so exempt or is not made in accordance with such federal and
state laws.
No Transfer of an ERISA Restricted Certificate shall be made
unless the Trustee shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code, or a Person acting on behalf of any such plan or using
the assets of any such plan, (ii) except in the case of the Class P, Class B-IO
Certificates and Class R Certificates, if such purchaser is an insurance
company, a representation that the purchaser is an insurance company that is
purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under Sections I and III of PTCE 95-60,
or (iii) in the case of any such ERISA Restricted Certificate presented for
registration in the name of an employee benefit plan subject to ERISA, or a plan
subject to Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan, an Opinion of Counsel satisfactory to the Trustee and the
Master Servicer to the effect that the purchase or holding of such ERISA
Restricted Certificate will not result in the assets of the Trust Fund being
deemed to be "plan assets" and subject to the prohibited transaction provisions
of ERISA and the Code and will not subject the Trustee or the Master Servicer to
any obligation in addition to those expressly undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee or the Master
Servicer. For purposes of clause (i) of the preceding sentence, such
representation shall be deemed to have been made to the Trustee by the
transferee's acceptance of an ERISA Restricted Certificate (or the acceptance by
a Certificate Owner of the beneficial interest in any such Class of ERISA
Restricted Certificates) unless the Trustee shall have received from the
transferee an alternative representation acceptable in form and substance to the
Master Servicer and the Depositor. Notwithstanding anything else to the contrary
herein, any purported transfer of an ERISA Restricted Certificate to or on
behalf of an employee benefit plan subject to Section 406 of ERISA or a plan
subject to Section 4975 of the Code without the delivery to the Trustee and the
Master Servicer of an Opinion of Counsel satisfactory to the Trustee and the
Master Servicer as described above shall be void and of no effect; provided that
the restriction set forth in this sentence shall not be applicable if there has
been delivered to the Trustee and the Master Servicer an Opinion of Counsel
meeting the requirements of clause (iii) of the first sentence of this
paragraph. The Trustee shall be under no liability to any Person for any
registration of transfer of any ERISA Restricted Certificate that is in fact not
permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements. The
Trustee shall be entitled, but not obligated, to recover from any Holder of any
ERISA Restricted Certificate that was in fact an employee benefit plan subject
to Section 406 of ERISA or a plan subject to Section 4975 of the Code or a
Person acting on behalf of any such plan at the time it became a Holder or, at
such subsequent time as it became such a plan or Person acting on behalf of such
a plan, all payments made on such ERISA Restricted Certificate at and after
either such time. Any
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such payments so recovered by the Trustee shall be paid and delivered by
the Trustee to the last preceding Holder of such Certificate that is not such a
plan or Person acting on behalf of a plan.
(c) Each Person who has or who acquires any Ownership
Interest in a Class R Certificate (which for purposes of this Section 5.02
includes an interest in Class R-1V, Class R-1F or Class 2), shall be deemed by
the acceptance or acquisition of such Ownership Interest to have agreed to be
bound by the following provisions, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class R Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
owner or the proposed transferee in the form attached hereto as Exhibit
I.
(iii) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall agree (A) to obtain a Transfer Affidavit
from any other Person to whom such Person attempts to Transfer its
Ownership Interest in a Class R Certificate, (B) to obtain a Transfer
Affidavit from any Person for whom such Person is acting as nominee,
trustee or agent in connection with any Transfer of a Class R
Certificate and (C) not to Transfer its Ownership Interest in a Class R
Certificate or to cause the Transfer of an Ownership Interest in a
Class R Certificate to any other Person if it has actual knowledge that
such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Class R
Certificate. The Trustee shall be under no liability to any Person for
any registration of Transfer of a Class R Certificate that is in fact
not permitted by Section 5.02(b) and this Section 5.02(c) or for making
any payments due on such Certificate to the Holder thereof or taking
any other action with respect to such Holder under the provisions of
this Agreement so long as the Transfer was registered after receipt of
the related Transfer Affidavit, Transferor Certificate and either the
Rule 144A Letter or the Investment Letter. The Trustee shall be
entitled but not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at
and after either such time. Any such payments so recovered by the
Trustee shall be paid and delivered by the Trustee to the last
preceding Permitted Transferee of such Certificate.
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(v) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under Section 860E(e)
of the Code as a result of a Transfer of an Ownership Interest in a
Class R Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set
forth in this Section 5.02(c) shall cease to apply (and the applicable portions
of the legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trustee, the Seller or the Master
Servicer to the effect that the elimination of such restrictions will not cause
the Trust Fund to fail to qualify as a REMIC at any time that the Certificates
are outstanding or result in the imposition of any tax on the Trust Fund, a
Certificateholder or another Person. Each Person holding or acquiring any
ownership Interest in a Class R Certificate hereby consents to any amendment of
this Agreement that, based on an Opinion of Counsel furnished to the Trustee, is
reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Class R Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class R Certificate that is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
(d) The preparation and delivery of all certificates and
opinions referred to above in this Section 5.02 shall not be an expense of the
Trust Fund, the Trustee, the Depositor, the Seller or the Master Servicer.
Section 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.
If (a) any mutilated Certificate is surrendered to the
Trustee, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and of the ownership thereof and
(b) there is delivered to the Master Servicer and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee that such Certificate has been acquired by a
bona fide purchaser, the Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and Percentage Interest. In
connection with the issuance of any new Certificate under this Section 5.03, the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Any replacement Certificate issued pursuant to this Section 5.03 shall
constitute complete and indefeasible evidence of ownership in the Trust Fund, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time. All Certificates surrendered to the Trustee under
the terms of this Section 5.03 shall be canceled and destroyed by the Trustee in
accordance with its standard procedures without liability on its part.
Section 5.04. Persons Deemed Owners.
The Master Servicer, the Trustee and any agent of the Master
Servicer or the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Master Servicer, the Trustee nor any agent of the
Master Servicer or the Trustee shall be affected by any notice to the contrary.
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Section 5.05. Access to List of Certificateholders' Names
and Addresses.
If three or more Certificateholders (a) request such
information in writing from the Trustee, (b) state that such Certificateholders
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor or Master Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the Depositor, the Master Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Trust Fund held by the Trustee, if any. The Depositor
and every Certificateholder, by receiving and holding a Certificate, agree that
the Trustee shall not be held accountable by reason of the disclosure of any
such information as to the list of the Certificateholders hereunder, regardless
of the source from which such information was derived.
Section 5.06. Book-Entry Certificates.
The Regular Certificates (other than the Class P and Class
B-IO Certificates), upon original issuance, shall be issued in the form of one
or more typewritten Certificates representing the Book-Entry Certificates, to be
delivered to the Depository by or on behalf of the Depositor. Such Certificates
shall initially be registered on the Certificate Register in the name of the
Depository or its nominee, and no Certificate Owner of such Certificates will
receive a definitive certificate representing such Certificate Owner's interest
in such Certificates, except as provided in Section 5.08. Unless and until
definitive, fully registered Certificates ("Definitive Certificates") have been
issued to the Certificate Owners of such Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force
and effect;
(b) the Depositor, the Master Servicer and the Trustee
may deal with the Depository and the Depository Participants for all purposes
(including the making of distributions) as the authorized representative of the
respective Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of
such Certificates shall be exercised only through the Depository and the
Depository Participants and shall be limited to those established by law and
agreements between the Owners of such Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;
(e) the Depository may collect its usual and customary
fees, charges and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants; and
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(g) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the provisions of this
Section shall control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of any Class of Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite percentage
of principal amount of such Class of Certificates.
Section 5.07. Notices to Depository.
Whenever any notice or other communication is required to be
given to Certificateholders of the Class with respect to which Book-Entry
Certificates have been issued, unless and until Definitive Certificates shall
have been issued to the related Certificate Owners, the Trustee shall give all
such notices and communications to the Depository.
Section 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with
respect to any Certificates, (a) the Depositor or the Depository advises the
Trustee that the Depository is no longer willing or able to discharge properly
its responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an Event
of Default, Certificate Owners of such Book-Entry Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry Certificates
advise the Trustee and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Trustee shall notify all Certificate Owners of such Certificates, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners of such Class requesting the same.
The Depositor shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon surrender to the Trustee of any such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall authenticate and deliver such Definitive Certificates. Neither
the Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.
Section 5.09. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its
expense an office or offices or agency or agencies in New York City where
Certificates may be surrendered for registration of transfer or exchange. The
Trustee initially designates its offices at Bankers Trust
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Company, Four Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Bear Xxxxxxx
Asset Backed Securities, Inc., Series 1999-2, as offices for such purposes. The
Trustee will give prompt written notice to the Certificateholders of any change
in such location of any such office or agency.
ARTICLE VI.
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
Section 6.01. Respective Liabilities of the Depositor, the
Master Servicer and the Seller.
The Depositor, the Master Servicer and the Seller shall each
be liable in accordance herewith only to the extent of the obligations
specifically and respectively imposed upon and undertaken by them herein.
Section 6.02. Merger or Consolidation of the Depositor, the
Master Servicer or the Seller.
The Depositor, the Master Servicer and the Seller will each
keep in full effect its existence, rights and franchises as a corporation under
the laws of the United States or under the laws of one of the States thereof and
will each obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, or any
of the Mortgage Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor, the Master Servicer or
the Seller may be merged or consolidated, or any Person resulting from any
merger or consolidation to which the Depositor, the Master Servicer or the
Seller shall be a party, or any person succeeding to the business of the
Depositor, the Master Servicer or the Seller, shall be the successor of the
Depositor, the Master Servicer or the Seller, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided that the successor or surviving Person to the Master Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
FNMA or FHLMC.
Section 6.03. Limitation on Liability of the Depositor, the
Seller, the Master Servicer and others.
None of the Depositor, the Seller, the Master Servicer or any
of the directors, officers, employees or agents of the Depositor, the Seller or
the Master Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided that this provision shall not protect the Depositor, the Seller, the
Master Servicer or any such Person against any breach of representations or
warranties made by it herein or protect the Depositor, the Seller, the Master
Servicer or any such Person from any liability that would otherwise be imposed
by reasons of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor, the Seller, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Seller or the
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Master Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Seller, the Master Servicer and any director,
officer, employee or agent of the Depositor, the Seller or the Master Servicer
shall be indemnified by the Trust Fund and held harmless against any loss,
liability or expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority or any legal
action relating to this Agreement or the Certificates, other than any loss,
liability or expense related to any specific Mortgage Loan or Mortgage Loans
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties hereunder or by reason of reckless disregard of obligations and duties
hereunder. None of the Depositor, the Seller or the Master Servicer shall be
under any obligation to appear in, prosecute or defend any legal action that is
not incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided that any of the Depositor, the
Seller or the Master Servicer may, in its discretion undertake any such action
that it may deem necessary or desirable in respect of this Agreement and the
rights and duties of the parties hereto and interests of the Trustee and the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be, expenses, costs and
liabilities of the Trust Fund, and the Depositor, the Seller and the Master
Servicer shall be entitled to be reimbursed therefor out of the Certificate
Account as provided by Section 3.08 hereof.
Section 6.04. Limitation on Resignation of Master Servicer.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon (x) determination that its duties
hereunder are no longer permissible under applicable law or (y) compliance with
the following requirements: (i) the Master Servicer has proposed a successor to
the Trustee and the Trustee has consented thereto (such consent not to be
withheld unreasonably; (ii) the successor is qualified to sell mortgage loans
to, and to service mortgage loans on behalf of, FNMA or FHLMC; and (iii) each
Rating Agency shall have delivered to the Trustee written confirmation that the
appointment of such successor will not result in the qualification, reduction or
withdrawal of the then-current ratings assigned by such Rating Agency to any of
the Certificates. Any such determination permitting the resignation of the
Master Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee. No such resignation shall become effective until the
Trustee or a successor servicer to such appointment shall have assumed the
Master Servicer's responsibilities, duties, liabilities and obligations
hereunder.
Section 6.05. Errors and Omissions Insurance; Fidelity Bonds.
The Master Servicer shall, for so long as it acts as servicer
under this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
servicer hereunder, and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of FNMA or FHLMC for persons
performing servicing for mortgage loans purchased by FNMA or FHLMC. In the event
that any such policy or bond ceases to be in effect, the Master Servicer shall
use its reasonable best efforts to obtain a comparable replacement policy or
bond from an insurer or issuer, meeting the requirements set forth above as of
the date of such replacement.
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ARTICLE VII.
DEFAULT; TERMINATION OF MASTER SERVICER
Section 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to deposit in the
Certificate Account or the Distribution Account or remit to the Trustee
any payment required to be made under the terms of this Agreement,
which failure shall continue unremedied for five calendar days and,
with respect to a payment required to be made under Section 4.01
hereof, for one calendar day, after the date on which written notice of
such failure shall have been given to the Master Servicer by the
Trustee or the Depositor, or to the Trustee and the Master Servicer by
the Holders of Certificates evidencing not less than 25% of the Voting
Rights evidenced by the Certificates; or
(ii) any failure by the Master Servicer or, so long as the
Master Servicer is also the Seller, the Seller to observe or perform in
any material respect any other of the covenants or agreements on the
part of the Master Servicer contained in this Agreement or any
representation or warranty shall prove to be untrue, which failure or
breach shall continue unremedied for a period of 60 days after the date
on which written notice of such failure shall have been given to the
Master Servicer by the Trustee or the Depositor, or to the Trustee and
the Master Servicer by the Holders of Certificates evidencing not less
than 25% of the Voting Rights evidenced by the Certificates; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60
consecutive days; or
(iv) the Master Servicer shall consent to the appointment of
a receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of, or commence a voluntary case under, any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations.
If an Event of Default shall occur, then, and in each and
every such case, so long as such Event of Default shall not have been remedied,
the Trustee may, and at the direction of the Holders of Certificates evidencing
not less than 25% of the Voting Rights evidenced by the Certificates, the
Trustee shall by notice in writing to the Master Servicer (with a copy to each
Rating Agency), terminate all of the rights and obligations of the Master
Servicer under this Agreement and
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in and to the Mortgage Loans and the proceeds thereof, other than its rights as
a Certificateholder hereunder. On or after the receipt by the Master Servicer of
such written notice, all authority and power of the Master Servicer hereunder,
whether with respect to the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee. The Trustee shall thereupon make any Advance described in
Section 4.01 hereof subject to Section 3.04 hereof. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. Unless expressly provided in such written
notice, no such termination shall affect any obligation of the Master Servicer
to pay amounts owed pursuant to Article VIII. The Master Servicer agrees to
cooperate with the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee of all cash amounts which shall at the time be credited
to the Certificate Account, or thereafter be received with respect to the
Mortgage Loans. The Trustee shall promptly notify the Rating Agencies of the
occurrence of an Event of Default.
Notwithstanding any termination of the activities of a Master
Servicer hereunder, such Master Servicer shall be entitled to receive, out of
any late collection of a Scheduled Payment on a Mortgage Loan that was due prior
to the notice terminating such Master Servicer's rights and obligations as
Master Servicer hereunder and received after such notice, that portion thereof
to which such Master Servicer would have been entitled pursuant to Sections
3.08(a)(i) through (viii), and any other amounts payable to such Master Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
Section 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 hereof, the Trustee shall, to the extent
provided in Section 3.04, be the successor to the Master Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof and applicable law including the obligation to make advances
pursuant to Section 4.01. As compensation therefor, the Trustee shall be
entitled to all fees, costs and expenses relating to the Mortgage Loans that the
Master Servicer would have been entitled to if the Master Servicer had continued
to act hereunder. Notwithstanding the foregoing, if the Trustee has become the
successor to the Master Servicer in accordance with Section 7.01 hereof, the
Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited
by applicable law from making Advances pursuant to Section 4.01 hereof or if it
is otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current rating of the
Certificates by each Rating Agency as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. Any successor Master Servicer
shall be an institution that is a FNMA and FHLMC approved seller/servicer in
good standing, that has a net worth of at least $15,000,000, and that is willing
to service the Mortgage Loans and executes and delivers to the Depositor and the
Trustee an agreement accepting such delegation and assignment, that contains an
assumption by such Person of the rights, powers, duties, responsibilities,
obligations and liabilities of the Master Servicer (other than liabilities of
the Master Servicer under Section 6.03 hereof incurred prior to termination
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of the Master Servicer under Section 7.01), with like effect as if originally
named as a party to this Agreement; and provided further that each Rating Agency
acknowledges that its rating of the Certificates in effect immediately prior to
such assignment and delegation will not be qualified or reduced as a result of
such assignment and delegation. No appointment of a successor to the Master
Servicer hereunder shall be effective until the Trustee shall have consented
thereto (such consent not to be withheld unreasonably), and written notice of
such proposed appointment shall have been provided by the Trustee to each
Certificateholder. The Trustee shall not resign as servicer until a successor
servicer has been appointed and has accepted such appointment. Pending
appointment of a successor to the Master Servicer hereunder, the Trustee, unless
the Trustee is prohibited by law from so acting, shall, subject to Section 3.04
hereof, act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided that no such compensation shall be in excess of
that permitted the Master Servicer hereunder. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Neither the Trustee nor any other successor
servicer shall be deemed to be in default hereunder by reason of any failure to
make, or any delay in making, any distribution hereunder or any portion thereof
or any failure to perform, or any delay in performing, any duties or
responsibilities hereunder, in either case caused by the failure of the Master
Servicer to deliver or provide, or any delay in delivering or providing, any
cash, information, documents or records to it.
Any successor to the Master Servicer as servicer shall give
notice to the Mortgagors of such change of servicer and shall, during the term
of its service as servicer maintain in force the policy or policies that the
Master Servicer is required to maintain pursuant to Section 6.05.
Section 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor
to the Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all Certificateholders notice of
each such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
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ARTICLE VIII.
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they conform
to the requirements of this Agreement. If any such instrument is found not to
conform to the requirements of this Agreement in a material manner, the Trustee
shall take action as it deems appropriate to have the instrument corrected.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own grossly negligent action, its own gross
negligent failure to act or its own misconduct, its grossly negligent failure to
perform its obligations in compliance with this Agreement, or any liability that
would be imposed by reason of its willful misfeasance or bad faith; provided
that:
(i) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default that may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable,
individually or as Trustee, except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee and the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement that it reasonably
believed in good faith to be genuine and to have been duly executed by
the proper authorities respecting any matters arising hereunder;
(ii) the Trustee shall not be liable, individually or as
Trustee, for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless the Trustee was
grossly negligent or acted in bad faith or with willful misfeasance;
and
(iii) the Trustee shall not be liable, individually or as
Trustee, with respect to any action taken, suffered or omitted to be
taken by it in good faith in accordance with the direction of Holders
of each Class of Certificates evidencing not less than 25% of the
Voting Rights of such Class relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this
Agreement.
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Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(ii) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) the Trustee shall not be liable, individually or as
Trustee, for any action taken, suffered or omitted by it in good faith
and believed by it to be authorized or within the discretion or rights
or powers conferred upon it by this Agreement;
(iv) prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default that may have occurred,
the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do
by Holders of each Class of Certificates evidencing not less than 25%
of the Voting Rights of such Class;
(v) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, accountants or attorneys;
(vi) the Trustee shall not be required to expend its own funds
or otherwise incur any financial liability in the performance of any of
its duties hereunder if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such
liability is not assured to it;
(vii) the Trustee shall not be liable, individually or as
Trustee, for any loss on any investment of funds pursuant to this
Agreement (other than as issuer of the investment security);
(viii) the Trustee shall not be deemed to have knowledge of an
Event of Default until a Responsible Officer of the Trustee shall have
received written notice thereof; and
(ix) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that may be incurred therein or
thereby.
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(b) All rights of action under this Agreement or under
any of the Certificates, enforceable by the Trustee, may be enforced by the
Trustee without the possession of any of the Certificates, or the production
thereof at the trial or other proceeding relating thereto, and any such suit,
action or proceeding instituted by the Trustee shall be brought in its name for
the benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.
Section 8.03. Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the statements
of the Depositor, the Seller or the Master Servicer, as the case may be, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document other than with respect to the Trustee's
execution and authentication of the Certificates. The Trustee shall not be
accountable for the use or application by the Depositor or the Master Servicer
of any funds paid to the Depositor or the Master Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Certificate Account by the
Depositor or the Master Servicer.
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
Section 8.05. Master Servicer to Pay Trustee's Fees and
Expenses.
The Trustee shall be entitled to the Trustee Fee as
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered by
it in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder of the Trustee. The Master
Servicer covenants and agrees to pay or reimburse the Trustee, upon its request,
for all reasonable expenses, disbursements and advances incurred or made by the
Trustee on behalf of the Trust Fund in accordance with any of the provisions of
this Agreement (including, without limitation: (A) the reasonable compensation
and the expenses and disbursements of its counsel, but only for representation
of the Trustee acting in its capacity as Trustee hereunder and (B) to the extent
that the Trustee must engage persons not regularly in its employ to perform acts
or services on behalf of the Trust Fund, which acts or services are not in the
ordinary course of the duties of a trustee, paying agent or certificate
registrar, in the absence of a breach or default by any party hereto, the
reasonable compensation, expenses and disbursements of such persons, except any
such expense, disbursement or advance as may arise from its negligence, bad
faith or willful misconduct). The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection with
any legal action relating to this Agreement or the Certificates, or in
connection with the performance of any of the Trustee's duties hereunder, other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of any of the Trustee's duties
hereunder or by reason of reckless disregard of the Trustee's obligations and
duties hereunder and (ii) resulting from any error in any tax or information
return prepared by the Master Servicer. Such indemnity shall survive the
termination of this Agreement or the resignation or removal of the Trustee
hereunder.
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Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit
rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates below the ratings issued on the
Closing Date (or having provided such security from time to time as is
sufficient to avoid such reduction). If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 8.06 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor, the Seller and the Master Servicer and
their respective affiliates; provided that such corporation cannot be an
affiliate of the Master Servicer other than the Trustee in its role as successor
to the Master Servicer.
Section 8.07. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the
trusts hereby created by (1) giving written notice of resignation to the
Depositor and the Master Servicer and by mailing notice of resignation by first
class mail, postage prepaid, to the Certificateholders at their addresses
appearing on the Certificate Register and each Rating Agency, not less than 60
days before the date specified in such notice when, subject to Section 8.08,
such resignation is to take effect, and (2) acceptance of appointment by a
successor trustee in accordance with Section 8.08 and meeting the qualifications
set forth in Section 8.06. If no successor trustee shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice or
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 hereof and shall fail to resign
after written request thereto by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor or the Master
Servicer may remove the Trustee and appoint a successor trustee by written
instrument, in triplicate, one copy of which instrument shall be delivered to
the Trustee, one copy of which shall be delivered to the Master Servicer and one
copy of which shall be delivered to the successor trustee.
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The Holders evidencing at least 51% of the Voting Rights of
each Class of Certificates may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered by the successor Trustee to the Master
Servicer one complete set to the Trustee so removed and one complete set to the
successor so appointed. Notice of any removal of the Trustee shall be given to
each Rating Agency by the Successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08 hereof.
Section 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07
hereof shall execute, acknowledge and deliver to the Depositor and to its
predecessor trustee and the Master Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein.
No successor trustee shall accept appointment as provided in
this Section 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 hereof and its
appointment shall not adversely affect the then current rating of the
Certificates.
Upon acceptance of appointment by a successor trustee as
provided in this Section 8.08, the Depositor shall mail notice of the succession
of such trustee hereunder to all Holders of Certificates. If the Depositor fails
to mail such notice within ten days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Depositor.
Section 8.09. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.06 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Fund or property securing any Mortgage Note may at
the time be located, the Master Servicer and the Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more
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Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the Master
Servicer and the Trustee may consider necessary or desirable. The Trustee shall
be ultimately liable for the actions of any co-trustee. If the Master Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request to do so, or in the case an Event of Default shall have occurred
and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 8.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee, except for the obligation of the Trustee
under this Agreement to advance funds on behalf of the Master Servicer,
shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized
to act separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Master Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Master Servicer and the Depositor.
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Any separate trustee or co-trustee may, at any time,
constitute the Trustee its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 8.11. Tax Matters.
It is intended that the Trust Fund shall constitute, and that
the affairs of the Trust Fund shall be conducted so that each REMIC formed
hereunder qualifies as, a "real estate mortgage investment conduit" as defined
in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Trustee covenants and agrees that it shall act as agent (and the
Trustee is hereby appointed to act as agent) on behalf of the Trust Fund and
that in such capacity it shall: (a) prepare and file, or cause to be prepared
and filed, in a timely manner, a U.S. Real Estate Mortgage Investment Conduit
Income Tax Returns (Form 1066 or any successor form adopted by the Internal
Revenue Service) and prepare and file or cause to be prepared and filed with the
Internal Revenue Service and applicable state or local tax authorities income
tax or information returns for each taxable year with respect to each such REMIC
containing such information and at the times and in the manner as may be
required by the Code or state or local tax laws, regulations, or rules, and
furnish or cause to be furnished to Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby; (b)
within thirty days of the Closing Date, furnish or cause to be furnished to the
Internal Revenue Service, on Forms 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the person that the
holders of the Certificates may contact for tax information relating thereto,
together with such additional information as may be required by such Form, and
update such information at the time or times in the manner required by the Code
for the Trust Fund; (c) make or cause to be made elections, on behalf of each
REMIC formed hereunder to be treated as a REMIC on the federal tax return of
such REMIC for its first taxable year (and, if necessary, under applicable state
law); (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions, including without
limitation, the calculation of any original issue discount using the Prepayment
Assumption; (e) provide information necessary for the computation of tax imposed
on the transfer of a Class R Certificate to a Person that is not a Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax); (f) to the extent that they are under its control conduct the affairs of
the Trust Fund at all times that any Certificates are outstanding so as to
maintain the status of each REMIC formed hereunder as a REMIC under the REMIC
Provisions; (g) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of any REMIC
formed hereunder (h) pay, from the sources specified in the last paragraph of
this Section 8.11, the amount of any federal, state and local taxes, including
prohibited transaction taxes as described below, imposed on any REMIC formed
hereunder prior to the termination of the Trust Fund when and as the same shall
be due and payable (but such obligation shall not prevent the Trustee or any
other appropriate Person from contesting any such tax in appropriate proceedings
and shall not prevent the Trustee from withholding payment of such tax,
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if permitted by law, pending the outcome of such proceedings); (i) sign or cause
to be signed federal, state or local income tax or information returns; (j)
maintain records relating to each REMIC formed hereunder including but not
limited to the income, expenses, assets and liabilities of each such REMIC and
the fair market value and adjusted basis of the Trust Fund property determined
at such intervals as may be required by the Code, as may be necessary to prepare
the foregoing returns, schedules, statements or information; and (k) as and when
necessary and appropriate, represent the Trust Fund in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any REMIC formed hereunder, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust Fund, and otherwise act on behalf of each REMIC formed
hereunder in relation to any tax matter involving any such REMIC.
In order to enable the Trustee to perform its duties as set
forth herein, the Depositor shall provide, or cause to be provided, to the
Trustee within 10 days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee promptly upon written request therefor, any such additional
information or data that the Trustee may, from time to time, request in order to
enable the Trustee to perform its duties as set forth herein. The Depositor
hereby indemnifies the Trustee for any losses, liabilities, damages, claims or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee that result from any failure of the Depositor to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited
transactions" of the Trust Fund as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of the Trust Fund as defined in
Section 860G(c) of the Code, on any contribution to the Trust Fund after the
startup day pursuant to Section 860G(d) of the Code, or any other tax is
imposed, including, without limitation, any federal, state or local tax or
minimum tax imposed upon the Trust Fund pursuant to Sections 23153 and 24872 of
the California Revenue and Taxation Code if not paid as otherwise provided for
herein, such tax shall be paid by (i) the Trustee, if any such other tax arises
out of or results from a breach by the Trustee of any of its obligations under
this Agreement, (ii) (x) the Master Servicer, in the case of any such minimum
tax, and (y) any party hereto (other than the Trustee) to the extent any such
other tax arises out of or results from a breach by such other party of any of
its obligations under this Agreement or (iii) in all other cases, or in the
event that any liable party here fails to honor its obligations under the
preceding clauses (i) or (ii), any such tax will be paid first with amounts
otherwise to be distributed to the Class R Certificateholders and the Class B-IO
Certificateholders (pro rata), and second with amounts otherwise to be
distributed to all other Certificateholders in the following order of priority:
first, to the Class BF and Class BV Certificates (pro rata), second, to the
Class MF-2 and MV-2 Certificates (pro rata), third, to the Class MF-1 and MV-1
Certificates (pro rata), and fourth, to the Fixed Rate Class A Certificates and
the Adjustable Rate Class A Certificates (pro rata). Notwithstanding anything to
the contrary contained herein, to the extent that such tax is payable by the
Class R Certificates, the Trustee is hereby authorized to retain on any
Distribution Date, from the Holders of the Class R Certificates (and, if
necessary, second, from the Holders of the all other Certificates in the
priority specified in the preceding sentence), funds otherwise distributable to
such Holders in an amount sufficient to pay such tax. The
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Trustee agrees to promptly notify in writing the party liable for any such tax
of the amount thereof and the due date for the payment thereof.
The Trustee shall treat the Adjustable Rate Carryover Reserve
Fund as an outside reserve fund within the meaning of Treasury Regulation
1.860G-2(h) that is owned by the Class BV-IO Certificateholders and that is not
an asset of the REMIC. The Trustee shall treat the rights of the Class AV-1,
Class AV-2, Class MV-1, Class MV-2 and Class BV Certificateholders to receive
payments from the Adjustable Rate Carryover Reserve Fund as rights in an
interest rate cap contract written by the Class BV-IO Certificateholder in favor
of the Class AV-1, Class AV-2, Class MV-1, Class MV-2, and Class BV
Certificateholders. Thus each Class AV-1, Class AV-2, Class MV-1, Class MV-2,
and Class BV Certificate shall be treated as representing ownership of not only
REMIC 2 Regular Interests, but also ownership of an interest in an interest rate
cap contract. For purposes of determining the issue price of the REMIC 2 Regular
interests, the Trustee shall assume that the interest rate cap contract has a
value of $10,000.
Section 8.12. Periodic Filings.
Pursuant to written instructions from the Depositor, the
Trustee shall prepare, execute and file all Form 8-Ks with exhibits (other than
the Form 8-K with which this Agreement is filed) and Form 10-Ks with exhibits
required under the Securities Exchange Act of 1934 in connection with this
Agreement (other than any such reports due as a result of the original issuance
of the Certificates). In addition, the Trustee shall prepare, execute and file
no later than January 30, 2000 a Form 15 to terminate the Trust Fund's reporting
obligations. In connection with the preparation and filing of such periodic
reports, the Depositor and the Master Servicer shall timely provide to the
Trustee all material information available to them which is required to be
included in such reports and not known to them to be in the possession of the
Trustee and such other information as the Trustee reasonably may request from
either of them and otherwise reasonably shall cooperate with the Trustee. The
Trustee shall have no liability with respect to any failure to properly prepare
or file such periodic reports resulting from or relating to the Trustee's
inability or failure to obtain any information not resulting from its own
negligence or willful misconduct.
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ARTICLE IX.
TERMINATION
Section 9.01. Termination upon Liquidation or Repurchase of
all Mortgage Loans.
Subject to Section 9.03, the obligations and responsibilities
of the Depositor, the Master Servicer, the Seller and the Trustee created hereby
with respect to the Trust Fund shall terminate upon the earlier of (a) the
purchase by the Master Servicer of all of the Mortgage Loans (and REO
Properties) remaining in the each Loan Group at the price equal to the sum of
(i) 100% of the Stated Principal Balance of each Mortgage Loan in such Loan
Group (other than in respect of REO Property), (ii) accrued interest thereon at
the applicable Net Mortgage Rate, (iii) the appraised value of any REO Property
in such Loan Group (up to the Stated Principal Balance of the related Mortgage
Loan), such appraisal to be conducted by an appraiser mutually agreed upon by
the Master Servicer and the Trustee and (iv) any unreimbursed Servicing
Advances, and the principal portion of any unreimbursed Advances, made on the
Mortgage Loans in such Loan Group prior to the exercise of such repurchase and
(b) the later of (i) the maturity or other liquidation (or any Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor of
the descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States
to the Court of St. Xxxxx, living on the date hereof and (ii) the Latest
Possible Maturity Date.
The right to repurchase all Mortgage Loans and REO Properties
in a Loan Group pursuant to clause (a) above shall be conditioned upon the
Stated Principal Balance of the Mortgage Loans in such Loan Group, at the time
of any such repurchase, aggregating ten percent or less of the aggregate Cut-off
Date Principal Balance of the Mortgage Loans in such Loan Group.
Section 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Master Servicer
determines that there are no Outstanding Mortgage Loans and no other funds or
assets in the Trust Fund other than the funds in the Certificate Account, the
Master Servicer shall direct the Trustee to send a final distribution notice
promptly to each Certificateholder or (ii) the Trustee determines that a Class
of Certificates shall be retired after a final distribution on such Class, the
Trustee shall notify the Certificateholders within five (5) Business Days after
such Determination Date that the final distribution in retirement of such Class
of Certificates is scheduled to be made on the immediately following
Distribution Date. Any final distribution made pursuant to the immediately
preceding sentence will be made only upon presentation and surrender of the
related Certificates at the Corporate Trust Office of the Trustee. If the Master
Servicer elects to terminate the Trust Fund pursuant to Section 9.01, at least
20 days prior to the date notice is to be mailed to the affected
Certificateholders, the Master Servicer shall notify the Depositor and the
Trustee of the date the Master Servicer intends to terminate the Trust Fund and
of the applicable repurchase price of the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier
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than the 10th day and no later than the 15th day of the month immediately
preceding the month of such final distribution. Any such notice shall specify
(a) the Distribution Date upon which final distribution on the Certificates will
be made upon presentation and surrender of Certificates at the office therein
designated, (b) the amount of such final distribution, (c) the location of the
office or agency at which such presentation and surrender must be made, and (d)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Master Servicer will give such
notice to each Rating Agency at the time such notice is given to
Certificateholders.
In the event such notice is given, the Master Servicer shall
cause all funds in the Certificate Account to be remitted to the Trustee for
deposit in the Distribution Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to the Master Servicer the Mortgage Files for the Mortgage
Loans.
Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders of each Class the
amounts allocable to such Certificates held in the Distribution Account (and, if
applicable, the Adjustable Rate Carryover Reserve Fund) in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that remain a part of the Trust Fund. If within one year after the second
notice all Certificates shall not have been surrendered for cancellation, the
Class R Certificateholders shall be entitled to all unclaimed funds and other
assets of the Trust Fund that remain subject hereto.
Section 9.03. Additional Termination Requirements.
(a) In the event the Master Servicer exercises its
purchase option on both of the Fixed Rate Mortgage Loans and the Adjustable Rate
Mortgage Loans as provided in Section 9.01, the Trust Fund shall be terminated
in accordance with the following additional requirements, unless the Trustee has
been supplied with an Opinion of Counsel, at the expense of the Master Servicer,
to the effect that the failure of the Trust Fund to comply with the requirements
of this Section 9.03 will not (i) result in the imposition of taxes on
"prohibited transactions" of a REMIC, or (ii) cause a REMIC to fail to qualify
as a REMIC at any time that any Certificates are outstanding:
(1) The Master Servicer shall establish a 90-day
liquidation period and notify the Trustee thereof, which shall in turn specify
the first day of such period in a statement attached to the Trust Fund's final
Tax Return pursuant to Treasury Regulation Section 1.860F-1. The Master
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Servicer shall satisfy all the requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder, as evidenced by an
Opinion of Counsel obtained at the expense of the Master Servicer;
(2) During such 90-day liquidation period, and at or
prior to the time of making the final payment on the Certificates, the Master
Servicer as agent of the Trustee shall sell all of the assets of the Trust Fund
for cash; and
(3) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited, to the Class R Certificateholders all cash on hand (other than cash
retained to meet claims), and the Trust Fund shall terminate at that time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby authorize the Master Servicer to specify the 90-day liquidation
period for the Trust Fund, which authorization shall be binding upon all
successor Certificateholders.
(c) The Trustee as agent for each REMIC hereby agrees to
adopt and sign such a plan of complete liquidation upon the written request of
the Master Servicer, and the receipt of the Opinion of Counsel referred to in
Section 9.03(a)(1) and to take such other action in connection therewith as may
be reasonably requested by the Master Servicer.
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ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.
This Agreement may be amended from time to time by the
Depositor, the Master Servicer, the Seller and the Trustee, without the consent
of any of the Certificateholders to cure any ambiguity, to correct or supplement
any provisions herein (including to give effect to the expectations of
investors), or to make such other provisions with respect to matters or
questions arising under this Agreement as shall not be inconsistent with any
other provisions herein if such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder; provided that any such amendment shall be deemed not to
adversely affect in any material respect the interests of the Certificateholders
and no such Opinion of Counsel shall be required if the Person requesting such
amendment obtains a letter from each Rating Agency stating that such amendment
would not result in the downgrading or withdrawal of the respective ratings then
assigned to the Certificates, it being understood and agreed that any such
letter in and of itself will not represent a determination as to the materiality
of any such amendment and will represent a determination only as to the credit
issues affecting any such rating.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Trustee, the Depositor, the Master Servicer and the
Seller may at any time and from time to time amend this Agreement to modify,
eliminate or add to any of its provisions to such extent as shall be necessary
or appropriate to maintain the qualification of the Trust Fund as a REMIC under
the Code or to avoid or minimize the risk of the imposition of any tax on the
Trust Fund pursuant to the Code that would be a claim against the Trust Fund at
any time prior to the final redemption of the Certificates, provided that the
Trustee have been provided an Opinion of Counsel, which opinion shall be an
expense of the party requesting such opinion but in any case shall not be an
expense of the Trustee, to the effect that such action is necessary or
appropriate to maintain such qualification or to avoid or minimize the risk of
the imposition of such a tax.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Seller and the Trustee and the Holders of
each Class of Certificates affected thereby evidencing not less than 51% of the
Voting Rights of such Class for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders of Certificates; provided
that no such amendment shall (i) reduce in any manner the amount of, or delay
the timing of, payments required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner other than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing 66% or more of the Voting Rights of such
Class or (iii) reduce the aforesaid percentages of Certificates the Holders of
which are required to consent to any such amendment without the consent of the
Holders of all such Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, which opinion shall be an expense of
the party requesting such amendment but in any case
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shall not be an expense of the Trustee, to the effect that such amendment will
not cause the imposition of any tax on the Trust Fund or the Certificateholders
or cause the Trust Fund's REMIC elections to fail to qualify at any time that
any Certificates are outstanding.
Promptly after the execution of any amendment to this
Agreement requiring the consent of Certificateholders, the Trustee shall furnish
written notification of the substance of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter
into an amendment without receiving an Opinion of Counsel, satisfactory to the
Trustee that (i) such amendment is permitted and is not prohibited by this
Agreement and that all requirements for amending this Agreement have been
complied with; and (ii) either (A) the amendment does not adversely affect in
any material respect the interests of any Certificateholder or (B) the
conclusion set forth in the immediately preceding clause (A) is not required to
be reached pursuant to this Section 10.01.
Section 10.02. Recordation of Agreement; Counterparts.
This Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer at its expense.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT
REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 10.04. Intention of Parties.
It is the express intent of the parties hereto that the
conveyance of the Mortgage Notes, Mortgages, assignments of Mortgages, title
insurance policies and any modifications,
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extensions and/or assumption agreements and private mortgage insurance policies
relating to the Mortgage Loans by the Seller to the Depositor, and by the
Depositor to the Trustee be, and be construed as, an absolute sale thereof to
the Depositor or the Trustee, as applicable. It is, further, not the intention
of the parties that such conveyance be deemed a pledge thereof by the Seller to
the Depositor, or by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Seller or the Depositor, as applicable, or if for any other
reason this Agreement is held or deemed to create a security interest in such
assets, then (i) this Agreement shall be deemed to be a security agreement
within the meaning of the Uniform Commercial Code of the State of New York and
(ii) each conveyance provided for in this Agreement shall be deemed to be an
assignment and a grant by the Seller or the Depositor, as applicable , for the
benefit of the Certificateholders, of a security interest in all of the assets
that constitute the Trust Fund, whether now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall,
to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the assets of the Trust Fund, such security interest would be deemed
to be a perfected security interest of first priority under applicable law and
will be maintained as such throughout the term of the Agreement. The Depositor
shall arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.
Section 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly
provide notice to each Rating Agency with respect to each of the following of
which it has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Master Servicer or
the Trustee and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans
pursuant to Sections 2.02, 2.03, 2.04 and 3.12; and
(v) The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(i) Each report to Certificateholders described in Section
4.04;
(ii) Each annual statement as to compliance described in
Section 3.17; and
(iii) Each annual independent public accountants' servicing
report described in Section 3.18.
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(b) All directions, demands and notices hereunder shall
be in writing and shall be deemed to have been duly given when delivered to (i)
in the case of the Depositor, Bear Xxxxxxx Asset Backed Securities, Inc., 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Chief Counsel; (ii) in the
case of the Seller and Master Servicer, EMC Mortgage Corporation, 000 Xxxxxx
Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000, Attention: Xxxxxx Xxxxx or such other address
as may be hereafter furnished to the Depositor and the Trustee by the Master
Servicer in writing; (iv) in the case of the Trustee, at the Corporate Trust
Office or such other address as the Trustee may hereafter furnish to the
Depositor or the Master Servicer; and (v) in the case of the Rating Agencies,
(x) Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Home Equity Monitoring and (y) Fitch IBCA, Inc., Attention:
Structured Finance, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.
Section 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.
Section 10.07. Assignment.
Notwithstanding anything to the contrary contained herein,
except as provided pursuant to Section 6.02, this Agreement may not be assigned
by the Master Servicer.
Section 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and management
of the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed so
as to constitute the Certificateholders from time to time as partners or members
of an association; nor shall any Certificateholder be under any liability to any
third party by reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, the Holders of Certificates evidencing not less than 25%
of the Voting Rights evidenced by
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the Certificates shall also have made written request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 10.09. Inspection and Audit Rights.
The Master Servicer agrees that, on reasonable prior notice,
it will permit any representative of the Depositor or the Trustee during the
Master Servicer's normal business hours, to examine all the books of account,
records, reports and other papers of the Master Servicer relating to the
Mortgage Loans, to make copies and extracts therefrom, to cause such books to be
audited by independent certified public accountants selected by the Depositor or
the Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees and independent public accountants
(and by this provision the Master Servicer hereby authorizes such accountants to
discuss with such representative such affairs, finances and accounts), all at
such reasonable times and as often as may be reasonably requested. Any
out-of-pocket expense incident to the exercise by the Depositor or the Trustee
of any right under this Section 10.09 shall be borne by the party requesting
such inspection; all other such expenses shall be borne by the Master Servicer.
Section 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders
shall not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and shall
be deemed fully paid.
* * *
113
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the
Seller and the Trustee have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above
written.
BEAR XXXXXXX ASSET BACKED SECURITIES,
INC.,
as Depositor
By:
_____________________________________
Name:
Title:
EMC MORTGAGE CORPORATION,
as Seller and Master Servicer
By:
_____________________________________
Name:
Title:
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.,
not in its individual capacity,
but solely as Trustee
By:
_____________________________________
Name:
Title:
000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On this __th day of October, 1999, before me, a notary public
in and for said State, appeared Xxx Xxxxxxx, personally known to me on the basis
of satisfactory evidence to be an authorized representative of Bear Xxxxxxx
Asset Backed Securities, Inc., one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such corporation and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________________________
Notary Public
[Notarial Seal]
000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On this __th day of October, 1999, before me, a notary public
in and for said State, appeared ______________________, personally known to me
on the basis of satisfactory evidence to be an Assistant Vice President of
Bankers Trust Company of California, N.A. that executed the within instrument,
and also known to me to be the person who executed it on behalf of such
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________________________
Notary Public
[Notarial Seal]
000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On this __th day of October, 1999, before me, a notary public
in and for said State, appeared ______________________, personally known to me
on the basis of satisfactory evidence to be an authorized representative of EMC
Mortgage Corporation, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such corporation and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________________________
Notary Public
[Notarial Seal]
117
Exhibit A-1
through A-15
[Exhibits A-1 through A-15 are
photocopies of such Certificates as
delivered.]
[see appropriate documents delivered at closing]
A-1
Exhibit B
[Reserved]
B-1
Exhibit C
[Reserved]
C-1
Exhibit D
[Exhibit D is a photocopy
of the Class R Certificate
as delivered.]
[see appropriate documents delivered at closing]
D-1
Exhibit E
[Exhibit E is a photocopy
of the Tax Matters Person Class R Certificate
as delivered.]
[see appropriate documents delivered at closing]
E-1
Exhibit F-1
[Exhibit F-1 is a list of the Mortgage Loans]
[see schedule on file with the Trustee]
F-1-1
Exhibit F-2
LIST OF DELAY DELIVERY MORTGAGE LOANS
None
F-2-1
EXHIBIT G-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of September
1, 1999 among Bear Xxxxxxx Asset Backed Securities,
Inc., as Depositor, EMC Mortgage Corporation as
Seller and Master Servicer and Bankers Trust Company
of California, N.A. as Trustee, Asset-Backed
Certificates, Series 0000-0
Xxxxxxxxx:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed in the attached list of exceptions) it has received:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse in the following form: "Pay
to the order of __________________, without recourse" or "Pay to the order of
Bankers Trust Company of California, N.A., a national banking association, as
trustee under the Pooling and Servicing Agreement dated as of September 1,
1999, Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed Certificates,
Series 1999-2, without recourse"; and
(ii) a duly executed assignment of the Mortgage in the form permitted
by Section 2.01 of the Pooling and Servicing Agreement referred to above.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
G-1-1
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
Bankers Trust Company of California, N.A.,
as Trustee
By: ______________________________________
Name:
Title:
G-1-2
EXHIBIT G-2
FORM OF INTERIM CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of September
1, 1999 among Bear Xxxxxxx Asset Backed Securities,
Inc., as Depositor, EMC Mortgage Corporation as
Seller and Master Servicer and Bankers Trust Company
of California, N.A. as Trustee, Asset-Backed
Certificates, Series 0000-0
Xxxxxxxxx:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as listed in the following paragraph, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attached list of exceptions) it has received:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse in the following form: "Pay
to the order of _______________ without recourse" or "Pay to the order of
Bankers Trust Company of California, N.A., a national banking association, as
trustee under the Pooling and Servicing Agreement dated as of September 1, 1999,
Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed Certificates, Series
1999-2, without recourse", with all intervening endorsements that show a
complete chain of endorsement from the originator to the Seller;
(ii) the original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage in the form permitted
by Section 2.01 of the Pooling and Servicing Agreement referred to above;
(iv) the original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage;
(v) [Reserved]; and
(vi) the original or duplicate original lender's title policy or, in
the event such original title policy has not been received from the insurer, any
one of an original title binder, an original preliminary title report or an
original title commitment, or a copy thereof certified by the title
G-2-1
company, with the original policy of title insurance to be delivered within one
year of the Closing Date.
If the Trustee has not received the original recorded Mortgage or an
original recorded assignment of the Mortgage satisfying the requirements of
clause (ii), (iii) or (iv) above, as applicable, the Trustee has received, in
lieu thereof, a true and complete copy of such Mortgage and/or such assignment
or assignments of the Mortgage, as applicable, each certified by the Seller, the
applicable title company, escrow agent or attorney, or the originator of such
Mortgage Loan, as the case may be, to be a true and complete copy of the
original Mortgage or assignment of Mortgage submitted for recording.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to such
Mortgage Loan, and (ii) the information set forth in items (i), (iv), (v), (vi)
and (viii) of the definition of the "Mortgage Loan Schedule" in Section 1.01 of
the Pooling and Servicing Agreement accurately reflects information set forth in
the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
G-2-2
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
Bankers Trust Company of California, N.A.
as Trustee
By: _____________________________________
Name:
Title:
G-2-3
EXHIBIT G-3
[RESERVED]
G-3-1
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Master Servicer]
[Seller]
Re: Pooling and Servicing Agreement dated as of September 1, 1999 among
Bear Xxxxxxx Asset Backed Securities, Inc., as Depositor, EMC Mortgage
Corporation as Seller and Master Servicer and Bankers Trust Company of
California, N.A., as Trustee, Asset-Backed Certificates, Series 0000-0
Xxxxxxxxx:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attached Document Exception Report) it has
received:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse in the following form: "Pay
to the order of _________________ without recourse" or "Pay to the order of
Bankers Trust Company of California, N.A., a national banking association, as
trustee under the Pooling and Servicing Agreement dated as of September 1, 1999,
Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed Certificates, Series
1999-2, without recourse", with all intervening endorsements that show a
complete chain of endorsement from the originator to the Seller;
(ii) the original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage in the form permitted
by Section 2.01 of the Pooling and Servicing Agreement referred to above;
(iv) the original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage;
(v) [Reserved]; and
(vi) the original or duplicate original lender's title policy or any
one of an original title binder, an original preliminary title report or an
original title commitment, or a copy thereof certified by the title company.
H-1
If the public recording office in which a Mortgage or assignment
thereof is recorded has retained the original of such Mortgage or assignment,
the Trustee has received, in lieu thereof, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be true
and complete by such recording office.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to such
Mortgage Loan, and (ii) the information set forth in items (i), (iv), (v), (vi)
and (viii) of the definition of the "Mortgage Loan Schedule" in Section 1.01 of
the Pooling and Servicing Agreement accurately reflects information set forth in
the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
Bankers Trust Company of California, N.A.,
as Trustee
By: ______________________________________
Name:
Title:
H-2
EXHIBIT I
TRANSFER AFFIDAVIT
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _______________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the "Certificate")
issued pursuant to the Pooling and Servicing Agreement, dated as of September 1,
1999 (the "Agreement"), by and among Bear Xxxxxxx Asset Backed Securities, Inc.,
as depositor (the "Depositor"), EMC Mortgage Corporation as seller and master
servicer ( in its capacity as seller, the "Seller" and its capacity as the
master servicer, the "Master Servicer") and Bankers Trust Company of California,
N.A., as trustee (the "Trustee"). Capitalized terms used, but not defined herein
or in Exhibit 1 hereto, shall have the meanings ascribed to such terms in the
Agreement. The Transferee has authorized the undersigned to make this affidavit
on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
I-1
5. The Transferee has reviewed the provisions of Section 5.02(c) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 5.02(c) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit J to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the Class R
Certificates.
8. The Transferee's taxpayer identification number is _____.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(3O).
10. The Transferee is aware that the Class R Certificates may be
"noneconomic residual interests" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax. In addition, as the
holder of a noneconomic residual interest, the Transferee may incur tax
liabilities in excess of any cash flows generated by the interest and the
Transferee hereby represents that it intends to pay taxes associated with
holding the residual interest as they become due.
* * *
I-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ____ day of _____________, 19__.
[NAME OF TRANSFEREE]
By:
______________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
_____________________________
[Assistant] Secretary
Personally appeared before me the above-named _____________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the ____________ of the Transferee, and acknowledged that he executed the
same as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this ____ day of _______, 19__.
_______________________________
_________________________________________
NOTARY PUBLIC
My Commission expires the ___ day
of _______________, 19__.
I-3
EXHIBIT 1 TO EXHIBIT I
Certain Definitions
"Ownership Interest": As to any Certificate, any ownership interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
"Permitted Transferee": Any person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, International Organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to any
Class R Certificate, (iv) rural electric and telephone cooperatives described in
section 1381(a)(2)(C) of the Code, (v) an "electing large partnership" as
defined in Section 775 of the Code, (vi) a Person that is not a citizen or
resident of the United States, a corporation, partnership, or other entity
(treated as a corporation or a partnership for federal income tax purposes)
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia, or an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trustor unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
4224, and (vii) any other Person so designated by the Trustee based upon an
Opinion of Counsel that the Transfer of an Ownership Interest in a Class R
Certificate to such Person may cause the Trust Fund to fail to qualify as a
REMIC at any time that certain Certificates are Outstanding. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code or successor provisions. A corporation will
not be treated as an instrumentality of the United States or of any State or
political subdivision thereof for these purposes if all of its activities are
subject to tax and, with the exception of the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by such
government unit.
"Person": Any individual, corporation, partnership, joint venture,
bank, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
I-4
EXHIBIT 2 TO EXHIBIT I
Section 5.02(c) of the Agreement
(c) Each Person who has or who acquires any Ownership
Interest in a Class R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions, and the rights of each Person acquiring any Ownership
Interest in a Class R Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class R Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
owner or the proposed transferee in the form attached hereto as Exhibit
I.
(iii) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall agree (A) to obtain a Transfer Affidavit
from any other Person to whom such Person attempts to Transfer its
Ownership Interest in a Class R Certificate, (B) to obtain a Transfer
Affidavit from any Person for whom such Person is acting as nominee,
trustee or agent in connection with any Transfer of a Class R
Certificate and (C) not to Transfer its Ownership Interest in a Class R
Certificate or to cause the Transfer of an Ownership Interest in a
Class R Certificate to any other Person if it has actual knowledge that
such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Class R
Certificate. The Trustee shall be under no liability to any Person for
any registration of Transfer of a Class R Certificate that is in fact
not permitted by Section 5.02(b) and this Section 5.02(c) or for making
any payments due on such Certificate to the Holder thereof or taking
any other action with respect to such Holder under the provisions of
this Agreement so long as the Transfer was registered after receipt of
the related Transfer Affidavit, Transferor Certificate and either the
Rule 144A Letter or the Investment Letter. The Trustee shall be
entitled but not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at
and after either such time. Any such payments so recovered by the
Trustee shall be paid and delivered by the Trustee to the last
preceding Permitted Transferee of such Certificate.
I-5
(v) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under Section 860E(e)
of the Code as a result of a Transfer of an Ownership Interest in a
Class R Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set
forth in this Section 5.02(c) shall cease to apply (and the applicable portions
of the legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trustee, the Seller or the Master
Servicer to the effect that the elimination of such restrictions will not cause
the Trust Fund to fail to qualify as a REMIC at any time that the Certificates
are outstanding or result in the imposition of any tax on the Trust Fund, a
Certificateholder or another Person. Each Person holding or acquiring any
Ownership Interest in a Class R Certificate hereby consents to any amendment of
this Agreement that, based on an Opinion of Counsel furnished to the Trustee, is
reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Class R Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class R Certificate that is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
I-6
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS B-IO AND CLASS R CERTIFICATES
Date:
Bear Xxxxxxx Asset Backed Securities, Inc.,
as Depositor
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Bankers Trust Company of California, N.A.
as Trustee
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed
Certificates, Series 1999-2
Ladies and Gentlemen:
In connection with our disposition of the Class __
Certificates, we certify that (a) we understand that the Certificates have not
been registered under the Securities Act of 1933, as amended (the "Act"), and
are being disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to, or
solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner that
would be deemed, or taken any other action that would result in, a violation of
Section 5 of the Act and (c) if we are disposing of a Class R Certificate, we
have no knowledge the Transferee is not a Permitted Transferee. All capitalized
terms used herein but not defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement dated as of September 1, 1999, among
Bear Xxxxxxx Asset Backed Securities, Inc., as Depositor, EMC Mortgage
Corporation as Seller and Master Servicer and Bankers Trust Company of
California, N.A., as Trustee.
Very truly yours,
_________________________________________
Name of Transferor
By: _______________________________
Name:
Title:
J-1
EXHIBIT K
FORM OF INVESTMENT LETTER [NON-RULE 144A] FOR
CLASS B-IO AND CLASS R CERTIFICATES
Date:
_____________________
Bear Xxxxxxx Asset Backed Securities, Inc.,
as Depositor
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Bankers Trust Company of California, N.A.,
as Trustee
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed
Certificates, Series 1999-2
Ladies and Gentlemen:
In connection with our acquisition of the Class __
Certificates in the Denomination of ___________________ (the "Certificates"), we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, nor
a plan subject to Section 4975 of the Internal Revenue Code of 1986 (each of the
foregoing, a "Plan"), nor are we acting on behalf of any Plan or (e) we are
acquiring the Certificates for investment for our own account and not with a
view to any distribution of the Certificates (but without prejudice to our right
at all times to sell or otherwise dispose of the Certificates in accordance with
clause (g) below), (f) we have not offered or sold any Certificates to, or
solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, or taken any
other action that would result in a violation of Section 5 of the Act, and (g)
we will not sell, transfer or otherwise dispose of any Certificates unless (1)
such sale, transfer or other disposition is made pursuant to an effective
registration statement under the Act or is exempt from such registration
requirements, and if requested, we will at our expense provide an opinion of
counsel satisfactory to the addressees of this certificate that such sale,
transfer or other disposition may be made pursuant to an exemption from the Act,
(2) the purchaser or transferee of the Certificate has executed and delivered to
you a certificate to substantially the same effect as this certificate, and (3)
the purchaser or transferee has
K-1
otherwise complied with any conditions for transfer set forth in the Pooling and
Servicing Agreement dated as of September 1, 1999 (the "Agreement"), among Bear
Xxxxxxx Asset Backed Securities, Inc., as Depositor, EMC Mortgage Corporation as
Seller and Master Servicer and Bankers Trust Company of California, N.A., as
Trustee. All capitalized terms used herein but not defined herein shall have the
meanings assigned to them in the Agreement.
Very truly yours,
_________________________________________
Name of Transferee
By: _______________________________
Name:
Title:
K-2
EXHIBIT L
FORM OF RULE 144A LETTER FOR
CLASS B-IO AND CLASS R CERTIFICATES
Date:
____________________
Bear Xxxxxxx Asset Backed Securities, Inc.,
as Depositor
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Bankers Trust Company of California, N.A.
as Trustee
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: Bear Xxxxxxx Asset Backed Securities, Inc. Asset-Backed
Certificates, Series 1999-2
Ladies and Gentlemen:
In connection with our proposed purchase of the Class R
Certificates (the "Certificates") we certify that (a) we understand that the
Certificates are not being registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities laws and are being transferred to
us in a transaction that is exempt from the registration requirements of the Act
and any such laws, (b) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
investments in the Certificates, (c) we have had the opportunity to ask
questions of and receive answers from the Depositor concerning the purchase of
the Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Certificates, (d) we are not an
employee benefit plan that is subject to the Employee Retirement Income Security
Act of 1974, as amended, nor a plan subject to Section 4975 of the Internal
Revenue Code of 1986 (each of the foregoing, a "Plan"), nor are we acting on
behalf of any Plan or (e) we have not, nor has anyone acting on our behalf
offered, transferred, pledged, sold or otherwise disposed of the Certificates,
any interest in the Certificates or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, and (f) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed either of the
forms of certification to that effect
L-1
attached hereto as Annex 1 or Annex 2. We are aware that the sale to us is being
made in reliance on Rule 144A. We are acquiring the Certificates for our own
account or for resale pursuant to Rule 144A and further, understand that the
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A, or (ii) pursuant to another exemption from registration under the
Securities Act. All capitalized terms used herein but not defined herein shall
have the meanings assigned to them in the Pooling and Servicing Agreement dated
as of September 1, 1999, among Bear Xxxxxxx Asset Backed Securities, Inc., as
Depositor, EMC Mortgage Corporation as Seller and Master Servicer and Bankers
Trust Company of California, N.A., as Trustee.
_________________________________________
Name of Buyer
By: _____________________________________
Name:
Title:
L-2
ANNEX 1 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $__________(1) in securities (except
for the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance with
Rule 144A and (ii) the Buyer satisfies the criteria in the category marked
below.
___ Corporation, etc. The Buyer is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business
trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business
of which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank
or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which
is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
State or Federal authority having supervision over
any such institutions or is a foreign savings and
loan association or equivalent institution and (b)
has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange
Act of 1934.
--------------------------
(1) Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
L-3
___ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is
the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is
subject to supervision by the insurance commissioner
or a similar official or agency of a State, territory
or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established
and maintained by a State, its political
subdivisions, or any agency or instrumentality of the
State or its political subdivisions, for the benefit
of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment
advisor registered under the Investment Advisors Act
of 1940.
___ Small Business Investment Company. The Buyer is a
small business investment company licensed by the
U.S. Small Business Administration under Section
301(c) or (d) of the Small Business Investment Act
of 1958.
___ Business Development Company. The Buyer is a business
development company as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee
is a bank or trust company and whose participants are
exclusively State or Local Plans or ERISA Plans as
defined above, and no participant of the Buyer is an
individual retirement account or an H.R. 10 (Xxxxx)
plan.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the basis
of their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market. Further, in determining such
aggregate amount, the Buyer may have included securities owned by subsidiaries
of the Buyer, but only if such subsidiaries are consolidated with the Buyer in
its financial statements prepared in accordance with generally accepted
accounting principles and if the investments of such subsidiaries are managed
under the Buyer's direction. However, such securities were not included if the
Buyer is a majority-owned, consolidated subsidiary of another enterprise and the
Buyer is not itself a reporting company under the Securities Exchange Act of
1934, as amended.
L-4
5. The Buyer acknowledges that it is familiar with Rule 144A
and understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
-----------------------------------
Name of Buyer
By:
---------------------------------
Name:
Title:
Date:
-------------------------------
L-5
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year. For purposes of determining the amount of securities
owned by the Buyer or the Buyer's Family of Investment Companies, the cost of
such securities was used, except (i) where the Buyer or the Buyer's Family of
Investment Companies reports its securities holdings in its financial statements
on the basis of their market value, and (ii) no current information with respect
to the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market.
___ The Buyer owned $____________ in securities (other
than the excluded securities referred to below) as of
the end of the Buyer's most recent fiscal year (such
amount being calculated in accordance with Rule
144A).
___ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $__________ in
securities (other than the excluded securities
referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
L-6
5. The Buyer is familiar with Rule 144A and understands that
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
____________________________________
Name of Buyer or Adviser
By: ________________________________
Name:
Title:
IF AN ADVISER:
____________________________________
Name of Buyer
Date: _______________________________
L-7
EXHIBIT M
REQUEST FOR RELEASE
(for Trustee)
Loan Information
Name of Mortgagor:
------------------------------------------
Master Servicer
Loan No.:
------------------------------------------
Trustee
Name:
------------------------------------------
Address:
------------------------------------------
Trustee
Mortgage File No.:
------------------------------------------
The undersigned Master Servicer hereby acknowledges that it has
received from _______________________________________, as Trustee for the
Holders of Asset-Backed Certificates, Series 1999-2, the documents referred to
below (the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement dated as of September 1, 1999 (the "Pooling and Servicing
Agreement") among Bear Xxxxxxx Asset Backed Securities, Inc., as Depositor, EMC
Mortgage Corporation as Seller and Master Servicer and Bankers Trust Company of
California, N.A., and the Trustee.
( ) Mortgage Note dated ___________, 19__, in the original principal
sum of $________, made by __________________, payable to, or endorsed to the
order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no. ______ in
the County Recorder's Office of the County of ________________, State of
_______________ in book/reel/docket _______________ of official records at
page/image_________________.
( ) Deed of Trust recorded on _________________ as instrument
no. ________________ in the County Recorder's Office of the County
of ________________, State of _______________ in book/reel/docket ___________ of
official records at page/image____________________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
_________________ as instrument no. __________ in the County Recorder's Office
of the County of __________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
M-1
( ) Other documents, including any amendments, assignments or
other assumptions of the Mortgage Note or Mortgage.
( ) ----------------------------------------------
( ) ----------------------------------------------
( ) ----------------------------------------------
( ) ----------------------------------------------
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall the Master
Servicer assert or seek to assert any claims or rights of setoff to or against
the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document previously
requested from the Mortgage File to the Trustee when the need therefor no longer
exists, unless the Mortgage Loan relating to the Documents has been liquidated
and the proceeds thereof have been remitted to the Certificate Account and
except as expressly provided in the Agreement.
(4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Master Servicer shall at
all times be earmarked for the account of the Trustee, and the Master Servicer
shall keep the Documents and any proceeds separate and distinct from all other
property in the Master Servicer's possession, custody or control.
[Master Servicer]
By _______________________________
Its ________________________________
Date: _________________, 19__
M-2
EXHIBIT N
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full, Repurchased or Replaced]
OFFICER'S CERTIFICATE AND TRUST RECEIPT
ASSET-BACKED CERTIFICATES,
Series 1999-2
__________________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE Master Servicer, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
[ALL PAYMENTS OF PRINCIPAL AND INTEREST HAVE BEEN MADE.] [THE [PURCHASE PRICE]
[MORTGAGE LOAN REPURCHASE PRICE] FOR SUCH MORTGAGE LOANS HAS BEEN PAID.] [THE
MORTGAGE LOANS HAVE BEEN LIQUIDATED AND THE RELATED [INSURANCE PROCEEDS]
[LIQUIDATION PROCEEDS] HAVE BEEN DEPOSITED PURSUANT TO SECTION 3.13 OF THE
POOLING AND SERVICING AGREEMENT.] [A REPLACEMENT MORTGAGE LOAN HAS BEEN
DELIVERED TO THE TRUSTEE IN THE MANNER AND OTHERWISE IN ACCORDANCE WITH THE
CONDITIONS SET FORTH IN SECTIONS 2.02 AND 2.03 OF THE POOLING AND SERVICING
AGREEMENT.]
LOAN NUMBER:_______________ BORROWER'S NAME:_____________
COUNTY:____________________
[For Substitution or Repurchase Only: The Master Servicer certifies that [an]
[no] opinion is required by Section 2.05 [and is attached hereto].]
I HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
THAT ARE REQUIRED TO BE DEPOSITED IN THE CERTIFICATE ACCOUNT PURSUANT TO SECTION
3.05 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
____________ _____________________ DATED:____________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
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Exhibit O
[Exhibit O is a photocopy
of the Depository Agreement
as delivered.]
[see appropriate documents delivered at closing]
O-1
