BEAR XXXXXXX ASSET BACKED SECURITIES, INC.,
Depositor
EMC MORTGAGE CORPORATION,
Seller and Master Servicer
and
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
Trustee and Securities Administrator
----------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 2001
----------------------------------------
BEAR XXXXXXX ASSET BACKED SECURITIES TRUST 2001-AC2
ASSET-BACKED CERTIFICATES, SERIES 2001-AC2
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.01 DEFINED TERMS...........................................................6
ARTICLE II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01 CONVEYANCE OF TRUST FUND...............................................48
Section 2.02 ACCEPTANCE OF THE MORTGAGE LOANS.......................................49
Section 2.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER SERVICER AND
THE SELLER.............................................................51
Section 2.03(A)ASSIGNMENT OF INTERESTS IN THE NATIONAL CITY SUBSERVICING AGREEMENT
......................................................................60
Section 2.04 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR........................61
Section 2.05 DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH SUBSTITUTIONS AND
REPURCHASES............................................................62
Section 2.06 COUNTERSIGNATURE AND DELIVERY OF CERTIFICATES..........................63
Section 2.07 COVENANTS OF THE MASTER SERVICER.......................................63
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 MASTER SERVICER........................................................64
Section 3.02 REMIC-RELATED COVENANTS................................................65
Section 3.03 SUBSERVICING; NATIONAL CITY SUBSERVICING AGREEMENT; MONITORING OF
SUBSERVICERS; ENFORCEMENT OF OBLIGATIONS...............................65
Section 3.04 SUCCESSOR MASTER SERVICER AND SUBSERVICING AGREEMENTS..................66
Section 3.05 RIGHTS OF THE DEPOSITOR AND THE TRUSTEE IN RESPECT OF THE MASTER
SERVICER ..............................................................67
Section 3.06 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.............................67
Section 3.07 RELEASE OF MORTGAGE FILES..............................................68
Section 3.08 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER SERVICER TO BE
HELD FOR TRUSTEE.......................................................69
Section 3.09 MAINTENANCE OF HAZARD INSURANCE........................................69
Section 3.10 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.......................70
i
Section 3.11 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.................70
Section 3.12 TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE POLICIES AND
DOCUMENTS..............................................................71
Section 3.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS; DETERMINATION OF EXCESS
LIQUIDATION PROCEEDS AND REALIZED LOSSES; REPURCHASES OF CERTAIN
MORTGAGE LOANS.........................................................71
Section 3.14 SERVICING COMPENSATION.................................................74
Section 3.15 REO PROPERTY...........................................................74
Section 3.16 ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE..........................74
Section 3.17 ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT.......................75
Section 3.18 REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION..................75
Section 3.19 ACCESS TO CERTAIN DOCUMENTATION........................................76
Section 3.20 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS..........................76
ARTICLE IV
ACCOUNTS
Section 4.01 COLLECTION OF MORTGAGE LOAN PAYMENTS; PROTECTED ACCOUNT................78
Section 4.02 PERMITTED WITHDRAWALS FROM THE PROTECTED ACCOUNT.......................80
Section 4.03 COLLECTION OF TAXES; ASSESSMENTS AND SIMILAR ITEMS; ESCROW ACCOUNTS
......................................................................81
Section 4.04 DISTRIBUTION ACCOUNT...................................................82
Section 4.05 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION ACCOUNT
......................................................................82
ARTICLE V
DISTRIBUTIONS AND ADVANCES
BY THE MASTER SERVICER
Section 5.01 ADVANCES...............................................................84
Section 5.02 COMPENSATING INTEREST PAYMENTS.........................................84
Section 5.03 REMIC DISTRIBUTIONS....................................................85
Section 5.04 DISTRIBUTIONS..........................................................85
Section 5.04A ALLOCATION OF REALIZED LOSSES..........................................89
Section 5.05 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS...............................89
Section 5.06 REMIC DESIGNATIONS AND ALLOCATIONS.....................................92
ARTICLE VI
THE CERTIFICATES
ii
Section 6.01 THE CERTIFICATES.......................................................98
Section 6.02 CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATE............................................................99
Section 6.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.....................102
Section 6.04 PERSONS DEEMED OWNERS.................................................102
Section 6.05 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.............103
Section 6.06 BOOK-ENTRY CERTIFICATES...............................................103
Section 6.07 NOTICES TO DEPOSITORY.................................................104
Section 6.08 DEFINITIVE CERTIFICATES...............................................104
Section 6.09 MAINTENANCE OF OFFICE OR AGENCY.......................................104
ARTICLE VII
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
Section 7.01 RESPECTIVE LIABILITIES OF THE DEPOSITOR, THE MASTER SERVICER AND THE
SELLER................................................................105
Section 7.02 MERGER OR CONSOLIDATION OF THE DEPOSITOR, THE MASTER SERVICER OR THE
SELLER................................................................105
Section 7.03 LIMITATION ON LIABILITY OF THE DEPOSITOR, THE SELLER, THE MASTER
SERVICER AND OTHERS...................................................105
Section 7.04 LIMITATION ON RESIGNATION OF MASTER SERVICER..........................106
Section 7.05 ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS........................106
ARTICLE VIII
DEFAULT; TERMINATION OF MASTER SERVICER
Section 8.01 EVENTS OF DEFAULT.....................................................106
Section 8.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR..............................108
Section 8.03 NOTIFICATION TO CERTIFICATEHOLDERS....................................109
ARTICLE IX
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 9.01 DUTIES OF TRUSTEE AND SECURITIES ADMINISTRATOR........................110
Section 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
.....................................................................111
Section 9.03 TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE FOR CERTIFICATES OR
MORTGAGE LOANS........................................................113
Section 9.04 TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN CERTIFICATES.............113
iii
Section 9.05 TRUSTEE'S FEE AND EXPENSES OF TRUSTEE AND SECURITIES ADMINISTRATOR
.....................................................................113
Section 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES ADMINISTRATOR.....114
Section 9.07 INSURANCE.............................................................114
Section 9.08 RESIGNATION AND REMOVAL OF TRUSTEE AND SECURITIES ADMINISTRATOR.......114
Section 9.09 SUCCESSOR TRUSTEE OR SECURITIES ADMINISTRATOR.........................115
Section 9.10 MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES ADMINISTRATOR........116
Section 9.11 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.........................116
Section 9.12 TAX MATTERS...........................................................117
ARTICLE X
TERMINATION
Section 10.01 TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL MORTGAGE LOANS
.....................................................................120
Section 10.02 FINAL DISTRIBUTION ON THE CERTIFICATES................................120
Section 10.03 ADDITIONAL TERMINATION REQUIREMENTS...................................121
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 AMENDMENT.............................................................123
Section 11.02 RECORDATION OF AGREEMENT; COUNTERPARTS................................124
Section 11.03 GOVERNING LAW.........................................................124
Section 11.04 INTENTION OF PARTIES..................................................124
Section 11.05 NOTICES...............................................................125
Section 11.06 SEVERABILITY OF PROVISIONS............................................126
Section 11.07 ASSIGNMENT............................................................126
Section 11.08 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS............................126
Section 11.09 INSPECTION AND AUDIT RIGHTS...........................................127
Section 11.10 CERTIFICATES NONASSESSABLE AND FULLY PAID.............................127
iv
EXHIBITS
Exhibit A-1 Form of Class I-A1 Certificates
Exhibit A-2 Form of Class I-A2 Certificates
Exhibit A-3 Form of Class I-A3 Certificates
Exhibit A-4 Form of Class I-A4 Certificates
Exhibit A-5 Form of Class I-A5 Certificates
Exhibit A-6 Form of Class I-A-IO Certificates
Exhibit A-7 Form of Class II-F Certificates
Exhibit A-8 Form of Class II-INV Certificates
Exhibit A-9 Form of Class II-A2 Certificates
Exhibit A-10 Form of Class II-A3 Certificates
Exhibit A-11 Form of Class M-1 Certificates
Exhibit A-12 Form of Class M-2 Certificates
Exhibit A-13 Form of Class B Certificates
Exhibit A-14 Form of Class B-IO Certificates
Exhibit A-15 Form of Class P Certificates
Exhibit A-16 Form of Class R-I Certificate
Exhibit A-17 Form of Class R-II Certificate
Exhibit A-18 Form of Class R-III Certificate
Exhibit A-19 Form of Class R-IV Certificate
Exhibit B Mortgage Loan Schedule
Exhibit C-1 Form of Initial Certification of Trustee
Exhibit C-2 Form of Interim Certification of Trustee
Exhibit C-3 Form of Final Certification of Trustee
Exhibit D Form of Transfer Affidavit
Exhibit E Form of Transferor Certificate
Exhibit F Form of Investment Letter (Non-Rule 144A)
Exhibit G Form of Rule 144A Investment Letter
Exhibit H Form of Request for Release
Exhibit I DTC Letter of Representations
Exhibit J Schedule of Mortgage Loans with Lost Notes
v
POOLING AND SERVICING AGREEMENT, dated as of October 1, 2001,
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 a master servicer (in such
capacity, the "Master Servicer"), XXXXX FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, as trustee (in such capacity, the
"Trustee" and as securities administrator (in such capacity, the "Securities
Administrator").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates.
REMIC I
-------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as "REMIC I." The Class R-I Certificates will
represent the sole class of "residual interests" in REMIC I for purposes of the
REMIC Provisions (as defined herein) under federal income tax law. The following
table irrevocably sets forth the designation, the Uncertificated REMIC I
Pass-Through Rate, the initial Uncertificated Principal Balance, and solely for
purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC I Regular Interests. None
of the REMIC I Regular Interests will be certificated.
Uncertificated REMIC I Initial Uncertificated Assumed Final
Designation Pass-Through Rate Principal Balance Maturity Date(1)
-------------------- -------------------------- ---------------------------- -----------------------
LT1A Variable(2) $ 181,976,254.00 November 25, 2031
LT1B Variable(2) $ 20,220,000.00 November 25, 2031
LT2 Variable(2) $ 326,265,756.00 November 25, 2031
LT1P Variable(2) $ 100.00 November 25, 2031
-------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month of the maturity date for
the Mortgage Loan with the latest maturity date has been designated as the
"latest possible maturity date" for each REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC I
Pass-Through Rate" herein.
REMIC II
--------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II". The Class R-II Certificates will represent the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions.
-1-
The following table irrevocably sets forth the designation, the
Uncertificated REMIC II Pass- Through Rate, the initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC
II Regular Interests. None of the REMIC II Regular Interests will be
certificated.
Uncertificated REMIC II Initial Uncertificated Assumed Final
Designation Pass-Through Rate Principal Balance Maturity Date(1)
-------------------- -------------------------- ---------------------------- -----------------------
LT1AA Variable(2) $ 198,152,328.92 November 25, 2031
LTAI1 Variable(2) $ 676,370.00 November 25, 2031
LTAI2 Variable(2) $ 629,270.00 November 25, 2031
LTAI3 Variable(2) $ 130,900.00 November 25, 2031
LTAI4 Variable(2) $ 212,310.00 November 25, 2031
LTAI5 Variable(2) $ 256,850.00 November 25, 2031
LTIM1 Variable(2) $ 45,491.86 November 25, 2031
LTIM2 Variable(2) $ 40,437.63 November 25, 2031
LTIB Variable(2) $ 30,329.18 November 25, 2031
LTIZZ Variable(2) $ 2,021,966.40 November 25, 2031
LT2AA Variable(2) $ 319,740,440.88 November 25, 2031
LTAII1 Variable(2) $ 2,438,340.00 November 25, 2031
LTIIA2 Variable(2) $ 372,900.00 November 25, 2031
LTAII3 Variable(2) $ 263,810.00 November 25, 2031
LTIIM1 Variable(2) $ 73,408.14 November 25, 2031
LTIIM2 Variable(2) $ 65,252.37 November 25, 2031
LTIIB Variable(2) $ 48,940.82 November 25, 2031
LTIIZZ Variable(2) $ 3,262,663.80 November 25, 2031
LT2A-IO Variable(2) N/A(3) November 25, 2031
-------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC II Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC II
Pass-Through Rate" herein.
(3) REMIC II Regular Interest LT2A-IO will not have an Uncertificated Principal
Balance, but will accrue interest on its Uncertificated Notional Amount
outstanding from time to time which shall equal the Uncertificated
Principal Balance of REMIC I Regular Interest LT1B.
REMIC III
---------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III". The Class R-III Certificates will represent the
sole class of "residual interests" in REMIC III for purposes of the REMIC
Provisions.
-2-
The following table irrevocably sets forth the designation, the
Uncertificated REMIC III Pass- Through Rate, the initial Uncertificated
Principal Balance, and solely for purposes of satisfying Treasury regulation
Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the
REMIC III Regular Interests. None of the REMIC III Regular Interests will be
certificated.
Uncertificated REMIC III Initial Uncertificated Assumed Final
Designation Pass-Through Rate Principal Balance Maturity Date(1)
-------------------- -------------------------- ---------------------------- -----------------------
LT3-AI1 Variable(2) $67,637,000 November 25, 2031
LT3-AI2 Variable(2) $62,927,000 November 25, 2031
LT3-AI3 Variable(2) $13,090,000 November 25, 2031
LT3-AI4 Variable(2) $21,231,000 November 25, 2031
LT3-AI5 Variable(2) $25,685,000 November 25, 2031
LT3A-IO Variable(2) N/A(3) November 25, 2031
LT3-AII1 Variable(2) $243,835,000 November 25, 2031
LT3-AII2 Variable(2) $37,290,000 November 25, 2031
LT3-AII3 Variable(2) $26,381,000 November 25, 2031
LT3-M1 Variable(2) $11,890,000 November 25, 2031
LT3-M2 Variable(2) $10,569,000 November 25, 2031
LT3-B Variable(2) $7,927,000 November 25, 2031
LT3-BIO Variable(2) $1,010.00 November 25, 2031
LT3-P N/A(5) $100 November 25, 2031
-------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each Class of Certificates that
represents one or more of the "regular interests" in REMIC III.
(2) Calculated in accordance with the definition of "Uncertificated REMIC II
Pass-Through Rate" herein.
(3) REMIC III Regular Interest LT3-BIO will accrue interest at the
Uncertificated REMIC III Pass-Through Rate on the Uncertificated Notional
Amount of REMIC III Regular Interest LT3-BIO outstanding from time to time
which shall equal the aggregate of the Uncertificated Principal Balances of
the REMIC II Regular Interests. REMIC III Regular Interest LT3-BIO will not
accrue interest on their Uncertificated Principal Balance.
(4) REMIC III Regular Interest LT3-AIO do not have an Uncertificated Principal
Balance and are not entitled to distributions of principal. REMIC III
Regular Interest LT3-AIO shall be entitled to receive 100% of amounts
received on REMIC II Regular Interest LT2-AIO.
(5) REMIC III Regular Interest LT3-P will not accrue interest.
REMIC IV
--------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the REMIC III Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC IV". The Class R-IV Certificates will represent the sole
class of "residual interests" in REMIC IV for purposes of the REMIC Provisions.
The following table irrevocably sets forth the Class designation,
Pass-Through Rate and Initial Certificate Principal Balance for each Class of
Certificates that represents one or more of the "regular interests" in REMIC IV
created hereunder:
-3-
Initial Certificate Assumed Final
Class Designation Principal Balance Pass-Through Rate Maturity Date(1)
-------------------- -------------------------- ---------------------------- -----------------------
Class I-A1
Class I-A1 $ 67,637,000 Pass-Through Rate November 25, 2031
Class I-A2
Class I-A2 $ 62,927,000 Pass-Through Rate November 25, 2031
Class I-A3
Class I-A3 $ 13,090,000 Pass-Through Rate November 25, 2031
Class I-A4
Class I-A4 $ 21,231,000 Pass-Through Rate November 25, 2031
Class I-A5
Class I-A5 $ 25,685,000 Pass-Through Rate November 25, 2031
Class I-A-IO
Class I-A-IO N/A(3) Pass-Through Rate November 25, 2031
Class II-F
Class II-F $ 243,835,000 Pass-Through Rate November 25, 2031
Class II-INV
Class II-INV N/A(4) Pass-Through Rate November 25, 2031
Class II-A2
Class II-A2 $ 37,290,000 Pass-Through Rate November 25, 2031
Class II-A3
Class II-A3 $ 26,381,000 Pass-Through Rate November 25, 2031
Class M-1
Class M-1 $ 11,890,000 Pass-Through Rate November 25, 2031
Class M-2
Class M-2 $ 10,569,000 Pass-Through Rate November 25, 2031
Class B
Class B $ 7,927,000 Pass-Through Rate November 25, 2031
Class B-IO
Class B-IO $ 11.00 Pass-Through Rate November 25, 2031
Class P $ 100 N/A(5) November 25, 2031
-------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each Class of Certificates that
represents one or more of the "regular interests" in REMIC IV.
(2) The Class B-IO Certificates will accrue interest at the Class B-IO
Pass-Through Rate on the Certificate Notional Balance of the Class B-IO
Certificates outstanding from time to time which shall equal 100% of
amounts received on REMIC III Regular Interest LT3-BIO. The Class B-IO
Certificates will not accrue interest on their Certificate Principal
Balance.
(3) The Class I-A-IO Certificates do not have a Certificate Principal Balance
and are not entitled to distributions of principal. The Class I-A-IO
Certificates accrue interest on a Certificate Notional Balance calculated
in accordance with the definition of "Certificate Notional Balance" herein.
(4) The Certificate Principal Balance of the Class II-INV Certificates is equal
to the Certificate Principal Balance of the Class II-F Certificates.
(5) The Class P Certificates do not accrue interest.
-4-
The Trust Fund shall be named, and may be referred to as, the "Bear
Xxxxxxx Asset Backed Securities Trust 2001-AC2." The Certificates issued
hereunder may be referred to as "Asset-Backed Certificates Series 2001-AC2"
(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 Securities Administrator, the Seller and the
Trustee agree as follows:
-5-
ARTICLE I
DEFINITIONS
Section 1.01 DEFINED TERMS.
In addition to those 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:
ACCEPTED MASTER SERVICING PRACTICES: With respect to any Mortgage
Loan, as applicable, either (a) those customary mortgage servicing practices of
prudent mortgage servicing institutions that master service mortgage loans of
the same type and quality as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located, to the extent applicable to the Trustee
(except in its capacity as successor to the Master Servicer), or (b) with
respect to the Master Servicer, as provided in this Agreement or, with respect
to any subservicer, as provided in the related Subservicing Agreement, but, in
each case, in no event below the standard set forth in clause (a).
ACCOUNT: The Distribution Account and any Protected Account.
ACCRUAL PERIOD: With respect to the Certificates (other than the
Class I-A1 Certificates, Class II-F Certificates, Class II-INV Certificates and
Class P Certificates) and any Distribution Date, the calendar month immediately
preceding such Distribution Date. With respect to the Class I-A1 Certificates,
Class II-F Certificates and Class II-INV Certificates and any Distribution Date,
the period from and including the immediately preceding Distribution Date (or,
in the case of the first Distribution Date, the Closing Date with respect to the
Class I-A1 Certificates or October 25, 2001 with respect to the Class II-F
Certificates and the Class II-INV Certificates) to but excluding such
Distribution Date. All calculations of interest on the Certificates (other than
the Class I-A1 Certificates and the Class P 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 Class I-A1 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.
ADVANCE: An advance of delinquent payments of principal or
interest in respect of a Mortgage Loan required to be made by the Master
Servicer as provided in Section 5.01 or by any subservicer in accordance with
the related Subservicing Agreement.
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 Master Servicer's Protected 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 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.
-6-
APPLIED REALIZED LOSS AMOUNT: With respect to any Distribution
Date and a Class of Subordinated Certificates (other than the Class B-IO
Certificates and the Residual Certificates) 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 that Class of Certificates pursuant to this
Agreement, which shall on any such Distribution Date equal with respect to the
Class B Certificates, Class M-2 Certificates and Class M-1 Certificates, in that
order, so long as their respective Certificate Principal Balances have not been
reduced to zero, the amount, if any, by which, (I) the aggregate Certificate
Principal Balance of all of the Certificates (after all distributions of
principal on such Distribution Date) exceeds (ii) the aggregate Stated Principal
Balance of all of the 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.
ASSUMPTION AGREEMENT: The Assignment, Assumption and Recognition
Agreement dated October 30, 2001, by and among the Seller, National City and the
Trust acknowledging the transfer of the National City Subservicing Agreement to
the Trust.
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 6.06). As of the Closing
Date, each Class of Regular Certificates (other than the Class P and the Class
B-IO 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,
Minneapolis, Minnesota or the city in which the Corporate Trust Office of the
Trustee or the principal office of the Master Servicer 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 A-1 through A-19.
CERTIFICATE GROUP: Either the Group I Certificates or the Group
II Certificates, as applicable.
CERTIFICATE NOTIONAL BALANCE: As to any Class I-A-IO Certificate
and any Distribution Date, an amount equal to the 100% of the interest payable
on REMIC III Regular Interest LT3-AIO. With respect to the Class II-INV
Certificate and any Distribution Date, the Certificate Principal Balance of the
Class II-F Certificates, which for federal income tax purposes, is the
equivalent of the
-7-
Uncertificated Principal Balance of REMIC III Regular Interest LT3-AII1. With
respect to the Class B-IO Certificates, immediately prior to any Distribution
Date, 100% of the interest payable on REMIC III Regular Interest LT3-BIO.
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 I-A-IO, Class II-INV or Class B-IO Certificate) 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 5.04, and (ii) in the case of any Subordinated
Certificate, any Applied Realized Loss Amounts allocated to such Certificate on
previous Distribution Dates. 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
6.02 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).
CLASS: All Certificates bearing the same Class designation as set
forth in Section 6.01 hereof.
CLASS A CERTIFICATES: The Senior Certificates.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date,
an amount equal to the excess, if any, of (i) the aggregate Certificate
Principal Balance of the Class A Certificates immediately prior to such
Distribution Date over (ii) the excess of (a) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period over
(b) the product of (1) the aggregate Stated Principal Balance of the Mortgage
Loans as of the last day of the related Due Period and (2) the sum of (x) 11.5%
and (y) the Current Specified Overcollateralization Percentage for such
Distribution Date.
CLASS I-A1 CERTIFICATE: Any Certificate designated as a "Class
I-A1 Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class I-A1 Certificates as set forth herein and evidencing a Regular
Interest in REMIC IV.
CLASS I-A1 PASS-THROUGH RATE: For the first Distribution Date,
2.604% per annum and for any Distribution Date thereafter, the lesser of (i)
One-Month LIBOR for the related Accrual Period plus 0.25% per annum and (ii) the
Class 1-A1 Rate Cap for such Distribution Date; for federal income tax purposes,
the equivalent of the foregoing is expressed as 100% of amounts payable on REMIC
III Regular Interest LT3-AI1.
-8-
CLASS I-A1 RATE CAP: With respect to any Distribution Date for
the Class I-A1 Certificates the product of (i) a fraction, the numerator of
which is the actual number of days elapsed in the related Accrual Period and the
denominator of which is 360, (ii) 12 and (iii) the Group I Net Rate Cap for such
Distribution Date.
CLASS I-A2 CERTIFICATE: Any Certificate designated as a "Class
I-A2 Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class I-A2 Certificates as set forth herein and evidencing a Regular
Interest in REMIC IV.
CLASS I-A2 PASS-THROUGH RATE: On any Distribution Date, the
lesser of (i) 4.910% per annum and (ii) the Group I Net Rate Cap for such
Distribution Date; for federal income tax purposes, the equivalent of the
foregoing is expressed as 100% of amounts payable on REMIC III Regular Interest
LT3-AI2.
CLASS I-A3 CERTIFICATE: Any Certificate designated as a "Class
I-A3 Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class I-A3 Certificates as set forth herein and evidencing a Regular
Interest in REMIC IV
CLASS I-A3 PASS-THROUGH RATE: On any Distribution Date, the
lesser of (i) 5.720% per annum and (ii) the Group I Net Rate Cap for such
Distribution Date; for federal income tax purposes, the equivalent of the
foregoing is expressed as 100% of amounts payable on REMIC III Regular Interest
LT3-AI3.
CLASS I-A4 CERTIFICATE: Any Certificate designated as a "Class
I-A4 Certificate" on the face thereof, in the form of Exhibit A-4 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class I-A4 Certificates as set forth herein and evidencing a Regular
Interest in REMIC IV.
CLASS I-A4 PASS-THROUGH RATE: On any Distribution Date, the
lesser of (i) if such Distribution Date occurs on or prior to the Optional
Termination Date, 6.160% per annum, and thereafter, 6.660% per annum and (ii)
the Group I Net Rate Cap for such Distribution Date; for federal income tax
purposes, the equivalent of the foregoing is expressed as 100% of amounts
payable on REMIC III Regular Interest LT3-AI4.
CLASS I-A5 CERTIFICATE: Any Certificate designated as a "Class
I-A5 Certificate" on the face thereof, in the form of Exhibit A-5 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class I-A5 Certificates as set forth herein and evidencing a Regular
Interest in REMIC IV.
CLASS I-A5 PASS-THROUGH RATE: On any Distribution Date, the
lesser of (i) if such Distribution Date occurs on or prior to the Optional
Termination Date, 6.380% per annum, and thereafter, 6.880% per annum and (ii)
the Group I Net Rate Cap for such Distribution Date; for federal income tax
purposes, the equivalent of the foregoing is expressed as 100% of amounts
payable on REMIC III Regular Interest LT3-AI5.
-9-
CLASS I-A-IO CERTIFICATE: Any Certificate designated as a "Class
I-A-IO Certificate" on the face thereof, in the form of Exhibit A-6 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class I-A-IO Certificates as set forth herein and evidencing a Regular
Interest in REMIC IV.
CLASS I-A-IO NET RATE CAP: For any Distribution Date, the
weighted average of the Net Mortgage Rates of the Mortgage Loans in Loan Group I
as of the last day of the related Due Period.
CLASS I-A-IO PASS-THROUGH RATE: With respect to the Class I-A-IO
Certificates and (a) any of the first through the eighteenth Distribution Dates,
8.00% per annum, (b) any of the nineteenth through the twenty-fourth
Distribution Dates, 7.25% per annum, (c) any of the twenty- fifth through the
thirtieth Distribution Dates, 7.00% per annum, and (d) any Distribution Date
after the thirtieth Distribution Date, 0.00% per annum. The interest calculated
in the preceding sentence shall be the equivalent of 100% of the interest
payable on REMIC III Regular Interest LT3A-IO.
CLASS II-A2 CERTIFICATE: Any Certificate designated as a "Class
II-A2 Certificate" on the face thereof, in the form of Exhibit A-9 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class II-A2 Certificates as set forth herein and evidencing a Regular
Interest in REMIC IV.
CLASS II-A2 PASS-THROUGH RATE: On any Distribution Date, the
lesser of (i) 5.820% per annum and (ii) the Group II Net Rate Cap for such
Distribution Date; for federal income tax purposes, the equivalent of the
foregoing is expressed as 100% of amounts payable on REMIC III Regular Interest
LT3-AII2.
CLASS II-A3 CERTIFICATE: Any Certificate designated as a "Class
II-A3 Certificate" on the face thereof, in the form of Exhibit A-9 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class II-A3 Certificates as set forth herein and evidencing a Regular
Interest in REMIC IV.
CLASS II-A3 PASS-THROUGH RATE: On any Distribution Date, the
lesser of (i) if such Distribution Date occurs on or prior to the Optional
Termination Date, 6.450% per annum, and thereafter 6.950% per annum and (ii) the
Group II Net Rate Cap for such Distribution Date; for federal income tax
purposes, the equivalent of the foregoing is expressed as 100% of amounts
payable on REMIC III Regular Interest LT3-AII3.
CLASS II-F CERTIFICATE: Any Certificate designated as a "Class
II-F Certificate" on the face thereof, in the form of Exhibit A-7 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class II-F Certificates as set forth herein and evidencing a Regular
Interest in REMIC IV.
CLASS II-F PASS-THROUGH RATE: For the first Distribution Date,
2.954% per annum and for any Distribution Date thereafter, the lesser of (i)
One-Month LIBOR for the related Accrual Period plus 0.60% per annum and (ii) the
lesser of (A) 8.00% per annum and (B) the Group II Net Rate Cap for such
Distribution Date.
-10-
CLASS II-INV CERTIFICATE: Any Certificate designated as a "Class
II-INV Certificate" on the face thereof, in the form of Exhibit A-8 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class II-INV Certificates as set forth herein and evidencing a Regular
Interest in REMIC IV.
CLASS II-INV PASS-THROUGH RATE: For the first Distribution Date,
5.046% per annum and for any Distribution Date thereafter, the lesser of (i)
7.40% per annum minus One-Month LIBOR for the related Accrual Period and (ii)
the lesser of (A) 7.40% per annum and (B) the Group II Net Rate Cap minus the
Class II-F Pass-Through Rate, in each case for such Distribution Date; for
federal income tax purposes, the equivalent of the foregoing is expressed as the
excess, if any, of (A) the Uncertificated Pass-Through Rate for REMIC III
Regular Interest LT3-AII1 over (B) the lesser of One-Month LIBOR for the related
Accrual Period plus 0.60% per annum and the Group II Net Rate Cap.
CLASS B CERTIFICATE: Any Certificate designated as a "Class B
Certificate" on the face thereof, in the form of Exhibit A-13 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B Certificates as set forth herein and evidencing a Regular Interest
in REMIC IV.
CLASS B PASS-THROUGH RATE: On any Distribution Date, the lesser
of (i) if such Distribution Date occurs on or prior to the Optional Termination
Date, 6.750% per annum, and thereafter, 7.250% per annum and (ii) the
Subordinated Certificates Rate Cap for such Distribution Date; for federal
income tax purposes, the equivalent of the foregoing is expressed as 100% of
amounts payable on REMIC III Regular Interest LT3B.
CLASS B PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date,
an amount equal to the excess, if any, of (i) the Certificate Principal Balance
of the Class B Certificates immediately prior to such Distribution Date over
(ii) the excess of (a) the aggregate Stated Principal Balance of the Mortgage
Loans as of the last day of the related Due Period over (b) the sum of (1) the
Certificate Principal Balance of the Class A Certificates (after taking into
account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (2) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date), (3) the Certificate Principal
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on such Distribution Date) and (4)
the product of (x) the aggregate Stated Principal Balance of the Mortgage Loans
as of the last day of the related Due Period and (y) the Current Specified
Overcollateralization Percentage for such Distribution Date.
CLASS B-IO CERTIFICATE: Any Certificate designated as a "Class
B-IO Certificate" on the face thereof, in the form of Exhibit A-14 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class B-IO Certificates herein and evidencing a Regular Interest in REMIC
IV.
CLASS B-IO PASS-THROUGH RATE: 100% of the interest payable on
REMIC III Regular Interest LT3-BIO.
-11-
CLASS M-1 CERTIFICATE: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-11 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-1 Certificates as set forth herein and evidencing a Regular Interest
in REMIC IV.
CLASS M-1 PASS-THROUGH RATE: On any Distribution Date, the lesser
of (i) if such Distribution Date occurs on or prior to the Optional Termination
Date, 6.050% per annum, and thereafter, 6.550% per annum and (ii) the
Subordinated Certificates Rate Cap for such Distribution Date; for federal
income tax purposes, the equivalent of the foregoing is expressed as 100% of
amounts payable on REMIC III Regular Interest LT3-M1.
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, an amount equal to the excess, if any, of (i) the Certificate Principal
Balance of the Class M-1 Certificates immediately prior to such Distribution
Date over (ii) the excess of (a) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period over (b) the sum of
(1) the Certificate Principal Balance of the Class A Certificates (after taking
into account the payment of the Class A Principal Distribution Amount on such
Distribution Date and (2) the product of (x) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period and
(y) the sum of (I) 7.00% and (II) the Current Specified Overcollateralization
Percentage for such Distribution Date.
CLASS M-2 CERTIFICATE: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-12 hereto,
representing the right to its Percentage Interest of distributions provided for
the Class M-2 Certificates as set forth herein and evidencing a Regular Interest
in REMIC IV.
CLASS M-2 PASS-THROUGH RATE: On any Distribution Date, the lesser
of (i) if such Distribution Date occurs on or prior to the Optional Termination
Date, 6.300% per annum, and thereafter, 6.800% per annum and (ii) the
Subordinated Certificates Rate Cap for such Distribution Date; for federal
income tax purposes, the equivalent of the foregoing is expressed as 100% of
amounts payable on REMIC III Regular Interest LT3-M2.
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, an amount equal to the excess, if any, of (i) the Certificate Principal
Balance of the Class M-2 Certificates immediately prior to such Distribution
Date over (ii) the excess of (a) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period over (b) the sum of
(1) the Certificate Principal Balance of the Class A Certificates (after taking
into account the payment of the Class A Principal Distribution Amount on such
Distribution Date), (2) the Certificate Principal Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on such Distribution Date) and (3) the product of (x) the
aggregate Stated Principal Balance of the Mortgage Loans as of the last day of
the related Due Period and (y) the sum of (I) 3.00% and (II) the Current
Specified Overcollateralization Percentage for such Distribution Date.
CLASS P CERTIFICATE: Any Certificate designated as a "Class P
Certificate" on the face thereof, in the form of Exhibit A-15 hereto,
representing the right to its Percentage Interest of
-12-
distributions provided for the Class P Certificates as set forth herein and
evidencing a Regular Interest in REMIC IV.
CLASS R-I CERTIFICATE: Any Certificate designated a "Class R-I
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-16 hereto, evidencing the Residual Interest in REMIC I and representing the
right to the Percentage Interest of distributions provided for the Class R-I
Certificates as set forth herein.
CLASS R-II CERTIFICATE: Any Certificate designated a "Class R-II
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-17 hereto, evidencing the Residual Interest in REMIC II and representing the
right to the Percentage Interest of distributions provided for the Class R-II
Certificates as set forth herein.
CLASS R-III CERTIFICATE: Any Certificate designated a "Class
R-III Certificate" on the face thereof, in substantially the form set forth in
Exhibit A-18 hereto, evidencing the Residual Interest in REMIC III and
representing the right to the Percentage Interest of distributions provided for
the Class R-III Certificates as set forth herein.
CLASS R-IV CERTIFICATE: Any Certificate designated a "Class R-III
Certificate" on the face thereof, in substantially the form set forth in Exhibit
A-19 hereto, evidencing the Residual Interest in REMIC III and representing the
right to the Percentage Interest of distributions provided for the Class R-III
Certificates as set forth herein.
CLOSING DATE: October 30, 2001.
CODE: The Internal Revenue Code of 1986, including any successor
or amendatory provisions.
COMPENSATING INTEREST: An amount, not to exceed the Servicing
Fee, to be applied by the Master Servicer pursuant to Section 5.02 to the
payment of a Prepayment Interest Shortfall on a Mortgage Loan subject to this
Agreement (other than a National City Loan); provided that with respect to each
National City Loan, National City shall be required to remit any Prepayment
Interest Shortfalls relating thereto directly to the Trustee for deposit in the
Distribution Account out of amounts otherwise payable to it as its Servicing
Fee.
CORPORATE TRUST OFFICE: The designated office of the Trustee
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, for Certificate transfer purposes, at Sixth and
Marquette, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Bear Xxxxxxx Asset Backed
Securities, Inc., Series 2001-AC2 and for all other purposes at 00000 Xxxxxx
Xxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx 00000-0000, Attention: Bear Xxxxxxx Asset
Backed Securities, Inc., Series 2001-AC2, or at such other address as the
Trustee may designate from time to time.
CORRESPONDING CERTIFICATE: With respect to:
(i) REMIC II Regular Interest LT2-AI1, the Class I-A1
Certificates,
-13-
(ii) REMIC II Regular Interest LT2-AI2, the Class I-A2
Certificates,
(iii)REMIC II Regular Interest LT2-AI3, the Class I-A3
Certificates,
(iv) REMIC II Regular Interest LT2-AI4, the Class I-A4
Certificates,
(v) REMIC II Regular Interest LT2-AI5, the Class I-A5
Certificates,
(vi) REMIC II Regular Interest LT2-AII, the Class II-A
Certificates,
(vii)REMIC II Regular Interest LT2-1M1 and REMIC II Regular
Interest LT2- 2M1, the Class M-1 Certificates,
(viii) REMIC II Regular Interest LT2-1M2 and REMIC II Regular
Interest LT2- 2M2, the Class M-2 Certificates,
(ix) REMIC II Regular Interest LT2-1B and REMIC II Regular
Interest LT2-2B, the Class B Certificates, and
(x) REMIC II Regular Interest LT2P, the Class P Certificates.
CURRENT INTEREST: As of any Distribution Date, with respect to
Certificates of each Class other than the Class P Certificates and the Residual
Certificates, (i) the interest accrued on the Certificate Principal Balance or
Certificate Notional Balance, as applicable, during the related Accrual Period
at the applicable Pass-Through Rate plus any amount previously distributed with
respect to interest for such Certificate that has been recovered as a voidable
preference by a trustee in bankruptcy minus (ii) the sum of (a) any Prepayment
Interest Shortfall for such Distribution Date, to the extent not covered by
Compensating Interest and (b) any shortfalls resulting from application of the
Relief Act during the related Due Period, provided, however, that for purposes
of calculating Current Interest for any such Class, amounts specified in clause
(ii) hereof for any such Distribution Date shall be allocated first to the Class
B-IO Certificates and the Residual Certificates in reduction of amounts
otherwise distributable to such Certificates on such Distribution Date and then
any excess shall be allocated to each Class of Offered Certificates pro rata
based on the respective amounts of interest accrued pursuant to clause (i)
hereof for each such Class on such Distribution Date.
CURRENT SPECIFIED OVERCOLLATERALIZATION PERCENTAGE: For any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the Overcollateralization Target Amount, and the denominator of which
is the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period.
CUT-OFF DATE: The close of business on October 1, 2001
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
-14-
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 6.06.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced or to be replaced
by a Replacement Mortgage Loan.
DELINQUENCY EVENT: A Delinquency Event shall have occurred and be
continuing if at any time, (x) the percent equivalent of a fraction, the
numerator of which is the aggregate Stated Principal Balance of the Mortgage
Loans that are 60 days or more Delinquent or are in bankruptcy or foreclosure or
are REO Properties, and the denominator of which is the aggregate Stated
Principal Balance of all of the Mortgage Loans as of the last day of the related
Due Period equals or exceeds (y) 50% of the Senior Enhancement Percentage.
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.
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
-15-
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
I.
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 4.03 in the name of the Trustee
for the benefit of the Certificateholders and designated "Xxxxx Fargo Bank
Minnesota, National Association, in trust for registered holders of Bear Xxxxxxx
Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2001- AC2".
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,
on or before 1:00 p.m. Eastern 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 November 2001.
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 close of business on 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 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 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
-16-
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.
EMC: EMC Mortgage Corporation, a Delaware corporation.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA RESTRICTED CERTIFICATE: Each of the Class B-IO
Certificates, Class P Certificates and Residual Certificates.
EVENT OF DEFAULT: As defined in Section 8.01 hereof.
EXCESS CASHFLOW: With respect to any Distribution Date, an
amount, if any, equal to the Remaining Excess Spread for such Distribution Date.
EXCESS LIQUIDATION PROCEEDS: To the extent not required by law to
be paid to the related Mortgagor, the excess, if any, of any Liquidation
Proceeds with respect to a Mortgage Loan over the Stated Principal Balance of
such Mortgage Loan and accrued and unpaid interest at the related Mortgage Rate
through the last day of the month in which the Mortgage Loan has been
liquidated.
EXCESS SPREAD: With respect to any Distribution Date, the excess,
if any, of (I) the Interest Funds for such Distribution Date over (ii) the sum
of Current Interest on the Offered Certificates and Interest Carry Forward
Amounts on the Class A Certificates, in each case for such Distribution Date.
EXTRA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the lesser of (i) the excess, if any, of the
Overcollateralization Target Amount for such Distribution Date over the
Overcollateralization Amount for such Distribution Date (after giving effect to
distributions of principal on the Certificates other than any Extra Principal
Distribution Amount) and (ii) the Excess Spread for such Distribution Date.
XXXXXX MAE: Xxxxxx Xxx (formerly, Federal National Mortgage
Association), or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
XXXXXXX MAC: Federal Home Loan Mortgage Corporation, or any
successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989.
-17-
GROUP I CERTIFICATES: The Class I-A1 Certificates, Class I-A2
Certificates, the Class I-A3 Certificates, Class I-A4 Certificates and Class
I-A5 Certificates.
GROUP I MARKER RATE: With respect to REMIC III Regular Interest
LT3-BIO Certificates and any Distribution Date, a per annum rate equal to two
(2) times the weighted average of the Uncertificated REMIC II Pass-Through Rates
for REMIC II Regular Interest LT2-AI1, REMIC II Regular Interest LT2-AI2, REMIC
II Regular Interest LT2-AI3, REMIC II Regular Interest LT2-AI4, REMIC II Regular
Interest LT2-AI5, REMIC II Regular Interest LT2-1MI, REMIC II Regular Interest
LT2-1M2, REMIC II Regular Interest LT2-1B and REMIC II Regular Interest LT2-1ZZ,
with the rate on REMIC II Regular Interest LT2-AI1 subject to a cap equal to the
lesser of (x) LIBOR plus 0.25% per annum and (y) the Group I Net Rate Cap for
the purpose of this calculation; with the rate on REMIC II Regular Interest
LT2-AI2 subject to a cap equal to the lesser of (x) 4.910% per annum and (y) the
Group I Net Rate Cap for the purpose of this calculation; with the rate on REMIC
II Regular Interest LT2-AI3 subject to a cap equal to the lesser of (x) 5.720%
per annum and (y) the Group I Net Rate Cap for the purpose of this calculation;
with the rate on REMIC II Regular Interest LT2-AI4 subject to a cap equal to (A)
in the case of any Distribution Date up to and including the Optional
Termination Date, the lesser of (x) 6.160% per annum and (y) the Group I Net
Rate Cap and (B) in the case of any Distribution Date after the Optional
Termination Date, the lesser of (x) 6.660% per annum and (y) the Group I Net
Rate Cap for the purpose of this calculation; with the rate on REMIC II Regular
Interest LT2-AI5 subject to a cap equal to (A) in the case of any Distribution
Date up to and including the Optional Termination Date, the lesser of (x) 6.380%
per annum and (y) the Group I Net Rate Cap and (B) in the case of any
Distribution Date after the Optional Termination Date, the lesser of (x) 6.880%
per annum and (y) the Group I Net Rate Cap for the purpose of this calculation;
with the rate on REMIC II Regular Interest LT2-1M1 subject to a cap equal to (A)
in the case of any Distribution Date up to and including the Optional
Termination Date, the lesser of (x) 6.050% per annum and (y) the Subordinated
Certificates Rate Cap and (B) in the case of any Distribution Date after the
Optional Termination Date, the lesser of (x) 6.550% per annum and (y) the
Subordinated Certificates Rate Cap for the purpose of this calculation; with the
rate on REMIC II Regular Interest LT2-1M2 subject to a cap equal to (A) in the
case of any Distribution Date up to and including the Optional Termination Date,
the lesser of (x) 6.300% per annum and (y) the Subordinated Certificates Rate
Cap and (B) in the case of any Distribution Date after the Optional Termination
Date, the lesser of (x) 6.800% per annum and (y) the Subordinated Certificates
Rate Cap for the purpose of this calculation; with the rate on REMIC II Regular
Interest LT2-1B subject to a cap equal to (A) in the case of any Distribution
Date up to and including the Optional Termination Date, the lesser of (x) 6.750%
per annum and (y) the Subordinated Certificates Rate Cap and (B) in the case of
any Distribution Date after the Optional Termination Date, the lesser of (x)
7.250% per annum and (y) the Subordinated Certificates Rate Cap for the purpose
of this calculation; and with the rate on REMIC II Regular Interest LT2-1ZZ
subject to a cap of zero for the purpose of this calculation; provided, however,
that for this purpose, calculations of the Uncertificated REMIC II Pass-Through
Rate and the related caps with respect to REMIC II Regular Interest LT2-AI1
shall be multiplied by a fraction, the numerator of which is the actual number
of days in the Accrual Period and the denominator of which is 30.
GROUP I NET RATE CAP: For any Distribution Date (i) through the
applicable Accrual Period for a Class relating to the Distribution Date in April
2004, the excess of (a) the weighted average of the Net Mortgage Rates of the
Mortgage Loans in Loan Group I as of the last day of the
-18-
related Due Period over (b) interest payable on the Class I-A-IO Certificates
with respect to each such Accrual Period expressed as a per annum rate
calculated on the basis of the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period and (ii) thereafter,
the weighted average of the Net Mortgage Rates of the Mortgage Loans in Loan
Group I. For federal income tax purposes, the equivalent of the foregoing is
expressed as the weighted average of (x) the Uncertificated REMIC I Pass-Through
Rate with respect to REMIC I Regular Interest LT1A and REMIC I Regular Interest
LT1P for such Distribution Date and (y) the excess, if any, of (i) the
Uncertificated REMIC I Pass-Through Rate with respect to REMIC I Regular
Interest LT1B for such Distribution Date over (ii) (A) in the case of the
Distribution Dates beginning in November 2001 and ending in April 2004, the
applicable Class I-A-IO Pass-Through Rate, and (B) in the case of any
Distribution Date thereafter, 0.00% per annum, weighted, in the case of clause
(x), on the basis of the aggregate Uncertificated Principal Balance of REMIC I
Regular Interest LT1A and REMIC I Regular Interest LT1P and in the case of
clause (y), on the basis of the Uncertificated Principal Balance of REMIC I
Regular Interest LT1B, respectively.
GROUP II MARKER RATE: With respect to the Class B-IO Certificates
and any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the Uncertificated REMIC II Pass-Through Rates for REMIC II Regular
Interest LT2-AII, 2 Regular Interest LT2-2MI, REMIC II Regular Interest LT2-2M2,
REMIC II Regular Interest LT2-2B and REMIC II Regular Interest LT2-2ZZ; with the
rate on REMIC II Regular Interest LT2-AII1 subject to a cap equal to the lesser
of (x) 8.00% per annum and (y) the Group II Net Rate Cap for the purpose of this
calculation; with the rate on REMIC II Regular Interest LT2-AII2 subject to a
cap equal to the lesser of (x) 5.820% per annum and (y) the Group II Net Rate
Cap for the purpose of this calculation; with the rate on REMIC II Regular
Interest LT2-AII3 subject to a cap equal to (A) in the case of any Distribution
Date up to and including the Optional Termination Date, the lesser of (x) 6.450%
per annum and (y) the Subordinated Certificates Rate Cap and (B) in the case of
any Distribution Date after the Optional Termination Date, the lesser of (x)
6.950% per annum and (y) the Subordinated Certificates Rate Cap for the purpose
of this calculation; with the rate on REMIC II Regular Interest LT2-2MI subject
to a cap equal to (A) in the case of any Distribution Date up to and including
the Optional Termination Date, the lesser of (x) 6.850% per annum and (y) the
Subordinated Certificates Rate Cap and (B) in the case of any Distribution Date
after the Optional Termination Date, the lesser of (x) 7.350% per annum and (y)
the Subordinated Certificates Rate Cap for the purpose of this calculation; with
the rate on REMIC II Regular Interest LT2-2M2 subject to a cap equal to (A) in
the case of any Distribution Date up to and including the Optional Termination
Date, the lesser of (x) 7.000% per annum and (y) the Subordinated Certificates
Rate Cap and (B) in the case of any Distribution Date after the Optional
Termination Date, the lesser of (x) 7.500% per annum and (y) the Subordinated
Certificates Rate Cap for the purpose of this calculation; with the rate on
REMIC II Regular Interest LT2-2B subject to a cap equal to (A) in the case of
any Distribution Date up to and including the Optional Termination Date, the
lesser of (x) 7.000% per annum and (y) the Subordinated Certificates Rate Cap
and (B) in the case of any Distribution Date after the Optional Termination
Date, the lesser of (x) 7.500% per annum and (y) the Subordinated Certificates
Rate Cap for the purpose of this calculation; and with the rate on REMIC II
Regular Interest LT2-2ZZ subject to a cap of zero for the purpose of this
calculation; provided, however, that for this purpose, calculations of the
Uncertificated REMIC II Pass-Through Rate and the related caps with respect to
REMIC II Regular Interest LT2-AII1 shall be multiplied by a fraction, the
numerator of which is the actual number of days in the Accrual Period and the
denominator of which is 30.
-19-
GROUP II CERTIFICATES: The Class II-F Certificates, Class II-A2
Certificates and Class II-A3 Certificates.
GROUP II NET RATE CAP: For any Distribution Date, the weighted
average of the Net Mortgage Rates of the Mortgage Loans in Loan Group II as of
the last day of the related Due Period.
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 OVERCOLLATERALIZATION AMOUNT: Zero.
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 CARRYFORWARD AMOUNT: As of any Distribution Date and
with respect to each Class of Certificates other than the Class P Certificates,
the Class B-IO Certificates and the Residual Certificates, the sum of (I) the
excess of (a) the Current Interest for such Class with respect to prior
Distribution Dates over (b) the amount actually distributed to such Class of
Certificates with respect to interest on such prior Distribution Dates and (ii)
interest thereon (to the extent permitted by applicable law) at the applicable
Pass-Through Rate for such Class for the related Accrual Period including the
Accrual Period relating to such Distribution Date.
INTEREST DETERMINATION DATE: With respect to the Class I-A1
Certificates, Class II- F Certificates and the Class II-INV Certificates and for
the first Accrual Period, October 28, 2001. With respect to the Class I-A1
Certificates, Class II-F Certificates and the Class II-INV Certificates and any
Accrual Period thereafter, the second LIBOR Business Day preceding the
commencement of such Accrual Period.
INTEREST FUNDS: For any Distribution Date with respect to each
Loan Group, (I) the sum, without duplication, of (a) all scheduled interest
during the related Due Period with respect to the related Mortgage Loans less
the Servicing Fee, (b) all Advances relating to interest with respect to the
related Mortgage Loans made on or prior to the related Distribution Account
Deposit Date, (c) all Compensating Interest with respect to the related Mortgage
Loans and required to be remitted by the Master Servicer pursuant to this
Agreement or the related Subservicer pursuant to the related
-20-
Subservicing Agreement with respect to such Distribution Date, (d) Liquidation
Proceeds with respect to the related Mortgage Loans collected during the related
Prepayment Period (to the extent such Liquidation Proceeds relate to interest),
(e) all amounts relating to interest with respect to each Mortgage Loan
repurchased by the Seller pursuant to Sections 2.02, 2.03 and 3.20 and (f) all
amounts in respect of interest paid by the Master Servicer pursuant to Section
10.01, in each case to the extent remitted by the Master Servicer, any
subservicer or the Trustee, as applicable, to the Distribution Account pursuant
to this Agreement or any Subservicing Agreement minus (ii) all amounts relating
to interest required to be reimbursed pursuant to Sections 4.02 and minus (iii)
all amounts relating to interest required to be reimbursed pursuant to Sections
4.04 and 4.05.
LATEST POSSIBLE MATURITY DATE: The Distribution Date following
the final 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 I, REMIC II, REMIC III
and REMIC IV shall be the Latest Possible Maturity Date.
LIBOR BUSINESS DAY: Any day on which banks in the 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 3.07) in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such liquidation.
LIQUIDATION PROCEEDS: Amounts, other than Insurance Proceeds,
received in connection with the partial or complete liquidation of a Mortgage
Loan, whether through trustee's sale, foreclosure sale or otherwise, or in
connection with any condemnation or partial release of a Mortgaged Property and
any other proceeds received with respect to an REO Property, less the sum of
related unreimbursed Advances, Servicing Fees and Servicing Advances and all
expenses of liquidation, including property protection expenses and foreclosure
and sale costs, including court and reasonable attorneys fees.
LOAN GROUP: Either Loan Group I or Loan Group II.
LOAN GROUP I: The Mortgage Loans included as such on the Mortgage
Loan Schedule.
LOAN GROUP II: The Mortgage Loans included as such on the
Mortgage Loan Schedule.
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.
-21-
MASTER SERVICER: EMC, in its capacity as master servicer, and its
successors and assigns.
MASTER SERVICER PREPAYMENT CHARGE PAYMENT AMOUNT: The amounts
payable by the Master Servicer in respect of any waived Prepayment Charges
pursuant to Section 2.03.
MAXIMUM UNCERTIFICATED ACCRUED INTEREST DEFERRAL AMOUNT: With
respect to any Distribution Date, the excess of (a) the sum of (I) accrued
interest at the Uncertificated REMIC II Pass-Through Rate applicable to REMIC II
Regular Interest LT2-1ZZ for such Distribution Date on a balance equal to the
excess of (I) the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-1ZZ and (ii) the REMIC II Group 1 Overcollateralized Amount for such
Distribution Date and (II) accrued interest at the Uncertificated REMIC II
Pass-Through Rate applicable to REMIC II Regular Interest LT2-2ZZ for such
Distribution Date on a balance equal to the excess of (I) the Uncertificated
Principal Balance of REMIC II Regular Interest LT2-2ZZ and (ii) the REMIC II
Group 2 Overcollateralized Amount for such Distribution Date, over (b)
Uncertificated Accrued Interest on REMIC II Regular Interest LT2-AI1, with the
rate on REMIC II Regular Interest LT2-AI1 subject to a cap equal to the lesser
of (x) LIBOR plus 0.25% per annum and (y) the Class I-A1 Rate Cap;
Uncertificated Accrued Interest on REMIC II Regular Interest LT2-AI2, with the
rate on REMIC II Regular Interest LT2-AI2 subject to a cap equal to the lesser
of (x) 4.910% per annum and (y) the Group I Net Rate Cap; Uncertificated Accrued
Interest on REMIC II Regular Interest LT2- AI3, with the rate on REMIC II
Regular Interest LT2-AI3 subject to a cap equal to the lesser of (x) 5.720% per
annum and (y) the Group I Net Rate Cap; Uncertificated Accrued Interest on REMIC
II Regular Interest LT2-AI4, with the rate on REMIC II Regular Interest LT2-AI4
subject to a cap equal to (A) in the case of any Distribution Date up to and
including the Optional Termination Date, the lesser of (x) 6.160% per annum and
(y) the Group I Net Rate Cap and (B) in the case of any Distribution Date after
the Optional Termination Date, the lesser of (x) 6.660% per annum and (y) the
Group I Net Rate Cap; with the rate on REMIC II Regular Interest LT2-AI5 subject
to a cap equal to (A) in the case of any Distribution Date up to and including
the Optional Termination Date, the lesser of (x) 6.380% per annum and (y) the
Group I Net Rate Cap and (B) in the case of any Distribution Date after the
Optional Termination Date, the lesser of (x) 6.880% per annum and (y) the Group
I Net Rate Cap; Uncertificated Accrued Interest on REMIC II Regular Interest
LT2-1M1 with the rate on REMIC II Regular Interest LT2-1M1 subject to a cap
equal to (A) in the case of any Distribution Date up to and including the
Optional Termination Date, the lesser of (x) 6.050% per annum and (y) the
Subordinated Certificates Rate Cap and (B) in the case of any Distribution Date
after the Optional Termination Date, the lesser of (x) 6.550% per annum and (y)
the Subordinated Certificates Rate Cap for the purpose of this calculation,
Uncertificated Accrued Interest on REMIC II Regular Interest LT2- 1M2, with the
rate on REMIC II Regular Interest LT2-1M2 subject to a cap equal to (A) in the
case of any Distribution Date up to and including the Optional Termination Date,
the lesser of (x) 6.300% per annum and (y) the Subordinated Certificates Rate
Cap and (B) in the case of any Distribution Date after the Optional Termination
Date, the lesser of (x) 6.800% per annum and (y) the Subordinated Certificates
Rate Cap for the purpose of this calculation, Uncertificated Accrued Interest on
REMIC II Regular Interest LT2-1B, with the rate on REMIC II Regular Interest
LT2-1B subject to a cap equal to (A) in the case of any Distribution Date up to
and including the Optional Termination Date, the lesser of (x) 6.750% per annum
and (y) the Subordinated Certificates Rate Cap and (B) in the case of any
Distribution Date after the Optional Termination Date, the lesser of (x) 7.250%
per annum and (y) the Subordinated Certificates Rate
-22-
Cap for the purpose of this calculation; Uncertificated Accrued Interest on
REMIC II Regular Interest LT2-AII1, with the rate on REMIC II Regular Interest
LT2-AII1 subject to a cap equal to the lesser of (x) 8.00% per annum and (y) the
Group II Net Rate Cap for the purpose of this calculation, Uncertificated
Accrued Interest on REMIC II Regular Interest LT2-AII2, with the rate on REMIC
II Regular Interest LT2-AII2 subject to a cap equal to the lesser of (x) 5.820%
per annum and (y) the Group II Net Rate Cap for the purpose of this calculation,
Uncertificated Accrued Interest on REMIC II Regular Interest LT2-AII3, with the
rate on REMIC II Regular Interest LT2-AII3 subject to a cap equal to (A) in the
case of any Distribution Date up to and including the Optional Termination Date,
the lesser of (x) 6.450% per annum and (y) the Group II Net Rate Cap and (B) in
the case of any Distribution Date after the Optional Termination Date, the
lesser of (x) 6.950% per annum and (y) the Group II Net Rate Cap, Uncertificated
Accrued Interest on REMIC II Regular Interest LT2-2M1, with the rate on REMIC II
Regular Interest LT2-2M1 subject to a cap equal to (A) in the case of any
Distribution Date up to and including the Optional Termination Date, the lesser
of (x) 6.050% per annum and (y) the Subordinated Certificates Rate Cap and (B)
in the case of any Distribution Date after the Optional Termination Date, the
lesser of (x) 6.550% per annum and (y) the Subordinated Certificates Rate Cap
for the purpose of this calculation, Uncertificated Accrued Interest on REMIC II
Regular Interest LT2-2M2, with the rate on REMIC II Regular Interest LT2-2M2
subject to a cap equal to (A) in the case of any Distribution Date up to and
including the Optional Termination Date, the lesser of (x) 6.300% per annum and
(y) the Subordinated Certificates Rate Cap and (B) in the case of any
Distribution Date after the Optional Termination Date, the lesser of (x) 6.800%
per annum and (y) the Subordinated Certificates Rate Cap for the purpose of this
calculation, and Uncertificated Accrued Interest on REMIC II Regular Interest
LT2-2B, with the rate on REMIC II Regular Interest LT2-2B subject to a cap equal
to (A) in the case of any Distribution Date up to and including the Optional
Termination Date, the lesser of (x) 6.750% per annum and (y) the Subordinated
Certificates Rate Cap and (B) in the case of any Distribution Date after the
Optional Termination Date, the lesser of (x) 7.250% per annum and (y) the
Subordinated Certificates Rate Cap for the purpose of this calculation.
MONTHLY STATEMENT: The statement delivered to the
Certificateholders pursuant to Section 5.05.
MOODY'S: Xxxxx'x Investors Service, Inc.
MORTGAGE: The mortgage, deed of trust or other instrument
creating a first lien on or first priority ownership interest 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 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
-23-
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 PURCHASE AGREEMENT: Shall mean the Mortgage Loan
Purchase Agreement dated as of October 30, 2001, between the Seller, as seller
and the Depositor, as purchaser.
MORTGAGE LOAN PURCHASE PRICE: The price, calculated as set forth
in Section 10.01, to be paid in connection with the repurchase of the Mortgage
Loans pursuant to Section 10.01.
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, the initial Mortgage Loan
Schedule being attached hereto as Exhibit B, setting forth the following
information with respect to each Mortgage Loan and divided into Loan Groups:
(i) the loan number;
(ii) the Mortgage Rate in effect as of the Cut-off Date;
(iii) the Servicing Fee Rate;
(iv) the Net Mortgage Rate in effect as of the Cut-off Date;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the original term;
(ix) the remaining term;
(x) the property type;
(xi) the type and term of the related Prepayment Charge,
if any; and
(xii) the Loan Group.
Such schedule shall also set forth the aggregate Cut-off Date Principal Balance
for all of the Mortgage Loans and such aggregate amount for all Mortgage Loans
for each Loan Group.
-24-
MORTGAGE NOTE: The original executed note or other evidence of
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGE RATE: The annual rate of interest borne by a Mortgage
Note.
MORTGAGED PROPERTY: The underlying property securing a Mortgage
Loan.
MORTGAGOR: The obligors on a Mortgage Note.
NATIONAL CITY: National City Mortgage Co., and any successor
thereto.
NATIONAL CITY LOANS: Those Mortgage Loans subject to this
Agreement which were purchased by the Seller from National City pursuant to the
National City Subservicing Agreement and assigned by the Seller to the Trust
pursuant to the Assumption Agreement.
NATIONAL CITY SUBSERVICING AGREEMENT: The Purchase, Warranties
and Servicing Agreement, dated as of October 1, 2001, by and between National
City and the Seller.
NET MORTGAGE RATE: As to each Mortgage Loan, and at any time, the
per annum rate equal to the Mortgage Rate less the sum of (i) the related
Servicing Fee Rate and (ii) the Master Servicing Fee Rate.
NON-BOOK-ENTRY CERTIFICATE: Any Certificate other than a
Book-Entry Certificate.
NONRECOVERABLE ADVANCE: Any portion of 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 it from the related Mortgagor, related
Liquidation Proceeds or otherwise.
OFFERED CERTIFICATES: The Class I-A1 Certificates, Class I-A2
Certificates, Class I-A3 Certificates, Class I-A4 Certificates, Class I-A5
Certificates, Class I-A-IO Certificates, Class II-F Certificates, Class II-INV
Certificates, Class II-A2 Certificates, Class II-A3 Certificates, Class M-1
Certificates, Class M-2 Certificates, Class B Certificates.
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, the
Securities Administrator and/or 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
-25-
for one month that appears on Telerate Screen Page 3750 as of 11:00 a.m. (London
time) on such Interest Determination Date. 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 Securities
Administrator), One-Month LIBOR for the applicable Accrual Period will be the
Reference Bank Rate. If no such quotations can be obtained by the Securities
Administrator 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 7.04 or 11.01,
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.
OPTIONAL TERMINATION: The termination of the Trust Fund created
hereunder as a result of the purchase of all of the Mortgage Loans and any REO
Property pursuant to the last sentence of Section 10.01 hereof.
OPTIONAL TERMINATION DATE: The Distribution Date on which the
Stated Principal Balance of all of the Mortgage Loans is equal to or less than
10% of the Stated Principal Balance of all of the Mortgage Loans as of the
Cut-off Date.
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 or the sales price of such property or, in the case of
a refinancing, on an appraisal.
ORIGINATOR: Any of First National Bank of Nevada, Greenpoint
Mortgage Funding and National City.
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:
(a) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and
(b) 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 date of determination, 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.
-26-
OVERCOLLATERALIZATION AMOUNT: With respect to any Distribution
Date, the excess, if any, of the aggregate Stated Principal Balances of the
Mortgage Loans as of the last day of the related Due Period over the Certificate
Principal Balances of the Certificates on such Distribution Date (after taking
into account the payment of principal other than any Extra Principal
Distribution Amount on such Certificates).
OVERCOLLATERALIZATION TARGET AMOUNT: $1,849,617.39.
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 each Class of Certificates
other than the Residual Certificates, the applicable Pass-Through Rate for each
such Class as set forth in the Preliminary Statement.
PERCENTAGE INTEREST: With respect to any Certificate of a
specified Class, 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 the such Class.
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 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 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 (including the Trustee in its commercial banking
capacity), 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 holding company
system, the commercial paper or long-term unsecured debt obligations
-27-
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 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 if the Rating
Agency is Moody's, such rating shall be the highest commercial paper
rating of Moody's for any such securities), 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 (including any such fund
managed or advised by the Trustee or any affiliate thereof) 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 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 (including any such fund managed or
advised by the Trustee or any affiliate thereof) which on the date of
acquisition has been rated by each Rating Agency 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 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;
-28-
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 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 the 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, any possession of the United
States 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 Residual
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership (other than a partnership that has any
direct or indirect foreign partners) 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, 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 and (vi) any other Person so designated by the Trustee based upon
an Opinion of Counsel (which shall not be an expense of the Trustee) that states
that the Transfer of an Ownership Interest in a Residual Certificate to such
Person may cause the REMIC I, REMIC II, REMIC III or REMIC IV 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.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint- stock company, limited liability company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
-29-
PREPAYMENT ASSUMPTION: The applicable rate of prepayment, as
described in the Prospectus Supplement relating to each Class of Offered
Certificates.
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,
3.20 or 10.01 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 immediately preceding the month in which such Distribution Date occurs.
PRIMARY MORTGAGE INSURANCE POLICY: Any primary mortgage guaranty
insurance policy issued in connection with a Mortgage Loan which provides
compensation to a Mortgage Note holder in the event of default by the obligor
under such Mortgage Note or the related security instrument, if any or any
replacement policy therefor through the related Accrual Period for such Class
relating to a Distribution Date.
PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Distribution
Date, an amount equal to (x) the Principal Funds for such Distribution Date plus
(y) any Extra Principal Distribution Amount for such Distribution Date.
PRINCIPAL FUNDS: With respect to any Distribution Date, (i) the
sum, without duplication, of (a) all scheduled principal collected during the
related Due Period, (b) all Advances relating to principal made on or before the
Distribution Account Deposit Date, (c) Principal Prepayments exclusive of
prepayment charges or penalties collected during the related Prepayment Period,
(iii) the Stated Principal Balance of each Mortgage Loan that was repurchased by
the Seller pursuant to Sections 2.02, 2.03 or 3.20, (d) the aggregate of all
Substitution Adjustment Amounts for the related Determination Date in connection
with the substitution of Mortgage Loans pursuant to Section 2.03(c), (e) amounts
in respect of principal paid by the Master Servicer pursuant to Section 10.01
and (f) all Liquidation Proceeds collected during the related Prepayment Period
(to the extent such Liquidation Proceeds relate to principal), in each case to
the extent remitted by the Master Servicer or any subservicer to the
Distribution Account pursuant to this Agreement or any applicable Subservicing
Agreement minus (ii) all amounts required to be reimbursed pursuant to Section
4.05.
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
-30-
2.02, 2.03, 3.20 and 10.01 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 or the applicable subservicer, as appropriate, in accordance
with the terms of the related Mortgage Note.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated October
26, 2001 relating to the public offering of the Offered Certificates.
PROTECTED ACCOUNT: An account established and maintained by the
Master Servicer with respect to receipts on the Mortgage Loans and REO Property
in accordance with Section 4.01 hereof or by a subservicer in accordance with
the applicable Subservicing Agreement.
PUD: A Planned Unit Development.
PURCHASE PRICE: With respect to any Mortgage Loan (x) required to
be repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof or (y) that
the Seller has a right to purchase pursuant to Section 3.20 hereof, an amount
equal to the sum of (i) 100% of the outstanding principal balance of the
Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon
at the applicable Mortgage Rate through the first day of the month in which the
Purchase Price is to be distributed to Certificateholders, reduced by any
portion of the Servicing Fee, Servicing Advances and Advances payable to the
purchaser of the Mortgage Loan.
RATING AGENCY: Each of Moody's and S&P. 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.
With respect to each Mortgage Loan that has become the subject of a Servicing
Modification, a loss resulting from such Servicing Modification.
-31-
RECORD DATE: With respect to the Certificates (other than the
Class I-A1 Certificates, Class II-F Certificates and the Class II-INV
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 such Distribution Date
occurs. With respect to any Distribution Date and the Class I-A1 Certificates,
Class II-F Certificates and the Class II-INV Certificates, so long as such
Certificates are Book-Entry Certificates, the Business Day preceding such
Distribution Date, and otherwise, the close of business on the last Business Day
of the month preceding the month in which such Distribution Date occurs.
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 aggregate
Certificate Principal Balance of all Certificates which bear an adjustable rate
of interest 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 whole multiple of 0.03125%) of the rates quoted by one or more
major banks in New York City, selected by the Securities Administrator, 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 aggregate Certificate Principal Balance of the Certificates which bear an
adjustable rate of interest on such Interest Determination Date.
REFERENCE BANKS: Barclays Bank PLC, Citibank, N.A. and Deutsche
Bank AG, provided that if any of the foregoing banks are not suitable to serve
as a Reference Bank, then any leading banks selected by the Securities
Administrator 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, the Seller, Master Servicer or any affiliate thereof
and (iii) which have been designated as such by the Trustee.
REGULAR CERTIFICATE: Any Certificate other than a Residual
Certificate.
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
REMAINING EXCESS SPREAD: With respect to any Distribution Date,
the Excess Spread less any Extra Principal Distribution Amount, in each case for
such Distribution Date.
REMIC: A "real estate mortgage investment conduit" within the
meaning of section 860D of the Code.
REMIC I: The segregated pool of assets described in Section
5.06(a).
REMIC I CERTIFICATES: The REMIC I Regular Interests and the Class
R-I Certificate.
-32-
REMIC I REGULAR INTEREST LT1A: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LT1A shall
accrue interest at the related Uncertificated REMIC I Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
REMIC I REGULAR INTEREST LT1B: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LT1B shall
accrue interest at the related Uncertificated REMIC I Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
REMIC I REGULAR INTEREST LT2: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LT2 shall
accrue interest at the related Uncertificated REMIC I Pass- Through Rate in
effect from time to time, and shall be entitled to distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
REMIC I REGULAR INTEREST LT1P: One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest LT1P shall
accrue interest at the related Uncertificated REMIC I Pass- Through Rate in
effect from time to time, and shall be entitled to any Prepayment Charges
relating to the Mortgage Loans collected by the Master Servicer and to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC I REGULAR INTERESTS: REMIC I Regular Interest LT1A, REMIC I
Regular Interest LT1B, REMIC I Regular Interest LT2 and REMIC I Regular Interest
LT1P.
REMIC II: The segregated pool of assets described in Section
5.06(a).
REMIC II CERTIFICATES: The REMIC II Regular Interests and the
Class R-II Certificate.
REMIC II GROUP 1 INTEREST LOSS ALLOCATION AMOUNT: With respect to
any Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans in Loan Group I and related REO
Properties then outstanding and (ii) the Uncertificated REMIC II Pass-Through
Rate for REMIC II Regular Interest LT2-1AA minus the Group I Marker Rate,
divided by (b) 12.
REMIC II GROUP 2 INTEREST LOSS ALLOCATION AMOUNT: With respect to
any Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans in Loan Group II and related REO
Properties then outstanding and (ii) the
-33-
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest LT2-2AA
minus the Group II Marker Rate, divided by (b) 12.
REMIC II GROUP 1 OVERCOLLATERALIZED AMOUNT: With respect to any
date of determination, (I) 1% of the aggregate Uncertificated Principal Balances
of REMIC II Regular Interest LT2-1AA, REMIC II Regular Interest LT2-AI1, REMIC
II Regular Interest LT2-AI2, REMIC II Regular Interest LT2-AI3, REMIC II Regular
Interest LT2-AI4, REMIC II Regular Interest LT2-AI5, REMIC II Regular Interest
LT2-1M1, REMIC II Regular Interest LT2-1M2, REMIC II Regular Interest LT2-1B and
REMIC II Regular Interest LT2-1ZZ, minus (ii) the aggregate of the
Uncertificated Principal Balances of REMIC II Regular Interest LT2-AI1, REMIC II
Regular Interest LT2-AI2, REMIC II Regular Interest LT2-AI3, REMIC II Regular
Interest LT2- AI4, REMIC II Regular Interest LT2-AI5, REMIC II Regular Interest
LT2- 1M1, REMIC II Regular Interest LT2-1M2 and REMIC II Regular Interest
LT2-1B, in each case as of such date of determination.
REMIC II GROUP 2 OVERCOLLATERALIZED AMOUNT: With respect to any
date of determination, (I) 1% of the aggregate Uncertificated Principal Balances
of REMIC II Regular Interest LT2-2AA, REMIC II Regular Interest LT2-AII1, REMIC
II Regular Interest LT2-AII2, REMIC II Regular Interest LT2-AII3, REMIC II
Regular Interest LT2-2M1, REMIC II Regular Interest LT2-2M2, REMIC II Regular
Interest LT2-2B and REMIC II Regular Interest LT2-2ZZ, minus (ii) the aggregate
of the Uncertificated Principal Balances of REMIC II Regular Interest LT2- AII1,
REMIC II Regular Interest LT2-AII2, REMIC II Regular Interest LT2-AII3, REMIC II
Regular Interest LT2-2M1, REMIC II Regular Interest LT2- 2M2 and REMIC II
Regular Interest LT2-2B, in each case as of such date of determination.
REMIC II GROUP 1 PRINCIPAL LOSS ALLOCATION AMOUNT: With respect
to any Distribution Date and the Mortgage Loans in Loan Group I, an amount equal
to (a) the product of (I) the aggregate Stated Principal Balance of the Mortgage
Loans in Loan Group and related REO Properties then outstanding and (ii) 1 minus
a fraction, the numerator of which is two times the aggregate of the
Uncertificated Principal Balances of REMIC II Regular Interest LT2-AI1, REMIC II
Regular Interest LT2-AI2, REMIC II Regular Interest LT2-AI3, REMIC II Regular
Interest LT2- AI4, REMIC II Regular Interest LT2-AI5, REMIC II Regular Interest
LT2-1M1, REMIC II Regular Interest LT2-1M2 and REMIC II Regular Interest LT2-1B,
and the denominator of which is the aggregate of the Uncertificated Principal
Balances of REMIC II Regular Interest LT2-AI1, REMIC II Regular Interest
LT2-AI2, REMIC II Regular Interest LT2-AI3, REMIC II Regular Interest LT2- AI4,
REMIC II Regular Interest LT2-AI5, REMIC II Regular Interest LT2-1M1, REMIC II
Regular Interest LT2-1M2, REMIC II Regular Interest LT2-1B and REMIC II Regular
Interest LT2-1ZZ.
REMIC II GROUP 2 PRINCIPAL LOSS ALLOCATION AMOUNT: With respect
to any Distribution Date and the Mortgage Loans in Loan Group II, an amount
equal to (a) the product of (I) the aggregate Stated Principal Balance of the
Mortgage Loans in Loan Group II and related REO Properties then outstanding and
(ii) 1 minus a fraction, the numerator of which is two times the aggregate of
the Uncertificated Principal Balances of REMIC II Regular Interest LT2-AII1,
Uncertificated Principal Balances of REMIC II Regular Interest LT2-AII2,
Uncertificated Principal Balances of REMIC II Regular Interest LT2-AII3, REMIC
II Regular Interest LT2-2M1, REMIC II Regular Interest LT2-2M2 and REMIC II
Regular Interest LT2-2B, and the denominator of which
-34-
is the aggregate of the Uncertificated Principal Balances of REMIC II Regular
Interest LT2-AII1, Uncertificated Principal Balances of REMIC II Regular
Interest LT2-AII2, Uncertificated Principal Balances of REMIC II Regular
Interest LT2-AII3, REMIC II Regular Interest LT2-2M1, REMIC II Regular Interest
LT2-2M2 and REMIC II Regular Interest LT2-2B.
REMIC II OVERCOLLATERALIZATION TARGET AMOUNT: 1% of the
Overcollateralization Target Amount.
REMIC II REGULAR INTEREST LT2A-IO: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2A-IO shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate on its Uncertificated Notional Amount outstanding from time to
time.
REMIC II REGULAR INTEREST LT2-1AA: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-1AA shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-AI1: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-AI1 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-AI2: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-AI2 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-AI3: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-AI3 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-AI4: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-AI4 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal,
-35-
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
REMIC II REGULAR INTEREST LT2-AI5: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-AI5 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-1M1: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-1M1 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-1M2: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-1M2 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-1B: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-1B
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-1ZZ: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-1ZZ shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-2AA: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-2AA shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
-36-
REMIC II REGULAR INTEREST LT2-AII1: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-AII1 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-AII2: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-AII1 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-AII3: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-AII1 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-2M1: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-2M1 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-2M2: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-2M2 shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-2B: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2-2B
shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate
in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2P: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest LT2P
shall accrue interest at the related Uncertificated REMIC II Pass- Through Rate
in effect from time to time, and shall be entitled to any Prepayment Charges
relating
-37-
to the Mortgage Loans collected by the Master Servicer and to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Principal Balance as set forth in the
Preliminary Statement hereto.
REMIC II REGULAR INTEREST LT2-2ZZ: One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. REMIC II Regular Interest
LT2-2ZZ shall accrue interest at the related Uncertificated REMIC II
Pass-Through Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Principal Balance as set
forth in the Preliminary Statement hereto.
REMIC II REGULAR INTERESTS: REMIC II Regular Interest LT21AA,
REMIC II Regular Interest LT2A-IO, REMIC II Regular Interest LT2-AI1, REMIC II
Regular Interest LT2-AI2, REMIC II Regular Interest LT2-AI3, REMIC II Regular
Interest LT2-AI4, REMIC II Regular Interest LT2-AI5, REMIC II Regular Interest
LT2-1M1, REMIC II Regular Interest LT2-1M2, REMIC II Regular Interest LT2-1B,
REMIC II Regular Interest LT2-1ZZ, REMIC II Regular Interest LT2-2AA, REMIC II
Regular Interest LT2-AII1, REMIC II Regular Interest LT2-AII2, REMIC II Regular
Interest LT2-AII3, REMIC II Regular Interest LT2-2M1, REMIC II Regular Interest
LT2- 2M2, REMIC II Regular Interest LT2-2B, REMIC II Regular Interest LT2P and
REMIC II Regular Interest LT2-2ZZ.
REMIC III: The segregated pool of assets described in the
Preliminary Statement.
REMIC III INTERESTS: The REMIC III Regular Interests and the
Class R-III Certificate.
REMIC III REGULAR INTERESTS: As defined in the Preliminary
Statement.
REMIC IV: The segregated pool of assets described in the
Preliminary Statement.
REMIC IV CERTIFICATES: The REMIC IV Regular Interests and the
Class R-IV Certificate.
REMIC IV REGULAR INTERESTS: As defined in the Preliminary
Statement.
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.
REMIC REGULAR INTEREST: A REMIC I Regular Interest, REMIC II
Regular Interest or REMIC III Regular Interest
REMITTANCE REPORT: As defined in Section 5.04(d).
-38-
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 or Mortgage Loans in
the aggregate substituted by the Seller for a Deleted Mortgage Loan, which must,
on the date of such substitution, as confirmed in a Request for Release, (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) have a fixed Mortgage Rate not less than or more than 1% per annum higher
than the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same or
higher credit quality characteristics than that of the Deleted Mortgage Loan;
(iv) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage
Loan; (v) have a remaining term to maturity no greater than (and not more than
one year less than) that of the Deleted Mortgage Loan; (vi) not permit
conversion of the Mortgage Rate from a fixed rate to a variable rate; (vii)
provide for a prepayment charge on terms substantially similar to those of the
prepayment charge, if any, of the Deleted Mortgage Loan; (viii) have the same
lien priority as the Deleted Mortgage Loan; (ix) constitute the same occupancy
type as the Deleted Mortgage Loan or be owner occupied; and (x) comply with each
representation and warranty set forth in Section 2.03 hereof.
REQUEST FOR RELEASE: The Request for Release to be submitted by
the Seller or the Master Servicer to the Trustee substantially in the form of
Exhibit H. Each Request for Release furnished to the Trustee by the Seller or
the Master Servicer shall be in duplicate and shall be executed by an officer of
the Seller or a Servicing Officer (or, if furnished electronically to the
Trustee, shall be deemed to have been sent and executed by an officer of the
Seller or a Servicing Officer) of the Master Servicer, as applicable.
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 or any applicable Subservicing Agreement.
RESIDUAL CERTIFICATES: The Class R-I Certificates, Class R-II
Certificates, Class R-III Certificates and Class R-IV Certificates each
evidencing the sole class of "residual interests" (within the meaning of Section
860G(a)(2) of the Code) in the related REMIC.
RESPONSIBLE OFFICER: With respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
any Trust Officer, any other officer customarily performing functions similar to
those performed by any of the above designated officers or other officers of the
Trustee specified by the Trustee, as 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.
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc.
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.
-39-
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES ADMINISTRATOR: Xxxxx Fargo Bank Minnesota, National
Association, in its capacity as securities administrator hereunder, and its
successors and assigns.
SELLER: EMC Mortgage Corporation, a Delaware corporation, and its
successors and assigns, in its capacity as seller of the Mortgage Loans to the
Depositor.
SENIOR CERTIFICATES: The Class I-A1 Certificates, Class I-A2
Certificates, Class I-A3 Certificates, Class I-A4 Certificates, Class I-A5
Certificates, Class I-A-IO Certificates, Class II-F Certificates, Class II-INV
Certificates, Class II-A2 Certificates and the Class II-A3 Certificates.
SENIOR ENHANCEMENT PERCENTAGE: As to each Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate of the Certificate Principal Balances of the Class M-1, Class M-2
and Class B Certificates and (ii) the Overcollateralization Amount, in each case
after taking into account the distribution of the related Principal Distribution
Amounts on such Distribution Date, and the denominator of which is the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period.
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, 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, realtor's commissions) and (iv)
compliance with any obligations under Section 3.09 hereof to cause insurance to
be maintained.
SERVICING FEE: As to each Mortgage Loan and any Distribution
Date, an amount equal to 1/12th of the Servicing Fee Rate multiplied by the
Stated Principal Balance of such Mortgage Loan as of the last day of the related
Due Period or, in the event of any payment of interest that accompanies a
Principal Prepayment in full during the related Due Period made by the Mortgagor
immediately prior to such prepayment, 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: 0.25% per annum.
SERVICING MODIFICATION: With respect to any Mortgage Loan that is
in default or, in the reasonable judgment of the Master Servicer or any
subservicer, as to which default is reasonably foreseeable, any modification
which is effected by the Master Servicer or any subservicer in accordance with
the terms of this Agreement or any applicable Subservicing Agreement which
results in any change in the outstanding Stated Principal Balance, any change in
the Mortgage Rate or any extension of the term of such Mortgage Loan.
SERVICING OFFICER: Any officer of the Master Servicer or any
subservicer involved in, or responsible for, the administration and servicing of
the Mortgage Loans (i) in the case of the
-40-
Master Servicer, 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 and (ii) in the case of any subservicer, as to which evidence reasonably
acceptable to the Trustee, as applicable, of due authorization, by such party
has been furnished from time to time to the Trustee.
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 (i) the principal portion of the Scheduled
Payments due with respect to such Mortgage Loan during each Due Period ending
prior to such Distribution Date (and irrespective of any delinquency in their
payment), (ii) 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 or any subservicer as
recoveries of principal in accordance with Section 3.13 or the applicable
Subservicing Agreement with respect to such Mortgage Loan, that were received by
the Master Servicer or the related subservicer as of the close of business on
the last day of the Prepayment Period related to such Distribution Date and
(iii) any Realized Losses on such Mortgage Loan incurred during the related
Prepayment Period. The Stated Principal Balance of a Liquidated Loan equals
zero. 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.
STEPDOWN DATE: The earlier to occur of (i) the Distribution Date
on which the aggregate Certificate Principal Balance of the Class A Certificates
has been reduced to zero and (ii) the later to occur of (a) the Distribution
Date in November 2004 and (b) the first Distribution Date on which the aggregate
Certificate Principal Balance of the Class M-1 Certificates, Class M-2
Certificates and the Class B Certificates divided by the Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period is
greater than or equal to 11.50%.
SUBORDINATED CERTIFICATES: The Class M-1 Certificates, Class M-2
Certificates, Class B Certificates, Class B-IO Certificates and Residual
Certificates.
SUBORDINATED CERTIFICATES RATE CAP: For each Distribution Date
with respect to the Class M-1 Certificates, Class M-2 Certificates and Class B
Certificates the lesser of (i) the Group I Net Rate Cap and (ii) the Group II
Net Rate Cap, in each case for such Distribution Date.
SUBSERVICING AGREEMENT: Any agreement (including, without
limitation, the National City Subservicing Agreement) entered into between the
Master Servicer and a subservicer with respect to the subservicing of any
Mortgage Loan hereunder by such subservicer.
SUBSTITUTION ADJUSTMENT AMOUNT: The meaning ascribed to such term
pursuant to Section 2.03(c).
SUCCESSOR MASTER SERVICER: The meaning ascribed to such term
pursuant to Section 8.01.
-41-
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. The holder of the greatest Percentage
Interest in a Class of Residual Certificates shall be the Tax Matters Person for
the related REMIC. The Securities Administrator, or any successor thereto or
assignee thereof shall serve as tax administrator hereunder and as agent for the
related Tax Matters Person.
TRANSFER AFFIDAVIT: As defined in Section 6.02(c).
TRANSFER: Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate.
TRIGGER EVENT: With respect to any Distribution Date after the
Stepdown Date, a Trigger Event exists if a Delinquency Event shall have occurred
and be continuing.
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; (ii) the Distribution Account and
the Protected Account maintained by the Master Servicer 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 Loans; (v) the National City
Subservicing Agreement and the Assumption Agreement; and (vi) all proceeds of
the foregoing, including proceeds of conversion, voluntary or involuntary, of
any of the foregoing into cash or other liquid property.
TRUSTEE: Xxxxx Fargo Bank Minnesota, National Association, 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 each Distribution Date, an amount equal to
1/12th of the Trustee Fee Rate multiplied by the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period.
TRUSTEE FEE RATE: 0.01% per annum.
UNCERTIFICATED ACCRUED INTEREST: With respect to each REMIC
Regular Interest on each Distribution Date, an amount equal to one month's
interest at the related Uncertificated Pass- Through Rate on the Uncertificated
Principal Balance or Uncertificated Notional Amount, as applicable, of such
REMIC Regular Interest. In each case, Uncertificated Accrued Interest will be
reduced by any Prepayment Interest Shortfalls and shortfalls resulting from
application of the Relief Act (allocated to such REMIC Regular Interests as set
forth in Section 5.06).
-42-
UNCERTIFICATED NOTIONAL AMOUNT: With respect to REMIC II Regular
Interest LT2A- IO and any Distribution Date, the Uncertificated Principal
Balance of REMIC I Regular Interest LT1B for such Distribution Date. With
respect to each of REMIC III Regular Interest LT3-BIO and any Distribution Date,
the aggregate Uncertificated Principal Balance of the REMIC II Regular Interests
for such Distribution Date.
UNCERTIFICATED PASS-THROUGH RATE: The Uncertificated REMIC I
Pass-Through Rate, the Uncertificated REMIC II Pass-Through Rate or the
Uncertificated REMIC III Pass-Through Rate, as applicable.
UNCERTIFICATED PRINCIPAL BALANCE: With respect to each REMIC
Regular Interest (other than REMIC II Regular Interest LT2A-IO), the principal
amount of such REMIC Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Principal Balance of
each REMIC Regular Interest (other than REMIC II Regular Interest LT2A-IO) shall
equal the amount set forth in the Preliminary Statement hereto as its initial
Uncertificated Principal Balance. On each Distribution Date, the Uncertificated
Principal Balance of each REMIC Regular Interest shall be reduced by all
distributions of principal made on such REMIC Regular Interest on such
Distribution Date pursuant to Section 5.06 and, if and to the extent necessary
and appropriate, shall be further reduced on such Distribution Date by Realized
Losses as provided in Section 5.06. The Uncertificated Principal Balance of each
of REMIC II Regular Interest LT2-1ZZ and REMIC II Regular Interest LT2-2ZZ shall
each be increased by interest deferrals as provided in Section 5.06. The
Uncertificated Principal Balance of each REMIC Regular Interest shall never be
less than zero. REMIC II Regular Interest LT2A-IO will not have an
Uncertificated Principal Balance.
UNCERTIFICATED REMIC I PASS-THROUGH RATE: With respect to any
Distribution Date and REMIC I Regular Interest LT1A, REMIC I Regular Interest
LT1B and REMIC I Regular Interest LT1P, a per annum rate equal to the Group I
Net Rate Cap. With respect to any Distribution Date and REMIC I Regular Interest
LT2, a per annum rate equal to the Group II Net Rate Cap.
UNCERTIFICATED REMIC II PASS-THROUGH RATE:
(a) With respect to REMIC II Regular Interest LT2-1AA, REMIC II
Regular Interest LT2-AI1, REMIC II Regular Interest LT2-AI2, REMIC II Regular
Interest LT2-AI3, REMIC II Regular Interest LT2-AI4, REMIC II Regular Interest
LT2-AI5, REMIC II Regular Interest LT2- 1M1, REMIC II Regular Interest LT2- 1M2,
REMIC II Regular Interest LT2-1B and REMIC II Regular Interest LT2-1ZZ and any
Distribution Date, a per annum rate equal to the Uncertificated REMIC
Pass-Through Rate of Uncertificated REMIC I Regular Interest LT1A.
(b) With respect to REMIC II Regular Interest LT2-2AA, REMIC II
Regular Interest LT2-AII1, REMIC II Regular Interest LT2-AII2, REMIC II Regular
Interest LT2-AII3, REMIC II Regular Interest LT2-M1, REMIC II Regular Interest
LT2-2M2, REMIC II Regular Interest LT2-2B and REMIC II Regular Interest LT2-2ZZ
and any Distribution Date after the Distribution Date in February 2004, a per
annum rate equal to the Uncertificated REMIC I Pass- Through Rate of
Uncertificated REMIC I Regular Interest LT2.
(c) With respect to REMIC II Regular Interest LT2A-IO.
-43-
(a) in the case of the first through eighteenth Distribution Dates, a
per annum rate equal to the excess of (i) the Group I Net Rate Cap over (ii) the
excess (but not less than zero) of (x) the Group I Net Rate Cap over (y) 8.00%
per annum;
(b) in the case of the nineteenth through the twenty-fourth Distribution
Dates, a per annum rate equal to the excess of (i) the Group I Net Rate Cap over
(ii) the excess (but not less than zero) of (x) the Group I Net Rate Cap over
(y) 7.25% per annum;
(c) in the case of the twenty-fifth through thirtieth Distribution
Dates, a per annum rate equal to the excess of (i) the Group I Net Rate Cap over
(ii) the excess (but not less than zero) of (x) the Group I Net Rate Cap over
(y) 7.00% per annum; and
(d) in the case of each Distribution Dates thereafter, 0.00% per annum.
UNCERTIFICATED REMIC III PASS-THROUGH RATE: With respect to:
REMIC III Regular Interest LT3-AI1, for the first Distribution Date,
2.604% per annum and for any Distribution Date thereafter, the lesser of (I)
One-Month LIBOR for the related Accrual Period plus 0.25% per annum and (ii) the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest AI1 for
such Distribution Date;
REMIC III Regular Interest LT3-AI2 and any Distribution Date, the lesser
of (i) 4.910% per annum and (ii) the Uncertificated REMIC II Pass-Through Rate
for REMIC II Regular Interest LT2- AI2 for such Distribution Date;
REMIC III Regular Interest LT3-AI3 and any Distribution Date, the lesser
of (i) 5.720% per annum and (ii) the Uncertificated REMIC II Pass-Through Rate
for REMIC II Regular Interest LT2- AI3 for such Distribution Date;
REMIC III Regular Interest LT3-AI4 and any Distribution Date, the lesser
of (i) if such Distribution Date occurs on or prior to the Optional Termination
Date, 6.160% per annum, and thereafter, 6.660% per annum and (ii) the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest LT2-AI4
for such Distribution Date;
REMIC III Regular Interest LT3-AI5 and any Distribution Date, the lesser
of (i) if such Distribution Date occurs on or prior to the Optional Termination
Date, 6.380% per annum, and thereafter, 6.880% per annum and (ii) the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest LT2-AI5
for such Distribution Date;
REMIC III Regular Interest LT3-AIO, 100% of the interest payable on
REMIC II Regular Interest LT2-AIO;
-44-
REMIC III Regular Interest LT3-AII1 and any Distribution Date, the
lesser of (i) 8.00% per annum and (ii) the Uncertificated REMIC II Pass-Through
Rate for REMIC II Regular Interest LT2- AII1 for such Distribution Date;
REMIC III Regular Interest LT3-AII2 and any Distribution Date, the
lesser of (i) 5.820% per annum and (ii) the Uncertificated REMIC II Pass-Through
Rate for REMIC II Regular Interest LT2- AII2 for such Distribution Date;
REMIC III Regular Interest LT3-AII3 and any Distribution Date, the
lesser of (i) if such Distribution Date occurs on or prior to the Optional
Termination Date, 6.450% per annum, and thereafter 6.950% per annum and (ii) the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest LT2-AII3
for such Distribution Date;
REMIC III Regular Interest LT3-M1 and any Distribution Date, the least
of (i) if such Distribution Date occurs on or prior to the Optional Termination
Date, 6.050% per annum, and thereafter, 6.550% per annum, (ii) the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest LT2-1M1
for such Distribution Date and (iii) the Uncertificated REMIC II Pass- Through
Rate for REMIC II Regular Interest LT2-2M1 for such Distribution Date;
REMIC III Regular Interest LT3-M2 and any Distribution Date, the least
of (i) if such Distribution Date occurs on or prior to the Optional Termination
Date, 6.300% per annum, and thereafter, 6.800% per annum and, (ii) the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest LT2-1M2
for such Distribution Date and (iii) the Uncertificated REMIC II Pass- Through
Rate for REMIC II Regular Interest LT2-2M2 for such Distribution Date;
REMIC III Regular Interest LT3-B and any Distribution Date, the least of
(i) if such Distribution Date occurs on or prior to the Optional Termination
Date, 6.750% per annum, and thereafter, 7.250% per annum, (ii) the
Uncertificated REMIC II Pass-Through Rate for REMIC II Regular Interest LT2-1B
for such Distribution Date and (iii) the Uncertificated REMIC II Pass- Through
Rate for REMIC II Regular Interest LT2-2B for such Distribution Date;
REMIC III Regular Interest LT3-BIO and any Distribution Date, a per
annum rate equal to the percentage equivalent of a fraction, the numerator of
which is (x) the sum of the amounts calculated pursuant to clauses (A) through
(S) below, and the denominator of which is (y) the aggregate of the
Uncertificated Principal Balances of the REMIC II Regular Interests. For
purposes of calculating the Uncertificated REMIC III Pass-Through Rate for REMIC
III Regular Interest LT3, the numerator is equal to the sum of the following
components:
(A) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-1AA minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-1AA;
(B) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-AI1 minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-AI1;
-45-
(C) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-AI2 minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-AI2;
(D) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-AI3 minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-AI3;
(E) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-AI4 minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-AI4;
(F) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-AI5 minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-AI5;
(G) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-1M1 minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-1M1;
(H) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-1M2 minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-1M2;
(I) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-1B minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-1B;
(J) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-1ZZ minus the Group I Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-1ZZ;
(K) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-2AA minus the Group II Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-2AA;
(L) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-AII1 minus the Group II Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-AII1;
(M) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-AII2 minus the Group II Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-AII2;
-46-
(N) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-AII3 minus the Group II Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-AII3;
(O) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-2M1 minus the Group II Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-2M1;
(P) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-2M2 minus the Group II Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-2M2;
(Q) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-2B minus the Group II Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-2B;
(R) the Uncertificated REMIC II Pass-Through Rate for REMIC II
Regular Interest LT2-2ZZ minus the Group II Marker Rate, applied to an amount
equal to the Uncertificated Principal Balance of REMIC II Regular Interest
LT2-2ZZ; and
(S) 100% of the interest accrued on REMIC II Regular Interest
LT2P.
REMIC III Regular Interest LT3P shall not accrue interest.
UNPAID REALIZED LOSS AMOUNT: As of any Distribution Date, and
each Class of Subordinated Certificates (other than the Class B-IO Certificates
and Residual Certificates) the excess of (i) the Applied Realized Loss Amount
for such Class over (ii) the sum of all distributions on such Class in reduction
of the Applied Realized Loss Amount for such Class on all previous Distribution
Dates.
VOTING RIGHTS: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions hereunder. Voting Rights shall be allocated (I) 93% to the Offered
Certificates (other than the Class I-A-IO Certificates and the Residual
Certificates), (ii) 1% to the Class I-A-IO Certificates until paid in full,
(iii) prior to payment in full of the Class I-A-IO Certificates, 2% and
thereafter 3%, to the Class B-IO Certificates, (iv) 1% to the Class P
Certificates and (v) 1% to each Class of Residual Certificates, with the
allocation among the Offered Certificates other than the Class I-A-IO
Certificates, the Class B-IO Certificates and the Residual Certificates to be in
proportion to the Certificate Principal Balance (or with respect to the Class
II-INV Certificates the Certificate Notional Balance thereof) of each Class
relative to the Certificate Principal Balance of all other such Classes. Voting
Rights will be allocated among the Certificates of each such Class in accordance
with their respective Percentage Interests.
-47-
ARTICLE II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01 CONVEYANCE OF TRUST FUND.
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 assets in the Trust Fund.
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 the following
documents or instruments with respect to each Mortgage Loan so assigned: (i) the
original Mortgage Note, including any riders thereto, endorsed without recourse
to the order of "Xxxxx Fargo Bank Minnesota, National Association, as Trustee
for certificateholders of Bear Xxxxxxx Asset Backed Securities, Inc. Asset
Backed Certificates, Series 2001- AC2," and showing to the extent available to
the Seller an unbroken chain of endorsements from the original payee thereof to
the Person endorsing it to the Trustee, (ii) the original Mortgage, which shall
have been recorded (or if the original is not available, a copy), with evidence
of such recording indicated thereon (or if clause (x) in the proviso below
applies, shall be in recordable form), (iii) the assignment (either an original
or a copy, which may be in the form of a blanket assignment if permitted in the
jurisdiction in which the Mortgaged Property is located) to the Trustee of the
Mortgage with respect to each Mortgage Loan in the name of "Xxxxx Fargo Bank
Minnesota, National Association, as Trustee for certificateholders of Bear
Xxxxxxx Asset Backed Securities, Inc. Asset Backed Certificates, Series
2001-AC2," which shall have been recorded (or if clause (x) in the proviso below
applies, shall be in recordable form) (iv) an original or a copy of all
intervening assignments of the Mortgage, if any, to the extent available to the
Seller, with evidence of recording thereon, (v) the original policy of title
insurance or mortgagee's certificate of title insurance or commitment or binder
for title insurance, if available, or a copy thereof, or, in the event that such
original title insurance policy is unavailable, a photocopy thereof, or in lieu
thereof, a current lien search on the related Mortgaged Property and (vi)
originals or copies of all available assumption, modification or substitution
agreements, if any; provided, however, that in lieu of the foregoing, the Seller
may deliver the following documents, under the circumstances set forth below:
(x) if any Mortgage, assignment thereof to the Trustee or intervening
assignments thereof have been delivered or are being delivered to recording
offices for recording and have not been returned in time to permit their
delivery as specified above, the Depositor may deliver a true copy thereof with
a certification by the Master Servicer or the title company issuing the
commitment for title insurance, on the face
-48-
of such copy, substantially as follows: "Certified to be a true and correct copy
of the original, which has been transmitted for recording"; and (y) in lieu of
the Mortgage Notes relating to the Mortgage Loans identified in the list set
forth in Exhibit J, the Depositor may deliver a lost note affidavit and
indemnity and a copy of the original note, if available; and provided, further,
however, that in the case of Mortgage Loans which have been prepaid in full
after the Cut-Off Date and prior to the Closing Date, the Depositor, in lieu of
delivering the above documents, may deliver to the Trustee a certification of a
Servicing Officer to such effect and in such case shall deposit all amounts paid
in respect of such Mortgage Loans, in the Master Servicer's Protected Account or
in the Distribution Account on the Closing Date. In the case of the documents
referred to in clause (x) above, the Depositor shall deliver such documents to
the Trustee promptly after they are received. The Seller shall cause, at its
expense, the Mortgage and intervening assignments, if any, and to the extent
required in accordance with the foregoing, the assignment of the Mortgage to the
Trustee to be submitted for recording promptly after the Closing Date; provided
that the Seller need not cause to be recorded any assignment in any jurisdiction
under the laws of which, as evidenced by an Opinion of Counsel delivered by the
Seller to the Trustee and the Rating Agencies, the recordation of such
assignment is not necessary to protect the Trustee's interest in the related
Mortgage Loan. In the event that the Seller, the Depositor or the Master
Servicer gives written notice to the Trustee that a court has recharacterized
the sale of the Mortgage Loans as a financing, 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 each such previously
unrecorded assignment to be submitted for recording as specified above at the
expense of the Trust pursuant to Section 9.05. 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, the Trustee shall, if not so completed,
complete the assignment of the related Mortgage in the manner specified in
clause (iii) above.
Section 2.02 ACCEPTANCE OF THE MORTGAGE LOANS.
(a) The Trustee acknowledges receipt of, subject to the further
review and exceptions reported by the Trustee pursuant to the procedures
described below, the documents (or certified copies thereof) delivered to the
Trustee pursuant to Section 2.01 and declares that it holds and will continue to
hold directly or through a custodian those documents and any amendments,
replacements or supplements thereto and all other assets of the Trust Fund
delivered to it in trust for the use and benefit of all present and future
Holders of the Certificates. On the Closing Date, the Trustee will deliver an
Initial Certification in the form annexed hereto as Exhibit C-1 confirming
whether or not it has received the Mortgage File for each Mortgage Loan, but
without review of such Mortgage File, except to the extent necessary to confirm
whether such Mortgage File contains the original Mortgage Note or a lost note
affidavit and indemnity in lieu thereof. No later than 90 days after the Closing
Date, the Trustee shall, for the benefit of the Certificateholders, review each
Mortgage File delivered to it and execute and deliver to the Seller and the
Master Servicer an Interim Certification substantially in the form annexed
hereto as Exhibit C-2. In conducting such review, the Trustee will ascertain
whether all required documents have been executed and received and whether those
documents relate, determined on the basis of the Mortgagor name, original
principal balance and loan number, to the Mortgage Loans identified in Exhibit B
to this Agreement, as supplemented (provided, however, that with respect to
those documents described in subclauses (iv) and (vi) of Section 2.01, such
obligations shall extend only to documents actually delivered pursuant to such
subclauses). In performing any such review, the Trustee may conclusively rely on
the purported due
-49-
execution and genuineness of any such document and on the purported genuineness
of any signature thereon. If the Trustee finds any document constituting part of
the Mortgage File not to have been executed or received, or to be unrelated to
the Mortgage Loans identified in Exhibit B or to appear to be defective on its
face, the Trustee shall include such information in the exception report
attached to Exhibit C-2. The Seller shall correct or cure any such defect or, if
prior to the end of the second anniversary of the Closing Date, the Seller may
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 shall deliver to the Trustee an Opinion of Counsel
to the effect that such defect does not materially or adversely affect the
interests of Certificateholders in such Mortgage Loan within 60 days from the
date of notice from the Trustee of the defect and if the Seller fails to correct
or cure the defect or deliver such opinion within such period, the Seller will,
subject to Section 2.03, within 90 days from the notification of the Trustee
purchase such Mortgage Loan at the Purchase Price; provided, however, that if
such defect relates solely to the inability of the Seller to deliver the
Mortgage, assignment thereof to the Trustee, or intervening assignments thereof
with evidence of recording thereon because such documents have been submitted
for recording and have not been returned by the applicable jurisdiction, the
Seller shall not be required to purchase such Mortgage Loan if the Seller
delivers such documents promptly upon receipt, but in no event later than 360
days after the Closing Date.
(b) No later than 180 days after the Closing Date, the Trustee
will review, for the benefit of the Certificateholders, the Mortgage Files and
will execute and deliver or cause to be executed and delivered to the Seller and
the Master Servicer, a Final Certification substantially in the form annexed
hereto as Exhibit C-3. In conducting such review, the Trustee will ascertain
whether each document required to be recorded has been returned from the
recording office with evidence of recording thereon and the Trustee has received
either an original or a copy thereof, as required in Section 2.01 (provided,
however, that with respect to those documents described in subclauses (iv) and
(vi) of Section 2.01, such obligations shall extend only to documents actually
delivered pursuant to such subclauses). If the Trustee finds any document with
respect to a Mortgage Loan has not been received, or to be unrelated, determined
on the basis of the Mortgagor name, original principal balance and loan number,
to the Mortgage Loans identified in Exhibit B or to appear defective on its
face, the Trustee shall note such defect in the exception report attached to the
Final Certification and shall promptly notify the Seller. The Seller shall
correct or cure any such defect or, if prior to the end of the second
anniversary of the Closing Date, the Seller may 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 shall deliver to the Trustee an Opinion of Counsel to the effect that
such defect does not materially or adversely affect the interests of
Certificateholders in such Mortgage Loan within 60 days from the date of notice
from the Trustee of the defect and if the Seller is unable within such period to
correct or cure such defect, or to substitute the related Mortgage Loan with a
Replacement Mortgage Loan or to deliver such opinion, the Seller shall, subject
to Section 2.03, within 90 days from the notification of the Trustee, purchase
such Mortgage Loan at the Purchase Price; provided, however, that if such defect
relates solely to the inability of the Seller to deliver the Mortgage,
assignment thereof to the Trustee or intervening assignments thereof with
evidence of recording thereon, because such documents have not been returned by
the applicable jurisdiction, the Seller shall not be required to purchase such
Mortgage Loan, if the Seller delivers such documents promptly upon receipt, but
in no event later than 360 days after the Closing Date.
-50-
(c) In the event that a Mortgage Loan is purchased by the Seller
in accordance with subsections 2.02(a) or (b) above or Section 2.03, the Seller
shall remit the applicable Purchase Price to the Trustee for deposit in the
Distribution Account and shall provide written notice to the Trustee detailing
the components of the Purchase Price, signed by a Servicing Officer. Upon
deposit of the Purchase Price in the Distribution Account and upon receipt of a
Request for Release with respect to such Mortgage Loan, the Trustee will release
to the Seller the related Mortgage File and the Trustee shall execute and
deliver all instruments of transfer or assignment, without recourse, furnished
to it by the Seller, as are necessary to vest in the Seller title to and rights
under the Mortgage Loan. Such purchase shall be deemed to have occurred on the
date on which the deposit into the Distribution Account was made. The Trustee
shall promptly notify the Rating Agencies of such repurchase. The obligation of
the Seller to cure, repurchase or substitute for any Mortgage Loan as to which a
defect in a constituent document exists shall be the sole remedy respecting such
defect available to the Certificateholders or to the Trustee on their behalf.
(d) The Seller shall deliver to the Trustee, and Trustee agrees
to accept the Mortgage Note and other documents constituting the Mortgage File
with respect to any Replacement Mortgage Loan, which the Trustee will review as
provided in subsections 2.02(a) and 2.02(b), provided, that the Closing Date
referred to therein shall instead be the date of delivery of the Mortgage File
with respect to each Replacement Mortgage Loan.
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, the Securities Administrator and the Trustee as follows, as of the
Closing Date:
(i) It is duly organized 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 it 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) It 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 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 its legal, valid and binding
obligation, enforceable against it 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.
-51-
(iii) The execution and delivery of this Agreement by it, the
servicing of the Mortgage Loans by it 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 its ordinary course of business and will not (A) result in a
material breach of any term or provision of its charter or by-laws 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 it is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to it of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it; and it 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 its ability to perform
or meet any of its obligations under this Agreement.
(iv) It is an approved servicer of conventional mortgage loans
for Xxxxxx Xxx or Xxxxxxx Mac 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 its knowledge,
threatened, against it that would materially and adversely affect the
execution, delivery or enforceability of this Agreement or its ability
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 its execution, delivery and
performance of, or compliance with, this Agreement or the consummation
of the transactions contemplated hereby, or if any such consent,
approval, authorization or order is required, it has obtained the same.
(vii) The Master Servicer will not waive any Prepayment Charge
unless it is waived in accordance with the standard set forth in Section
3.01.
(b) The Seller hereby represents and warrants to the Depositor,
the Securities Administrator, the Master Servicer and the Trustee as follows, 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.
-52-
(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 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 Xxxxxx Mae or Xxxxxxx Mac 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):
-53-
(A) The information set forth in the Mortgage Loan Schedule on
the Closing Date is complete, true and correct.
(B) All payments required to be made prior to the Cut-off Date
with respect to each Mortgage Loan have been made and no Mortgage Loan is
delinquent sixty or more days; and the Seller has not advanced funds, or
induced, solicited or knowingly received any 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 any Mortgage Loan.
(C) Except with respect to taxes, insurance and other amounts
previously advanced by a prior servicer with respect to any Mortgage Loan, to
the best of Seller's knowledge, 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 in the case of the Mortgage Loans 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 in the case of the
Mortgage Loans 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 Xxxxxx Xxx and Xxxxxxx Mac
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, (B) the minimum amount required to
compensate for damage or loss on a
-54-
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.
(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 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 and (3) 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; the related
-55-
Originator or the Seller or the applicable Servicer 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 subject to the National City Subservicing
Agreement, if applicable, 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.
(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 clause (I) above) the Seller (as assignee), its
successors and assigns as to the first priority lien of the Mortgage 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. With respect to each Mortgage
Loan, 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 in the case of a
Mortgage Loan, 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.
-56-
(S) [Reserved]
(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 Xxxxxx Xxx/Xxxxxxx Mac
standard, in accordance with the proper, prudent and customary practices in the
mortgage origination and servicing business. With respect to the escrow accounts
and escrow payments, if any, and a Mortgage Loan (other than the National City
Loans) all such payments are in the possession or under the control of the
Seller (including pursuant to a Servicing Agreement) and there exists no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. 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) [Reserved]
(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.
(AA) The Mortgagor has received all disclosure materials required
by applicable law with respect to the making of the Mortgage Loan.
(BB) No Mortgage Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property.
-57-
(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 with respect to a Mortgage Loan
is in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.
(EE) [Reserved].
(FF) [Reserved].
(GG) The Mortgaged Property consists of a single parcel of real
property with or without 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 Xxxxxx Mae or a manufactured
dwelling which conforms with Xxxxxx Xxx and Xxxxxxx Mac requirements regarding
such dwellings, or a townhouse, each structure of which is permanently affixed
to the Mortgaged Property, and is legally classified as real estate.
(HH) [Reserved]
(II) [Reserved].
(JJ) Each Mortgage Loan at the time of origination was
underwritten in general in accordance with guidelines not inconsistent with the
guidelines set forth in the Prospectus Supplement and generally accepted 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.
(LL) As of the Cut-off Date, none of the Mortgage Loans were
subject to the Home Ownership and Equity Protection Act of 1994 ("HOEPA").
(MM) No Mortgage Loan imposes a Prepayment Charge for a term in
excess of five years.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(b)(vii) that materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the party discovering such breach shall give prompt written notice thereof to
the other parties. Any breach of a representation or warranty contained in
clauses (LL) and/or (MM) above, shall be automatically deemed to affect
materially and adversely the interests of the Certificateholders. The Seller
hereby covenants with respect to the representations and warranties set forth in
Section 2.03(b)(vii), that within 90 days of the discovery of a breach of any
representation or warranty set forth therein that materially and adversely
affects the interests of
-58-
the Certificateholders in any Mortgage Loan, it shall cure such breach in all
material respects and, if such breach is not so cured, (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 an Opinion of Counsel if 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. The Seller 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 Securities Administrator
to amend the Mortgage Loan Schedule, the Seller shall, unless it cures such
breach in a timely fashion pursuant to this Section 2.03, promptly notify the
Securities Administrator whether it intends either to repurchase, or to
substitute for, the Mortgage Loan affected by such breach. With respect to the
representations and warranties in Section 2.03(b)(vii) that are made to the best
of the Seller's knowledge, if it is discovered by any of the Depositor, the
Master Servicer, the Seller, the Securities Administrator 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 Seller's lack of knowledge with respect to the
substance of such representation or warranty, the Seller shall nevertheless be
required to cure, substitute for or repurchase the affected Mortgage Loan in
accordance with the foregoing.
Notwithstanding the foregoing, within 90 days of the earlier of
discovery by the Master Servicer or receipt of notice by the Master Servicer of
the breach of the covenant of the Master Servicer set forth in Section
2.03(a)(vii) above which materially and adversely affects the interests of the
Holders of the Class P Certificates in any Prepayment Charge, the Master
Servicer shall remedy such breach as follows: the Master Servicer shall pay the
amount of such waived Prepayment Charge, for the benefit of the holders of the
Class P Certificates, by depositing such amount into the Distribution Account
(net of any amount actually collected by the Master Servicer in respect of such
Prepayment Charge and remitted by the Master Servicer, for the benefit of the
holders of the Class P Certificates, in respect of such Prepayment Charge, into
the Distribution Account).
With respect to any Replacement Mortgage Loan or Loans, the
Seller shall deliver to the Trustee for the benefit of the Certificateholders
such documents and agreements as are 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. 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 Securities Administrator
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 Securities Administrator shall
deliver the amended Mortgage Loan Schedule to the Trustee. Upon
-59-
such substitution, the Replacement Mortgage Loan or Loans shall be subject to
the terms of this Agreement in all respects, and the Seller 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)(vii) with respect to such Mortgage Loan. Upon any such substitution and
the deposit into the Protected Account maintained by the Master Servicer of the
amount required to be deposited therein in connection with such substitution as
described in the following paragraph and receipt by the Trustee of a Request for
Release for such Mortgage Loan, the Trustee shall release to the Seller the
Mortgage File relating to such Deleted Mortgage Loan and held for the benefit of
the Certificateholders and shall execute and deliver at the Seller's direction
such instruments of transfer or assignment as have been prepared by the Seller,
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 a Deleted Mortgage Loan, the Master Servicer will
determine the amount (if any) by which the aggregate principal balance of all
the 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 such Deleted Mortgage
Loan. An amount equal to the aggregate of such deficiencies, described in the
preceding sentence for any Distribution Date (such amount, the "Substitution
Adjustment Amount") shall be deposited into the Protected Account maintained by
the Master Servicer, 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 the Seller shall have repurchased a Mortgage
Loan, the Purchase Price therefor shall be deposited into the Protected Account
maintained by the Master Servicer, on the Determination Date for the
Distribution Date in the month following the month during which the Seller
became obligated to repurchase or replace such Mortgage Loan and upon such
deposit of the Purchase Price, the delivery of an Opinion of Counsel if required
by Section 2.05 and the receipt of a Request for Release, the Trustee shall
release the related Mortgage File held for the benefit of the Certificateholders
to the Seller, and the Trustee shall execute and deliver at such Person's
direction the related instruments of transfer or assignment prepared by the
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 the 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 2.03(A) ASSIGNMENT OF INTERESTS IN THE NATIONAL CITY
SUBSERVICING AGREEMENT.
-60-
To the extent not provided for in the Assumption Agreement, the
Seller hereby assigns to the Depositor who concurrently with the execution and
delivery of this Agreement assigns to the Trustee, on behalf of the
Certificateholders, all of its right, title and interest in the National City
Subservicing Agreement and, if applicable, the Assumption Agreement, including
but not limited to the Seller's rights pursuant to the National City
Subservicing Agreement (noting that the Seller has retained the right in the
event of breach of the representations, warranties and covenants, if any, with
respect to the related Mortgage Loans of National City under the National City
Subservicing Agreement to enforce the provisions thereof and to seek all or any
available remedies).
Section 2.04 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to the Master
Servicer, the Securities Administrator 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 (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.
-61-
(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 as of
the Closing Date, following the transfer of the Mortgage Loans to it by the
Seller, the Depositor had good title to the Mortgage Loans and the related
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 immediately preceding paragraph shall survive
delivery of the Mortgage Files to the Trustee. Upon discovery by the Depositor
or the Trustee of a breach of such representations and warranties, the party
discovering such breach shall give prompt written notice to the others and to
each Rating Agency.
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 or 2.03
shall be made unless the Seller 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 REMIC I, REMIC II, REMIC III or REMIC IV or contributions after the Closing
Date, as defined in sections 860F(a)(2) and 860G(d) of the Code, respectively or
(ii) cause any of REMIC I, REMIC II, REMIC III or REMIC IV 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 or 2.03) upon the earlier of (a) the occurrence of a default
or imminent default with respect to such Mortgage 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 or the Master
Servicer that any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning of section 860G(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 and the Trustee. 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(c) with respect to
substitutions are satisfied, a Replacement Mortgage Loan for the
-62-
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 COUNTERSIGNATURE 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,
countersigned 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 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
Securities Administrator and the Trustee as follows:
(a) it 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;
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Securities
Administrator, the Depositor, any affiliate of the Depositor or the Trustee and
prepared by such 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; and
(c) it shall accurately and fully provide information regarding
payment performance of the Mortgagors to the nationally recognized credit
repositories, to the extent such reporting remains customary and prudent in the
servicing of mortgage loans similar to the Mortgage Loans. Nothing in this
Section shall derogate from 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.
-63-
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01 MASTER SERVICER.
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 servicers 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 3.03,
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 herein), (iii) to
collect any Insurance Proceeds and other Liquidation Proceeds, and (iv) subject
to Section 3.13, 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.
To the extent consistent with the foregoing, the Master Servicer shall be
permitted to waive a Prepayment Charge only under the following circumstances:
(I) such waiver is standard and customary in servicing similar mortgage loans
and (ii) such waiver would, in the reasonable judgment of the Master Servicer,
maximize recovery of total proceeds taking into account the value of such
Prepayment Charge and the related Mortgage Loan.
Without limiting the generality of the foregoing, the Master
Servicer, in its own name or in the name of the Trust, the Depositor or the
Trustee, is hereby authorized and empowered by the Trust, 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 first paragraph of this
Section 3.01, 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 4.03,
and further as provided in Section 4.02. All costs incurred by the Master
Servicer, if any, in effecting the timely payments of taxes and assessments on
the Mortgaged Properties and related
-64-
insurance premiums shall not, for the purpose of calculating monthly
distributions to the Certificateholders, be added to the Stated Principal
Balance under the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loans so permit.
Section 3.02 REMIC-RELATED COVENANTS.
For as long as each REMIC shall exist, the Trustee shall act in
accordance herewith to assure continuing treatment of such REMIC as a REMIC, and
the Trustee shall comply with any directions of the Seller, the Depositor, any
Servicer or the Master Servicer to assure such continuing treatment. In
particular, the Trustee shall not (a) sell or permit the sale of all or any
portion of the Mortgage Loans or of any investment of deposits in an Account
unless such sale is as a result of a repurchase of the Mortgage Loans pursuant
to this Agreement or the Trustee has received a REMIC Opinion prepared at the
expense of the Trust Fund; and (b) other than with respect to a substitution
pursuant to Section 2.04 of this Agreement, as applicable, accept any
contribution to any REMIC after the Startup Day without receipt of a REMIC
Opinion.
For as long as each REMIC shall exist, the Master Servicer shall
act in accordance herewith to assure continuing treatment of such REMIC as a
REMIC. Notwithstanding anything in this Agreement to the contrary, the Master
Servicer shall not (unless the Mortgagor is in default with respect to the
Mortgage Loan or such default is, in the judgment of the Master Servicer,
reasonably foreseeable) make or permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both (i) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or Treasury
regulations promulgated thereunder) and (ii) cause any of REMIC I, REMIC II,
REMIC III or REMIC IV to fail to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited transactions" or "contributions" after the
startup date under the REMIC Provisions.
Section 3.03 SUBSERVICING; NATIONAL CITY SUBSERVICING AGREEMENT;
MONITORING OF SUBSERVICERS; ENFORCEMENT OF OBLIGATIONS.
(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a subservicer pursuant to 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 herein relating to agreements or arrangements between the Master
Servicer or a subservicer or reference to actions taken through the Master
Servicer or otherwise, the Master Servicer shall remain obligated and liable to
the Depositor, the Trust, 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 any 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
-65-
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 (other than the National City Loans) that are received by a
subservicer regardless of whether such payments are remitted by the subservicer
to the Master Servicer.
(c) The parties hereto acknowledge that the National City Loans
are currently being subserviced by National City in accordance with the terms
and provisions of the National City Subservicing Agreement. The National City
Subservicing Agreement has been assigned to the Trust pursuant to the Assumption
Agreement. Pursuant to the National City Subservicing Agreement, National City
will make all remittances required thereunder directly to the Trustee for
deposit in the Distribution Account.
(d) The Master Servicer, on behalf of the Trustee and the
Certificateholders, shall enforce the obligations of each Subservicer (including
National City) under the related Subservicing Agreement, and shall, in the event
that any such Subservicer (including National City) fails to perform its
obligations in accordance with the related Subservicing Agreement, subject to
the preceding paragraph, terminate the rights and obligations of such
Subservicer (including National City) thereunder and thereafter perform the
primary servicing obligations with respect to such Mortgage Loans; provided,
however, it is understood and acknowledged by the parties hereto that there will
be a period of transition (not to exceed 90 days) before the actual servicing
functions can be fully transferred to the Master Servicer. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
Subservicing Agreements and the pursuit of other appropriate remedies, shall be
in such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, provided that the Master Servicer shall not be
required to prosecute or defend any legal action except to the extent that the
Master Servicer shall have received reasonable indemnity for its costs and
expenses in pursuing such action.
Section 3.04 SUCCESSOR MASTER SERVICER AND SUBSERVICING AGREEMENTS.
In the event that, pursuant to Section 8.01 hereof, the Trustee
or any other Person shall become Successor Master Servicer, such Successor
Master Servicer may, at its option, succeed to any rights and obligations of the
predecessor Master Servicer under any Subservicing Agreement in accordance with
the terms thereof; provided that such Successor Master 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 predecessor
Master Servicer thereunder; and the predecessor Master Servicer shall not
thereby be relieved of any liability or obligations under the Subservicing
Agreement arising prior to the date of such succession.
Such predecessor Master Servicer shall, upon request of the
Trustee, but at the expense of such predecessor Master Servicer, deliver to the
assuming party all documents and
-66-
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 RIGHTS OF THE DEPOSITOR AND 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.
Section 3.06 DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
(a) Except as otherwise provided in this Section 3.06, 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 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
3.06(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 3.06(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 3.06(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 3.06(a), 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
-67-
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 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.
Section 3.07 RELEASE OF MORTGAGE FILES.
(a) Upon the payment in full of any Mortgage Loan or the escrow
of such amount in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the Master Servicer will
promptly furnish to the Trustee a copy of a certification substantially in the
form of Exhibit H hereto signed by a Servicing Officer or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer (which certification shall include a
statement to the effect that all amounts received in connection with such
payment that are required to be deposited in the Protected Account maintained by
the Master Servicer have been or will be so deposited or escrowed) and shall
request that the Trustee deliver to the Master Servicer the related Mortgage
File. Upon receipt of such certification and request, the Trustee shall promptly
release the related Mortgage File to the Master Servicer and the Trustee shall
have any further responsibility with regard to such Mortgage File. Upon any such
payment in full, the Master Servicer is authorized to give, as agent for the
Trustee, as the mortgagee under the Mortgage that secured the Mortgage Loan, an
instrument of satisfaction (or assignment of mortgage without recourse)
regarding the Mortgaged Property subject to the Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of such payment, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Protected Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee shall execute such documents as
shall be prepared and furnished to the Trustee by the Master Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Trustee shall, upon the request of the Master
Servicer, and delivery to the Trustee, of two copies of a request for release
signed by a Servicing Officer substantially in the form of Exhibit H (or in a
mutually agreeable electronic format which will, in lieu of a signature on its
face, originate from a Servicing Officer), release the related Mortgage File
held in its possession or control to the Master Servicer. Such trust receipt
shall obligate the Master Servicer to return the Mortgage File to the Trustee,
when the need therefor by the Master Servicer no longer exists unless the
Mortgage Loan shall be liquidated, in which case,
-68-
upon receipt of a certificate of a Servicing Officer similar to that hereinabove
specified, the Mortgage File shall be released by the Trustee, to the Master
Servicer.
Section 3.08 DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER
SERVICER TO BE HELD FOR 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
Protected 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 Protected Account or Distribution Account or in any
Escrow Account, 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, 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 3.09 MAINTENANCE OF HAZARD INSURANCE.
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 4.01,
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 Protected Account maintained by the Master Servicer. 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 4.02. It is understood and agreed that no earthquake or
other additional insurance is to be required
-69-
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 least 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 3.09, 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 3.09, and there shall
have been a loss that would have been covered by such policy, deposit in the
Protected Account maintained by the Master Servicer 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 3.10 PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS.
The Master Servicer shall prepare and present on behalf of the
Trustee and the Certificateholders all claims under the Insurance Policies and
take such actions (including the negotiation, settlement, compromise or
enforcement of the insured's claim) as shall be necessary to realize recovery
under such Insurance Policies. Any proceeds disbursed to the Master Servicer in
respect of such Insurance Policies shall be promptly deposited in the Protected
Account maintained by the Master Servicer upon receipt, except that any amounts
realized that are to be applied to the repair or restoration of the related
Mortgaged Property as a condition precedent to the presentation of claims on the
related Mortgage Loan to the insurer under any applicable Insurance Policy need
not be so deposited (or remitted).
Section 3.11 MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.
(a) The Master Servicer shall not take any action that would
result in noncoverage under any applicable Primary Mortgage Insurance Policy of
any loss which, but for the actions of the Master Servicer would have been
covered thereunder. The Master Servicer shall use its best efforts to keep in
force and effect (to the extent that the Mortgage Loan requires the Mortgagor to
maintain such insurance), Primary Mortgage Insurance applicable to each Mortgage
Loan. The Master Servicer shall not cancel or refuse to renew any such Primary
Mortgage Insurance Policy that
-70-
is in effect at the date of the initial issuance of the Mortgage Note and is
required to be kept in force hereunder.
(b) The Master Servicer agrees to present on behalf of the
Trustee and the Certificateholders, claims to the insurer under any Primary
Mortgage Insurance Policies and, in this regard, to take such reasonable action
as shall be necessary to permit recovery under any Primary Mortgage Insurance
Policies respecting defaulted Mortgage Loans. Pursuant to Section 4.01, any
amounts collected by the Master Servicer under any Primary Mortgage Insurance
Policies shall be deposited in the Protected Account maintained by the Master
Servicer, subject to withdrawal pursuant to Section 4.02 hereof.
Section 3.12 TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE
POLICIES AND DOCUMENTS.
The Trustee shall retain possession and custody of the originals
(to the extent available) of any Primary Mortgage Insurance Policies, or
certificate of insurance if applicable, and any certificates of renewal as to
the foregoing as may be issued from time to time. Until all amounts
distributable in respect of the Certificates have been distributed in full and
the Master Servicer otherwise has fulfilled its obligations under this
Agreement, the Trustee shall also retain possession and custody of each Mortgage
File in accordance with and subject to the terms and conditions of this
Agreement. The Master Servicer shall promptly deliver or cause to be delivered
to the Trustee, upon the execution or receipt thereof the originals of any
Primary Mortgage Insurance Policies, any certificates of renewal, and such other
documents or instruments that constitute portions of the Mortgage File that come
into the possession of the Master Servicer from time to time.
Section 3.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS;
DETERMINATION OF EXCESS LIQUIDATION PROCEEDS AND REALIZED
LOSSES; REPURCHASES 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 Protected Account maintained by the Master
Servicer pursuant to Section 4.02). If the Master Servicer reasonably believes
that 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 Loan. The Master Servicer will
give notice of any such charge-off to the Trustee and the Securities
Administrator. 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
-71-
that it shall be entitled to reimbursement thereof from the proceeds of
liquidation of the related Mortgaged Property, as contemplated in Section 4.02.
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 hereunder. 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 Protected Account maintained by the Master Servicer 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 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 REMIC I, REMIC II, REMIC III or REMIC IV as defined in section
860F of the Code or cause any of REMIC I, REMIC II, REMIC III or REMIC IV 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 any of REMIC I, REMIC II, REMIC III or REMIC IV to the
imposition of any
-72-
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 the
Agreement, to be payments on account of principal and interest on the related
Mortgage Notes and shall be deposited into the Protected Account maintained by
the Master Servicer. 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 Protected Account on the next succeeding Determination Date following
receipt thereof for distribution on the related Distribution Date, except that
any Excess Liquidation 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 Servicing Advances
and Servicing Fees, pursuant to Section 4.02 or this Section 3.13; second, to
reimburse the Master Servicer for any unreimbursed Advances, pursuant to Section
4.02 or this Section 3.13; 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 Liquidation Proceeds and
Realized Losses, if any, for the related Prepayment Period.
(c) 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.
-73-
Section 3.14 SERVICING COMPENSATION.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain or withdraw from the Protected Account out of each
payment of interest on a Mortgage Loan included in the Trust Fund an amount
equal to the Servicing Fee.
Additional servicing compensation in the form of any Excess
Liquidation Proceeds, assumption fees, late payment charges, all income and gain
net of any losses realized from Permitted Investments with respect to funds in
or credited to the Protected Account shall be retained by the Master Servicer to
the extent not required to be deposited in the Protected Account pursuant to
Section 4.02. The Master Servicer shall be required to pay all expenses incurred
by it in connection with its servicing activities hereunder (including payment
of any 10:01PM premiums for hazard insurance, as required by Section 3.09 and
maintenance of the other forms of insurance coverage required by Section 3.11)
and shall not be entitled to reimbursement therefor except as specifically
provided in Section 4.02.
Section 3.15 REO PROPERTY.
(a) In the event the Trust Fund acquires ownership of any REO
Property in respect of any related Mortgage Loan, the deed or certificate of
sale shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall sell any REO Property as
expeditiously as possible and in accordance with the provisions of this
Agreement. Pursuant to its efforts to sell such REO Property, the Master
Servicer shall protect and conserve such REO Property in the manner and to the
extent required herein, subject to the REMIC Provisions.
(b) The Master Servicer shall deposit all funds collected and
received in connection with the operation of any REO Property into the Protected
Account maintained by the Master Servicer.
(c) The Master Servicer, upon the final disposition of any REO
Property, shall be entitled to reimbursement for any related unreimbursed
Advances, unreimbursed Servicing Advances or Servicing Fees from Liquidation
Proceeds received in connection with the final disposition of such REO Property;
provided, that any such unreimbursed Advances or Servicing Fees as well as any
unpaid Servicing Fees may be reimbursed or paid, as the case may be, prior to
final disposition, out of any net rental income or other net amounts derived
from such REO Property.
Section 3.16 ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
(a) The Master Servicer shall deliver to the Depositor, the
Trustee and the Rating Agencies within 120 days after the end of its fiscal
year, commencing with its fiscal year end in 2001, an Officer's Certificate,
certifying that with respect to the period ending on its fiscal year end: (i)
such Servicing Officer has reviewed the activities of the Master Servicer during
the preceding fiscal year or portion thereof and its performance under this
Agreement and (ii) to the best of such Servicing Officer's knowledge, based on
such review, the Master Servicer has performed and fulfilled its duties,
responsibilities and obligations under this Agreement in all material respects
throughout such year, or, if there has been a default in the fulfillment of any
such duties,
-74-
responsibilities or obligations, specifying each such default known to such
Servicing Officer and the nature and status thereof, (iii) nothing has come to
the attention of such Servicing Officer to lead such Servicing Officer to
believe that any Subservicer has failed to perform any of its duties,
responsibilities and obligations under its Subservicing Agreement in all
material respects throughout such year, or, if there has been a material default
in the performance or fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Servicing Officer and
the nature and status thereof.
(b) Copies of such statements shall be provided by the Trustee to
any Certificateholder upon request at the Master Servicer's expense, provided
that such statement shall have been delivered to the Trustee.
Section 3.17 ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT.
The Master Servicer, at its expense, shall cause a nationally
recognized firm of independent certified public accountants to furnish a
statement to the Trustee, the Rating Agencies and the Seller within 120 days
after the end of each fiscal year, commencing with the fiscal year ending in
2001 to the effect that, with respect to the most recently ended fiscal year,
such firm has examined certain records and documents relating to the Master
Servicer's performance of its servicing obligations under this Agreement and
pooling and servicing and trust agreements in material respects similar to this
Agreement and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
Xxxxxxx Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced by Xxxxxxx Mac
requires it to report. Copies of such statements shall be provided to any
Certificateholder, upon request, by the Master Servicer, or by the Trustee at
the expense of the Master Servicer if the Master Servicer shall fail to provide
such copies. If any such report discloses exceptions that are material, the
Master Servicer shall advise the Trustee whether such exceptions have been or
are susceptible of cure, and will take prompt action to do so.
Section 3.18 REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION.
Within 15 days after each Distribution Date, the Securities
Administrator shall, in accordance with industry standards, file with the
Commission via the Electronic Data Gathering and Retrieval System ("XXXXX"), a
Form 8-K with a copy of the statement to the Trustee who shall furnish a copy of
the monthly statement to the Certificateholders for such Distribution Date as an
exhibit thereto. Prior to January 30, 2002, the Securities Administrator shall,
in accordance with industry standards and only if instructed by the Depositor,
file a Form 15 Suspension Notice with respect to the Trust Fund, if applicable.
Prior to March 30, 2002, the Securities Administrator shall file a Form 10-K, in
substance conforming to industry standards, with respect to the Trust Fund. The
Depositor hereby grants to the Securities Administrator a limited power of
attorney to execute and file each such document on behalf of the Depositor. Such
power of attorney shall continue until
-75-
either the earlier of (I) receipt by the Securities Administrator from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Securities Administrator, from time to time upon request, such further
information, reports and financial statements within its control related to this
Agreement and the Mortgage Loans as the Securities Administrator reasonably
deems appropriate to prepare and file all necessary reports with the Commission.
The Securities Administrator shall have no responsibility to file any items
other than those specified in this Section 3.18; provided, however, the
Securities Administrator will cooperate with the Depositor in connection with
any additional filings with respect to the Trust Fund as the Depositor deems
necessary under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Copies of all reports filed by the Securities Administrator under the
Exchange Act shall be sent to: the Depositor c/o Bear, Xxxxxxx & Co. Inc., Attn:
Managing Director-Analysis and Control, Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx,
Xxx Xxxx 00000-0000. Fees and expenses incurred by the Securities Administrator
in connection with this Section 3.18 shall not be reimbursable from the Trust
Fund.
Section 3.19 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 any documentation as may be held by the Master Servicer
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 3.20 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.
Beginning on the first Business Day of the fiscal quarter
immediately following the date on which a Mortgage Loan has become at least 91
days delinquent, the Seller may, at its option, purchase such Mortgage Loan from
the Trustee at the Purchase Price therefor. If at any time the Seller makes a
payment to the Protected Account maintained by the Master Servicer, covering the
amount of the Purchase Price for such Mortgage Loan, and the Seller provides to
the Trustee a certification signed by a Servicing Officer stating that the
amount of such payment has been deposited in such Protected Account then the
Trustee shall execute the assignment of such Mortgage Loan at the request of the
Seller without recourse to the Seller which shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan, and all security and
documents relative thereto. Such assignment shall be an assignment outright and
not for security. The Seller will thereupon own such Mortgage Loan, and all such
security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto. Notwithstanding the foregoing, any such
optional right of repurchase by the Seller hereunder with respect to a
delinquent Mortgage Loan shall, if unexercised, terminate on the earlier of (i)
the date on which such delinquency has been cured or (ii) the last Business Day
of such fiscal quarter immediately following the date on which such Mortgage
Loan became 91 days delinquent, provided however, that such
-76-
optional right of repurchase shall be reinstated if (a) in the case of clause
(I), the related Mortgage Loan shall thereafter again have become 91 or more
days delinquent and (b) in the case of clause (ii), such delinquency shall have
been subsequently cured and the related Mortgage Loan shall thereafter again
become 91 or more days delinquent in any subsequent fiscal quarter.
-77-
ARTICLE IV
ACCOUNTS
Section 4.01 COLLECTION OF MORTGAGE LOAN PAYMENTS; PROTECTED 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 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 5.01.
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) a 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 such Mortgage Loan will not result in
the imposition of taxes on or disqualify any of REMIC I, REMIC II, REMIC III or
REMIC IV, the Master Servicer may, (A) amend the related Mortgage Note to reduce
the Mortgage Rate applicable thereto, provided that such reduced Mortgage Rate
shall in no event be lower than 8.25% and (B) amend any Mortgage Note to extend
to the maturity thereof.
(b) The Master Servicer shall establish and maintain a Protected
Account (which shall at all times be an Eligible Account) with a depository
institution in the name of the Master Servicer for the benefit of the Trustee on
behalf of the Certificateholders and designated "Xxxxx Fargo Bank Minnesota,
National Association, in trust for registered holders of Bear Xxxxxxx Asset
Backed Securities, Inc., Asset-Backed Certificates Series 2001-AC2". The Master
Servicer shall deposit or cause to be deposited into the Protected Account on a
daily basis within one Business Day of receipt, except as otherwise specifically
provided herein, the following payments and collections remitted by subservicers
(other than National City) 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 and all Prepayment Charges collected
by the Master Servicer with respect to the Mortgage Loans;
-78-
(ii) all payments on account of interest on the Mortgage Loans
net of the related Servicing Fee permitted under Section 3.14;
(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) any amount required to be deposited by the Master Servicer
pursuant to Section 4.01(c) in connection with any losses on Permitted
Investments;
(vi) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.09;
(vii) the Purchase Price for any Mortgage Loan repurchased by the
Seller pursuant to Sections 2.02, 2.03 or 3.20 of this Agreement and any
Substitution Adjustment Amount relating to a Mortgage Loan; and
(viii) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Master Servicer
into the Protected 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 4.02, it may at any time withdraw or direct the institution
maintaining the Protected Account, to withdraw such amount from the Protected
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 Protected Account, that describes the amounts
deposited in error in the Protected Account. The Master Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Protected Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 4.02.
(c) The institution that maintains the Protected Account shall
invest the funds in the Protected Account, in the manner directed by the Master
Servicer, in Permitted Investments which shall mature not later than 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 Protected Account, then such Permitted Investment shall
mature not later than the Business Day next preceding such Distribution Account
Deposit Date) and 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. 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. The amount of any losses incurred in the Protected Account in
respect of any such investments shall be deposited by the Master Servicer into
the Protected Account, out of the Master Servicer's own funds.
-79-
(d) 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 Protected Account prior to any change
thereof.
Section 4.02 PERMITTED WITHDRAWALS FROM THE PROTECTED ACCOUNT.
(a) The Master Servicer may from time to time make withdrawals
from the Protected Account for the following purposes:
(i) to pay itself (to the extent not previously paid to or
withheld by the Master Servicer), as servicing compensation in
accordance with Section 3.14, 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 3.14;
(ii) to reimburse the Master Servicer for Advances made by it
with respect to the Mortgage Loans, provided, however, that the Master
Servicer's right of reimbursement pursuant to this subclause (ii) shall
be 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 previously made
portion of a Servicing Advance or an Advance made by the Master Servicer
that, in the good faith judgment of the Master Servicer, will not be
ultimately recoverable by it from the related Mortgagor, any related
Liquidation Proceeds or otherwise (a "Nonrecoverable Advance"), to the
extent not reimbursed pursuant to clause (ii) or clause (v);
(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, provided, however,
that the Master Servicer's right to reimbursement for Servicing Advances
pursuant to this subclause (v) with respect to any Mortgage Loan shall
be 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 Servicing Advances were made;
(vi) to pay to the Seller, the Depositor or itself, as
applicable, with respect to each Mortgage Loan or property acquired in
respect thereof that has been purchased pursuant to Section 2.02 or 2.03
of this Agreement, all amounts received thereon and not taken into
account in determining the related Stated Principal Balance of such
repurchased Mortgage Loan;
(vii) to pay any expenses recoverable by the Master Servicer
pursuant to Sections 3.03, 7.01, 7.03, 7.04 and 9.05 of this Agreement;
-80-
(viii) to withdraw pursuant to Section 4.01 any amount
deposited in the Protected Account and not required to be deposited
therein; and
(ix) to clear and terminate the Protected Account upon
termination of this Agreement pursuant to Section 10.01 hereof.
In addition, no later than 1:00 p.m. Eastern time on the
Distribution Account Deposit Date, the Master Servicer shall withdraw from the
Protected Account and remit to the Trustee the amount of Interest Funds (without
taking into account any reduction in the amount of Interest Funds attributable
to the application of clause (iii) of the definition thereof contained in
Article I of this Agreement) and Principal Funds collected, to the extent on
deposit, and the Trustee shall deposit such amount in the Distribution Account.
In addition, on or before the Distribution Account Deposit Date, the Master
Servicer shall remit to the Trustee for deposit in the Distribution Account any
Advances or any payments of Compensating Interest required to be made by the
Master Servicer with respect to the Mortgage Loans; provided that the Master
Servicer will not be required to make any payments in respect of Compensating
Interest on the National City Loans. Furthermore, on each Distribution Account
Deposit Date, the Master Servicer shall remit to the Trustee all Prepayment
Charges collected by the Master Servicer with respect to the Mortgage Loans
during the related Prepayment Period and any Master Servicer Prepayment Charge
Payment Amounts required to be made by the Master Servicer in connection with
any Prepayment Charges waived by the Master Servicer during the related
Prepayment Period.
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 Protected Account pursuant to subclauses (i), (ii), (iv),
(v) and (vi) above. Prior to making any withdrawal from the Protected 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 or Servicing 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.
Section 4.03 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
Section 3.01 (with respect to taxes and assessments and insurance premiums) and
Section 3.09 (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
-81-
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 10.01 thereof. The Escrow Account
shall not be a part of the Trust Fund.
Section 4.04 DISTRIBUTION ACCOUNT.
(a) The Trustee shall establish and maintain in the name of the
Trustee, for the benefit of the Certificateholders, the Distribution Account as
a segregated trust account or accounts.
(b) All amounts deposited to the Distribution Account shall be
held by the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.
(c) The Distribution Account shall constitute an Eligible Account
of the Trust Fund segregated on the books of the Trustee and held by the Trustee
and the Distribution Account and the funds deposited therein shall not be
subject to, and shall be protected from, all claims, liens, and encumbrances of
any creditors or depositors of the Trustee (whether made directly, or indirectly
through a liquidator or receiver of the Trustee). The amount at any time
credited to the Distribution Account may be invested in the name of the Trustee,
in such Permitted Investments, or deposited in demand deposits with such
depository institutions, as determined by the Trustee. All Permitted Investments
shall mature or be subject to redemption or withdrawal on or before, and shall
be held until, the next succeeding Distribution Date if the obligor for such
Permitted Investment is the Trustee or, if such obligor is any other Person, the
Business Day preceding such Distribution Date. All investment earnings on
amounts on deposit in the Distribution Account or benefit from funds uninvested
therein from time to time shall be for the account of the Trustee. The Trustee
shall be permitted to withdraw or receive distribution of any and all investment
earnings from the Distribution Account on each Distribution Date. If there is
any loss on a Permitted Investment or demand deposit, the Trustee shall deposit
the amount of the loss in the Distribution Account. With respect to the
Distribution Account and the funds deposited therein, the Trustee shall take
such action as may be necessary to ensure that the Certificateholders shall be
entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e),
and applicable regulations pursuant thereto, if applicable, or any applicable
comparable state statute applicable to state chartered banking corporations.
(d) The Trustee shall deposit in the Distribution Account for
inclusion in the Interest Funds and Principal Funds to be distributed to the
Certificateholders in the related Distribution Date, all payments, collections
and other recoveries received by it from National City with respect to the
National City Loans during the related Due Period or Prepayment Period, as
applicable, (which shall include all Principal Prepayments and Insurance
Proceeds received after the related Prepayment Period by the Master Servicer or
the Trustee, as applicable, which the Master Servicer deems to have been
received during the related Prepayment Period).
Section 4.05 PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION
ACCOUNT.
(a) The Trustee will, from time to time on demand of the Master
Servicer or the Securities Administrator, make or cause to be made such
withdrawals or transfers from the
-82-
Distribution Account as the Master Servicer has designated for such transfer or
withdrawal or as the Securities Administrator has instructed hereunder for the
following purposes:
(i) to reimburse the Trustee or the Securities Administrator for
expenses, costs and liabilities incurred by or reimbursable
to it pursuant to this Agreement;
(ii) to pay investment income to the Trustee;
(iii) to pay the Trustee Fee to the Trustee;
(iv) to remove amounts deposited in error; and
(v) to clear and terminate the Distribution Account pursuant to
Section 10.01.
(b) On each Distribution Date, the Trustee shall distribute
Interest Funds and Principal Funds in the Distribution Account for each Loan
Group to the holders of the Certificates in accordance with Section 5.04.
-83-
ARTICLE V
DISTRIBUTIONS AND ADVANCES
BY THE MASTER SERVICER
Section 5.01 ADVANCES.
The Master Servicer shall, or shall cause the related subservicer
pursuant to the Subservicing Agreement to, make an Advance and deposit such
Advance in the Protected Account. Each such Advance shall be remitted to the
Distribution Account no later than 1:00 p.m. Eastern time on the Distribution
Account Deposit 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. Subject to
the Master Servicer's recoverability determination, in the event that a
subservicer fails to make a required Advance, the Master Servicer shall be
required to remit the amount of such Advance to the Distribution Account.
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 Protected 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
Protected Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Master Servicer by deposit in the
Distribution 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
Distribution Account for all Advances of its own funds made pursuant to this
Section as provided in Section 4.02. 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 5.01.
Subject to and in accordance with the provisions of Article VIII
hereof, in the event the Master Servicer fails to make such Advance, then the
Trustee, as Successor Master Servicer, shall be obligated to make such Advance,
subject to the provisions of this Section 5.01.
Section 5.02 COMPENSATING INTEREST PAYMENTS.
In the event that there is a Prepayment Interest Shortfall
arising from a voluntary Principal Prepayment in part or in full by the
Mortgagor with respect to any Mortgage Loan (other
-84-
than a National City Loan), the Master Servicer shall, to the extent of the
Servicing Fee for such Distribution Date, deposit into the Distribution 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 Seller, the Securities
Administrator, the Trust Fund or the Certificateholders.
In the event that there is a Prepayment Interest Shortfall
arising from a voluntary Principal Prepayment in full by the Mortgagor with
respect to any National City Loan, National City shall remit to the Trustee for
deposit into the Distribution Account on such Distribution Date, an amount equal
to the Prepayment Interest Shortfall from funds otherwise payable to it as its
Servicing Fee and in case of such deposit, National City shall not be entitled
to any recovery or reimbursement from the Trustee, the Depositor, the Master
Servicer, the Seller, the Securities Administrator, the Trust Fund or the
Certificateholders.
Section 5.03 REMIC DISTRIBUTIONS.
On each Distribution Date the Securities Administrator, as agent
for the Trustee, shall allocate distributions to the REMIC I Regular Interests,
the REMIC II Regular Interests, and the REMIC III Regular Interests, in
accordance with Section 5.06 hereof.
Section 5.04 DISTRIBUTIONS.
(a) On each Distribution Date, an amount equal to the Interest
Funds and Principal Funds for such Distribution Date shall be withdrawn by the
Trustee from the Distribution Account and distributed as directed in accordance
with the Remittance Report for such Distribution Date, in the following order of
priority:
FIRST, to pay accrued and unpaid interest on the Offered Certificates,
in the following order of priority:
1. (a) From Interest Funds in respect of Loan Group I:
(i) to the Class I-A-IO Certificates, the Current Interest
and any Interest Carry Forward Amount for such Class;
(ii) from remaining Interest Funds in respect to Loan Group
I, to each Class of the Group I Certificates, the
Current Interest and any Interest Carry Forward Amount
for each such Class, pro rata in accordance with the
amount of accrued interest due thereon; and
(b) From Interest Funds in respect of Loan Group II: to
each the Class II-F Certificates, Class II-INV
Certificates, Class II-A Certificates and Class II-A3
-85-
Certificates, the Current Interest and any Interest
Carry Forward Amount for each such Class, pro rata in
accordance with the amount of accrued interest due
thereon;
2. From remaining Interest Funds in respect of:
(a) Loan Group I, to each of the Class II-F Certificates, Class
II-INV Certificates, Class II-A2 Certificates and Class
II-A3 Certificates, any remaining Interest Carry Forward
Amount for each such Class for such Distribution Date, pro
rata in accordance with any remaining Interest Carry Forward
Amount for each such Class;
(b) Loan Group II:
(i) to the Class I-A-IO Certificates, any remaining
Interest Carry Forward Amount for such Class for
such Distribution Date, in accordance with any
remaining Interest Carry Forward Amount for such
Class.
(ii) to each of the Group I Certificates, any remaining
Interest Carry Forward Amount for each such Class
for such Distribution Date, pro rata in accordance
with any remaining Interest Carry Forward Amount
for each such Class.
3. From remaining Interest Funds in respect of Loan Group I and Loan
Group II, to the Class M-1 Certificates, the Class M-2
Certificates and the Class B Certificates, sequentially, in that
order, the Current Interest for each such Class;
4. Any Excess Spread to the extent necessary to meet a level of
overcollateralization equal to the Overcollateralization Target
Amount will be the Extra Principal Distribution Amount and will
be included as part of the Principal Distribution Amount; and
5. Any Remaining Excess Spread will be applied as Excess Cashflow
pursuant to clauses SECOND (D) through SEVENTH, below.
Notwithstanding the provisions of clauses first 4 and 5, above, on the
first Distribution Date, all Excess Spread will be paid to the holders of the
Class B-IO Certificates.
On any Distribution Date, any shortfalls resulting from the application
of the Relief Act and any Prepayment Interest Shortfalls to the extent not
covered by Compensating Interest will be allocated as set forth in the
definition of "Current Interest" herein.
SECOND, to pay as principal on the Offered Certificates entitled to
payments of principal, in the following order of priority:
-86-
(A) For each Distribution Date (i) prior to the Stepdown Date or (ii) on
which a Trigger Event is in effect:
1. To the Group I Certificates and the Group II Certificates
entitled to payments of principal, the Principal Distribution
Amount, pro rata, based on the Principal Funds for such
Distribution Date from each of Loan Group I and Loan Group II,
respectively, in each case until the Certificate Principal
Balance of the respective Class is reduced to zero to be
distributed as follows:
(a) to the Class I-A1 Certificates, Class I-A2 Certificates,
Class I-A3 Certificates, Class I-A4 Certificates and
Class I-A5 Certificates, sequentially, in that order, the
Principal Distribution Amount with respect to Loan Group
I; and
(b) to the Class II-F Certificates, the Class II-A2
Certificates and the Class II-A3 Certificates,
sequentially, in that order, the Principal Distribution
Amount with respect to Loan Group II;
2. To the Class M-1 Certificates, any remaining Principal
Distribution Amount until the Certificate Principal Balance
thereof is reduced to zero;
3. To the Class M-2 Certificates, any remaining Principal
Distribution Amount until the Certificate Principal Balance
thereof is reduced to zero;
4. To the Class B Certificates, any remaining Principal Distribution
Amount until the Certificate Principal Balance thereof is reduced
to zero;
(B) For each Distribution Date on or after the Stepdown Date, so long as a
Trigger Event is not in effect:
1. To the Group I Certificates and Group II Certificates then
entitled to payments of principal, from the Principal
Distribution Amount, the Class A Principal Distribution Amount,
pro rata, based on the Principal Funds for such Distribution Date
from each of Loan Group I and Loan Group II, respectively, in
each case until the Certificate Principal Balance of the
respective Class is reduced to zero to be distributed as follows;
(a) to the Class I-A1 Certificates, Class I-A2 Certificates,
Class I-A3 Certificates, Class I-A4 Certificates and
Class I-A5 Certificates, sequentially, in that order, the
Class A Principal Distribution Amount with respect to
Loan Group I, and
(b) to the Class II-F Certificates, the Class II-A2
Certificates and the Class II-A3 Certificates,
sequentially, in that order, the Class A Principal
Distribution Amount with respect to Loan Group II,
-87-
2. To the Class M-1 Certificates, from any remaining Principal
Distribution Amount, the Class M-1 Principal Distribution Amount,
until the Certificate Principal Balance thereof is reduced to
zero;
3. To the Class M-2 Certificates, from any remaining Principal
Distribution Amount, the Class M-2 Principal Distribution Amount,
until the Certificate Principal Balance thereof is reduced to
zero;
4. To the Class B Certificates, from any remaining Principal
Distribution Amount, the Class B Principal Distribution Amount,
until the Certificate Principal Balance thereof is reduced to
zero;
(C) Notwithstanding the provisions of clauses second (A) and (B), if on any
Distribution Date all of the Senior Certificates of a Certificate Group
are no longer outstanding, the pro rata portion of the Class A Principal
Distribution Amount otherwise allocable to such Certificate Group will
be allocated to the other Certificate Group, pro rata in accordance with
the aggregate Certificate Principal Balances of the outstanding Senior
Certificates of the Certificate Group to which such funds are allocated;
and
(D) Notwithstanding the provisions of clauses second (A) and (B), if on any
Distribution Date the pro rata portion of the Class A Principal
Distribution Amount allocated to a Certificate Group is insufficient to
pay to the related Senior Certificates the principal to which they are
entitled under clause second (B)(1), any Excess Cashflow will be
allocated in an amount equal to the lesser of the deficiency and the
aggregate amount of such Excess Cashflow, and if the pro rata portion of
the Class A Principal Distribution Amount is insufficient in both
Certificate Groups, then pro rata based upon the respective amounts of
such deficiencies.
THIRD, from any remaining Excess Cashflow, to the Class M-1 Certificates
an amount equal to (i) any Interest Carry Forward Amount and then (ii) any
Unpaid Realized Losses for such Class for such Distribution Date;
FOURTH, from any remaining Excess Cashflow, to the Class M-2
Certificates an amount equal to (i) any Interest Carry Forward Amount and then
(ii) any Unpaid Realized Losses for such Class for such Distribution Date;
FIFTH, from any remaining Excess Cashflow, to the Class B Certificates
an amount equal to (i) any Interest Carry Forward Amount and then (ii) any
Unpaid Realized Losses for such Class and such Distribution Date;
SIXTH, from any remaining Excess Cashflow, to the Class B-IO
Certificates, the Class B-IO Distribution Amount;
SEVENTH, if such Distribution Date follows a Prepayment Period during
which occurs the latest date on which a Prepayment Charge may be required to be
paid in respect of any of the Mortgage Loans, to the Class P Certificates, in
reduction of the Certificate Principal Balance thereof, until the Certificate
Principal Balance thereof is reduced to zero; and
-88-
EIGHTH, any remaining amounts to each of the Class R-I Certificates,
Class R-II Certificates, Class R-III Certificates and Class R-IV Certificates,
based on the related REMIC in which such amounts remain.
(b) On each Distribution Date, all amounts representing
Prepayment Charges in respect of the Mortgage Loans received during the related
Prepayment Period and any Master Servicer Prepayment Charge Amounts paid by the
Master Servicer during the related Prepayment Period will be withdrawn from the
Distribution Account and distributed by the Trustee to the Holders of the Class
P Certificates and shall not be available for distribution to the Holders of any
other Class of Certificates. The payment of the foregoing amounts to the Holders
of the Class P Certificates shall not reduce the Certificate Principal Balances
thereof.
(c) Subject to Section 10.02 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 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 10.02 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.
(d) On or before 5:00 p.m. Eastern time on the fifth Business Day
immediately preceding each Distribution Date, the Master Servicer shall deliver
a report to the Securities Administrator in the form of a computer readable
magnetic tape (or by such other means as the Master Servicer and the Securities
Administrator may agree from time to time) containing such data and information,
as agreed to by the Master Servicer and the Securities Administrator such as to
permit the Securities Administrator to prepare the Monthly Statement to
Certificateholders and to direct the Trustee in writing to make the required
distributions for the related Distribution Date (the "Remittance Report"). The
Securities Administrator shall deliver a Remittance Report to the Trustee on or
before 5:00 p.m. Eastern time on the Business Day immediately preceding each
Distribution Date.
Section 5.04A ALLOCATION OF REALIZED LOSSES.
Any Realized Losses with respect to the Mortgage Loans in the
aggregate or the Mortgage Loans in a particular Loan Group, as applicable, shall
be applied on each Distribution Date after the distributions provided for in
Section 5.04 in reduction of the Certificate Principal Balance of the Class or
Classes of Certificates as provided in the definition of Applied Realized Loss
Amount.
Section 5.05 MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.
-89-
(a) Not later than each Distribution Date, the Securities
Administrator shall prepare and make available to each Holder of Certificates,
the Trustee, 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
Extra Principal Distribution Amount (if any);
(ii) the amount of such distribution to Holders of each Class
(other than Class P) allocable to interest;
(iii) the Certificate Principal Balance or Certificate Notional
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 Balances of all of the
Mortgage Loans and of the Mortgage Loans in each Loan Group for the
following Distribution Date;
(v) the related amount of the Servicing Fees paid to or
retained by the Master Servicer and the Servicing Fees paid to or
retained by any subservicer for the related Due Period;
(vi) the Pass-Through Rate for each Class of Offered Certificates
with respect to the current Accrual Period, and, if applicable, whether
such Pass-Through Rate was limited by any interest rate cap;
(vii) any Interest Carry Forward Amount for each Class of
Offered Certificates;
(viii) the amount of the distribution made on such Distribution
Date to the Holders of the Class P Certificates allocable to Prepayment
Charges and Master Servicer Prepayment Charge Payment Amounts;
(ix) the amount of Advances for each Loan Group included in
the distribution on such Distribution Date;
(x) the cumulative amount of Applied Realized Loss Amounts to
date and, in addition, if the Certificate Principal Balances of the
Class M-1 Certificates, Class M-2 Certificates and Class B Certificates
have all been reduced to zero, the cumulative amount of any Realized
Losses that have not been allocated to any Certificates;
(xi) the number and aggregate principal amounts of Mortgage Loans
in each Loan Group for each such Loan Group and the mortgage pool (A)
Delinquent (exclusive of Mortgage Loans in foreclosure and bankruptcy)
(1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, (B) in
foreclosure and delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3)
91 or more days and (C) in bankruptcy and delinquent (1) 31 to 60 days,
(2) 61 to 90 days
-90-
and (3) 91 or more days, 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 was liquidated
during the preceding calendar month in each Loan Group and the mortgage
pool, the loan number and Stated Principal Balance of, and Realized Loss
on, such Mortgage Loan as of the close of business on the Determination
Date preceding such Distribution Date;
(xiii) the total number and principal balance of any real estate
owned or REO Properties in each Loan Group as of the close of business
on the Determination Date preceding such Distribution Date;
(xiv) the three month rolling average of the percent equivalent
of a fraction, the numerator of which is the aggregate stated Principal
Balance of the Mortgage Loans that are 60 days or more delinquent or are
in bankruptcy or foreclosure or are REO Properties, and the denominator
of which is the aggregate Stated Principal Balance of all of the
Mortgage Loans as of the last day of such Distribution Date;
(xv) the Realized Losses for each Loan Group during the related
Prepayment Period and the cumulative Realized Losses for each Loan Group
and the mortgage pool through the end of the preceding month; and
(xvi) whether a Trigger Event exists.
The Securities Administrator may make the foregoing monthly
statement (and, at its option, any additional files containing the same
information in an alternative format) available each month to Certificateholders
via the Securities Administrator's internet website. The Security
Administrator's internet website shall initially be located at
"xxx.xxxxxxx.xxx". Assistance in using the website can be obtained by calling
the Securities Administrator's customer service desk at (000) 000-0000. Parties
that are unable to use the above distribution options are entitled to have a
paper copy mailed to them via first class mail by calling the customer service
desk and indicating such. The Securities Administrator may change the way
monthly statements are distributed in order to make such distributions more
convenient or more accessible to the above parties.
(b) The Securities Administrator's responsibility for making the
above information available to the Certificateholders is limited to the
availability, timeliness and accuracy of the information derived from the Master
Servicer and the Trustee. The Securities Administrator will make available a
copy of each statement provided pursuant to this Section 5.05 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 upon request 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) and (a)(ii) of
this Section 5.05 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
-91-
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.
(d) Upon filing with the Internal Revenue Service, the Securities
Administrator shall furnish to the Holders of the Residual Certificates the
applicable Form 1066 and each applicable Form 1066Q and shall respond promptly
to written requests made not more frequently than quarterly by any Holder of a
Residual Certificate 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 a 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 a
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 9.12.
Section 5.06 REMIC DESIGNATIONS AND ALLOCATIONS.
(a) The Trustee shall elect that each of REMIC I, REMIC II, REMIC
III and REMIC IV shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of
this Agreement shall be resolved in a manner that preserves the validity of such
REMIC elections. The assets of REMIC I shall include the Mortgage Loans and all
interest owing in respect of and principal due thereon, the Distribution
Account, the Protected Account maintained by the Master Servicer, any REO
Property and any
-92-
proceeds of the foregoing. The REMIC I Regular Interests shall constitute the
assets of REMIC II. The REMIC II Regular Interests shall constitute the assets
of REMIC III. The REMIC III Regular Interests shall constitute the assets of
REMIC IV.
(b) On each Distribution Date, the Trustee shall cause the
Interest Funds and Principal Funds, in the following order of priority, to be
distributed by REMIC I to REMIC II on account of the REMIC I Regular Interests
or withdrawn from the Distribution Account and distributed to the Holders of the
Class R-I Certificates, as the case may be:
(1) first, (A) with respect to Mortgage Loans in Group I from
Interest Funds, to REMIC I Regular Interest LT1B, in an amount equal to
(A) the Uncertificated Accrued Interest for such Distribution Date, plus
(B) any amounts in respect thereof remaining unpaid from previous
Distribution Dates and second, to Holders of REMIC I Regular Interest
LT1A and REMIC I Regular Interest LT1P in an amount equal to (A) the
Uncertificated Accrued Interest for such Distribution Date, plus (B) any
amounts in respect thereof remaining unpaid from previous Distribution
Dates; and (B) with respect to Mortgage Loans in Group II to REMIC I
Regular Interest LT2, in an amount equal to (A) the Uncertificated
Accrued Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates;
(2) second, from Principal Funds, to the Holders of REMIC I
Regular Interests, allocated in the following order of priority:
(A) to the Holders of REMIC I Regular Interest LT1P, on
the Distribution Date immediately following the expiration of the
latest Prepayment Charge as identified on the Prepayment Charge
Schedule or any Distribution Date thereafter until $100 has been
distributed pursuant to this clause (A);
(B) with respect to the Mortgage Loans in Loan Group I,
first, to the Holders of REMIC I Regular Interest LT1A, and
second, to the Holders of REMIC I Regular Interest LT1B until the
Uncertificated Principal Balance of those REMIC I Regular
Interests are reduced to zero;
(C) with respect to the Mortgage Loans in Loan Group II,
to the Holders of REMIC I Regular Interest LT2, until the
Uncertificated Principal Balance of such REMIC I Regular Interest
is reduced to zero; and
(E) any remaining amount to the Holders of the Class R-I
Certificates.
On each Distribution Date, all amounts representing Prepayment
Charges in respect of the Mortgage Loans received during the related Prepayment
Period and any Master Servicer Prepayment Charge Payment Amounts paid by the
Master Servicer during the related Prepayment Period will be distributed by
REMIC I to the Holders of REMIC I Regular Interest LT1P. The payment of the
foregoing amounts to the Holders of REMIC I Regular Interest LT1P shall not
reduce the Uncertificated Principal Balance thereof.
-93-
On each Distribution Date, the Trustee shall cause in the
following order of priority, the following amounts to be distributed by REMIC II
to REMIC III on account of the REMIC II Regular Interests or withdrawn from the
Distribution Account and distributed to the holders of the Class R-II
Certificates, as the case may be:
(i) first, from Interest Funds in respect of the Group I Mortgage
Loans, to the Holders of REMIC II Regular Interest LT2A-IO, in an amount
equal to (A) the Uncertificated Accrued Interest for such Distribution
Date, plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates and then to Holders of REMIC II Regular
Interest LT2-1AA, REMIC II Regular Interest LT2-AI1, REMIC II Regular
Interest LT2-AI2, REMIC II Regular Interest LT2-AI3, REMIC II Regular
Interest LT2-AI4, REMIC II Regular Interest LT2-AI5, REMIC II Regular
Interest LT2-1M1, REMIC II Regular Interest LT2- 1M2, REMIC II Regular
Interest LT2-1B, REMIC II Regular Interest LT2-1ZZ and REMIC II Regular
Interest LT2P, PRO RATA, in an amount equal to (A) the Uncertificated
Accrued Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates and
from Interest Funds in respect of the Group II Mortgage Loans, to
Holders of REMIC II Regular Interest LT2-2AA, REMIC II Regular Interest
LT2-AII1, REMIC II Regular Interest LT2-AII2, REMIC II Regular Interest
LT2- AII3, REMIC II Regular Interest LT2-2M1, REMIC II Regular Interest
LT2-2M2, REMIC II Regular Interest LT2-2B and REMIC II Regular Interest
LT2-2ZZ, PRO RATA, in an amount equal to (A) the Uncertificated Accrued
Interest for such Distribution Date, plus (B) any amounts in respect
thereof remaining unpaid from previous Distribution Dates. Amounts
payable as Uncertificated Accrued Interest in respect of REMIC II
Regular Interest LT2-1ZZ and REMIC II Regular Interest LT2-2ZZ shall be
reduced when the sum of the REMIC II Group 1 Overcollateralized Amount
and REMIC II Group 2 Overcollateralized Amount is less than the REMIC II
Overcollateralization Target Amount, by the lesser of (x) the amount of
such difference and (y) the Maximum Uncertificated Accrued Interest
Deferral Amount, and such amount will be payable to the Holders of REMIC
II Regular Interest LT2-AI1, REMIC II Regular Interest LT2- AI2, REMIC
II Regular Interest LT2-AI3, REMIC II Regular Interest LT2-AI4, REMIC II
Regular Interest LT2-AI5, REMIC II Regular Interest LT2-1M1, REMIC II
Regular Interest LT2-1M2, REMIC II Regular Interest LT2-1B, REMIC II
Regular Interest LT2-AII1, REMIC II Regular Interest LT2-AII2, REMIC II
Regular Interest LT2-AII3, REMIC II Regular Interest LT2-2M1, REMIC II
Regular Interest LT2-2M2 and REMIC II Regular Interest LT2-2B in the
same proportion as the Extra Principal Distribution Amount is allocated
to the Corresponding Certificates;
(ii) second, from Principal Funds to the Holders of REMIC II
Regular Interests, allocated as follows:
(a) with respect to the Mortgage Loans in Loan Group I,
to the Holders of REMIC II Regular Interest LT2-1AA, 98.00% of
such remainder, until the Uncertificated Principal Balance of
such Uncertificated REMIC II Regular Interest is reduced to zero,
and with respect to the Mortgage Loans in Loan Group II, to the
Holders of REMIC II Regular Interest LT2-2AA, 98.00% of such
remainder, until the Uncertificated Principal Balance of such
Uncertificated REMIC II Regular Interest is reduced to zero;
-94-
(b) with respect to the Mortgage Loans in Loan Group I,
to the Holders of REMIC II Regular Interest LT2-AI1, REMIC II
Regular Interest LT2-AI2, REMIC II Regular Interest LT2-AI3,
REMIC II Regular Interest LT2-AI4, REMIC II Regular Interest
LT2-AI5, REMIC II Regular Interest LT2-1M1, REMIC II Regular
Interest LT2-1M2 and REMIC II Regular Interest LT2-1B, 1.00% of
such remainder, in the same proportion as principal payments are
allocated to the Corresponding Certificates, until the
Uncertificated Principal Balances of such REMIC II Regular
Interests are reduced to zero; and with respect to the Mortgage
Loans in Loan Group II, to the Holders of REMIC II Regular
Interest LT2-AII1, to the Holders of REMIC II Regular Interest
LT2-AII2, to the Holders of REMIC II Regular Interest LT2-AII3,
REMIC II Regular Interest LT2-2M1, REMIC II Regular Interest
LT2-2M2 and REMIC II Regular Interest LT2-2B, 1.00% of such
remainder, in the same proportion as principal payments are
allocated to the Corresponding Certificates, until the
Uncertificated Principal Balances of such REMIC II Regular
Interests are reduced to zero;
(c) with respect to the Mortgage Loans in Loan Group I,
to the Holders of REMIC II Regular Interest LT2-1ZZ, 1.00% of
such remainder, until the Uncertificated Principal Balance of
such REMIC II Regular Interest is reduced to zero, and with
respect to the Mortgage Loans in Loan Group II, to the Holders of
REMIC II Regular Interest LT2-2ZZ, 1.00% of such remainder, until
the Uncertificated Principal Balance of such REMIC II Regular
Interest is reduced to zero; and
(d) to the Holders of REMIC II Regular Interest LT2P, on
the Distribution Date immediately following the expiration of the
latest Prepayment Charge as identified on the Prepayment Charge
Schedule or any Distribution Date thereafter until $100 has been
distributed pursuant to this clause; then
(e) any remaining amount to the Holders of the Class
R-II Certificates; and
(iii) third, to REMIC II Regular Interest LT2P, 100% of the
amount paid in respect of Prepayment Charges and Master Servicer
Prepayment Charge Payment Amounts on REMIC I Regular Interest LT1P.
(c) On each Distribution Date, the Trustee shall cause the
Interest Funds and Principal Funds, to be distributed by REMIC II to REMIC III
on account of the REMIC II Regular Interests or withdrawn from the Distribution
Account and distributed to the Holders of the Class R- III Certificates, as the
case may be in the same manner and extent as such amounts are paid to the
Certificates with the same numerical and alphabetical designation.
(d) For purposes of calculating the amount of Uncertificated
Accrued Interest for the Uncertificated REMIC I Regular Interests for any
Distribution Date, the aggregate amount of any Prepayment Interest Shortfalls
and shortfalls resulting from application of the Relief Act incurred in respect
of the Mortgage Loans for any Distribution Date shall be allocated first: with
respect to
-95-
any Mortgage Loans in Loan Group I, to REMIC I Regular Interest LT1A, and second
to REMIC I Regular Interest LT1B, and with respect to any Group II Loan, to
REMIC I Regular Interest LT2, in each case to the extent of one month's interest
at the then applicable respective Uncertificated REMIC I Pass- Through Rate on
the respective Uncertificated Principal Balance of each such Uncertificated
REMIC I Regular Interest.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC II Regular Interests for any Distribution
Date, the aggregate amount of any Prepayment Interest Shortfalls and shortfalls
resulting from application of the Relief Act incurred in respect of the Mortgage
Loans for any Distribution Date shall be allocated (i) with respect to the
Mortgage Loans in Loan Group I, first, to Uncertificated Accrued Interest
payable to REMIC II Regular Interest LT2-1AA and REMIC II Regular Interest
LT2-1ZZ up to an aggregate amount equal to the REMIC II Group 1 Interest Loss
Allocation Amount, 98% and 2%, respectively, and thereafter among REMIC II
Regular Interest LT2A-IO, REMIC II Regular Interest LT2-1AA, REMIC II Regular
Interest LT2-AI1, REMIC II Regular Interest LT2-AI2, REMIC II Regular Interest
LT2-AI3, REMIC II Regular Interest LT2-AI4, REMIC II Regular Interest LT2-AI5,
REMIC II Regular Interest LT2-1M1, REMIC II Regular Interest LT2-1M2, REMIC II
Regular Interest LT2-1B and REMIC II Regular Interest LT2-1ZZ, PRO RATA based
on, and to the extent of, one month's interest at the then applicable respective
Uncertificated REMIC II Pass-Through Rate on the respective Uncertificated
Principal Balance of each such Uncertificated REMIC II Regular Interest, and
(ii) with respect to the Mortgage Loans in Loan Group II, first, to
Uncertificated Accrued Interest payable to REMIC II Regular Interest LT2-2AA and
REMIC II Regular Interest LT2-2ZZ up to an aggregate amount equal to the REMIC
II Group 2 Interest Loss Allocation Amount, 98% and 2%, respectively, and
thereafter among REMIC II Regular Interest LT2-2AA, REMIC II Regular Interest
LT2-AII1, REMIC II Regular Interest LT2-AII2, REMIC II Regular Interest
LT2-AII3, REMIC II Regular Interest LT2-2M1, REMIC II Regular Interest LT2-2M2,
REMIC II Regular Interest LT2-2B and REMIC II Regular Interest LT2-2ZZ, PRO RATA
based on, and to the extent of, one month's interest at the then applicable
respective Uncertificated REMIC II Pass-Through Rate on the respective
Uncertificated Principal Balance of each such Uncertificated REMIC II Regular
Interest.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the Uncertificated REMIC III Regular Interests for any Distribution
Date, the aggregate amount of any Prepayment Interest Shortfalls and shortfalls
resulting from application of the Relief Act incurred in respect of the Mortgage
Loans for any Distribution Date shall be allocated in the same manner and extent
as such amounts are allocated to the Certificates with the same numerical and
alphabetical designation.
(e) All Realized Losses on the Mortgage Loans shall be allocated
by the Trustee on each Distribution Date as follows: with respect to Realized
Losses on the Mortgage Loans in Loan Group I, first to REMIC I Regular Interest
LT1A, and second, to REMIC I Regular Interest LT1B, until the Uncertificated
Principal Balance has been reduced to zero and with respect to Realized Losses
on the Mortgage Loans in Loan Group II, to REMIC I Regular Interest LT2, until
the Uncertificated Principal Balance has been reduced to zero.
(f) All Realized Losses on the REMIC I Regular Interest LT1A,
REMIC I Regular Interest LT1B and REMIC I Regular Interest LT12 shall be deemed
to have been allocated
-96-
in the specified percentages, as follows: with respect to Realized Losses on the
Mortgage Loans in Loan Group I, first, to Uncertificated Accrued Interest
payable to the REMIC II Regular Interest LT2-1AA and REMIC II Regular Interest
LT2-1ZZ up to an aggregate amount equal to the REMIC II Group 1 Interest Loss
Allocation Amount, 98% and 2%, respectively; second, to the Uncertificated
Principal Balances of REMIC II Regular Interest LT2- 1AA and REMIC II Regular
Interest LT2-1ZZ up to an aggregate amount equal to the REMIC II Group 1
Principal Loss Allocation Amount, 98% and 2%, respectively; third, to the
Uncertificated Principal Balances of REMIC II Regular Interest LT2-1AA, REMIC II
Regular Interest LT2-1B and REMIC II Regular Interest LT2-1ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LT2- 1B has been reduced to zero; fourth, to the Uncertificated
Principal Balances of REMIC II Regular Interest LT2-1AA, REMIC II Regular
Interest LT2-1M2 and REMIC II Regular Interest LT2-1ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LT2-1M2 has been reduced to zero; and fifth, to the Uncertificated
Principal Balances of REMIC II Regular Interest LT2-1AA, REMIC II Regular
Interest LT2-1M1 and REMIC II Regular Interest LT2-1ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LT2-1M1 has been reduced to zero, and with respect to Realized Losses
on the Mortgage Loans in Loan Group II, first, to Uncertificated Accrued
Interest payable to the REMIC II Regular Interest LT2-2AA and REMIC II Regular
Interest LT2-2ZZ up to an aggregate amount equal to the REMIC II Group 2
Interest Loss Allocation Amount, 98% and 2%, respectively; second, to the
Uncertificated Principal Balances of REMIC II Regular Interest LT2-2AA and REMIC
II Regular Interest LT2-2ZZ up to an aggregate amount equal to the REMIC II
Group 2 Principal Loss Allocation Amount, 98% and 2%, respectively; third, to
the Uncertificated Principal Balances of REMIC II Regular Interest LT2-2AA,
REMIC II Regular Interest LT2-2B and REMIC II Regular Interest LT2-2ZZ, 98%, 1%
and 1%, respectively, until the Uncertificated Principal Balance of REMIC II
Regular Interest LT2-2B has been reduced to zero; fourth, to the Uncertificated
Principal Balances of REMIC II Regular Interest LT2-2AA, REMIC II Regular
Interest LT2-2M2 and REMIC II Regular Interest LT2-2ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LT2- 2M2 has been reduced to zero; and fifth, to the Uncertificated
Principal Balances of REMIC II Regular Interest LT2-2AA, REMIC II Regular
Interest LT2-2M1 and REMIC II Regular Interest LT2-2ZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC II Regular
Interest LT2-2M1 has been reduced to zero.
All Realized Losses on the REMIC III Regular Interests shall be deemed
to have been allocated in the same manner and extent as such amounts are
allocated to the Certificates with the same numerical and alphabetical
designation.
-97-
ARTICLE VI
THE CERTIFICATES
Section 6.01 THE CERTIFICATES.
The Certificates shall be substantially in the forms attached
hereto as Exhibits A-1 through A-19. 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:
Original Certificate
Principal Balance/or
Minimum Integral Multiple in Notional Principal
Class Denomination Excess of Minimum Balance Pass-Through Rate
------------------------------------------------------------------------------------------------------------------
Class I-A1
I-A1 $25,000 $1,000 $67,637,000 Pass-Through Rate
Class I-A2
I-A2 $25,000 $1,000 $62,927,000 Pass-Through Rate
Class I-A3
I-A3 $25,000 $1,000 $13,090,000 Pass-Through Rate
Class I-A4
I-A4 $25,000 $1,000 $21,231,000 Pass-Through Rate
Class I-A5
I-A5 $25,000 $1,000 $25,685,000 Pass-Through Rate
Class I-A-IO
I-A-IO $25,000 $1,000 N/A Pass-Through Rate
Class II-F
II-F $25,000 $1,000 $243,835,000 Pass-Through Rate
Class II-INV
II-INV $25,000 $1,000 N/A Pass-Through Rate
Class II-A2
II- A2 $25,000 $1,000 $37,290,000 Pass-Through Rate
Class II-A3
II-A3 $25,000 $1,000 $26,381,000 Pass-Through Rate
Class M-1
M-1 $25,000 $1,000 $11,890,000 Pass-Through Rate
Class M-2
M-2 $25,000 $1,000 $10,569,000 Pass-Through Rate
Class B
B $25,000 $1,000 $7,927,000 Pass-Through Rate
Class B-IO
B-IO 10% 1% N/A Pass-Through Rate
-98-
P $100 N/A $100 N/A
R-I 100% N/A N/A N/A
R-II 100% N/A N/A N/A
R-III 100% N/A 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 the
countersignature of the Trustee by manual signature, and such countersignature
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly countersigned and delivered hereunder. All
Certificates shall be dated the date of their countersignature. 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.
Section 6.02 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 6.09 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 Certificate or Class R
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
-99-
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 and the Securities Administrator in
writing the facts surrounding the Transfer in substantially the forms set forth
in Exhibit E (the "Transferor Certificate") and (x) deliver a letter in
substantially the form of either Exhibit F (the "Investment Letter") or Exhibit
G (the "Rule 144A Letter") or (y) there shall be delivered to the Trustee and
the Securities Administrator 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, the
Securities Administrator 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, the Securities Administrator 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 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, the Securities Administrator
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, the Master Servicer and the Securities Administrator shall
have received either (I) a representation from the transferee of such
Certificate acceptable to and in form and substance satisfactory to the Trustee,
the Master Servicer and the Securities Administrator, to the effect that such
transferee is not an employee benefit plan subject to Section 406 of ERISA
and/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, or (ii) 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, the Master Servicer and the
Securities Administrator to the effect that the purchase or holding of such
ERISA Restricted Certificate will not result in any prohibited transactions
under ERISA or Section 4975 of the Code and will not subject the Trustee, the
Master Servicer or the Securities Administrator to any obligation in addition to
those expressly undertaken in this Agreement, which Opinion of Counsel shall not
be an expense of the Trustee, the Master Servicer or the Securities
Administrator. For purposes of clause (I) of the preceding sentence, such
representation shall be deemed to have been made to the Trustee, the Master
Servicer and the Securities Administrator 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, the Master Servicer and the Securities Administrator shall have
received from the transferee an alternative representation acceptable in form
and substance to the Trustee, the Master Servicer, the Depositor and the
Securities Administrator. 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 and/or a plan subject to
Section 4975 of the Code without the delivery to the Trustee, the Master
Servicer and the Securities Administrator of an Opinion of Counsel satisfactory
to the Trustee, the Master Servicer and the Securities Administrator 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, the Master Servicer and the Securities Administrator an Opinion
of Counsel meeting the requirements of clause (ii) of the first sentence of this
paragraph. None of the Trustee, the Securities Administrator or the Master
Servicer shall be required to monitor, determine or inquire as to compliance
with
-100-
the transfer restrictions with respect to any ERISA Restricted Certificate that
is a Book-Entry Certificate, and none of the Trustee, the Securities
Administrator or the Master Servicer shall have any liability for transfers of
any such Book-Entry Certificates made through the book-entry facilities of any
Depository or between or among participants of the Depository or Certificate
Owners made in violation of the transfer restrictions set forth herein. None of
the Trustee, the Securities Administrator or the Master Servicer shall be under
any liability to any Person for any registration of transfer of any ERISA
Restricted Certificate that is in fact not permitted by this Section 6.02(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. The Trustee and the Securities Administrator shall each 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
such payments so recovered by the Trustee or the Securities Administrator shall
be paid and delivered by the Trustee or the Securities Administrator 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 Residual 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 Residual
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual 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 Residual Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Residual 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
D.
(iii) Each Person holding or acquiring any Ownership Interest in
a Residual 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 Residual 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 Residual
Certificate and (C) not to Transfer its Ownership Interest in a Residual
Certificate or to cause the Transfer of an Ownership Interest in a
Residual 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 Residual Certificate in violation of the provisions of
this Section 6.02(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 Residual Certificate in violation of the provisions
of this Section 6.02(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 Residual Certificate. The
Trustee shall be under no liability to any Person for any registration
of Transfer of a Residual Certificate that is in fact not permitted by
Section 6.02(b) and this Section 6.02(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. The
-101-
Trustee shall be entitled but not obligated to recover from any Holder
of a Residual 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 Residual
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.
(v) The Master Servicer shall make available within 60 days 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 Residual Certificate to any
Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set
forth in this Section 6.02(c) shall cease to apply (and the applicable portions
of the legend on a Residual 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 Securities
Administrator, the Seller or the Master Servicer to the effect that the
elimination of such restrictions will not cause the REMIC I, REMIC II, REMIC III
and/or REMIC IV, as applicable, 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 Residual 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 Residual 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 Residual 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 6.02 shall not be an expense of the
Trust Fund, the Trustee, the Depositor, the Seller, the Securities Administrator
or the Master Servicer.
Section 6.03 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 each Master Servicer, the Securities Administrator 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 6.03, 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 6.03
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 6.03 shall be canceled and destroyed by
the Trustee in accordance with its standard procedures without liability on its
part.
Section 6.04 PERSONS DEEMED OWNERS.
The Securities Administrator, the Trustee and any agent of the
Securities Administrator or the Trustee may treat the person in whose name any
Certificate is registered as the owner of such Certificate
-102-
for the purpose of receiving distributions as provided in this Agreement and for
all other purposes whatsoever, and neither the Securities Administrator, the
Trustee nor any agent of the Securities Administrator or the Trustee shall be
affected by any notice to the contrary.
Section 6.05 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 the 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 6.06 BOOK-ENTRY CERTIFICATES.
The Regular Certificates (other than the 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 6.08. Unless and until
definitive, fully registered Certificates ("Definitive Certificates") have been
issued to the Certificate Owners of such Certificates pursuant to Section 6.08:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Depositor, the Securities Administrator 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 6.08, 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
-103-
(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 6.07 NOTICES TO DEPOSITORY.
Whenever any notice or other communication is required to be
given to Certificateholders of a 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 6.08 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 applicable Certificate Owners 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 countersign 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 6.09 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 at the Corporate Trust Office
where Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially designates its Corporate Trust Office, as the office 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.
-104-
ARTICLE VII
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
Section 7.01 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 7.02 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, Xxxxxx Xxx or Xxxxxxx Mac.
Section 7.03 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 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
-105-
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
Protected Account as provided by Section 4.02 and out of the Distribution
Account as provided in Section 4.05 hereof.
Section 7.04 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, Xxxxxx Xxx or Xxxxxxx Mac; 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 (which opinion shall not be an expense of the Trustee) 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 7.05 ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS.
The Master Servicer shall, for so long as it acts as a successor
servicer under a Servicing Agreement, obtain and maintain in force (a) a policy
or policies of insurance covering errors and omissions in the performance of its
obligations as successor servicer thereunder, 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 Xxxxxx Mae or
Xxxxxxx Mac for persons performing servicing for mortgage loans purchased by
Xxxxxx Mae or Xxxxxxx Mac. 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.
ARTICLE VIII
DEFAULT; TERMINATION OF MASTER SERVICER
Section 8.01 EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the following
events:
(I) any failure by the Master Servicer to remit to the Trustee
any payment, including any Advance, required to be made pursuant to this
Agreement, which failure shall continue unremedied for five Business
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
-106-
(ii) any failure by the Master Servicer 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 breach of
a representation or warranty by the Master Servicer, 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 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 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, or any successor
appointed pursuant to Section 8.02 (a "Successor Master Servicer"). Such
Successor Master Servicer shall thereupon if such Successor Master Servicer is a
successor to the Master Servicer, make any Advance required by Section 5.01,
subject, in the case of the Trustee, to Section 8.02. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the terminated
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 any 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 IX. 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 applicable Successor Master Servicer of all cash amounts which
shall at the time be credited to the Protected Account maintained pursuant to
Section 4.01, or thereafter be received with respect to the applicable Mortgage
Loans. The Trustee shall promptly notify the Rating Agencies of the occurrence
of an Event of Default known to the Trustee.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the 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 the Master Servicer's rights and obligations as Master
-107-
Servicer hereunder and received after such notice, that portion thereof to which
the Master Servicer would have been entitled pursuant to Sections 4.03 and 4.05
and to receive any other amounts payable to the Master Servicer hereunder the
entitlement to which arose prior to the termination of its activities hereunder.
Section 8.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 8.01 hereof the Trustee shall automatically
become the successor to the Master Servicer with respect to the transactions set
forth or provided for herein and after a transition period (not to exceed 90
days), 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, if applicable, the obligation to make
Advances pursuant to Section 5.01 except as otherwise provided herein. Effective
on the date of such notice of termination, 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 it had continued to act
hereunder, provided, however, that the Trustee shall not be (i) liable for any
acts or omissions of the Master Servicer, (ii) obligated to make Advances if it
is prohibited from doing so under applicable law, (iii) obligated to effectuate
any 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 Section 2.03 or (v) deemed to have made any representations
and warranties hereunder, including pursuant to Section 2.03. Notwithstanding
the foregoing, 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 5.01
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 (I) be an institution that is a Xxxxxx Xxx and Xxxxxxx Mac
approved seller/servicer in good standing, that has a net worth of at least
$15,000,000 and (ii) be willing to act as successor servicer of any Mortgage
Loans under any Servicing Agreement with respect to which the original Servicer
has been terminated as servicer, and shall have executed and delivered 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
any liabilities of the Master Servicer hereof incurred prior to termination of
the Master Servicer under Section 8.01 or as otherwise set forth herein), with
like effect as if originally named as a party to this Agreement, provided that
each Rating Agency shall have acknowledged in writing 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. If
the Trustee assumes the duties and responsibilities of the Master Servicer in
accordance with this Section 8.02, the Trustee shall not resign as Master
Servicer until a Successor Master 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 or otherwise 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 Master 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.
-108-
The costs and expenses of the Trustee in connection with the
termination of the Master Servicer, appointment of a Successor Master Servicer
and, if applicable, any transfer of servicing, including, without limitation,
all costs and expenses associated with the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee or the Successor Master
Servicer to service the related Mortgage Loans properly and effectively, to the
extent not paid by the terminated Master Servicer, shall be payable to the
Trustee pursuant to Section 9.05. Any successor to the Master Servicer as
successor servicer under any Subservicing Agreement shall give notice to the
applicable Mortgagors of such change of servicer and shall, during the term of
its service as successor servicer maintain in force the policy or policies that
the Master Servicer is required to maintain pursuant to Section 7.05.
Section 8.03 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.
Section 8.04 WAIVER OF DEFAULTS.
The Trustee shall transmit by mail to all Certificateholders,
within 60 days after the occurrence of any Event of Default known to the
Trustee, unless such Event of Default shall have been cured, notice of each such
Event of Default hereunder known to the Trustee. The Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust Fund may, on behalf of all Certificateholders, waive any default by the
Master Servicer in the performance of its obligations hereunder and the
consequences thereof, except a default in the making of or the causing to be
made any required distribution on the Certificates. Upon any such waiver of a
past default, such default shall be deemed to cease to exist, and any Event of
Default arising therefrom shall be deemed to have been timely remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived. The Trustee shall give notice of any such waiver to the
Rating Agencies.
-109-
ARTICLE IX
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 9.01 DUTIES OF TRUSTEE AND SECURITIES ADMINISTRATOR.
(a) The Trustee, prior to the occurrence of an Event of Default
and after the curing or waiver of all Events of Default which may have occurred,
and the Securities Administrator each undertake to perform such duties and only
such duties as are specifically set forth in this Agreement as duties of the
Trustee and the Securities Administrator, respectively. If an Event of Default
has occurred and has not been cured or waived, the Trustee shall exercise such
of the rights and powers vested in it by this Agreement, and the same degree of
care and skill in their exercise, as a prudent person would exercise under the
circumstances in the conduct of such Person's own affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee or the Securities Administrator pursuant
to any provision of this Agreement, the Trustee or the Securities Administrator,
respectively, shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that neither the Trustee nor the
Securities Administrator shall be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Master Servicer; provided, further, that neither the
Trustee nor the Securities Administrator shall be responsible for the accuracy
or verification of any calculation provided to it pursuant to this Agreement.
(c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 5.04 and 10.01 herein based the
applicable Remittance Report. In addition, the Trustee shall promptly notify the
Master Servicer if, on any Distribution Account Deposit Date, any fails to remit
to the Trustee the funds required to be remitted by such subservicer under its
Subservicing Agreement.
(d) No provision of this Agreement shall be construed to relieve
the Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:
(I) Prior to the occurrence of an Event of Default, and after
the curing or waiver of all such Events of Default which may have
occurred with respect to the Trustee and at all times with respect to
the Securities Administrator, the duties and obligations of the Trustee
and the Securities Administrator shall be determined solely by the
express provisions of this Agreement, neither the Trustee nor the
Securities Administrator shall be liable except for the performance of
their respective 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 or the Securities Administrator and,
in the absence of bad faith on the part of the Trustee or the Securities
Administrator, respectively, the Trustee or the Securities
Administrator, respectively, 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 or the
Securities Administrator, respectively, and conforming to the
requirements of this Agreement;
(ii) Neither the Trustee nor the Securities Administrator shall
be liable in its individual capacity for an error of judgment made in
good faith by a Responsible Officer or Responsible
-110-
Officers of the Trustee or an officer or officers of the Securities
Administrator, respectively, unless it shall be proved that the Trustee
or the Securities Administrator, respectively, was negligent in
ascertaining the pertinent facts;
(iii) Neither the Trustee nor the Securities Administrator shall
be liable with respect to any action taken, suffered or omitted to be
taken by it in good faith in accordance with the directions of the
Holders of Certificates evidencing not less than 25% of the aggregate
Voting Rights of the Certificates, if such action or non-action relates
to the time, method and place of conducting any proceeding for any
remedy available to the Trustee or the Securities Administrator,
respectively, or exercising any trust or other power conferred upon the
Trustee or the Securities Administrator, respectively, under this
Agreement;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default
unless a Responsible Officer of the Trustee shall have actual knowledge
thereof. In the absence of such notice, the Trustee may conclusively
assume there is no such default or Event of Default;
(v) The Trustee shall not in any way be liable by reason of any
insufficiency in any Account held by or in the name of Trustee unless it
is determined by a court of competent jurisdiction that the Trustee's
gross negligence or willful misconduct was the primary cause of such
insufficiency (except to the extent that the Trustee is obligor and has
defaulted thereon);
(vi) Anything in this Agreement to the contrary notwithstanding,
in no event shall the Trustee or the Securities Administrator be liable
for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the
Trustee or the Securities Administrator, respectively, has been advised
of the likelihood of such loss or damage and regardless of the form of
action; and
(vii) None of the Securities Administrator, the Master Servicer,
the Seller, the Depositor or the Trustee shall be responsible for the
acts or omissions of the other, it being understood that this Agreement
shall not be construed to render them partners, joint venturers or
agents of one another.
Neither the Trustee nor the Securities Administrator shall be required to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there is reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it, and none of the provisions contained in this Agreement shall in
any event require the Trustee or the Securities Administrator to perform, or be
responsible for the manner of performance of, any of the obligations of the
Master Servicer hereunder or any subservicer under the applicable Subservicing
Agreements.
(e) All funds received by the Trustee and required to be
deposited in the Distribution Account pursuant to this Agreement will be
promptly so deposited by the Trustee.
Section 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE AND THE SECURITIES
ADMINISTRATOR.
(a) Except as otherwise provided in Section 9.01:
(i) The Trustee and the Securities Administrator may rely and
shall be protected in acting or refraining from acting in reliance on
any resolution or certificate of the Seller or the Master Servicer or
any Subservicer, any certificates of auditors or any other certificate,
statement,
-111-
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 and the Securities Administrator may consult
with counsel and any advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection with respect to any action taken
or suffered or omitted by it hereunder in good faith and in accordance with such
advice or Opinion of Counsel:
(iii) Neither the Trustee nor the Securities Administrator shall
be under any obligation to exercise any of the trusts or powers vested in it by
this Agreement, other than its obligation to give notices pursuant to this
Agreement, 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 or the Securities
Administrator, as applicable, reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby.
Nothing contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default of which a Responsible Officer of the
Trustee has actual knowledge (which has not been cured or waived), to exercise
such of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in their exercise, as a prudent person would
exercise under the circumstances in the conduct of his own affairs;
(iv) Prior to the occurrence of an Event of Default hereunder
and after the curing or waiver of all Events of Default which may have occurred
with respect to the Trustee and at all times with respect to the Securities
Administrator, neither the Trustee nor the Securities Administrator shall be
liable in its individual capacity 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;
(v) Neither the Trustee nor the Securities Administrator shall
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 to do so by Holders of Certificates evidencing not less
than 25% of the aggregate Voting Rights of the Certificates and provided that
the payment within a reasonable time to the Trustee or the Securities
Administrator, as applicable, of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Trustee or the Securities Administrator, as applicable, reasonably assured to
the Trustee or the Securities Administrator, as applicable, by the security
afforded to it by the terms of this Agreement. The Trustee or the Securities
Administrator may require reasonable indemnity against such expense or liability
as a condition to taking any such action. The reasonable expense of every such
examination shall be paid by the Certificateholders requesting the
investigation;
(vi) The Trustee and the Securities Administrator may execute
any of the trusts or powers hereunder or perform any duties hereunder either
directly or through Affiliates, agents or attorneys; provided, however, that the
Trustee may not appoint any paying agent other than the Securities Administrator
to perform any paying agent functions under this Agreement without the express
written consent of the Master Servicer, which consent will not be unreasonably
withheld. Neither the Trustee nor the Securities Administrator shall be liable
or responsible for the misconduct or negligence of any of the Trustee's or the
Securities Administrator's agents or attorneys or paying agent appointed
hereunder by the Trustee or the Securities Administrator with due care and, when
required, with the consent of the Master Servicer;
(vii) Should the Trustee or the Securities Administrator deem
the nature of any action required on its part to be unclear, the Trustee or the
Securities Administrator, respectively, may require prior
-112-
to such action that it be provided by the Depositor with reasonable further
instructions; the right of the Trustee or the Securities Administrator to
perform any discretionary act enumerated in this Agreement shall not be
construed as a duty, and neither the Trustee nor the Securities Administrator
shall be accountable for other than its negligence or willful misconduct in the
performance of any such act;
(viii) Neither the Trustee nor the Securities Administrator
shall be required to give any bond or surety with respect to the execution of
the trust created hereby or the powers granted hereunder, except as provided in
Subsection 9.07; and
(ix) Neither the Trustee nor the Securities Administrator shall
have any duty to conduct any affirmative investigation as to the occurrence of
any condition requiring the repurchase of any Mortgage Loan by any Person
pursuant to this Agreement, or the eligibility of any Mortgage Loan for purposes
of this Agreement.
Section 9.03 TRUSTEE AND SECURITIES ADMINISTRATOR NOT LIABLE FOR
CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other
than the signature and countersignature of the Trustee on the Certificates)
shall be taken as the statements of the Depositor, and neither the Trustee nor
the Securities Administrator shall have any responsibility for their
correctness. Neither the Trustee nor the Securities Administrator makes any
representation as to the validity or sufficiency of the Certificates (other than
the signature and countersignature of the Trustee on the Certificates) or of any
Mortgage Loan except as expressly provided in Sections 2.02 and 2.06 hereof;
provided, however, that the foregoing shall not relieve the Trustee of the
obligation to review the Mortgage Files pursuant to Sections 2.02 and 2.05 of
this Agreement. The Trustee's signature and countersignature (or
countersignature of its agent) on the Certificates shall be solely in its
capacity as Trustee and shall not constitute the Certificates an obligation of
the Trustee in any other capacity. Neither the Trustee or the Securities
Administrator shall be accountable for the use or application by the Depositor
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Depositor with respect to the
Mortgage Loans. Subject to the provisions of Section 2.06, neither the Trustee
nor the Securities Administrator shall be responsible for the legality or
validity of this Agreement or any document or instrument relating to this
Agreement, the validity of the execution of this Agreement or of any supplement
hereto or instrument of further assurance, or the validity, priority, perfection
or sufficiency of the security for the Certificates issued hereunder or intended
to be issued hereunder. Neither the Trustee nor the Securities Administrator
shall at any time have any responsibility or liability for or with respect to
the legality, validity and enforceability of any Mortgage or any Mortgage Loan,
or the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement. Neither the Trustee nor the Securities
Administrator shall have any responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04 TRUSTEE AND SECURITIES ADMINISTRATOR MAY OWN
CERTIFICATES.
Each of the Trustee and the Securities Administrator in its
individual capacity or in any capacity other than as Trustee or Securities
Administrator hereunder may become the owner or pledgee of any Certificates with
the same rights it would have if it were not the Trustee or the Securities
Administrator, as applicable, and may otherwise deal with the parties hereto.
Section 9.05 TRUSTEE'S FEE AND EXPENSES OF TRUSTEE AND SECURITIES
ADMINISTRATOR.
-113-
The Trustee shall be entitled to the Trustee's Fee (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 the Trustee 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 Trustee and the
Securities Administrator will be entitled to recover from the Distribution
Account all reasonable out-of-pocket expenses, disbursements and advances and
the expenses of the Trustee and the Securities Administrator, respectively, in
connection with any Event of Default, any breach of this Agreement or any claim
or legal action (including any pending or threatened claim or legal action)
incurred or made by the Trustee in the administration of the trusts hereunder or
the Securities Administrator, respectively, (including the reasonable
compensation, expenses and disbursements of its counsel) except any such
expense, disbursement or advance as may arise from its negligence, bad faith or
intentional misconduct. If such funds are insufficient therefor, any such
insufficiency shall be recoverable from the Depositor. Such reimbursement
obligation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust.
Section 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE AND SECURITIES
ADMINISTRATOR.
The Trustee and any successor Trustee and the Securities
Administrator and any successor Securities Administrator shall during the entire
duration of this Agreement be a state bank or trust company or a national
banking 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 and undivided profits of at
least $40,000,000 or, in the case of a successor Trustee, $50,000,000, subject
to supervision or examination by federal or state authority and, in the case of
the Trustee, rated "BBB" or higher by Fitch with respect to their long-term
rating and rated "BBB" or higher by Standard & Poor's and "Baa2" or higher by
Moody's with respect to any outstanding long-term unsecured unsubordinated debt,
and, in the case of a successor Trustee or successor Securities Administrator
other than pursuant to Section 9.10, rated in one of the two highest long-term
debt categories of, or otherwise acceptable to, each of the Rating Agencies. The
Trustee shall not be an Affiliate of the Master Servicer. If the Trustee
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 9.06 the combined capital and surplus of such
corporation shall be deemed to be its total equity capital (combined capital and
surplus) as set forth in its most recent report of condition so published. In
case at any time the Trustee or the Securities Administrator, as applicable,
shall cease to be eligible in accordance with the provisions of this Section
9.06, the Trustee or the Securities Administrator shall resign immediately in
the manner and with the effect specified in Section 9.08.
Section 9.07 INSURANCE.
The Trustee and the Securities Administrator, at their own
expense, shall at all times maintain and keep in full force and effect: (i)
fidelity insurance, (ii) theft of documents insurance and (iii) forgery
insurance (which may be collectively satisfied by a "Financial Institution Bond"
and/or a "Bankers' Blanket Bond"). All such insurance shall be in amounts, with
standard coverage and subject to deductibles, as are customary for insurance
typically maintained by banks or their affiliates which act as custodians for
investor-owned mortgage pools. A certificate of an officer of the Trustee or the
Securities Administrator as to the Trustee's or the Securities Administrator's,
respectively, compliance with this Section 9.07 shall be furnished to any
Certificateholder upon reasonable written request.
Section 9.08 RESIGNATION AND REMOVAL OF TRUSTEE AND SECURITIES
ADMINISTRATOR.
The Trustee and the Securities Administrator may at any time
resign and be discharged from the Trust hereby created by giving written notice
thereof to the Depositor, the Seller, the Securities
-114-
Administrator (or the Trustee, if the Securities Administrator resigns) and the
Master Servicer, with a copy to the Rating Agencies. Upon receiving such notice
of resignation, the Depositor shall promptly appoint a successor trustee or
successor securities administrator, as applicable, by written instrument, in
triplicate, one copy of which instrument shall be delivered to each of the
resigning trustee or securities administrator, as applicable, and the successor
trustee or securities administrator, as applicable. If no successor trustee or
successor securities administrator shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Securities Administrator may petition any
court of competent jurisdiction for the appointment of a successor trustee or
securities administrator.
If at any time (i) the Trustee or the Securities Administrator
shall cease to be eligible in accordance with the provisions of Section 9.06
hereof and shall fail to resign after written request thereto by the Depositor,
(ii) the Trustee or the Securities Administrator shall become incapable of
acting, or shall be adjudged as bankrupt or insolvent, or a receiver of the
Trustee or the Securities Administrator or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or the
Securities Administrator 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 Securities
Administrator or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee or securities administrator
and (C) the Trustee or the Securities Administrator, as applicable fails to
indemnify the Trust Fund against such tax, then the Depositor or the Master
Servicer may remove the Trustee or the Securities Administrator, as applicable,
and appoint a successor trustee or successor securities administrator, as
applicable, by written instrument, in multiple copies, a copy of which
instrument shall be delivered to the Trustee, the Securities Administrator, each
Master Servicer and the successor trustee or successor securities administrator,
as applicable.
The Holders evidencing at least 51% of the Voting Rights of each
Class of Certificates may at any time remove the Trustee or Securities
Administrator and appoint a successor trustee or securities administrator by
written instrument or instruments, in multiple copies, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered by the successor trustee or successor securities
administrator to each of the Master Servicer, the Trustee or Securities
Administrator so removed and the successor trustee or securities administrator
so appointed. Notice of any removal of the Trustee or Securities Administrator
shall be given to each Rating Agency by the Trustee or successor trustee.
Any resignation or removal of the Trustee or Securities
Administrator and appointment of a successor trustee or securities administrator
pursuant to any of the provisions of this Section 9.08 shall become effective
upon acceptance of appointment by the successor trustee or securities
administrator as provided in Section 9.09 hereof.
Section 9.09 SUCCESSOR TRUSTEE OR SECURITIES ADMINISTRATOR.
Any successor trustee or securities administrator appointed as
provided in Section 9.08 hereof shall execute, acknowledge and deliver to the
Depositor and to its predecessor trustee or predecessor securities
administrator, as applicable, and the Master Servicer an instrument accepting
such appointment hereunder and thereupon the resignation or removal of the
predecessor trustee or securities administrator shall become effective and such
successor trustee or securities administrator, 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 or securities administrator herein.
-115-
No successor trustee or securities administrator shall accept
appointment as provided in this Section 9.09 unless at the time of such
acceptance such successor trustee or securities administrator shall be eligible
under the provisions of Section 9.07 hereof and its appointment shall not
adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee or
securities administrator as provided in this Section 9.09, the successor trustee
or securities administrator shall mail notice of the succession of such trustee
or securities administrator hereunder to all Holders of Certificates. If the
successor trustee or securities administrator fails to mail such notice within
ten days after acceptance of appointment, the Depositor shall cause such notice
to be mailed at the expense of the Trust Fund.
Section 9.10 MERGER OR CONSOLIDATION OF TRUSTEE OR SECURITIES
ADMINISTRATOR.
Any corporation, state bank or national banking association into
which the Trustee or the Securities Administrator may be merged or converted or
with which it may be consolidated or any corporation, state bank or national
banking association resulting from any merger, conversion or consolidation to
which the Trustee or the Securities Administrator shall be a party, or any
corporation, state bank or national banking association succeeding to
substantially all of the corporate trust business of the Trustee or of the
business of the Securities Administrator, shall be the successor of the Trustee
or the Securities Administrator hereunder, provided that such corporation shall
be eligible under the provisions of Section 9.06 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 9.11 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 Servicers and the Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more 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 9.11, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable. 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
9.06 and no notice to Certificateholders of the appointment of any co- trustee
or separate trustee shall be required under Section 9.09.
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 a Trustee hereunder or as a
Successor Master Servicer hereunder), the Trustee shall be incompetent
-116-
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 IX. 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.
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 9.12 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 Securities Administrator covenants and agrees that it shall act
as agent (and the Securities Administrator is hereby appointed to act as agent)
on behalf of the Trust Fund. The Trustee and/or the Securities Administrator, as
agent on behalf of the Trust Fund, shall do or refrain from doing, as
applicable, the following: (a) the Securities Administrator shall prepare and
file, or cause to be prepared and filed, in a timely manner, 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) the Securities Administrator shall
apply for an employer identification number with the Internal Revenue Service
via a Form SS-4 or other comparable method for each REMIC that is or becomes a
taxable entity, and 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
-117-
Fund; (c) the Trustee shall 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) the Securities Administrator shall 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) the Securities
Administrator shall provide information necessary for the computation of tax
imposed on the transfer of a Residual Certificate to a Person that is not a
Permitted Transferee, or an agent (including a broker, nominee or other
middleman) of a Person that is not a Permitted Transferee, or a pass-through
entity in which a Person that is not a 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) each of the Securities
Administrator and the Trustee shall, to the extent 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) neither the Trustee nor the Securities Administrator shall
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) the
Trustee shall pay, from the sources specified in the last paragraph of this
Section 9.11, as directed by the Securities Administrator in its Remittance
Report, 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, the Securities
Administrator at the written request of the Trustee, or any other appropriate
Person from contesting any such tax in appropriate proceedings and shall not
prevent the Securities Administrator from withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings); (I) the Trustee
shall sign or cause to be signed federal, state or local income tax or
information returns or any other document prepared by the Securities
Administrator pursuant to this Section 9.12 requiring a signature thereon by the
Trustee; (j) the Securities Administrator shall maintain records relating to
each REMIC formed hereunder including but not limited to the income, expenses,
assets and liabilities of each such REMIC 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; (k) the Securities Administrator shall, for federal income tax
purposes, maintain books and records with respect to the REMICs on a calendar
year and on an accrual basis; (l) neither the Trustee nor the Master Servicer
shall enter into any arrangement not otherwise provided for in this Agreement by
which the REMICs will receive a fee or other compensation for services nor
permit the REMICs to receive any income from assets other than "qualified
mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code; and (m) as and when
necessary and appropriate, the Trustee, or at the written request of the
Trustee, the Securities Administrator, shall 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 each of the Trustee and the Securities
Administrator to perform its duties as set forth herein, the Depositor shall
provide, or cause to be provided, to the Trustee or the Securities Administrator
within 10 days after the Closing Date all information or data that the Trustee
or the Securities Administrator 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 or the Securities
Administrator promptly upon written request therefor, any such additional
information or data that the Trustee or the Securities Administrator may, from
time to time, request in order
-118-
to enable the Trustee or the Securities Administrator to perform its duties as
set forth herein. The Depositor hereby indemnifies each of Trustee and the
Securities Administrator for any losses, liabilities, damages, claims or
expenses of the Trustee or the Securities Administrator arising from any errors
or miscalculations of the Trustee or the Securities Administrator, as
applicable, that result from any failure of the Depositor to provide, or to
cause to be provided, accurate information or data to the Trustee or the
Securities Administrator, as applicable, on a timely basis.
In the event that any tax is imposed on "prohibited
transactions" of any of REMIC I, REMIC II, REMIC III or REMIC IV 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
any of REMIC I, REMIC II, REMIC III or REMIC IV 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 any of
REMIC I, REMIC II, REMIC III or REMIC IV, and is not paid as otherwise provided
for herein, such tax shall be paid by (I) the Trustee or the Securities
Administrator, if any such other tax arises out of or results from a breach by
the Trustee or the Securities Administrator, respectively, of any of its
obligations under this Agreement, (ii) any party hereto (other than the Trustee
or the Securities Administrator) 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 hereto 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 based on the amounts to be distributed), and second with amounts otherwise
to be distributed to all other Certificateholders in the following order of
priority: first, to the Class B Certificates, second, to the Class M-2
Certificates, third, to the Class M-1 Certificates, and fourth, to the Senior
Certificates (pro rata based on the amounts to be distributed). Notwithstanding
anything to the contrary contained herein, to the extent that such tax is
payable by the Holder of any 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 other Certificates in the
priority specified in the preceding sentence), funds otherwise distributable to
such Holders in an amount sufficient to pay such tax. Following written
notification to the Securities Administrator by the Trustee of any amount
payable out of distributions to the Certificateholders pursuant to the preceding
two sentences, the Securities Administrator shall include in its Remittance
Report instructions as to distributions to such parties taking into account the
priorities described in the second preceding sentence. The Securities
Administrator, on written request by the 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 and the Securities Administrator each agree that, in
the event it should obtain any information necessary for the other party to
perform its obligations pursuant to this Section 9.12, it will promptly notify
and provide such information to such other party. Notwithstanding anything in
this Agreement to the contrary, the Trustee agrees that, in the event that the
Trustee obtains actual knowledge that the Securities Administrator has breached
any of its obligations pursuant to this Section 9.12, the Trustee shall perform
such obligations on its behalf to the extent that the Trustee possesses all
documents necessary to so perform and receives reasonable compensation therefor,
provided, however, that the Trustee shall not be liable for any losses resulting
from any such breach.
-119-
ARTICLE X
TERMINATION
Section 10.01 TERMINATION UPON LIQUIDATION OR REPURCHASE OF ALL
MORTGAGE LOANS.
Subject to Section 10.03, the obligations and responsibilities
of the Depositor, the Master Servicer, the Securities Administrator, 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 Trust Fund at a price equal
to the sum of (i) 100% of the Stated Principal Balance of each Mortgage Loan
(other than in respect of REO Property), (ii) accrued interest thereon at the
applicable Mortgage Rate to, but not including, the first day of the month of
such purchase, (iii) the appraised value of any REO Property in the Trust Fund
(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 Securities Administrator and (iv) unreimbursed out-of pocket
costs of the related Servicer or the Master Servicer, including unreimbursed
servicing advances and the principal portion of any unreimbursed Advances, made
on the Mortgage Loans prior to the exercise of such repurchase right and (v) any
unreimbursed costs and expenses of the Trustee and the Securities Administrator
payable pursuant to Section 9.05 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
pursuant to clause (a) above shall be conditioned upon the Stated Principal
Balance of all of the Mortgage Loans in the Trust Fund, at the time of any such
repurchase, aggregating ten percent or less of the aggregate Cut- off Date
Principal Balance of all of the Mortgage Loans.
Section 10.02 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 Protected Account of the Master Servicer,
the Master Servicer shall direct the Securities Administrator to send a final
distribution notice promptly to each Certificateholder or (ii) the Securities
Administrator determines that a Class of Certificates shall be retired after a
final distribution on such Class, the Securities Administrator 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 10.01, at least 20 days prior to
the date notice is to be mailed to the Certificateholders, the Master Servicer
shall notify the Depositor, the Securities Administrator, the Trustee and the
Securities Administrator of the date the Master Servicer intends to terminate
the Trust Fund. The Master Servicer shall remit the Mortgage Loan Repurchase
Price to the Trustee on the Business Day prior to the Distribution Date for such
Optional Termination by the Master Servicer.
-120-
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 Securities Administrator by letter to Certificateholders mailed not
earlier 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 Securities
Administrator 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 applicable Protected 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 or its designee the
Mortgage Files for the Mortgage Loans and any documents necessary to transfer
any REO Property.
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 in the order and
priority set forth in Section 5.04 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 Securities Administrator
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
Securities Administrator 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 10.03 ADDITIONAL TERMINATION REQUIREMENTS.
(a) Upon exercise by the Master Servicer of its purchase option
as provided in Section 10.01, the Trust Fund shall be terminated in accordance
with the following additional requirements, unless each of the Trustee and the
Securities Administrator have 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 10.03 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 and Securities Administrator thereof, and the
Securities Administrator shall in turn specify the first day of such period in a
statement attached to each of REMIC I, REMIC II, REMIC III and REMIC IV's Tax
Return pursuant to Treasury Regulation Section 1.860F-1. The Master Servicer
shall satisfy all the
-121-
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 REMIC I, REMIC II and REMIC
III for cash; and
(3) At the time of the making of the final payment on the
Certificates, the Securities Administrator as agent for the Trustee shall
distribute or credit, or cause to be distributed or credited, to the Holders of
the Residual Certificates all cash on hand (other than cash retained to meet
claims), and REMIC I, REMIC II and REMIC III 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 REMIC I, REMIC II, REMIC III and REMIC IV, which authorization shall be
binding upon all successor Certificateholders.
(c) The Securities Administrator 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 10.03(a)(1) and to take such other action in connection
therewith as may be reasonably requested by the Master Servicer.
-122-
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 AMENDMENT.
This Agreement may be amended from time to time by parties
hereto, 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), to change the manner in which the
Protected Account maintained by the Master Servicer is maintained 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.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the parties hereto 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 each of REMIC I, REMIC II, REMIC III and REMIC IV as a REMIC under the Code
or to avoid or minimize the risk of the imposition of any tax on any of REMIC I,
REMIC II, REMIC III or REMIC IV pursuant to the Code that would be a claim
against any of REMIC I, REMIC II, REMIC III or REMIC IV at any time prior to the
final redemption of the Certificates, provided that the Trustee has 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
or the Securities Administrator, 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
parties hereto and the Holders of each Class of Certificates affected thereby
evidencing over 50% of the Voting Rights of such Class or Classes 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) cause any of REMIC I, REMIC II, REMIC III or REMIC IV's REMIC
elections to fail to qualify or (iii) reduce the aforesaid percentages of
Certificates of each Class the Holders of which are required to consent to any
such amendment without the consent of the Holders of all Certificates of such
Class 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 shall not be an expense of
the Trustee or the Securities Administrator, to the effect that such amendment
will not (other than an amendment pursuant to clause (ii) of, and in accordance
with, the preceding paragraph) cause the imposition of any tax on REMIC I, REMIC
II, REMIC III or REMIC IV or the Certificateholders or cause REMIC I, REMIC II,
REMIC III or REMIC IV's REMIC elections to fail to qualify at any time that any
Certificates are outstanding. Further, 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
-123-
prohibited by this Agreement and that all requirements for amending this
Agreement (including any consent of the applicable Certificateholders) have been
complied with.
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.
Section 11.02 RECORDATION OF AGREEMENT; COUNTERPARTS.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all of the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties are situated, and in any other appropriate
public recording office or elsewhere. The Master Servicer shall effect such
recordation at the Trust's expense upon the request in writing of a
Certificateholder, but only if such direction is accompanied by an Opinion of
Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
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 11.03 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 11.04 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, 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
-124-
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.
Section 11.05 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, the
Securities Administrator or the Trustee and the appointment
of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02, 2.03, 3.12 and 10.01; 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 5.05;
(ii) Each annual statement as to compliance described in Section
3.16; and
(iii) Each annual independent public accountants' servicing
report described in Section 3.17.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered at or mailed
by registered mail, return receipt requested, postage prepaid, or by recognized
overnight courier, or by facsimile transmission to a number provided by the
appropriate party if receipt of such transmission is confirmed 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 or the 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 other parties hereto by the Master Servicer in
writing; (iv) in the case of the Trustee, at each Corporate Trust Office or such
other address as the Trustee may hereafter furnish to the other parties hereto;
(v) in the case of the Securities Administrator, 00000 Xxxxxx Xxxx Xxxxxxx,
Xxxxxxxx, Xxxxxxxx 00000, Attention: BSABS 2001-AC2 or such other address as may
be hereafter furnished to the other parties hereto by the Securities
Administrator in writing and (vi) 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) Standard & Poor's, 00 Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mortgage
-125-
Surveillance Group. Any notice delivered to the Seller, the Master Servicer, the
Securities Administrator or the Trustee under this Agreement shall be effective
only upon receipt. Any notice required or permitted to be mailed to a
Certificateholder, unless otherwise provided herein, shall be given by
first-class mail, postage prepaid, at the address of such Certificateholder as
shown in the Certificate Register; any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice.
Section 11.06 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 11.07 ASSIGNMENT.
Notwithstanding anything to the contrary contained herein,
except as provided pursuant to Section 7.02, this Agreement may not be assigned
by the Master Servicer, the Seller or the Depositor.
Section 11.08 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 or the
Securities Administrator, as appropriate, 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 the
Certificates shall also have made written request to the Trustee or the
Securities Administrator, as appropriate to institute such action, suit or
proceeding in its own name as Trustee or the Securities Administrator, as
appropriate, hereunder and shall have offered to the Trustee or the Securities
Administrator, as appropriate, such reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or thereby,
and the Trustee or the Securities Administrator, as appropriate, 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
-126-
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 11.08, each and
every Certificateholder, the Trustee or the Securities Administrator shall be
entitled to such relief as can be given either at law or in equity.
Section 11.09 INSPECTION AND AUDIT RIGHTS.
(a) 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 such
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 11.09 shall be borne by the party requesting
such inspection; all other such expenses shall be borne by the Master Servicer.
(b) The Trustee and the Securities Administrator shall each
provide access to the records and documentation in its possession regarding the
related Mortgage Loans and REO Property and the servicing thereof to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC, such access being afforded only upon reasonable prior written request and
during normal business hours at its respective office; provided, however, that,
unless otherwise required by law, neither the Trustee nor the Securities
Administrator shall be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee and the Securities Administrator shall each allow
representatives of the above entities to photocopy any of the records and
documentation and shall provide equipment for that purpose at a charge that
covers its actual costs.
Section 11.10 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.
* * *
-127-
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the
Seller, the Securities Administrator 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:
XXXXX FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION
as Securities Administrator and Trustee
By:
---------------------------------------------
Name:
Title:
-128-
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of October, 2001, 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 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]
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of October, 2001, 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 Xxxxx Fargo
Bank Minnesota, National Association 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]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of October, 2001, 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]
