EXHIBIT 4.1
-------------------------------------------------------------------------------
LONG BEACH SECURITIES CORP.,
Depositor
LONG BEACH MORTGAGE COMPANY,
Master Servicer
FEDERAL NATIONAL MORTGAGE ASSOCIATION,
Guarantor (with respect to the Class A-1 Certificates
and the Class S-1 Certificates)
and
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 2002
------------------------------
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates, Series 2002-5
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................9
Section 1.01 Defined Terms................................................................................9
Section 1.02 Accounting..................................................................................76
Section 1.03 Allocation of Certain Interest Shortfalls...................................................76
Section 1.04 Rights of the NIMS Insurer and the Guarantor................................................79
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES.......................................80
Section 2.01 Conveyance of Mortgage Loans................................................................80
Section 2.02 Acceptance of REMIC 1 by the Trustee........................................................82
Section 2.03 Cure, Repurchase or Substitution of Mortgage Loans by the Seller; Remedies for Breaches by
Depositor or Master Servicer; Remedies for Breaches Relating to Prepayment Charges..........84
Section 2.04 Representations, Warranties and Covenants of the Master Servicer............................87
Section 2.05 Representations and Warranties of the Depositor.............................................89
Section 2.06 Issuance of Certificates....................................................................91
Section 2.07 Reserved....................................................................................91
Section 2.08 Conveyance of REMIC Regular Interests and Acceptance of REMIC 1 by the Trustee; Issuance of
Certificates................................................................................91
ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS...................................................93
Section 3.01 Master Servicer to Act as Master Servicer...................................................93
Section 3.02 Sub-Servicing Agreements Between the Master Servicer and Sub-Servicers......................95
Section 3.03 Successor Sub-Servicers.....................................................................96
Section 3.04 Liability of the Master Servicer............................................................97
Section 3.05 No Contractual Relationship Between Sub-Servicers and the NIMS Insurer, the Guarantor, the
Trustee or Certificateholders...............................................................97
Section 3.06 Assumption or Termination of Sub-Servicing Agreements by Trustee............................97
Section 3.07 Collection of Certain Mortgage Loan Payments................................................98
Section 3.08 Sub-Servicing Accounts......................................................................99
Section 3.09 Collection of Taxes, Assessments and Similar Items; Servicing Accounts......................99
Section 3.10 Collection Account and Distribution Account................................................100
Section 3.11 Withdrawals from the Collection Account and Distribution Account...........................103
Section 3.12 Investment of Funds in the Collection Account and the Distribution Account.................105
Section 3.13 Agreement to Appoint a Special Servicer....................................................106
Section 3.14 Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage.............108
Section 3.15 Enforcement of Due-On-Sale Clauses; Assumption Agreements..................................109
Section 3.16 Realization Upon Defaulted Mortgage Loans..................................................111
Section 3.17 Trustee to Cooperate; Release of Mortgage Files............................................113
i
Section 3.18 Servicing Compensation.....................................................................114
Section 3.19 Reports to the Trustee; Collection Account Statements......................................115
Section 3.20 Statement as to Compliance.................................................................115
Section 3.21 Independent Public Accountants' Servicing Report...........................................116
Section 3.22 Access to Certain Documentation............................................................116
Section 3.23 Title, Management and Disposition of REO Property..........................................117
Section 3.24 Obligations of the Master Servicer in Respect of Prepayment Interest Shortfalls............120
Section 3.25 Obligations of the Master Servicer in Respect of Mortgage Rates and Monthly Payments.......120
Section 3.26 Net WAC Rate Carryover Reserve Fund........................................................120
Section 3.27 Advance Facility...........................................................................122
Section 3.28 Policy; Claims Under the PMI Policy........................................................123
Section 3.29 Group I Mortgage Loans Subject to Relief Act...............................................124
Section 3.30 Cap Reserve Agreements.....................................................................124
Section 3.31 Excess Net WAC Rate Reserve Fund...........................................................125
ARTICLE IV FLOW OF FUNDS........................................................................................127
Section 4.01 Distributions..............................................................................127
Section 4.02 Preference Claims..........................................................................136
Section 4.03 Statements.................................................................................136
Section 4.04 Remittance Reports; Advances...............................................................140
Section 4.05 Distributions on the REMIC Regular Interests...............................................141
Section 4.06 Allocation of Realized Losses..............................................................147
Section 4.07 Compliance with Withholding Requirements...................................................150
Section 4.08 Commission Reporting.......................................................................150
Section 4.09 The Guaranty...............................................................................151
ARTICLE V THE CERTIFICATES......................................................................................151
Section 5.01 The Certificates...........................................................................151
Section 5.02 Registration of Transfer and Exchange of Certificates......................................153
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates..........................................158
Section 5.04 Persons Deemed Owners......................................................................158
ARTICLE VI THE MASTER SERVICER AND THE DEPOSITOR................................................................158
Section 6.01 Liability of the Master Servicer and the Depositor.........................................158
Section 6.02 Merger or Consolidation of the Depositor or the Master Servicer............................158
Section 6.03 Limitation on Liability of the Depositor, the Master Servicer and Others...................159
Section 6.04 Limitation on Resignation of Master Servicer...............................................160
Section 6.05 Rights of the Depositor, the NIMS Insurer, the Guarantor and the Trustee in Respect of the
Master Servicer............................................................................161
ARTICLE VII DEFAULT.............................................................................................162
Section 7.01 Master Servicer Events of Default..........................................................162
ii
Section 7.02 Trustee to Act; Appointment of Successor...................................................164
Section 7.03 Notification to Certificateholders.........................................................166
Section 7.04 Waiver of Master Servicer Events of Default................................................166
ARTICLE VIII THE TRUSTEE........................................................................................167
Section 8.01 Duties of Trustee..........................................................................167
Section 8.02 Certain Matters Affecting the Trustee......................................................168
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans......................................169
Section 8.04 Trustee May Own Certificates...............................................................169
Section 8.05 Trustee's Fees and Expenses................................................................170
Section 8.06 Eligibility Requirements for Trustee.......................................................171
Section 8.07 Resignation or Removal of Trustee..........................................................171
Section 8.08 Successor Trustee..........................................................................172
Section 8.09 Merger or Consolidation of Trustee.........................................................172
Section 8.10 Appointment of Co-Trustee or Separate Trustee..............................................173
Section 8.11 Appointment of Custodians..................................................................174
Section 8.12 Appointment of Office or Agency............................................................174
Section 8.13 Representations and Warranties of the Trustee..............................................175
Section 8.14 Cap Agreement..............................................................................175
ARTICLE IX TERMINATION..........................................................................................175
Section 9.01 Termination Upon Purchase or Liquidation of All Mortgage Loans.............................175
Section 9.02 Additional Termination Requirements........................................................178
ARTICLE X REMIC PROVISIONS......................................................................................179
Section 10.01 REMIC Administration.......................................................................179
Section 10.02 Prohibited Transactions and Activities.....................................................182
Section 10.03 Trustee, Master Servicer and Depositor Indemnification.....................................183
ARTICLE XI MISCELLANEOUS PROVISIONS.............................................................................183
Section 11.01 Amendment..................................................................................183
Section 11.02 Recordation of Agreement; Counterparts.....................................................185
Section 11.03 Limitation on Rights of Certificateholders.................................................185
Section 11.04 Governing Law; Jurisdiction................................................................186
Section 11.05 Notices....................................................................................186
Section 11.06 Severability of Provisions.................................................................186
Section 11.07 Notice to the Rating Agencies, the NIMS Insurer and the Guarantor..........................187
Section 11.08 Article and Section References.............................................................188
Section 11.09 Third-Party Beneficiaries..................................................................188
Section 11.10 Grant of Security Interest.................................................................188
iii
Exhibits
Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2 Certificates
Exhibit A-3 Form of Class S-1 Certificates
Exhibit A-4 Form of Class S-2 Certificates
Exhibit A-5 Form of Class M-1 Certificates
Exhibit A-6 Form of Class M-2 Certificates
Exhibit A-7 Form of Class M-3 Certificates
Exhibit A-8 Form of Class M-4A Certificates
Exhibit A-9 Form of Class M-4B Certificates
Exhibit A-10 Form of Class C Certificates
Exhibit A-11 Form of Class P Certificates
Exhibit A-12 Form of Class R Certificates
Exhibit A-13 Form of Class R-CX Certificates
Exhibit A-14 Form of Class R-PX Certificates
Exhibit B-1 Form of Group I Cap Agreement
Exhibit B-2 Form of Group II Cap Agreement
Exhibit C Form of Mortgage Loan Purchase Agreement
Exhibit D Mortgage Loan Schedule
Exhibit E-1 Request for Release (for Trustee/Custodian)
Exhibit E-2 Request for Release (Certificate -
Mortgage Loan Paid in Full)
Exhibit F-1 Form of Trustee's Initial Certification
Exhibit F-2 Form of Trustee's Final Certification
Exhibit G Relief Act Forms
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of ERISA Representation
Exhibit J Form of Investment Letter
Exhibit K Form of Class R Certificate and Class R-CX Certificate
Transfer Affidavit and Class R-PX Certificate Transfer
Affidavit
Exhibit L Form of Transferor Certificate
Schedules
Schedule I Prepayment Charge Schedule
Schedule II Cap Premium Schedules
Schedule III [Reserved]
Schedule IV PMI Mortgage Loan Schedule (Not applicable)
iv
This POOLING AND SERVICING AGREEMENT is dated as of November 1, 2002
(the "Agreement"), among LONG BEACH SECURITIES CORP., as depositor (the
"Depositor"), LONG BEACH MORTGAGE COMPANY, as master servicer (the "Master
Servicer"), FEDERAL NATIONAL MORTGAGE ASSOCIATION, as Guarantor of the Class A-1
Certificates and the Class S-1 Certificates (the "Guarantor") and DEUTSCHE BANK
NATIONAL TRUST COMPANY, as Trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates (collectively,
the "Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of fourteen classes of
certificates, designated as (i) the Class A-1 Certificates, (ii) the Class A-2
Certificates, (iii) the Class S-1 Certificates, (iv) the Class S-2 Certificates,
(v) the Class M-1 Certificates, (vi) the Class M-2 Certificates, (vii) the Class
M-3 Certificates, (viii) the Class M-4A Certificates, (ix) the Class M-4B
Certificates, (x) the Class C Certificates, (xi) the Class P Certificates, (xii)
the Class R Certificates, (xiii) the Class R-CX Certificates and (xiv) the Class
R-PX Certificates.
1
REMIC 1
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 (exclusive of the Excess Net WAC Rate
Reserve Fund, the Net WAC Rate Carryover Reserve Fund and the Master Servicer
Prepayment Charge Payment Amounts) as a REMIC for federal income tax purposes,
and such segregated pool of assets will be designated as "REMIC 1." The Class
R-1 Interest will represent the sole class of "residual interests" in REMIC 1
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 1 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 1
Regular Interests. None of the REMIC 1 Regular Interests will be certificated.
Uncertificated Rate
REMIC 1 Initial Uncertificated Change Assumed Final
Designation Pass-Through Rate Principal Balance Date(3) Maturity Date(1)
---------------- ----------------- ---------------------- -------------- ----------------
LT1A-A Variable(2) $499,830,979.39 N/A November 2032
LT1A-B(4) Variable(2) 0.00 N/A November 2032
LT1S1-1 Variable(2) 64,200,000.00 May 2005 November 2032
LT1S1-2 Variable(2) 5,200,000.00 April 2005 November 2032
LT1S1-3 Variable(2) 5,700,000.00 March 2005 November 2032
LT1S1-4 Variable(2) 700,000.00 February 2005 November 2032
LT1S1-5 Variable(2) 5,400,000.00 September 2004 November 2032
LT1S1-6 Variable(2) 4,900,000.00 June 2004 November 2032
LT1S1-7 Variable(2) 13,100,000.00 April 2004 November 2032
LT1S1-8 Variable(2) 200,000.00 February 2004 November 2032
LT1S1-9 Variable(2) 14,700,000.00 November 2003 November 2032
LT1S1-10 Variable(2) 6,000,000.00 May 2003 November 2032
LT1A-P Variable(2) 100.00 N/A November 2032
LT1B-A Variable(2) 305,159,713.32 N/A November 2032
LT1B-B Variable(2) 8,509,955.63 N/A November 2032
LT1S2-1 Variable(2) 29,700,000.00 May 2005 November 2032
LT1S2-2 Variable(2) 9,900,000.00 March 2005 November 2032
LT1S2-3 Variable(2) 6,000,000.00 July 2004 November 2032
LT1S2-4 Variable(2) 8,100,000.00 March 2004 November 2032
LT1S2-5 Variable(2) 3,700,000.00 December 2003 November 2032
LT1S2-6 Variable(2) 5,400,000.00 September 2003 November 2032
LT1S2-7 Variable(2) 3,600,000.00 May 2003 November 2032
LT1B-P Variable(2) 100.00 N/A November 2032
------------------------
(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 1 Regular Interest.
2
(2) Calculated in accordance with the definition of "Uncertificated REMIC 1
Pass-Through Rate" herein.
(3) The rates for the REMIC 1 Regular Interests will not change. The "Rate
Change Date" listed here is solely for the purpose of calculating weighted
average rates for higher-tier REMIC interests.
(4) REMIC 1 Regular Interest LT1A-B will have no principal amount and will
pay no interest. It is intended that it be disregarded for federal and state
income tax purposes. References to REMIC 1 Regular Interest LT1A-B have been
left in this Agreement solely for administrative convenience.
3
REMIC 2
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the REMIC 1 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 2". The Class R-2 Interest represents the sole class of
"residual interests" in REMIC 2 for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, the Uncertificated REMIC
2 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 2 Regular Interests. None
of the REMIC 2 Regular Interests will be certificated.
Uncertificated
REMIC 2
Pass-Through Initial Uncertificated Rate Change Assumed Final
Designation Rate Principal Balance Date Maturity Date(1)
---------------- ----------------- ---------------------- -------------- ----------------
LLT2A-A Variable(2) $499,830,979.39 N/A November 2032
LT2A-B(3) Variable(2) 0.00 N/A November 2032
LT2S1-1 Variable(2) 64,200,000.00 May 2005 November 2032
LT2S1-2 Variable(2) 5,200,000.00 April 2005 November 2032
LT2S1-3 Variable(2) 5,700,000.00 March 2005 November 2032
LT2S1-4 Variable(2) 700,000.00 February 2005 November 2032
LT2S1-5 Variable(2) 5,400,000.00 September 2004 November 2032
LT2S1-6 Variable(2) 4,900,000.00 June 2004 November 2032
LT2S1-7 Variable(2) 13,100,000.00 April 2004 November 2032
LT2S1-8 Variable(2) 200,000.00 February 2004 November 2032
LT2S1-9 Variable(2) 14,700,000.00 November 2003 November 2032
LT2S1-10 Variable(2) 6,000,000.00 May 2003 November 2032
LT2A-P Variable(2) 100.00 N/A November 2032
LT2B-A Variable(2) 305,159,713.32 N/A November 2032
LT2B-B Variable(2) 8,509,955.63 N/A November 2032
LT2S2-1 Variable(2) 29,700,000.00 May 2005 November 2032
LT2S2-2 Variable(2) 9,900,000.00 March 2005 November 2032
LT2S2-3 Variable(2) 6,000,000.00 July 2004 November 2032
LT2S2-4 Variable(2) 8,100,000.00 March 2004 November 2032
LT2S2-5 Variable(2) 3,700,000.00 December 2003 November 2032
LT2S2-6 Variable(2) 5,400,000.00 September 2003 November 2032
LT2S2-7 Variable(2) 3,600,000.00 May 2003 November 2032
LT2B-P Variable(2) 100.00 N/A November 2032
-------------------
(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 2 Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated
REMIC 2 Pass-Through Rate" herein.
(3) REMIC 2 Regular Interest LT2A-B will have no principal amount and
will pay no interest. It is intended that it be disregarded for federal and
state income tax purposes. References to REMIC 2 Regular Interest LT2A-B have
been left in this Agreement solely for administrative convenience.
4
REMIC 3
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the REMIC 2 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 3". The Class R-3 Interest represents the sole class of
"residual interests" in REMIC 3 for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, the Uncertificated REMIC
3 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 3 Regular Interests. None
of the REMIC 3 Regular Interests will be certificated.
Uncertificated REMIC 3
Pass-Through Initial Uncertificated Assumed Final
Designation Rate Principal Balance Maturity Date(1)
---------------- --------------------- ---------------------- ----------------
LLT3A-1 Variable(2) $607,532,359.08 November 2032
LT3B-1 Variable(2) 4,981,150.00 November 2032
LT3C-1 Variable(2) 402,954.87 November 2032
LT3D-1 Variable(2) 309,965.28 November 2032
LT3E-1 Variable(2) 278,968.75 November 2032
LT3F-1 Variable(2) 52,694.10 November 2032
LT3G-1 Variable(2) 55,793.75 November 2032
LT3H-1 Variable(2) 6,317,092.86 November 2032
LT3S-1 Variable(2) N/A(3) November 2032
LT3P-1 Variable(2) 100.00 November 2032
LT3A-2 Variable(2) 372,468,275.57 November 2032
LT3B-2 Variable(2) 3,053,850.00 November 2032
LT3C-2 Variable(2) 247,045.13 November 2032
LT3D-2 Variable(2) 190,034.72 November 2032
LT3E-2 Variable(2) 171,031.25 November 2032
LT3F-2 Variable(2) 32,305.90 November 2032
LT3G-2 Variable(2) 34,206.25 November 2032
LT3H-2 Variable(2) 3,872,920.11 November 2032
LT3S-2 Variable(2) N/A(4) November 2032
LT3P-2 Variable(2) 100.00 November 2032
-------------------
(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 3 Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated
REMIC 3 Pass-Through Rate" herein.
(3) REMIC 3 Regular Interest LT3S-1 will not have an Uncertificated
Principal Balance, but will accrue interest on its Uncertificated Notional
Amount from time to time which will at all times be equal to sum of the
Uncertificated Principal Balances of the REMIC 2 S1 Interests.
(4) REMIC 3 Regular Interest LT3S-2 will not have an Uncertificated
Principal Balance, but will accrue interest on its Uncertificated Notional
Amount from time to time which will at all times be equal to sum of the
Uncertificated Principal Balances of the REMIC 2 S2 Interests.
5
REMIC 4
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the REMIC 3 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 4." The Class R-4 Interest represents the sole class of
"residual interests" in REMIC 4 for purposes of the REMIC Provisions.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for each
Class of Certificates that represents one or more of the "regular interests" in
REMIC 4 and each class of uncertificated "regular interests" in REMIC 4:
Original Class Certificate Pass-Through Assumed Final
Class Designation Principal Balance Rate Maturity Date(1)
----------------- -------------------------- -------------- ----------------
A-1 $498,115,000.00 Variable(2) November 2032
A-2 305,385,000.00 Variable(2) November 2032
M-1 65,000,000.00 Variable(2) November 2032
M-2 50,000,000.00 Variable(2) November 2032
M-3 45,000,000.00 Variable(2) November 2032
M-4A 8,500,000.00 Variable(2) November 2032
M-4B 9,000,000.00 Variable(2) November 2032
S-1 N/A N/A(3) November 2032
S-2 N/A N/A(4) November 2032
LT4-C 19,000,748.34(5) Variable(2) November 2032
LT4-P 100.00 N/A(6) November 2032
-------------------
(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 Class of Certificates or uncertificated
interests that represents one or more of the "regular interests" in REMIC 4.
(2) Calculated in accordance with the definition of "Pass-Through
Rate" herein.
(3) The Class S-1 Certificates will receive all amounts distributed on
REMIC 3 Regular Interests LT3S-1.
(4) The Class S-2 Certificates will receive all amounts distributed on
REMIC 3 Regular Interests LT3S-2.
(5) REMIC 4 Regular Interest LT4-C will accrue interest at its variable
Pass-Through Rate on its Notional Amount outstanding from time to time, which
shall equal the aggregate of the Uncertificated Principal Balances of the REMIC
3 Regular Interests. REMIC 4 Regular Interest LT4-C will not accrue interest on
its Uncertificated Principal Balance.
(6) REMIC 4 Regular Interest LT4-P will not accrue interest.
6
REMIC CX
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of REMIC 4 Regular Interest LT4-C as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC CX." The Class R-CX Interest will represent the sole
class of "residual interests" in REMIC CX for purposes of the REMIC Provisions
(as defined herein) under federal income tax law. The following table
irrevocably sets forth the designation, the Pass-Through Rate, Original Class
Certificate 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 CX Regular Interests.
Uncertificated REMIC CX
Pass-Through Initial Uncertificated Assumed Final
Designation Rate Principal Balance Maturity Date(1)
---------------- --------------------- ---------------------- ----------------
Class C Variable $19,000,748.34(2) November 2032
-------------------------
(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 CX Regular Interest.
(2) The Class C Certificates will not accrue interest on their Certificate
Principal Balance. Instead, the monthly interest due on the Class C Certificates
will be 100% of the interest paid on REMIC 4 Regular Interest LT4-C.
7
REMIC PX
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of REMIC 4 Regular Interest LT4-P as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC PX." The Class R-PX Interest will represent the sole
class of "residual interests" in REMIC PX for purposes of the REMIC Provisions
(as defined herein) under federal income tax law. The following table
irrevocably sets forth the designation, the Pass-Through Rate, Original Class
Certificate 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 PX Regular Interests.
Uncertificated REMIC PX Initial Uncertificated Assumed Final
Designation Pass-Through Rate Principal Balance Maturity Date(1)
---------------- ------------------------ ---------------------- ----------------
Class P N/A(2) $100.00 November 2032
-------------------------
(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 PX Regular Interest.
(2) The Class P Certificates will not accrue interest.
8
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations in respect of interest on the Class A Certificates and the LIBOR
Mezzanine Certificates shall be made on the basis of the actual number of days
elapsed on the basis of a 360-day year and all other calculations of interest
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months. The Class P Certificates and the Residual Certificates are
not entitled to distributions in respect of interest and, accordingly, will not
accrue interest.
"1933 Act": The Securities Act of 1933, as amended.
"Account": Either of the Collection Account and Distribution Account.
"Accrual Period": With respect to the Class S Certificates, the Class
M-4B Certificates, Class C Certificates, the REMIC 1 Regular Interests, the
REMIC 2 Regular Interests, REMIC 3 Regular Interest LT3S-1, REMIC 3 Regular
Interest LT3S-2 and REMIC 4 Regular Interest LT4-C, and each Distribution Date,
the calendar month prior to the month of such Distribution Date. With respect to
the Class A Certificates, the LIBOR Mezzanine Certificates, the remaining REMIC
3 Regular Interests and each Distribution Date, the period commencing on the
immediately preceding Distribution Date (or in the case of the first such
Accrual Period, commencing on the Closing Date) and ending on the day
immediately preceding such Distribution Date.
"Adjustable Rate Mortgage Loan": A Mortgage Loan which provides for an
adjustable Mortgage Rate payable with respect thereto.
"Adjusted 30/360 Guaranty Fee Rate": With respect to any Distribution
Date, the product of (x) the Guaranty Fee Rate multiplied by a fraction, the
numerator of which is the Certificate Principal Balances of the Class A-1
Certificates immediately prior to such Distribution Date and the denominator of
which is the outstanding Principal Balance of the Group I Mortgage Loans and (y)
a fraction, the numerator of which is the actual number of days elapsed in the
related Accrual Period and the denominator of which is 30.
"Adjusted Net Maximum Mortgage Rate": With respect to any Mortgage Loan
(or the related REO Property), as of any Distribution Date, a per annum rate of
interest equal to the Maximum Mortgage Rate for such Mortgage Loan (if such
Mortgage Loan is an Adjustable Rate Mortgage Loan) or the Mortgage Rate for such
Mortgage Loan (if such Mortgage Loan is a Fixed Rate Mortgage Loan), in either
such case as of the first day of the month preceding the month in which such
Distribution Date occurs, minus the sum of (i) the Servicing Fee Rate, (ii) the
PMI Insurer Fee Rate, if applicable, and (iii) the Trustee Fee Rate.
9
"Adjusted Net Minimum Mortgage Rate": With respect to any Mortgage Loan
(or the related REO Property), as of any Distribution Date, a per annum rate of
interest equal to the Minimum Mortgage Rate for such Mortgage Loan (if such
Mortgage Loan is an Adjustable Rate Mortgage Loan) or the Mortgage Rate for such
Mortgage Loan (if such Mortgage Loan is a Fixed Rate Mortgage Loan), in either
such case as of the Cut-off Date, minus the sum of (i) the Servicing Fee Rate,
(ii) the PMI Insurer Fee Rate, if applicable, (iii) the Trustee Fee Rate, and
(iv) with respect to a Group I Mortgage Loan, the Guaranty Fee Rate.
"Adjusted Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property), as of any Distribution Date, a per annum rate of interest
equal to the Mortgage Rate for such Mortgage Loan as of the first day of the
month preceding the month in which such Distribution Date occurs, minus the sum
of (i) the Servicing Fee Rate, (ii) the PMI Insurer Fee Rate, if applicable, and
(iii) the Trustee Fee Rate.
"Adjustment Date": With respect to each Adjustable Rate Mortgage Loan,
each date, on which the Mortgage Rate of such Mortgage Loan changes pursuant to
the related Mortgage Note. The first Adjustment Date following the Cut-off Date
as to each Adjustable Rate Mortgage Loan is set forth in the Mortgage Loan
Schedule.
"Advance": As to any Mortgage Loan or REO Property, any advance made by
the Master Servicer in respect of any Distribution Date pursuant to Section
4.04.
"Advancing Person": As defined in Section 3.27 hereof.
"Adverse REMIC Event": As defined in Section 10.01(f) hereof.
"Affiliate": With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"Allocated Realized Loss Amount": With respect to any Distribution Date
and any Class of the Mezzanine Certificates, the sum of (i) any Realized Losses
allocated to such Class of Certificates on any Distribution Date and (ii) the
amount of any Allocated Realized Loss Amount for such Class of Certificates
remaining unpaid from the previous Distribution Date.
"Approved Rating Thresholds": As defined in Section 3.30(b) hereof.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom, if applicable,
the mortgage recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder's office), which is
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect or record the sale of the Mortgage.
10
"Available Funds": With respect to any Distribution Date, an amount
equal to the excess of (i) the sum of (a) the aggregate of the Monthly Payments
on the Mortgage Loans due on the related Due Date and received on or prior to
the related Determination Date, (b) Liquidation Proceeds, Insurance Proceeds,
Principal Prepayments and other unscheduled recoveries of principal and interest
in respect of the Mortgage Loans during the related Prepayment Period (other
than any Prepayment Charges collected by the Master Servicer in connection with
the full or partial prepayment of any of the Mortgage Loans and any Master
Servicer Prepayment Charge Payment Amount in connection with Mortgage Loans),
(c) the aggregate of any amounts received in respect of an REO Property acquired
in respect of a Mortgage Loan withdrawn from any REO Account and deposited in
the Collection Account for such Distribution Date, (d) the aggregate of any
amounts deposited in the Collection Account by the Master Servicer in respect of
related Prepayment Interest Shortfalls on the Mortgage Loans for such
Distribution Date, (e) the aggregate of any Advances made by the Master Servicer
or the Trustee for such Distribution Date with respect to the Mortgage Loans,
(f) the aggregate of any related advances made by or on behalf of the Trustee
for such Distribution Date with respect to the Mortgage Loans pursuant to
Section 7.02(b) and (g) the aggregate of any amounts constituting proceeds of
repurchases or substitutions of the Mortgage Loans occurring during the related
Prepayment Period over (ii) the sum, without duplication, of (a) amounts
reimbursable or payable to the Depositor, the Master Servicer, the Trustee, the
Seller, the Guarantor, the NIMS Insurer or any Sub-Servicer pursuant to Section
3.11 or Section 3.12 in respect of the Mortgage Loans or otherwise payable in
respect of Extraordinary Trust Fund Expenses, (b) amounts deposited in the
Collection Account or the Distribution Account pursuant to clauses (i)(a)
through (g) above, as the case may be, in error, (c) Stayed Funds, (d) any
Trustee Fee pursuant to Section 8.05 and any indemnification payments or expense
reimbursements made by the Trust Fund pursuant to Section 8.05 and (e) amounts
reimbursable to the Trustee for an advance made pursuant to Section 7.02(b)
which advance the Trustee has determined to be nonrecoverable from the Stayed
Funds in respect of which it was made.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a Realized Loss
resulting from a Deficient Valuation or Debt Service Reduction.
"Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Class A Certificates, the Class S Certificates and the Mezzanine
Certificates shall be Book-Entry Certificates.
"Book-Entry Custodian": The custodian appointed pursuant to Section
5.01(b).
"Business Day": Any day other than a Saturday, a Sunday or a day on
which the Guarantor or banking or savings institutions in the State of
California, the State of Delaware, the State of Maryland, the State of New York,
the State of Washington, or in the city in which the Corporate Trust Office of
11
the Trustee is located, are authorized or obligated by law or executive order to
be closed.
"Cap Agreements": The Group I Cap Agreement and the Group II Cap
Agreement.
"Cap Provider": Bank of America, N.A. or any successor thereto.
"Certificate": Any Regular Certificate or Residual Certificate.
"Certificate Margin": With respect to the Class A-1 Certificates on
each Distribution Date (A) on or prior to the Optional Termination Date, 0.23%
per annum and (B) after the Optional Termination Date, 0.46% per annum. With
respect to the Class A-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 0.45% per annum and (B) after the Optional
Termination Date, 0.90% per annum. With respect to the Class M-1 Certificates on
each Distribution Date (A) on or prior to the Optional Termination Date, 0.83%
per annum and (B) after the Optional Termination Date, 1.245% per annum. With
respect to the Class M-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 2.00% per annum and (B) after the Optional
Termination Date, 3.00% per annum. With respect to the Class M-3 Certificates on
each Distribution Date (A) on or prior to the Optional Termination Date, 3.25%
per annum and (B) after the Optional Termination Date, 4.875% per annum. With
respect to the Class M-4A Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 2.50% per annum and (B) after the Optional
Termination Date, 3.75% per annum.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class A
Certificates, Mezzanine Certificates or Class P Certificates immediately prior
to any Distribution Date, an amount equal to the Initial Certificate Principal
Balance thereof reduced by the sum of all amounts actually distributed in
respect of principal of such Class and, in the case of a Mezzanine Certificate
Realized Losses allocated thereto on all prior Distribution Dates. With respect
to any Class C Certificates as of any date of determination, an amount equal to
the Uncertificated Principal Balance of REMIC 4 Regular Interest LT4-C. The
Class S Certificates and the Residual Certificates will not have a Certificate
Principal Balance.
"Certificate Register": The register established and maintained
pursuant to Section 5.02 hereof.
"Certificateholder" or "Holder": The Person in whose name a Certificate
is registered in the Certificate Register, except that a Disqualified
Organization or a Non-United States Person shall not be a Holder of a Residual
Certificate for any purposes hereof and, solely for the purposes of giving any
consent direction or taking any other action pursuant to this Agreement, any
Certificate registered in the name of the Depositor or the Master Servicer or
any Affiliate thereof shall be deemed not to be outstanding and the Voting
Rights to which it is entitled shall not be taken into account in determining
whether the requisite percentage of Voting Rights necessary to effect any such
consent, direction or other action has been obtained, except as otherwise
12
provided in Section 11.01. The Trustee, the NIMS Insurer and the Guarantor may
conclusively rely upon a certificate of the Depositor or the Master Servicer in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee, the NIMS Insurer and the Guarantor
shall be required to recognize as a "Holder" or "Certificateholder" only the
Person in whose name a Certificate is registered in the Certificate Register.
"Class": Collectively, Certificates which have the same priority of
payment and bear the same class designation and the form of which is identical
except for variation in the Percentage Interest evidenced thereby.
"Class A Certificates": The Class A-1 Certificates and the Class A-2
Certificates.
"Class A Principal Distribution Amount": With respect to any
Distribution Date, the sum of the Class A-1 Principal Distribution Amount and
the Class A-2 Principal Distribution Amount.
"Class A-1 Certificate": Any one of the Class A-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-1 executed, authenticated and delivered by the Trustee, representing
the rights to distributions as set forth herein and therein and evidencing a
regular interest in REMIC 4.
"Class A-1 Principal Allocation Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is (x) the Group
I Principal Remittance Amount for such Distribution Date, and the denominator of
which is (y) the Principal Remittance Amount for such Distribution Date.
"Class A-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the amount equal to the lesser of (I) the aggregate Certificate
Principal Balance of the Class A-1 Certificates immediately prior to such
Distribution Date and (II) the excess of (x) the aggregate Certificate Principal
Balance of the Class A-1 Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (i) 60.70% and (ii) the aggregate
Stated Principal Balance of the Group I Mortgage Loans as of the last day of the
related Due Period (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Group I Mortgage
Loans as of the last day of the related Due Period (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period) minus $3,099,654.73.
"Class A-2 Certificate": Any one of the Class A-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-2 executed, authenticated and delivered by the Trustee, representing
the rights to distributions as set forth herein and therein and evidencing a
regular interest in REMIC 4.
13
"Class A-2 Principal Allocation Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is (x) the Group
II Principal Remittance Amount for such Distribution Date, and the denominator
of which is (y) the Principal Remittance Amount for such Distribution Date.
"Class A-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the amount equal to the lesser of (I) the aggregate Certificate
Principal Balance of the Class A-2 Certificates immediately prior to such
Distribution Date and (II) the excess of (x) the aggregate Certificate Principal
Balance of the Class A-2 Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (i) 60.70% and (ii) the aggregate
Stated Principal Balance of the Group II Mortgage Loans as of the last day of
the related Due Period (after giving effect to scheduled payments of principal
due during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Group II Mortgage
Loans as of the last day of the related Due Period (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period) minus $1,900,348.33.
"Class C Certificate": Any one of the Class C Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-10, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
regular interest in REMIC CX.
"Class Factors": The Trustee will determine a Class Factor (carried to
eight decimal places) for each Class of Regular Certificates in connection with
each Distribution Date. When the Class Factor is multiplied by the Original
Class Certificate Principal Balance (or Original Class Notional Amount) of a
Certificate of that Class, the product will equal the Certificate Principal
Balance (or Notional Amount) of such Certificate (after giving effect to the
distribution to Certificateholders on such Distribution Date of, to the extent
part of the Available Funds, as applicable, for such Distribution Date,
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period).
"Class M-1 Certificate": Any one of the Class M-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-5, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
regular interest in REMIC 4.
"Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, an amount equal to the lesser of (I) the aggregate Certificate
Principal Balance of the Class M-1 Certificates immediately prior to such
Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
Certificate Principal Balance of the Class A-2 Certificates (after taking into
account the payment of the Class A-2 Principal Distribution Amount on such
Distribution Date) and (ii) the aggregate Certificate Principal Balance of the
Class M-1 Certificates immediately prior to such Distribution Date over (y) the
14
lesser of (A) the product of (i) 73.70% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor.
"Class M-2 Certificate": Any one of the Class M-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-6, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
regular interest in REMIC 4.
"Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the amount equal to the lesser of (I) the aggregate Certificate
Principal Balance of the Class M-2 Certificates immediately prior to such
Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
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), (ii) the aggregate 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 (iii) the aggregate
Certificate Principal Balance of the Class M-2 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 83.70% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus the Overcollateralization Floor.
"Class M-3 Certificate": Any one of the Class M-3 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-7, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
regular interest in REMIC 4.
"Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the amount equal to the lesser of (I) the aggregate Certificate
Principal Balance of the Class M-3 Certificates immediately prior to such
Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
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), (ii) the aggregate Certificate Principal Balance of the
Class M-1 Certificates (after taking into account the payment of the Class M-1
15
Principal Distribution Amount on such Distribution Date), (iii) the aggregate
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 (iv) the aggregate Certificate Principal Balance of the
Class M-3 Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 92.70% and (ii) the aggregate Stated Principal
Balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor.
"Class M-4 Certificates": The Class M-4A Certificates and the Class
M-4B Certificates.
"Class M-4 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the amount equal to the lesser of (I) the aggregate Certificate
Principal Balance of the Class M-4 Certificates immediately prior to such
Distribution Date and (II) the excess of (x) the sum of (i) the aggregate
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), (ii) the aggregate 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), (iii) the aggregate
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), (iv) the aggregate Certificate Principal Balance of the
Class M-3 Certificates (after taking into account the payment of the Class M-3
Principal Distribution Amount on such Distribution Date), and (v) the aggregate
Certificate Principal Balance of the Class M-4 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 96.20% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or advanced, and unscheduled collections of principal received during the
related Prepayment Period) minus the Overcollateralization Floor.
"Class M-4A Certificate": Any one of the Class M-4A Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-8, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
regular interest in REMIC 4.
"Class M-4B Certificate": Any one of the Class M-4B Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-9, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
regular interest in REMIC 4.
"Class P Certificate": Any one of the Class P Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-11, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
regular interest in REMIC PX.
16
"Class R Certificate": Any one of the Class R Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-12, executed, authenticated and delivered by the Trustee, evidencing
the ownership of the Class R-1 Interest, the Class R-2 Interest, the Class R-3
Interest and the Class R-4 Interest.
"Class R-1 Interest": The Residual Interest in REMIC 1.
"Class R-2 Interest": The Residual Interest in REMIC 2.
"Class R-3 Interest": The Residual Interest in REMIC 3.
"Class R-4 Interest": The Residual Interest in REMIC 4.
"Class R-CX Certificate": Any one of the Class R-CX Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-13, executed, authenticated and delivered by the Trustee, evidencing
the ownership of the Class R-CX Interest.
"Class R-CX Interest": The Residual Interest in REMIC CX.
"Class R-PX Certificate": Any one of the Class R-PX Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-14, executed, authenticated and delivered by the Trustee, evidencing
the ownership of the Class R-PX Interest.
"Class R-PX Interest": The Residual Interest in REMIC PX.
"Class S Certificates": The Class S-1 Certificates and the Class S-2
Certificates.
"Class S-1 Certificate": Any one of the Class S-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-3, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
regular interest in REMIC 4.
"Class S-2 Certificate": Any one of the Class S-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-4, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
regular interest in REMIC 4.
"Close of Business": As used herein, with respect to any Business Day,
5:00 p.m. (New York time).
"Closing Date": November 5, 2002.
"Closing Date Mortgage Loans": The Group I Closing Date Mortgage Loans
and the Group II Closing Date Mortgage Loans.
"Code": The Internal Revenue Code of 1986, as amended.
17
"Collection Account": The account or accounts created and maintained by
the Master Servicer pursuant to Section 3.10(a), which shall be entitled
"Deutsche Bank National Trust Company, as Trustee, in trust for registered
Holders of Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5," which must be an Eligible Account.
"Commission": The Securities and Exchange Commission.
"Compensating Interest": As defined in Section 3.24.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 0000 Xxxx Xx. Xxxxxx Xxxxx,
Xxxxx Xxx, Xxxxxxxxxx 00000, or at such other address as the Trustee may
designate from time to time by notice to the Certificateholders, the Depositor
and the Master Servicer.
"Corresponding Certificates": With respect to (i) REMIC 3 Regular
Interest LT3B-1, (ii) REMIC 3 Regular Interest LT3B-2, (iii) REMIC 3 Regular
Interest LT3C-1 and REMIC 3 Regular Interest LT3C-2, (iv) REMIC 3 Regular
Interest LT3D-1 and REMIC 3 Regular Interest LT3D-2, (v) REMIC 3 Regular
Interest LT3E-1 and REMIC 3 Regular Interest LT3E-2; (vi) REMIC 3 Regular
Interest LT3F-1 and REMIC 3 Regular Interest LT3F-2, (vii) REMIC 3 Regular
Interest LT3G-1 and REMIC 3 Regular Interest LT3G-2, and (viii) REMIC 3 Regular
Interest LT3P-1 and REMIC 3 Regular Interest LT3P-2, (i) the Class A-1
Certificates, (ii) the Class A-2 Certificates, (iii) the Class M-1 Certificates,
(iv) the Class M-2 Certificates, (v) the Class M-3 Certificates, (vi) the Class
M-4A Certificates, (vii) the Class M-4B Certificates, and (viii) REMIC 4 Regular
Interest LT4-P, respectively.
"Credit Enhancement Percentage": With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is (x) the sum
of the aggregate Certificate Principal Balance of the Mezzanine Certificates and
the Uncertificated Principal Balance of REMIC 4 Regular Interest LT4-C, and the
denominator of which is (y) the aggregate Stated Principal Balance of the
Mortgage Loans, calculated prior to taking into account payments of principal on
the Mortgage Loans due on the related Due Date or received during the related
Prepayment Period and distribution of the Group I Principal Distribution Amount
and the Group II Principal Distribution Amount in respect of the Certificates
then entitled to distributions of principal on such Distribution Date.
"Cumulative Loss Percentage": With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses incurred from the Cut-off Date to the last day of the
calendar month preceding such Distribution Date and the denominator of which is
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.
"Cumulative Loss Trigger Event": A Cumulative Loss Trigger Event has
occurred with respect to any Distribution Date on or after the Stepdown Date, if
the percentage obtained by dividing (x) the aggregate amount of Realized Losses
incurred with respect to the Mortgage Loans from the Cut-off Date through the
last day of the related Due Period by (y) the aggregate Stated Principal Balance
18
of the Mortgage Loans as of the Cut-off Date, exceeds the applicable percentage
set forth below for such Distribution Date:
Distribution Date Occurring in Cumulative Loss Percentage
----------------------------------- ----------------------------------------------------
December 2005 through November 2006 2.90% for the first month, plus an additional 1/12th
of 1.72% for each month thereafter.
December 2006 through November 2007 4.62% for the first month, plus an additional 1/12th
of 1.38% for each month thereafter.
December 2007 through November 2008 6.00% for the first month, plus an additional 1/12th
of 0.75% for each month thereafter.
December 2008 and thereafter 6.75% for each month
"Custodial Agreement": Any agreement that may be entered into by the
Trustee and any Custodian or any agreement assigned to the Trustee providing for
holding and safekeeping of Mortgage Files on behalf of the Trust.
"Custodian": A custodian appointed as provided in Section 8.11 hereof
pursuant to a Custodial Agreement.
"Cut-off Date": With respect to each Closing Date Mortgage Loan,
November 1, 2002; and with respect to each Qualified Substitute Mortgage Loan,
its date of substitution, as applicable.
"Cut-off Date Aggregate Principal Balance": The aggregate of the
Cut-off Date Principal Balances of the Mortgage Loans.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the Cut-off Date (with respect to a
Closing Date Mortgage Loan); or as of the applicable date of substitution (with
respect to a Qualified Substitute Mortgage Loan), after giving effect to
scheduled payments due on or before the Cut-off Date, whether or not received.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Deficiency Amount": With respect to any Distribution Date, the sum of
(i) the Guaranteed Interest Distribution Amount and (ii) the Guaranteed
Principal Distribution Amount.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.01(b) hereof.
19
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
one or more Qualified Substitute Mortgage Loans.
"Delinquency Percentage": With respect to any Distribution Date, the
percentage obtained by dividing (x) the aggregate Stated Principal Balance of
Mortgage Loans Delinquent 60 days or more, (ii) REO Properties related to the
Mortgage Loans and (iii) Mortgage Loans in foreclosure and in bankruptcy
(excluding any such Mortgage Loans which are less than 60 days Delinquent under
the bankruptcy plan) by (y) the aggregate Stated Principal Balance of the
Mortgage Loans, in each case, calculated prior to taking into account payments
of principal on the Mortgage Loans due on the related Due Date or received
during the related Prepayment Period.
"Delinquency Trigger Event": A Trigger Event has occurred with respect
to a Distribution Date if the Delinquency Percentage exceeds 40% of the Credit
Enhancement Percentage.
"Delinquent": With respect to any Mortgage Loan and related Monthly
Payment, the Monthly Payment due on a Due Date which is not made by the Close of
Business on the next scheduled Due Date for such Mortgage Loan. For example, a
Mortgage Loan is 60 or more days Delinquent if the Monthly Payment due on a Due
Date is not made by the Close of Business on the second scheduled Due Date after
such Due Date.
"Depositor": Long Beach Securities Corp., a Delaware corporation, or
any successor in interest.
"Depository": The initial Depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
"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 calendar month in which such Distribution Date occurs or, if such
15th day is not a Business Day, the Business Day immediately preceding such 15th
day.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the REMIC other than through an
Independent Contractor; provided, however, that the Trustee (or the Master
Servicer on behalf of the Trustee) shall not be considered to Directly Operate
an REO Property solely because the Trustee (or the Master Servicer on behalf of
20
the Trustee) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.
"Disqualified Organization": Any: (A) "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of (i) the United
States, any state or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (ii) any organization (other than a cooperative described in Section
521 of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
unless such organization is subject to the tax imposed by Section 511 of the
Code, or (iii) any organization described in Section 1381(a)(2)(C) of the Code;
(B) "electing large partnership" within the meaning of Section 775 of the Code;
or (C) other Person so designated by the Trustee based upon an Opinion of
Counsel provided by nationally recognized counsel to the Trustee that the
holding of an ownership interest in a Residual Certificate by such Person may
cause the Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in a Residual Certificate to such Person. A corporation
will not be treated as an instrumentality of the United States or of any state
or political subdivision thereof if all of its activities are subject to income
tax and a majority of its board of directors is not selected by a governmental
unit. The terms "United States," "state" and "international organization" shall
have the meanings set forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, Deutsche Bank National Trust Company, as Trustee, in
trust for the registered Certificateholders of Long Beach Mortgage Loan Trust
2002-5, Asset-Backed Certificates, Series 2002-5" and which must be an Eligible
Account.
"Distribution Date": The 25th day of any calendar month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in December 2002.
"Due Date": With respect to each Distribution Date, the first day of
the calendar month in which such Distribution Date occurs, which is the day of
the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of
any days of grace.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
"Effective Date": As defined in Section 3.13 hereof.
"Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
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 short-term unsecured debt obligations of such holding company) are
rated no lower than P-1 by Xxxxx'x, F-1 by Fitch and A-1 by S&P (or comparable
ratings if Xxxxx'x, Fitch and S&P are not the Rating Agencies) at the time any
amounts are held on deposit therein; provided that so long as Washington Mutual
21
Bank, FA is the Sub-Servicer, any account maintained with Washington Mutual
Bank, FA shall be an Eligible Account if the long-term unsecured debt
obligations of Washington Mutual Bank, FA are rated no lower than "A2" by
Xxxxx'x, or "A" by Fitch and "A-" by S&P and the short-term unsecured debt
obligations of Washington Mutual Bank, FA are rated no lower than A-2 by S&P,
provided that if the long-term unsecured debt obligations of Washington Mutual
Bank, FA are downgraded by S&P to a rating lower than "A-" or the short-term
unsecured debt obligations of Washington Mutual Bank, FA are downgraded by S&P
to a rating lower than A-2, Washington Mutual Bank, FA shall transfer the
deposits in any account maintained by Washington Mutual Bank, FA (unless any
such account is otherwise qualified as an Eligible Account pursuant to (ii),
(iii) or (iv) of the definition of Eligible Account) to an Eligible Account
within ten (10) Business Days of notification of such downgrade, (ii) an account
or accounts the deposits in which are fully insured by the FDIC (to the limits
established by such corporation), the uninsured deposits in which account are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Certificateholders will have a claim
with respect to the funds in such account or a perfected first priority security
interest against such 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 with which such account is
maintained, (iii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution, national
banking association or trust company acting in its fiduciary capacity or (iv) an
account otherwise acceptable to each Rating Agency without reduction or
withdrawal of their then current ratings of the Certificates as evidenced by a
letter from each Rating Agency to the Trustee. Eligible Accounts may bear
interest.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Payments": As defined in Section 3.09 hereof.
"Excess Group Net WAC Rate Amount": For the Class A-1 Certificates and
any Distribution Date on which the Pass-Through Rate on the Class A-1
Certificates is equal to the Pool Net WAC Rate, the positive excess, if any, of
(i) the amount of interest that would have accrued on such Class A-1
Certificates during the related Accrual Period if interest had been calculated
at the lesser of (A) the related Net WAC Rate or (B) the Formula Rate for such
Certificates over (ii) the amount of interest that accrued during the related
Accrual Period on the Class A-1 Certificates calculated at the Pool Net WAC
Rate. For the Class A-2 Certificates and any Distribution Date on which the
Pass-Through Rate on the Class A-2 Certificates is equal to the Pool Net WAC
Rate, the positive excess, if any, of (i) the amount of interest that would have
accrued on such Class A-2 Certificates during the related Accrual Period if
interest had been calculated at the lesser of (A) the related Net WAC Rate or
(B) the Formula Rate for such Certificates over (ii) the amount of interest that
accrued during the related Accrual Period on the Class A-2 Certificates
calculated at the Pool Net WAC Rate.
"Excess Net WAC Rate Reserve Fund": The reserve fund established
pursuant to Section 3.31.
"Excess Overcollateralized Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date, the
excess, if any, of (i) the Overcollateralized Amount for such Distribution Date
22
(assuming that 100% of the Principal Remittance Amount is applied as a principal
payment on such Distribution Date) over (ii) the Overcollateralization Target
Amount for such Distribution Date.
"Excess Mezzanine Net WAC Rate Amount": For any Distribution Date on
which either (i) the Excess Group Net WAC Rate Amount for the Class A-1
Certificates is greater than the Excess Pool Net WAC Rate Amount for the Class
A-2 Certificates, or (ii) the Excess Group Net WAC Rate Amount for the Class A-2
Certificates is greater than the Excess Pool Net WAC Rate Amount for the Class
A-1 Certificates, the Excess Mezzanine Net WAC Rate Amount is the sum of such
excess and the Monthly Interest Distributable Amount for REMIC 4 Regular
Interest LT4-C.
"Excess Pool Net WAC Rate Amount": For the Class A-1 Certificates and
any Distribution Date on which the Pass-Through Rate on the Class A-1
Certificates is greater than the related Net WAC Rate, the positive excess, if
any, of (i) the amount of interest that accrued during the related Accrual
Period on the Class A-1 Certificates calculated at the Pass-Through Rate for
such Certificates over (ii) the amount of interest that would have accrued on
such Class A-1 Certificates during the related Accrual Period if interest had
been calculated at the related Net WAC Rate. For the Class A-2 Certificates and
any Distribution Date on which the Pass-Through Rate on the Class A-2
Certificates is greater than the related Net WAC Rate, the positive excess, if
any, of (i) the amount of interest that accrued during the related Accrual
Period on the Class A-2 Certificates calculated at the Pass-Through Rate for
such Certificates over (ii) the amount of interest that would have accrued on
such Class A-2 Certificates during the related Accrual Period if interest had
been calculated at the related Net WAC Rate.
"Extra Principal Distribution Amount": With respect to any Distribution
Date, the lesser of (x) the Net Monthly Excess Cashflow for such Distribution
Date and (y) the Overcollateralization Deficiency Amount for such Distribution
Date.
"Extraordinary Trust Fund Expense": Any amounts reimbursable to the
Trustee, or any director, officer, employee or agent of the Trustee, from the
Trust Fund pursuant to Section 8.05, any amounts payable from the Distribution
Account in respect of taxes pursuant to Section 10.01(g)(iii), any amounts
payable from the Distribution Account in respect of any REMIC pursuant to
Section 10.01(c), any amounts payable from the Trust Fund as a trustee fee for
any successor trustee and any amounts payable by the Trustee for the recording
of the assignments of mortgage pursuant to Section 2.01.
"Xxxxxx Xxx": Federal National Mortgage Association, or any successor
thereto.
"FDIC": Federal Deposit Insurance Corporation, or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller or the Master Servicer pursuant to or as contemplated by Section
2.03 or 9.01), a determination made by the Master Servicer that all Insurance
Proceeds, Liquidation Proceeds and other payments or recoveries which the Master
Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Master Servicer shall
23
maintain records, prepared by a Servicing Representative, of each Final Recovery
Determination made thereby.
"Fitch": Fitch Ratings, Inc., or its successor in interest.
"Fixed Rate Mortgage Loan": A Mortgage Loan which provides for a fixed
Mortgage Rate payable with respect thereto.
"Formula Rate": For any Distribution Date and the Class A Certificates
and the LIBOR Mezzanine Certificates, the lesser of (i) LIBOR plus the related
Certificate Margin and (ii) the related Maximum Cap Rate. For any Distribution
Date and the Class M-4B Certificates, the lesser of (i) 6% per annum and (ii)
the related Maximum Cap Rate.
"Xxxxxxx Mac": The Federal Home Loan Mortgage Corporation, or any
successor thereto.
"Gross Margin": With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
"Group I Cap Agreement": The interest rate cap agreement with respect
to the Group I Mortgage Loans consisting of the ISDA Master Agreement and the
schedule and confirmation thereto, each dated November 5, 2002 between the
Trustee, on behalf of the Trust, and the Cap Provider, as such agreement may be
amended and supplemented in accordance with its terms and any replacement
interest rate cap agreement acceptable to the Trustee.
"Group I Cap Controlling Person": The Guarantor or, if the Class A-1
Certificates are no longer outstanding, the majority of the Percentage Interest
of the Holders of the Class C Certificates.
"Group I Closing Date Mortgage Loan": Any of the Group I Mortgage Loans
included in the Trust Fund on the Closing Date. The aggregate Cut-off Date
Principal Balance of the Group I Closing Date Mortgage Loans is equal to
$619,931,079.39.
"Group I Early Termination Date": An early termination date under the
Group I Cap Agreement.
"Group I Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Funds for such Distribution Date
attributable to interest received or advanced with respect to the Group I
Mortgage Loans or to Compensating Interest paid by the Master Servicer with
respect to the Group I Mortgage Loans.
"Group I Mortgage Loans": Those Mortgage Loans identified as Group I
Mortgage Loans on the Mortgage Loan Schedule.
24
"Group I Principal Distribution Amount": The sum of (i) (x) the Group I
Principal Remittance Amount minus (y) the amount of any Overcollateralization
Release Amount multiplied by the Class A-1 Principal Allocation Percentage for
such Distribution Date, and (ii) the Extra Principal Distribution Amount
multiplied by the Class A-1 Principal Allocation Percentage for such
Distribution Date.
"Group I Principal Remittance Amount": With respect to any Distribution
Date, the sum of (i) all scheduled payments of principal collected or advanced
on the Group I Mortgage Loans by the Master Servicer that were due during the
related Due Period, (ii) all partial and full principal prepayments of the Group
I Mortgage Loans applied by the Master Servicer during the related Prepayment
Period, (iii) the principal portion of all Net Liquidation Proceeds and
Insurance Proceeds received during the related Prepayment Period with respect to
the Group I Mortgage Loans, (iv) that portion of the Purchase Price,
representing principal of any repurchased Group I Mortgage Loan, deposited to
the Collection Account during the related Prepayment Period, (v) the principal
portion of any Substitution Adjustments deposited in the Collection Account
during the related Prepayment Period with respect to the Group I Mortgage Loans
and (vi) on the Distribution Date on which the Trust is to be terminated in
accordance with this Agreement, that portion of the Termination Price
representing principal with respect to the Group I Mortgage Loans.
"Group II Cap Agreement": The interest rate cap agreement with respect
to the Group II Mortgage Loans consisting of the ISDA Master Agreement and the
schedule and confirmation thereto, dated as of November 5, 2002 between the
Trustee, on behalf of the Trust, and the Cap Provider, as such agreement may be
amended and supplemented in accordance with its terms and any replacement
interest rate cap agreement acceptable to the Trustee.
"Group II Cap Controlling Person": The majority of the Percentage
Interest of the Holders of the Class C Certificates.
"Group II Closing Date Mortgage Loan": Any of the Group II Mortgage
Loans included in the Trust Fund on the Closing Date. The aggregate Cut-off Date
Principal Balance of the Group II Closing Date Mortgage Loans is equal to
$380,069,768.95.
"Group II Early Termination Date": An early termination date under the
Group II Cap Agreement.
"Group II Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Funds for such Distribution Date
attributable to interest received or advanced with respect to the Group II
Mortgage Loans or to Compensating Interest paid by the Master Servicer with
respect to the Group II Mortgage Loans.
"Group II Mortgage Loans": Those Mortgage Loans identified as Group II
Mortgage Loans on the Mortgage Loan Schedule.
"Group II Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) (x) the Group II Principal Remittance Amount
minus (y) the amount of any Overcollateralization Release Amount multiplied by
the Class A-2 Principal Allocation Percentage for such Distribution Date, and
25
(ii) the Extra Principal Distribution Amount multiplied by the Class A-2
Principal Allocation Percentage for such Distribution Date.
"Group II Principal Remittance Amount": With respect to any
Distribution Date, the sum of (i) all scheduled payments of principal collected
or advanced on the Group II Mortgage Loans by the Master Servicer that were due
during the related Due Period, (ii) all partial and full principal prepayments
of the Group II Mortgage Loans applied by the Master Servicer during the related
Prepayment Period, (iii) the principal portion of all Net Liquidation Proceeds
and Insurance Proceeds received during the related Prepayment Period with
respect to the Group II Mortgage Loans, (iv) that portion of the Purchase Price,
representing principal of any repurchased Group II Mortgage Loan, deposited to
the Collection Account during the related Prepayment Period, (v) the principal
portion of any Substitution Adjustments deposited in the Collection Account
during the related Prepayment Period with respect to the Group II Mortgage Loans
and (vi) on the Distribution Date on which the Trust is to be terminated in
accordance with this Agreement, that portion of the Termination Price
representing principal with respect to the Group II Mortgage Loans.
"Guaranteed Certificates": The Class A-1 Certificates and the Class S-1
Certificates.
"Guaranteed Interest Distribution Amount": With respect to any
Distribution Date and the Guaranteed Certificates, the amount, if any, after
giving effect to the distributions of the Interest Remittance Amount on such
Distribution Date, by which the (i) sum of (x) the Monthly Interest
Distributable Amount and the Unpaid Interest Shortfall Amount payable on the
Guaranteed Certificates for such Distribution Date and (y) the Net Prepayment
Interest Shortfalls and the Relief Act Interest Shortfalls allocated to the
Guaranteed Certificates for such Distribution Date exceeds (ii) the amount of
interest actually paid (without giving effect to any Guarantor Payment) to the
Holders of the related Classes of Guaranteed Certificates on such Distribution
Date.
"Guaranteed Principal Distribution Amount": With respect to (a) any
Distribution Date other than the Distribution Date in November 2032, the amount,
if any, by which (i) the aggregate Certificate Principal Balance of the Class
A-1 Certificates (after giving effect to all amounts distributable and allocable
to principal on such Class A-1 Certificates but prior to giving effect to any
Guarantor Payment on such Distribution Date) exceeds (ii) the aggregate Stated
Principal Balance of the Group I Mortgage Loans (after giving effect to the
principal portion of Monthly Payments due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) and (b) the Distribution Date in November
2032, the amount equal to the Certificate Principal Balance of the Class A-1
Certificates (after giving effect to all amounts distributable and allocable to
principal on such Class A-1 Certificates, but prior to giving effect to any
Guarantor Payment on such Distribution Date).
"Guarantor": Xxxxxx Xxx, or its successor in interest.
"Guarantor Interest Reimbursement Amount": With respect to any
Distribution Date, (i) the sum of any accrued but unpaid Guaranty Fees, not
including the Guaranty Fee due on such Distribution Date, and (ii) the sum of
26
all amounts paid by the Guarantor in respect of the Guaranteed Interest
Distribution Amounts on all prior Distribution Dates to the extent not
previously reimbursed.
"Guarantor Payment": Any payment made by the Guarantor in respect of a
Guaranteed Interest Distribution Amount or a Guaranteed Principal Distribution
Amount.
"Guarantor Principal Reimbursement Amount": With respect to any
Distribution Date, the sum of all amounts paid by the Guarantor in respect of
Guaranteed Principal Distribution Amounts on all prior Distribution Dates to the
extent not previously reimbursed.
"Guarantor Reimbursement Amount": With respect to any Distribution
Date, the sum of Guarantor Interest Reimbursement Amount and the Guarantor
Principal Reimbursement Amount.
"Guaranty": The obligations of the Guarantor pursuant to Section 4.09.
"Guaranty Fee": With respect to any Distribution Date and with respect
to the Guaranteed Certificates, the fee payable to the Guarantor in respect of
its services as Guarantor that accrues at the applicable Guaranty Fee Rate for
such Guaranteed Certificates on a balance equal to the aggregate Certificate
Principal Balance of the Class A-1 Certificates immediately prior to such
Distribution Date, computed on the basis of a 360-day year and the actual number
of days elapsed in the related Accrual Period.
"Guaranty Fee Rate": The per annum rate set forth in a side letter of
the Guarantor, addressed to the Trustee, the Seller and the Master Servicer.
"Indenture": The indenture or a document of similar import, if any,
entered into following the Closing Date, by one or more Affiliates of the
Depositor or one or more entities sponsored by an Affiliate of the Depositor
relating to the NIM Notes to be issued thereunder.
"Independent": When used with respect to any specified Person, any such
Person who (a) is in fact independent of the Depositor, the Master Servicer and
their respective Affiliates, (b) does not have any direct financial interest in
or any material indirect financial interest in the Depositor or the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor
or the Master Servicer or any Affiliate thereof as an officer, employee,
promoter, underwriter, trustee, trust administrator, partner, director or Person
performing similar functions; provided, however, that a Person shall not fail to
be Independent of the Depositor or the Master Servicer or any Affiliate thereof
merely because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Depositor or the Master Servicer or any Affiliate
thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the Master
Servicer) that would be an "independent contractor" with respect to any of the
REMICs created hereunder within the meaning of Section 856(d)(3) of the Code if
such REMIC were a real estate investment trust (except that the ownership tests
set forth in that Section shall be considered to be met by any Person that owns,
directly or indirectly, 35% or more of any Class of Certificates), so long as
each such REMIC does not receive or derive any income from such Person and
27
provided that the relationship between such Person and such REMIC is at arm's
length, all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or
(ii) any other Person (including the Master Servicer) if the Trustee has
received an Opinion of Counsel to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code (determined
without regard to the exception applicable for purposes of Section 860D(a) of
the Code), or cause any income realized in respect of such REO Property to fail
to qualify as Rents from Real Property.
"Index": With respect to each Adjustable Rate Mortgage Loan and with
respect to each related Adjustment Date, the index as specified in the related
Mortgage Note.
"Information Supplement": The Information Supplement of the Depositor
dated October 31, 2002, relating to the Guaranteed Certificates.
"Initial Certificate Principal Balance": With respect to any Regular
Certificate (other than any Class S Certificate), the amount designated "Initial
Certificate Principal Balance" on the face thereof.
"Initial Notional Amount": With respect to any Class S Certificate or
Class C Certificate, the amount designated "Initial Notional Amount" on the face
thereof.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan or the related Mortgaged
Property, to the extent such proceeds are not to be applied to the restoration
of the related Mortgaged Property (including any related PMI Policy) 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, subject to
the terms and conditions of the related Mortgage Note and Mortgage.
"Insured NIM Notes": Net interest margin securities, if any, issued by
one or more Affiliates of the Depositor or by one or more entities sponsored by
an Affiliate of the Depositor which are backed by the cashflow on certain or all
of the Class C Certificates and the Class P Certificates and insured by the NIMS
Insurer.
"Interest Determination Date": With respect to the Class A Certificates
and the LIBOR Mezzanine Certificates and each Accrual Period, the second LIBOR
Business Day preceding the commencement of such Accrual Period.
"Interest Remittance Amount": The Group I Interest Remittance Amount
and the Group II Interest Remittance Amount.
"Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any related
Due Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late payments or
28
collections of principal and/or interest due (without regard to any acceleration
of payments under the related Mortgage and Mortgage Note) but delinquent on a
contractual basis for such Due Period and not previously recovered.
"LIBOR": With respect to each Accrual Period, the rate determined by
the Trustee on the related Interest Determination Date on the basis of the
"Interest Settlement Rate" for United States dollar deposits of one-month
maturity set forth by the British Bankers' Association (the "BBA"), as such rate
appears on the Telerate Page 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date. With respect to any Interest Determination Date, if
the BBA's Interest Settlement Rate does not appear on Telerate Page 3750 as of
11:00 a.m. (London time) on such date, or if Telerate Page 3750 is not available
on such date the Trustee will obtain such rate from Reuters Monitor Money Rates
Service page "LIBOR01" or Bloomberg L.P. page "BBAM." Alternatively, the Trustee
may request the principal London office of each of the Reference Banks to
provide a quotation of its rate. On such Interest Determination Date, LIBOR for
the related Accrual Period will be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period shall be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole multiples of
0.03125%); and
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related
Accrual Period shall be the higher of (i) LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve Interest
Rate.
The Trustee will select a particular index as the alternative index
only if it receives an Opinion of Counsel that the selection of such index will
not cause any REMIC to lose its classification as a REMIC for federal income tax
purposes.
"LIBOR Business Day": Any day on which banks in London, England and The
City of New York are open for conducting transactions in foreign currency and
exchange.
"LIBOR Mezzanine Certificates": The Class M-1 Certificates, the Class
M-2 Certificates, the Class M-3 Certificates and the Class M-4A Certificates.
"Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified herein, as of the end of the related
Prepayment Period, that all Liquidation Proceeds which it expects to recover
with respect to the liquidation of the Mortgage Loan or disposition of the
related REO Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 9.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property or (ii) such REO Property is
29
removed from the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.23 or Section 9.01.
"Liquidation Proceeds": The amount (other than amounts received in
respect of the rental of any REO Property prior to REO Disposition) received by
the Master Servicer in connection with (i) the taking of all or a part of a
Mortgaged Property by exercise of the power of eminent domain or condemnation,
(ii) the liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise or (iii) the repurchase, substitution or sale of a
Mortgage Loan or an REO Property pursuant to or as contemplated by Section 2.03,
Section 3.23 or Section 9.01.
"Loan Group I": All of the Group I Mortgage Loans collectively.
"Loan Group II": All of the Group II Mortgage Loans collectively.
"Loan-to-Value Ratio": As of any date and as to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the (x) Principal
Balance of the Mortgage Loan (if such Mortgage Loan is secured by a first lien
on the related Mortgaged Property) or the sum of the Principal Balance of the
Mortgage Loan and any other mortgage loan secured by a senior lien on the
related Mortgaged Property (if such Mortgage Loan is secured by a junior lien on
the related Mortgaged Property) and the denominator of which is (y) the Value of
the related Mortgaged Property.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which
the original Mortgage Note has been permanently lost or destroyed and has not
been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost or destroyed (together with a copy of the related
Mortgage Note and indemnifying the Trust against any loss, cost or liability
resulting from the failure to deliver the original Mortgage Note) in the form of
Exhibit H hereto.
"Marker Rate 1": With respect to REMIC 4 Regular Interest LT4-C and any
Distribution Date other than the first Distribution Date, a per annum rate equal
to 2 times the weighted average of the Uncertificated REMIC 3 Pass-Through Rates
for REMIC 3 Regular Interest LT3B-1, REMIC 3 Regular Interest LT3C-1, REMIC 3
Regular Interest LT3D-1, REMIC 3 Regular Interest LT3E-1, REMIC 3 Regular
Interest LT3F-1, REMIC 3 Regular Interest LT3G-1, and REMIC 3 Regular Interest
LT3H-1, calculated as follows:
o with the rate on REMIC 3 Regular Interest LT3B-1 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class A-1
Certificates and (ii) the Pool Net WAC Rate,
o with the rate on REMIC 3 Regular Interest LT3C-1 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class M-1
Certificates and (ii) the Pool Net WAC Rate,
30
o with the rate on REMIC 3 Regular Interest LT3D-1 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class M-2
Certificates and (ii) the Pool Net WAC Rate,
o with the rate on REMIC 3 Regular Interest LT3E-1 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class M-3
Certificates and (ii) the Pool Net WAC Rate,
o with the rate on REMIC 3 Regular Interest LT3F-1 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class M-4A
Certificates and (ii) the Pool Net WAC Rate,
o with the rate on REMIC 3 Regular Interest LT3G-1 subject to a cap equal to
the lesser of (i) 6.00% and (ii) the Pool Net WAC Rate, and
o with the rate on REMIC 3 Regular Interest LT3H-1 subject to a cap of zero
for the purpose of this calculation,
provided that in each case the rate used herein shall be multiplied by a
fraction the numerator of which is the actual number of days elapsed in the
Accrual Period and the denominator of which is 30. With respect to REMIC 4
Regular Interest LT4-C and the first Distribution Date, a per annum rate equal
to the weighted average of the Uncertificated REMIC 3 Pass-Through Rates for
REMIC 3 Regular Interest LT3B-1, REMIC 3 Regular Interest LT3C-1, REMIC 3
Regular Interest LT3D-1, REMIC 3 Regular Interest LT3E-1, REMIC 3 Regular
Interest LT3F-1, REMIC 3 Regular Interest LT3G-1, and REMIC 3 Regular Interest
LT3H-1.
"Marker Rate 2": With respect to REMIC 4 Regular Interest LT4-C and any
Distribution Date other than the first Distribution Date, a per annum rate equal
to 2 times the weighted average of the Uncertificated REMIC 3 Pass-Through Rates
for REMIC 3 Regular Interest LT3B-2, REMIC 3 Regular Interest LT3C-2, REMIC 3
Regular Interest LT3D-2, REMIC 3 Regular Interest LT3E-2, REMIC 3 Regular
Interest LT3F-2, REMIC 3 Regular Interest LT3G-2, and REMIC 3 Regular Interest
LT3H-2, calculated as follows:
o with the rate on REMIC 3 Regular Interest LT3B-2 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class A-2
Certificates and (ii) the Pool Net WAC Rate;
o with the rate on REMIC 3 Regular Interest LT3C-2 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class M-1
Certificates and (ii) the Pool Net WAC Rate;
o with the rate on REMIC 3 Regular Interest LT3D-2 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class M-2
Certificates and (ii) the Pool Net WAC Rate,
31
o with the rate on REMIC 3 Regular Interest LT3E-2 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class M-3
Certificates and (ii) the Pool Net WAC Rate;
o with the rate on REMIC 3 Regular Interest LT3F-2 subject to a cap equal to
the lesser of (i) LIBOR plus the Certificate Margin of the Class M-4A
Certificates and (ii) the Pool Net WAC Rate;
o with the rate on REMIC 3 Regular Interest LT3G-2 subject to a cap equal to
the lesser of (i) 6.00% and (ii) the Pool Net WAC Rate; and
o with the rate on REMIC 3 Regular Interest LT3H-2 subject to a cap of zero
for the purpose of this calculation,
provided that in each case the rate used herein 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. With respect to REMIC 4 Regular
Interest LT4-C and the first Distribution Date, a per annum rate equal to the
weighted average of the Uncertificated REMIC 3 Pass-Through Rates for REMIC 3
Regular Interest LT3B-2, REMIC 3 Regular Interest LT3C-2, REMIC 3 Regular
Interest LT3D-2, REMIC 3 Regular Interest LT3E-2, REMIC 3 Regular Interest
LT3F-2, REMIC 3 Regular Interest LT3G-2, and REMIC 3 Regular Interest LT3H-2.
"Master Servicer": Long Beach Mortgage Company, a Delaware corporation,
or any successor servicer appointed as herein provided, in its capacity as
Master Servicer hereunder.
"Master Servicer Event of Default": One or more of the events described
in Section 7.01.
"Master Servicer Prepayment Charge Payment Amount": The amounts (i)
payable by the Master Servicer in respect of any Prepayment Charges waived other
than in accordance with the standard set forth in Section 2.04(a)(viii) or (ii)
collected from the Master Servicer in its capacity as Seller in respect of a
remedy for the breach of the representation and warranty made by the Master
Servicer in its capacity as Seller set forth in Section 2.04(a)(vii).
"Master Servicer Remittance Date": With respect to any Distribution
Date, 3:00 p.m. New York time on the Business Day preceding the Distribution
Date.
"Master Servicer Termination Test": With respect to any Distribution
Date, the Master Servicer Termination Test will be failed with respect to the
Master Servicer if the Cumulative Loss Percentage exceeds 6.125%.
"Maximum Cap Rate": For any Distribution Date and the Class A-1
Certificates, (a) a per annum rate equal to the excess, if any, of (i) the
weighted average of the Adjusted Net Maximum Mortgage Rates of the Group I
Mortgage Loans, weighted on the basis of the Stated Principal Balances thereof
as of the Due Date in the month preceding the month of such Distribution Date,
over (ii) the percentage equivalent of a fraction, (1) the numerator of which is
the sum of (A) the Guaranty Fee for such Distribution Date multiplied by 12 and
(B) the product of (I) the Pass-Through Rate for the Class S-1 Certificates for
32
such Distribution Date and (II) the Notional Amount with respect to the Class
S-1 Certificates immediately prior to such Distribution Date and (2) the
denominator of which is the aggregate Stated Principal Balance of the Group I
Mortgage Loans as of the Due Date in the month preceding the month of such
Distribution Date multiplied by (b) a fraction the numerator of which is 30 and
the denominator of which is the actual number of days elapsed in the related
Accrual Period.
For any Distribution Date and the Class A-2 Certificates, (a) a per
annum rate equal to the excess, if any, of (i) the weighted average of the
Adjusted Net Maximum Mortgage Rates of the Group II Mortgage Loans, weighted on
the basis of the Stated Principal Balances thereof as of the Due Date in the
month preceding the month of such Distribution Date, over (ii) the percentage
equivalent of a fraction, (1) the numerator of which is the product of (I) the
Pass-Through Rate for the Class S-2 Certificates for such Distribution Date and
(II) the Notional Amount with respect to the Class S-2 Certificates immediately
prior to such Distribution Date and (2) the denominator of which is the
aggregate Stated Principal Balance of the Group II Mortgage Loans as of the Due
Date in the month preceding the month of such Distribution Date multiplied by
(b) a fraction the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Accrual Period.
For any Distribution Date and the Mezzanine Certificates is (a) a per
annum rate equal to the excess, if any, of (i) the weighted average of the
Adjusted Net Maximum Mortgage Rates of the Mortgage Loans, weighted on the basis
of the Stated Principal Balances thereof as of the Due Date in the month
preceding the month of such Distribution Date, over (ii) the percentage
equivalent of a fraction, (1) the numerator of which is the sum of (A) the
Guaranty Fee for such Distribution Date multiplied by 12, (B) the product of (I)
the Pass-Through Rate for the Class S-1 Certificates for such Distribution Date
and (II) the Notional Amount with respect to the Class S-1 Certificates
immediately prior to such Distribution Date and (C) the product of (I) the
Pass-Through Rate for the Class S-2 Certificates for such Distribution Date and
(II) the Notional Amount with respect to the Class S-2 Certificates immediately
prior to such Distribution Date and (2) the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans as of the Due Date in
the month preceding the month of such Distribution Date and, except with respect
to the Class M-4B Certificates, multiplied by (b) a fraction the numerator of
which is 30 and the denominator of which is the actual number of days elapsed in
the related Accrual Period.
"Maximum LT3H-1 Uncertificated Accrued Interest Deferral Amount": With
respect to any Distribution Date, the sum of:
(A) the excess of (a) accrued interest at the Uncertificated REMIC 3
Pass-Through Rate applicable to REMIC 3 Regular Interest LT3H-1 for such
Distribution Date on a balance equal to the Uncertificated Principal Balance of
REMIC 3 Regular Interest LT3H-1 minus the REMIC 3 Overcollateralized Amount 1,
in each case for such Distribution Date, over (b) Uncertificated Accrued
Interest on REMIC 3 Regular Interest LT3B-1 with the rate on REMIC 3 Regular
Interest LT3B-1 subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class A-1 Certificates and (ii) the Pool Net WAC Rate,
33
Uncertificated Accrued Interest on REMIC 3 Regular Interest LT3C-1 with the rate
on REMIC 3 Regular Interest LT3C-1 subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class M-1 Certificate and (ii) the Pool
Net WAC Rate, Uncertificated Accrued Interest on REMIC 3 Regular Interest LT3D-1
with the rate on REMIC 3 Regular Interest LT3D-1 subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class M-2 Certificate and
(ii) the Pool Net WAC Rate, Uncertificated Accrued Interest on REMIC 3 Regular
Interest LT3E-1 with the rate on REMIC 3 Regular Interest LT3E-1 subject to a
cap equal to the lesser of (i) LIBOR plus the Certificate Margin of the Class
M-3 Certificates and (ii) the Pool Net WAC Rate, Uncertificated Accrued Interest
on REMIC 3 Regular Interest LT3F-1 with the rate on REMIC 3 Regular Interest
LT3F-1 subject to a cap equal to the lesser of (i) LIBOR plus the Certificate
Margin of the Class M-4A Certificates and (ii) the Pool Net WAC Rate, and
Uncertificated Accrued Interest on REMIC 3 Regular Interest LT3G-1 with the rate
on REMIC 3 Regular Interest LT3G-1 subject to a cap equal to the lesser of (i)
6.00% and (ii) the Pool Net WAC Rate, provided, that in each case the rates set
forth in clauses (i) above (other than the clause (i) related to REMIC 3 Regular
Interest LT3G-1) shall be multiplied by a fraction the numerator of which is the
actual number of days elapsed in the Accrual Period and the denominator of which
is 30, and
(B) the REMIC 3 Group I Diverted Excess Spread.
"Maximum LT3H-2 Uncertificated Accrued Interest Deferral Amount": With
respect to any Distribution Date, the sum of:
(A) the excess of (a) accrued interest at the Uncertificated REMIC 3
Pass-Through Rate applicable to REMIC 3 Regular Interest LT3H-2 for such
Distribution Date on a balance equal to the Uncertificated Principal Balance of
REMIC 3 Regular Interest LT3H-2 minus the REMIC 3 Overcollateralized Amount 2,
in each case for such Distribution Date, over (b) the sum of:
o Uncertificated Accrued Interest on REMIC 3 Regular Interest LT3B-2 with the
rate on REMIC 3 Regular Interest LT3B-2 subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class A-2
Certificates and (ii) the Pool Net WAC Rate;
o Uncertificated Accrued Interest on REMIC 3 Regular Interest LT3C-2, with
the rate on REMIC 3 Regular Interest LT3C-2 subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class M-1
Certificates and (ii) the Pool Net WAC Rate;
o Uncertificated Accrued Interest on REMIC 3 Regular Interest LT3D-2 with the
rate on REMIC 3 Regular Interest LT3D-2 subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class M-2
Certificates and (ii) the Pool Net WAC Rate;
o Uncertificated Accrued Interest on REMIC 3 Regular Interest LT3E-2 with the
rate on REMIC 3 Regular Interest LT3E-2 subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class M-3
Certificates and (ii) the Pool Net WAC Rate;
34
o Uncertificated Accrued Interest on REMIC 3 Regular Interest LT3F-2 with the
rate on REMIC 3 Regular Interest LT3F-2 subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class M-4A
Certificates and (ii) the Pool Net WAC Rate; and
o Uncertificated Accrued Interest on REMIC 3 Regular Interest LT3G-2 with the
rate on REMIC 3 Regular Interest LT3G-2 subject to a cap equal to the
lesser of (i) 6.00% and (ii) the Pool Net WAC Rate,
provided, that in each case the rates set forth in clauses (i) above (other than
the clause (i) related to REMIC 3 Regular Interest LT3G-2) shall be multiplied
by a fraction the numerator of which is the actual number of days elapsed in the
Accrual Period and the denominator of which is 30, and
(B) the REMIC 3 Group II Diverted Excess Spread.
"Maximum Mortgage Rate": With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note as the maximum Mortgage Rate
thereunder.
"Mezzanine Certificates": The Class M-1 Certificates, the Class M-2
Certificates, the Class M-3 Certificates and the Class M-4 Certificates.
"Minimum Mortgage Rate": With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note as the minimum Mortgage Rate
thereunder.
"Monthly Interest Distributable Amount": With respect to any
Distribution Date and the Class A Certificates, the amount of interest accrued
during the related Accrual Period at the related Pass-Through Rate on the
Certificate Principal Balance of such Class immediately prior to such
Distribution Date, and for any Distribution Date other than the first
Distribution Date, (i) increased by the Excess Group Net WAC Rate Amount, if
any, for such Distribution Date and (ii) decreased by the Excess Pool Net WAC
Rate Amount, if any for such Distribution Date. With respect to any Distribution
Date and the Mezzanine Certificates, the amount of interest accrued during the
related Accrual Period at the related Pass-Through Rate on the Certificate
Principal Balance of such Class immediately prior to such Distribution Date, and
for any Distribution Date other than the first Distribution Date, decreased by
the Excess Mezzanine Net WAC Rate Amount, if any, allocated to such Class under
Section 3.31. With respect to REMIC 4 Regular Interest LT4-C and the Class S
Certificates and any Distribution Date, the amount of interest accrued during
the related Accrual Period at the related Pass-Through Rate on the Notional
Amount of such Class immediately prior to such Distribution Date. With respect
to the Class C Certificates and any Distribution Date, the Monthly Interest
Distributable Amount shall equal the Monthly Interest Distributable Amount for
REMIC 4 Regular Interest LT4-C.
35
In all cases, the Monthly Interest Distributable Amount for any Class
of Certificates and REMIC 4 Interest LT4-C shall be reduced by any Net
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls allocated to
such Class under Section 1.03.
Notwithstanding the foregoing, for federal income tax purposes and
under the REMIC Provisions, the Monthly Interest Distributable Amount for the
Class S-1 Certificates and any Distribution Date shall equal the Uncertificated
Accrued Interest for REMIC 3 Regular Interest LT3S-1 for such Distribution Date;
and the Monthly Interest Distributable Amount for the Class S-2 Certificates and
any Distribution Date shall equal the Uncertificated Accrued Interest for REMIC
3 Regular Interest LT3S-2 for such Distribution Date.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the related Mortgagor from time to time under the related Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Sections 3.01 and 3.07; and (c) on the
assumption that all other amounts, if any, due under such Mortgage Loan are paid
when due.
"Moody's": Xxxxx'x Investors Service, Inc. or its successor in
interest.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien or second lien on, or first priority security interest or second
priority security interest in, a Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee and delivered to the Trustee or another Custodian pursuant to Section
2.01 or Section 2.03(d) as from time to time held as a part of the Trust Fund,
the Mortgage Loans so held being identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the Master
Servicer, in its capacity as Seller, and the Depositor, regarding the transfer
of the Mortgage Loans by the Seller to or at the direction of the Depositor,
substantially in the form attached hereto as Exhibit C.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in REMIC 1 on such date, attached hereto as Exhibit D. The Mortgage
Loan Schedule shall be prepared by the Seller and shall set forth the following
information as of the Cut-off Date with respect to each Mortgage Loan, as
applicable:
(i) the Mortgagor's name and the originator's Mortgage Loan identifying
number;
36
(ii) the street address of the Mortgaged Property including the state
and zip code;
(iii) a code indicating whether the Mortgaged Property is
owner-occupied;
(iv) the type of Residential Dwelling constituting the Mortgaged
Property;
(v) the original months to maturity;
(vi) the Loan-to-Value Ratio and the combined Loan-to-Value Ratio at
origination;
(vii) the Mortgage Rate in effect immediately following the Cut-off
Date;
(viii) the date on which the first Monthly Payment was due on the
Mortgage Loan;
(ix) the stated maturity date;
(x) the amount of the Monthly Payment due on the first Due Date after
the Cut-off Date;
(xi) the last Due Date on which a Monthly Payment was actually applied
to the unpaid Stated Principal Balance;
(xii) the original principal amount of the Mortgage Loan;
(xiii) the Stated Principal Balance of the Mortgage Loan as of the
Close of Business on the Cut-off Date;
(xiv) whether such Mortgage Loan is a Fixed Rate Mortgage Loan or an
Adjustable Rate Mortgage Loan, and with respect to each Adjustable Rate Mortgage
Loan: (a) the Gross Margin, (b) the Maximum Mortgage Rate, (c) the Minimum
Mortgage Rate, (d) the Periodic Rate Cap for the first Adjustment Date and each
subsequent Adjustment Date and (e) the next Adjustment Date immediately
following the Cut-off Date;
(xv) a code indicating the purpose of the Mortgage Loan (i.e., purchase
financing, rate/term refinancing, cash-out refinancing);
(xvi) the Mortgage Rate at origination;
(xvii) a code indicating the documentation program;
(xviii) the Seller's risk grade and the FICO score;
(xix) the Value of the Mortgaged Property;
37
(xx) the sale price of the Mortgaged Property, if applicable;
(xxi) whether such Mortgage Loan is secured by a first lien or a second
lien on the related Mortgaged Property;
(xxii) the date of origination;
(xxiii) the stated remaining months to maturity as of the Cut-off Date;
(xxiv) the current principal and interest payment of the Mortgage Loan
as of the Cut-off Date;
(xxv) the interest "paid to date" of the Mortgage Loan as of the
Cut-off Date;
(xxvi) a code indicating whether the Mortgage Loan is a Group I
Mortgage Loan or a Group II Mortgage Loan;
(xxvii) a code indicating the Index that is associated with such
Mortgage Loan (if such Mortgage Loan is an Adjustable Rate Mortgage Loan);
(xxviii) the rate adjustment frequency (if such Mortgage Loan is an
Adjustable Rate Mortgage Loan);
(xxix) the number of years the prepayment penalty is in effect; and
(xxx) a code indicating that such Mortgage Loan is covered under the
PMI Policy.
The Mortgage Loan Schedule shall set forth the following information,
with respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1)
the number of Mortgage Loans; (2) the Cut-off Date Principal Balance of the
Mortgage Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans and
(4) the weighted average maturity of the Mortgage Loans. The Mortgage Loan
Schedule shall be amended from time to time by the Master Servicer in accordance
with the provisions of this Agreement. With respect to any Qualified Substitute
Mortgage Loan, Cut-off Date shall refer to the related Cut-off Date for such
Mortgage Loan, determined in accordance with the definition of Cut-off Date
herein. The Mortgage Loan Schedule shall clearly identify the Mortgage Loans
that are included in Group I Mortgage Loans and those that are included in Group
II Mortgage Loans.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Exhibit D
from time to time, and any REO Properties acquired in respect thereof.
"Mortgage Rate": With respect to each Fixed Rate Mortgage Loan, the
annual rate set forth in the related Mortgage Note, as amended, modified or
supplemented from time to time. With respect to each Adjustable Rate Mortgage
38
Loan, the annual rate at which interest accrues on such Mortgage Loan from time
to time in accordance with the provisions of the related Mortgage Note, which
rate (A) as of any date of determination until the first Adjustment Date
following the Cut-off Date shall be the rate set forth in the Mortgage Loan
Schedule as the Mortgage Rate in effect immediately following the Cut-off Date
and (B) as of any date of determination thereafter shall be the rate as adjusted
on the most recent Adjustment Date, to equal the sum, rounded to the next
highest or nearest 0.125% (as provided in the Mortgage Note), of the Index,
determined as set forth in the related Mortgage Note, plus the related Gross
Margin subject to the limitations set forth in the related Mortgage Note. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a Mortgage Loan,
including any REO Property, consisting of a fee simple or leasehold estate in a
parcel of real property improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage
Loan or any other disposition of related Mortgaged Property (including REO
Property), the related Liquidation Proceeds net of Advances, Servicing Advances,
Servicing Fees and any other Servicing Fees received and retained in connection
with the liquidation of such Mortgage Loan or Mortgaged Property in accordance
with the terms of this Agreement.
"Net Monthly Excess Cashflow": With respect to each Distribution Date,
the sum of (a) any Overcollateralization Release Amount for such Distribution
Date and (b) the positive excess of (x) Available Funds for such Distribution
Date over (y) the sum for such Distribution Date of (A) the Monthly Interest
Distributable Amounts for the Class A Certificates, the Class S Certificates and
the Mezzanine Certificates, (B) the Unpaid Interest Shortfall Amounts for the
Class A Certificates and the Class S Certificates, (C) the Principal Remittance
Amount, (D) the Guarantor Reimbursement Amount and (E) the Guaranty Fee.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the related
REO Property), as of any date of determination, a per annum rate of interest
equal to the then applicable Mortgage Rate for such Mortgage Loan minus the
Servicing Fee Rate.
"Net Prepayment Interest Shortfall": With respect to any Distribution
Date, the excess, if any, of any Prepayment Interest Shortfalls for such date
over the related Compensating Interest.
"Net WAC Rate": For any Distribution Date and the Class A-1
Certificates, (a) a per annum rate equal to the excess, if any, of (i) the
weighted average of the Adjusted Net Mortgage Rates of the Group I Mortgage
Loans, weighted on the basis of the Stated Principal Balances thereof as of the
Due Date in the month preceding the month of such Distribution Date, over (ii)
the percentage equivalent of a fraction, (1) the numerator of which is the sum
39
of (A) the Guaranty Fee for such Distribution Date multiplied by 12 and (B) the
product of (I) the Pass-Through Rate for the Class S-1 Certificates for such
Distribution Date and (II) the Notional Amount with respect to the Class S-1
Certificates immediately prior to such Distribution Date and (2) the denominator
of which is the aggregate Stated Principal Balance of the Group I Mortgage Loans
as of the Due Date in the month preceding the month of such Distribution Date
multiplied by (b) a fraction the numerator of which is 30 and the denominator of
which is the actual number of days elapsed in the related Accrual Period.
For any Distribution Date and the Class A-2 Certificates (a) a per
annum rate equal to the excess, if any, of (i) the weighted average of the
Adjusted Net Mortgage Rates of the Group II Mortgage Loans, weighted on the
basis of the Stated Principal Balances thereof as of the Due Date in the month
preceding the month of such Distribution Date, over (ii) the percentage
equivalent of a fraction, (1) the numerator of which is the product (I) the
Pass-Through Rate for the Class S-2 Certificates for such Distribution Date and
(II) the Notional Amount with respect to the Class S-2 Certificates immediately
prior to such Distribution Date and (2) the denominator of which is the
aggregate Stated Principal Balance of the Group II Mortgage Loans as of the Due
Date in the month preceding the month of such Distribution Date multiplied by
(b) a fraction the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Accrual Period.
For any Distribution Date and the Mezzanine Certificates is the Pool
Net WAC Rate.
"Net WAC Rate Carryover Amount": With respect to the Class A
Certificates, the Mezzanine Certificates and any Distribution Date for which the
Pass-Through Rate for such Class of Certificates for such Distribution Date is
the Net WAC Rate, the sum of (i) the positive excess of (A) the amount of
interest that would have been payable to such Class of Certificates on such
Distribution Date if the Pass-Through Rate for such Class of Certificates for
such Distribution Date were calculated at the related Formula Rate over (B) the
amount of interest payable on such Class of Certificates at the Net WAC Rate for
such Distribution Date and (ii) the related Net WAC Rate Carryover Amount for
the previous Distribution Date not previously paid together with interest
thereon at a rate equal to the related Formula Rate for such Class of
Certificates for the most recently ended Accrual Period.
"Net WAC Rate Carryover Reserve Fund": The reserve fund established
pursuant to Section 3.26.
"New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed or extended on behalf of the Trust if the
Trust has the right to renegotiate the terms of such lease.
"NIM Notes": The Insured NIM Notes and the Other NIM Notes.
"NIMS Insurer": A Person, or any of its successors that shall be the
insurer under an insurance policy insuring certain payments on Insured NIM
Notes, if any, provided, however, upon the occurrence of certain events (as set
forth in the Indenture and/or any other agreement among such Person, Long Beach
Asset Holdings Corp., the Master Servicer, the Trustee and other Persons), the
40
NIMS Insurer shall be the Person designated in the Indenture or such other
agreement. If none of the net interest margin securities have been issued by one
or more of the Affiliates of the Depositor or by one or more entities which are
sponsored by an Affiliate of the Depositor, that are insured by an insurance
policy, there shall be no NIMS Insurer under this Agreement, all references to
the NIMS Insurer or Insured NIM Notes in this agreement are for administrative
convenience only, shall be completely disregarded and no Person shall have any
rights of the NIMS Insurer under this Agreement.
"NIMS Insurer Default": The existence and continuation of a failure by
the NIMS Insurer to make a payment under an insurance policy or policies issued
in connection with the Indenture or any other event of default by the NIMS
Insurer under the Indenture or any documents relating to the Indenture.
"Nonrecoverable Advance": Any Advance or Servicing Advance previously
made or proposed to be made in respect of a Mortgage Loan or REO Property that,
in the good faith business judgment of the Master Servicer, will not or, in the
case of a proposed Advance or Servicing Advance, would not be ultimately
recoverable from related late payments, Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property as provided herein.
"Notional Amount": With respect to the Class S-1 Certificates, the
lesser of (i) the following amounts:
Class S-1
Distribution Date Notional Amount
----------------------------- ----------------
December 2002................ $120,100,000
January 2003................. 120,100,000
February 2003................ 120,100,000
March 2003................... 120,100,000
April 2003................... 120,100,000
May 2003..................... 120,100,000
June 2003.................... 114,100,000
July 2003.................... 114,100,000
August 2003.................. 114,100,000
September 2003............... 114,100,000
October 2003................. 114,100,000
November 2003................ 114,100,000
December 2003................ 99,400,000
January 2004................. 99,400,000
February 2004................ 99,400,000
March 2004................... 99,200,000
April 2004................... 99,200,000
May 2004..................... 86,100,000
June 2004.................... 86,100,000
July 2004.................... 81,200,000
August 2004.................. 81,200,000
September 2004............... 81,200,000
October 2004................. 75,800,000
November 2004................ 75,800,000
41
Class S-1
Distribution Date Notional Amount
----------------------------- ----------------
December 2004................ 75,800,000
January 2005................. 75,800,000
February 2005................ 75,800,000
March 2005................... 75,100,000
April 2005................... 69,400,000
May 2005..................... 64,200,000
and (ii) the sum of the Uncertificated Principal Balances of REMIC 1 Regular
Interest LT1A-A, REMIC I Regular Interest LT1A-P and the REMIC 1 S1 Interests,
in each case, immediately prior to such Distribution Date.
With respect to the Class S-2 Certificates, the lesser (i) of the
following amounts:
Class S-2
Distribution Date Notional Amount
----------------------------- ----------------
December 2002................ $66,400,000
January 2003................. 66,400,000
February 2003................ 66,400,000
March 2003................... 66,400,000
April 2003................... 66,400,000
May 2003..................... 66,400,000
June 2003.................... 62,800,000
July 2003.................... 62,800,000
August 2003.................. 62,800,000
September 2003............... 62,800,000
October 2003................. 57,400,000
November 2003................ 57,400,000
December 2003................ 57,400,000
January 2004................. 53,700,000
February 2004................ 53,700,000
March 2004................... 53,700,000
April 2004................... 45,600,000
May 2004..................... 45,600,000
June 2004.................... 45,600,000
July 2004.................... 45,600,000
August 2004.................. 39,600,000
September 2004............... 39,600,000
October 2004................. 39,600,000
November 2004................ 39,600,000
December 2004................ 39,600,000
January 2005................. 39,600,000
February 2005................ 39,600,000
42
Class S-2
Distribution Date Notional Amount
----------------------------- ----------------
March 2005................... 39,600,000
April 2005................... 29,700,000
May 2005..................... 29,700,000
and (ii) the sum of the Uncertificated Principal Balance of REMIC 1 Regular
Interest LT1B-A, REMIC 1 Regular Interest LT1B-P and the REMIC 1 S2 Interests,
in each case, immediately prior to such Distribution Date.
With respect to REMIC 4 Regular Interest LT4-C, immediately prior to
any Distribution Date, an amount equal to the aggregate of the Uncertificated
Principal Balances of the REMIC 3 Regular Interests. With respect to the Class C
Certificates, immediately prior to any Distribution Date, an amount equal to the
Notional Amount of REMIC 4 Regular Interest LT4-C.
"Notional Regular Interest": Each of the Regular Interests described in
the Preliminary Statement as not having an Uncertificated Principal Balance.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the Seller
or the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Master Servicer,
reasonably acceptable to the Trustee, if such opinion is delivered to the
Trustee, except that any opinion of counsel relating to (a) the qualification of
any Trust REMIC as a REMIC or (b) compliance with the REMIC Provisions must be
an opinion of Independent counsel.
"Optional Termination Date": The first Distribution Date on which the
Terminator may elect to terminate the Trust Fund pursuant to Section 9.01.
"Original Class Certificate Principal Balance": With respect to the
Class A Certificates, the Mezzanine Certificates and the Class P Certificate,
the corresponding Certificate Principal Balance on the Closing Date.
"Original Class Notional Amount": With respect to the Class S-1
Certificates, $120,100,000.00. With respect to the Class S-2 Certificates,
$66,400,000.00. With respect to REMIC 4 Regular Interest LT4-C,
$1,000,000,612.00.
"Other NIM Notes": Net Interest Margin Securities, if any, issued by
one or more Affiliates of the Depositor or by one or more entities sponsored by
an Affiliate of the Depositor, which are backed by the cashflow on certain Class
C Certificates and Class P Certificates and not insured by any NIMS Insurer.
"Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the amount, if any, by which the Overcollateralization Target
43
Amount exceeds the Overcollateralized Amount on such Distribution Date (assuming
that 100% of the aggregate Principal Remittance Amount is applied as a principal
payment on such Distribution Date).
"Overcollateralization Floor": $5,000,003.06.
"Overcollateralization Release Amount": With respect to any
Distribution Date, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the Excess Overcollateralized Amount.
"Overcollateralization Target Amount": With respect to any Distribution
Date (i) prior to the Stepdown Date, 1.90% of the aggregate Cut-off Date
Principal Balance of the Closing Date Mortgage Loans, (ii) on or after the
Stepdown Date provided a Trigger Event is not in effect, the greater of (x) the
lesser of (I) 1.90% of the aggregate Cut-off Date Principal Balance of the
Closing Date Mortgage Loans and (II) 3.80% of the aggregate Stated Principal
Balance of the Mortgage Loans on the last day of the related Due Period (after
giving effect to scheduled payments of principal due during the related Due
Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (y) the
Overcollateralization Floor, and (iii) on or after the Stepdown Date if a
Trigger Event is in effect, the Overcollateralization Target Amount for the
immediately preceding Distribution Date.
"Overcollateralized Amount": With respect to any Distribution Date, the
amount, if any, by which (i) the aggregate Stated Principal Balance of the
Mortgage Loans on the last day of the related Due Period (after giving effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced, and unscheduled collections of principal received during
the related Prepayment Period) exceeds (ii) the sum of the aggregate Certificate
Principal Balances of the Class A Certificates and the Mezzanine Certificates
and the Uncertificated Principal Balance of REMIC 4 Regular Interest LT4-P as of
such Distribution Date (after giving effect to distributions to be made on such
Distribution Date, other than distributions of the Extra Principal Distribution
Amount, if any).
"Ownership Interest": As to any Certificate, any ownership or security
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, as owner or as pledgee.
"Pass-Through Rate":
With respect to the Class A Certificates and the Mezzanine Certificates
for any Distribution Date (other than the first Distribution Date), the lesser
of (x) the related Formula Rate for such Distribution Date and (y) the Pool Net
WAC Rate for such Distribution Date.
With respect to the Class A Certificates and the Mezzanine Certificates
and the first Distribution Date, the related Formula Rate for such Distribution
Date;
With respect to the Class S-1 Certificates and any Distribution Date
for the Distribution Date in December 2002 through the Distribution Date in May
2005, the following per annum rate:
44
Class S-1
Distribution Date Pass-Through Rate
------------------------------------------ -----------------
December 2002............................. 4.23938%
January 2003.............................. 4.23585
February 2003............................. 4.23585
March 2003................................ 4.23231
April 2003................................ 3.98813
May 2003.................................. 4.25000
June 2003................................. 3.99299
July 2003................................. 4.25000
August 2003............................... 3.78812
September 2003............................ 3.68383
October 2003.............................. 3.91849
November 2003............................. 3.48269
December 2003............................. 4.25000
January 2004.............................. 3.77113
February 2004............................. 3.65996
March 2004................................ 4.25000
April 2004................................ 3.46169
May 2004.................................. 4.25000
June 2004................................. 3.75639
July 2004................................. 4.25000
August 2004............................... 3.74754
September 2004............................ 3.63762
October 2004.............................. 4.16029
November 2004............................. 3.67249
December 2004............................. 3.91920
January 2005.............................. 3.45383
February 2005............................. 3.35290
March 2005................................ 4.25000
April 2005................................ 3.74835
May 2005.................................. 3.70000
and for any Distribution Date after the Distribution Date in May 2005, 0.00%.
45
With respect to the Class S-2 Certificates and any Distribution Date
for the Distribution Date in December 2002 through the Distribution Date in May
2005, the following per annum rate:
Class S-2
Distribution Date Pass Through Rate
------------------------------------------ -----------------
December 2002............................. 4.19239%
January 2003.............................. 4.19880
February 2003............................. 4.19880
March 2003................................ 4.20520
April 2003................................ 3.93637
May 2003.................................. 4.25000
June 2003................................. 3.95223
July 2003................................. 4.25000
August 2003............................... 3.72890
September 2003............................ 3.61385
October 2003.............................. 4.25000
November 2003............................. 3.71690
December 2003............................. 3.99085
January 2004.............................. 3.71182
February 2004............................. 3.59311
March 2004................................ 4.25000
April 2004................................ 3.94243
May 2004.................................. 4.25000
June 2004................................. 3.68147
July 2004................................. 3.97039
August 2004............................... 3.94949
September 2004............................ 3.80997
October 2004.............................. 4.12121
November 2004............................. 3.53093
December 2004............................. 3.84217
January 2005.............................. 3.27336
February 2005............................. 3.15530
March 2005................................ 4.25000
April 2005................................ 3.89226
May 2005.................................. 4.25000
and for any Distribution Date after the Distribution Date in May 2005, 0.00%.
However, for federal income tax purposes and under the REMIC
Provisions, (A) the Class S Certificates will not have a Pass-Through Rate, and
(B) the Monthly Interest Distributable Amounts for the Class S Certificates and
46
any Distribution Date will be as specified in the definition of Monthly Interest
Distributable Amount.
With respect to REMIC 4 Regular Interest LT4-C and any Distribution
Date, a per annum rate equal to the percentage equivalent of a fraction, the
numerator of which is the sum of the amounts calculated pursuant to clauses (A)
through (R) below, and the denominator of which is the aggregate of the
Uncertificated Principal Balances of the REMIC 3 Regular Interests. For purposes
of calculating the Pass-Through Rate for REMIC 4 Regular Interest LT4-C, the
numerator is equal to the sum of the following components:
(A) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3A-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3A-1;
(B) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3B-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3B-1;
(C) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3C-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3C-1;
(D) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3D-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3D-1;
(E) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3E-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3E-1;
(F) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3F-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3F-1;
(G) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3G-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3G-1;
(H) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3H-1 minus Marker Rate 1, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3H-1;
(I) 100% of the interest on REMIC 3 Regular Interest LT3P-1;
(J) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3A-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3A-2;
47
(K) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3B-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3B-2;
(L) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3C-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3C-2;
(M) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3D-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3D-2;
(N) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3E-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3E-2;
(O) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3F-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3F-2;
(P) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3G-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3G-2;
(Q) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3 Regular
Interest LT3H-2 minus Marker Rate 2, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3H-2; and
(R) 100% of the interest on REMIC 3 Regular Interest
LT3P-2.
The Class C Certificates will not have a Pass-Through Rate.
"Percentage Interest": With respect to any Certificate (other than a
Residual Certificate), a fraction, expressed as a percentage, the numerator of
which is the Initial Certificate Principal Balance or Initial Notional Amount
represented by such Certificate and the denominator of which is the Original
Class Certificate Principal Balance or Original Class Notional Amount of the
related Class. With respect to a Residual Certificate, the portion of the Class
evidenced thereby, expressed as a percentage, as stated on the face of such
Certificate; provided, however, with respect to each Class referred to in this
paragraph, that the sum of all such percentages for each such Class totals 100%.
"Periodic Rate Cap": With respect to each Adjustable Rate Mortgage Loan
and any Adjustment Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the maximum amount by which the Mortgage Rate for such
Mortgage Loan may increase or decrease (without regard to the Maximum Mortgage
Rate or the Minimum Mortgage Rate) on such Adjustment Date from the Mortgage
Rate in effect immediately prior to such Adjustment Date.
48
"Permitted Investments": Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued or managed by the Depositor, the Master Servicer, the NIMS
Insurer, the Trustee or any of their respective Affiliates or for which an
Affiliate of the NIMS Insurer or the Trustee serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full faith
and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agents acting in
their commercial capacities) incorporated under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal and/or state authorities, so long as, at the time of such investment or
contractual commitment providing for such investment, such depository
institution or trust company (or, if the only Rating Agency is S&P, in the case
of the principal depository institution in a depository institution holding
company, debt obligations of the depository institution holding company) or its
ultimate parent has a short-term uninsured debt rating in one of the two highest
available ratings of Fitch and the highest available rating category of Xxxxx'x
and S&P and provided that each such investment has an original maturity of no
more than 365 days; and provided further that, if the only Rating Agency is S&P
and if the depository or trust company is a principal subsidiary of a bank
holding company and the debt obligations of such subsidiary are not separately
rated, the applicable rating shall be that of the bank holding company; and,
provided further that, if the original maturity of such short-term obligations
of a domestic branch of a foreign depository institution or trust company shall
exceed 30 days, the short-term rating of such institution shall be A-1+ in the
case of S&P if S&P is the Rating Agency; and (B) any other demand or time
deposit or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (i) above and entered into with a
depository institution or trust company (acting as principal) rated F-1+ or
higher by Fitch, rated A-1+ or higher by S&P and rated A2 or higher by Xxxxx'x;
(iv) securities bearing interest or sold at a discount that are issued
by any corporation incorporated under the laws of the United States of America
or any State thereof and that are rated by a Rating Agency in its highest
long-term unsecured rating category at the time of such investment or
contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than 30 days after the date of acquisition thereof) that is rated
by a Rating Agency in its highest short-term unsecured debt rating available at
the time of such investment;
49
(vi) units of taxable money market funds (which may be 12b-1 funds, as
contemplated under the rules promulgated by the Securities and Exchange
Commission under the Investment Company Act of 1940), which funds have the
highest rating available for such securities from the Rating Agencies or which
have been designated in writing by the Rating Agencies as Permitted Investments;
and
(vii) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies in writing as a
permitted investment of funds backing securities having ratings equivalent to
its highest initial rating of the Class A-2 Certificates;
provided, that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any transferee of a Residual Certificate other
than a Disqualified Organization or a non-U.S. Person.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": Any employee benefit plan or certain other retirement plans and
arrangements, including individual retirement accounts and annuities, Xxxxx
plans and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA or Section 4975 of the Code.
"PMI Insurer": None of the Mortgage Loans are insured by a primary
mortgage insurance policy. References to the PMI Insurer, PMI Insurer Fee, PMI
Insurer Fee Rate, PMI Mortgage Loans and PMI Policy are left in this Agreement
for administrative convenience and shall be completely disregarded. There are no
PMI Mortgage Loans nor any PMI Insurer under this Agreement and no Person shall
have any rights of the PMI Insurer under this Agreement.
"PMI Insurer Fee": The amount payable to the PMI Insurer on each
Distribution Date, which amount shall equal one twelfth of the product of (i)
the PMI Insurer Fee Rate, multiplied by (ii) the aggregate Stated Principal
Balance of the PMI Mortgage Loans and any related REO Properties as of the first
day of the related Due Period.
"PMI Insurer Fee Rate": 0.00% per annum.
"PMI Mortgage Loans": The Mortgage Loans insured by the PMI Insurer set
forth on the list of Mortgage Loans attached hereto as Schedule IV. There are no
PMI Mortgage Loans under this Agreement.
50
"PMI Policy": Not applicable.
"Pool Net WAC Rate": For any Distribution Date, a per annum rate equal
to the weighted average (weighted on the basis of Uncertificated Principal
Balances) of:
(a) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT1A-A for such Distribution Date;
(b) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT1A-B for such Distribution Date;
(c) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT1B-A for such Distribution Date;
(d) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT1B-B for such Distribution Date;
(e) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT1A-P for such Distribution Date;
(f) the Uncertificated REMIC 1 Pass-Through Rate for REMIC 1 Regular
Interest LT1B-P for such Distribution Date;
(g) the excess, if any, of (i) the Uncertificated REMIC 1 Pass-Through
Rate for each of the REMIC 1 S1 Interests for such Distribution Date over (ii)
(A) for any Distribution Date starting with the first Distribution Date and
ending with the Rate Change Date for such interest, the S1 Percentage for such
Distribution Date, and (B) for any Distribution Date after the Rate Change Date
for such REMIC 1 S1 Interest, 0.00%; and
(h) the excess, if any, of (i) the Uncertificated REMIC 1 Pass-Through
Rate for each of the REMIC 1 S2 Interests for such Distribution Date over (ii)
(A) for any Distribution Date starting with the first Distribution Date and
ending with the Rate Change Date for such interest, the S2 Percentage for such
Distribution Date, and (B) for any Distribution Date after the Rate Change Date
for such REMIC 1 S1 Interest, 0.00%.
"Prepayment Assumption": The pricing prepayment assumption as described
in the Prospectus Supplement.
"Prepayment Charge": With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof (other than any Master
Servicer Prepayment Charge Payment Amount).
"Prepayment Charge Schedule": As of the Cut-off Date, a list attached
hereto as Schedule I (including the Prepayment Charge Summary attached thereto),
setting forth the following information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
51
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on the related
Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage Loan as of the
Cut-off Date.
The Prepayment Charge Schedule shall be amended from time to time by
the Master Servicer in accordance with the provisions of this Agreement and a
copy of each related amendment shall be furnished by the Master Servicer to the
NIMS Insurer and the Trustee.
"Prepayment Interest Shortfall": With respect to any Distribution Date,
for each Mortgage Loan that was during the related Prepayment Period the subject
of a Principal Prepayment in full or in part that was applied by the Master
Servicer to reduce the outstanding principal balance of such loan on a date
preceding the Due Date in the succeeding Prepayment Period, an amount equal to
interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the lesser of (i) the number of days commencing on the date on
which the prepayment is applied and ending on the last day of the related
Prepayment Period and (ii) 30 days. The obligations of the Master Servicer in
respect of any Prepayment Interest Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to the first Distribution Date, the
period from October 1, 2002 through November 30, 2002, and with respect to any
Distribution Date thereafter, the calendar month immediately preceding the
calendar month in which such Distribution Date occurs.
"Prime Rate": The prime rate of United States money center commercial
banks as published in The Wall Street Journal.
"Principal Balance": As to any Mortgage Loan other than a Liquidated
Mortgage Loan, and any day, the related Cut-off Date Principal Balance, minus
all collections credited against the Cut-off Date Principal Balance of any such
Mortgage Loan. For purposes of this definition, a Liquidated Mortgage Loan shall
be deemed to have a Principal Balance equal to the Principal Balance of the
related Mortgage Loan as of the final recovery of related Liquidation Proceeds
and a Principal Balance of zero thereafter. As to any REO Property and any day,
the Principal Balance of the related Mortgage Loan shall equal the Principal
Balance of the related Mortgage Loan immediately prior to such Mortgage Loan
becoming REO Property minus any REO Principal Amortization received with respect
thereto on or prior to such day.
"Principal Distribution Amount": With respect to any Distribution Date,
the sum of the Group I Principal Distribution Amount and the Group II Principal
Distribution Amount.
52
"Principal Prepayment": Any payment of principal made by the Mortgagor
on a Mortgage Loan which is received in advance of its scheduled Due Date and
which is not accompanied by an amount of interest representing the full amount
of scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.
"Principal Remittance Amount": With respect to any Distribution Date,
the sum of the Group I Principal Remittance Amount and the Group II Principal
Remittance Amount.
"Prospectus Supplement": That certain Prospectus Supplement dated
October 31, 2002 relating to the public offering of the Class A-2 Certificates,
the Class S-2 Certificates and the Mezzanine Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO Property to
be purchased pursuant to or as contemplated by Section 2.03, Section 3.16(c) or
Section 9.01, and as confirmed by an Officers' Certificate from the Master
Servicer to the Trustee, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof as of the date of purchase (or such other price as
provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last paid by
the Mortgagor or by an advance by the Master Servicer through the end of the
calendar month in which the purchase is to be effected and (y) an REO Property,
the sum of (1) accrued interest on such Stated Principal Balance at the
applicable Net Mortgage Rate in effect from time to time from the Due Date as to
which interest was last paid by the Mortgagor or by an advance by the Master
Servicer through the end of the calendar month immediately preceding the
calendar month in which such REO Property was acquired, plus (2) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such purchase is to be effected, net of the total of all
net rental income, Insurance Proceeds, Liquidation Proceeds and Advances that as
of the date of purchase had been distributed in respect of REO Imputed Interest
pursuant to Section 4.01, (iii) any unreimbursed Servicing Advances, Advances
and Nonrecoverable Advances and any unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant to
Section 3.11 (a)(ix) and Section 3.16(b), and (v) in the case of a Mortgage Loan
required to be purchased pursuant to Section 2.03, enforcement expenses
reasonably incurred or to be incurred by the NIMS Insurer, the Master Servicer,
the Guarantor or the Trustee in respect of the breach or defect giving rise to
the purchase obligation.
Notwithstanding the foregoing, if an amount of Mortgage Loans (measured
by the aggregate principal balance) that is in excess of 2.00% of the aggregate
principal balance of the Closing Date Mortgage Loans as of the Cut-Off Date has
previously been repurchased (exclusive of any Mortgage Loans purchased by the
Master Servicer pursuant to Section 3.16(c)) or substituted for, then in
addition to those requirements set forth above, the Purchase Price shall include
the amount of any related Prepayment Charge (other than with respect to a
Purchase Price paid in connection with Section 9.01).
"Qualified Insurer": Any insurance company acceptable to Xxxxxx Xxx.
53
"Qualified Substitute Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement or the Mortgage
Loan Purchase Agreement which must, on the date of such substitution, (i) have
an outstanding principal balance (or in the case of a substitution of more than
one mortgage loan for a Deleted Mortgage Loan, an aggregate principal balance),
after application of all scheduled payments of principal and interest due during
or prior to the month of substitution, not in excess of, and not more than 5.00%
less than, the outstanding principal balance of the Deleted Mortgage Loan as of
the Due Date in the calendar month during which the substitution occurs, (ii)
have a Mortgage Rate not less than (and not more than one percentage point in
excess of) the Mortgage Rate of the Deleted Mortgage Loan, (iii) if the
Qualified Substitute Mortgage Loan is an Adjustable Rate Mortgage Loan, have a
Maximum Mortgage Rate not greater than the Maximum Mortgage Rate on the Deleted
Mortgage Loan and have a Minimum Mortgage Rate not less than the Minimum
Mortgage Rate of the Deleted Mortgage Loan, (iv) if the Qualified Substitute
Mortgage Loan is an Adjustable Rate Mortgage Loan, have a Gross Margin equal to
or greater than the Gross Margin of the Deleted Mortgage Loan, (v) if the
Qualified Substitute Mortgage Loan is an Adjustable Rate Mortgage Loan, have a
next Adjustment Date not more than two months later than the next Adjustment
Date on the Deleted Mortgage Loan, (vi) have a remaining term to maturity not
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan, (vii) be current (with no contractual delinquencies outstanding) as of the
date of substitution, (viii) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date, (ix) have a risk grading determined by the Seller
at least equal to the risk grading assigned on the Deleted Mortgage Loan, (x)
have been underwritten or reunderwritten by the Seller in accordance with the
same or, as determined by the Seller, more favorable, underwriting criteria and
guidelines as the Deleted Mortgage Loan, (xi) with respect to Qualified
Substituted Mortgage Loans substituted for Deleted Mortgage Loans that are Group
I Mortgage Loans, have had an original Principal Balance that conformed to
Xxxxxx Xxx loan limits as of the date of its origination and be otherwise
acceptable to the Guarantor, (xii) be secured by the same property type as the
Deleted Mortgage Loan, (xiii) have a lien priority equal to or superior to that
of the Deleted Mortgage Loan, (xiv) be covered by the PMI Policy if the Deleted
Mortgage Loan was covered by the PMI Policy, and (xv) conform to each
representation and warranty set forth in Section 6 of the Mortgage Loan Purchase
Agreement applicable to the Deleted Mortgage Loan. In the event that one or more
mortgage loans are substituted for one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances (applied separately for the Group I Mortgage Loans
and Group II Mortgage Loans), the Mortgage Rates described in clauses (ii)
through (v) hereof shall be satisfied for each such mortgage loan, the risk
gradings described in clause (ix) hereof shall be satisfied as to each such
mortgage loan, the terms described in clause (vi) hereof shall be determined on
the basis of weighted average remaining term to maturity (provided that no such
mortgage loan may have a remaining term to maturity longer than the Deleted
Mortgage Loan), the Loan-to-Value Ratios described in clause (viii) hereof shall
be satisfied as to each such mortgage loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (xv) hereof must be satisfied as to each Qualified Substitute Mortgage
Loan or in the aggregate, as the case may be.
Notwithstanding the foregoing, if an amount of Mortgage Loans (measured
by the aggregate principal balance) that is in excess of 2.00% of the aggregate
54
principal balance of the Closing Date Mortgage Loans as of the Cut-Off Date has
previously been repurchased (exclusive of any Mortgage Loans purchased by the
Master Servicer pursuant to Section 3.16(c)) or substituted for, then in
addition to clauses (i) through (xiv) above, each Qualified Substitute Mortgage
Loan shall also have a Prepayment Charge provision at least as favorable to the
Holders of the related Class P Certificates as the Prepayment Charge provisions
in the Deleted Mortgage Loan.
"Rate Change Date": The date specified in the Preliminary Statement for
certain REMIC Regular Interests.
"Rating Agency or Rating Agencies": Fitch, Xxxxx'x and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Master Servicer.
"Realized Loss": With respect to any Liquidated Mortgage Loan, the
amount of loss realized equal to the portion of the Principal Balance remaining
unpaid after application of all Net Liquidation Proceeds and Insurance Proceeds
in respect of such Mortgage Loan.
"Record Date": With respect to (i) the Class S Certificates, the Class
M-4B Certificates, the Class P Certificates, the Class C Certificates, the
Residual Certificates and any Definitive Certificates, the Close of Business on
the last Business Day of the calendar month preceding the month in which the
related Distribution Date occurs and (ii) with respect to the Class A
Certificates and the LIBOR Mezzanine Certificates, the Close of Business on the
Business Day immediately preceding the related Distribution Date; provided,
however, that following the date on which Definitive Certificates for a Class A
Certificate or a LIBOR Mezzanine Certificate are available pursuant to Section
5.02, the Record Date for such Certificates shall be the last Business Day of
the calendar month preceding the month in which the related Distribution Date
occurs.
"Recording Documents": As defined in Section 2.01 hereof.
"Reference Banks": Those banks (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 or the Master Servicer or any
affiliate thereof and (iii) which have been designated as such by the Trustee
with the consent of the NIMS Insurer; provided, however, that if fewer than two
of such banks provide a LIBOR rate, then any leading banks selected by the
Trustee with the consent of the NIMS Insurer which are engaged in transactions
in United States dollar deposits in the international Eurocurrency market.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
"Regular Certificates": The Class A Certificates, the Class S
Certificates, the Mezzanine Certificates, the Class C Certificates and the Class
P Certificates.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
55
"Relief Act Interest Shortfall": With respect to any Distribution Date,
for any Mortgage Loan with respect to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Due Period as
a result of the application of the Relief Act, the amount by which (i) interest
collectible on such Mortgage Loan during such Due Period is less than (ii) one
month's interest on the Principal Balance of such Mortgage Loan at the Mortgage
Rate for such Mortgage Loan before giving effect to the application of the
Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC 1": The segregated pool of assets subject hereto, constituting a
primary trust created hereby and to be administered hereunder, with respect to
which a REMIC election is to be made consisting of: (i) such Mortgage Loans as
from time to time are subject to this Agreement, together with the Mortgage
Files relating thereto, and together with all collections thereon and proceeds
thereof, (ii) any REO Property, together with all collections thereon and
proceeds thereof, (iii) the Trustee's rights with respect to the Mortgage Loans
under all insurance policies, including the PMI Policy, required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights with respect to the Mortgage Loans under the Mortgage Loan
Purchase Agreement (including any security interest created thereby), (v) the
obligations of the Guarantor to the Holders of the Guaranteed Certificates under
the Guaranty and, (vi) the Collection Account, the Distribution Account (subject
to the last sentence of this definition) and any REO Account and such assets
that are deposited therein from time to time and any investments thereof,
together with any and all income, proceeds and payments with respect thereto.
Notwithstanding the foregoing, however, a REMIC election will not be made with
respect to the Excess Net WAC Rate Reserve Fund, the Net WAC Rate Carryover
Reserve Fund and Master Servicer Prepayment Charge Payment Amounts.
"REMIC 1 Group I Regular Interests": REMIC 1 Regular Interest LT1A-A,
REMIC 1 Regular Interest LT1A-B, REMIC 1 Regular Interest LT1A-P, and the REMIC
1 S1 Interests.
"REMIC 1 Group II Regular Interests": REMIC 1 Regular Interest LT1B-A,
REMIC 1 Regular Interest LT1B-B, REMIC 1 Regular Interest LT1B-P, and the REMIC
1 S2 Interests.
"REMIC 1 Regular Interest LT1A-A": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1A-A shall accrue
interest at the related Uncertificated REMIC 1 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 1 Regular Interest LT1A-B": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1A-B shall accrue
interest at the related Uncertificated REMIC 1 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.
56
"REMIC 1 Regular Interest LT1A-P": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1A-P shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to any Prepayment Charges relating to the
Group I Mortgage Loans collected by the Master Servicer and to a distribution 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 1 Regular Interest LT1B-A": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1B-A shall accrue
interest at the related Uncertificated REMIC 1 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 1 Regular Interest LT1B-B": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1B-B shall accrue
interest at the related Uncertificated REMIC 1 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 1 Regular Interest LT1B-P": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1B-P shall accrue
interest at the related Uncertificated REMIC 1 Pass-Through Rate in effect from
time to time, and shall be entitled to any Prepayment Charges relating to the
Group II Mortgage Loans collected by the Master Servicer and to a distribution
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 1 Regular Interests": REMIC 1 Regular Interest LT1A-A, REMIC 1
Regular Interest LT1A-B, REMIC 1 Regular Interest LT1A-P, REMIC 1 Regular
Interest LT1B-A, REMIC 1 Regular Interest LT1B-B, REMIC 1 Regular Interest
LT1B-P, the REMIC 1 S1 Interests and the REMIC 1 S2 Interests.
"REMIC 1 S1 Interests": The regular interests in REMIC 1 that are
described in the Preliminary Statement and designated as LT1S1-1 through
LT1S1-10. Each REMIC 1 S1 Interest shall accrue interest at the related
Uncertificated REMIC 1 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 1 S2 Interests": The regular interests in REMIC 1 that are
described in the Preliminary Statement and designated as LT1S2-1 through
LT1S2-7. Each REMIC 1 S2 Interest shall accrue interest at the related
Uncertificated REMIC 1 Pass-Through Rate in effect from time to time, and shall
be entitled to distributions of principal, subject to the terms and conditions
57
hereof, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement hereto.
"REMIC 2": The segregated pool of assets consisting of all of the REMIC
1 Regular Interests conveyed in trust to the Trustee, for the benefit of REMIC
3, as holder of the REMIC 2 Regular Interests and the Class R
Certificateholders, as holders of the Class R-2 Interest, pursuant to Article II
hereunder, and all amounts deposited therein, with respect to which a separate
REMIC election is to be made.
"REMIC 2 Regular Interest LT2A-A": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2A-A shall accrue
interest at the related Uncertificated REMIC 2 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 2 Regular Interest LT2A-B": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2A-B shall accrue
interest at the related Uncertificated REMIC 2 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 2 Regular Interest LT2A-P": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2A-P shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
time to time, and shall be entitled to any amounts distributed to REMIC 1
Regular Interest LT1A-P.
"REMIC 2 Regular Interest LT2B-A": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2B-A shall accrue
interest at the related Uncertificated REMIC 2 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 2 Regular Interest LT2B-B": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2B-B shall accrue
interest at the related Uncertificated REMIC 2 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 2 Regular Interest LT2B-P": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2B-P shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate in effect from
58
time to time, and shall be entitled to any amounts distributed to REMIC 1
Regular Interest LT1B-P.
"REMIC 2 Regular Interests": REMIC 2 Regular Interest LT2A-A, REMIC 2
Regular Interest LT2A-B, REMIC 2 Regular Interest LT2B-A, REMIC 2 Regular
Interest LT2B-B, REMIC 2 Regular Interest LT2A-P, REMIC 2 Regular Interest
LT2B-P, REMIC 2 S1 Interests and REMIC 2 S2 Interests.
"REMIC 2 S1 Interests": The regular interests in REMIC 2 that are
described in the Preliminary Statement and designated as LT2S1-1 through
LT2S1-10. Each REMIC 2 S1 Interest shall accrue interest at the related
Uncertificated REMIC 2 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 2 S2 Interests": The regular interests in REMIC 2 that are
described in the Preliminary Statement and designated as LT2S2-1 through
LT2S2-7. Each REMIC 2 S2 Interest shall accrue interest at the related
Uncertificated REMIC 2 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 3": The segregated pool of assets consisting of all of the REMIC
2 Regular Interests conveyed in trust to the Trustee, for the benefit of REMIC
4, as holder of the REMIC 3 Regular Interests, and the Class R
Certificateholders, as holders of the Class R-3 Interest, pursuant to Article II
hereunder, and all amounts deposited therein, with respect to which a separate
REMIC election is to be made.
"REMIC 3 Group I Diverted Excess Spread": 1% of any amount otherwise
payable as accrued interest on the Class C Certificates in respect of the Group
I Mortgage Loans that, pursuant to Section 4.01(d)(i)(m), is used to increase
the REMIC 3 Overcollateralized Amount 1 on any Group I Mortgage Loans.
"REMIC 3 Group I Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Group I Mortgage Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3
Regular Interest LT3A-1 minus Marker Rate 1, divided by (b) 12.
"REMIC 3 Group I Regular Interests": REMIC 3 Regular Interest LT3A-1,
REMIC 3 Regular Interest LT3B-1, REMIC 3 Regular Interest LT3C-1, REMIC 3
Regular Interest LT3D-1, REMIC 3 Regular Interest LT3E-1, REMIC 3 Regular
Interest LT3F-1, REMIC 3 Regular Interest LT3G-1, REMIC 3 Regular Interest
LT3H-1, REMIC 3 Regular Interest LT3S-1 and REMIC 3 Regular Interest LT3P-1.
"REMIC 3 Group II Diverted Excess Spread": 1% of any amount otherwise
payable as accrued interest on the Class C Certificates in respect of the Group
59
II Mortgage Loans that, pursuant to Section 4.01(d)(i)(m), is used to increase
the REMIC 3 Overcollateralized Amount 2 on any Group II Mortgage Loans.
"REMIC 3 Group II Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Group II Mortgage Loans and related REO Properties then
outstanding and (ii) the Uncertificated REMIC 3 Pass-Through Rate for REMIC 3
Regular Interest LT3A-2 minus Marker Rate 2, divided by (b) 12.
"REMIC 3 Group II Regular Interests": REMIC 3 Regular Interest LT3A-2,
REMIC 3 Regular Interest LT3B-2, REMIC 3 Regular Interest LT3C-2, REMIC 3
Regular Interest LT3D-2, REMIC 3 Regular Interest LT3E-2, REMIC 3 Regular
Interest LT3F-2, REMIC 3 Regular Interest LT3G-2, REMIC 3 Regular Xxxxxxxx
XX0X-0, and REMIC 3 Regular Interest LT3P-2.
"REMIC 3 Overcollateralization Target Amount 1": 1% of the Group I
Overcollateralization Target Amount.
"REMIC 3 Overcollateralization Target Amount 2": 1% of the Group II
Overcollateralization Target Amount.
"REMIC 3 Overcollateralized Amount 1": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC 3 Regular Interest LT3A-1, REMIC 3 Regular Interest LT3B-1, REMIC 3
Regular Interest LT3C-1, REMIC 3 Regular Interest LT3D-1, REMIC 3 Regular
Interest LT3E-1, REMIC 3 Regular Interest LT3F-1, REMIC 3 Regular Interest
LT3G-1, REMIC 3 Regular Interest LT3H-1, and REMIC 3 Regular Interest LT3P-1
minus (ii) the aggregate of the Uncertificated Principal Balances of REMIC 3
Regular Interest LT3B-1, REMIC 3 Regular Interest LT3C-1, REMIC 3 Regular
Interest LT3D-1, REMIC 3 Regular Interest LT3E-1, REMIC 3 Regular Interest
LT3F-1, and REMIC 3 Regular Interest LT3G-1, in each case as of such date of
determination.
"REMIC 3 Overcollateralized Amount 2": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC 3 Regular Interest LT3A-2, REMIC 3 Regular Interest LT3B-2, REMIC 3
Regular Interest LT3C-2, REMIC 3 Regular Interest LT3D-2, REMIC 3 Regular
Interest LT3E-2, REMIC 3 Regular Interest LT3F-2, REMIC 3 Regular Interest
LT3G-2, REMIC 3 Regular Interest LT3H-2, and REMIC 3 Regular Interest LT3P-2
minus (ii) the aggregate of the Uncertificated Principal Balances of REMIC 3
Regular Interest LT3B-2, REMIC 3 Regular Interest LT3C-2, REMIC 3 Regular
Interest LT3D-2, REMIC 3 Regular Interest LT3E-2, REMIC 3 Regular Interest
LT3F-2 and REMIC 3 Regular Interest LT3G-2, in each case as of such date of
determination.
"REMIC 3 Principal Loss Allocation Amount 1": With respect to any
Distribution Date, an amount equal to the product of (i) the aggregate Principal
Balance of the Group I Mortgage Loans and related REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is 2 times the
aggregate of the Uncertificated Principal Balances of REMIC 3 Regular Interest
LT3B-1, REMIC 3 Regular Interest LT3C-1, REMIC 3 Regular Interest LT3D-1, REMIC
60
3 Regular Interest LT3E-1, REMIC 3 Regular Interest LT3F-1, and REMIC 3 Regular
Interest LT3G-1 and the denominator of which is the aggregate of the
Uncertificated Principal Balances of REMIC 3 Regular Interest LT3B-1, REMIC 3
Regular Interest LT3C-1, REMIC 3 Regular Interest LT3D-1, REMIC 3 Regular
Interest LT3E-1, REMIC 3 Regular Interest LT3F-1, REMIC 3 Regular Interest
LT3G-1 and REMIC 3 Regular Interest LT3H-1.
"REMIC 3 Principal Loss Allocation Amount 2": With respect to any
Distribution Date, an amount equal to the product of (i) the aggregate Principal
Balance of the Group II Mortgage Loans and related REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is 2 times the
aggregate of the Uncertificated Principal Balances of REMIC 3 Regular Interest
LT3B-2, REMIC 3 Regular Interest LT3C-2, REMIC 3 Regular Interest LT3D-2, REMIC
3 Regular Interest LT3E-2, REMIC 3 Regular Interest LT3F-2 and REMIC 3 Regular
Interest LT3G-2 and the denominator of which is the aggregate of the
Uncertificated Principal Balances of REMIC 3 Regular Interest LT3B-2, REMIC 3
Regular Interest LT3C-2, REMIC 3 Regular Interest LT3D-2, REMIC 3 Regular
Interest LT3E-2, REMIC 3 Regular Interest LT3F-2, REMIC 3 Regular Interest
LT3G-2 and REMIC 3 Regular Interest LT3H-2.
"REMIC 3 Regular Interest LT3A-1": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3A-1 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3A-2": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3A-2 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3B-1": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3B-1 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3B-2": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3B-2 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3C-1": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3C-1 shall accrue
interest at the related Uncertificated REMIC 3 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
61
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 3 Regular Interest LT3C-2": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3C-2 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3D-1": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3D-1 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3D-2": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3D-2 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3E-1": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3E-1 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3E-2": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3E-2 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3F-1": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3F-1 shall accrue
interest at the related Uncertificated REMIC 3 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.
62
"REMIC 3 Regular Interest LT3F-2": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3F-2 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3G-1": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3G-1 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3G-2": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3G-2 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3H-1": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3H-1 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3H-2": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3H-2 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3P-1": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3P-1 shall accrue
interest at the related Uncertificated REMIC 3 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 3 Regular Interest LT3P-2": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3P-2 shall accrue
interest at the related Uncertificated REMIC 3 Pass-Through Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
63
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 3 Regular Interest LT3S-1": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3S-1 shall accrue
interest as provided in this Agreement.
"REMIC 3 Regular Interest LT3S-2": One of the separate non-certificated
beneficial ownership interests in REMIC 3 issued hereunder and designated as a
Regular Interest in REMIC 3. REMIC 3 Regular Interest LT3S-2 shall accrue
interest as provided in this Agreement.
"REMIC 3 Regular Interests": REMIC 3 Group I Regular Interests and
REMIC 3 Group II Regular Interests.
"REMIC 4": The segregated pool of assets consisting of all of the REMIC
3 Regular Interests conveyed in trust to the Trustee, for the benefit of the
Holders of the Regular Certificates (other than the Class C Certificates and the
Class P Certificates), REMIC CX, as the holder of REMIC 4 Regular Interest
LT4-C, REMIC PX as holder of REMIC 4 Regular Interest LT4-P, and the Class R
Certificateholders, as holders of the Class R-4 Interest, pursuant to Article II
hereunder, and all amounts deposited therein, with respect to which a separate
REMIC election is to be made.
"REMIC 4 Regular Interest LT4-C": One of the separate non-certificated
beneficial ownership interests in REMIC 4 issued hereunder and designated as a
Regular Interest in REMIC 4. REMIC 4 Regular Interest LT4-C shall accrue
interest at the related Pass-Through Rate in effect from time to time on its
Notional Amount outstanding 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 4 Regular Interest LT4-P": One of the separate non-certificated
beneficial ownership interests in REMIC 4 issued hereunder and designated as a
Regular Interest in REMIC 4. REMIC 4 Regular Interest LT4-P shall be entitled to
any amounts distributed to REMIC 3 Regular Interest LT3P-1 and REMIC 3 Regular
Interest LT3P-2.
"REMIC 4 Regular Interests": REMIC 4 Regular Interest LT4-C and REMIC 4
Regular Interest LT4-P.
"REMIC CX": The segregated pool of assets consisting of REMIC 4 Regular
Interest LT4-C, conveyed in trust to the Trustee, for the benefit of the Holders
of the Class C Certificates and the Class R-CX Certificates, pursuant to Article
II hereunder, and all amounts deposited therein, with respect to which a
separate REMIC election is to be made.
64
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
"REMIC PX": The segregated pool of assets consisting of REMIC 4 Regular
Interest LT4-P, conveyed in trust to the Trustee, for the benefit of the Holders
of the Class P Certificates and the Class R-PX Certificates, pursuant to Article
II hereunder, and all amounts deposited therein, with respect to which a
separate REMIC election is to be made.
"REMIC Regular Interests": The REMIC 1 Regular Interests, the REMIC 2
Regular Interests, the REMIC 3 Regular Interests and the REMIC 4 Regular
Interests.
"Remittance Report": A report prepared by the Master Servicer and
delivered to the NIMS Insurer, the Guarantor and the Trustee pursuant to Section
4.04.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.
"REO Account": The account or accounts maintained by the Master
Servicer in respect of an REO Property pursuant to Section 3.23.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Mortgage Rate on the Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan if appropriate) as of the Close of Business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 9.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts (i) payable pursuant
to Section 3.23 in respect of the proper operation, management and maintenance
of such REO Property or (ii) payable or reimbursable to the Master Servicer
pursuant to Section 3.23 for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances and Advances in respect of
such REO Property or the related Mortgage Loan, over (b) the REO Imputed
Interest in respect of such REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Master Servicer on
behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.23.
65
"Request for Release": A release signed by a Servicing Representative,
in the form of Exhibit E-1 or E-2 attached hereto.
"Reserve Funds": The Net WAC Rate Carryover Reserve Fund and the Excess
Net WAC Rate Reserve Fund.
"Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
0.03125%) of the one-month United States dollar lending rates which banks in The
City of New York selected by the Trustee with the consent of the NIMS Insurer
are quoting on the relevant Interest Determination Date to the principal London
offices of leading banks in the London interbank market or (ii) in the event
that the Trustee can determine no such arithmetic mean, in the case of any
Interest Determination Date after the initial Interest Determination Date, the
lowest one-month United States dollar lending rate which such New York banks
selected by the Trustee with the consent of the NIMS Insurer are quoting on such
Interest Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a Xxxxxx Xxx eligible condominium project, (iv) a
manufactured home, or (v) a detached one-family dwelling in a planned unit
development, none of which is a co-operative or mobile home.
"Residual Certificates": The Class R Certificates, the Class R-CX
Certificates and the Class R-PX Certificates.
"Residual Interest": The sole class of "residual interests" in a REMIC
within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or trustees, the President, any vice president, any assistant vice president,
the Secretary, any assistant secretary, the Treasurer, any assistant treasurer,
the Cashier, any assistant cashier, any trust officer or assistant trust
officer, the Controller and any assistant controller or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and, with respect to a particular matter, to whom
such matter is referred because of such officer's knowledge of and familiarity
with the particular subject.
"S1 Percentage": For any Distribution Date, the percentage set forth in
the following schedule:
66
Distribution Date Percentage
------------------------------------ ----------
December 2002............................. 4.23938%
January 2003.............................. 4.23585
February 2003............................. 4.23585
March 2003................................ 4.23231
April 2003................................ 3.98813
May 2003.................................. 4.25000
June 2003................................. 3.99299
July 2003................................. 4.25000
August 2003............................... 3.78812
September 2003............................ 3.68383
October 2003.............................. 3.91849
November 2003............................. 3.48269
December 2003............................. 4.25000
January 2004.............................. 3.77113
February 2004............................. 3.65996
March 2004................................ 4.25000
April 2004................................ 3.46169
May 2004.................................. 4.25000
June 2004................................. 3.75639
July 2004................................. 4.25000
August 2004............................... 3.74754
September 2004............................ 3.63762
October 2004.............................. 4.16029
November 2004............................. 3.67249
December 2004............................. 3.91920
January 2005.............................. 3.45383
February 2005............................. 3.35290
March 2005................................ 4.25000
April 2005................................ 3.74835
May 2005.................................. 3.70000
"S2 Percentage": For any Distribution Date, the percentage set forth in
the following schedule:
67
Distribution Date Percentage
------------------------------------------ ----------
December 2002............................. 4.19239%
January 2003.............................. 4.19880
February 2003............................. 4.19880
March 2003................................ 4.20520
April 2003................................ 3.93637
May 2003.................................. 4.25000
June 2003................................. 3.95223
July 2003................................. 4.25000
August 2003............................... 3.72890
September 2003............................ 3.61385
October 2003.............................. 4.25000
November 2003............................. 3.71690
December 2003............................. 3.99085
January 2004.............................. 3.71182
February 2004............................. 3.59311
March 2004................................ 4.25000
April 2004................................ 3.94243
May 2004.................................. 4.25000
June 2004................................. 3.68147
July 2004................................. 3.97039
August 2004............................... 3.94949
September 2004............................ 3.80997
October 2004.............................. 4.12121
November 2004............................. 3.53093
December 2004............................. 3.84217
January 2005.............................. 3.27336
February 2005............................. 3.15530
March 2005................................ 4.25000
April 2005................................ 3.89226
May 2005.................................. 4.25000
"S&P": Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc., or its successor in interest.
"Seller": Long Beach Mortgage Company, a Delaware corporation, or its
successor in interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
68
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and expenses)
incurred by the Master Servicer in the performance of its servicing obligations
in connection with a default, delinquencies or other unanticipated event or
where reimbursement is otherwise permitted in accordance with any of the terms
of this Agreement, including, but not limited to, the cost of (i) the
preservation, restoration, inspection and protection of the Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Sections 3.01, 3.09, 3.16, and 3.23.
"Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. A
portion of such Servicing Fee may be retained by any Sub-Servicer as its
servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Representative": Any officer or employee of the Master
Servicer involved in, or responsible for, the administration and servicing of
Mortgage Loans, whose name and specimen signature appear on a list of servicing
representatives furnished by the Master Servicer to the Trustee and the
Depositor on the Closing Date, as such list may from time to time be amended.
"Special Servicer": As defined in Section 3.13 hereof.
"Specially Serviced Mortgage Loan": A Mortgage Loan that (i) has been
delinquent in payment with respect to three or more monthly payments (provided,
however, that the third such payment shall not be deemed to be delinquent for
purposes of this clause (i) until the close of business on the last day of the
month in which such payment first became due), and (ii) has been transferred to
the Special Servicer in accordance with Section 3.13.
"Startup Day": As defined in Section 10.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a) as
of any date of determination up to but not including the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, the related Cut-off Date Principal Balance, as shown
in the Mortgage Loan Schedule, minus the sum of (i) the principal portion of
each Monthly Payment due on a Due Date subsequent to the Cut-off Date, to the
extent received from the Mortgagor or advanced by the Master Servicer and
distributed pursuant to Section 4.01 on or before such date of determination,
(ii) all Principal Prepayments received after the Cut-off Date, to the extent
distributed pursuant to Section 4.01 on or before such date of determination,
(iii) all Liquidation Proceeds and Insurance Proceeds to the extent distributed
pursuant to Section 4.01 on or before such date of determination, and (iv) any
69
Realized Loss incurred with respect thereto as a result of a Deficient Valuation
made during or prior to the Due Period for the most recent Distribution Date
coinciding with or preceding such date of determination; and (b) as of any date
of determination coinciding with or subsequent to the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, zero. With respect to any REO Property: (a) as of any date
of determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of the Trust Fund, minus the aggregate amount of REO
Principal Amortization in respect of such REO Property for all previously ended
calendar months, to the extent distributed pursuant to Section 4.01 on or before
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Stayed Funds": If the Master Servicer is the subject of a proceeding
under the federal Bankruptcy Code and the making of a Remittance (as defined in
Section 7.02(b)) is prohibited by Section 362 of the federal Bankruptcy Code,
funds that are in the custody of the Master Servicer, a trustee in bankruptcy or
a federal bankruptcy court and should have been the subject of such Remittance
absent such prohibition.
"Stepdown Date": The earlier of (a) the later of (i) the Distribution
Date in December 2005 and (ii) the first Distribution Date on which the Credit
Enhancement Percentage (calculated for this purpose only after taking into
account payments of principal on the Mortgage Loans due on the related Due Date
or received during the related Prepayment Period but prior to distribution of
the Group I Principal Distribution Amount and the Group II Principal
Distribution Amount in respect of the Certificates then entitled to
distributions of principal on such Distribution Date) is greater than or equal
to 39.30% and (b) the date on which the aggregate Certificate Principal Balance
of the Class A Certificates has been reduced to zero.
"Sub-Servicer": Any Person with which the Master Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
"Sub-Servicing Account": An account or accounts established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the applicable Master Servicer.
"Sub-Servicing Agreement": The written contract between the Master
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.
"Substitution Adjustment": An amount equal to the excess of the
Principal Balance of the related Deleted Mortgage Loan over the Principal
Balance of such Qualified Substitute Mortgage Loan that the Seller is required
to deposit in the Collection Account on or prior to the next succeeding
Determination Date in connection with a substitution of a Qualified Substitute
Mortgage Loan.
70
"Substitution Shortfall Amounts": As defined in Section 2.03(d) hereof.
"Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holder of the REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed by the Trustee on behalf of each REMIC, together with any and
all other information reports or returns that may be required to be furnished to
the Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
"Telerate Page 3750": The display designated as page "3750" on the Dow
Xxxxx Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Price": As defined in Section 9.01(a) hereof.
"Terminator": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
"Trigger Event": A Trigger Event has occurred with respect to a
Distribution Date if either a Cumulative Loss Trigger Event or a Delinquency
Trigger Event has occurred with respect to such Distribution Date.
"Trust": Long Beach Mortgage Loan Trust 2002-5, the trust created
hereunder.
"Trust Fund": All of the assets of the Trust, which is the trust
created hereunder consisting of REMIC 1, REMIC 2, REMIC 3, REMIC 4, REMIC CX,
REMIC PX, the Excess Net WAC Rate Reserve Fund, the Net WAC Rate Carryover
Reserve Fund and any Master Servicer Prepayment Charge Payment Amounts and the
Trust's rights under the Cap Agreements.
"Trust REMIC": Any of REMIC 1, REMIC 2, REMIC 3, REMIC 4, REMIC CX
and/or REMIC PX.
"Trustee": Deutsche Bank National Trust Company, a national banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.
"Trustee Fee": With respect to each Distribution Date, one-twelfth 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 (prior to giving
71
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period).
"Trustee Fee Rate": 0.0020% 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 of such REMIC Regular Interest. In
each case, Uncertificated Accrued Interest will be reduced by any Net Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls allocated to such REMIC
Regular Interests pursuant to Section 1.03.
"Uncertificated Notional Amount":
(a) With respect to REMIC 3 Regular Interest LT3S1 and any Distribution
Date, the sum of the Uncertificated Principal Balances of the REMIC 2 S1
Interests for such Distribution Date; and
(b) With respect to REMIC 3 Regular Interest LT3S2 and any Distribution
Date, the sum of the Uncertificated Principal Balances of the REMIC 2 S2
Interests for such Distribution Date.
"Uncertificated Pass-Through Rate": The Uncertificated REMIC 1
Pass-Through Rate, the Uncertificated REMIC 2 Pass-Through Rate, or the
Uncertificated REMIC 3 Pass-Through Rate.
"Uncertificated Principal Balance": With respect to each REMIC Regular
Interest (other than the Notional Regular Interests), 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 the Notional Regular Interests) 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 4.05 and, if and to the extent necessary and appropriate, shall be
further reduced on such Distribution Date by Realized Losses as provided in
Section 4.06, and the Uncertificated Principal Balances of REMIC 3 Regular
Interest LT3H-1 and REMIC 3 Regular Interest LT3H-2 shall be increased by
interest deferrals as provided in Section 4.05. The Uncertificated Principal
Balance of each REMIC Regular Interest that has an Uncertificated Principal
Balance shall never be less than zero. Notwithstanding the foregoing, the
Uncertificated Principal Balance of (i) REMIC 4 Regular Interest LT4-C shall
always be equal to the excess, if any, of (A) the then aggregate Uncertificated
Principal Balances of the REMIC 3 Regular Interests over (B) the sum of the
Certificate Principal Balance of the Class A Certificates, the Mezzanine
Certificates and the Uncertificated Principal Balance of REMIC 4 Regular
Interest LT4-P.
72
"Uncertificated REMIC 1 Pass-Through Rate": With respect to REMIC 1
Regular Interest LT1A-A, REMIC Regular Interest LT1A-P and the REMIC 1 S1
Interests and any Distribution Date, a per annum rate equal to the weighted
average of the Adjusted Net Mortgage Rates (less the Adjusted 30/360 Guaranty
Fee Rate) of those Group I Mortgage Loans that have Adjusted Net Minimum
Mortgage Rates of 4.25% or greater, weighted on the basis of the Stated
Principal Balances of such Group I Mortgage Loans as of the Due Date in the
month preceding the month of such Distribution Date. With respect to REMIC 1
Regular Interest LT1A-B and any Distribution Date, a per annum rate equal to the
weighted average of the Adjusted Net Mortgage Rates (less the Adjusted 30/360
Guaranty Fee Rate) of those Group I Mortgage Loans that have Adjusted Net
Minimum Mortgage Rates of less than 4.25%, weighted on the basis of the sum of
the Stated Principal Balances of such Group I Mortgage Loans as of the Due Date
preceding the month of such Distribution Date. With respect to REMIC 1 Regular
Interest LT1B-A, REMIC Regular Interest LT1B-P and the REMIC 1 S2 Interests and
any Distribution Date, a per annum rate equal to the weighted average of the
Adjusted Net Mortgage Rates of those Group II Mortgage Loans that have Adjusted
Net Minimum Mortgage Rates of 4.25% or greater, weighted on the basis of the
Stated Principal Balances of such Group II Mortgage Loans as of the Due Date in
the month preceding the month of such Distribution Date. With respect to REMIC 1
Regular Interest LT1B-B and any Distribution Date, a per annum rate equal to the
weighted average of the Adjusted Net Mortgage Rates of those Group II Mortgage
Loans that have Adjusted Net Minimum Mortgage Rates of less than 4.25%, weighted
on the basis of the Stated Principal Balances of such Group II Mortgage Loans as
of the Due Date in the month preceding the month of such Distribution Date.
"Uncertificated REMIC 2 Pass-Through Rate":
(a) With respect to REMIC 2 Regular Interest LT2A-A and REMIC 2 Regular
Interest LT2A-P and any Distribution Date, a per annum rate equal to the
weighted average of (x) the Uncertificated REMIC 1 Pass-Through Rates with
respect to REMIC 1 Regular Interest LT1A-A and REMIC 1 Regular Interest LT1A-P
for such Distribution Date, and (y) the excess, if any, of the Uncertificated
REMIC 1 Pass-Through Rate for each REMIC 1 S1 Interest over (ii) (A) for any
Distribution Date starting with the first Distribution Date and ending with the
Rate Change Date for such interest, the S1 Percentage for such Distribution
Date, and (B) for any Distribution Date after the Rate Change Date for such
REMIC 1 S1 Interest, 0.00%, weighted on the basis of the Uncertificated
Principal Balances of the respective REMIC 1 Regular Interests;
(b) With respect to REMIC 2 Regular Interest LT2A-B and any
Distribution Date, a per annum rate equal to the Uncertificated Pass-Through
Rate on REMIC 1 Regular Interest LT1A-B;
(c) With respect to REMIC 2 Regular Interest LT2B-A and REMIC 2 Regular
Interest LT2B-P and any Distribution Date, a per annum rate equal to the
weighted average of (x) the Uncertificated REMIC 1 Pass-Through Rates with
respect to REMIC 1 Regular Interest LT1B-A and REMIC 1 Regular Interest LT1A-P
for such Distribution Date, and (y) the excess, if any, of the Uncertificated
REMIC 1 Pass-Through Rate for each REMIC 1 S2 Interest over (ii) (A) for any
Distribution Date starting with the first Distribution Date and ending with the
73
Rate Change Date for such interest, the S2 Percentage for such Distribution
Date, and (B) for any Distribution Date after the Rate Change Date for such
REMIC 1 S2 Interest, 0.00%, weighted on the basis of the Uncertificated
Principal Balances of the respective REMIC 1 Regular Interests;
(d) With respect to REMIC 2 Regular Interest LT2B-B and any
Distribution Date, a per annum rate equal to the Uncertificated Pass-Through
Rate on REMIC 1 Regular Interest LT1B-B;
(e) With respect to each REMIC 2 S1 Interest and (i) any
Distribution Date starting with the first Distribution Date and ending with the
Rate Change Date for such REMIC 2 S1 Interest, the S1 Percentage for such
Distribution Date, and (ii) any Distribution Date after the Rate Change Date for
such REMIC 2 Regular Interest, 0.00% per annum; and
(f) With respect to each REMIC 2 S2 Interest and (i) any Distribution
Date starting with the first Distribution Date and ending with the Rate Change
Date for such REMIC 2 S2 Interest, the S2 Percentage for such Distribution Date,
and (ii) any Distribution Date after the Rate Change Date for such REMIC 2
Regular Interest, 0.00% per annum.
"Uncertificated REMIC 3 Pass-Through Rate":
(a) With respect to REMIC 3 Regular Interest LT3A-1, REMIC 3 Regular
Interest LT3B-1, REMIC 3 Regular Interest LT3C-1, REMIC 3 Regular Interest
LT3D-1, REMIC 3 Regular Interest LT3E-1, REMIC 3 Regular Interest LT3F-1, REMIC
3 Regular Interest LT3G-1, REMIC 3 Regular Interest LT3H-1 and REMIC 3 Regular
Interest LT3P-1 and any Distribution Date, a per annum rate equal to the
weighted average of the Uncertificated REMIC 2 Pass-Through Rates with respect
to REMIC 2 Regular Interest LT2A-A, REMIC 2 Regular Interest LT2A-B, and REMIC 2
Regular Interest LT2A-P for such Distribution Date, weighted on the basis of the
Uncertificated Principal Balances of the respective REMIC 2 Regular Interests;
multiplied by a fraction, the numerator of which is 30 and the denominator of
which is the actual number of days in the related Accrual Period;
(b) With respect to REMIC 3 Regular Interest LT3A-2, REMIC 3 Regular
Interest LT3B-2, REMIC 3 Regular Interest LT3C-2, REMIC 3 Regular Interest
LT3D-2, REMIC 3 Regular Interest LT3E-2, REMIC 3 Regular Interest LT3F-2, REMIC
3 Regular Interest LT3G-2, REMIC 3 Regular Interest LT3H-2, and REMIC 3 Regular
Interest LT3P-2 and any Distribution Date, a per annum rate equal to the
weighted average of the Uncertificated REMIC 2 Pass-Through Rates with respect
to REMIC 2 Regular Interest LT2B-A, REMIC 2 Regular Interest LT2B-B and REMIC 2
Regular Interest LT2B-P for such Distribution Date, weighted on the basis of the
Uncertificated Principal Balances of the respective REMIC 2 Regular Interests;
multiplied by a fraction, the numerator of which is 30 and the denominator of
which is the actual number of days in the related Accrual Period;
(c) With respect to REMIC 3 Regular Interest LT3S1, the S1 Percentage
per annum for each Distribution Date starting with the Distribution Date in
December 2002 and ending with the Distribution Date in May 2005, and 0.00% per
annum for each Distribution Date thereafter. For federal income tax purposes,
each REMIC 3 Regular Interest LT3S1 will be entitled to 100% of the interest on
the REMIC 2 S1 Interest; and
74
(d) With respect to REMIC 3 Regular Interest LT3S-2, the S2 Percentage
per annum for each Distribution Date starting with the Distribution Date in
December 2002 and ending with the Distribution Date in May 2005, and 0.00% per
annum for each Distribution Date thereafter. For federal income tax purposes,
REMIC 3 Regular Interest LT3S-2 will be entitled to 100% of the interest paid on
the REMIC 2 S2 Interests.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.14.
"United States Person" or "U.S. Person": (i) A citizen or resident of
the United States; (ii) a corporation, partnership or other entity classified as
a corporation or partnership for tax purposes created or organized in, or under
the laws of, the United States or any political subdivision thereof (except, in
the case of a partnership or entity treated as a partnership, to the extent
provided in regulations) provided that, solely for purposes of the restrictions
on the transfer of the Residual Certificates, no partnership or other entity
treated as a partnership shall be treated as a United States Person unless all
persons that own an interest in such partnership or other entity, either
directly or through any entity that is not a corporation for United States
federal income tax purposes, are required by the applicable operative agreement
to be United States Persons; (iii) an estate the income of which is subject to
United States federal income taxation regardless of its source, or (iv) 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 the
authority to control all substantial decisions of the trust or if the trust was
in existence on August 20, 1996, was treated as a United States Person on August
19, 1996, and made a valid election to continue to be treated as a United States
Person. The term "United States" shall have the meaning set forth in Section
7701 of the Code or successor provisions.
"Unpaid Interest Shortfall Amount": With respect to the Class A
Certificates, the Class S Certificates and the Mezzanine Certificates and (i)
the first Distribution Date, zero, and (ii) any Distribution Date after the
first Distribution Date, the amount, if any, by which (a) the sum of (1) the
Monthly Interest Distributable Amount for such Class of Certificates for the
immediately preceding Distribution Date and (2) the outstanding Unpaid Interest
Shortfall Amount, if any, for such Class of Certificates for such preceding
Distribution Date exceeds (b) the aggregate amount distributed on such Class of
Certificates in respect of interest pursuant to clause (a) of this definition on
such preceding Distribution Date, plus interest on the amount of interest due
but not paid on such Class of Certificates on such preceding Distribution Date,
to the extent permitted by law, at the Pass-Through Rate for such Class of
Certificates for the related Accrual Period.
"Value": With respect to any Mortgaged Property, the lesser of (i) the
value thereof as determined by an appraisal made for the originator of the
Mortgage Loan at the time of origination of the Mortgage Loan by an appraiser
who met the minimum requirements of Xxxxxx Xxx, and (ii) the purchase price paid
for the related Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan, provided, however, in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the value determined
by an appraisal made for the originator of such Refinanced Mortgage Loan at the
time of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of Xxxxxx Mae.
75
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates shall have
97% of the Voting Rights (allocated among the Holders of the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates in
proportion to the then outstanding Certificate Principal Balances of their
respective Certificates), the Class S Certificates shall have 1% of the Voting
Rights, the Class P Certificates shall have 1% of the Voting Rights and the
Class R Certificates shall have 1% of the Voting Rights, provided that, if and
for so long as the Class C Certificates and the Class P Certificates are held by
one or more foreign entities and serve as collateral for the NIM Notes, the
total combined voting power of such Classes of Certificates shall not exceed
9.9%. The Voting Rights allocated to any Class of Certificates (other than the
Class P Certificates and the Class R Certificates) shall be allocated among all
Holders of each such Class in proportion to the outstanding Certificate
Principal Balance or Notional Amount of such Certificates and the Voting Rights
allocated to the Class P Certificates and the Class R Certificates shall be
allocated among all Holders of each such Class in proportion to such Holders'
respective Percentage Interest; provided, however, that when none of the Regular
Certificates are outstanding, 100% of the Voting Rights shall be allocated among
Holders of the Class R Certificates in accordance with such Holders' respective
Percentage Interests in the Certificates of such Class. Notwithstanding any of
the foregoing, unless the Guarantor defaults on its obligations under the
Guaranty, on any date on which any Guaranteed Certificates are outstanding or
any amounts are owed the Guarantor under this Agreement, all of the Voting
Rights allocated to the Guaranteed Certificates shall be vested in the
Guarantor.
"Washington Mutual Custodian": None of the Mortgage Loans are held by
the Washington Mutual Custodian as custodian. References to the Washington
Mutual Custodian are left in this Agreement for administrative convenience and
shall be completely disregarded. There is no Washington Mutual Custodian under
this Agreement and no Person shall have any rights of the Washington Mutual
Custodian under this Agreement.
"Washington Mutual Mortgage Loans": The Mortgage Loans acquired by the
Seller from Washington Mutual Bank, Washington Mutual Bank, FA, Washington
Mutual Bank fsb, or from any of their subsidiaries.
Section 1.02 Accounting.
Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account, such definition or calculation and any
related definitions or calculations shall be determined without duplication of
such functions.
Section 1.03 Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class A Certificates, the Class S Certificates, the
Mezzanine Certificates and REMIC 4 Regular Interest LT4-C for any Distribution
Date, the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first to REMIC 4 Regular Interest LT4-C to
76
the extent of one month's interest at the then applicable Pass-Through Rate on
the Notional Amount of such Regular Interest and, then, among the Class A
Certificates, the Class S Certificates and the Mezzanine Certificates on a pro
rata basis based on, and to the extent of, interest for the related Accrual
Period at the then applicable respective Pass-Through Rate on the respective
Certificate Principal Balance or Notional Amount of each such Certificate.
For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class C Certificates for any Distribution Date, the
aggregate amount of any Net Prepayment Interest Shortfalls and any Relief Act
Interest Shortfalls allocated to REMIC 4 Regular Interest LT4-C pursuant to the
paragraphs above shall be allocated among the Class C Certificates on a pro rata
basis based on one month's interest.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC 1 Group I Regular Interests for any Distribution Date,
the aggregate amount of any Net Prepayment Interest Shortfalls and any Relief
Act Interest Shortfalls incurred for any Distribution Date (i) in respect of
those Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates of less
than 4.25% shall be allocated to REMIC 1 Regular Interest LT1A-B and (ii) in
respect of those Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates
of 4.25% or greater shall be allocated first to REMIC 1 Regular Interest LT1A-A,
and then to each of the REMIC 1 S1 Interests in descending numerical order, in
each case to the extent of interest for the related Accrual Period at the then
applicable respective Uncertificated REMIC 1 Pass-Through Rate on the respective
Uncertificated Principal Balance of each such REMIC 1 Regular Interest.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC 1 Group II Regular Interests for any Distribution Date,
the aggregate amount of any Net Prepayment Interest Shortfalls and any Relief
Act Interest Shortfalls incurred for any Distribution Date (i) in respect of
those Group II Mortgage Loans with Adjusted Net Minimum Mortgage Rates of less
than 4.25% shall be allocated to REMIC 1 Regular Interest LT1B-B, (ii) in
respect of those Group II Mortgage Loans with Adjusted Net Minimum Mortgage
Rates of 4.25% or greater shall be allocated first to REMIC 1 Regular Interest
LT1B-A and then to each REMIC 1 S2 Interest in descending numerical order, in
each case to the extent of interest for the related Accrual Period at the then
applicable respective Uncertificated REMIC 1 Pass-Through Rate on the respective
Uncertificated Principal Balance of each such REMIC 1 Regular Interest.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC 2 Regular Interests for any Distribution Date, the
aggregate amount of any Net Prepayment Interest Shortfalls and any Relief Act
Interest Shortfalls incurred for any Distribution Date (i) in respect of those
Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates of less than
4.25% shall be allocated to REMIC 2 Regular Interest LT2A-B and (ii) in respect
of those Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates of
4.25% or greater shall be allocated first to REMIC 2 Regular Interest LT2A-A,
and then to each of the REMIC 2 S1 Interests in descending numerical order, in
each case to the extent of interest for the related Accrual Period at the then
applicable respective Uncertificated REMIC 2 Pass-Through Rate on the respective
Uncertificated Principal Balance of each such REMIC 2 Regular Interest.
77
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC 2 Regular Interests for any Distribution Date, the
aggregate amount of any Net Prepayment Interest Shortfalls and any Relief Act
Interest Shortfalls incurred for any Distribution Date (i) in respect of those
Group II Mortgage Loans with Adjusted Net Minimum Mortgage Rates of less than
4.25% shall be allocated to REMIC 2 Regular Interest LT2B-B and (ii) in respect
of those Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates of
4.25% or greater shall be allocated first to REMIC 2 Regular Interest LT2B-A,
and then to each of the REMIC 2 S2 Interests in descending numerical order, in
each case to the extent of interest for the related Accrual Period at the then
applicable respective Uncertificated REMIC 2 Pass-Through Rate on the respective
Uncertificated Principal Balance of each such REMIC 2 Regular Interest.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC 3 Group I Regular Interests for any Distribution Date,
the aggregate amount of any Net Prepayment Interest Shortfalls and any Relief
Act Interest Shortfalls incurred in respect of the Group I Mortgage Loans shall
be allocated first, pro rata to REMIC 3 Regular Interest LT3A-1 and REMIC 3
Regular Interest LT3H-1, up to an aggregate amount equal to the REMIC 3 Group I
Interest Loss Allocation Amount, with allocations between REMIC 3 Regular
Interest LT3A-1 and REMIC 3 Regular Interest LT3H-1 being made 98% and 2%,
respectively. Then, Net Prepayment Interest Shortfalls and any Relief Act
Interest Shortfalls incurred in respect of the Group I Mortgage Loans for any
Distribution Date shall be allocated pro rata among REMIC 3 Regular Interest
LT3A-1, REMIC 3 Regular Interest LT3B-1, REMIC 3 Regular Interest LT3C-1, REMIC
3 Regular Interest LT3D-1, REMIC 3 Regular Interest LT3E-1, REMIC 3 Regular
Interest LT3F-1, REMIC 3 Regular Interest LT3G-1, REMIC 3 Regular Interest
LT3H-1 and REMIC 3 Regular Interest LT3S-1.
For purposes of calculating the amount of Uncertificated Accrued
Interest for the REMIC 3 Group II Regular Interests for any Distribution Date,
the aggregate amount of any Net Prepayment Interest Shortfalls and any Relief
Act Interest Shortfalls incurred in respect of the Group II Mortgage Loans for
any Distribution Date shall be allocated first, pro rata to REMIC 3 Regular
Interest LT3A-2 and REMIC 3 Regular Interest LT3H-2, up to an aggregate amount
equal to the REMIC 3 Group II Interest Loss Allocation Amount, with allocations
between REMIC 3 Regular Interest LT3A-2 and REMIC 3 Regular Interest LT3H-2
being made 98% and 2%, respectively. Then, Net Prepayment Interest Shortfalls
and any Relief Act Interest Shortfalls incurred in respect of the Group II
Mortgage Loans for any Distribution Date shall be allocated pro rata among REMIC
3 Regular Interest LT3A-2, REMIC 3 Regular Interest LT3B-2, REMIC 3 Regular
Interest LT3C-2, REMIC 3 Regular Interest LT3D-2, REMIC 3 Regular Interest
LT3E-2, REMIC 3 Regular Interest LT3F-2, REMIC 3 Regular Interest LT3G-2, REMIC
3 Regular Interest LT3H-2 and REMIC 3 Regular Interest LT3S-2.
For purposes of the preceding paragraphs, pro rata allocations shall be
based on interest for the related Accrual Period at the then applicable
respective Uncertificated REMIC 3 Pass-Through Rate, Uncertificated REMIC 2
Pass-Through Rate, or Uncertificated REMIC 1 Pass-Through Rate on the respective
Uncertificated Principal Balance or Uncertificated Notional Amount of each such
REMIC 3 Regular Interest, REMIC 2 Regular Interest or REMIC 1 Regular Interest.
78
Section 1.04 Rights of the NIMS Insurer and the Guarantor.
(a) Each of the rights of the NIMS Insurer set forth in this Agreement
shall exist so long as the Insured NIM Notes remain outstanding; provided,
however, the NIMS Insurer shall not have any rights hereunder (except as
provided in Section 9.01) so long as any NIMS Insurer Default is continuing.
(b) If and when (i) no Insured NIM Notes remain outstanding, (ii) any
Guaranteed Certificates remain outstanding and (iii) no default under the
Guaranty shall have occurred and be continuing, the Guarantor shall be entitled
to exercise the rights of the NIMS Insurer set forth in this Agreement.
(c) Notwithstanding anything to the contrary anywhere in this
Agreement, all rights of the Guarantor hereunder, except any rights to
indemnification, shall permanently terminate upon the later to occur of (A) such
time as the Guaranteed Certificates shall no longer be outstanding and (B) the
payment in full to the Guarantor of any amounts owed to the Guarantor in respect
of its guarantee of payment on the Guaranteed Certificates; provided that the
Guarantor shall not have any rights hereunder, except indemnification rights, so
long as any default has occurred and is continuing under the Guaranty.
(d) Notwithstanding anything to the contrary anywhere in this
Agreement, all rights and benefits of the NIMS Insurer hereunder shall
permanently terminate upon such time as the Insured NIM Notes shall no longer be
outstanding.
(e) The rights of the NIMS Insurer or the Guarantor referenced in
Sections 3.02(a), 3.03, 6.04, 7.01, 7.02(a), 7.04, 8.07 and 8.10 of this
Agreement shall be applied as follows:
(i) In the event that the Class M-1 Certificates are rated at least
"AA" (in the case of Fitch and/or S&P) or "Aa2" (in the case of Xxxxx'x), the
XXXX Insurer shall have the right to act, after consultation with the Guarantor;
(ii) In the event that (x) the rating of the Class M-1 Certificates is
reduced by two of the three Rating Agencies to less than "AA" or "Aa2" and (y)
the aggregate Certificate Principal Balance of the Class M-4 Certificates is
greater than zero or the Overcollateralized Amount is greater than zero, the
NIMS Insurer and the Guarantor each shall have the right to act, upon the
receipt of the reasonable consent of the other; and
(iii) In the event that (x) the rating of the Class M-1 Certificates is
reduced by two of the three Rating Agencies to less than "AA" or "Aa2" and (y)
each of the aggregate Certificate Principal Balance of the Class M-4
Certificates and the Overcollateralized Amount is equal to zero, the Guarantor
shall have the sole right to act.
The NIMS Insurer and the Guarantor shall promptly consult each other
with regard to the rights referred to in this sub-section. If this consultation
would create a delay that would have a material adverse effect on this
transaction, each party may act individually with respect to their rights and
consult with the other party after such action has been taken. Any consents
required between the NIMS Insurer and the Guarantor shall not be unreasonably
withheld or delayed.
79
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse for the benefit of the Certificateholders all the right, title
and interest of the Depositor, including any security interest therein for the
benefit of the Depositor, in and to the Mortgage Loans identified on the
Mortgage Loan Schedule, the rights of the Depositor under the Mortgage Loan
Purchase Agreement (other than the Depositor's rights under Section 17 thereof)
and all other assets included or to be included in REMIC 1. Such assignment
includes all scheduled payments on the Mortgage Loans due after the Cut-off Date
and all unscheduled collections in respect of the Mortgage Loans received after
October 1, 2002 (other than the portion of such collections due on or prior to
the Cut-off Date). The Depositor herewith delivers to the Trustee an executed
copy of the Mortgage Loan Purchase Agreement and the PMI Policy.
If the assignment and transfer of the Mortgage Loans and the other
property specified in Section 2.01 from the Depositor to the Trustee pursuant to
this Agreement is held or deemed not to be a sale or is held or deemed to be a
pledge of security for a loan, the Depositor intends that the rights and
obligations of the parties shall be established pursuant to the terms of this
Agreement and that, in such event, (i) the Depositor shall be deemed to have
granted and does hereby grant to the Trustee as of the Closing Date a perfected,
first priority security interest in the entire right, title and interest of the
Depositor in and to the Mortgage Loans and all other property conveyed to the
Trust Fund pursuant to this Section 2.01 and all proceeds thereof and (ii) this
Agreement shall constitute a security agreement under applicable law.
In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, the Trustee as custodian (in which capacity
it will, unless otherwise specified, be acting under this Article II) the
following documents or instruments with respect to each Mortgage Loan so
transferred and assigned (with respect to each Mortgage Loan, a "Mortgage
File"):
(a) the original Mortgage Note, endorsed in blank or in the following
form: "Pay to the order of Deutsche Bank National Trust Company, as Trustee
under the applicable agreement, without recourse," with all prior and
intervening endorsements showing a complete chain of endorsement from the
originator to the Person so endorsing to the Trustee or (in the case of not more
than 1.00% of the Mortgage Loans, by aggregate principal balance as of the
Cut-off Date) a copy of such original Mortgage Note with an accompanying Lost
Note Affidavit executed by the Seller;
(b) the original Mortgage with evidence of recording thereon, and a
copy, certified by the appropriate recording office, of the recorded power of
attorney, if the Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon;
80
(c) an original Assignment in blank;
(d) the original recorded Assignment or Assignments showing a complete
chain of assignment from the originator to the Person assigning the Mortgage to
the Trustee or in blank;
(e) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(f) the original lender's title insurance policy, together with all
endorsements or riders issued with or subsequent to the issuance of such policy
(or a copy of the above, in the case of the Washington Mutual Mortgage Loans),
insuring the priority of the Mortgage as a first lien or second lien on the
Mortgaged Property represented therein as a fee interest vested in the
Mortgagor, or in the event such title policy is unavailable, a written
commitment or uniform binder or preliminary report of title issued by the title
insurance or escrow company.
The Master Servicer, in its capacity as Seller, shall promptly (and in
no event later than thirty (30) Business Days, subject to extension upon a
mutual agreement between the Master Servicer and the Trustee), following the
later of the Closing Date and the date of receipt by the Master Servicer of the
recording information for a Mortgage submit or cause to be submitted for
recording, at no expense to the Trust Fund, the Trustee or the Depositor, in the
appropriate public office for real property records, each Assignment referred to
in Sections 2.01(c) and (d) above and shall execute each original Assignment
referred to in clause (c) above in the following form: "Deutsche Bank National
Trust Company, as Trustee under applicable agreement, without recourse." In the
event that any such Assignment is lost or returned unrecorded because of a
defect therein, the Master Servicer, in its capacity as Seller, shall promptly
prepare or cause to be prepared a substitute Assignment or cure or cause to be
cured such defect, as the case may be, and thereafter cause each such Assignment
to be duly recorded. Notwithstanding the foregoing, the Assignments shall not be
required to be completed and submitted for recording with respect to any
Mortgage Loan if each Rating Agency does not require recordation in order for
such Rating Agency to assign the initial ratings to the Class A-2 Certificates,
the Class S-2 Certificates, the Mezzanine Certificates and the NIM Notes;
provided, however, each Assignment shall be submitted for recording by the
Master Servicer, in its capacity as Seller, in the manner described above, at no
expense to the Trust Fund or the Trustee, upon the earliest to occur of: (i)
reasonable direction by Holders of Certificates entitled to at least 25% of the
Voting Rights, (ii) the occurrence of a Master Servicer Event of Default, (iii)
the occurrence of a bankruptcy, insolvency or foreclosure relating to the
Seller, (iv) the occurrence of a servicing transfer as described in Section 7.02
hereof and (v) if the Seller is not the Master Servicer and with respect to any
one Assignment, the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Mortgagor under the related Mortgage. Notwithstanding the
foregoing, if the Master Servicer is unable to pay the cost of recording the
Assignments, such expense shall be paid by the Trustee and shall be reimbursable
to the Trustee as an Extraordinary Trust Fund Expense.
If any of the documents referred to in Sections 2.01(b), (c), (d) or
(e) above (collectively, the "Recording Documents") has as of the Closing Date
been submitted for recording but either (x) has not been returned from the
81
applicable public recording office or (y) has been lost or such public recording
office has retained the original of such document, the obligations of the Master
Servicer, in its capacity as the Seller, to deliver such Recording Documents
shall be deemed to be satisfied upon (1) delivery to the Trustee or the
applicable Custodian of a copy of each such Recording Document certified by the
Seller in the case of (x) above or the applicable public recording office in the
case of (y) above to be a true and complete copy of the original that was
submitted for recording and (2) if such copy is certified by the Seller,
delivery to the Trustee or the applicable Custodian promptly upon receipt
thereof, and in any event no later than one year after the Closing Date, of
either the original or a copy of such Recording Document certified by the
applicable public recording office to be a true and complete copy of the
original. In instances where, due to a delay on the part of the recording office
where any such Recording Documents have been delivered for recordation, the
Recording Documents cannot be delivered to the Trustee or the applicable
Custodian within one year after the Closing Date, the Master Servicer, in its
capacity as the Seller, shall deliver to the Trustee or the applicable Custodian
within such time period an Officer's Certificate stating the date by which the
Master Servicer, in its capacity as the Seller, expects to receive such
Recording Documents from the applicable recording office. In the event that
Recording Documents have still not been received by the Master Servicer, in its
capacity as the Seller, and delivered to the Trustee or the applicable Custodian
by the date specified in its previous Officer's Certificate delivered to the
Trustee or the applicable Custodian, as the case may be, the Master Servicer, in
its capacity as the Seller, shall deliver to the Trustee or the applicable
Custodian by such date an additional Officer's Certificate stating a revised
date by which the Master Servicer, in its capacity as the Seller, expects to
receive the applicable Recording Documents. This procedure shall be repeated
until the Recording Documents have been received by the Master Servicer, in its
capacity as the Seller, and delivered to the Trustee or the applicable
Custodian. If the original lender's title insurance policy (or a copy thereof,
in the case of the Washington Mutual Mortgage Loans) was not delivered pursuant
to Section 2.01(f) above, the Master Servicer, in its capacity as the Seller,
shall deliver or cause to be delivered to the Trustee or the applicable
Custodian promptly after receipt thereof, and in any event within 120 days after
the Closing Date, the original lender's title insurance policy (or a copy
thereof, in the case of the Washington Mutual Mortgage Loans). The Master
Servicer, in its capacity as the Seller, shall deliver or cause to be delivered
to the Trustee or the applicable Custodian promptly upon receipt thereof any
other original documents constituting a part of a Mortgage File received with
respect to any Mortgage Loan, including, but not limited to, any original
documents evidencing an assumption or modification of any Mortgage Loan.
All original documents relating to the Mortgage Loans that are not
delivered to the Trustee or the applicable Custodian are and shall be held by or
on behalf of the Seller, the Depositor or the Master Servicer, as the case may
be, in trust for the benefit of the Trustee on behalf of the Certificateholders.
In the event that any such original document is required pursuant to the terms
of this Section to be a part of a Mortgage File, such document shall be
delivered promptly to the Trustee or the applicable Custodian. Any such original
document delivered to or held by the Depositor that is not required pursuant to
the terms of this Section to be a part of a Mortgage File, shall be delivered
promptly to the Master Servicer.
Section 2.02 Acceptance of REMIC 1 by the Trustee.
Subject to the provisions of Section 2.01 and subject to any exceptions
noted on the exception report described in the next paragraph below, the Trustee
82
or a Custodian on behalf of the Trustee, as applicable, acknowledges receipt of
the documents referred to in Section 2.01 above and all other assets included in
the definition of "REMIC 1" under clauses (i), (iii), (iv) and (vi) (to the
extent of amounts deposited into the Distribution Account) and declares that it
holds and will hold such documents and the other documents delivered to it
constituting the Mortgage File, and all such assets and such other assets
included in the definition of "REMIC 1" in trust for the exclusive use and
benefit of all present and future Certificateholders.
The Trustee or the Custodian, as applicable, agrees, for the benefit of
the Certificateholders, to review each Mortgage File on or before the Closing
Date, with respect to each Mortgage Loan and to certify to the Trustee, the
Guarantor, the NIMS Insurer, the Depositor and the Master Servicer in
substantially the form attached hereto as Exhibit F-1 that, as to each Closing
Date Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified in the exception
report annexed thereto as not being covered by such certification), (i) all
documents constituting part of such Mortgage File (other than such documents
described in Section 2.01(e)) required to be delivered to it pursuant to this
Agreement are in its possession, (ii) such documents have been reviewed by the
Trustee or the Washington Mutual Custodian, as applicable and are not mutilated,
torn or defaced unless initialed by the related borrower and relate to such
Mortgage Loan and (iii) based on the Trustee's examination and only as to the
foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i), (ii), (ix), (xii), (xiv) (to the extent of the
Periodic Rate Cap for the first Adjustment Date and subsequent Adjustment Dates)
and (xvi) of the definition of "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. It is herein acknowledged that, in
conducting such review, neither the Trustee nor any Custodian is under any duty
or obligation (i) to inspect, review or examine any such documents, instruments,
certificates or other papers to determine whether they are genuine, enforceable,
or appropriate for the represented purpose (including with respect to Section
2.01(f), whether such title insurance policy (a) contains all necessary
endorsements, (b) insures the priority of the Mortgage as a first lien or (c)
whether the interest vested in the Mortgagor is a fee interest) or whether they
have actually been recorded or that they are other than what they purport to be
on their face or (ii) to determine whether any Mortgage File should include any
of the documents specified in clause (e) of Section 2.01.
Prior to the first anniversary date of this Agreement, the Trustee
shall deliver (or, with respect to the Mortgage Loans held by another Custodian,
such Custodian shall deliver) to the Depositor, the Master Servicer, the NIMS
Insurer and the Guarantor a final certification in the form annexed hereto as
Exhibit F-2 evidencing the completeness of the Mortgage Files, with any
applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trustee
holding such Mortgage Files or any Custodian holding such Mortgage Files finds
any document or documents constituting a part of a Mortgage File to be missing
or defective in any material respect, at the conclusion of its review the
Trustee shall so notify or such other Custodian shall notify the Depositor, the
Seller, the Guarantor, the NIMS Insurer and the Master Servicer. In addition,
upon the discovery by the Depositor, the Master Servicer, the Guarantor or the
Trustee of a breach of any of the representations and warranties made by the
Seller in the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan
83
which materially and adversely affects the value of such Mortgage Loan or the
interests of the related Certificateholders in such Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other parties.
Section 2.03 Cure, Repurchase or Substitution of Mortgage Loans by the
Seller; Remedies for Breaches by Depositor or Master Servicer;
Remedies for Breaches Relating to Prepayment Charges.
(a) Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, the Mortgage File or of the
breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially and adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders (in the case of any such representation or
warranty made to the knowledge or the best of knowledge of the Seller, as to
which the Seller has no knowledge, without regard to the Seller's lack of
knowledge with respect to the substance of such representation or warranty being
inaccurate at the time it was made), the Trustee shall promptly notify the
Depositor, the Seller, the NIMS Insurer, the Guarantor and the Master Servicer
of such defect, missing document or breach and request that the Seller deliver
such missing document or cure such defect or breach within 90 days from the date
the Seller was notified of such missing document, defect or breach (except as
described in Section 2.03(e)), and if the Seller does not deliver such missing
document or cure such defect or breach in all material respects during such
period, the Master Servicer (or, in accordance with Section 3.02(b), the
Trustee) shall enforce the obligations of the Seller under the Mortgage Loan
Purchase Agreement to repurchase such Mortgage Loan from REMIC 1 at the Purchase
Price within 90 days after the date on which the Seller was notified (subject to
Section 2.03(e)) of such missing document, defect or breach, if and to the
extent that the Seller is obligated to do so under the Mortgage Loan Purchase
Agreement. The Purchase Price for the repurchased Mortgage Loan shall be
deposited in the Collection Account, and the Trustee or a Custodian, as
applicable, upon receipt of written certification from the Master Servicer of
such deposit, shall release to the Seller the related Mortgage File, and the
Trustee or a Custodian on behalf of the Trustee, as applicable, shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, as the Seller shall furnish to it or such Custodian, as applicable,
and as shall be necessary to vest in the Seller any Mortgage Loan released
pursuant hereto, and neither the Trustee nor any Custodian shall have any
further responsibility with regard to such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as provided above, if so provided in the
Mortgage Loan Purchase Agreement, the Seller may cause such Mortgage Loan to be
removed from REMIC 1 (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute Mortgage Loans in the manner and
subject to the limitations set forth in Section 2.03(d). It is understood and
agreed that the obligation of the Seller to cure or to repurchase (or to
substitute for) any Mortgage Loan as to which a document is missing, a material
defect in a constituent document exists or as to which such a breach has
occurred and is continuing shall constitute the sole remedy respecting such
omission, defect or breach available to the Certificateholders, the Trustee on
behalf of the Certificateholders, and the NIMS Insurer and the Guarantor.
(b) Within 90 days of the earlier of discovery by the Depositor or
receipt of notice by the Depositor of the breach of any representation or
warranty of the Depositor set forth in Section 2.05 with respect to any Mortgage
84
Loan, which materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, the Depositor shall cure such breach
in all material respects.
(c) As promptly as practicable (and no later than 90 days) after the
earlier of discovery by the Master Servicer or receipt of notice by the Master
Servicer of the breach of any representation, warranty or covenant of the Master
Servicer set forth in Section 2.04 which materially and adversely affects the
value of any Mortgage Loan or the interests of the Certificateholders in any
Mortgage Loan, the Master Servicer shall cure such breach in all material
respects.
Within 90 days of the earlier of discovery by the Master Servicer or
receipt of notice by the Master Servicer of the breach of any representation,
warranty or covenant of the Master Servicer set forth in Section 2.04(a)(vii) or
(viii) which materially and adversely affects the interests of the Holders of
the Class P Certificates to any Prepayment Charge, the Master Servicer shall
cure such breach in all material respects. If the representation made by the
Master Servicer in its capacity as Seller in Section 2.04(a)(vii) is breached,
the Master Servicer in its capacity as Seller shall pay into the Collection
Account the amount of the scheduled Prepayment Charge, less any amount
previously collected and deposited by, or paid by, the Master Servicer into the
Collection Account; and if the covenant made by the Master Servicer in Section
2.04(a)(viii) is breached, the Master Servicer shall pay into the Collection
Account the amount of the waived Prepayment Charge.
(d) Any substitution of Qualified Substitute Mortgage Loans for Deleted
Mortgage Loans made pursuant to Section 2.03(a) shall be effected prior to the
date which is two years after the Startup Date for REMIC 1.
As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected
by the Seller delivering to the Trustee (or, with respect to the Mortgage Loans
held by another Custodian, to such Custodian) on behalf of the Trustee, for such
Qualified Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage,
the Assignment to the Trustee, and such other documents and agreements, with all
necessary endorsements thereon, as are required by Section 2.01, together with
an Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Shortfall
Amounts (as described below), if any, in connection with such substitution. The
Trustee shall acknowledge or with respect to the Mortgage Loans held by another
Custodian such other Custodian shall acknowledge receipt for such Qualified
Substitute Mortgage Loan or Loans and, within ten Business Days thereafter,
review such documents as specified in Section 2.02 and deliver to the Depositor,
the Master Servicer, the NIMS Insurer and the Guarantor, with respect to such
Qualified Substitute Mortgage Loan or Loans, a certification substantially in
the form attached hereto as Exhibit F-1, with any applicable exceptions noted
thereon. Within one year of the date of substitution, the Trustee shall deliver
or with respect to the Mortgage Loans held by another Custodian, such other
Custodian shall deliver to the Depositor, the Seller, the NIMS Insurer, the
Guarantor and the Master Servicer a certification substantially in the form of
Exhibit F-2 hereto with respect to such Qualified Substitute Mortgage Loan or
Loans, with any applicable exceptions noted thereon. Monthly Payments due with
respect to Qualified Substitute Mortgage Loans in the month of substitution are
not part of REMIC 1 and will be retained by the Seller. For the month of
85
substitution, distributions to Certificateholders will reflect the Monthly
Payment due on such Deleted Mortgage Loan on or before the Due Date in the month
of substitution, and the Seller shall thereafter be entitled to retain all
amounts subsequently received in respect of such Deleted Mortgage Loan. The
Trustee shall give or cause to be given written notice to the Guarantor, the
NIMS Insurer and the Certificateholders that such substitution has taken place,
and the Master Servicer shall amend or cause to be amended the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
this Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the
Guarantor, the NIMS Insurer and the Trustee. Upon such substitution, such
Qualified Substitute Mortgage Loan or Loans shall constitute part of the
Mortgage Pool and shall be subject in all respects to the terms of this
Agreement and the Mortgage Loan Purchase Agreement, including all applicable
representations and warranties thereof included in the Mortgage Loan Purchase
Agreement as of the date of substitution.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amounts (the "Substitution Shortfall Amounts"), if
any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans in
Loan Group I or Loan Group II, respectively, exceeds the aggregate of the Stated
Principal Balance of the Qualified Substitute Mortgage Loans that will become
part of Loan Group I or Loan Group II, respectively, as of the date of
substitution, together with one month's interest on such Stated Principal
Balance at the applicable Net Mortgage Rate, plus all outstanding Advances and
Servicing Advances with respect to such Deleted Mortgage Loan. On the date of
such substitution, the Seller will deliver or cause to be delivered to the
Master Servicer for deposit in the Collection Account an amount equal to the sum
of Substitution Shortfall Amounts, if any (which for federal income tax purposes
will be treated as payment for the repurchase of that portion of the Deleted
Mortgage Loans), and the Trustee, upon receipt of the related Qualified
Substitute Mortgage Loan or Loans (or acknowledgement of such receipt by another
Custodian) and certification by the Master Servicer of such deposit, shall
release or, if such Mortgage File is held by another Custodian, such Custodian
shall release to the Seller the related Mortgage File or Files and the Trustee
shall execute and deliver or, if such Mortgage File is held by another
Custodian, such Custodian shall execute and deliver such instruments of transfer
or assignment, without recourse, as the Seller shall deliver to it or such
Custodian, as applicable, and as shall be necessary to vest therein any Deleted
Mortgage Loan released pursuant hereto.
In addition, the Master Servicer in its capacity as Seller shall obtain
at its own expense and deliver to the NIMS Insurer, the Guarantor and the
Trustee an Opinion of Counsel to the effect that such substitution will not
cause (a) any federal tax to be imposed on REMIC 1, created hereunder, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on contributions after the startup day under
Section 860G(d)(1) of the Code, or (b) any Trust REMIC hereunder to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
(e) Upon discovery by the Depositor, the Seller, the Master Servicer or
the Trustee that any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party discovering such
fact shall within two Business Days give written notice thereof to the other
parties. In connection therewith, the Master Servicer in its capacity as Seller
86
shall repurchase or, subject to the limitations set forth in Section 2.03(d),
substitute one or more Qualified Substitute Mortgage Loans for the affected
Mortgage Loan within 90 days of the earlier of discovery or receipt of such
notice with respect to such affected Mortgage Loan. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a).
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.
Section 2.04 Representations, Warranties and Covenants of the Master Servicer.
(a) The Master Servicer hereby represents, warrants and covenants to
the Trustee, for the benefit of the Trustee and the Certificateholders, and to
the Guarantor and the Depositor, that as of the Closing Date or as of such date
specifically provided herein:
(i) The Master Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
is duly authorized and qualified to transact any and all business contemplated
by this Agreement and has all licenses necessary to carry on its business as now
being conducted and is licensed, qualified and in good standing in the states
where the Mortgaged Properties are located if the laws of such state require
licensing or qualification in order to conduct business of the type conducted by
the Master Servicer or to ensure the enforceability or validity of each Mortgage
Loan 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 and to service the Mortgage Loans in accordance with the terms of
this Agreement;
(ii) The Master Servicer has the full power and authority to service
each Mortgage Loan, to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary action on the part of the Master Servicer the
execution, delivery and performance of this Agreement; and this Agreement,
assuming the due authorization, execution and delivery thereof by the Depositor,
the Guarantor and the Trustee, constitutes a legal, valid and binding obligation
of the Master Servicer, enforceable against the Master Servicer in accordance
with its terms, except to the extent that (a) the enforceability thereof 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
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the Master
Servicer, the servicing of the Mortgage Loans by the Master Servicer hereunder,
the consummation by the Master Servicer of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof are in
the ordinary course of business of the Master Servicer and will not (A) result
in a breach of any term or provision of the charter or by-laws of the Master
Servicer or (B) conflict with, result in a breach, violation or acceleration of,
or result in a default under, the terms of any other material agreement or
instrument to which the Master Servicer is a party or by which it may be bound,
87
or any statute, order or regulation applicable to the Master Servicer of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Master Servicer; and the Master Servicer is not a party
to, bound by, or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or regulation of
any court, regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects or, to the Master
Servicer's knowledge, would in the future materially and adversely affect, (x)
the ability of the Master Servicer to perform its obligations under this
Agreement or (y) the business, operations, financial condition, properties or
assets of the Master Servicer taken as a whole;
(iv) The Master Servicer is an approved seller/servicer for Xxxxxx Xxx
or Xxxxxxx Mac in good standing and is a HUD approved mortgagee pursuant to
Section 203 and Section 211 of the National Housing Act;
(v) No litigation is pending against the Master Servicer that would
materially and adversely affect the execution, delivery or enforceability of
this Agreement or the ability of the Master Servicer to service the Mortgage
Loans or to perform any of its other obligations hereunder in accordance with
the terms hereof;
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of, or compliance by the Master Servicer
with, this Agreement or the consummation by the Master Servicer of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained prior to
the Closing Date;
(vii) The information set forth in the Prepayment Charge Schedule is
complete, true and correct in all material respects at the date or dates
respecting which such information is furnished and each Prepayment Charge is
permissible and enforceable in accordance with its terms under applicable law
upon the Mortgagor's full and voluntary principal prepayment (except to the
extent that: (1) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally; or (2) the collectability thereof may be limited
due to acceleration in connection with a foreclosure or other involuntary
prepayment); provided that the representation, warranty and covenant contained
in this clause (vii) is made by the Master Servicer only in its capacity as
Seller; and
(viii) The Master Servicer will not waive any Prepayment Charge or part
of a Prepayment Charge unless such waiver is related to a default or a
reasonably foreseeable default and would maximize recovery of total proceeds
taking into account the value of such Prepayment Charge and related Mortgage
Loan and doing so is standard and customary in servicing mortgage loans similar
to the Mortgage Loans (including any waiver of a Prepayment Charge in connection
with a refinancing of a Mortgage Loan that is related to a default or a
reasonably foreseeable default).
(ix) For each Mortgage Loan, the Master Servicer will accurately, fully
and in a timely manner report its borrower credit files to each of Equifax,
Transunion, and Experian (the "Credit Repositories").
88
(b) It is understood and agreed that the representations, warranties
and covenants set forth in this Section 2.04 shall survive delivery of the
Mortgage Files to the Trustee or a Custodian, as the case may be, and shall
inure to the benefit of the Trustee, the Depositor and the Certificateholders.
Upon discovery by any of the Depositor, the Master Servicer or the Trustee of a
breach of any of the foregoing representations, warranties and covenants which
materially and adversely affects the value of any Mortgage Loan, Prepayment
Charge or the interests therein of the Certificateholders, the party discovering
such breach shall give prompt written notice (but in no event later than two
Business Days following such discovery) to the other of such parties. The
obligation of the Master Servicer set forth in Section 2.03(c) to cure breaches
(or, in the case of (a)(vii) or (a)(viii) above, to pay a Master Servicer
Prepayment Charge Payment Amount) shall constitute the sole remedy against the
Master Servicer available to the Certificateholders, the Depositor, the
Guarantor, the NIMS Insurer or the Trustee on behalf of the Certificateholders
respecting a breach of the representations, warranties and covenants contained
in this Section 2.04. The preceding sentence shall not, however, limit any
remedies available to the Certificateholders, the Depositor, the Guarantor, the
NIMS Insurer or the Trustee on behalf of the Certificateholders, (i) pursuant to
the Mortgage Loan Purchase Agreement signed by the Master Servicer in its
capacity as Seller, respecting a breach of the representations, warranties and
covenants of the Master Servicer in its capacity as Seller contained in the
Mortgage Loan Purchase Agreement or (ii) pursuant to Section 7.01 hereof.
Section 2.05 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
for the benefit of the Trustee and the Certificateholders, and to the Guarantor
and the Master Servicer, that as of the Closing Date or as of such date
specifically provided herein:
(i) Each of this Agreement and the Mortgage Loan Purchase Agreement
constitutes a legal, valid and binding obligation of the Depositor, enforceable
against the Depositor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the Depositor to
the Trustee on behalf of the Trust of each Mortgage Loan, the Depositor had good
and marketable title to each Mortgage Loan subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or other
encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all right,
title interest in the Mortgage Loans to the Trustee on behalf of the Trust;
(iv) The Depositor is solvent and will not be made insolvent by the
transfer of the Mortgage Loans. The Depositor has not transferred the Mortgage
Loans to the Trustee with any intent to hinder, delay or defraud any of its
creditors;
89
(v) The Depositor has been duly incorporated and is validly existing as
a corporation in good standing under the laws of Delaware, with full corporate
power and authority to own its assets and conduct its business as presently
being conducted;
(vi) The Depositor is not in violation of its articles of incorporation
or by-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Depositor is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial condition,
earnings, affairs or business of the Depositor or which might materially and
adversely affect the properties or assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement and the
Mortgage Loan Purchase Agreement by the Depositor, and the consummation of the
transactions contemplated hereby and thereby, do not and will not result in a
material breach or violation of any of the terms or provisions of, or, to the
knowledge of the Depositor, constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Depositor is a party or by which the Depositor is bound or to which any of the
property or assets of the Depositor is subject, nor will such actions result in
any violation of the provisions of the articles of incorporation or by-laws of
the Depositor or, to the best of the Depositor's knowledge without independent
investigation, any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Depositor or any of its
properties or assets (except for such conflicts, breaches, violations and
defaults as would not have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement or the Mortgage Loan
Purchase Agreement);
(viii) To the best of the Depositor's knowledge without any independent
investigation, no consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States or any other jurisdiction is required for the issuance of the
Certificates, or the consummation by the Depositor of the other transactions
contemplated by this Agreement or the Mortgage Loan Purchase Agreement, except
such consents, approvals, authorizations, registrations or qualifications as (a)
may be required under State securities or blue sky laws, (b) have been
previously obtained or (c) the failure of which to obtain would not have a
material adverse effect on the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement or the Mortgage Loan
Purchase Agreement;
(ix) There are no actions, proceedings or investigations pending before
or, to the Depositor's knowledge, threatened by any court, administrative agency
or other tribunal to which the Depositor is a party or of which any of its
properties is the subject: (a) which if determined adversely to the Depositor
would have a material adverse effect on the business, results of operations or
financial condition of the Depositor; (b) asserting the invalidity of this
Agreement, the Mortgage Loan Purchase Agreement or the Certificates; (c) seeking
to prevent the issuance of the Certificates or the consummation by the Depositor
of any of the transactions contemplated by this Agreement or the Mortgage Loan
90
Purchase Agreement, as the case may be; or (d) which might materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement or the Mortgage Loan Purchase
Agreement; and
(x) The Depositor has the full 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 action on the part of
the Depositor the execution, delivery and performance of this Agreement and this
Agreement, assuming the due authorization, execution and delivery thereof by the
parties thereto other than the Depositor, constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in accordance
with its terms, except to the extent that (a) the enforceability thereof 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
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 2.06 Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery to it or a Custodian of the Mortgage Files, subject to the
provisions of Sections 2.01 and 2.02, together with the assignment to it of all
other assets included in the Trust Fund, receipt of which is hereby
acknowledged. Concurrently with such assignment and delivery and in exchange
therefor, the Trustee, pursuant to the written request of the Depositor executed
by an officer of the Depositor, has executed, authenticated and delivered to or
upon the written order of the Depositor, the Certificates in authorized
denominations. The interests evidenced by the Certificates constitute the entire
beneficial ownership interest in the Trust Fund.
Section 2.07 Reserved.
Section 2.08 Conveyance of REMIC Regular Interests and Acceptance of REMIC
1 by the Trustee; Issuance of Certificates.
(a) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC 1 Regular Interests for the benefit of the holders of the REMIC
2 Regular Interests and the Class R-2 Interest. The Trustee acknowledges receipt
of the REMIC 1 Regular Interests (which are uncertificated) and declares that it
holds and will hold the same in trust for the exclusive use and benefit of the
holders of the REMIC 2 Regular Interests and the Class R-2 Interest. The
interests evidenced by the Class R-2 Interest, together with the REMIC 2 Regular
Interests, constitute the entire beneficial ownership interest in REMIC 2.
(b) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC 2 Regular Interests for the benefit of the holders of the REMIC
3 Regular Interests and the Class R-3 Interest. The Trustee acknowledges receipt
of the REMIC 2 Regular Interests (which are uncertificated) and declares that it
holds and will hold the same in trust for the exclusive use and benefit of the
91
holders of the REMIC 3 Regular Interests and the Class R-3 Interest. The
interests evidenced by the Class R-3 Interest, together with the REMIC 3 Regular
Interests, constitute the entire beneficial ownership interest in REMIC 3.
(c) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC 3 Regular Interests for the benefit of the holders of the
Certificates (other than the Class C Certificates, the Class P Certificates, the
Class R-CX Certificates and the Class R-PX Certificates), REMIC CX, as holder of
REMIC 4 Regular Interest LT4-C, and REMIC PX, as holder of REMIC 4 Regular
Interest LT4-P. The Trustee acknowledges receipt of the REMIC 3 Regular
Interests (which are uncertificated) and declares that it holds and will hold
the same in trust for the exclusive use and benefit of the holders of the
Certificates (other than the Class C Certificates, the Class P Certificates, the
Class R-CX Certificates and the Class R-PX Certificates), and REMIC CX, as
holder of REMIC 4 Regular Interests LT4-C, and REMIC PX, as holder of REMIC 4
Regular Interest LT4-P. The interests evidenced by the Class R-4 Interest, the
Regular Certificates (other than the Class C Certificates and the Class P
Certificates), and the REMIC 4 Regular Interests, constitute the entire
beneficial ownership interest in REMIC 4.
(d) In exchange for the REMIC 3 Regular Interests and, concurrently
with the assignment to the Trustee thereof, pursuant to the written request of
the Depositor executed by an officer of the Depositor, the Trustee has executed,
authenticated and delivered to or upon the order of the Depositor, the Regular
Certificates (other than the Class C Certificates and the Class P Certificates)
in authorized denominations evidencing (together with the Class R-4 Interest and
the REMIC 4 Regular Interests) the entire beneficial ownership interest in REMIC
4.
(e) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC 4 Regular Interest LT4-C for the benefit of the holders of the
Class C Certificates and the Class R-CX Certificates. The Trustee acknowledges
receipt of the REMIC 4 Regular Interests LT4-C and declares that it holds and
will hold the same in trust for the exclusive use and benefit of the holders of
the Class C Certificates and the Class R-CX Certificates. The interests
evidenced by the Class C Certificates and the Class R-CX Certificates constitute
the entire beneficial ownership interest in REMIC CX.
(f) In exchange for the REMIC 4 Regular Interest LT4-C and,
concurrently with the assignment to the Trustee thereof, pursuant to the written
request of the Depositor executed by an officer of the Depositor, the Trustee
has executed, authenticated and delivered to or upon the order of the Depositor,
the Class C Certificates in authorized denominations evidencing (together with
the Class R-CX Interest) the entire beneficial ownership interest in REMIC CX.
(g) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to REMIC 4 Regular Interest LT4-P for the benefit of the holders of the
Class P Certificates and the Class R-PX Interest. The Trustee acknowledges
receipt of REMIC 4 Regular Interest LT4-P and declares that it holds and will
hold the same in trust for the exclusive use and benefit of the holders of the
Class P Certificates and the Class R-PX Certificates. The interests evidenced by
92
the Class P Certificates and the Class R-PX Certificates constitute the entire
beneficial ownership interest in REMIC PX.
(h) In exchange for REMIC 4 Regular Interest LT4-P and, concurrently
with the assignment to the Trustee thereof, pursuant to the written request of
the Depositor executed by an officer of the Depositor, the Trustee has executed,
authenticated and delivered to or upon the order of the Depositor, the Class P
Certificates in authorized denominations evidencing (together with the Class
R-PX Interest) the entire beneficial ownership interest in REMIC PX.
(i) Concurrently with (i) the assignment and delivery to the Trustee of
REMIC 1 (including the Residual Interest therein represented by the Class R-1
Interest) and the acceptance by the Trustee thereof, pursuant to Section 2.01,
Section 2.02 and Section 2.08(a), (ii) the assignment and delivery to the
Trustee of REMIC 2 (including the Residual Interest therein represented by the
Class R-2 Interest) and the acceptance by the Trustee thereof, pursuant to
Section 2.08(b), (iii) the assignment and delivery to the Trustee of REMIC 3
(including the Residual Interest therein represented by the Class R-3 Interest)
and the acceptance by the Trustee thereof, pursuant to Section 2.08(c), and (iv)
the assignment and delivery to the Trustee of REMIC 4 (including the Residual
Interest therein represented by the Class R-4 Interest) and the acceptance by
the Trustee thereof, pursuant to Section 2.08(e) and Section 2.08(g), the
Trustee, pursuant to the written request of the Depositor executed by an officer
of the Depositor, has executed, authenticated and delivered to or upon the order
of the Depositor, the Class R Certificates in authorized denominations
evidencing the Class R-1 Interest, the Class R-2 Interest, the Class R-3
Interest, and the Class R-4 Interest, the Class R-CX Certificates evidencing the
Class R-CX Interest and the Class R-PX Certificates evidencing the Class R-PX
Interest.
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 3.01 Master Servicer to Act as Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans on
behalf of the Trustee and in the best interests of and for the benefit of the
Certificateholders (as determined by the Master Servicer in its reasonable
judgment) in accordance with the terms of this Agreement and the respective
Mortgage Loans and, to the extent consistent with such terms, in the same manner
in which it services and administers similar mortgage loans for its own
portfolio, giving due consideration to customary and usual standards of practice
of mortgage lenders and loan servicers administering similar mortgage loans in
the local areas where the related Mortgaged Property is located but without
regard to:
(i) any relationship that the Master Servicer, any Sub-Servicer or any
Affiliate of the Master Servicer or any Sub-Servicer may have with the related
Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the Master
Servicer or any Affiliate of the Master Servicer;
93
(ii) the Master Servicer's obligation to make Advances or Servicing
Advances; or
(iv) the Master Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder or with respect to any particular
transaction.
To the extent consistent with the foregoing, the Master Servicer shall
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes. Subject only to the above-described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans, the Master
Servicer shall have full power and authority, acting alone or through
Sub-Servicers as provided in Section 3.02, to do or cause to be done any and all
things in connection with such servicing and administration in accordance with
policies and procedures generally accepted in the mortgage banking industry.
Without limiting the generality of the foregoing, the Master Servicer in its own
name or in the name of a Sub-Servicer is hereby authorized and empowered by the
Trustee when the Master Servicer believes it appropriate in its best judgment in
accordance with the servicing standards set forth above, to execute and deliver,
on behalf of the Certificateholders and the Trustee, and upon notice to the
Trustee, 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 the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee and Certificateholders. The Master Servicer
shall service and administer the Mortgage Loans in accordance with applicable
state and federal law and shall provide to the Mortgagors any reports required
to be provided to them thereby. The Master Servicer shall also comply in the
performance of this Agreement with all reasonable rules and requirements of each
insurer under any standard hazard insurance policy. Subject to Section 3.17, the
Trustee, shall execute, at the written direction of the Master Servicer, and
furnish to the Master Servicer and any Sub-Servicer such documents as are
necessary or appropriate to enable the Master Servicer or any Sub-Servicer to
carry out their servicing and administrative duties hereunder, and the Trustee
hereby grants to the Master Servicer and each Sub-Servicer a power of attorney
to carry out such duties including a power of attorney to take title to
Mortgaged Properties after foreclosure on behalf of the Trustee and the
Certificateholders. The Trustee, at the direction of the Master Servicer, shall
execute a separate power of attorney in favor of (and furnish such power of
attorney to) the Master Servicer and/or each Sub-Servicer for the purposes
described herein to the extent necessary or desirable to enable the Master
Servicer to perform its duties hereunder. The Trustee shall not be liable for
the actions of the Master Servicer or any Sub-Servicers under such powers of
attorney.
Subject to Section 3.09 hereof, in accordance with the standards of the
preceding paragraph, the Master Servicer shall advance or cause to be advanced
funds as necessary for the purpose of effecting the timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from collections on the related
Mortgage Loans from the Mortgagors pursuant to Section 3.09, and further as
provided in Section 3.11. Any cost incurred by the Master Servicer or by
94
Sub-Servicers in effecting the timely payment of taxes and assessments on a
Mortgaged Property shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the Master
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.04) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) or (ii) permit any modification,
waiver or amendment of any term of any Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or final, temporary or proposed Treasury regulations promulgated thereunder)
and (B) cause any Trust REMIC to fail to qualify as a REMIC under the Code or
the imposition of any tax on "prohibited transactions" or contributions after
the startup day under the REMIC Provisions.
The Master Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release the Master
Servicer from the responsibilities or liabilities arising under this Agreement.
For each Mortgage Loan, the Master Servicer will accurately and fully
report its borrower credit files to each of the Credit Repositories in a timely
manner.
Section 3.02 Sub-Servicing Agreements Between the Master Servicer
and Sub-Servicers.
(a) The Master Servicer may enter into Sub-Servicing Agreements
provided (i) that such agreements would not result in a withdrawal or a
downgrading by any Rating Agency of the ratings on any Class of Certificates or
any of the NIM Notes, as evidenced by a letter to that effect delivered by each
Rating Agency to the Depositor, the NIMS Insurer and the Guarantor and (ii)
that, except in the case of any Sub-Servicing Agreements the Master Servicer may
enter into with Washington Mutual, Inc. or any Affiliate thereof, the NIMS
Insurer or the Guarantor (as provided in Section 1.04) shall have consented to
such Sub-Servicing Agreements (which consent shall not be unreasonably withheld)
with Sub-Servicers, for the servicing and administration of the Mortgage Loans.
That certain Subservicing Agreement by and between the Master Servicer and
Washington Mutual Bank, FA dated April 9, 2001 is hereby acknowledged as being
permitted under this Agreement and meeting the requirements applicable to
Sub-Servicing Agreements set forth in this Agreement. The Trustee is hereby
authorized to acknowledge, at the request of the Master Servicer, any
Sub-Servicing Agreement that meets the requirements applicable to Sub-Servicing
Agreements set forth in this Agreement and that is otherwise permitted under
this Agreement.
Each Sub-Servicer shall be (i) authorized to transact business in the
state or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement, (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution the deposit accounts in which
95
are insured by the FDIC and (iii) a Xxxxxx Xxx approved mortgage servicer. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements conforming
to the provisions set forth in Section 3.08. The Master Servicer will examine
each Sub-Servicing Agreement and will be familiar with the terms thereof. The
terms of any Sub-Servicing Agreement will not be inconsistent with any of the
provisions of this Agreement. The Master Servicer and the Sub-Servicers may
enter into and make amendments to the Sub-Servicing Agreements or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this Agreement, and that no such amendment or different form shall
be made or entered into which could be reasonably expected to be materially
adverse to the interests of the Certificateholders, without the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights. Any
variation without the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights from the provisions set forth in Section 3.08
relating to insurance or priority requirements of Sub-Servicing Accounts, or
credits and charges to the Sub-Servicing Accounts or the timing and amount of
remittances by the Sub-Servicers to the Master Servicer, are conclusively deemed
to be inconsistent with this Agreement and therefore prohibited. The Master
Servicer shall deliver to the Guarantor, the NIMS Insurer and the Trustee copies
of all Sub-Servicing Agreements, and any amendments or modifications thereof,
promptly upon the Master Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Master Servicer
(except as otherwise provided in the last sentence of this paragraph), for the
benefit of the Trustee and the Certificateholders, shall enforce the obligations
of each Sub-Servicer under the related Sub-Servicing Agreement and, subject to
the last sentence of this paragraph, of the Seller under the Mortgage Loan
Purchase Agreement including, without limitation, any obligation to make
advances in respect of delinquent payments as required by a Sub-Servicing
Agreement, or to purchase or otherwise remedy as contemplated herein a Mortgage
Loan on account of missing or defective documentation or on account of a breach
of a representation, warranty or covenant, as described in Section 2.03(a). Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-Servicing 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, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement, to
the extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans or (ii) from a specific recovery of costs, expenses or
attorneys' fees against the party against whom such enforcement is directed.
Enforcement of the Mortgage Loan Purchase Agreement against the Seller shall be
effected by the Master Servicer to the extent it is not the Seller, and
otherwise by the Trustee, in accordance with the foregoing provisions of this
paragraph.
Section 3.03 Successor Sub-Servicers.
The Master Servicer, with the written consent of the NIMS Insurer or
the Guarantor (as provided in Section 1.04), shall be entitled to terminate any
Sub-Servicing Agreement and the rights and obligations of any Sub-Servicer
pursuant to any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement. In the event of termination of any
96
Sub-Servicer, all servicing obligations of such Sub-Servicer shall be assumed
simultaneously by the Master Servicer without any act or deed on the part of
such Sub-Servicer or the Master Servicer, and the Master Servicer either shall
service directly the related Mortgage Loans or shall enter into a Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, and the Trustee shall so terminate
such Sub-Servicing Agreement at the direction of the NIMS Insurer or the
Guarantor (as provided in Section 1.04) in the event that the Master Servicer
(or the Trustee, if then acting as Master Servicer) shall, for any reason, no
longer be the Master Servicer (including termination due to a Master Servicer
Event of Default).
Section 3.04 Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer and a Sub-Servicer or reference to actions taken through a Sub-Servicer
or otherwise, the Master Servicer shall remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of
the Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Sub-Servicing
Agreements or arrangements or by virtue of indemnification from the Sub-Servicer
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. The Master
Servicer shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification and no such indemnification shall be an expense of the Trust.
Section 3.05 No Contractual Relationship Between Sub-Servicers and
the NIMS Insurer, the Guarantor, the Trustee or
Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Master Servicer alone, and the Trustee, the NIMS Insurer, the Guarantor and the
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer
except as set forth in Section 3.06. The Master Servicer shall be solely liable
for all fees owed by it to any Sub-Servicer, irrespective of whether the Master
Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees and such fees shall not be an expense of the Trust.
Section 3.06 Assumption or Termination of Sub-Servicing Agreements by
Trustee.
In the event the Master Servicer shall for any reason no longer be the
master servicer (including by reason of the occurrence of a Master Servicer
Event of Default), the Trustee or its designee shall thereupon assume all of the
rights and obligations of the Master Servicer under each Sub-Servicing Agreement
that the Master Servicer may have entered into, unless the Trustee elects to
terminate any Sub-Servicing Agreement in accordance with its terms as provided
97
in Section 3.03. Upon such assumption, the Trustee, its designee or the
successor servicer for the Trustee appointed pursuant to Section 7.02 shall be
deemed, subject to Section 3.03, to have assumed all of the Master Servicer's
interest therein and to have replaced the Master Servicer as a party to each
Sub-Servicing Agreement to the same extent as if each Sub-Servicing Agreement
had been assigned to the assuming party, except that (i) the Master Servicer
shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Master Servicer
and (ii) none of the Trustee, its designee or any successor Master Servicer
shall be deemed to have assumed any liability or obligation of the Master
Servicer that arose before it ceased to be the Master Servicer.
The Master Servicer at its own expense and without reimbursement shall,
upon request of the Trustee, deliver to the assuming party all documents and
records relating to each Sub-Servicing Agreement and the Mortgage Loans then
being serviced and an accounting of amounts collected and held by or on behalf
of it, and otherwise use its best efforts to effect the orderly and efficient
transfer of the Sub-Servicing Agreements to the assuming party.
Section 3.07 Collection of Certain Mortgage Loan Payments.
The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Master Servicer may in its discretion (i) waive any late
payment charge or, if applicable, any penalty interest, or (ii) extend the due
dates for the Monthly Payments due on a Mortgage Note for a period of not
greater than 180 days; provided that any extension pursuant to this clause (ii)
shall not affect the amortization schedule of any Mortgage Loan for purposes of
any computation hereunder, except as provided below. In the event of any such
arrangement pursuant to clause (ii) above, the Master Servicer shall make timely
advances on such Mortgage Loan during such extension pursuant to Section 4.04
and in accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements, subject to Section 4.04(d)
pursuant to which the Master Servicer shall not be required to make any such
advances that are Nonrecoverable Advances. Notwithstanding the foregoing, in the
event that any Mortgage Loan is in default or, in the judgment of the Master
Servicer, such default is reasonably foreseeable, the Master Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan no later than two years with
respect to a Group I Mortgage Loan), accept payment from the related Mortgagor
98
of an amount less than the Stated Principal Balance in final satisfaction of
such Mortgage Loan (such payment, a "Short Pay-off") or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor; provided, that in the judgment of the Master
Servicer, any such modification, waiver or amendment could reasonably be
expected to result in collections and other recoveries in respect of such
Mortgage Loans in excess of Net Liquidation Proceeds that would be recovered
upon the foreclosure of, or other realization upon, such Mortgage Loan and
provided further, that the NIMS Insurer's prior written consent shall be
required for any modification, waiver or amendment if the aggregate number of
outstanding Mortgage Loans which have been modified, waived or amended exceeds
5% of the number of Closing Date Mortgage Loans as of the Cut-off Date. If the
aggregate Certificate Principal Balance of the Class M-4 Certificates has been
reduced to zero and Class C Certificates are no longer outstanding, the Master
Servicer shall not take any action pursuant to the preceding sentence with
respect to a Group I Mortgage Loan without obtaining the prior written consent
of the Guarantor to such modification. The Master Servicer shall submit to the
Guarantor with its request for consent, such information related to the proposed
modification as can be expected to be needed by the Guarantor to evaluate the
Master Servicer's request, including the terms of the proposed modification and
the reasons for the Master Servicer's decision that such Group I Mortgage Loan
should be modified. The Guarantor shall be deemed to have consented to the
Master Servicer's request in the event that the Guarantor does not either
provide the Master Servicer with its written consent to such requested
modification or written notice of its objection to such modification within five
Business Days of its receipt of the Master Servicer's request. Requests for
modification shall be sent to the Guarantor at: Xxxxxx Xxx, 0000 Xxxxxxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attn: Vice President-Loss Mitigation. With
respect to each Group I Mortgage Loan which is modified with the consent of the
Guarantor, the Master Servicer shall give written notice to the NIMS Insurer to
the address set forth in Section 11.05 and to the Guarantor to the following
address: Xxxxxx Xxx, 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attn:
Bond Administration. Such notice shall be delivered within thirty Business Days
following such modification and shall include information with respect to the
modification, including, without limitation, the interest rate, the principal
balance and the maturity date of such Group I Mortgage Loan before and after
such modification.
Section 3.08 Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub-Servicing Agreement, the Sub-Servicer shall be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall be
entitled "Deutsche Bank National Trust Company, as Trustee, in trust for
registered Holders of Long Beach Mortgage Loan Trust 2002-5, Asset-Backed
Certificates, Series 2002-5. The Sub-Servicer shall be required to deposit in
the clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Sub-Servicer's receipt thereof, all
proceeds of Mortgage Loans received by the Sub-Servicer less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and shall
thereafter deposit such amounts in the Sub-Servicing Account, in no event more
than two Business Days after the deposit of such funds into the clearing
account. The Sub-Servicer shall thereafter be required to deposit such proceeds
in the Collection Account or remit such proceeds to the Master Servicer for
deposit in the Collection Account not later than two Business Days after the
deposit of such amounts in the Sub-Servicing Account. For purposes of this
Agreement, the Master Servicer shall be deemed to have received payments on the
Mortgage Loans when the Sub-Servicer receives such payments.
Section 3.09 Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
The Master Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts").
99
Servicing Accounts shall be Eligible Accounts. The Master Servicer shall deposit
in the clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Master Servicer's receipt thereof, all
collections from the Mortgagors (or related advances from Sub-Servicers) for the
payment of taxes, assessments, hazard insurance premiums and comparable items
for the account of the Mortgagors ("Escrow Payments") collected on account of
the Mortgage Loans and shall thereafter deposit such Escrow Payments in the
Servicing Accounts, in no event more than two Business Days after the deposit of
such funds in the clearing account, for the purpose of effecting the payment of
any such items as required under the terms of this Agreement. Withdrawals of
amounts from a Servicing Account may be made only to (i) effect payment of
taxes, assessments, hazard insurance premiums, and comparable items; (ii)
reimburse the Master Servicer (or a Sub-Servicer to the extent provided in the
related Sub-Servicing Agreement) out of related collections for any advances
made pursuant to Section 3.01 (with respect to taxes and assessments) and
Section 3.14 (with respect to hazard insurance); (iii) refund to Mortgagors any
sums as may be determined to be overages; (iv) pay interest, if required and as
described below, to Mortgagors on balances in the Servicing Account; (v) clear
and terminate the Servicing Account upon the termination of the Master
Servicer's obligations and responsibilities in respect of the Mortgage Loans
under this Agreement in accordance with Article IX or (vi) recover amounts
deposited in error. As part of its servicing duties, the Master Servicer or
Sub-Servicers shall pay to the Mortgagors interest on funds in Servicing
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Servicing Accounts is insufficient, to pay such interest from
its or their own funds, without any reimbursement therefor. To the extent that a
Mortgage does not provide for Escrow Payments, the Master Servicer shall
determine whether any such payments are made by the Mortgagor in a manner and at
a time that avoids the loss of the Mortgaged Property due to a tax sale or the
foreclosure of a tax lien. The Master Servicer assumes full responsibility for
the payment of all such bills within such time and shall effect payments of all
such bills irrespective of the Mortgagor's faithful performance in the payment
of same or the making of the Escrow Payments and shall make advances from its
own funds to effect such payments; provided, however, that such advances shall
constitute Servicing Advances.
Section 3.10 Collection Account and Distribution Account.
(a) On behalf of the Trust Fund, the Master Servicer shall establish
and maintain, or cause to be established and maintained, one or more accounts
(such account or accounts, the "Collection Account"), held in trust for the
benefit of the Trustee and the Certificateholders. On behalf of the Trust Fund,
the Master Servicer shall deposit or cause to be deposited in the clearing
account (which account must be an Eligible Account) in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Master Servicer's receipt thereof, and shall
thereafter deposit in the Collection Account, in no event more than two Business
Days after the deposit of such funds into the clearing account, as and when
received or as otherwise required hereunder, the following payments and
collections received or made by it subsequent to the Cut-off Date (other than in
100
respect of principal or interest on the related Mortgage Loans due on or before
the Cut-off Date or payments (other than Principal Prepayments) received by it
on or prior to the Cut-off Date but allocable to a Due Period subsequent
thereto):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related Servicing
Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds (other than
proceeds collected in respect of any particular REO Property and amounts paid by
the Master Servicer in connection with a purchase of Mortgage Loans and REO
Properties pursuant to Section 9.01);
(iv) any amounts required to be deposited pursuant to Section 3.12 in
connection with any losses realized on Permitted Investments with respect to
funds held in the Collection Account;
(v) any amounts required to be deposited by the Master Servicer
pursuant to the second paragraph of Section 3.14(a) in respect of any blanket
policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with Section 2.03, Section 3.16 or Section 9.01 and all Master
Servicer Prepayment Charge Payment Amounts required to be deposited in the
Collection Account pursuant to Section 2.03;
(vii) all Substitution Shortfall Amounts;
(viii) all Prepayment Charges collected by the Master Servicer; and
(ix) without duplication, all payments of claims received by the Master
Servicer under the PMI Policy.
For purposes of the immediately preceding sentence, the Cut-off Date
with respect to any Qualified Substitute Mortgage Loan shall be deemed to be the
date of substitution.
The foregoing requirements for deposit in the Collection Accounts shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges, NSF
fees, reconveyance fees, assumption fees and other similar fees and charges
(other than Prepayment Charges) need not be deposited by the Master Servicer in
the Collection Account and shall, upon collection, belong to the Master Servicer
as additional compensation for its servicing activities. In the event the Master
Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
101
Account"), held in trust for the benefit of the Trustee and the
Certificateholders. On behalf of the Trust Fund, the Master Servicer shall
deliver to the Trustee in immediately available funds for deposit in the
Distribution Account on or before 3:00 p.m. New York time (i) on the Master
Servicer Remittance Date, that portion of the Available Funds (calculated
without regard to the references in the definition thereof to amounts that may
be withdrawn from the Distribution Account) for the related Distribution Date
then on deposit in the Collection Account, the amount of all Prepayment Charges
on the Prepayment Charge Schedule collected by the Master Servicer in connection
with any of the Mortgage Loans and any Master Servicer Prepayment Charge Payment
Amounts then on deposit in the Collection Account and the amount of any funds
reimbursable to an Advancing Person pursuant to Section 3.27 and (ii) on each
Business Day as of the commencement of which the balance on deposit in the
Collection Account exceeds $75,000 following any withdrawals pursuant to the
next succeeding sentence, the amount of such excess, but only if the Collection
Account constitutes an Eligible Account solely pursuant to clause (ii) of the
definition of "Eligible Account." If the balance on deposit in the Collection
Account exceeds $75,000 as of the commencement of business on any Business Day
and the Collection Account constitutes an Eligible Account solely pursuant to
clause (ii) of the definition of "Eligible Account," the Master Servicer shall,
on or before 3:00 p.m. New York time on such Business Day, withdraw from the
Collection Account any and all amounts payable or reimbursable to the Depositor,
the Master Servicer, the Trustee, the Seller or any Sub-Servicer pursuant to
Section 3.11 and shall pay such amounts to the Persons entitled thereto.
(c) Funds in the Collection Account and the Distribution Account may be
invested in Permitted Investments in accordance with the provisions set forth in
Section 3.12. The Master Servicer shall give notice to the Trustee, the NIMS
Insurer, the Guarantor and the Depositor of the location of the Collection
Account maintained by it when established and prior to any change thereof. The
Trustee shall give notice to the Master Servicer, the NIMS Insurer, the
Guarantor and the Depositor of the location of the Distribution Account when
established and prior to any change thereof.
(d) Funds held in the Collection Account at any time may be delivered
by the Master Servicer to the Trustee for deposit in an account (which may be
the Distribution Account and must satisfy the standards for the Distribution
Account as set forth in the definition thereof) and for all purposes of this
Agreement shall be deemed to be a part of the Collection Account; provided,
however, that the Trustee shall have the sole authority to withdraw any funds
held pursuant to this subsection (d). In the event the Master Servicer shall
deliver to the Trustee for deposit in the Distribution Account any amount not
required to be deposited therein, it may at any time request that the Trustee
withdraw, and the Trustee shall withdraw, such amount from the Distribution
Account and remit to the Master Servicer any such amount, any provision herein
to the contrary notwithstanding. In addition, the Master Servicer shall deliver
to the Trustee from time to time for deposit, and the Trustee shall so deposit,
in the Distribution Account:
(i) any Advances, as required pursuant to Section 4.04, unless
delivered directly to the Trustee by an Advancing Person;
(ii) any amounts required to be deposited pursuant to Section 3.23(d)
or (f) in connection with any REO Property;
102
(iii) any amounts to be paid by the Master Servicer in connection with
a purchase of Mortgage Loans and REO Properties pursuant to Section 9.01;
(iv) any amounts required to be deposited pursuant to Section 3.24 in
connection with any Prepayment Interest Shortfalls; and
(v) any Stayed Funds, as soon as permitted by the federal bankruptcy
court having jurisdiction in such matters.
(e) Promptly upon receipt of any Stayed Funds, whether from the Master
Servicer, a trustee in bankruptcy, federal bankruptcy court or other source, the
Trustee shall deposit such funds in the Distribution Account, subject to
withdrawal thereof pursuant to Section 7.02(b) or as otherwise permitted
hereunder.
Section 3.11 Withdrawals from the Collection Account and Distribution Account.
(a) The Master Servicer shall, from time to time, make withdrawals from
the Collection Account, for any of the following purposes or as described in
Section 4.04, without priority:
(i) to remit to the Trustee for deposit in the Distribution Account the
amounts required to be so remitted pursuant to Section 3.10(b) or permitted to
be so remitted pursuant to the first sentence of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Master Servicer for
Advances, but only to the extent of amounts received which represent Late
Collections (net of the related Servicing Fees) of Monthly Payments on the
related Mortgage Loans in accordance with the provisions of Section 4.04;
(iii) subject to Section 3.16(d), to pay the Master Servicer or any
Sub-Servicer (a) any unpaid Servicing Fees or (b) any unreimbursed Servicing
Advances with respect to each Mortgage Loan, but only to the extent of any Late
Collections, Liquidation Proceeds, Insurance Proceeds or other amounts as may be
collected by the Master Servicer from a Mortgagor, or otherwise received with
respect to such Mortgage Loan;
(iv) to pay to the Master Servicer as servicing compensation (in
addition to the Servicing Fee) on the Master Servicer Remittance Date any
interest or investment income earned on funds deposited in the Collection
Account;
(v) to pay to the Master Servicer or the Seller, as the case may be,
with respect to each Mortgage Loan that has previously been purchased or
replaced pursuant to Section 2.03 or Section 3.16(c) all amounts received
thereon subsequent to the date of purchase or substitution, as the case may be;
(vi) to reimburse the Master Servicer for any Advance or Servicing
Advance previously made which the Master Servicer has determined to be a
Nonrecoverable Advance in accordance with the provisions of Section 4.04;
103
(vii) to reimburse the Master Servicer or the Depositor for expenses
incurred by or reimbursable to the Master Servicer or the Depositor, as the case
may be, pursuant to Section 6.03;
(viii) to reimburse the Guarantor (with respect to Group I Mortgage
Loans only), the NIMS Insurer, the Master Servicer or the Trustee, as the case
may be, for enforcement expenses reasonably incurred in respect of the breach or
defect giving rise to the purchase obligation under Section 2.03 of this
Agreement that were included in the Purchase Price of the Mortgage Loan,
including any expenses arising out of the enforcement of the purchase
obligation; provided, however, that the reimbursement to the NIMS Insurer
pursuant to this clause shall be limited to an annual amount of $25,000;
(ix) to pay, or to reimburse the Master Servicer for advances in
respect of, expenses incurred in connection with any Mortgage Loan pursuant to
Section 3.16(b); and
(x) to clear and terminate the Collection Account pursuant to Section
9.01.
The Master Servicer shall keep and maintain separate accounting, on an
individual Mortgage Loan basis, for the purpose of justifying any withdrawal
from the Collection Account, to the extent held by or on behalf of it, pursuant
to subclauses (ii), (iii), (v), (vi), (viii) and (ix) above. The Master Servicer
shall provide written notification to the Trustee, the NIMS Insurer and the
Guarantor, on or prior to the next succeeding Master Servicer Remittance Date,
upon making any withdrawals from the Collection Account pursuant to subclause
(vii) above.
(b) The Trustee shall, from time to time, make withdrawals from the
Distribution Account, for any of the following purposes, without priority:
(i) to make distributions to Certificateholders and the Guarantor in
accordance with Section 4.01;
(ii) to pay to itself amounts to which it is entitled pursuant to
Section 8.05 or to pay any other Extraordinary Trust Fund Expenses;
(iii) to pay to itself any interest income earned on funds deposited in
the Distribution Account pursuant to Section 3.12(c);
(iv) to reimburse itself pursuant to Section 7.02 or pursuant to
Section 7.01 to the extent such amounts in Section 7.01 were not reimbursed by
the Master Servicer;
(v) to pay any amounts in respect of taxes pursuant to Section
10.01(g);
(vi) to remit to the Master Servicer any amount deposited in the
Distribution Account by the Master Servicer but not required to be deposited
therein in accordance with Section 3.10(d);
(vii) to pay to an Advancing Person reimbursements for Advances and/or
Servicing Advances pursuant to Section 3.27;
104
(viii) to clear and terminate the Distribution Account pursuant to
Section 9.01;
(ix) to pay the PMI Insurer the PMI Insurer Fee based on information
received from the Master Servicer; and
(x) to pay itself the Trustee Fees.
Section 3.12 Investment of Funds in the Collection Account and the
Distribution Account.
(a) The Master Servicer may direct any depository institution
maintaining the Collection Account and any REO Account (for purposes of this
Section 3.12, an "Investment Account"), and the Trustee, in its individual
capacity, may direct any depository institution maintaining the Distribution
Account (for purposes of this Section 3.12, the Distribution Account is also an
"Investment Account"), to invest the funds in such Investment Account in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee is the
obligor thereon and (ii) no later than the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement, if the Trustee is
the obligor thereon. All such Permitted Investments shall be held to maturity,
unless payable on demand. Any investment of funds in an Investment Account shall
be made in the name of the Trustee (in its capacity as such), or in the name of
a nominee of the Trustee. The Trustee shall be entitled to sole possession
(except with respect to investment direction of funds held in the Collection
Account and any REO Account and any income and gain realized thereon) over each
such investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee or its nominee. In the event amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the Trustee shall:
(x) consistent with any notice required to be given thereunder, demand
that payment thereon be made on the last day such Permitted Investment may
otherwise mature hereunder in an amount equal to the lesser of (1) all amounts
then payable thereunder and (2) the amount required to be withdrawn on such
date; and
(y) demand payment of all amounts due thereunder promptly upon actual
notice by a Responsible Officer of the Trustee that such Permitted Investment
would not constitute a Permitted Investment in respect of funds thereafter on
deposit in the Investment Account.
(b) All income and gain realized from the investment of funds deposited
in the Collection Account and any REO Account held by or on behalf of the Master
Servicer shall be for the benefit of the Master Servicer and shall be subject to
its withdrawal in accordance with Section 3.11 or Section 3.23, as applicable.
The Master Servicer shall deposit in the Collection Account or any REO Account,
as applicable, the amount of any loss of principal incurred in respect of any
such Permitted Investment made with funds in such accounts immediately upon
realization of such loss.
105
(c) All income and gain realized from the investment of funds deposited
in the Distribution Account held by or on behalf of the Trustee shall be for the
benefit of the Trustee and shall be subject to its withdrawal at any time. The
Trustee shall deposit in the Distribution Account, the amount of any loss of
principal incurred in respect of any such Permitted Investment made with funds
in such accounts immediately upon realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may, and subject to Section 8.01 and Section 8.02(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates shall, take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.
Section 3.13 Agreement to Appoint a Special Servicer.
(a) The Guarantor may require the Master Servicer to enter into a
special subservicing agreement with a servicer with expertise in servicing
delinquent mortgage loans as designated by the Guarantor (the "Special
Servicer") on or after the earliest Distribution Date with respect to which the
aggregate Certificate Principal Balance of the Mezzanine Certificates and the
Class C Certificates has been reduced to zero. Such special subservicing
agreement shall relate to the servicing of only Group I Mortgage Loans that (x)
have been delinquent in payment with respect to three or more Monthly Payments
(provided, however, that the third such Monthly Payment shall not be deemed to
be delinquent for purposes of this clause (x) until the close of business on the
last day of the month in which such Monthly Payment first became due) and (y)
have been transferred to the Special Servicer in accordance with this Section
3.13 and the related special subservicing agreement (a "Specially Serviced
Mortgage Loan").
(b) The special subservicing agreement shall be consistent with the
provisions of this Agreement, including but not limited to this Section 3.13,
Section 3.02 (a), Section 3.02 (b), and Section 3.08, except as provided
otherwise in this Section 3.13. In addition, the special subservicing agreement
shall be on terms which shall be reasonably acceptable to the Guarantor and the
Master Servicer and shall provide, at a minimum that:
(1) the Special Servicer shall at all times meet the eligibility
criteria described in Section 3.02(a);
(2) the Special Servicer shall service only the Specially Serviced
Mortgage Loans in a manner consistent with the provisions with this Agreement
except as provided otherwise in the special subservicing agreement;
(3) the Special Servicer shall use the Xxxxxx Xxx foreclosure network
(and pay the customary fees therefor) for foreclosures and bankruptcies relating
to Specially Serviced Mortgage Loans;
106
(4) the Special Servicer shall use the Xxxxxx Mae disposition service
(and pay the customary fees therefor) for the disposition of REO Property
related to Specially Serviced Mortgage Loans;
(5) the Special Servicer shall make Servicing Advances on the Specially
Serviced Mortgage Loans to the same extent and in the same manner as the Master
Servicer with respect to the Group I Mortgage Loans pursuant to this Agreement;
(6) the Special Servicer shall be entitled to receive the Servicing Fee
with respect to all Specially Serviced Mortgage Loans;
(7) prior to the transfer of servicing to the Special Servicer, the
Master Servicer and the Special Servicer shall have provided all notices
relating to such transfer of servicing as required to be delivered to the
borrowers by applicable state and federal law;
(8) the Special Servicer shall indemnify the Master Servicer and the
Trustee for any liabilities to them arising from failures of the Special
Servicer to perform its obligations according to the terms of the subservicing
agreement;
(9) the Master Servicer shall promptly give notice thereof to the
Trustee, the NIMS Insurer and the Guarantor of the transfer of servicing to the
Special Servicer, including the loan number together with the borrower's name
and the unpaid principal balance of the transferred Mortgage Loan at the time of
transfer;
(10) each of the respective obligations, duties, and liabilities of the
Master Servicer and the Special Servicer (or either of them) with respect to the
servicing of the Specially Serviced Mortgage Loans that have arisen prior to the
date on which the servicing of such Specially Serviced Mortgage Loan was
transferred to the Special Servicer (the "Effective Date"), or that arise on and
after the Effective Date, under this Agreement and the subservicing agreement
and that remain unperformed or unsatisfied shall survive any transfer of
servicing;
(11) once a Group I Mortgage Loan becomes a Specially Serviced Mortgage
Loan, such Mortgage Loan shall remain a Specially Serviced Mortgage Loan, and
shall continue to be serviced by the Special Servicer, until the earlier of the
liquidation or other disposition of such Mortgage Loan or the termination of the
subservicing agreement, regardless of delinquency status or otherwise;
(12) the Guarantor may remove the Special Servicer if the Special
Servicer at any time fails to meet any of the above criteria or otherwise, in
the judgment of the Guarantor, fails to perform according to the terms of the
subservicing agreement and the provisions of this Section 3.13; provided that
prior to any such removal the Guarantor shall designate a successor Special
Servicer meeting the requirements of this Section 3.13, and no removal of a
Special Servicer shall be effective until a successor Special Servicer has
entered into a special subservicing agreement meeting the requirements of this
107
Section 3.13 and agreed to assume the duties of the Special Servicer or the
Master Servicer has undertaken such duties; and
(13) in connection with any transfer of a Group I Mortgage Loan to the
Special Servicer as a Specially Serviced Mortgage Loan, the Master Servicer
shall execute any appropriate assignments or other documents reasonable and
necessary to further the prosecution of the Special Servicer obligations under
the special subservicing agreement.
Section 3.14 Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each Mortgage
Loan fire insurance with extended coverage on the related Mortgaged Property in
an amount which is at least equal to the least of (i) the then current principal
balance of such Mortgage Loan, (ii) the amount necessary to fully compensate for
any damage or loss to the improvements that are a part of such property on a
replacement cost basis and (iii) the maximum insurable value of the improvements
which are a part of such Mortgaged Property, in each case in an amount not less
than such amount as is necessary to avoid the application of any coinsurance
clause contained in the related hazard insurance policy. The Master Servicer
shall also cause to be maintained fire insurance with extended coverage on each
REO Property in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements which are a part of such property
and (ii) the outstanding principal balance of the related Mortgage Loan at the
time it became an REO Property, plus accrued interest at the Mortgage Rate and
related Servicing Advances. The Master Servicer will comply in the performance
of this Agreement with all reasonable rules and requirements of each insurer
under any such hazard policies. Any amounts to be collected by the Master
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or amounts
to be released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing loans held for its own account,
subject to the terms and conditions of the related Mortgage and Mortgage Note)
shall be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.11, if received in respect of a Mortgage Loan, or in the REO Account,
subject to withdrawal pursuant to Section 3.23, if received in respect of an REO
Property. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor 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 or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Master Servicer will cause to be maintained a flood
insurance policy in respect thereof. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid principal balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
108
In the event that the Master Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of A:X or better
in Best's Key Rating Guide (or such other rating that is comparable to such
rating) 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 two sentences of this Section 3.14, it being understood and agreed that
such policy may contain a deductible clause, in which case the Master Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 3.14, and there shall have been one or more losses
which would have been covered by such policy, deposit to the Collection Account
from its own funds the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Master Servicer agrees to
prepare and present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy.
(b) The Master Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of Xxxxxx Xxx if it were the purchaser of the Mortgage
Loans, unless the Master Servicer or any of its Affiliates has obtained a waiver
of such requirements from Xxxxxx Mae. The Master Servicer shall also maintain a
fidelity bond in the form and amount that would meet the requirements of Xxxxxx
Xxx, unless the Master Servicer or any of its Affiliates has obtained a waiver
of such requirements from Xxxxxx Mae. The Master Servicer shall provide the
Trustee, the NIMS Insurer and the Guarantor (upon such party's reasonable
request) with copies of any such insurance policies and fidelity bond. The
Master Servicer shall be deemed to have complied with this provision if an
Affiliate of the Master Servicer has such errors and omissions and fidelity bond
coverage and, by the terms of such insurance policy or fidelity bond, the
coverage afforded thereunder extends to the Master Servicer. Any such errors and
omissions policy and fidelity bond shall by its terms not be cancelable without
thirty days' prior written notice to the Trustee. The Master Servicer shall also
cause each Sub-Servicer to maintain a comparable policy of insurance covering
errors and omissions and a fidelity bond meeting such requirements.
Section 3.15 Enforcement of Due-On-Sale Clauses; Assumption Agreements.
The Master Servicer shall, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause, if any, applicable thereto; provided, however,
that the Master Servicer shall not be required to take such action if in its
sole business judgment the Master Servicer believes that the collections and
other recoveries in respect of such Mortgage Loans could reasonably be expected
to be maximized if the Mortgage Loan were not accelerated, and the Master
109
Servicer shall not exercise any such rights if prohibited by law from doing so.
If the Master Servicer reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, or if any of the other conditions set forth
in the proviso to the preceding sentence apply, the Master Servicer will enter
into an assumption and modification agreement from or with the person to whom
such property has been conveyed or is proposed to be conveyed, pursuant to which
such person becomes liable under the Mortgage Note and, to the extent permitted
by applicable state law, the Mortgagor remains liable thereon. The Master
Servicer may also 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 the Mortgagor and becomes liable under the
Mortgage Note, provided that no such substitution shall be effective unless such
person satisfies the underwriting criteria of the Master Servicer and has a
credit risk rating at least equal to that of the original Mortgagor. In
connection with any assumption, modification or substitution, the Master
Servicer shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. The
Master Servicer shall not take or enter into any assumption and modification
agreement, however, unless (to the extent practicable under the circumstances)
it shall have received confirmation, in writing, of the continued effectiveness
of any applicable hazard insurance policy, or a new policy meeting the
requirements of this Section is obtained. Any fee collected by the Master
Servicer in respect of any assumption, modification or substitution of liability
agreement will be retained by the Master Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Mortgage Rate and the
amount of the Monthly Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. The Master Servicer shall notify the
Trustee, the NIMS Insurer and the Guarantor that any such substitution,
modification or assumption agreement has been completed by forwarding to the
Trustee (with a copy to the NIMS Insurer) the executed original of such
substitution, modification or assumption agreement, which document 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. If the aggregate Certificate Principal
Balances of the Mezzanine Certificates has been reduced to zero and Class C
Certificates are no longer outstanding, the Master Servicer shall not take or
enter into any substitution, assumption or modification agreement with respect
to a Group I Mortgage Loan without obtaining the prior written consent of the
Guarantor to such substitution, assumption or modification agreement. The Master
Servicer shall submit to the Guarantor with its request for consent, such
information related to the proposed substitution, assumption or modification
agreement as can be expected to be needed by the Guarantor to evaluate the
Master Servicer's request, including the terms of the proposed substitution,
assumption or modification and the reasons for the Master Servicer's decision
that such substitution, assumption or modification agreement should be taken or
entered into with respect to such Group I Mortgage Loan. The Guarantor shall be
deemed to have consented to the Master Servicer's request in the event that the
Guarantor does not either provide the Master Servicer with its written consent
to such requested substitution, assumption or modification agreement or written
notice of its objection to such substitution, assumption or modification
agreement within five Business Days of its receipt of the Master Servicer's
request. Such requests shall be sent to the Guarantor at: Xxxxxx Xxx, 0000
Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attn: Vice President-Loss
Mitigation. With respect to each substitution, assumption or modification
agreement which is entered into with the consent of the Guarantor, the Master
Servicer shall give written notice to the NIMS Insurer to the address set forth
in Section 11.05 and to the Guarantor to the following address: Xxxxxx Xxx, 0000
Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attn: Bond Administration. Such
110
notice shall be delivered within thirty Business Days following the date of such
substitution, assumption or modification agreement.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Master Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.15, the term
"assumption" is deemed to also include a sale of the Mortgaged Property subject
to the Mortgage that is not accompanied by an assumption or substitution of
liability agreement.
Section 3.16 Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall use reasonable efforts consistent with
the servicing standard set forth in Section 3.01, 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 pursuant to
Section 3.07. The Master Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that such
costs and expenses will constitute and be recoverable as Servicing Advances by
the Master Servicer as contemplated in Section 3.11 and Section 3.23. The
foregoing is subject to the provision that, in any case in which Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Master Servicer
shall not be required to expend its own funds toward the restoration of such
property unless it shall determine in its sole and absolute discretion that such
restoration will increase the proceeds of liquidation of the related Mortgage
Loan after reimbursement to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the Master Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Master Servicer shall not, on behalf of the Trustee, either (i)
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Fund or the Certificateholders would be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless the Master Servicer has also
previously determined, based on its reasonable judgment and a report prepared by
an Independent Person who regularly conducts environmental audits using
customary industry standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic interest of
the Trust Fund to take such actions as are necessary to bring the Mortgaged
Property into compliance therewith; and
111
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, hazardous wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any federal, state or local law or regulation, or that if any
such materials are present for which such action could be required, that it
would be in the best economic interest of the Trust Fund to take such actions
with respect to the affected Mortgaged Property.
Notwithstanding the foregoing, with respect to the Group I Mortgage
Loans, if such environmental audit reveals, or if the Master Servicer has
knowledge or notice, that the Mortgaged Property securing such Group I Mortgage
Loan contains such wastes or substances or is within one mile of the site of
such wastes or substances, the Master Servicer shall not foreclose or accept a
deed in lieu of foreclosure without the prior written consent of the Guarantor.
The cost of the environmental audit report contemplated by this Section
3.16 shall be advanced by the Master Servicer, subject to the Master Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders or the Guarantor to receive any amount in the Collection
Account received in respect of the affected Mortgage Loan or other Mortgage
Loans. It is understood by the parties hereto that any such advance will
constitute a Servicing Advance.
If the Master Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(a)(ix), such right of
reimbursement being prior to the rights of Certificateholders or the Guarantor
to receive any amount in the Collection Account received in respect of the
affected Mortgage Loan or other Mortgage Loans. It is understood by the parties
hereto that any such advance will constitute a Servicing Advance.
(c) The Master Servicer may at its option purchase from REMIC 1, as
applicable, any Mortgage Loan or related REO Property that is 90 days or more
delinquent or that has been otherwise in default for 90 days or more, which the
Master Servicer determines in good faith will otherwise become subject to
foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee prior to purchase), at a price equal to the Purchase
Price; provided, however, that the Master Servicer shall purchase any such
Mortgage Loans or related REO Properties on the basis of delinquency or default,
purchasing first the Mortgage Loans or related REO Properties that became
delinquent or otherwise in default on an earlier date; and provided, further,
that such option shall expire as of the last day of the calendar quarter during
112
which such Mortgage Loan or related REO Property became 90 days delinquent or
otherwise in default for 90 days or more. In the event the Master Servicer does
not exercise its option to purchase from REMIC 1 any such Mortgage Loan or
related REO Property prior to the expiration of such option, the NIMS Insurer
shall be entitled to purchase such Mortgage Loan or related REO Property at any
time thereafter. In the event neither the Master Servicer nor the NIMS Insurer
exercises its option to purchase from REMIC 1 any such Group I Mortgage Loan or
related REO Property prior to the expiration of such option, the Guarantor shall
be entitled to purchase such Group I Mortgage Loan or related REO Property at
any time thereafter. The Purchase Price for any Mortgage Loan or related REO
Property purchased hereunder shall be deposited in the Collection Account, and
the Trustee, upon receipt of written certification from the Master Servicer of
such deposit, shall release or cause to be released to the Master Servicer, the
NIMS Insurer or the Guarantor, as applicable, the related Mortgage File and the
Trustee shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as the Master Servicer, the NIMS Insurer or the
Guarantor, as applicable, shall furnish and as shall be necessary to vest in the
Master Servicer, the NIMS Insurer or the Guarantor, as applicable, title to any
Mortgage Loan or related REO Property released pursuant hereto.
(d) Proceeds received (other than any Prepayment Charges received) in
connection with any Final Recovery Determination, as well as any recovery
resulting from a partial collection of Insurance Proceeds or Liquidation
Proceeds, in respect of any Mortgage Loan, will be applied in the following
order of priority: first, to reimburse the Master Servicer or any Sub-Servicer
for any related unreimbursed Servicing Advances and Advances, pursuant to
Section 3.11(a)(ii) or (a)(iii); second, to accrued and unpaid interest on the
Mortgage Loan, to the date of the Final Recovery Determination, or to the Due
Date prior to the Distribution Date on which such amounts are to be distributed
if not in connection with a Final Recovery Determination; and third, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than the full amount of accrued and unpaid
interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Master Servicer as follows: first, to unpaid Servicing Fees;
and second, to the balance of the interest then due and owing. The portion of
the recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Master Servicer or any Sub-Servicer pursuant to Section 3.11(a)(iii).
Section 3.17 Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full shall be escrowed in
a manner customary for such purposes, the Master Servicer will promptly notify
the Trustee and the applicable Custodian holding the related Mortgage File by a
certification in the form of Exhibit E-2 (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Representative and shall request delivery to it of the related
Mortgage File. Upon receipt of such certification and request, the Trustee or
such Custodian, as applicable, shall promptly release the related Mortgage File
to the Master Servicer. No expenses incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to the Collection
Account or the Distribution Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Trustee or the
113
applicable Custodian shall, upon request of the Master Servicer and delivery to
the Trustee or the applicable Custodian of a Request for Release in the form of
Exhibit E-l, release the related Mortgage File to the Master Servicer, and the
Trustee or the applicable Custodian, on behalf of the Trustee, shall, at the
direction of the Master Servicer, execute such documents as shall be necessary
to the prosecution of any such proceedings and the Master Servicer shall retain
such Mortgage File in trust for the benefit of the Certificateholders. Such
Request for Release shall obligate the Master Servicer to return each and every
document previously requested from the Mortgage File to the Trustee or the
applicable Custodian when the need therefor by the Master Servicer no longer
exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the Master
Servicer has delivered to the Trustee or the applicable Custodian a certificate
of a Servicing Representative certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Representative stating that such Mortgage Loan was liquidated and that
all amounts received or to be received in connection with such liquidation that
are required to be deposited into the Collection Account have been so deposited,
or that such Mortgage Loan has become an REO Property, a copy of the Request for
Release shall be released by the Trustee or the applicable Custodian to the
Master Servicer or its designee.
(c) At the direction of the Master Servicer and upon written
certification of a Servicing Representative, each of the Trustee or the
applicable Custodian shall execute and deliver to the Master Servicer any court
pleadings, requests for trustee's sale or other documents reasonably necessary
to the foreclosure or trustee's sale in respect of a Mortgaged Property or to
any legal action brought to obtain judgment against any Mortgagor on the
Mortgage Note or Mortgage or to obtain a deficiency judgment, or to enforce any
other remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity, or shall execute and deliver to the Master
Servicer a power of attorney sufficient to authorize the Master Servicer or the
Sub-Servicer to execute such documents on its behalf, provided that each of the
Trustee or the applicable Custodian shall be obligated to execute the documents
identified above if necessary to enable the Master Servicer or the Sub-Servicer
to perform their respective duties hereunder or under the Sub-Servicing
Agreement. Each such certification shall include a request that such pleadings
or documents be executed by the Trustee or the applicable Custodian and a
statement as to the reason such documents or pleadings are required.
Section 3.18 Servicing Compensation.
As compensation for the activities of the Master Servicer hereunder,
the Master Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.24. In addition, the Master Servicer shall
be entitled to recover unpaid Servicing Fees out of Late Collections, Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii)
and out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.23. The right to receive the Servicing Fee may not
be transferred in whole or in part except in connection with the transfer of all
of the Master Servicer's responsibilities and obligations under this Agreement;
114
provided, however, that the Master Servicer may pay from the Servicing Fee any
amounts due to a Sub-Servicer pursuant to a Sub-Servicing Agreement entered into
under Section 3.02.
Additional servicing compensation in the form of assumption or
modification fees, late payment charges, NSF fees, reconveyance fees and other
similar fees and charges (other than Prepayment Charges) shall be retained by
the Master Servicer (subject to Section 3.24) only to the extent such fees or
charges are received by the Master Servicer. The Master Servicer shall also be
entitled pursuant to Section 3.11(a)(iv) to withdraw from the Collection
Account, and pursuant to Section 3.23(b) to withdraw from any REO Account, as
additional servicing compensation, interest or other income earned on deposits
therein, subject to Section 3.12. The Master Servicer shall be required to pay
all expenses incurred by it in connection with its servicing activities
hereunder (including premiums for the insurance required by Section 3.14, to the
extent such premiums are not paid by the related Mortgagors or by a
Sub-Servicer, it being understood however, that payment of such premiums by the
Master Servicer shall constitute Servicing Advances and servicing compensation
of each Sub-Servicer, and to the extent provided herein and in Section 8.05, the
fees and expenses of the Trustee) and shall not be entitled to reimbursement
therefor except as specifically provided herein.
Section 3.19 Reports to the Trustee; Collection Account Statements.
Not later than fifteen days after each Distribution Date, the Master
Servicer shall forward to the Trustee, the NIMS Insurer and the Depositor (and,
upon request, the Guarantor) a statement prepared by the Master Servicer setting
forth the status of the Collection Account as of the close of business on such
Distribution Date and showing, for the period covered by such statement, the
aggregate amount of deposits into and withdrawals from the Collection Account of
each category of deposit specified in Section 3.10(a) and each category of
withdrawal specified in Section 3.11. Such statement may be in the form of the
then current Xxxxxx Xxx Monthly Accounting Report for its Guaranteed Mortgage
Pass-Through Program with appropriate additions and changes, and shall also
include information as to the aggregate of the outstanding principal balances of
all of the Mortgage Loans as of the last day of the calendar month immediately
preceding such Distribution Date. Copies of such statement shall be provided by
the Trustee to any Certificateholder and to any Person identified to the Trustee
as a prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Master Servicer to
the Trustee.
Section 3.20 Statement as to Compliance.
The Master Servicer shall deliver to the Trustee, the Depositor, the
NIMS Insurer, the Guarantor and each Rating Agency on or before April 15 of each
calendar year commencing in 2003, an Officers' Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Master Servicer
during the preceding year and of performance under this Agreement has been made
under such officers' supervision and (ii) to the best of such officers'
knowledge, based on such review, the Master Servicer has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof. Copies of any such
115
statement shall be provided by the Trustee to any Certificateholder and to any
Person identified to the Trustee as a prospective transferee of a Certificate,
upon the request and at the expense of the requesting party, provided that such
statement is delivered by the Master Servicer to the Trustee.
Section 3.21 Independent Public Accountants' Servicing Report.
Not later than April 15 of each calendar year commencing in 2003, the
Master Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Master Servicer a
report stating that (i) it has obtained a letter of representation regarding
certain matters from the management of the Master Servicer which includes an
assertion that the Master Servicer has complied with certain minimum residential
mortgage loan servicing standards, identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association of
America, with respect to the servicing of residential mortgage loans during the
most recently completed fiscal year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of residential mortgage loans by
Sub-Servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Sub-Servicers. Immediately upon receipt of such report, the Master
Servicer shall furnish a copy of such report to the Trustee, the NIMS Insurer,
the Guarantor and each Rating Agency. Copies of such statement shall be provided
by the Trustee to any Certificateholder upon request at the Master Servicer's
expense, provided that such statement is delivered by the Master Servicer to the
Trustee. In the event such firm of independent certified public accountants
requires the Trustee to agree to the procedures performed by such firm, the
Master Servicer shall direct the Trustee in writing to so agree; it being
understood and agreed that the Trustee will deliver such letter of agreement in
conclusive reliance upon the direction of the Master Servicer, and the Trustee
has not made any independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or correctness
of such procedures.
Section 3.22 Access to Certain Documentation.
(a) The Master Servicer shall provide to the Office of Thrift
Supervision, the FDIC and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder
access to the documentation regarding the Mortgage Loans serviced by the Master
Servicer under this Agreement, as may be required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer designated by it. In addition, access to the documentation regarding
the Mortgage Loans serviced by the Master Servicer under this Agreement will be
provided to any Certificateholder, the Guarantor (with respect to Group I
Mortgage Loans only), the NIMS Insurer, the Trustee and to any Person identified
to the Master Servicer as a prospective transferee of a Certificate, upon
reasonable request during normal business hours at the offices of the Master
Servicer designated by it at the expense of the Person requesting such access.
116
(b) For a period of two years from the Closing Date, the Guarantor may
contact the Seller to confirm that the Seller continues to actively engage in a
program to originate mortgage loans to low-income families and to obtain other
non-proprietary information about the Seller's activities that may assist the
Guarantor in completing its own regulatory requirements during normal business
hours and subject to reimbursement for expenses. The Seller shall use reasonable
efforts to provide such information to the Guarantor.
Section 3.23 Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be taken
in the name of the Trustee, or its nominee, in trust for the benefit of the
Certificateholders. The Master Servicer, on behalf of REMIC 1, as applicable
(and on behalf of the Trustee for the benefit of the Certificateholders), shall
sell any REO Property as soon as practicable and, in any event, shall either
sell any REO Property before the close of the third taxable year after the year
REMIC 1 acquires ownership of such REO Property for purposes of Section
860G(a)(8) of the Code or request from the Internal Revenue Service, no later
than 60 days before the day on which the three-year grace period would otherwise
expire, an extension of the three-year grace period, unless the Master Servicer
shall have delivered to Trustee, the NIMS Insurer, the Guarantor and the
Depositor an Opinion of Counsel, addressed to the Trustee, the NIMS Insurer, the
Guarantor and the Depositor, to the effect that the holding by REMIC 1 of such
REO Property subsequent to three years after its acquisition will not result in
the imposition on any Trust REMIC of taxes on "prohibited transactions" thereof,
as defined in Section 860F of the Code, or cause any Trust REMIC to fail to
qualify as a REMIC under Federal law at any time that any Certificates are
outstanding. If an extension of the three-year period is granted, the Master
Servicer shall sell the related REO Property no later than 60 days prior to the
expiration of such extension period. The Master Servicer shall manage, conserve,
protect and operate each REO Property for the Certificateholders solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by any Trust REMIC of
any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code, or any "net income from foreclosure property" which
is subject to taxation under the REMIC Provisions.
(b) The Master Servicer shall segregate and hold all funds collected
and received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall establish and maintain, or
cause to be established and maintained, with respect to REO Properties an
account held in trust for the Trustee for the benefit of the Certificateholders
(the "REO Account"), which shall be an Eligible Account. The Master Servicer may
allow the Collection Account to serve as the REO Account, subject to separate
ledgers for each REO Property. The Master Servicer may retain or withdraw any
interest income paid on funds deposited in the REO Account.
(c) The Master Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Master Servicer manages and operates similar property owned
by the Master Servicer or any of its Affiliates, all on such terms and for such
period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited in the clearing account (which account must be an
117
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Master
Servicer's receipt thereof and shall thereafter deposit in the REO Account, in
no event more than two Business Days after the deposit of such funds into the
clearing account, all revenues received by it with respect to an REO Property
and shall withdraw therefrom funds necessary for the proper operation,
management and maintenance of such REO Property including, without limitation:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO Property.
To the extent that amounts on deposit in the REO Account with respect
to an REO Property are insufficient for the purposes set forth in clauses (i)
through (iii) above with respect to such REO Property, the Master Servicer shall
advance from its own funds as Servicing Advances such amount as is necessary for
such purposes if, but only if, the Master Servicer would make such advances if
the Master Servicer owned the REO Property and if such Servicing Advance would
not constitute a Nonrecoverable Advance.
Notwithstanding the foregoing, neither the Master Servicer nor the
Trustee shall:
(i) authorize the Trust Fund to enter into, renew or extend any New
Lease with respect to any REO Property, if the New Lease by its terms will give
rise to any income that does not constitute Rents from Real Property;
(ii) authorize any amount to be received or accrued under any New Lease
other than amounts that will constitute Rents from Real Property;
(iii) authorize any construction on any REO Property, other than
construction permitted under Section 856(e)(4)(B) of the Code; or
(iv) authorize any Person to Directly Operate any REO Property on any
date more than 90 days after its date of acquisition by the Trust Fund;
unless, in any such case, the Master Servicer has obtained an Opinion of Counsel
(the cost of which shall constitute a Servicing Advance), a copy of which shall
be provided to the NIMS Insurer and the Trustee, to the effect that such action
will not cause such REO Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code at any time that it is held
by REMIC 1, in which case the Master Servicer may take such actions as are
specified in such Opinion of Counsel.
The Master Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:
118
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that the Independent Contractor pay all costs and expenses incurred in
connection with the operation and management of such REO Property, including
those listed above, and remit all related revenues (net of such costs and
expenses) to the Master Servicer as soon as practicable, but in no event later
than thirty days following the receipt thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c) relating to any
such contract or to actions taken through any such Independent Contractor shall
be deemed to relieve the Master Servicer of any of its duties and obligations to
the Trustee on behalf of the Certificateholders with respect to the operation
and management of any such REO Property; and
(iv) the Master Servicer shall be obligated with respect thereto to the
same extent as if it alone were performing all duties and obligations in
connection with the operation and management of such REO Property.
The Master Servicer shall be entitled to enter into any agreement with
any Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.
(d) In addition to the withdrawals permitted under Section 3.23(c), the
Master Servicer may from time to time make withdrawals from the REO Account for
any REO Property: (i) to pay itself or any Sub-Servicer unpaid Servicing Fees in
respect of the related Mortgage Loan; and (ii) to reimburse itself or any
Sub-Servicer for unreimbursed Servicing Advances and Advances made in respect of
such REO Property or the related Mortgage Loan. On the Master Servicer
Remittance Date, the Master Servicer shall withdraw from each REO Account
maintained by it and deposit into the Distribution Account in accordance with
Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a), each
REO Disposition shall be carried out by the Master Servicer at such price and
upon such terms and conditions as the Master Servicer shall deem necessary or
advisable, as shall be normal and usual in its general servicing activities for
similar properties.
119
(f) The proceeds from the REO Disposition, net of any amount required
by law to be remitted to the Mortgagor under the related Mortgage Loan and net
of any payment or reimbursement to the Master Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Master Servicer Remittance Date in the month
following the receipt thereof for distribution on the related Distribution Date
in accordance with Section 4.01. Any REO Disposition shall be for cash only
(unless changes in the REMIC Provisions made subsequent to the Startup Day allow
a sale for other consideration).
(g) The Master Servicer shall file information returns with respect to
the receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
Section 3.24 Obligations of the Master Servicer in Respect of Prepayment
Interest Shortfalls.
The Master Servicer shall deliver to the Trustee for deposit into the
Distribution Account on or before 3:00 p.m. New York time on the Master Servicer
Remittance Date from its own funds an amount ("Compensating Interest") equal to
the lesser of (i) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting solely from Principal Prepayments during the
related Prepayment Period and (ii) the amount of its aggregate Servicing Fee for
the most recently ended calendar month.
Section 3.25 Obligations of the Master Servicer in Respect of Mortgage
Rates and Monthly Payments.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Monthly Payments or Stated Principal Balances that were made by
the Master Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Master Servicer, upon discovery or receipt
of notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor,
the Guarantor and any successor master servicer in respect of any such
liability; provided, that in the case of the Guarantor such indemnity shall only
apply with respect to Group I Mortgage Loans. Such indemnities shall survive the
termination or discharge of this Agreement. Notwithstanding the foregoing, this
Section 3.25 shall not limit the ability of the Master Servicer to seek recovery
of any such amounts from the related Mortgagor under the terms of the related
Mortgage Note, as permitted by law and shall not be an expense of the Trust.
Section 3.26 Net WAC Rate Carryover Reserve Fund.
No later than the Closing Date, the Trustee, on behalf of the
Certificateholders, shall establish and maintain with itself a separate,
segregated trust account titled, "Net WAC Rate Carryover Reserve Fund, Deutsche
Bank National Trust Company, as Trustee, in trust for registered Holders of Long
120
Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates, Series 2002-5." The
Trustee shall account for the right to receive payments from the Net WAC Rate
Carryover Reserve Fund as property that the Trustee holds separate and apart
from the REMIC Regular Interests.
(a) The following amounts shall be deposited into the Net WAC Rate
Carryover Reserve Fund:
(i) On each Distribution Date, the Trustee shall deposit all amounts
received with respect to the Cap Agreements;
(ii) On the Closing Date, the Depositor shall deposit, or cause to be
deposited, into the Net WAC Rate Carryover Reserve Fund $1,000;
(iii) On each Distribution Date as to which there is a Net WAC Rate
Carryover Amount payable to any of the Class A Certificates or the Mezzanine
Certificates, the Trustee has been directed by the Holders of the Class C
Certificates to, and therefore shall, deposit into the Net WAC Rate Carryover
Reserve Fund the amounts described in Section 4.01(d)(i)(k); and
(iv) On each Distribution Date as to which there are no Net WAC Rate
Carryover Amounts, the Trustee shall deposit into the Net WAC Rate Carryover
Reserve Fund on behalf of the Holders of the Class C Certificates, from amounts
otherwise distributable to such Class C Certificates, an amount such that when
added to other amounts already on deposit in the Net WAC Rate Carryover Reserve
Fund, the aggregate amount on deposit therein is equal to $1,000.
(b) The Net WAC Rate Carryover Reserve Fund shall be segregated into
two separate portions, for which the Trustee shall keep separate accounts.
"Portion 1" of the Net WAC Rate Carryover Reserve Fund will consist of amounts
deposited pursuant to Section 3.26(a)(i), above, plus any amounts earned on any
such funds while on deposit in the Net WAC Rate Carryover Reserve Fund. "Portion
2" of the Net WAC Rate Carryover Reserve Fund will consist of amounts deposited
pursuant to Sections 3.26(a)(ii), (a)(iii), and (a)(iv), above, plus any amounts
earned on any such funds while on deposit in the Net WAC Rate Carryover Reserve
Fund. Amounts distributed from the Net WAC Rate Carryover Reserve Fund under
Sections 4.01(d)(ii) and 3.26(c) shall be deemed to be distributed first from
Portion 1 of the Net WAC Rate Carryover Reserve Fund to the extent thereof and
then from Portion 2.
(c) Each Portion of the Net WAC Rate Carryover Reserve Fund shall be
treated as an "outside reserve fund" under applicable Treasury regulations and
will not be part of any REMIC created hereunder. For federal and state income
tax purposes, the Trustee shall be deemed to be the owner of Portion 1 of the
Net WAC Rate Carryover Reserve Fund and no amount will be transferred by any
REMIC to Portion 1 of the Net WAC Rate Carryover Reserve Fund. For federal and
state income tax purposes, the Holders of the Class C Certificates shall be
deemed to be the owners of Portion 2 of the Net WAC Rate Carryover Reserve Fund
and all amounts deposited into such Portion 2 of the Net WAC Rate Carryover
Reserve Fund (other than the initial deposit therein of $1,000) shall be treated
as amounts distributed by REMIC 4 to REMIC CX in respect of the REMIC 4 Regular
Interest LT4-C, and then distributed by REMIC CX to the Holders of the Class C
Certificates. For federal and state income tax purposes, payments in respect of
121
the Class A Certificates and the Mezzanine Certificates of Net WAC Rate
Carryover Amounts will not be payments with respect to a "regular interest" in a
REMIC within the meaning of Code Section 860G(a)(1).
(d) By accepting a Class C Certificate, each Holder of a Class C
Certificate shall be deemed to have directed the Trustee to, and the Trustee
shall pursuant to such direction, deposit into the Net WAC Rate Carryover
Reserve Fund the amounts described in Section 3.26(b)(iii) and (b)(iv) above on
each Distribution Date. By accepting a Class C Certificate, each Holder of a
Class C Certificate further agrees that such direction is given for good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
such acceptance.
(e) At the direction of the Holders of a majority in Percentage
Interest in the Class C Certificates, the Trustee shall direct any depository
institution maintaining Portion 2 of the Net WAC Rate Carryover Reserve Fund to
invest the funds in such account in one or more Permitted Investments bearing
interest or sold at a discount, and maturing, unless payable on demand, (i) no
later than the Business Day immediately preceding the date on which such funds
are required to be withdrawn from such account pursuant to this Agreement, if a
Person other than the Trustee or an Affiliate manages or advises such
investment, and (ii) no later than the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement, if the Trustee or an
Affiliate manages or advises such investment. If no investment direction of the
Holders of a majority in Percentage Interest in the Class C Certificates with
respect to Portion 2 of the Net WAC Rate Carryover Reserve Fund is received by
the Trustee, the Trustee shall invest the funds in such Portion in Permitted
Investments managed by the Trustee or an Affiliate of the kind described in
clause (vi) of the definition of Permitted Investments. Notwithstanding the
foregoing, any funds in Portion 2 of the Net WAC Rate Carryover Reserve Fund
shall be invested in Deutsche Bank Cash Management Fund 541 for so long as such
investment complies with clause (vi) of the definition of Permitted Investments.
All income and gain earned upon such investment shall be deposited into Portion
2 of the Net WAC Rate Carryover Reserve Fund.
The Trustee shall hold the funds in Portion 1 of the Net WAC Rate
Carryover Reserve Fund uninvested in an Eligible Account.
(f) For federal tax return and information reporting, the right of the
Certificateholders to receive payment on account of the Class A Certificates and
the Mezzanine Certificates from the Net WAC Rate Carryover Reserve Fund in
respect of any Net WAC Rate Carryover Amount shall be assigned a value of zero.
Section 3.27 Advance Facility.
(a) The Trustee, on behalf of the Trust Fund, at the direction of the
Master Servicer and with the consent of the NIMS Insurer, after consultation
with the Guarantor (or, if no Insured NIM Notes are outstanding, the Guarantor),
is hereby authorized to enter into a facility with any Person which provides
that such Person (an "Advancing Person") may make all or a portion of the
Advances and/or Servicing Advances to the Trust Fund under this Agreement,
although no such facility shall reduce or otherwise affect the Master Servicer's
obligation to fund such Advances and/or Servicing Advances. To the extent that
122
an Advancing Person makes all or a portion of any Advance or any Servicing
Advance and provides the Trustee with notice acknowledged by the Master Servicer
that such Advancing Person is entitled to reimbursement, such Advancing Person
shall be entitled to receive reimbursement pursuant to this Agreement for such
amount to the extent provided in Section 3.27(b). Such notice from the Advancing
Person shall specify the amount of the reimbursement and shall specify which
Section of this Agreement permits the applicable Advance or Servicing Advance to
be reimbursed. The Trustee shall be entitled to rely without independent
investigation on the Advancing Person's statement with respect to the amount of
any reimbursement pursuant to this Section 3.27 and with respect to the
Advancing Person's statement with respect to the Section of this Agreement that
permits the applicable Advance or Servicing Advance to be reimbursed. An
Advancing Person whose obligations are limited to the making of Advances and/or
Servicing Advances shall not be required to meet the qualifications of a Master
Servicer or a Sub-Servicer pursuant to Article VI hereof and will not be deemed
to be a Sub-Servicer under this Agreement. If the terms of a facility proposed
to be entered into with an Advancing Person by the Trust Fund would not
materially and adversely affect the interests of any Certificateholder, then the
NIMS Insurer shall not withhold its consent, after consultation with the
Guarantor, to the Trust Fund's entering into such facility.
(b) If an advancing facility is entered into, then the Master Servicer
shall not be permitted to reimburse itself under any Section specified or for
any amount specified by the Advancing Person in the notice described under
Section 3.27(a) above and acknowledged by the Master Servicer prior to the
remittance to the Trust Fund, but instead the Master Servicer shall include such
amounts in the applicable remittance to the Trustee made pursuant to Section
3.10(a). The Trustee is hereby authorized to pay to the Advancing Person
reimbursements for Advances and Servicing Advances from the Distribution Account
to the same extent the Master Servicer would have been permitted to reimburse
itself for such Advances and/or Servicing Advances in accordance with the
specified Sections had the Master Servicer itself made such Advance or Servicing
Advance. The Trustee is hereby authorized to pay directly to the Advancing
Person such portion of the Servicing Fee as the parties to any advancing
facility may agree.
(c) All Advances and Servicing Advances made pursuant to the terms of
this Agreement shall be deemed made and shall be reimbursed on a "first in-first
out" (FIFO) basis.
Section 3.28 Policy; Claims Under the PMI Policy
Notwithstanding anything to the contrary elsewhere in this Article III,
the Master Servicer shall not agree to any modification or assumption of a PMI
Mortgage Loan or take any other action with respect to a PMI Mortgage Loan that
could result in denial of coverage under the PMI Policy. The Master Servicer
shall notify the PMI Insurer that the Trustee, as trustee on behalf of the
Certificateholders, is the insured, as that term is defined in the PMI Policy,
of each PMI Mortgage Loan. The Master Servicer shall, on behalf of the Trustee,
prepare and file on a timely basis with the PMI Insurer, with a copy to the
Trustee, all claims which may be made under the PMI Policy with respect to the
PMI Mortgage Loans. The Master Servicer shall take all actions required under
the PMI Policy as a condition to the payment of any such claim. Any amount
123
received from the PMI Insurer with respect to any such PMI Mortgage Loan shall
be deposited by the Master Servicer, no later than two Business Days following
receipt thereof, into the Collection Account.
Section 3.29 Group I Mortgage Loans Subject to Relief Act.
If any of the Group I Mortgage Loans becomes subject to the Relief Act,
the Master Servicer shall, with respect to such Group I Mortgage Loan, complete
Xxxxxx Xxx Special Information Worksheet (for Military Indulgence) substantially
in the form set forth on Exhibit G-1 hereto and shall require the related
Mortgagor to complete Xxxxxx Mae Form 180 Request For Military Indulgence
substantially in the form set forth as Exhibit G-2 hereto. The Master Servicer
shall retain the executed originals of such forms in its servicing files related
to such Group I Mortgage Loan and, upon the Guarantor's request, shall promptly
deliver such forms to the Guarantor at the address specified by the Guarantor,
or if no such address is specified, to Xxxxxx Xxx, Management Portfolio
Processing Unit, 00000 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Mail Stop:
5H-1W-06. Each Remittance Report delivered by the Master Servicer to the
Guarantor pursuant to Section 4.04 in connection with a Distribution Date shall
include a schedule of the Group I Mortgage Loans subject to the Relief Act on
such Distribution Date and shall set forth the amount of Relief Act Interest
Shortfalls for such Distribution Date in connection with each such Group I
Mortgage Loan.
Section 3.30 Cap Reserve Agreements.
(a) The Depositor hereby directs the Trustee to execute and deliver on
behalf of the Trust each of the Cap Contracts and authorizes the Trustee to
perform its obligations thereunder on behalf of the Trust in accordance with the
respective terms of each Cap Agreement.
(b) If the Cap Provider no longer has a short-term certificate of
deposit rating of at least "A-1" from S&P or "P-1" from Xxxxx'x (or their
equivalent) (the "Approved Rating Thresholds"), the Trustee shall, promptly
after a Responsible Officer of the Trustee has received actual knowledge or
written notice of the reduction or withdrawal of the rating (it being understood
that the Trustee has no duty to monitor the ratings of the Cap Provider),
request the Cap Provider to (i) assign the Cap Agreements to a counterparty that
is a bank or other financial institution with the Approved Rating Thresholds; or
(ii) post collateral with the Trustee in an amount sufficient to restore the
immediately prior ratings of the Certificates and the NIM Notes (without regard
to the insurance policy, if any, issued by the NIMS Insurer).
(c) In the event that either of the Cap Agreements is canceled or
otherwise terminated for any reason (other than the exhaustion of the interest
rate protection provided thereby or replacement of the applicable Cap Agreement
by the Cap Provider in accordance with Section 3.30(b)), the Depositor shall, to
the extent a replacement contract is available, direct the Trustee to obtain
from a counterparty designated by the Depositor a replacement contract
comparable to the related Cap Agreement (which both such counterparty and such
replacement contract shall be acceptable to the Trustee and the Holders of the
Certificates entitled to at least 50% of the Voting Rights) providing interest
rate protection which is equal to the then-existing protection provided by the
related Cap Agreement, provided, however, that if the cost of any such
replacement contract providing the same interest rate protection would be
greater than the amount of any early termination payment received by the Trustee
124
under such Cap Agreement, the amount of interest rate protection provided by
such replacement contract may be reduced to a level such that the cost of such
replacement contract shall not exceed the amount of such early termination
payment.
Section 3.31 Excess Net WAC Rate Reserve Fund.
(a) No later than the Closing Date, the Trustee, on behalf of the
Certificateholders, shall establish and maintain with itself a separate,
segregated trust account titled, "Excess Net WAC Rate Reserve Fund, Deutsche
Bank National Trust Company, as Trustee, in trust for registered Holders of Long
Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates, Series 2002-5." The
Trustee shall account for the right to receive payments from the Excess Net WAC
Rate Reserve Fund as property that the Trustee holds separate and apart from the
REMIC Regular Interests. No amount will be deposited into the Excess Net WAC
Rate Reserve Fund on the Closing Date.
(b) On each Distribution Date as to which there is an Excess Pool Net
WAC Rate Amount with respect to the Class A-1 Certificates or the Class A-2
Certificates, the Trustee has been directed by the Holders of such Class A
Certificates to, and therefore will, deposit into the Excess Net WAC Rate
Reserve Fund, such Excess Pool Net WAC Rate Amount rather than distributing such
amounts to the Holders of the applicable Class A Certificates.
(c) On each Distribution Date as to which there is an Excess Mezzanine
Net WAC Rate Amount, the Trustee has been directed by the Holders of the
Mezzanine Certificates to, and therefore will, deposit into the Excess Net WAC
Rate Reserve Fund, such Excess Mezzanine Net WAC Rate Amount rather than
distributing such amounts to the Holders of the Mezzanine Certificates. If the
Excess Mezzanine Net WAC Rate Amount is less than the interest otherwise
distributable on all the Mezzanine Certificates for such Distribution Date, the
Trustee shall reduce the interest payable on the Mezzanine Certificates in the
following order: (i) first, the Class M-4A Certificates and the Class M-4B
Certificates, pro rata, based on their respective Certificate Principal
Balances; (ii) then, the Class M-3 Certificates; (iii) then, the Class M-2
Certificates; and (iv) finally, the Class M-1 Certificates.
(d) On each Distribution Date on which the Trustee deposits funds into
the Excess Net WAC Rate Reserve Fund, the Trustee shall hold all such amounts
for the benefit of the Holders of the Class A Certificates or the Class C
Certificates. If on such Distribution Date there is an Excess Group Net WAC Rate
Amount with respect to the Class A-1 Certificates or the Class A-2 Certificates,
the Trustee will distribute on such Distribution Date from the Excess Net WAC
Rate Reserve Fund to the Holders of the applicable Class A Certificates an
amount equal to such Excess Group Net WAC Amount. Also on such Distribution
Date, the Trustee shall distribute any amount remaining in the Excess Net WAC
Rate Reserve Fund after the distribution in the preceding sentence to the
Holders of the Class C Certificates.
(e) The Excess Net WAC Rate Reserve Fund will be part of the Trust but
not part of any Trust REMIC. For federal and state income tax purposes, any
Excess Pool Net WAC Rate Amount or Excess Mezzanine Net WAC Rate Amount paid
into the Excess Net WAC Rate Reserve Fund under paragraphs (b) or (c) will be
treated as paid as interest by REMIC 4 to the Holders of the applicable
Certificates, and then contributed by such Holders to the Excess Net WAC Rate
125
Reserve Fund. For federal and state income tax purposes, any amount paid from
the Excess Net WAC Rate Reserve Fund to the Holders of the Class A Certificates
or the Class C Certificates under paragraph (d) will not be payments with
respect to a "regular interest" in a REMIC within the meaning of Code Section
860(G)(a)(1). The Holders of the Class C Certificates will be deemed to be the
owners of the Excess Net WAC Rate Reserve Fund for federal and state income tax
purposes.
(f) By accepting a Class A Certificate or a Mezzanine Certificate, such
Certificateholder hereby agrees to direct the Trustee, and the Trustee hereby is
directed, to deposit into the Excess Net WAC Rate Reserve Fund the amounts
described above on each Distribution Date as to which there is any Excess Pool
Net WAC Rate Amount or Excess Mezzanine Net WAC Rate Amount, rather than
distributing such amounts to the Class A Certificates or the Mezzanine
Certificates. By accepting a Class A Certificate or a Mezzanine Certificate,
each such Certificateholder further agrees that such direction is given for good
and valuable consideration, the receipt and sufficiency of which is acknowledged
by such acceptance.
(g) At the direction of the Holders of a majority in Percentage
Interest in the Class C Certificates, the Trustee shall direct any depository
institution maintaining the Excess Net WAC Rate Reserve Fund to invest the funds
in such account in one or more Permitted Investments bearing interest or sold at
a discount, and maturing, unless payable on demand, (i) no later than the
Business Day immediately preceding the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement, if a Person other
than the Trustee or an Affiliate manages or advises such investment, and (ii) no
later than the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if the Trustee or an Affiliate manages or
advises such investment. If no investment direction of the Holders of a majority
in Percentage Interest in the Class C Certificates with respect to the Excess
Net WAC Rate Reserve Fund is received by the Trustee, the Trustee shall invest
the funds in such account in Permitted Investments managed by the Trustee or an
Affiliate of the kind described in clause (vi) of the definition of Permitted
Investments. Notwithstanding the foregoing, any funds in the Excess Net WAC Rate
Reserve Fund shall be invested in Deutsche Bank Cash Management Fund 541 for so
long as such investment complies with clause (vi) of the definition of Permitted
Investments. All income and gain earned upon such investment shall be deposited
into the Excess Net WAC Rate Reserve Fund.
(h) For federal tax return and information reporting, the right of the
Holders of the Class A Certificates and the Class C Certificates to receive
payments from the Excess Net WAC Rate Reserve Fund shall be assigned a value of
zero.
126
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Distributions.
(a) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account that portion of the Available Funds for such Distribution
Date consisting of the Group I Interest Remittance Amount and the Group II
Interest Remittance Amount for such Distribution Date, and make the following
disbursements and transfers in the order of priority described below, in each
case to the extent of the Group I Interest Remittance Amount or the Group II
Interest Remittance Amount remaining for such Distribution Date:
(i) the Group I Interest Remittance Amount shall be distributed:
(A) first, to Xxxxxx Xxx for payment of (i) the Guaranty Fee and (ii)
any Guarantor Reimbursement Amount then due;
(B) second, concurrently, to the Class A-1 Certificates and the Class
S-1 Certificates, the Monthly Interest Distributable Amount and any Unpaid
Interest Shortfall Amount for such Classes, allocated between the Class A-1
Certificates and the Class S-1 Certificates, pro rata, based on their respective
entitlements; and
(C) third, concurrently, to the Class A-2 Certificates and the Class
S-2 Certificates, the Monthly Interest Distributable Amount and any Unpaid
Interest Shortfall Amount for such Classes, in each case to the extent not paid
pursuant to Section 4.01(a)(ii)(A) below, allocated between the Class A-2
Certificates and the Class S-2 Certificates, pro rata, based on their respective
entitlements.
(ii) the Group II Interest Remittance Amount shall be distributed:
(A) first, concurrently, to the Class A-2 Certificates and the Class
S-2 Certificates, the Monthly Interest Distributable Amount and any Unpaid
Interest Shortfall Amount for such Classes, allocated between the Class A-2
Certificates and the Class S-2 Certificates, pro rata, based on their respective
entitlements; and
(B) second, concurrently, to the Class A-1 Certificates and the Class
S-1 Certificates, the Monthly Interest Distributable Amount and any Unpaid
Interest Shortfall Amount for such Classes, in each case to the extent not paid
pursuant to Section 4.01(a)(i)(B) above, allocated between the Class A-1
Certificates and the Class S-1 Certificates, pro rata, based on their respective
entitlements.
(iii) Any Group I Interest Remittance Amount and Group II Interest
Remittance Amount remaining undistributed following the distributions pursuant
to clauses (i) and (ii) above shall be distributed:
127
first, to the Class M-l Certificates, the related Monthly Interest
Distributable Amount;
second, to the Class M-2 Certificates, the related Monthly Interest
Distributable Amount;
third, to the Class M-3 Certificates, the related Monthly Interest
Distributable Amount; and
fourth, concurrently, to the Class M-4A Certificates and the Class M-4B
Certificates, the related Monthly Interest Distributable Amount for such
Classes, allocated between the Class M-4A Certificates and the Class M-4B
Certificates, pro rata, based on their respective entitlements.
(iv) Any Group I Interest Remittance Amount or any Group II Interest
Remittance Amount remaining undistributed following distributions pursuant to
clause (iii) above shall be used in determining the amount of Net Monthly Excess
Cashflow, if any, for such Distribution Date.
(b) On each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event is in effect, the Class A Certificates and the Mezzanine
Certificates shall be entitled to receive distributions in respect of principal
to the extent of the Group I Principal Distribution Amount and the Group II
Principal Distribution Amount in the following amounts and order of priority:
(i) first,
(A) (x) an amount equal to the Group I Principal Distribution Amount
shall be distributed in the following order of priority:
first, to Xxxxxx Xxx for payment of (i) the Guaranty Fee and (ii) any
Guarantor Reimbursement Amount then due (to the extent not paid from the Group I
Interest Remittance Amount for such Distribution Date);
second, to the Class A-1 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and then
(y) any portion of the Group II Principal Distribution Amount
distributable pursuant to Section 4.01(b)(i)(B)(x), below, that remains
following distribution to the Class A-2 Certificates shall be distributed as set
forth in Section 4.01(b)(i)(A)(x), above;
(B) (x) an amount equal to the Group II Principal Distribution Amount
shall be distributed to the Class A-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and then
128
(y) any portion of the Group I Principal Distribution Amount
distributable pursuant to Section 4.01(b)(i)(A)(x), above, that remains
following distribution to the Class A-1 Certificates, shall be distributed to
the Class A-2 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero.
(ii) second, any Group I Principal Distribution Amount and Group II
Principal Distribution Amount remaining undistributed following the
distributions pursuant to Section 4.01(b)(i) will be distributed:
first, to the Class M-1 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;
second, to the Class M-2 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero;
third, to the Class M-3 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and
fourth, concurrently, to the Class M-4A Certificates and the Class M-4B
Certificates, pro rata, based on their respective Certificate Principal
Balances, until the Certificate Principal Balances thereof have been reduced to
zero.
(iii) Any principal remaining undistributed pursuant to Sections
4.01(b)(i) and 4.01(b)(ii) above shall be used in determining the amount of Net
Monthly Excess Cashflow, if any, for such Distribution Date.
(c) On each Distribution Date (a) on or after the Stepdown Date and (b)
on which a Trigger Event is not in effect, the Class A Certificates and the
Mezzanine Certificates shall be entitled to receive distributions in respect of
principal to the extent of the Group I Principal Distribution Amount and the
Group II Principal Distribution Amount in the following amounts and order of
priority:
(i) first,
(A) (x) an amount equal to the Class A-1 Principal Distribution Amount
shall be distributed in the following order of priority:
first, to Xxxxxx Mae for payment of (i) the Guaranty Fee and (ii) any
Guarantor Reimbursement Amount then due (to the extent not paid from the Group I
Interest Remittance Amount for such Distribution Date);
second, to the Class A-1 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and then
129
(y) any portion of the Class A-2 Principal Distribution Amount
distributable pursuant to Section 4.01(c)(i)(B)(x), below, that remains
following distribution to the Class A-2 Certificates, shall be distributed as
set forth in Section 4.01(c)(i)(A)(x) above;
(B) (x) an amount equal to the Class A-2 Principal Distribution Amount
shall be distributed to the Class A-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and then
(y) any portion of the Class A-1 Principal Distribution Amount
distributable pursuant to Section 4.01(c)(i)(A)(x), above, that remains
following distribution to the Class A-1 Certificates, shall be distributed to
the Class A-2 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero.
(ii) second, any Group I Principal Distribution Amount and Group II
Principal Distribution Amount remaining undistributed following the distribution
pursuant to Section 4.01(c)(i) shall be distributed:
first, to the Class M-1 Certificates, the Class M-l Principal
Distribution Amount, until the Certificate Principal Balance thereof has been
reduced to zero;
second, to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount, until the Certificate Principal Balance thereof has been
reduced to zero;
third, to the Class M-3 Certificates, the Class M-3 Principal
Distribution Amount, until the Certificate Principal Balance thereof has been
reduced to zero; and
fourth, concurrently, to the Class M-4A Certificates and the Class M-4B
Certificates, their pro rata portion of the Class M-4 Principal Distribution
Amount (pro rated based on their respective Certificate Principal Balances),
until the Certificate Principal Balances thereof have been reduced to zero.
(iii) Any principal remaining undistributed following distributions
pursuant to Sections 4.01(c)(i) and 4.01(c)(ii) shall be used in determining the
amount of Net Monthly Excess Cashflow, if any, for such Distribution Date.
(d) (i) On each Distribution Date, any Net Monthly Excess Cashflow
shall be paid in the following order or priority, in each case to the extent of
the Net Monthly Excess Cashflow remaining undistributed:
(a) to the Class or Classes of Certificates then entitled to receive
distributions in respect of principal, in an amount equal to any Extra Principal
Distribution Amount, payable to such Class or Classes of Certificates as part of
130
the Group I Principal Distribution Amount or the Group II Principal Distribution
Amount, as applicable, pursuant to Section 4.01(b) or Section 4.01(c) above, as
applicable;
(b) concurrently, to the Class A Certificates and the Class S
Certificates, in an amount equal to the Unpaid Interest Shortfall Amount, if
any, for such Classes for such Distribution Date to the extent remaining unpaid
after distribution of the Group I Interest Remittance Amount and the Group II
Interest Remittance Amount on such Distribution Date, allocated between the
Class A Certificates and the Class S Certificates, pro rata, based on their
respective entitlements;
(c) to the Class M-1 Certificates, in an amount equal to the Unpaid
Interest Shortfall Amount, if any, for such Class for such Distribution Date;
(d) to the Class M-1 Certificates, in an amount equal to the Allocated
Realized Loss Amount, if any, for such Class for such Distribution Date;
(e) to the Class M-2 Certificates, in an amount equal to the Unpaid
Interest Shortfall Amount, if any, for such Class for such Distribution Date;
(f) to the Class M-2 Certificates, in an amount equal to the Allocated
Realized Loss Amount, if any, for such Class for such Distribution Date;
(g) to the Class M-3 Certificates, in an amount equal to the Unpaid
Interest Shortfall Amount, if any, for such Class for such Distribution Date;
(h) to the Class M-3 Certificates, in an amount equal to the Allocated
Realized Loss Amount, if any, for such Class for such Distribution Date;
(i) concurrently, to the Class M-4A Certificates and the Class M-4B
Certificates, each in an amount equal to the Unpaid Interest Shortfall Amount,
if any, for such Classes for such Distribution Date, pro rata based on their
respective entitlements;
(j) concurrently, to the Class M-4A Certificates and the Class M-4B
Certificates, each in an amount equal to the Allocated Realized Loss Amount, if
any, for such Classes for such Distribution Date, pro rata, based on their
respective entitlements;
(k) to the Net WAC Rate Carryover Reserve Fund, the amount by which the
sum of any Net WAC Rate Carryover Amounts, if any, with respect to the Class A
Certificates and the Mezzanine Certificates for such Distribution Date exceeds
the sum of (i) any amounts received by the Trustee with respect to the Cap
Agreements for such Distribution Date and (ii) any amounts in the Net WAC Rate
Carryover Reserve Fund that were not distributed on the prior Distribution Dates
(or, if no Net WAC Rate Carryover Amounts are payable to such Classes of
Certificates on such Distribution Date, to the Net WAC Rate Carryover Reserve
Fund, an amount such that when added to other amounts already on deposit in the
Net WAC Rate Carryover Reserve Fund, the aggregate amount on deposit therein is
equal to $1,000);
131
(l) if such Distribution Date follows the Prepayment Period during
which occurs the latest date on which a Prepayment Charge may be required to be
paid in respect of any Mortgage Loans, to REMIC PX, as holder of REMIC 4 Regular
Interest LT4-P, in reduction of the Uncertificated Principal Balance thereof,
until the Uncertificated Principal Balance thereof is reduced to zero;
(m) to REMIC CX, as holder of REMIC 4 Regular Interest LT4-C, the
Monthly Interest Distributable Amount for REMIC 4 Regular Interest LT4-C plus,
until the Uncertificated Principal Balance of REMIC 4 Regular Interest LT4-C is
reduced to zero, any Overcollateralization Release Amount for such Distribution
Date (in both cases, net of such portion of amounts payable pursuant to this
clause (m) that were paid pursuant to clause (k) above);
(n) any remaining amounts to the Class R Certificates (in respect of
the appropriate Class R-4 Interest).
(ii) On each Distribution Date, after making the distributions of the
Available Funds as provided in this Section 4.01 and after depositing in the Net
WAC Rate Carryover Reserve Fund any payments received under the Cap Agreements,
the Trustee shall withdraw from the Net WAC Rate Carryover Reserve Fund the
amounts on deposit therein and shall distribute such amounts in the following
order of priority to the extent of amounts remaining in the Net WAC Rate
Carryover Reserve Fund:
(a) Any amounts received by the Trustee on account of the Group I Cap
Agreement shall be distributed:
(A) first, to the Class A-1 Certificates, the related Net WAC Rate
Carryover Amount; and
(B) second, to the Class A-2 Certificates, the related Net WAC Rate
Carryover Amount to the extent not paid pursuant to Section 4.01(d)(ii)(b)(A)
below.
(b) Any amounts received by the Trustee on account of the Group II Cap
Agreement shall be distributed:
(A) first, to the Class A-2 Certificates, the related Net WAC Rate
Carryover Amount; and
(B) second, to the Class A-1 Certificates, the related Net WAC Rate
Carryover Amount to the extent not paid pursuant to Section 4.01(d)(ii)(a)(A)
above; and
(c) Any amounts received by the Trustee on account of the Cap
Agreements remaining undistributed following the distributions pursuant to
Sections 4.01(d)(ii)(a) and 401(d)(ii)(b) above and any amounts deposited in the
Net WAC Rate Carryover Reserve Fund from the Net Monthly Excess Cashflow shall
be distributed:
132
(A) first, concurrently, to the Class A-1 Certificates and the Class
A-2 Certificates, the related Net WAC Rate Carryover Amount to the extent not
paid pursuant to Sections 4.01(d)(ii)(a) and 4.01(d)(ii)(b) above, allocated
between the Class A-1 Certificates and the Class A-2 Certificates, pro rata,
based on their respective Net WAC Rate Carryover Amounts for such Distribution
Date;
(B) second, to the Class M-l Certificates, the related Net WAC Rate
Carryover Amount;
(C) third, to the Class M-2 Certificates, the related Net WAC Rate
Carryover Amount;
(D) fourth, to the Class M-3 Certificates, the related Net WAC Rate
Carryover Amount; and
(E) fifth, concurrently, to the Class M-4A Certificates and the Class
M-4B Certificates, the related Net WAC Rate Carryover Amount, pro rata. based on
their respective Net WAC Rate Carryover Amounts for such Distribution Date.
On the Distribution Date in November 2006, after making all other
distributions on such Distribution Date (including to the Class A Certificates
and the Mezzanine Certificates out of the Net WAC Rate Carryover Reserve Fund),
the Trustee shall distribute to itself all remaining amounts on deposit in
Portion 1 of the Net WAC Rate Carryover Reserve Fund, and shall distribute all
remaining amounts in Portion 2 of the Net WAC Rate Carryover Reserve Fund to the
Class C Certificates.
(iii) 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 or collected by
the Master Servicer during the related Prepayment Period will be withdrawn from
the Distribution Account and distributed by the Trustee to REMIC 4 Regular
Interest LT4-P, and shall not be available for distribution to any other Class
of Certificates. The payment of the foregoing amounts in respect of such Regular
Interests shall not reduce the Uncertificated Principal Balance thereof.
(e) Without limiting the provisions of Section 9.01(b), by acceptance
of the Class R Certificates the Holders of the Class R Certificates agree, and
it is the understanding of the parties hereto, for so long as the Cap Agreements
or any of the NIM Notes are outstanding, to assign and transfer their rights to
receive any amounts otherwise distributable to the Holders of the Class R
Certificates (and such rights are hereby assigned and transferred) to the
Holders of the Class C Certificates to be paid to the Holders of the Class C
Certificates.
(f) All distributions made with respect to each Class of Certificates
on each Distribution Date shall be allocated pro rata among the outstanding
Certificates in such Class based on their respective Percentage Interests.
Payments in respect of each Class of Certificates on each Distribution Date will
be made to the Holders of the respective Class of record on the related Record
Date (except as otherwise provided in this Section 4.01 or Section 9.01
respecting the final distribution on such Class), based on the aggregate
133
Percentage Interest represented by their respective Certificates, and shall be
made by wire transfer of immediately available funds to the account of any such
Holder at a bank or other entity having appropriate facilities therefor, if such
Holder shall have so notified the Trustee in writing at least five Business Days
prior to the Record Date immediately prior to such Distribution Date and is the
registered owner of Certificates having an initial aggregate Certificate
Principal Balance or Notional Amount that is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the Original Class Certificate Principal
Balance or Original Class Notional Amount of such Class of Certificates, or
otherwise by check mailed by first class mail to the address of such Holder
appearing in the Certificate Register. Notwithstanding the foregoing, the
Holders of the Class A-1 Certificates and the Class S-1 Certificates shall
receive all distributions pursuant to this Section 4.01(f) by wire transfer of
immediately available funds. The final distribution on each Certificate will be
made in like manner, but only upon presentment and surrender of such Certificate
at the Corporate Trust Office of the Trustee or such other location specified in
the notice to Certificateholders of such final distribution.
Payments to the Guarantor on each Distribution Date will be made by
wire transfer of immediately available funds to the following Federal Reserve
Account:
Telegraphic: FNMA NYC
ABA: 000-000-000
Ref: 2002-T17
Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Certificates. None of the Trustee, the Depositor, the Master Servicer or the
Seller shall have any responsibility therefor except as otherwise provided by
applicable law.
(g) The rights of the Certificateholders to receive distributions in
respect of the Certificates, and all interests of the Certificateholders in such
distributions, shall be as set forth in this Agreement. None of the Holders of
any Class of Certificates, the Trustee or the Master Servicer shall in any way
be responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.
(h) Except as otherwise provided in Section 9.01, whenever the Trustee
expects that the final distribution with respect to any Class of Certificates
will be made on the next Distribution Date, the Trustee shall, no later than
three (3) days before the related Distribution Date, mail to the NIMS Insurer,
the Guarantor and each Holder on such date of such Class of Certificates a
notice to the effect that:
134
(i) the Trustee expects that the final distribution with respect to
such Class of Certificates will be made on such Distribution Date but only upon
presentation and surrender of such Certificates at the office of the Trustee
therein specified, and
(ii) no interest shall accrue on such Certificates from and after the
end of the related Accrual Period; provided, that such notice shall be sent to
the Guarantor only with respect to Guaranteed Certificates.
Any funds not distributed to any Holder or Holders of Certificates of
such Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust by the Trustee and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.01(h) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee shall, directly or through an agent, mail a final
notice to the remaining non-tendering Certificateholders concerning surrender of
their Certificates but shall continue to hold any remaining funds for the
benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust fund. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Greenwich Capital Markets, Inc. and UBS
Warburg, LLC, pro rata, all such amounts, and all rights of non-tendering
Certificateholders in or to such amounts shall thereupon cease. No interest
shall accrue or be payable to any Certificateholder on any amount held in trust
by the Trustee as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section
4.01(h).
(i) Notwithstanding anything to the contrary herein, (i) in no event
shall the Certificate Principal Balance of a Mezzanine Certificate be reduced
more than once in respect of any particular amount both (a) allocated to such
Certificate in respect of Realized Losses pursuant to Section 4.06 and (b)
distributed to such Certificate in reduction of the Certificate Principal
Balance thereof pursuant to this Section 4.01, and (ii) in no event shall the
Uncertificated Principal Balance of a REMIC Regular Interest be reduced more
than once in respect of any particular amount both (a) allocated to such REMIC
Regular Interest in respect of Realized Losses pursuant to Section 4.06 and (b)
distributed on such REMIC Regular Interest in reduction of the Uncertificated
Principal Balance thereof pursuant to Section 4.05
(j) Any amounts distributed to REMIC CX on any Distribution Date in
respect of REMIC 4 Regular Interest LT4-C under Section 4.01(d)(i) shall, on
such Distribution Date, be distributed by REMIC CX to the Holders of the Class C
Certificates. Any amounts remaining in REMIC CX shall be distributed to the
Holders of the Class R-CX Certificates in respect of the Class R-CX Interest.
Any amounts distributed to REMIC PX on any Distribution Date in respect of REMIC
4 Regular Interest LT4-P shall, on such Distribution Date, be distributed by
REMIC PX to the Holders of the Class P Certificates. Any amounts remaining in
REMIC PX shall be distributed to the Holders of the Class R-PX Certificates in
respect of the Class R-PX Interest. For the avoidance of doubt, the provisions
135
of Sections 4.01(f), 4.01(g) and 4.01(h) shall apply to the Class C Certificates
and the Class P Certificates.
Section 4.02 Preference Claims.
The Trustee shall promptly notify the NIMS Insurer of any proceeding or
the institution of any action, of which a Responsible Officer of the Trustee has
actual knowledge, seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership or similar law (a "Preference
Claim") of any distribution made with respect to the Class C Certificates or the
Class P Certificates. Each Holder of the Class C Certificates or the Class P
Certificates, by its purchase of such Certificates, the Master Servicer and the
Trustee hereby agree that the NIMS Insurer may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without limitation, (i) the
direction of any appeal of any order relating to such Preference Claim and (ii)
the posting of any surety, supersedes or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the NIMS Insurer
shall be subrogated to the rights of the Master Servicer, the Trustee and each
Holder of the Class C Certificates and the Class P Certificates in the conduct
of any such Preference Claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such Preference Claim; provided, however, that the NIMS
Insurer will not have any rights with respect to any Preference Claim set forth
in this paragraph unless the Trustee, as indenture trustee with respect to the
Insured NIM Notes or the holder of any Insured NIM Notes has been required to
relinquish a distribution made on the Class C Certificates, the Class P
Certificates or the Insured NIM Notes, as applicable, and the NIMS Insurer made
a payment in respect of such relinquished amount.
Section 4.03 Statements.
(a) On each Distribution Date, based, as applicable, on information
provided to it by the Master Servicer, the Trustee shall prepare and make
available by electronic medium (as set forth in the penultimate paragraph of
this Section 4.03(a)) to each Holder of the Regular Certificates, the Trustee,
the Master Servicer, the NIMS Insurer, the Guarantor and the Rating Agencies, a
statement as to the distributions made on such Distribution Date:
(i) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Regular Certificates (other than the Class S
Certificates), separately identified, allocable to principal and the amount of
the distribution made to the Holders of the Class P Certificates allocable to
Prepayment Charges and Master Servicer Prepayment Charge Payment Amounts;
(ii) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Regular Certificates (other than the Class P
Certificates), allocable to interest, separately identified;
(iii) the Overcollateralized Amount, the Overcollateralization Release
Amount, the Overcollateralization Deficiency Amount and the
136
Overcollateralization Target Amount as of such Distribution Date and the Excess
Overcollateralized Amount for the Mortgage Pool, for such Distribution Date;
(iv) the aggregate amount of servicing compensation received by the
Master Servicer with respect to the related Due Period and such other customary
information as the Trustee deems necessary or desirable, or which a
Certificateholder reasonably requests, to enable Certificateholders to prepare
their tax returns;
(v) the Deficiency Amount, the Guarantor Payments and the Guarantor
Reimbursement Amount for such Distribution Date;
(vi) the aggregate amount of Advances for the related Due Period;
(vii) the aggregate Stated Principal Balance of the Mortgage Loans at
the Close of Business at the end of the related Due Period;
(viii) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage Rate of the Mortgage
Loans as of the related Determination Date;
(ix) the number and aggregate unpaid principal balance of Mortgage
Loans (a) delinquent 30-59 days, (b) delinquent 60-89 days, (c) delinquent 90 or
more days in each case, as of the last day of the preceding calendar month
provided, however that any aggregate unpaid principal balance of Mortgage Loans
shall be reported as of the last day of the related Due Period, (d) as to which
foreclosure proceedings have been commenced and (e) with respect to which the
related Mortgagor has filed for protection under applicable bankruptcy laws,
with respect to whom bankruptcy proceedings are pending or with respect to whom
bankruptcy protection is in force;
(x) with respect to any Mortgage Loan that became an REO Property
during the preceding Prepayment Period, the unpaid principal balance and the
Principal Balance of such Mortgage Loan as of the date it became an REO
Property;
(xi) the total number and cumulative principal balance of all REO
Properties as of the Close of Business of the last day of the preceding
Prepayment Period;
(xii) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xiii) the aggregate amount of Realized Losses incurred during the
related Prepayment Period and the cumulative amount of Realized Losses;
(xiv) the aggregate amount of Extraordinary Trust Fund expenses
withdrawn from the Collection Account or the Distribution Account for such
Distribution Date;
(xv) the Certificate Principal Balance of the Class A Certificates, the
Mezzanine Certificates and the Class C Certificates, after giving effect to the
distributions made on such Distribution Date, and the Notional Amount of the
137
Class S Certificates and the Class C Certificates, after giving effect to the
distributions made on such Distribution Date;
(xvi) the Monthly Interest Distributable Amount in respect of the Class
A Certificates, the Class S Certificates, the Mezzanine Certificates and the
Class C Certificates for such Distribution Date and the Unpaid Interest
Shortfall Amount, if any, with respect to the Class A Certificates, the Class S
Certificates and the Mezzanine Certificates for such Distribution Date;
(xvii) the aggregate amount of any Prepayment Interest Shortfalls for
such Distribution Date, to the extent not covered by payments by the Master
Servicer pursuant to Section 3.24, and the aggregate amount of any Relief Act
Interest Shortfalls for such Distribution Date;
(xviii) the Credit Enhancement Percentage for such Distribution Date;
(xix) the Net WAC Rate Carryover Amount for the Class A Certificates
and the Mezzanine Certificates, if any, for such Distribution Date and the
amount remaining unpaid after reimbursements therefor on such Distribution Date;
(xx) the Trustee Fee on such Distribution Date;
(xxi) whether a Stepdown Date or a Trigger Event has occurred;
(xxii) the Available Funds;
(xxiii) the respective Pass-Through Rates applicable to the Class A
Certificates, the Class S Certificates, the Mezzanine Certificates and the Class
C Certificates for such Distribution Date and the Pass-Through Rate applicable
to the Class A Certificates and the Mezzanine Certificates for the immediately
succeeding Distribution Date;
(xxiv) the Guaranty Fee to be paid to the Guarantor with respect to the
Guaranteed Certificates for such Distribution Date;
(xxv) such other information as the Guarantor may reasonably request in
such format as reasonably required by the Guarantor and any other information
that is required by the Code and regulations thereunder to be made available to
Certificateholders;
(xxvi) the amount on deposit in the Net WAC Rate Carryover Reserve
Fund;
(xxvii) (A) the dollar amount of payments received related to claims
under the PMI Policy during the related Prepayment Period (and the number of
Mortgage Loans to which such payments related) and (B) the aggregate dollar
138
amount of payments received related to claims under the PMI Policy since the
Cut-off Date (and the number of Mortgage Loans to which such payments related);
(xxviii) (A) the dollar amount of claims made under the PMI Policy that
were denied during the related Prepayment Period (and the number of Mortgage
Loans to which such denials related) and (B) the aggregate dollar amount of
claims made under the PMI Policy that were denied since the Cut-off Date (and
the number of Mortgage Loans to which such denials related); and
(xxix) for such Distribution Date, the amount of any payment made by
the Cap Provider under each Cap Agreement.
Subject to Section 4.03(f) below, the Trustee will make such statement
(and, at its option, any additional files containing the same information in an
alternative format) available each month to Certificateholders, the Master
Servicer, the NIMS Insurer, the Guarantor and the Rating Agencies via the
Trustee's internet website. The Trustee's internet website shall initially be
located at "http:\\xxx.xxxxxxxxxxxxxx.xx.xxx. Assistance in using the website
can be obtained by calling the Trustee's customer service desk at
0-000-000-0000. 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 Trustee shall have the right
to change the way such statements are distributed in order to make such
distribution more convenient and/or more accessible to the above parties and the
Trustee shall provide timely and adequate notification to all above parties
regarding any such changes.
In the case of information furnished pursuant to subclauses (i) through
(iii) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Closing Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall, upon written request, furnish to each Person who at any
time during the calendar year was a Certificateholder of a Regular Certificate,
if requested in writing by such Person, such information as is reasonably
necessary to provide to such Person a statement containing the information set
forth in subclauses (i) through (iii) above, aggregated for such calendar year
or applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be prepared and furnished
by the Trustee to Certificateholders pursuant to any requirements of the Code as
are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the Holders
of the Residual Certificates and the NIMS Insurer a copy of the reports
forwarded to the Regular Certificateholders in respect of such Distribution Date
with such other information as the Trustee deems necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Holder of a Residual Certificate, if requested in writing by
such Person, such information as is reasonably necessary to provide to such
Person a statement containing the information provided pursuant to the previous
paragraph aggregated for such calendar year or applicable portion thereof during
which such Person was a Holder of a Residual Certificate. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
139
comparable information shall be prepared and furnished to Certificateholders by
the Trustee pursuant to any requirements of the Code as from time to time in
force.
(e) On each Distribution Date the Trustee shall provide Bloomberg
Financial Markets, L.P. ("Bloomberg") CUSIP level factors for each Class of
Certificates as of such Distribution Date, using a format and media mutually
acceptable to the Trustee and Bloomberg.
(f) On the fourth Business Day preceding each Distribution Date, the
Trustee shall deliver to the Guarantor (by electronic medium as specified in the
next sentence) a statement identifying the Class Factor for each Class of
Certificates. The Trustee shall deliver such statement on or before 12:00 noon
(New York time) on such day via the internet using the following domain name:
xxxx_xxxxx@xxxxxxxxx.xxx. If a Guarantor Payment will be payable on a
Distribution Date, all information required under Section 4.03(a) must also be
similarly delivered to Guarantor on the third Business Day preceding such
Distribution Date. The second consecutive failure by the Trustee to deliver the
Class Factor (or to deliver an accurate Class Factor) to the Guarantor shall
constitute an event of default and permit the Guarantor to remove the Trustee
for cause; provided that the Master Servicer had delivered the Remittance Report
for the related Distribution Date to the Trustee pursuant to Section 4.04.
Section 4.04 Remittance Reports; Advances.
(a) Within one Business Day after each Determination Date, but in no
event later than such date which would allow the Trustee to submit a claim to
the NIMS Insurer under the Indenture, the Master Servicer shall deliver to the
NIMS Insurer, the Guarantor and the Trustee by telecopy or electronic mail (or
by such other means as the Master Servicer, the NIMS Insurer, the Guarantor and
the Trustee, as the case may be, may agree from time to time) a Remittance
Report with respect to the related Distribution Date. All such reports shall be
delivered to the Guarantor at xxxxxx_xxxxxxxxxxxxxx@xxxxxxxxx.xxx. Not later
than each Master Servicer Remittance Date (or, in the case of certain
information, as agreed between the Trustee and the Master Servicer, not later
than four Business Days after the end of each Due Period), the Master Servicer
shall deliver or cause to be delivered to the Trustee in addition to the
information provided on the Remittance Report, such other information reasonably
available to it with respect to the Mortgage Loans as the Trustee may reasonably
require to perform the calculations necessary to make the distributions
contemplated by Section 4.01 and to prepare the statements to Certificateholders
contemplated by Section 4.03. The Trustee shall not be responsible to recompute,
recalculate or verify any information provided to it by the Master Servicer.
(b) The amount of Advances to be made by the Master Servicer for any
Distribution Date shall equal, subject to Section 4.04(d), the sum of (i) the
aggregate amount of Monthly Payments (with each interest portion thereof net of
the related Servicing Fee), due on the related Due Date in respect of the
Mortgage Loans, which Monthly Payments were delinquent as of the close of
business on the related Determination Date, plus (ii) with respect to each REO
Property, which REO Property was acquired during or prior to the related
Prepayment Period and as to which such REO Property an REO Disposition did not
occur during the related Prepayment Period, an amount equal to the excess, if
any, of the Monthly Payments (with each interest portion thereof net of the
related Servicing Fee) that would have been due on the related Due Date in
140
respect of the related Mortgage Loans, over the net income from such REO
Property transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date.
On or before 3:00 p.m. New York time on the Master Servicer Remittance
Date, the Master Servicer shall remit in immediately available funds to the
Trustee for deposit in the Distribution Account an amount equal to the aggregate
amount of Advances, if any, to be made in respect of the Mortgage Loans and REO
Properties for the related Distribution Date either (i) from its own funds or
(ii) from the Collection Account, to the extent of funds held therein for future
distribution (in which case, it will cause to be made an appropriate entry in
the records of Collection Account that amounts held for future distribution have
been, as permitted by this Section 4.04, used by the Master Servicer in
discharge of any such Advance) or (iii) in the form of any combination of (i)
and (ii) aggregating the total amount of Advances to be made by the Master
Servicer with respect to the Mortgage Loans and REO Properties. Any amounts held
for future distribution and so used shall be appropriately reflected in the
Master Servicer's records and replaced by the Master Servicer by deposit in the
Collection Account on or before any future Master Servicer Remittance Date to
the extent that the Available Funds for the related Distribution Date
(determined without regard to Advances to be made on the Master Servicer
Remittance Date) shall be less than the total amount that would be distributed
to the Classes of Certificateholders pursuant to Section 4.01 on such
Distribution Date if such amounts held for future distributions had not been so
used to make Advances. The Trustee will provide notice to the NIMS Insurer, the
Guarantor and the Master Servicer by telecopy by the close of business on any
Master Servicer Remittance Date in the event that the amount remitted by the
Master Servicer to the Trustee on such date is less than the Advances required
to be made by the Master Servicer for the related Distribution Date.
(c) The obligation of the Master Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
Mortgage Loan is paid in full or until the recovery of all Liquidation Proceeds
thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Master Servicer
if such Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance or Servicing Advance, if
made, would constitute a Nonrecoverable Advance, shall be evidenced by an
Officers' Certificate of the Master Servicer delivered to the NIMS Insurer, the
Guarantor, the Depositor and the Trustee.
Section 4.05 Distributions on the REMIC Regular Interests.
(a) On each Distribution Date, the Trustee shall cause the Group I
Interest Remittance Amount and the Group I Principal Remittance Amount, in the
following order of priority, to be distributed by REMIC 1 to REMIC 2 on account
of the REMIC 1 Regular Interests or withdrawn from the Distribution Account and
distributed to the Holders of the Class R Certificates (in respect of the Class
R-1 Interest), as the case may be:
141
(i) first, with respect to the Group I Mortgage Loans with Adjusted Net
Minimum Mortgage Rates of less than 4.25%, to the Holders of REMIC 1 Regular
Interest LT1A-B in an amount equal to (A) the Uncertificated Accrued Interest
for such REMIC 1 Regular Interest for such Distribution Date, plus (B) any
amounts in respect thereof remaining unpaid from previous Distribution Dates,
and with respect to the Group I Mortgage Loans with Adjusted Net Minimum
Mortgage Rates of 4.25% or greater, in the following order: first to the Holders
of each REMIC 1 S1 Interest in ascending numerical order, then to the Holders of
REMIC 1 Regular Interest LT1A-A and REMIC 1 Regular Interest LT1A-P, in each
case, in an amount equal to (A) the Uncertificated Accrued Interest for such
REMIC 1 Regular Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates;
(ii) second, to the Holders of REMIC 1 Regular Interest LT1A-P, 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;
(iii) third, the remainder of the Group I Interest Remittance Amount
and the Group I Principal Remittance Amount for such Distribution Date with
respect to those Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates
of less than 4.25%, to the Holders of REMIC 1 Regular Interest LT1A-B until the
Uncertificated Principal Balance of such REMIC 1 Regular Interest is reduced to
zero and with respect to those Group I Mortgage Loans with Adjusted Net Minimum
Mortgage Rates of 4.25% or greater, in the following order, first to the Holders
of REMIC 1 Regular Interest LT1A-A, then to the Holders of each REMIC 1 S1
Interest, in descending numerical order, until the Uncertificated Principal
Balance of each such REMIC 1 Regular Interest is reduced to zero; and
(iv) fourth, any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-1 Interest).
On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Group I Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC 1 to the Holders of REMIC 1 Regular Interest
LT1A-P. The payment of the foregoing amounts to the Holders of REMIC 1 Regular
Interest LT1A-P shall not reduce the Uncertificated Principal Balance thereof.
(b) On each Distribution Date, the Trustee shall cause the Group II
Interest Remittance Amount and the Group II Principal Remittance Amount, in the
following order of priority, to be distributed by REMIC 1 to REMIC 2 on account
of the REMIC 1 Regular Interests or withdrawn from the Distribution Account and
distributed to the Holders of the Class R Certificates (in respect of the Class
R-1 Interest), as the case may be:
(1) first, with respect to the Group II Mortgage Loans with Adjusted
Net Minimum Mortgage Rates of less than 4.25%, to the Holders of REMIC 1 Regular
Interest LT1B-B in an amount equal to (A) the Uncertificated Accrued Interest
for such REMIC 1 Regular Interest for such Distribution Date, plus (B) any
amounts in respect thereof remaining unpaid from previous Distribution Dates,
142
and with respect to the Group II Mortgage Loans with Adjusted Net Minimum
Mortgage Rates of 4.25% or greater, in the following order: first to the Holders
of each REMIC 1 S2 Interest in ascending numerical order, then, to the Holders
of REMIC 1 Regular Interest LT1B-A and REMIC 1 Regular Interest LT1B-P, in each
case, in an amount equal to (A) the Uncertificated Accrued Interest for such
REMIC 1 Regular Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates;
(2) second, to the Holders of REMIC 1 Regular Interest LT1B-P, 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;
(3) third, the remainder of the Group II Interest Remittance Amount and
the Group II Principal Remittance Amount for such Distribution Date with respect
to those Group II Mortgage Loans with Adjusted Net Minimum Mortgage Rates of
less than 4.25%, to the Holders of REMIC 1 Regular Interest LT1B-B until the
Uncertificated Principal Balance of such REMIC 1 Regular Interest is reduced to
zero and with respect to those Group II Mortgage Loans with Adjusted Net Minimum
Mortgage Rates of 4.25% or greater, in the following order, first to the Holders
of REMIC 1 Regular Interest LT1B-A, then to the Holders of each REMIC 1 S2
Interest, in descending numerical order until the Uncertificated Principal
Balance of each such REMIC 1 Regular Interest is reduced to zero; and
(4) fourth, any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-1 Interest).
On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Group II Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC 1 to the Holders of REMIC 1 Regular Interest
LT1B-P. The payment of the foregoing amounts to the Holders of REMIC 1 Regular
Interest LT1B-P shall not reduce the Uncertificated Principal Balance thereof.
(c) On each Distribution Date, the Trustee shall cause the Group I
Interest Remittance Amount and the Group II Principal Remittance Amount, in the
following order of priority, to be distributed by REMIC 2 to REMIC 3 on account
of the REMIC 2 Regular Interests or withdrawn from the Distribution Account and
distributed to the holders of the Class R Certificates (in respect of the Class
R-2 Interest), as the case may be:
(1) first, with respect to the Group I Mortgage Loans with Adjusted Net
Minimum Mortgage Rates of less than 4.25%, to the Holders of REMIC 2 Regular
Interest LT2A-B in an amount equal to (A) the Uncertificated Accrued Interest
for such REMIC 2 Regular Interest for such Distribution Date, plus (B) any
amounts in respect thereof remaining unpaid from previous Distribution Dates,
and with respect to the Group I Mortgage Loans with Adjusted Net Minimum
Mortgage Rates of 4.25% or greater, in the following order: first to the Holders
of each REMIC 2 S1 Interest in ascending numerical order, then to the Holders of
143
REMIC 2 Regular Interest LT2A-A and REMIC 2 Regular Interest LT2A-P, in each
case, in an amount equal to (A) the Uncertificated Accrued Interest for such
REMIC 2 Regular Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates;
(2) second, to the Holders of REMIC 2 Regular Interest LT2A-P, 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;
(3) third, the remainder of the Group I Interest Remittance Amount and
the Group I Principal Remittance Amount for such Distribution Date with respect
to those Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates of less
than 4.25%, to the Holders of REMIC 2 Regular Interest LT2A-B until the
Uncertificated Principal Balance of such REMIC 2 Regular Interest is reduced to
zero, and with respect to those Group I Mortgage Loans with Adjusted Net Minimum
Mortgage Rates of 4.25% or greater, in the following order, first to the Holders
of REMIC 2 Regular Interest LT2A-A, then to the Holders of each REMIC 2 S1
Interest, in descending numerical order, until the Uncertificated Principal
Balance of each such REMIC 2 Regular Interest is reduced to zero; and
(4) fourth, any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-2 Interest).
On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Group I Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC 2 to the Holders of REMIC 2 Regular Interest
LT2A-P. The payment of the foregoing amounts to the Holders of REMIC 2 Regular
Interest LT2A-P shall not reduce the Uncertificated Principal Balance thereof.
(d) On each Distribution Date, the Trustee shall cause the Group II
Interest Remittance Amount and the Group II Principal Remittance Amount, in the
following order of priority, to be distributed by REMIC 2 to REMIC 3 on account
of the REMIC 2 Regular Interests or withdrawn from the Distribution Account and
distributed to the Holders of the Class R Certificates (in respect of the Class
R-2 Interest), as the case may be:
(1) first, with respect to the Group II Mortgage Loans with Adjusted
Net Minimum Mortgage Rates of less than 4.25%, to the Holders of REMIC 2 Regular
Interest LT2B-B in an amount equal to (A) the Uncertificated Accrued Interest
for such REMIC 2 Regular Interest for such Distribution Date, plus (B) any
amounts in respect thereof remaining unpaid from previous Distribution Dates,
and with respect to the Group II Mortgage Loans with Adjusted Net Minimum
Mortgage Rates of 4.25% or greater, in the following order: first to the Holders
of each REMIC 2 S2 Interest in ascending numerical order, then to the Holders of
REMIC 2 Regular Interest LT2B-A and REMIC 2 Regular Interest LT2B-P, in each
case, in an amount equal to (A) the Uncertificated Accrued Interest for such
REMIC 2 Regular Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates;
144
(2) second, to the Holders of REMIC 2 Regular Interest LT2B-P, 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;
(3) third, the remainder of the Group II Interest Remittance Amount and
the Group II Principal Remittance Amount for such Distribution Date with respect
to those Group II Mortgage Loans with Adjusted Net Minimum Mortgage Rates of
less than 4.25%, to the Holders of REMIC 2 Regular Interest LT2B-B until the
Uncertificated Principal Balance of such REMIC 2 Regular Interest is reduced to
zero, and with respect to those Group II Mortgage Loans with Adjusted Net
Minimum Mortgage Rates of 4.25% or greater, in the following order, first to the
Holders of REMIC 2 Regular Interest LT2B-A, then to the Holders of each REMIC 2
S2 Interest, in descending numerical order, until the Uncertificated Principal
Balance of each such REMIC 2 Regular Interest is reduced to zero; and
(4) fourth, any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-2 Interest).
On each Distribution Date, all amounts representing Prepayment Charges
in respect of the Group II Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC 2 to the Holders of REMIC 2 Regular Interest
LT2B-P. The payment of the foregoing amounts to the Holders of REMIC 2 Regular
Interest LT2B-P shall not reduce the Uncertificated Principal Balance thereof.
(e) On each Distribution Date, the Trustee shall cause in the following
order of priority, the following amounts to be distributed by REMIC 3 to REMIC 4
on account of the REMIC 3 Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates (in respect
of the Class R-4 Interest), as the case may be:
(1) first, Available Funds equal to the Group I Interest Remittance
Amount shall be distributed (i) first, pro rata to the Holders of REMIC 3
Regular Interest LT3S1, and (ii) second, pro rata to the Holders of REMIC 3
Regular Interest LT3A-1, REMIC 3 Regular Interest LT3B-1, REMIC 3 Regular
Interest LT3C-1, REMIC 3 Regular Interest LT3D-1, REMIC 3 Regular Interest
LT3E-1, REMIC 3 Regular Interest LT3F-1, REMIC 3 Regular Interest LT3G-1, REMIC
3 Regular Interest LT3H-1, and REMIC 3 Regular Interest LT3P-1, in each case 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; provided, however, that amounts payable as Uncertificated
Accrued Interest in respect of REMIC 3 Regular Interest LT3H-1 shall be reduced,
when the REMIC 3 Overcollateralized Amount 1 is less than the REMIC 3
Overcollateralization Target Amount 1, by the lesser of (x) the amount of such
difference and (y) the Maximum LT3H-1 Uncertificated Accrued Interest Deferral
Amount;
(2) second, Available Funds equal to the Group II Interest Remittance
Amount shall be distributed (i) first, pro rata to the Holders of REMIC 3
145
Regular Xxxxxxxx XX0X-0, and (ii) second, pro rata to Holders of REMIC 3 Regular
Interest LT3A-2, REMIC 3 Regular Interest LT3B-2, REMIC 3 Regular Interest
LT3C-2, REMIC 3 Regular Interest LT3D-2, REMIC 3 Regular Interest LT3E-2, REMIC
3 Regular Interest LT3F-2, REMIC 3 Regular Interest LT3G-2, REMIC 3 Regular
Interest LT3H-2, and REMIC 3 Regular Interest LT3P-2, in each case 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; provided, however, that amounts payable as Uncertificated
Accrued Interest in respect of REMIC 3 Regular Interest LT3H-2 shall be reduced,
when the REMIC 3 Overcollateralized Amount 2 is less than the REMIC 3
Overcollateralization Target Amount 2, by the lesser of (x) the amount of such
difference and (y) the Maximum LT3H-2 Uncertificated Accrued Interest Deferral
Amount;
(3) third, to the Holders of REMIC 3 Regular Interests, in an amount
equal to the remainder of the Available Funds for such Distribution Date after
the distributions made pursuant to clause (1) above, allocated as follows:
(A) (i) 98% to the Holders of REMIC 3 Regular Interest LT3A-1, (ii)
1.00% to the Holders of REMIC 3 Regular Interest LT3B-1, REMIC 3 Regular
Interest LT3C-1, REMIC 3 Regular Interest LT3D-1, REMIC 3 Regular Interest
LT3E-1, REMIC 3 Regular Interest LT3F-1, and REMIC 3 Regular Interest LT3G-1, in
the same proportion as principal payments are allocated to the Corresponding
Certificates, and (iii) 1.00% to the Holders of REMIC 3 Regular Interest LT3H-1,
until the Uncertificated Principal Balance of all such Uncertificated REMIC 3
Regular Interests is reduced to zero;
(B) then, to the Holders of REMIC 3 Regular Interest LT3P-1, on the
Distribution Date immediately following the expiration of the latest Prepayment
Charge with respect to Group I Mortgage Loans as identified on the Prepayment
Charge Schedule or any Distribution Date thereafter until $100 has been
distributed pursuant to this clause; and
(C) then, any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-3 Interest);
(4) fourth, to the Holders of REMIC 3 Regular Interests, in an amount
equal to the remainder of the Available Funds for such Distribution Date after
the distributions made pursuant to clause (2) above, allocated as follows:
(A) (i) 98% to the Holders of REMIC 3 Regular Interest LT3A-2, (ii)
1.00% to the Holders of REMIC 3 Regular Interest LT3B-2, REMIC 3 Regular
Interest LT3C-2, REMIC 3 Regular Interest LT3D-2, REMIC 3 Regular Interest
LT3E-2, and REMIC 3 Regular Interest LT3F-2, and REMIC 3 Regular Interest
LT3G-2, in the same proportion as principal payments are allocated to the
Corresponding Certificates, and (iii) 1.00% to the Holders of REMIC 3 Regular
Interest LT3H-2, until the Uncertificated Principal Balance of all such
Uncertificated REMIC 3 Regular Interests is reduced to zero;
146
(B) then, to the Holders of REMIC 3 Regular Interest LT3P-2, on the
Distribution Date immediately following the expiration of the latest Prepayment
Charge with respect to Group II Mortgage Loans as identified on the Prepayment
Charge Schedule or any Distribution Date thereafter until $100 has been
distributed pursuant to this clause;
(C) then, any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-4 Interest); and
(5) fifth, to REMIC 3 Regular Interest LT3P-1, 100% of the amount of
Prepayment Charges paid in respect of REMIC 2 Regular Interest LT2A-P, and to
REMIC 3 Regular Interest LT3P-2, 100% of the amount of Prepayment Charges paid
in respect of REMIC 2 Regular Interest LT2B-P
provided, however, that 98% and 2% of any principal payments that are
attributable to Overcollateralization Release Amount shall be allocated to
Holders of REMIC 3 Regular Interest LT3A-1 and REMIC 3 Regular Interest LT3H-1,
respectively.
Section 4.06 Allocation of Realized Losses.
(a) Prior to each Determination Date, the Master Servicer shall
determine as to each Mortgage Loan and REO Property: (i) the total amount of
Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Prepayment Period; (ii) whether and the
extent to which such Realized Losses constituted Bankruptcy Losses; and (iii)
the respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, the Master Servicer
shall also determine as to each Mortgage Loan: (i) the total amount of Realized
Losses, if any, incurred in connection with any Deficient Valuations made during
the related Prepayment Period; and (ii) the total amount of Realized Losses, if
any, incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period. The information described in the two
preceding sentences that is to be supplied by the Master Servicer shall be
evidenced by an Officers' Certificate delivered to the NIMS Insurer and the
Trustee (and upon request, to the Guarantor) by the Master Servicer prior to the
Determination Date immediately following the end of (i) in the case of
Bankruptcy Losses allocable to interest, the Due Period during which any such
Realized Loss was incurred, and (ii) in the case of all other Realized Losses,
the Prepayment Period during which any such Realized Loss was incurred.
(b) For the avoidance of doubt, through application of definitions in
Section 1.01, all Realized Losses on the Mortgage Loans on any Distribution Date
shall reduce the amount otherwise payable in respect of REMIC 4 Regular Interest
LT4-C pursuant to Section 4.01(d)(i)(m) (through the reduction of the Net
Monthly Excess Cashflow resulting both from a reduction in the
Overcollateralization Release Amount which reduces the amount of the Net Monthly
Excess Cashflow and the application of the Net Monthly Excess Cashflow to fund
the amount of the Overcollateralization Deficiency Amount, if any, caused by
such Realized Losses) until the Overcollateralization Release Amount is reduced
to zero and/or the Extra Principal Distribution Amount equals the Net Monthly
Excess Cashflow, in each case for such Distribution Date after giving effect to
all Realized Losses incurred with respect to the Mortgage Loans during or prior
147
to the related Due Period and distributions of principal with respect to the
Class A Certificates and the Mezzanine Certificates on such Distribution Date.
If on any Distribution Date after giving effect to all Realized Losses incurred
with respect to the Mortgage Loans during or prior to the related Due Period and
distributions of principal with respect to the Class A Certificates and the
Mezzanine Certificates on such Distribution Date, an Overcollateralization
Deficiency Amount exists and such amount exceeds the Net Monthly Excess
Cashflow, the Realized Losses equal to the amount of such excess shall be
allocated by the Trustee on such Distribution Date as follows: first, to the
Class M-4A Certificates and the Class M-4B Certificates, pro rata, based on
their respective Certificate Principal Balances, until the Certificate Principal
Balances thereof have been reduced to zero, second to the Class M-3
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero, third to the Class M-2 Certificates until the Certificate Principal
Balance thereof has been reduced to zero, and fourth to the Class M-1
Certificates until the Certificate Principal Balance thereof has been reduced to
zero. All Realized Losses to be allocated to the Certificate Principal Balances
of the Mezzanine Certificates on any Distribution Date shall be so allocated
after the actual distributions to be made on such date as provided in Section
4.01. All references above to the Certificate Principal Balance of the Mezzanine
Certificates shall be to the Certificate Principal Balance of the Mezzanine
Certificates immediately prior to the relevant Distribution Date, before
reduction thereof by any Realized Losses, in each case to be allocated to such
Mezzanine Certificates on such Distribution Date.
Any allocation of Realized Losses to a Mezzanine Certificate on any
Distribution Date shall be made by reducing the Certificate Principal Balance
thereof by the amount so allocated. No allocations of any Realized Losses shall
be made to the Class A Certificates, the Class S Certificates or the Class P
Certificates. Any Realized Losses that reduce the distributions in respect of
and/or the Uncertificated Principal Balance of REMIC 4 Regular Interest LT4-C,
shall be allocated by the Trustee to reduce the distributions in respect of
and/or the Certificate Principal Balance of the Class C Certificates.
(c) All Realized Losses on the Group I Mortgage Loans shall be
allocated by the Trustee on each Distribution Date as follows: with respect to
those Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates of less
than 4.25%, to REMIC 1 Regular Interest LT1A-B until the Uncertificated
Principal Balance thereof has been reduced to zero, and with respect to those
Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates of 4.25% or
greater, first to REMIC 1 Regular Interest LT1A-A until the Uncertificated
Principal Balance thereof has been reduced to zero, then to each REMIC 1 S1
Interest in descending numerical order until the Uncertificated Principal
Balance of each has been reduced to zero. All Realized Losses on the Group II
Mortgage Loans shall be allocated by the Trustee on each Distribution Date as
follows: with respect to those Group II Mortgage Loans with Adjusted Net Minimum
Mortgage Rates of less than 4.25%, to REMIC 1 Regular Interest LT1B-B until the
Uncertificated Principal Balance thereof has been reduced to zero, and with
respect to those Group II Mortgage Loans with Adjusted Net Minimum Mortgage
Rates of 4.25% or greater, first to REMIC 1 Regular Interest LT1B-A until the
Uncertificated Principal Balance thereof has been reduced to zero, then to each
REMIC 1 S2 Interest in descending numerical order until the Uncertificated
Principal Balance thereof has been reduced to zero.
148
(d) All Realized Losses on the Group I Mortgage Loans shall be
allocated by the Trustee on each Distribution Date as follows: with respect to
those Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates of less
than 4.25%, to REMIC 2 Regular Interest LT2A-B until the Uncertificated
Principal Balance thereof has been reduced to zero, and with respect to those
Group I Mortgage Loans with Adjusted Net Minimum Mortgage Rates of 4.25% or
greater, first to REMIC 2 Regular Interest LT2A-A until the Uncertificated
Principal Balance thereof has been reduced to zero, then to each REMIC 2 S1
Interest in descending numerical order until the Uncertificated Principal
Balance of each has been reduced to zero. All Realized Losses on the Group II
Mortgage Loans shall be allocated by the Trustee on each Distribution Date as
follows: with respect to those Group II Mortgage Loans with Adjusted Net Minimum
Mortgage Rates of less than 4.25%, to REMIC 2 Regular Interest LT2B-B until the
Uncertificated Principal Balance thereof has been reduced to zero, and with
respect to those Group II Mortgage Loans with Adjusted Net Minimum Mortgage
Rates of 4.25% or greater, first to REMIC 2 Regular Interest LT2B-A until the
Uncertificated Principal Balance thereof has been reduced to zero, then to each
REMIC 2 S2 Interest in descending numerical order until the Uncertificated
Principal Balance thereof has been reduced to zero.
(e) All Realized Losses on the Group I Mortgage Loans shall be deemed
to have been allocated in the specified percentages, as follows: first, to
Uncertificated Accrued Interest payable to the REMIC 3 Regular Interest LT3A-1
and REMIC 3 Regular Interest LT3H-1 up to an aggregate amount equal to the REMIC
3 Group I Interest Loss Allocation Amount, 98% and 2%, respectively; second, to
the Uncertificated Principal Balances of REMIC 3 Regular Interest LT3A-1 and
REMIC 3 Regular Interest LT3H-1 up to an aggregate amount equal to the REMIC 3
Principal Loss Allocation Amount-1, 98% and 2%, respectively; third, to the
Uncertificated Principal Balances of (i) REMIC 3 Regular Interest LT3A-1, (ii)
pro rata to REMIC 3 Regular Interest LT3F-1 and REMIC 3 Regular Interest LT3G-1
and (iii) REMIC 3 Regular Interest LT3H-1, 98%, 1.00% and 1.00%, respectively,
until the Uncertificated Principal Balances of REMIC 3 Regular Interest LT3F-1
and REMIC 3 Regular Interest LT3G-1 have been reduced to zero; fourth, to the
Uncertificated Principal Balances of REMIC 3 Regular Interest LT3A-1, REMIC 3
Regular Interest LT3E-1 and REMIC 3 Regular Interest LT3H-1, 98%, 1.00% and
1.00%, respectively, until the Uncertificated Principal Balance of REMIC 3
Regular Interest LT3E-1 has been reduced to zero; fifth, to the Uncertificated
Principal Balances of REMIC 3 Regular Interest LT3A-1, REMIC 3 Regular Interest
LT3D-1 and REMIC 3 Regular Interest LT3H-1, 98%, 1.00% and 1.00%, respectively,
until the Uncertificated Principal Balance of REMIC 3 Regular Interest LT3D-1
has been reduced to zero; and sixth, to the Uncertificated Principal Balances of
REMIC 3 Regular Interest LT3A-1, REMIC 3 Regular Interest LT3C-1 and REMIC 3
Regular Interest LT3H-1, 98%, 1.00% and 1.00%, respectively, until the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3C-1 has been
reduced to zero.
(f) All Realized Losses on the Group II Mortgage Loans shall be deemed
to have been allocated in the specified percentages, as follows: first, to
Uncertificated Accrued Interest payable to the REMIC 3 Regular Interest LT3A-2
and REMIC 3 Regular Interest LT3H-2 up to an aggregate amount equal to the REMIC
3 Group II Interest Loss Allocation Amount, 98% and 2%, respectively; second, to
the Uncertificated Principal Balances of REMIC 3 Regular Interest LT3A-2 and
REMIC 3 Regular Interest LT3H-2 up to an aggregate amount equal to the REMIC 3
Principal Loss Allocation Amount-2, 98% and 2%, respectively; third, to the
149
Uncertificated Principal Balances of (i) REMIC 3 Regular Interest LT3A-2, (ii)
pro rata to REMIC 3 Regular Interest LT3F-1 and REMIC 3 Regular Interest LT3G-2
and (iii) REMIC 3 Regular Interest LT3H-2, 98%, 1.00% and 1.00%, respectively,
until the Uncertificated Principal Balances of REMIC 3 Regular Interest LT3F-1
and REMIC 3 Regular Interest LT3G-2 have been reduced to zero; fourth, to the
Uncertificated Principal Balances of REMIC 3 Regular Interest LT3A-2, REMIC 3
Regular Interest LT3E-2 and REMIC 3 Regular Interest LT3H-2, 98%, 1.00% and
1.00%, respectively, until the Uncertificated Principal Balance of REMIC 3
Regular Interest LT3E-2 has been reduced to zero; fifth, to the Uncertificated
Principal Balances of REMIC 3 Regular Interest LT3A-2, REMIC 3 Regular Interest
LT3D-2 and REMIC 3 Regular Interest LT3H-2, 98%, 1.00% and 1.00%, respectively,
until the Uncertificated Principal Balance of REMIC 3 Regular Interest LT3D-2
has been reduced to zero and sixth, to the Uncertificated Principal Balances of
REMIC 3 Regular Interest LT3A-2, REMIC 3 Regular Interest LT3C-2 and REMIC 3
Regular Interest LT3H-2, 98%, 1.00% and 1.00%, respectively, until the
Uncertificated Principal Balance of REMIC 3 Regular Interest LT3C-2 has been
reduced to zero.
Section 4.07 Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.
Section 4.08 Commission Reporting.
(a) Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards and applicable regulations, file with the
Commission via the Electronic Data Gathering Analysis and Retrieval system, a
Form 8-K with a copy of the statement to Certificateholders for such
Distribution Date as an Exhibit thereto. Prior to April 30, in the year
following the year of execution of this Agreement, the Trustee shall in
accordance with industry standards file a Form 15 Suspension Notification with
respect to the Trust Fund, if applicable. Prior to March 31, in the year
following the year of execution of this Agreement, the Depositor shall execute
and the Trustee shall file a Form 10-K, in substance conforming to industry
standards and applicable regulations, with respect to the Trust Fund together
with the accompanying certification described below. The Trustee shall provide
the Form 10-K to the Depositor by March 20 (or the preceding Business Day if
such day is not a Business Day) of the year that such Form 10-K is required to
be filed. The Depositor shall execute such Form 10-K and return the original to
the Trustee by March 25 (or the preceding Business Day if such day is not a
Business Day). The Trustee shall prepare, execute, file and deliver on behalf of
the Depositor Form 8-Ks required to be filed under the Exchange Act so long as
no certification in respect of such Form 8-K is required by the Commission. The
Depositor shall prepare and the appropriate person shall execute, in accordance
with the Exchange Act or any other applicable law, any certification required
under the Exchange Act or any other applicable law to accompany the Form 10-K or
150
any other periodic report. The Depositor hereby grants to the Trustee a limited
power of attorney to execute and file each such document on behalf of the
Depositor, provided, however, that the Trustee shall not execute the Form 10-K
on behalf of the Depositor. Such power of attorney shall continue until the
earlier of (i) receipt by the Trustee 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 Trustee, 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 Trustee
reasonably deems appropriate to prepare and file all necessary reports with the
Commission. The Trustee shall have no responsibility to file any items other
than those specified in this Section.
Section 4.09 The Guaranty.
On each Distribution Date following receipt of a statement (as set
forth in Section 4.03) that indicates a Deficiency Amount for such Distribution
Date, the Guarantor shall distribute to the Trustee a Guarantor Payment in an
aggregate amount equal to the Deficiency Amount for such Distribution Date
directly to the Holders of the Guaranteed Certificates, without first depositing
such amount in the Distribution Account, as follows: (i) the Guaranteed Interest
Distribution Amount shall be distributed as interest with respect to the Class
A-1 Certificates and Class S-1 Certificates as provided in Section
4.01(a)(i)(B); and (ii) the Guaranteed Principal Distribution Amount shall be
distributed as principal with respect to the Class A-1 Certificates as provided
in Section 4.01(b)(i)(A)(x)(2) or Section 4.01(c)(i)(A)(x)(2), as applicable.
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates.
(a) The Certificates in the aggregate will represent the entire beneficial
ownership interest in the Mortgage Loans and all other assets included in REMIC
1.
The Certificates will be substantially in the forms annexed hereto as
Exhibits A-1 through A-14. The Certificates of each Class will be issuable in
registered form only, in denominations of authorized Percentage Interests as
described in the definition thereof. Each Certificate will share ratably in all
rights of the related Class.
Upon original issue, the Certificates shall be executed by the Trustee
and authenticated and delivered by the Trustee, to or upon the order of the
Depositor. The Certificates shall be executed and attested by manual or
facsimile signature on behalf of the Trustee by an authorized signatory.
Certificates bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in the form provided herein executed by the Trustee by manual signature, and
151
such certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
(b) The Book Entry Certificates shall initially be issued as one or
more Certificates held by the Book-Entry Custodian or, if appointed to hold such
Certificates as provided below, the Depository and registered in the name of the
Depository or its nominee and, except as provided below, registration of the
Book-Entry Certificates may not be transferred by the Trustee except to another
Depository that agrees to hold the Book-Entry Certificates for the respective
Certificate Owners with Ownership Interests therein. The Certificate Owners
shall hold their respective Ownership Interests in and to the Book-Entry
Certificates through the book-entry facilities of the Depository and, except as
provided below, shall not be entitled to definitive, fully registered
Certificates ("Definitive Certificates") in respect of such Ownership Interests.
All transfers by Certificate Owners of their respective Ownership Interests in
the Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owner. Each Depository Participant shall only transfer the Ownership
Interests in the Book-Entry Certificates of Certificate Owners it represents or
of brokerage firms for which it acts as agent in accordance with the
Depository's normal procedures. The Trustee is hereby initially appointed as the
Book-Entry Custodian and hereby agrees to act as such in accordance herewith and
in accordance with the agreement that it has with the Depository authorizing it
to act as such. The Book-Entry Custodian may, and if it is no longer qualified
to act as such, the Book-Entry Custodian shall, appoint, by a written instrument
delivered to the Depositor, the Master Servicer and if the Trustee is not the
Book-Entry Custodian, the Trustee and any other transfer agent (including the
Depository or any successor Depository) to act as Book-Entry Custodian under
such conditions as the predecessor Book-Entry Custodian and the Depository or
any successor Depository may prescribe, provided that the predecessor Book-Entry
Custodian shall not be relieved of any of its duties or responsibilities by
reason of any such appointment of other than the Depository. If the Trustee
resigns or is removed in accordance with the terms hereof, successor Trustee or,
if it so elects, the Depository shall immediately succeed to its predecessor's
duties as Book-Entry Custodian. The Depositor shall have the right to inspect,
and to obtain copies of, any Certificates held as Book-Entry Certificates by the
Book-Entry Custodian.
The Trustee, the Master Servicer, the NIMS Insurer and the Depositor
may for all purposes (including the making of payments due on the Book-Entry
Certificates) deal with the Depository as the authorized representative of the
Certificate Owners with respect to the Book-Entry Certificates for the purposes
of the exercise by Certificateholders of the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates with respect
to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trustee may establish a reasonable
record date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
152
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the Depository
or (iii) after the occurrence of a Master Servicer Event of Default, Certificate
Owners representing in the aggregate not less than 51% of the Ownership
Interests of the Book-Entry Certificates advise the Trustee through the
Depository, in writing, that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Certificate Owners, the
Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Book-Entry Certificates by the Book-Entry Custodian or the Depository, as
applicable, accompanied by registration instructions from the Depository for
registration of transfer, the Trustee shall issue the Definitive Certificates.
Such Definitive Certificates will be issued in minimum denominations of
$100,000, except that any beneficial ownership that was represented by a
Book-Entry Certificate in an amount less than $100,000 immediately prior to the
issuance of a Definitive Certificate shall be issued in a minimum denomination
equal to the amount represented by such Book-Entry Certificate. None of the
Depositor, the Master Servicer or the Trustee shall be liable for any delay in
the delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of 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 the Definitive
Certificates as Certificateholders hereunder.
Section 5.02 Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register for the Certificates in which, subject 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.
(b) No transfer, sale, pledge or other disposition of any Class C
Certificate, Class P Certificate or Residual Certificate shall be made unless
such disposition is exempt from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and any applicable state securities
laws or is made in accordance with the 1933 Act and laws. In the event of any
such transfer (other than in connection with the initial transfer of any Class C
Certificate, Class P Certificate or Residual Certificates by the Depositor to
the Seller or the transfer of any Class C Certificate, Class P Certificate or
Residual Certificates by the Seller to an Affiliate of the Seller or to a trust,
the depositor of which is an Affiliate of the Seller or the transfer of any
Class C Certificate, Class P Certificate or Residual Certificates by an
Affiliate of the Seller to one or more entities sponsored by such Affiliate or
to a trust the depositor of which is one or more entities sponsored by such
Affiliate) (i) unless such transfer is made in reliance upon Rule 144A (as
evidenced by the investment letter delivered to the Trustee, in substantially
the form attached hereto as Exhibit J) under the 1933 Act, the Trustee and the
Depositor shall require a written Opinion of Counsel (which may be in-house
counsel) acceptable to and in form and substance reasonably satisfactory to the
Trustee and the Depositor that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
153
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall not be an expense of the Trustee or the Depositor or (ii) the Trustee
shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit L) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit J) acceptable to and in form and substance reasonably satisfactory to
the Depositor and the Trustee certifying to the Depositor and the Trustee the
facts surrounding such transfer, which investment letter shall not be an expense
of the Trustee or the Depositor. The Holder of a Class C Certificate, Class P
Certificate or Residual Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Depositor and the Trust Fund
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.
(c) Each Transferee of a Class A-2 Certificate, Class S-2 Certificate,
or Mezzanine Certificate will be deemed to have represented by virtue of its
purchase or holding of such Certificate (or interest therein) that either (a)
such Transferee is not a Plan or purchasing such Certificate with Plan Assets as
defined below, (b) it has acquired and is holding such Certificate in reliance
on Prohibited Transaction Exemption ("PTE") 89-90 at 54 F.R. 42597 (as amended
on November 23, 1990 at 55 F.R. 48939 and by PTE 97-34 at 62 F.R. 39021 (July
21, 1997)) or PTE 90-24 at 55 F.R. 20548 (May 17, 1990) (as amended by PTE
97-34), as both such PTEs are further amended by XXX 0000-00, 00 X. X. 00000
(November 13, 2000) (the "Exemption"), and that it understands that there are
certain conditions to the availability of the Exemption including that the Cap
Agreements are "eligible yield supplement agreements" within the meaning of PTE
2000-58 and that such Certificate must be rated, at the time of purchase, not
lower than "BBB-" (or its equivalent) by a Rating Agency, or (c) the following
conditions are satisfied: (i) such Transferee is an insurance company, (ii) the
source of funds used to purchase or hold such Certificate (or interest therein)
is an "insurance company general account" (as defined in U.S. Department of
Labor Prohibited Transaction Class Exemption ("PTCE") 95-60, and (iii) the
conditions set forth in Sections I and III of PTCE 95-60 have been satisfied.
No transfer of a Class C Certificate, Class P Certificate or Residual
Certificate or any interest therein shall be made to any Plan subject to ERISA
or Section 4975 of the Code, any Person acting, directly or indirectly, on
behalf of any such Plan or any Person acquiring such Certificates with "Plan
Assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") unless the Depositor,
the Trustee and the Master Servicer are provided with an Opinion of Counsel
which establishes to the satisfaction of the Depositor, the Trustee and the
Master Servicer that the purchase of such Certificates is permissible under
applicable law, will not constitute or result in any prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor, the
Master Servicer, the Trustee or the Trust Fund to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement, which Opinion of Counsel
shall not be an expense of the Depositor, the Master Servicer, the Trustee or
the Trust Fund. Neither an Opinion of Counsel nor any certification will be
required in connection with the initial transfer of any Class C Certificate,
Class P Certificate or Residual Certificates by the Depositor to the Seller or
the transfer of any Class C Certificate, Class P Certificate or Residual
Certificates by the Seller to an Affiliate of the Seller or to a trust, the
154
depositor of which is an Affiliate of the Seller or the transfer of any Class C
Certificates, Class P Certificates or Residual Certificates by an Affiliate of
the Seller to one or more entities sponsored by such Affiliate or to a trust the
depositor of which is one or more entities sponsored by such Affiliate (in which
case, the Depositor, the Seller, any such Affiliate and such entities sponsored
by such Affiliate shall have deemed to have represented that the applicable
transferee is not a Plan or a Person investing Plan Assets) and the Trustee
shall be entitled to conclusively rely upon a representation (which, upon the
request of the Trustee, shall be a written representation) from the Depositor of
the status of each transferee the Seller or such an Affiliate. Each transferee
of a Class C Certificate, Class P Certificate or Residual Certificate shall sign
a letter substantially in the form of Exhibit I to demonstrate its compliance
with this Section 5.02(c) (other than in connection with the initial transfer of
any Class C Certificate, Class P Certificate or Residual Certificates by the
Depositor to the Seller or the transfer of any Class C Certificate, Class P
Certificate or Residual Certificates by the Seller to an Affiliate of the Seller
or to a trust, the depositor of which is an Affiliate of the Seller or the
transfer of any Class C Certificates, Class P Certificates or Residual
Certificates by an Affiliate of the Seller to one or more entities sponsored by
such Affiliate or to a trust the depositor of which is one or more entities
sponsored by such Affiliate).
If any Mezzanine Certificate, Class C Certificate, Class P Certificate
or Residual Certificate or any interest therein is acquired or held in violation
of the provisions of the preceding paragraphs, the next preceding permitted
beneficial owner will be treated as the beneficial owner of that Certificate
retroactive to the date of transfer to the purported beneficial owner. Any
purported beneficial owner whose acquisition or holding of any such Certificate
or interest therein was effected in violation of the provisions of the preceding
paragraph shall indemnify and hold harmless the Depositor, the Master Servicer,
the Trustee and the Trust Fund from and against any and all liabilities, claims,
costs or expenses incurred by those parties as a result of that acquisition or
holding.
(d) 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 to
have irrevocably appointed the Depositor or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (v) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, 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 Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a pro rata undivided interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and substance
satisfactory to it, of each of the following:
155
A. an affidavit in the form of Exhibit K hereto from the proposed
transferee to the effect that such transferee is a Permitted Transferee and that
it is not acquiring its Ownership Interest in the Residual Certificate that is
the subject of the proposed transfer as a nominee, trustee or agent for any
Person who is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that the
proposed transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest in a
Residual Certificate in violation of the provisions of this Section shall be
absolutely null and void and shall vest no rights in the purported transferee.
If any purported transferee shall, in violation of the provisions of this
Section, become a Holder of a Residual Certificate, then the prior Holder of
such Residual Certificate that is a Permitted Transferee shall, upon discovery
that the registration of transfer of such Residual Certificate was not in fact
permitted by this Section, be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Residual
Certificate. The Trustee shall not be under any liability to any Person for any
registration of transfer of a Residual Certificate that is in fact not permitted
by this Section or for making any distributions due on such Residual 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 Trustee received the
documents specified in clause (iii). The Trustee shall be entitled to recover
from any Holder of a Residual Certificate that was in fact not a Permitted
Transferee at the time such distributions were made all distributions made on
such Residual Certificate. Any such distributions so recovered by the Trustee
shall be distributed and delivered by the Trustee to the prior Holder of such
Residual Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the restrictions in
this Section, then the Trustee shall have the right but not the obligation,
without notice to the Holder of such Residual Certificate or any other Person
having an Ownership Interest therein, to notify the Depositor to arrange for the
sale of such Residual Certificate. The proceeds of such sale, net of commissions
(which may include commissions payable to the Depositor or its affiliates in
connection with such sale), expenses and taxes due, if any, will be remitted by
the Trustee to the previous Holder of such Residual Certificate that is a
Permitted Transferee, except that in the event that the Trustee determines that
the Holder of such Residual Certificate may be liable for any amount due under
this Section or any other provisions of this Agreement, the Trustee may withhold
a corresponding amount from such remittance as security for such claim. The
156
terms and conditions of any sale under this clause (v) shall be determined in
the sole discretion of the Trustee and it shall not be liable to any Person
having an Ownership Interest in a Residual Certificate as a result of its
exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the restrictions in
this Section, then the Trustee will provide to the Internal Revenue Service, and
to the persons designated in Section 860E(e)(3) of the Code, information needed
to compute the tax imposed under Section 860E(e)(1) of the Code on such
transfer.
The foregoing provisions of this Section shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section will not cause such Rating
Agency to downgrade its rating of any of the NIM Notes or the Certificates and
(ii) an Opinion of Counsel to the effect that such removal will not cause any
REMIC created hereunder to fail to qualify as a REMIC.
(e) Subject to the preceding subsections, upon surrender for registration of
transfer of any Certificate at any office or agency of the Trustee designated
from time to time for such purpose pursuant to Section 8.12, the Trustee shall
execute and authenticate and deliver, in the name of the designated Transferee
or Transferees, one or more new Certificates of the same Class of a like
aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may be
exchanged for other Certificates of the same Class with authorized denominations
and a like aggregate Percentage Interest, upon surrender of such Certificate to
be exchanged at any office or agency of the Trustee maintained for such purpose
pursuant to Section 8.12. Whenever any Certificates are so surrendered for
exchange the Trustee shall execute, authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(g) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Trustee may require 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.
All Certificates surrendered for registration of transfer or exchange
shall be canceled by the Trustee and disposed of pursuant to its standard
procedures.
157
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) 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 (ii) there is delivered to the Trustee and the Depositor
and (in the case of a Class C Certificate or Class P Certificate) the NIMS
Insurer such security or indemnity as may be required by them to save each of
them, and the Trust Fund, 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 tenor and Percentage Interest. Upon the issuance of any new Certificate
under this Section, 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)
in connection therewith. Any duplicate Certificate issued pursuant to this
Section, shall constitute complete and indefeasible evidence of ownership in the
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 5.04 Persons Deemed Owners.
The Master Servicer, the Depositor, the Trustee, the NIMS Insurer, the
Guarantor and any agent of the Master Servicer, the Depositor, the Trustee, the
NIMS Insurer or the Guarantor may treat the Person, including a Depository, in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 4.01 and for all
other purposes whatsoever, and none of the Master Servicer, the Depositor, the
Trustee, the NIMS Insurer, the Guarantor nor any agent of any of them shall be
affected by notice to the contrary.
ARTICLE VI
THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Master Servicer and the Depositor.
The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement and undertaken hereunder by the Depositor and the Master
Servicer herein.
Section 6.02 Merger or Consolidation of the Depositor or the Master Servicer.
Subject to the following paragraph, the Depositor will keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation. Subject to the following paragraph, the
Master Servicer will keep in full effect its existence, rights and franchises as
a corporation under the laws of the jurisdiction of its incorporation and its
qualification as an approved conventional seller/servicer for Xxxxxx Xxx or
Xxxxxxx Mac in good standing. The Depositor and the Master Servicer each will
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
158
protect the validity and enforceability of this Agreement, the Certificates or
any of the Mortgage Loans and to perform its respective duties under this
Agreement.
The Depositor or the Master Servicer may be merged or consolidated with
or into any Person, or transfer all or substantially all of its assets to any
Person, in which case any Person resulting from any merger or consolidation to
which the Depositor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, 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, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
Xxxxxx Mae; and provided further that the Rating Agencies' ratings of the NIM
Notes, the Class A-2 Certificates and the Mezzanine Certificates in effect
immediately prior to such merger or consolidation will not be qualified, reduced
or withdrawn as a result thereof (as evidenced by a letter to such effect from
the Rating Agencies to the Trustee).
Section 6.03 Limitation on Liability of the Depositor, the Master Servicer
and Others.
None of the Depositor, the Guarantor, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor, the Guarantor 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, however, that this provision shall not protect the Depositor, the
Guarantor, the Master Servicer or any such person against any breach of
warranties, representations or covenants made herein, or against any specific
liability imposed on the Master Servicer, the Depositor, or the Guarantor, as
applicable, pursuant hereto, or against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Depositor, the Guarantor, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Guarantor or the
Master Servicer may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor, the Guarantor, the Master Servicer and any
director, officer, employee or agent of the Depositor, the Guarantor or the
Master Servicer shall be indemnified and held harmless by the Trust Fund against
any loss, liability or expense incurred in connection with any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense relating to any specific Mortgage Loan or Mortgage Loans (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) or any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder. None of the
Depositor, the Guarantor or the Master Servicer shall be under any obligation to
appear in, prosecute or defend any legal action unless such action is related to
its respective duties under this Agreement and, in its opinion, does not involve
it in any expense or liability; provided, however, that each of the Depositor,
the Guarantor and the Master Servicer may in its discretion undertake any such
action which it may deem necessary or desirable with respect to this Agreement
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, unless the Depositor, the Guarantor
or the Master Servicer acts without the consent of Holders of Certificates
entitled to at least 51% of the Voting Rights (which consent shall not be
necessary in the case of litigation or other legal action by either to enforce
their respective rights or defend themselves hereunder), the legal expenses and
159
costs of such action and any liability resulting therefrom (except any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder) shall be expenses, costs and
liabilities of the Trust Fund, and the Depositor, the Guarantor and the Master
Servicer shall be entitled to be reimbursed therefor from the Collection Account
as and to the extent provided in Section 3.11, any such right of reimbursement
being prior to the rights of the Certificateholders to receive any amount in the
Collection Account.
The Master Servicer (except the Trustee to the extent it has succeeded
the Master Servicer as required hereunder) indemnifies and holds the Trustee,
the Depositor, the Guarantor and the Trust Fund harmless against any and all
claims, losses, penalties, fines, forfeitures, reasonable legal fees and related
costs, judgments, and any other costs, fees and expenses that the Trustee, the
Depositor, the Guarantor or the Trust Fund may sustain in any way related to the
failure of the Master Servicer to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement. The Master Servicer shall
immediately notify the Trustee, the NIMS Insurer, the Guarantor and the
Depositor if a claim is made that may result in such claims, losses, penalties,
fines, forfeitures, legal fees or related costs, judgments, or any other costs,
fees and expenses, and the Master Servicer shall assume (with the consent of the
Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Master Servicer,
the Trustee, the Depositor, the Guarantor and/or the Trust Fund in respect of
such claim. The provisions of this paragraph shall survive the termination of
this Agreement and the payment of the outstanding Certificates.
Section 6.04 Limitation on Resignation of Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that its duties hereunder are
no longer permissible under applicable law or (ii) with the written consent of
the Trustee and the NIMS Insurer or the Guarantor (as provided in Section 1.04)
and written confirmation from each Rating Agency (which confirmation shall be
furnished to the Depositor and the Trustee) that such resignation will not cause
such Rating Agency to reduce the then current rating of any of the NIM Notes,
the Class A-2 Certificates or the Mezzanine Certificates. Any such determination
pursuant to clause (i) of the preceding sentence permitting the resignation of
the Master Servicer shall be evidenced by an Opinion of Counsel to such effect
obtained at the expense of the Master Servicer and delivered to the Trustee. No
resignation of the Master Servicer shall become effective until the Trustee or a
successor servicer reasonably acceptable to the NIMS Insurer or the Guarantor
(as provided in Section 1.04) shall have assumed the Master Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
Except as expressly provided herein, the Master Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, nor delegate to or subcontract with, nor authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder. The foregoing prohibition on
160
assignment shall not prohibit the Master Servicer from designating a
Sub-Servicer as payee of any indemnification amount payable to the Master
Servicer hereunder; provided, however, that as provided in Section 3.06 hereof,
no Sub-Servicer shall be a third-party beneficiary hereunder and the parties
hereto shall not be required to recognize any Sub-Servicer as an indemnitee
under this Agreement. If, pursuant to any provision hereof, the duties of the
Master Servicer are transferred to a successor master servicer, the entire
amount of the Servicing Fee and other compensation payable to the Master
Servicer pursuant hereto shall thereafter be payable to such successor master
servicer.
Section 6.05 Rights of the Depositor, the NIMS Insurer, the Guarantor and
the Trustee in Respect of the Master Servicer.
The Master Servicer shall afford (and any Sub-Servicing Agreement shall
provide that each Sub-Servicer shall afford) the Depositor, the NIMS Insurer,
the Guarantor and the Trustee, upon reasonable notice, during normal business
hours, access to all records maintained by the Master Servicer (and any such
Sub-Servicer) in respect of the Master Servicer's rights and obligations
hereunder and access to officers of the Master Servicer (and those of any such
Sub-Servicer) responsible for such obligations; provided, that access to records
for the Guarantor shall be limited to those related to Group I Mortgage Loans.
Upon request, the Master Servicer shall furnish to the Depositor, the NIMS
Insurer, the Guarantor and the Trustee its (and any such Sub-Servicer's) most
recent financial statements and such other information relating to the Master
Servicer's capacity to perform its obligations under this Agreement that it
possesses; provided, that any such information furnished to the Guarantor shall
be limited to that which is related to Group I Mortgage Loans. To the extent
such information is not otherwise available to the public, the Depositor, the
NIMS Insurer, the Guarantor and the Trustee shall not disseminate any
information obtained pursuant to the preceding two sentences without the Master
Servicer's (or any such Sub-Servicer's) written consent, except as required
pursuant to this Agreement or to the extent that it is necessary to do so (i) in
working with legal counsel, auditors, taxing authorities or other governmental
agencies, rating agencies or reinsurers or (ii) pursuant to any law, rule,
regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Depositor, the NIMS Insurer,
the Guarantor, the Trustee or the Trust Fund, and in either case, the Depositor,
the Guarantor or the Trustee, as the case may be, shall use, and the NIMS
Insurer shall be deemed to have agreed with the parties hereto to use, its best
efforts to assure the confidentiality of any such disseminated non-public
information. The Depositor may, but is not obligated to, enforce the obligations
of the Master Servicer under this Agreement and may, but is not obligated to,
perform, or cause a designee to perform, any defaulted obligation of the Master
Servicer under this Agreement or exercise the rights of the Master Servicer
under this Agreement; provided that the Master Servicer shall not be relieved of
any of its obligations under this Agreement by virtue of such performance by the
Depositor or its designee. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Master Servicer and is not
obligated to supervise the performance of the Master Servicer under this
Agreement or otherwise.
161
ARTICLE VII
DEFAULT
Section 7.01 Master Servicer Events of Default.
"Master Servicer 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 for
distribution to the Certificateholders any payment (other than an Advance
required to be made from its own funds on any Master Servicer Remittance Date
pursuant to Section 4.04) required to be made under the terms of the
Certificates and this Agreement which continues unremedied for a period of one
Business Day after the date upon which written notice of such failure, requiring
the same to be remedied, shall have been given to the Master Servicer by the
Depositor, the Trustee (in which case notice shall be provided by telecopy), or
to the Master Servicer, the Depositor and the Trustee by the NIMS Insurer, the
Guarantor or the Holders of Certificates entitled to at least 25% of the Voting
Rights; or
(ii) any failure on the part of the Master Servicer duly to observe or
perform in any material respect any of the covenants or agreements on the part
of the Master Servicer contained in this Agreement which continues unremedied
for a period of 45 days (30 days in the case of any failure to maintain a
Sub-Servicing Agreement with an eligible Sub-Servicer to the extent required in
accordance with Section 3.02(c)) after the earlier of (i) the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Depositor or the Trustee, or to the
Master Servicer, the Depositor and the Trustee by the NIMS Insurer, the
Guarantor or the Holders of Certificates entitled to at least 25% of the Voting
Rights and (ii) actual knowledge of such failure by a Servicing Representative
of the Master Servicer; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law or the appointment
of a conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceeding, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Master Servicer and if such proceeding is being contested by the Master Servicer
in good faith, such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days or results in the entry of an order for relief
or any such adjudication or appointment; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to it
or of or relating to all or substantially all of its property; or
162
(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 any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors; or
(vi) any failure by the Master Servicer of the Master Servicer
Termination Test; or
(vii) any failure of the Master Servicer to make, or cause an Advancing
Person to make, any Advance on any Master Servicer Remittance Date required to
be made from its own funds pursuant to Section 4.04 which continues unremedied
until 3:00 p.m. New York time on the Business Day immediately following the
Master Servicer Remittance Date; or
(viii) the Master Servicer ceases to be an approved seller or servicer
of Xxxxxx Xxx.
If a Master Servicer Event of Default described in clauses (i) through
(vi) of this Section shall occur, then, and in each and every such case, so long
as such Master Servicer Event of Default shall not have been remedied, the
Depositor or the Trustee may, and at the written direction of the NIMS Insurer,
the Guarantor, or the Holders of Certificates entitled to at least 51% of Voting
Rights, the Trustee shall, by notice in writing to the NIMS Insurer, the
Guarantor and the Master Servicer (and to the Depositor if given by the Trustee
or to the Trustee if given by the Depositor), terminate all of the rights and
obligations of the Master Servicer in its capacity as Master Servicer under this
Agreement, to the extent permitted by law, and in and to the Mortgage Loans and
the proceeds thereof. If a Master Servicer Event of Default described in clauses
(vii) or (viii) hereof shall occur, the Trustee shall, by notice in writing to
the Master Servicer, the NIMS Insurer, the Guarantor and the Depositor,
terminate all of the rights and obligations of the Master Servicer in its
capacity as Master Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof. On or after the receipt by the Master Servicer
of such written notice, all authority and power of the Master Servicer under
this Agreement, whether with respect to the Certificates (other than as a Holder
of any Certificate) or the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee pursuant to and under this Section and, without
limitation, the Trustee is hereby authorized and empowered, as attorney-in-fact
or otherwise, to execute and deliver on behalf of and at the expense of the
Master Servicer, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. The Master Servicer agrees, at its sole cost and expense, promptly
(and in any event no later than ten Business Days subsequent to such notice) to
provide the Trustee with all documents and records requested by it to enable it
to assume the Master Servicer's functions under this Agreement, and to cooperate
with the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights under this Agreement, including, without limitation,
the transfer within one Business Day to the Trustee for administration by it of
all cash amounts which at the time shall be or should have been credited by the
Master Servicer to the Collection Account held by or on behalf of the Master
Servicer, or any REO Account or Servicing Account held by or on behalf of the
Master Servicer or thereafter be received with respect to the Mortgage Loans or
163
any REO Property (provided, however, that the Master Servicer shall continue to
be entitled to receive all amounts accrued or owing to it under this Agreement
on or prior to the date of such termination, whether in respect of Advances or
otherwise, and shall continue to be entitled to the benefits of Section 6.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of a Master Servicer Event of Default unless a
Responsible Officer of Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless written notice of
any event which is in fact such a Master Servicer Event of Default is received
by the Trustee and such notice references the Certificates, any of the Trust
REMICs or this Agreement.
The Trustee shall be entitled to be reimbursed by the Master Servicer
(or by the Trust Fund if the Master Servicer is unable to fulfill its
obligations hereunder) for all costs associated with the transfer of servicing
from the predecessor master servicer, including without limitation, any costs or
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 to service the Mortgage Loans properly and
effectively.
Section 7.02 Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto and arising
thereafter, which shall be assumed by the Trustee (except for any
representations or warranties of the Master Servicer under this Agreement, the
responsibilities, duties and liabilities contained in Section 2.03(c) and its
obligation to deposit amounts in respect of losses pursuant to Section 3.12) by
the terms and provisions hereof including, without limitation, the Master
Servicer's obligations to make Advances pursuant to Section 4.04; provided,
however, that if the Trustee is prohibited by law or regulation from obligating
itself to make advances regarding delinquent Mortgage Loans, then the Trustee
shall not be obligated to make Advances pursuant to Section 4.04; and provided
further, that any failure to perform such duties or responsibilities caused by
the Master Servicer's failure to provide information required by Section 7.01
shall not be considered a default by the Trustee as successor to the Master
Servicer hereunder; provided, however, it is understood and acknowledged by the
parties that there will be a period of transition (not to exceed 90 days) before
the servicing transfer is fully effected. As compensation therefor, the Trustee
shall be entitled to the Servicing Fee and all funds relating to the Mortgage
Loans to which the Master Servicer would have been entitled if it had continued
to act hereunder (other than amounts which were due or would become due to the
Master Servicer prior to its termination or resignation). Notwithstanding
anything herein to the contrary, in no event shall the Trustee be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any successor Master Servicer to
act as successor Master Servicer under this Agreement and the transactions set
forth or provided for herein. After the Master Servicer receives a notice of
termination, notwithstanding the above and subject to the next paragraph, the
Trustee may, if it shall be unwilling to so act, or shall, if it is unable to so
act or if it is prohibited by law from making advances regarding delinquent
164
Mortgage Loans, or if the NIMS Insurer, the Guarantor or the Holders of
Certificates entitled to at least 51% of the Voting Rights so request in writing
to the Trustee, promptly appoint, or petition a court of competent jurisdiction
to appoint, an established mortgage loan servicing institution acceptable to
each Rating Agency, having a net worth of not less than $15,000,000 and
reasonably acceptable to the NIMS Insurer or the Guarantor, as provided in
Section 1.04, as the successor to the Master Servicer under this Agreement in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Master Servicer under this Agreement.
No appointment of a successor to the Master Servicer under this
Agreement shall be effective until the assumption by the successor of all of the
Master Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the Trustee
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Master Servicer as such hereunder. The Depositor, the Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Pending appointment of a successor to the Master
Servicer under this Agreement, the Trustee shall act in such capacity as
hereinabove provided.
Upon removal or resignation of the Master Servicer, the Trustee, with
the cooperation of the Depositor, (x) shall solicit bids for a successor Master
Servicer as described below and (y) pending the appointment of a successor
Master Servicer as a result of soliciting such bids, shall serve as Master
Servicer of the Mortgage Loans serviced by such predecessor Master Servicer. The
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth in the first paragraph of this Section 7.02 (including
the Trustee or any affiliate thereof). Such public announcement shall specify
that the successor Master Servicer shall be entitled to the servicing
compensation agreed upon between the Trustee, the successor Master Servicer and
the Depositor; provided, however, that no such fee shall exceed the Servicing
Fee. Within thirty days after any such public announcement, the Trustee with the
cooperation of the Depositor, shall negotiate in good faith and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest satisfactory bid as to the price
they will pay to obtain such servicing. The Trustee, upon receipt of the
purchase price shall pay such purchase price to the Master Servicer being so
removed, after deducting from any sum received by the Trustee from the successor
to the Master Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities reasonably incurred
hereunder. After such deductions, the remainder of such sum shall be paid by the
Trustee to the Master Servicer at the time of such sale.
(b) If the Master Servicer fails to remit to the Trustee for
distribution to the Certificateholders any payment required to be made under the
terms of this Agreement (for purposes of this Section 7.02(b), a "Remittance")
because the Master Servicer is the subject of a proceeding under the Bankruptcy
Code and the making of such Remittance is prohibited by Section 362 of the
Bankruptcy Code, the Trustee shall upon written notice of such prohibition,
regardless of whether it has received a notice of termination under Section
7.01, shall be treated as though it had succeeded to the Master Servicer and
165
shall advance the amount of such Remittance by depositing such amount in the
Distribution Account on the related Distribution Date. The Trustee shall be
obligated to make such advance only if (i) such advance, in the good faith
judgment of the Trustee can reasonably be expected to be ultimately recoverable
from Stayed Funds and (ii) the Trustee is not prohibited by law from making such
advance or obligating itself to do so. Upon remittance of the Stayed Funds to
the Trustee or the deposit thereof in the Distribution Account by the Master
Servicer, a trustee in bankruptcy or a federal bankruptcy court, the Trustee may
recover the amount so advanced, without interest, by withdrawing such amount
from the Distribution Account; however, nothing in this Agreement shall be
deemed to affect the Trustee's rights to recover from the Master Servicer's own
funds interest on the amount of any such advance. If the Trustee at any time
makes an advance under this Subsection which it later determines in its good
faith judgment will not be ultimately recoverable from the Stayed Funds with
respect to which such advance was made, the Trustee shall be entitled to
reimburse itself for such advance, without interest, by withdrawing from the
Distribution Account, out of amounts on deposit therein, an amount equal to the
portion of such advance attributable to the Stayed Funds.
Section 7.03 Notification to Certificateholders.
(a) Upon any termination of the Master Servicer pursuant to Section
7.01 above or any appointment of a successor to the Master Servicer pursuant to
Section 7.02 above, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register, to the NIMS Insurer and to the Guarantor.
(b) Not later than the later of 60 days after the occurrence of any
event, which constitutes or which, with notice or lapse of time or both, would
constitute a Master Servicer Event of Default or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Holders of Certificates, to the NIMS
Insurer and to the Guarantor notice of each such occurrence, unless such default
or Master Servicer Event of Default shall have been cured or waived.
Section 7.04 Waiver of Master Servicer Events of Default.
The Holders representing at least 66% of the Voting Rights evidenced by
all Classes of Certificates affected by any default or Master Servicer Event of
Default hereunder may, with the consent of the NIMS Insurer or the Guarantor, as
provided in Section 1.04, waive such default or Master Servicer Event of
Default; provided, however, that a default or Master Servicer Event of Default
under clause (i) or (vii) of Section 7.01 may be waived only by all of the
Holders of the Regular Certificates and the NIMS Insurer or the Guarantor, as
provided in Section 1.04 (as evidenced by the written consent of the NIMS
Insurer or the Guarantor, as the case may be). Upon any such waiver of a default
or Master Servicer Event of Default, such default or Master Servicer Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose hereunder. No such waiver shall extend to any subsequent or other
default or Master Servicer Event of Default or impair any right consequent
thereon except to the extent expressly so waived.
166
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee.
The Trustee, prior to the occurrence of a Master Servicer Event of
Default and after the curing of all Master Servicer Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Master Servicer Event of
Default, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) Prior to the occurrence of a Master Servicer Event of Default, and
after the curing of all such Master Servicer Events of Default which may have
occurred, the duties and obligations of the Trustee shall be determined solely
by the express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith on the
part of the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee that conform to the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible Officers of
the Trustee unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the NIMS Insurer, the Guarantor or the Holders of
Certificates entitled to at least 25% of the Voting Rights relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Agreement.
167
Section 8.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely conclusively upon and shall be
fully protected in acting or refraining from acting upon any resolution,
Officers' Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties and
the manner of obtaining consents and evidencing the authorization of the
execution thereof shall be subject to such reasonable regulations as the Trustee
may prescribe;
(ii) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by 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 NIMS Insurer, the Guarantor or the Certificateholders,
pursuant to the provisions of this Agreement, unless the NIMS Insurer, the
Guarantor or such Certificateholders shall have offered to the Trustee security
or indemnity satisfactory to it 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 a Master
Servicer Event of Default (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 or
use under the circumstances in the conduct of such person's own affairs;
(iv) The Trustee shall not be personally liable 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) Prior to the occurrence of a Master Servicer Event of Default
hereunder and after the curing of all Master Servicer Events of Default which
may have occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the NIMS
Insurer, the Guarantor or the Holders of Certificates entitled to at least 25%
of the Voting Rights; provided, however, that if the payment within a reasonable
time to the Trustee 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 not
reasonably assured to the Trustee by the NIMS Insurer, the Guarantor or such
Certificateholders, the Trustee may require reasonable indemnity against such
expense, or liability from the NIMS Insurer, the Guarantor or such
Certificateholders as a condition to taking any such action;
168
(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents custodians,
nominees or attorneys and shall not be responsible for any willful misconduct or
negligence of such agents, custodians, nominees or attorneys (as long as such
agents, custodians, nominees or attorneys are appointed with due and proper
care);
(vii) The Trustee shall not be personally liable for any loss resulting
from the investment of funds held in the Collection Account at the direction of
the Master Servicer pursuant to Section 3.12; and
(viii) Except as otherwise expressly provided herein, none of the
provisions of this Agreement shall require the Trustee to expend or risk its own
funds or otherwise to incur any liability, financial or otherwise, in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers (not including expenses, disbursements and advances incurred or
made by the Trustee including the compensation and the expenses and
disbursements of its agents and counsel, in the ordinary course of the Trustee's
performance in accordance with the provisions of this Agreement) if it shall
have reasonable grounds for believing that repayment of such funds or indemnity
satisfactory to it against such risk or liability is not assured to it.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
signature of the Trustee, the execution and authentication of the Trustee on the
Certificates, the acknowledgments of the Trustee contained in Article II and the
representations and warranties of the Trustee in Section 8.13) shall be taken as
the statements of the Depositor, and the Trustee shall not assume any
responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth in Section 8.13) or of the Certificates (other than
execution and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of the Certificates, or for the use or application of any funds paid to
the Depositor or the Master Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Collection Account by the Master Servicer,
other than any funds held by or on behalf of the Trustee in accordance with
Section 3.10.
Section 8.04 Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity may become
the owner or pledgee of Certificates with the same rights it would have if it
169
were not Trustee and may transact banking and/or trust business with the Seller,
the Depositor, the Master Servicer, the Guarantor or their Affiliates.
Section 8.05 Trustee's Fees and Expenses.
(a) On the Closing Date, the Depositor shall pay to the Trustee as
specified in a separate agreement between the Depositor and the Trustee. The
Trustee shall withdraw from the Distribution Account on each Distribution Date
and pay to itself the Trustee Fee for such Distribution Date and one day's
interest earnings (net of losses) on amounts on deposit in the Distribution
Account. The right to receive the Trustee Fee may not be transferred in whole or
in part except in connection with the transfer of all of the Trustee's
responsibilities and obligations under this Agreement.
The Trustee, and any director, officer, employee or agent of the
Trustee shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense (not including expenses, disbursements and advances
incurred or made by the Trustee, including the compensation and the expenses and
disbursements of its agents and counsel, in the ordinary course of the Trustee's
performance in accordance with the provisions of this Agreement) incurred by the
Trustee arising out of or in connection with the acceptance or administration of
its obligations and duties under this Agreement, other than any loss, liability
or expense (i) in any way relating to the failure of the Master Servicer to
perform its duties and service the Mortgage Loans in compliance with the terms
of this Agreement, (ii) that constitutes a specific liability of the Trustee
pursuant to Section 10.01(c) or (iii) any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder, including as a result of a breach of the Trustee's obligations under
Article X hereof. Any amounts payable to the Trustee or any director, officer,
employee or agent of the Trustee in respect of the indemnification provided by
this paragraph (a), or pursuant to any other right of reimbursement from the
Trust Fund that the Trustee or any director, officer, employee or agent of the
Trustee may have hereunder in its capacity as such, may be withdrawn by the
Trustee from the Distribution Account at any time. Such indemnity shall survive
the termination of this Agreement and the resignation of the Trustee.
As a limitation on the foregoing with respect to certain expenses of
the Trustee, the Trustee shall receive from the Trust Fund amounts with respect
to indemnification for counsel fees and expenses (collectively, "Legal Fees") in
connection with any third-party litigation or other claims alleging violations
of laws or regulations relating to consumer lending and/or servicing of the
Trust Fund (collectively, "Third Party Claims") in an amount not greater than
$25,000 per month, and $600,000 in the aggregate (with amounts in excess of
$25,000 for any month carried-forward to subsequent months, until the $600,000
aggregate maximum is reached). The Trustee shall have no obligation to incur
additional expenses for which reimbursement is limited pursuant to this
paragraph in excess of the aggregate limit set forth above unless it has
received reasonable security or indemnity for such additional expenses. The
Certificateholders shall hold the Trustee harmless for any consequences to such
Certificateholders resulting from any failure of the Trustee to incur any such
additional expenses in excess of the aforementioned aggregate limit.
170
(b) Without limiting the Master Servicer's indemnification obligations
under Section 6.03, the Master Servicer agrees to indemnify the Trustee from,
and hold it harmless against, any loss, liability or expense resulting from a
breach of the Master Servicer's obligations and duties under this Agreement.
Such indemnity shall survive the termination or discharge of this Agreement and
the resignation or removal of the Trustee. Any payment under this Section
8.05(b) made by the Master Servicer to the Trustee shall be from the Master
Servicer's own funds, without reimbursement from the Trust Fund therefor.
Section 8.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or an
association (other than the Depositor, the Seller, the Master Servicer or any
Affiliate of the foregoing) organized and doing business under the laws of any
state or the United States of America, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
conditions so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.07.
Section 8.07 Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the NIMS Insurer, the
Guarantor, the Depositor, the Master Servicer and the Certificateholders. Upon
receiving such notice of resignation, the Depositor shall promptly appoint a
successor Trustee by written instrument, in duplicate, which instrument shall be
delivered to the resigning Trustee and to the successor Trustee acceptable to
the NIMS Insurer or the Guarantor, as provided in Section 1.04, and to the
Holders of Certificates entitled to at least 51% of the Voting Rights. A copy of
such instrument shall be delivered to the Certificateholders and the Master
Servicer by the Depositor. If no successor Trustee shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor or the NIMS Insurer or the Guarantor, as
provided in Section 1.04, or if at any time the Trustee shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Depositor or the NIMS
Insurer or the Guarantor, as provided in Section 1.04, may remove the Trustee
and the Depositor may appoint a successor Trustee, acceptable to the NIMS
Insurer or the Guarantor, as provided in Section 1.04, and to the Holders of
Certificates entitled to at least 51% of the Voting Rights, by written
171
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor Trustee. A copy of such instrument shall be
delivered to the Certificateholders and the Master Servicer by the Depositor.
The Holders of Certificates entitled to at least 51% of the Voting
Rights, with the consent of the NIMS Insurer or the Guarantor, as provided in
Section 1.04, may at any time remove the Trustee and appoint a successor Trustee
by written instrument or instruments, in triplicate, signed by the NIMS Insurer,
the Guarantor or such Holders, as applicable, or their attorneys-in-fact duly
authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor so appointed. A copy of such instrument shall be delivered to the
NIMS Insurer, the Guarantor, the Certificateholders and the Master Servicer by
the Depositor.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.08.
Section 8.08 Successor Trustee.
Any successor Trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor, and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as Trustee
herein. The predecessor Trustee shall deliver to the successor Trustee all
Mortgage Files and related documents and statements, as well as all moneys, held
by it hereunder (other than any Mortgage Files at the time held by a Custodian,
which Custodian shall become the agent of any successor Trustee hereunder), and
the Depositor and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 8.06 and the appointment of such
successor Trustee shall not result in a downgrading of any of the NIM Notes or
any Class of Certificates by either Rating Agency, as evidenced by a letter from
each Rating Agency.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice of the succession of such Trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Depositor.
Section 8.09 Merger or Consolidation of Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation or association
172
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or association succeeding to the business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or association shall be eligible under the provisions of Section
8.06, 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.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of REMIC 1, or property securing the same may at the time be located, the Master
Servicer and the Trustee, acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the NIMS Insurer or the Guarantor (as provided in Section 1.04), to
act as co-trustee or co-trustees, jointly with the Trustee, or separate trustee
or separate trustees, of all or any part of REMIC 1, and to vest in such Person
or Persons, in such capacity, such title to REMIC 1, or any part thereof and,
subject to the other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Master Servicer and the Trustee may
consider necessary or desirable. If the Master Servicer shall not have joined in
such appointment or the NIMS Insurer or the Guarantor shall (as provided in
Section 1.04) not have approved such appointment within 15 days after the
receipt by it of a request so to do, or in case a Master Servicer Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 8.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof. If such appointment is at the request of the Master
Servicer then any expense of the Trustee shall be deemed a Servicing Advance for
all purpose of this Agreement, otherwise it will be an expense of the Trustee
and will be payable out of the Trustee's funds.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to the Master Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of title to
REMIC 1, or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee at the direction of the
Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trust 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
173
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11 Appointment of Custodians.
The Trustee may, with the consent of the Depositor and the Master
Servicer, appoint one or more Custodians to hold all or a portion of the
Mortgage Files as agent for the Trustee, by entering into a Custodial Agreement.
The Trustee shall initially serve as the Custodian and this Agreement shall
serve as the Custodial Agreement. The appointment of any Custodian may at any
time be terminated and a substitute Custodian appointed therefor upon the
reasonable request of the Master Servicer to the Trustee and the consent of the
NIMS Insurer, after consultation with the Guarantor, the consent to which shall
not be unreasonably withheld. The Trustee shall pay any and all fees and
expenses of any Custodian (other than the Washington Mutual Custodian) in
accordance with each Custodial Agreement. Subject to Article VIII hereof, the
Trustee agrees to comply with the terms of each Custodial Agreement and to
enforce the terms and provisions thereof against the Custodian for the benefit
of the Certificateholders having an interest in any Mortgage File held by such
Custodian. Each Custodian shall be a depository institution or trust company
subject to supervision by federal or state authority, shall have combined
capital and surplus of at least $10,000,000 and shall be qualified to do
business in the jurisdiction in which it holds any Mortgage File. Each Custodial
Agreement may be amended only as provided in Section 11.01. In no event shall
the appointment of any Custodian pursuant to a Custodial Agreement diminish the
obligations of the Trustee hereunder. The Trustee shall at all times remain
responsible under the terms of this Agreement only to the extent the Trustee is
responsible for its own acts hereunder. Any documents delivered by the Depositor
or the Master Servicer to a Custodian other than the Trustee, if any, shall be
deemed to have been delivered to the Trustee for all purposes hereunder; and any
documents held by such a Custodian, if any, shall be deemed to be held by the
Trustee for all purposes hereunder.
Section 8.12 Appointment of Office or Agency.
The Trustee will appoint an office or agency in the City of New York
where the Certificates may be surrendered for registration of transfer or
exchange, and presented for final distribution, and where notices and demands to
or upon the Trustee in respect of the Certificates and this Agreement may be
served. As of the Closing Date, the Trustee designates its offices located at
the office of Trustee's agent, located at DTC transfer agent services, 00 Xxxxx
Xxxxxx, Xxxxxxxx Xxxx Xxxxxxxx, Xxx Xxxx, XX 00000 for such purpose.
174
Section 8.13 Representations and Warranties of the Trustee.
The Trustee hereby represents and warrants to the Master Servicer, the
Guarantor and the Depositor, as of the Closing Date, that:
(i) it is a national banking association duly organized, validly
existing and in good standing under the laws of the United States.
(ii) the execution and delivery of this Agreement, and the performance
and compliance with the terms of this Agreement, will not violate its charter or
bylaws or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in the breach of, any
material agreement or other instrument to which it is a party or which is
applicable to it or any of its assets.
(iii) it has the full power and authority to enter into and consummate
all transactions contemplated by this Agreement, has duly authorized the
execution, delivery and performance of this Agreement, and has duly executed and
delivered this Agreement.
(iv) this Agreement, assuming due authorization, execution and delivery
by the Master Servicer and the Depositor, constitutes its valid, legal and
binding obligation, enforceable against it in accordance with the terms hereof,
subject to (A) applicable bankruptcy, insolvency, receivership, reorganization,
moratorium and other laws affecting the enforcement of creditors' rights
generally, and (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
Section 8.14 Cap Agreement.
The Trustee shall not designate a Group I Early Termination Date under
the Group I Cap Agreement without the consent of the Group I Cap Controlling
Person. The Trustee shall not designate a Group II Early Termination Date under
the Group II Cap Agreement without the consent of the Group II Cap Controlling
Person.
ARTICLE IX
TERMINATION
Section 9.01 Termination Upon Purchase or Liquidation of All Mortgage
Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Guarantor and the Trustee (other than the obligations of the Master Servicer to
the Trustee pursuant to Section 8.05 and of the Master Servicer to provide for
and the Trustee to make payments in respect of the REMIC 1 Regular Interests,
REMIC 2 Regular Interests, REMIC 3 Regular Interests, REMIC 4 Regular Interests,
and the Classes of Certificates as hereinafter set forth) shall terminate upon
the latest of (A) the payment in full of all amounts owing to the Guarantor
hereunder unless the Guarantor shall otherwise consent and (B) payment to the
Certificateholders and the deposit of all amounts held by or on behalf of the
175
Trustee and required hereunder to be so paid or deposited on the Distribution
Date coinciding with or following the earlier to occur of (i) the purchase by
the Terminator (as defined below) of all Mortgage Loans and each REO Property
remaining in REMIC 1 and (ii) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan or REO Property
remaining in REMIC 1; provided, however, that in no event shall the trust
created hereby continue beyond 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. The
purchase by the Terminator of all Mortgage Loans and each REO Property remaining
in REMIC 1 shall be at a price (the "Termination Price") equal to (a) if the
Terminator is the Master Servicer, 100% of the aggregate Stated Principal
Balance of all the Mortgage Loans included in REMIC 1 and accrued interest on
the Stated Principal Balance of each such Mortgage Loan at the applicable Net
Mortgage Rate in effect from time to time from the Due Date as to which interest
was last paid by the related Mortgagor or by an advance by the Master Servicer
to but not including the first day of the month in which such purchase is to be
effected, plus the appraised value of each REO Property, if any, included in
REMIC 1, such appraisal to be conducted by an appraiser selected by the
Terminator in its reasonable discretion and (b) if the Terminator is the NIMS
Insurer, the greater of (A) the aggregate Purchase Price of all the Mortgage
Loans included in REMIC 1, plus the appraised value of each REO Property, if
any, included in REMIC 1, such appraisal to be conducted by an appraiser
selected by the Terminator in its reasonable discretion, and (B) the aggregate
fair market value of all of the assets of REMIC 1 (as determined by the
Terminator, as of the close of business on the third Business Day next preceding
the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Section 9.01), and in
the case of both clauses (b)(A) and (b)(B) of this sentence, any unpaid
Guarantor Reimbursement Amount, and any additional amounts necessary to pay all
interest accrued on, as well as amounts necessary to pay in full the principal
balance of, the NIM Notes and any amounts necessary to reimburse the NIMS
Insurer for all amounts paid under the NIMs insurance policy and any other
amounts reimbursable or otherwise payable to the NIMS Insurer, in each case,
with interest thereon at the applicable rate set forth in the Indenture and to
the extent not previously reimbursed or paid.
(b) The Master Servicer shall have the right and, if the Master
Servicer does not exercise such right, the NIMS Insurer, shall have the right
(the party exercising such right, the "Terminator") to purchase all of the
Mortgage Loans and each REO Property in both Loan Groups remaining in REMIC 1
pursuant to clause (i) of the preceding paragraph no later than the
Determination Date in the month immediately preceding the Distribution Date on
which the Certificates will be retired; provided, however, that the Terminator
may elect to purchase all of the Mortgage Loans and each REO Property remaining
in REMIC 1 pursuant to clause (i) of the preceding paragraph only if (A) the
aggregate Stated Principal Balance of the Mortgage Loans and each REO Property
remaining in the Trust Fund at the time of such election is equal to or less
than 10% of the Cut-off Date Principal Balance of the Closing Date Mortgage
Loans. Additionally, if the Terminator is the Master Servicer, the Terminator
may elect to purchase all of the Mortgage Loans and each REO Property in REMIC 1
pursuant to clause (i) of the preceding paragraph only if the Termination Price
(A) is equal to or less than the aggregate fair market value of all of the
176
assets of REMIC 1 (as determined by the Terminator, as of the close of business
on the third Business Day next preceding the date upon which notice of any such
termination is furnished to Certificateholders pursuant to Section 9.01(c)) and
(B) will result in distributions on the Certificates sufficient to pay (a) all
unpaid Guarantor Reimbursement Amounts and unpaid Guaranty Fees to the Guarantor
(unless the Guarantor consents to the purchase), and (b) all interest accrued
on, as well as amounts necessary to pay in full the principal balance of, the
NIM Notes and any amounts necessary to reimburse the NIMS Insurer for all
amounts paid under the NIMs insurance policy and any other amounts reimbursable
or otherwise payable to the NIMS Insurer, in each case, with interest thereon at
the applicable rate set forth in the Indenture and to the extent not previously
reimbursed or paid (unless the NIMS Insurer consents to the purchase). The
Terminator shall not be entitled to exercise a purchase right under this Section
9.01, without the Guarantor's consent, if the distribution of the Termination
Price according to such priorities would result in the Guarantor being required
to make a Guarantor Payment on the applicable Distribution Date. By acceptance
of the Residual Certificates, the Holders of the Residual Certificates agree, in
connection with any termination hereunder, to assign and transfer any amounts in
excess of par, and to the extent received in respect of such termination, to pay
any such amounts to the Holders of the Class C Certificates.
(c) Notice of the liquidation of the REMIC 1 Regular Interests shall be
given promptly by the Trustee by letter to Certificateholders mailed (a) in the
event such notice is given in connection with the purchase of the Mortgage Loans
and each REO Property by the Terminator, not earlier than the 15th day and not
later than the 25th day of the month next preceding the month of the final
distribution on the Certificates or (b) otherwise during the month of such final
distribution on or before the Determination Date in such month, in each case
specifying (i) the Distribution Date upon which the Trust Fund will terminate
and final payment in respect of the REMIC 1 Regular Interests and the related
Certificates will be made upon presentation and surrender of the related
Certificates at the office of the Trustee therein designated, (ii) the amount of
any such final payment, (iii) that no interest shall accrue in respect of the
REMIC 1 Regular Interests or the related Certificates from and after the Accrual
Period relating to the final Distribution Date therefor and (iv) that the Record
Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office of the Trustee designated in such notice for purposes of such surrender.
The Trustee shall remit to the Master Servicer from such funds deposited in the
Distribution Account (i) any amounts which the Master Servicer would be
permitted to withdraw and retain from the Collection Account pursuant to Section
3.11 and (ii) any other amounts otherwise payable by the Trustee to the Master
Servicer from amounts on deposit in the Distribution Account pursuant to the
terms of this Agreement, in each case prior to making any final distributions
pursuant to Section 9.01(d) below. Upon certification to the Trustee by a
Servicing Representative of the making of such final deposit, the Trustee shall
promptly release or cause to be released to the Terminator the Mortgage Files
for the remaining Mortgage Loans, and the Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.
(d) Upon presentation of the Certificates by the Certificateholders on
the final Distribution Date, the Trustee shall distribute to each
Certificateholder so presenting and surrendering its Certificates the amount
otherwise distributable on such Distribution Date in accordance with Section
4.01 in respect of the Certificates so presented and surrendered. On the final
Distribution Date, the Trustee will withdraw from the Distribution Account and
remit to the Guarantor amounts otherwise payable to the Guarantor on such
Distribution Date in accordance with Section 4.01. Any funds not distributed to
any Holder or Holders of Certificates being retired on such Distribution Date
because of the failure of such Holder or Holders to tender their Certificates
177
shall, on such date, be set aside and held in trust by the Trustee and credited
to the account of the appropriate non-tendering Holder or Holders. If any
Certificates as to which notice has been given pursuant to this Section 9.01
shall not have been surrendered for cancellation within six months after the
time specified in such notice, the Trustee shall mail a second notice to the
remaining non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Trustee shall, directly or through an
agent, mail a final notice to remaining related non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in the trust funds. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Greenwich Capital Markets, Inc. and UBS
Warburg, LLC all such amounts, and all rights of non-tendering
Certificateholders in or to such amounts shall thereupon cease. No interest
shall accrue or be payable to any Certificateholder on any amount held in trust
by the Trustee as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section 9.01.
Immediately following the deposit of funds in trust hereunder in
respect of the Certificates, the Trust Fund shall terminate.
Section 9.02 Additional Termination Requirements.
(a) In the event that the Terminator purchases all the Mortgage Loans
and each REO Property or the final payment on or other liquidation of the last
Mortgage Loan or REO Property remaining in REMIC 1 pursuant to Section 9.01, the
Trust Fund shall be terminated in accordance with the following additional
requirements:
(i) The Trustee shall specify the first day in the 90-day liquidation
period in a statement attached to each Trust REMIC's final Tax Return pursuant
to Treasury regulation Section 1.860F-l and shall satisfy all requirements of a
qualified liquidation under Section 860F of the Code and any regulations
thereunder, as evidenced by an Opinion of Counsel delivered to the Guarantor,
the Trustee, and the Depositor obtained at the expense of the Terminator;
(ii) During such 90-day liquidation period, and at or prior to the time
of making of the final payment on the Certificates, the Trustee shall sell all
of the assets of REMIC 1 to the Terminator for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited, to the Holders of the Residual Certificates all cash on hand in the
Trust Fund (other than cash retained to meet claims), and the Trust Fund shall
terminate at that time.
(b) At the expense of the Terminator, the Trustee shall prepare or
cause to be prepared the documentation required in connection with the adoption
of a plan of liquidation of each Trust REMIC pursuant to the Section 9.02(a).
178
(c) By their acceptance of Certificates, the Holders thereof hereby
agree to authorize the Trustee to specify the 90-day liquidation period for each
Trust REMIC, which authorization shall be binding upon all successor
Certificateholders.
ARTICLE X
REMIC PROVISIONS
Section 10.01 REMIC Administration.
(a) The Trustee shall elect to treat each Trust REMIC as a REMIC under
the Code and, if necessary, under applicable state law. Each such election will
be made on Form 1066 or other appropriate federal tax or information return
(including Form 8811) or any appropriate state return for the taxable year
ending on the last day of the calendar year in which the Certificates are
issued, copies of which forms and returns shall promptly be furnished by the
Trustee to the NIMS Insurer. For the purposes of the REMIC election in respect
of REMIC 1, the REMIC 1 Regular Interests shall be designated as the Regular
Interests in REMIC 1 and the Class R-1 Interest shall be designated as the
Residual Interest in REMIC 1. For the purposes of the REMIC election in respect
of REMIC 2, the REMIC 2 Regular Interests shall be designated as the Regular
Interests in REMIC 2 and the Class R-2 Interest shall be designated as the
Residual Interest in REMIC 2. For the purposes of the REMIC election in respect
of REMIC 3, the REMIC 3 Regular Interests shall be designated as the Regular
Interests in REMIC 3 and the Class R-3 Interest shall be designated as the
Residual Interest in REMIC 3. For the purposes of the REMIC election in respect
of REMIC 4, (i) the Regular Certificates (other than the Class C Certificates
and the Class P Certificates) and the REMIC 4 Regular Interests shall be
designated as the Regular Interests in REMIC 4 and (ii) the Class R-4 Interest
shall be designated as the Residual Interest in REMIC 4. For the purposes of the
REMIC election in respect of REMIC CX, the Class C Certificates shall be
designated as the Regular Interests in REMIC CX and the Class R-CX Interest
shall be designated as the Residual Interest in REMIC CX. For purposes of the
REMIC election in respect of REMIC PX, the Class P Certificates shall be
designated as the Regular Interests in REMIC PX and the Class R-PX Interest
shall be designated as the Residual Interest in REMIC PX. The Trustee shall not
permit the creation of any "interests" in REMIC 1, REMIC 2, REMIC 3, REMIC 4,
REMIC CX or REMIC PX (within the meaning of Section 860G of the Code) other than
the REMIC 1 Regular Interests, the REMIC 2 Regular Interests, the REMIC 3
Regular Interests, the REMIC 4 Regular Interests and the interests represented
by the Certificates.
(b) The Closing Date is hereby designated as the "Startup Day" of each
Trust REMIC within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay, out of funds on deposit in the Distribution
Account, any and all expenses relating to any tax audit of the Trust Fund
(including, but not limited to, any professional fees or any administrative or
judicial proceedings with respect to any Trust REMIC that involve the Internal
Revenue Service or state tax authorities) unless such expenses, professional
fees or any administrative or judicial proceedings are incurred by reason of the
179
Trustee's willful misfeasance, bad faith or negligence. The Trustee, as agent
for each Trust REMIC's tax matters person, shall (i) act on behalf of the Trust
Fund in relation to any tax matter or controversy involving any Trust REMIC and
(ii) represent, after consultation with the Guarantor and upon accommodation of
the Guarantor's reasonable requests, the Trust Fund in any administrative or
judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto and will be entitled to reimbursement from
the Trust Fund for any expenses incurred by the Trustee in connection therewith
unless such administrative or judicial proceeding relating to an examination or
audit by any governmental taxing authority is incurred by reason of the
Trustee's willful misfeasance, bad faith or negligence. The holder of the
largest Percentage Interest of the Class R Certificates shall be designated, in
the manner provided under Treasury regulations Section 1.860F-4(d) and Treasury
regulations Section 301.6231(a)(7)-1, as the tax matters person of each Trust
REMIC created hereunder other than REMIC CX and REMIC PX. The holder of the
largest Percentage Interest of the Class R-CX Certificates shall be designated,
in the manner provided under Treasury regulations Section 1.860F-4(d) and
Treasury regulations Section 301.6231(a)(7)-1, as the tax matters person of
REMIC PX. The holder of the largest Percentage Interest of the Class R-PX
Certificates shall be designated, in the manner provided under Treasury
regulations Section 1.860F-4(d) and Treasury regulations Section
301.6231(a)(7)-1, as the tax matters person of REMIC PX. By its acceptance
thereof, each such holder hereby agrees to irrevocably appoint the Trustee or an
Affiliate as its agent to perform all of the duties of the tax matters person of
each respective REMIC.
(d) The Trustee shall prepare, sign and file in a timely manner, all of
the Tax Returns in respect of each REMIC created hereunder, copies of which Tax
Returns shall be promptly furnished to the NIMS Insurer. The expenses of
preparing and filing such returns shall be borne by the Trustee without any
right of reimbursement therefor. The Master Servicer shall provide on a timely
basis to the Trustee or its designee such information with respect to the assets
of the Trust Fund as is in its possession and reasonably required by the Trustee
to enable it to perform its respective obligations under this Article.
(e) The Trustee shall perform on behalf of each Trust REMIC all
reporting and other tax compliance duties that are the responsibility of such
REMIC under the Code, the REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or such other
compliance guidance, the Trustee shall provide (i) to any Transferor of a
Residual Certificate (or other person designated in Section 860E(e)(3) of the
Code) and to the Internal Revenue Service such information as is necessary for
the computation of any tax relating to the transfer of a Residual Certificate to
any Person who is not a Permitted Transferee, (ii) to the Certificateholders
such information or reports as are required by the Code or the REMIC Provisions
including reports relating to interest, original issue discount and market
discount or premium (using the Prepayment Assumption as required) and (iii) to
the Internal Revenue Service the name, title, address and telephone number of
the person who will serve as the representative of each Trust REMIC. The Master
Servicer shall provide on a timely basis to the Trustee such information with
respect to the assets of the Trust Fund, including, without limitation, the
Mortgage Loans, as is in its possession and reasonably required by the Trustee
to enable it to perform its obligations under this subsection. In addition, the
Depositor shall provide or cause to be provided to the Trustee, within ten (10)
days after the Closing Date, all information or data that the Trustee reasonably
180
determines to be relevant for tax purposes as to the valuations and issue prices
of the Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates. The Depositor shall also
provide such information or data to the NIMS Insurer.
(f) The Trustee shall take such action and shall cause each Trust REMIC
created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the
Master Servicer shall assist the Trustee, to the extent reasonably requested by
the Trustee to do specific actions in order to assist in the maintenance of such
status). The Trustee shall not take any action, cause the Trust Fund to take any
action or fail to take (or fail to cause to be taken) any action that, under the
REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger
the status of any Trust REMIC as a REMIC or (ii) result in the imposition of a
tax upon the Trust Fund (including but not limited to the tax on prohibited
transactions set forth in Section 860F(a) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee, the NIMS Insurer and the
Guarantor have received an Opinion of Counsel, addressed to the Trustee, the
NIMS Insurer and the Guarantor (at the expense of the party seeking to take such
action but in no event at the expense of the Trustee) to the effect that the
contemplated action will not, with respect to any Trust REMIC, endanger such
status or result in the imposition of such a tax, nor shall the Master Servicer
take or fail to take any action (whether or not authorized hereunder) as to
which the Trustee has advised it in writing that it has received an Opinion of
Counsel to the effect that an Adverse REMIC Event could occur with respect to
such action; provided that the Master Servicer may conclusively rely on such
Opinion of Counsel and shall incur no liability for its action or failure to act
in accordance with such Opinion of Counsel. The Trustee shall deliver to the
NIMS Insurer and the Guarantor a copy of any such advice or opinion. In
addition, prior to taking any action with respect to any Trust REMIC or the
assets thereof, or causing any Trust REMIC to take any action, which is not
contemplated under the terms of this Agreement, the Master Servicer will consult
with the Trustee or its designee, in writing, with respect to whether such
action could cause an Adverse REMIC Event to occur with respect to a Trust
REMIC, and the Master Servicer shall not take any such action or cause any Trust
REMIC to take any such action as to which the Trustee has advised it in writing
that an Adverse REMIC Event could occur; provided that the Master Servicer may
conclusively rely on such writing and shall incur no liability for its action or
failure to act in accordance with such writing. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement, but in no
event shall such cost be an expense of the Trustee. At all times as may be
required by the Code, the Trustee will ensure that substantially all of the
assets of REMIC 1 will consist of "qualified mortgages" as defined in Section
860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
(g) If any tax is imposed on prohibited transactions of any Trust REMIC
created hereunder pursuant to Section 860F(a) of the Code, on the net income
from foreclosure property of any such REMIC pursuant to Section 860G(c) of the
Code, or on any contributions to any such REMIC after the Startup Day therefor
pursuant to Section 860G(d) of the Code, or if any other tax is imposed by the
Code or any applicable provisions of state or local tax laws, such tax shall be
181
charged (i) to the Trustee pursuant to Section 10.03 hereof, if such tax arises
out of or results from a breach by the Trustee of any of its obligations under
this Article X, (ii) to the Master Servicer pursuant to Section 10.03 hereof, if
such tax arises out of or results from a breach by the Master Servicer of any of
its obligations under Article III or this Article X, or (iii) otherwise against
amounts on deposit in the Distribution Account and shall be paid by withdrawal
therefrom.
(h) On or before April 15 of each calendar year commencing after the
date of this Agreement, the Trustee shall deliver to the Master Servicer, the
NIMS Insurer, the Guarantor and each Rating Agency a Certificate from a
Responsible Officer of the Trustee stating the Trustee's compliance with this
Article X.
(i) The Trustee shall, for federal income tax purposes, maintain books
and records with respect to each Trust REMIC on a calendar year and on an
accrual basis.
(j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to any Trust REMIC other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the Trust Fund will not cause any Trust REMIC to
fail to qualify as a REMIC at any time that any Certificates are outstanding or
subject any Trust REMIC to any tax under the REMIC Provisions or other
applicable provisions of federal, state and local law or ordinances.
(k) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which any Trust REMIC will receive a fee or other compensation
for services or permit any Trust REMIC 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.
Section 10.02 Prohibited Transactions and Activities.
None of the Depositor, the Master Servicer or the Trustee shall sell,
dispose of or substitute for any of the Mortgage Loans (except in connection
with (i) the foreclosure of a Mortgage Loan, including but not limited to, the
acquisition or sale of a Mortgaged Property acquired by deed in lieu of
foreclosure, (ii) the bankruptcy of REMIC 1, (iii) the termination of REMIC 1
pursuant to Article IX of this Agreement, (iv) a substitution pursuant to
Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), nor acquire any assets for any Trust REMIC
(other than REO Property acquired in respect of a defaulted Mortgage Loan), nor
sell or dispose of any investments in the Collection Account or the Distribution
Account for gain, nor accept any contributions to any Trust REMIC after the
Closing Date (other than a Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03), unless it, the NIMS Insurer and the Guarantor
have received an Opinion of Counsel, addressed to the Trustee, the NIMS Insurer
and the Guarantor (at the expense of the party seeking to cause such sale,
disposition, substitution, acquisition or contribution but in no event at the
expense of the Trustee) that such sale, disposition, substitution, acquisition
or contribution will not (a) affect adversely the status of any Trust REMIC as a
REMIC or (b) cause any Trust REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.
182
Section 10.03 Trustee, Master Servicer and Depositor Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the Depositor and
the Master Servicer for any taxes and costs including, without limitation, any
reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor or the Master Servicer as a result of a breach of the Trustee's
covenants set forth in this Article X or any state, local or franchise taxes
imposed upon the Trust as a result of the location of the Trustee.
(b) The Master Servicer agrees to indemnify the Trust Fund, the
Depositor and the Trustee for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor or the Trustee as a result of a breach of the Master Servicer's
covenants set forth in Article III or this Article X or any state, local or
franchise taxes imposed upon the Trust as a result of the location of the Master
Servicer or any subservicer.
(c) The Depositor agrees to indemnify the Trust Fund, the Master
Servicer and the Trustee for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Master Servicer or the Trustee as a result of a breach of the Depositor's
covenants set forth in this Article X.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment.
This Agreement or any Custodial Agreement may be amended from time to
time by the Depositor, the Master Servicer, the Trustee, the Guarantor and, if
applicable, the Custodian, with the consent of the NIMS Insurer, and without the
consent of any of the Certificateholders, (i) to cure any ambiguity or defect,
(ii) to correct, modify or supplement any provisions herein (including to give
effect to the expectations of Certificateholders), or in any Custodial
Agreement, (iii) to modify, eliminate or add to any of its provisions to such
extent as shall be necessary or desirable to maintain the qualification of the
Trust Fund as a REMIC at all times that any Certificate is outstanding or to
avoid or minimize the risk of the imposition of any tax on the Trust Fund
pursuant to the Code that would be a claim against the Trust Fund, provided that
the Trustee, the NIMS Insurer, the Guarantor, the Depositor and the Master
Servicer have received an Opinion of Counsel to the effect that (A) such action
is necessary or desirable to maintain such qualification or to avoid or minimize
the risk of the imposition of any such tax and (B) such action will not
adversely affect the status of the Trust Fund as a REMIC or adversely affect in
any material respect the interest of any Certificateholder or (iv) to make any
other provisions with respect to matters or questions arising under this
Agreement or in any Custodial Agreement which shall not be inconsistent with the
provisions of this Agreement or such Custodial Agreement, provided that, in each
case, such action shall not, as evidenced by an Opinion of Counsel delivered to
the parties hereto and the NIMS Insurer, adversely affect in any material
respect the interests of any Certificateholder and, provided, further, that (A)
such action will not affect in any material respect the permitted activities of
the Trust and (B) such action will not increase in any material respect the
183
degree of discretion which the Master Servicer is allowed to exercise in
servicing the Mortgage Loans. No amendment shall be deemed to adversely affect
in any material respect the interests of any Certificateholder who shall have
consented thereto, and no Opinion of Counsel shall be required to address the
effect of any such amendment on any such consenting Certificateholder.
This Agreement or any Custodial Agreement may also be amended from time
to time by the Depositor, the Master Servicer, the Trustee, the Guarantor and,
if applicable, the Custodian, with the consent of the NIMS Insurer, and with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights, for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or any Custodial Agreement
or of modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, (ii) adversely affect in any material respect the interests
of the Holders of any Class of Certificates in a manner, other than as described
in (i), without the consent of the Holders of Certificates of such Class
evidencing at least 66% of the Voting Rights allocated to such Class, or (iii)
modify the consents required by the immediately preceding clauses (i) and (ii)
without the consent of the Holders of all Certificates then outstanding.
Notwithstanding any other provision of this Agreement, for purposes of the
giving or withholding of consents pursuant to this Section 11.01, Certificates
registered in the name of the Depositor or the Master Servicer or any Affiliate
thereof shall be entitled to Voting Rights with respect to matters affecting
such Certificates.
Notwithstanding any contrary provision of this Agreement, the Trustee,
the NIMS Insurer and the Guarantor shall be entitled to receive an Opinion of
Counsel to the effect that such amendment will not result in the imposition of
any tax on any Trust REMIC pursuant to the REMIC Provisions or cause any Trust
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment to each Certificateholder and the NIMS Insurer.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 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.
The cost of any Opinion of Counsel to be delivered pursuant to this
Section 11.01 shall be borne by the Person seeking the related amendment, but in
no event shall such Opinion of Counsel be an expense of the Trustee.
The Trustee may, but shall not be obligated to enter into any amendment
pursuant to this Section that affects its rights, duties and immunities under
this Agreement or otherwise.
184
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
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Trust, but only upon direction of
Certificateholders accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
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 together constitute but
one and the same instrument.
Section 11.03 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i) operate
to terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as expressly provided for herein, no Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, 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 person 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 of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 15 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 is understood
and intended, and 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 of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
185
of the provisions of this Section 11.03 each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04 Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 11.05 Notices.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
first class mail, postage prepaid, by facsimile or by express delivery service,
to (a) in the case of the Master Servicer, Long Beach Mortgage Company, 0000
Xxxx & Xxxxxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000, Attention: General
Counsel (telecopy number: (000) 000-0000), or such other address or telecopy
number as may hereafter be furnished to the other parties hereto in writing by
the Master Servicer, (b) in the case of the Trustee, Deutsche Bank National
Trust Company, 0000 Xx. Xxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxxxxx 00000-0000,
Attention: Trust Administration Services LB0205 (telecopy number (000) 000-0000)
or such other address or telecopy number as may hereafter be furnished to the
other parties hereto in writing by the Trustee, (c) in the case of the
Depositor, Long Beach Securities Corp., 0000 Xxxx & Xxxxxxx Xxxx, Xxxxx 0000,
Xxxxxx Xxxxxxxxxx 00000, Attention: General Counsel (telecopy number: (714)
543-6847), or such other address or telecopy number as may be furnished to the
other parties hereto in writing by the Depositor, (d) in the case of Guarantor,
Xxxxxx Mae, 0000 Xxxxxxxxx Xxxxxx, XX, Xxxxxxxxxx, X.X. 00000, Attention: Vice
President-Capital Markets (telecopy number (000) 000-0000), or such other
addresses or telecopy number as may be furnished to the other parties thereto in
writing by the Guarantor, and (e) in the case of the NIMS Insurer, Asset
Guaranty Insurance Company, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Manager, Asset-Backed Surveillance (telecopy number: (000) 000-0000),
or such other addresses or telecopy number as may be furnished to the other
parties thereto in writing by the NIMS Insurer. Any notice required or permitted
to be mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register.
Notice of any Master Servicer default shall be given by telecopy and by
certified mail. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have duly been given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder shall also be mailed to the appropriate
party in the manner set forth above.
Section 11.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall for any reason whatsoever be 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.
186
Section 11.07 Notice to the Rating Agencies, the NIMS Insurer and the Guarantor.
The Trustee shall use its best efforts promptly to provide notice to
the Rating Agencies, the NIMS Insurer and the Guarantor with respect to each of
the following of which it has actual knowledge:
1. Any amendment to this Agreement;
2. The occurrence of any Master Servicer Event of Default that has not
been cured or waived;
3. The resignation or termination of the Master Servicer or the
Trustee;
4. The repurchase or substitution of Mortgage Loans pursuant to or as
contemplated by Section 2.03;
5. The final payment to the Holders of any Class of Certificates;
6. Any change in the location of the Collection Account or the
Distribution Account;
7. The Trustee were it to succeed as Master Servicer, is unable to make
advances regarding delinquent Mortgage Loans; and
8. The filing of any claim under the Master Servicer's blanket bond and
errors and omissions insurance policy required by Section 3.14 or the
cancellation or material modification of coverage under any such instrument.
In addition, the Trustee shall promptly make available to each Rating
Agency copies of each Statement to Certificateholders described in Section 4.03
hereof and the Master Servicer shall promptly furnish to each Rating Agency
copies of the following:
1. each annual statement as to compliance described in Section 3.20
hereof;
2. each annual independent public accountants' servicing report
described in Section 3.21 hereof.
Any such notice pursuant to this Section 11.07 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: MBS
Monitoring/Long Beach Mortgage Loan Trust 2002-5; Fitch, Inc., Xxx Xxxxx Xxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Standard & Poor's Rating Services, Inc., 00
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and the NIMS Insurer and the Guarantor
at the address provided in Section 11.05.
In addition, each party hereto agrees that it will furnish or make
available to the NIMS Insurer a copy of any opinions, notices, reports,
schedules, certificates, statements, rating confirmation letters or other
information that are furnished hereunder to the Trustee or the
Certificateholders.
187
Section 11.08 Article and Section References.
All Article and Section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
Section 11.09 Third-Party Beneficiaries.
Subject to Section 1.04, the NIMS Insurer shall be deemed a third-party
beneficiary of this Agreement, and shall be entitled to enforce such rights, in
each case, as if it were a party hereto. Notwithstanding anything to the
contrary anywhere in this Agreement, all rights of the NIMS Insurer hereunder
(i) shall be suspended whenever rights of the NIMS Insurer under the Indenture
(other than the right to consent to amendments to the Indenture) are suspended
and (ii) except in the case of any right to indemnification hereunder shall
permanently terminate upon the later to occur of (A) the payment in full of the
Insured NIM Notes as provided in the Indenture and (B) the payment in full to
the NIMS Insurer of any amounts owed to the NIMS Insurer as provided in the
Indenture.
Section 11.10 Grant of Security Interest.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Depositor to the Trustee be, and be construed as, a
sale of the Mortgage Loans by the Depositor and not a pledge of the Mortgage
Loans by the Depositor to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Depositor, then, (a)
it is the express intent of the parties that such conveyance be deemed a pledge
of the Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof shall be deemed to be a grant by
the Depositor to the Trustee of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement, including the obligation to provide to the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security interest in
the Mortgage Loans and all other property described in clause (2) of the
preceding sentence, for the purpose of securing to the Trustee the performance
by the Depositor of the obligations described in clause (3) of the preceding
188
sentence. Notwithstanding the foregoing, the parties hereto intend the
conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the Mortgage Loans and assets constituting the Trust Fund by the
Depositor to the Trustee.
189
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Guarantor
and the Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
LONG BEACH SECURITIES CORP.,
as Depositor
By:
----------------------------------------------
Name: Xxxxxxx X Xxxxxxxx
Title: Vice President
LONG BEACH MORTGAGE COMPANY,
as Master Servicer
By:
----------------------------------------------
Name: Xxxxxxx X Xxxxxxxx
Title: First Vice President
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
By:
----------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Associate
By:
----------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION,
as Guarantor (with respect to the Class A-1
Certificates and the Class S-1 Certificates)
By:
----------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
000
XXXXX XX XXXXXXXXXX )
) ss.:
COUNTY OF KING )
On the ___th day of November, 2002 before me, a notary public in and
for said State, personally appeared Xxxxxxx X Xxxxxxxx known to me to be a Vice
President of Long Beach Securities Corp., a Delaware corporation that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said 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
000
XXXXX XX XXXXXXXXXX )
) ss.:
COUNTY OF KING )
On the ___th day of November, 2002 before me, a notary public in and
for said State, personally appeared Xxxxxxx X Xxxxxxxx known to me to be a First
Vice President of Long Beach Mortgage Company, a corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said 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
192
STATE OF )
) ss.:
COUNTY OF )
On the ___th day of November, 2002 before me, a notary public in and
for said State, personally appeared Xxxxxxx Xxxxx, known to me to be an
Associate of Deutsche Bank National Trust Company, a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said association, and acknowledged to me
that such association 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
193
STATE OF )
) ss.:
COUNTY OF )
On the ___th day of November, 2002 before me, a notary public in and
for said State, personally appeared _________________, known to me to be an
Associate of Deutsche Bank National Trust Company, a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said association, and acknowledged to me
that such association 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
000
XXXXXXXX XX XXXXXXXX )
) ss.:
CITY OF WASHINGTON )
On the ___th day of November, 2002 before me, a notary public in and
for said State, personally appeared ____________, known to me to be a
____________ of Federal National Mortgage Association, a corporation organized
and existing under the laws of the United States, that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said association, and acknowledged to me that such association 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
195
EXHIBIT A-1
CLASS A-1 CERTIFICATES
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Principal Balance of
this Certificate ("Denomination") : $[-------]
Original Class Certificate Principal
Balance of this Class : $[_______]
Percentage Interest : [ ]
Pass-Through Rate : Variable
CUSIP [____]
Class : A-1
Assumed Maturity Date : November, 2032
A-1-1
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class A-1
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-1 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class A-1 Certificate (obtained by
dividing the Denomination of this Class A-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class A-1 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class A-1 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the 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 Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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.
A-1-2
Reference is hereby made to the further provisions of this Class A-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class A-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-1-3
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class A-1 Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-1-4
[Reverse of Class A-1 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
A-1-5
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denomi-nations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-1-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
A-1-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
A-1-8
CLASS A-1 CERTIFICATES
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 2
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Principal Balance of
this Certificate ("Denomination") : $[-------]
Original Class Certificate Principal
Balance of this Class : $[_______]
Percentage Interest : [ ]
Pass-Through Rate : Variable
CUSIP [____]
Class : A-1
Assumed Maturity Date : November, 2032
A-1-1
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class A-1
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-1 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class A-1 Certificate (obtained by
dividing the Denomination of this Class A-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class A-1 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class A-1 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the 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 Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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.
A-1-2
Reference is hereby made to the further provisions of this Class A-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class A-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-1-3
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class A-1 Certificates referenced in the
within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-1-4
[Reverse of Class A-1 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
A-1-5
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denomi-nations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-1-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
A-1-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
X-0-0
XXXXXXX X-0
CLASS A-2 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Principal Balance of
this Certificate ("Denomination") : $[-------]
Original Class Certificate Principal
Balance of this Class : $[_______]
Percentage Interest : [____]
Pass-Through Rate : Variable
CUSIP : [____]
Class : A-2
Assumed Maturity Date : November, 2032
A-2-1
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class A-2
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-2 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class A-2 Certificate (obtained by
dividing the Denomination of this Class A-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class A-2 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class A-2 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class A-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class A-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-2-2
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class A-2 Certificates referenced in the
within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
A-2-3
[Reverse of Class A-2 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
A-2-4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denomi-nations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-2-5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
A-2-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
X-0-0
XXXXXXX X-0
CLASS S-1 CERTIFICATES
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Notional Amount of
this Certificate ("Denomination") : $[-------]
Original Class Certificate Notional
Amount of this Class : $[_______]
Percentage Interest : 100.00%
CUSIP [____]
Pass-Through Rate : Scheduled
Class : S-1
Assumed Maturity Date : May, 2005
S-1-1
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class S-1
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
This Class S-1 Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Master Servicer or the
Trustee referred to below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class S-1 Certificate (obtained by
dividing the Denomination of this Class S-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class S-1 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class S-1 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the 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 Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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.
S-1-2
Reference is hereby made to the further provisions of this Class S-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class S-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
S-1-3
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class S-1 Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
S-1-4
[Reverse of Class S-1 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
S-1-5
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
S-1-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
S-1-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
S-1-8
EXHIBIT A-4
CLASS S-2 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Notional Amount of
this Certificate ("Denomination") : $[-------]
Original Class Certificate Notional
Amount of this Class : $[_______]
Percentage Interest : 100.00%
Pass-Through Rate : Scheduled
CUSIP : [____]
Class : S-2
Assumed Maturity Date : May, 2005
S-2-1
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class S-2
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
This Class S-2 Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Master Servicer or the
Trustee referred to below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class S-2 Certificate (obtained by
dividing the Denomination of this Class S-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class S-2 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class S-2 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class S-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class S-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
S-2-2
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class S-2 Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
S-2-3
[Reverse of Class S-2 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
S-2-4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
S-2-5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
S-2-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
S-2-7
EXHIBIT A-5
CLASS M-1 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES AND THE CLASS S-2 CERTIFICATES TO THE
EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Principal Balance of
this Certificate ("Denomination") : $[-------]
Original Class Certificate Principal
Balance of this Class : $[_______]
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [____]
Class : M-1
Assumed Maturity Date : November, 0000
X-0-0
Xxxx Xxxxx Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class M-1
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-1 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-1 Certificate (obtained by
dividing the Denomination of this Class M-1 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class M-1 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class M-1 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class M-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class M-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
M-1-2
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class M-1 Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
M-1-3
[Reverse of Class M-1 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
M-1-4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
M-1-5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
M-1-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
M-1-7
EXHIBIT A-6
CLASS M-2 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES, THE CLASS S-2 CERTIFICATES AND THE
CLASS M-1 CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Principal Balance of
this Certificate ("Denomination") : $[-------]
Original Class Certificate Principal
Balance of this Class : $[_______]
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [____]
Class : M-2
Assumed Maturity Date : November, 0000
X-0-0
Xxxx Xxxxx Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class M-2
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-2 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-2 Certificate (obtained by
dividing the Denomination of this Class M-2 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class M-2 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class M-2 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class M-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class M-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
M-2-2
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class M-2 Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
M-2-3
[Reverse of Class M-2 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
M-2-4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
M-2-5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
M-2-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
M-2-7
EXHIBIT A-7
CLASS M-3 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES, THE CLASS S-2 CERTIFICATES, THE CLASS
M-1 CERTIFICATES AND THE CLASS M-2 CERTIFICATES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Principal Balance of
this Certificate ("Denomination") : $[-------]
Original Class Certificate Principal
Balance of this Class : $[_______]
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [____]
Class : M-3
Assumed Maturity Date : November, 0000
X-0-0
Xxxx Xxxxx Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class M-3
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-3 Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-3
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-3 Certificate (obtained by
dividing the Denomination of this Class M-3 Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class M-3 Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class M-3 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class M-3
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class M-3 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
M-3-2
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class M-3 Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
M-3-3
[Reverse of Class M-3 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
M-3-4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
M-3-5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
M-3-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
M-3-7
EXHIBIT A-8
CLASS M-4A CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES, THE CLASS S-2 CERTIFICATES, THE CLASS
M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES AND THE CLASS M-3 CERTIFICATES TO
THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Principal Balance of
this Certificate ("Denomination") : $[-------]
Original Class Certificate Principal
Balance of this Class : $[_______]
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [____]
Class : M-4A
Assumed Maturity Date : November, 0000
X-0X-0
Xxxx Xxxxx Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class M-4A
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-4A Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-4A
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-4A Certificate (obtained by
dividing the Denomination of this Class M-4A Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class M-4A Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class M-4A Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class M-4A
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class M-4A Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
M-4A-2
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class M-4A Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
M-4A-3
[Reverse of Class M-4A Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
M-4A-4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
M-4A-5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
M-4A-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
M-4A-7
EXHIBIT A-9
CLASS M-4B CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES, THE CLASS S-2 CERTIFICATES, THE CLASS
M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES AND THE CLASS M-3 CERTIFICATES TO
THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Principal Balance of
this Certificate ("Denomination") : $[-------]
Original Class Certificate Principal
Balance of this Class : $[_______]
Percentage Interest : 100.00%
Pass-Through Rate : 6.00%
CUSIP : [____]
Class : M-4B
Assumed Maturity Date : November, 0000
X-0X-0
Xxxx Xxxxx Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class M-4B
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-4B Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-4B
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class M-4B Certificate (obtained by
dividing the Denomination of this Class M-4B Certificate by the Original Class
Certificate Principal Balance) in certain monthly distributions with respect to
a Trust consisting primarily of the Mortgage Loans deposited by Long Beach
Securities Corp. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class M-4B Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Class M-4B Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class M-4B
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class M-4B Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
M-4B-2
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class M-4B Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
M-4B-3
[Reverse of Class M-4B Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
M-4B-4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
M-4B-5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
M-4B-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
M-4B-7
EXHIBIT A-10
CLASS C CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S-1 CERTIFICATES, THE CLASS S-2 CERTIFICATES, THE CLASS
M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS M-3 CERTIFICATES, THE
CLASS M-4A CERTIFICATES AND THE CLASS M-4B CERTIFICATES TO THE EXTENT DESCRIBED
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Original Certificate Principal Balance : $[-------]
Initial Notional Amount of this
Certificate ("Denomination") : $[_______]
Original Notional Amount of this Class : $[-------]
Percentage : 100.00%
Pass-Through Rate : Variable
Class : C
C-1
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class C
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class C
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class C
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Class C Certificate (obtained
by dividing the Denomination of this Class C Certificate by the Original Class
Certificate Principal Balance) in certain distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class C Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class C Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the 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 Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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.
C-2
No transfer of this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
Reference is hereby made to the further provisions of this Class C
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class C Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
C-3
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class C Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
C-4
[Reverse of Class C Certificate]
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
C-5
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, and any agent of the Depositor, the Master Servicer, the
Trustee, the Guarantor or the NIMS Insurer, if any, may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Depositor, the Master Servicer, the Trustee, the Guarantor, the
NIMS Insurer, if any, nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
C-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
C-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
C-8
EXHIBIT A-11
CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Initial Certificate Principal Balance of
this Certificate ("Denomination") : $100.00
Original Class Certificate Principal
Balance of this Class : $100.00
Percentage Interest : 100.00%
Class : P
P-1
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class P
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class P
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class P
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Class P Certificate (obtained
by dividing the Denomination of this Class P Certificate by the Original Class
Certificate Principal Balance) in certain distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of November 1, 2002 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates, and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Class P Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class P Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
This Certificate does not have a pass-through rate and will be entitled
to distributions only to the extent set forth in the Agreement.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the 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 Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
P-2
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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 this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
Reference is hereby made to the further provisions of this Class P
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class P Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
P-3
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class P Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
P-4
[Reverse of Class P Certificate]
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
P-5
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer, the Trustee, the Guarantor or the NIMS Insurer,
if any, may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Master Servicer,
the Trustee, the Guarantor, the NIMS Insurer, if any, nor any such agent shall
be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
P-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
P-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
P-8
EXHIBIT A-12
CLASS R CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
"RESIDUAL INTERESTS" IN FOUR SEPARATE "REAL ESTATE MORTGAGE INVESTMENT
CONDUITS," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO A "DISQUALIFIED ORGANIZATION", AS SUCH TERM
IS DEFINED IN SECTION 860E OF THE CODE, SHALL BE MADE.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Percentage Interest : 100.00%
Class : R
X-0
Xxxx Xxxxx Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class R
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting primarily of a pool of first lien and second lien,
fixed rate and adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Master Servicer or the Trustee
referred to below or any of their respective affiliates.
This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in a Trust consisting primarily of the Mortgage Loans
deposited by Long Beach Securities Corp. (the "Depositor"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of November 1,
2002 (the "Agreement") among the Depositor, Long Beach Mortgage Company, as
master servicer (the "Master Servicer"), Federal National Mortgage Association,
as guarantor with respect to the Class A-1 Certificates and the Class S-1
Certificates, and Deutsche Bank National Trust Company, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
This Certificate does not have a principal balance or pass-through rate
and will be entitled to distributions only to the extent set forth in the
Agreement. In addition, any distribution of the proceeds of any remaining assets
of the Trust will be made only upon presentment and surrender of this
Certificate at the office or agency designated by the Trustee.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the 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 Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
R-2
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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 this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee. Pursuant to the Agreement, the Trustee will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to Disqualified Organizations, if any
Disqualified Organization acquires an Ownership Interest on a Class R
Certificate in violation of the restrictions mentioned above.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
R-3
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class R Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
R-4
[Reverse of Class R Certificate]
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
R-5
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer, the Trustee, the Guarantor or the NIMS Insurer,
if any, may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Master Servicer,
the Trustee, the Guarantor, the NIMS Insurer, if any, nor any such agent shall
be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
By acceptance of the Class R Certificates the Holders of the Class R
Certificates agree that for so long as any of the NIM Notes are outstanding or
any amounts are reimbursable or payable to the NIMS Insurer, if any, in
accordance with the terms of the Indenture, in connection with any amounts
distributable to the Holders of the Class R Certificates pursuant to Section
4.01(d)(i)(n) of the Agreement, their rights to receive the amounts so
distributable are assigned and transferred and any such amounts shall be paid by
the Trustee out of the Trust Fund, and to the extent received by the Holders of
the Class R Certificates they shall pay any such amounts, to the Holders of the
Class C Certificates.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
R-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
R-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
R-8
EXHIBIT A-13
CLASS R-CX CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R-CX CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO A "DISQUALIFIED ORGANIZATION", AS SUCH TERM
IS DEFINED IN SECTION 860E OF THE CODE, SHALL BE MADE.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Percentage Interest : 100.00%
Class : R-CX
R-CX-1
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class R-CX
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting primarily of a pool of first lien and second lien,
fixed rate and adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Master Servicer or the Trustee
referred to below or any of their respective affiliates.
This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in a Trust consisting primarily of the Mortgage Loans
deposited by Long Beach Securities Corp. (the "Depositor"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of November 1,
2002 (the "Agreement") among the Depositor, Long Beach Mortgage Company, as
master servicer (the "Master Servicer"), Federal National Mortgage Association,
as guarantor with respect to the Class A-1 Certificates and the Class S-1
Certificates, and Deutsche Bank National Trust Company, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
This Certificate does not have a principal balance or pass-through rate
and will be entitled to distributions only to the extent set forth in the
Agreement. In addition, any distribution of the proceeds of any remaining assets
of the Trust will be made only upon presentment and surrender of this
Certificate at the office or agency designated by the Trustee.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the 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 Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
R-CX-2
Trustee and the Depositor 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 this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee. Pursuant to the Agreement, the Trustee will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to Disqualified Organizations, if any
Disqualified Organization acquires an Ownership Interest on a Class R-CX
Certificate in violation of the restrictions mentioned above.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
R-CX-3
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class R-CX Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
R-CX-4
[Reverse of Class R-CX Certificate]
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
R-CX-5
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer, the Trustee, the Guarantor or the NIMS Insurer,
if any, may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Master Servicer,
the Trustee, the Guarantor, the NIMS Insurer, if any, nor any such agent shall
be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
R-CX-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
R-CX-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
R-CX-8
EXHIBIT A-14
CLASS R-PX CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R-PX CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO A "DISQUALIFIED ORGANIZATION", AS SUCH TERM
IS DEFINED IN SECTION 860E OF THE CODE, SHALL BE MADE.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, November__, 2002
First Distribution Date : December 26, 2002
Percentage Interest : 100.00%
Class : R-PX
R-PX-1
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
Class R-PX
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting primarily of a pool of first lien and second lien,
fixed rate and adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Master Servicer or the Trustee
referred to below or any of their respective affiliates.
This certifies that Long Beach Asset Holdings Corp. is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in a Trust consisting primarily of the Mortgage Loans
deposited by Long Beach Securities Corp. (the "Depositor"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of November 1,
2002 (the "Agreement") among the Depositor, Long Beach Mortgage Company, as
master servicer (the "Master Servicer"), Federal National Mortgage Association,
as guarantor with respect to the Class A-1 Certificates and the Class S-1
Certificates, and Deutsche Bank National Trust Company, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
This Certificate does not have a principal balance or pass-through rate
and will be entitled to distributions only to the extent set forth in the
Agreement. In addition, any distribution of the proceeds of any remaining assets
of the Trust will be made only upon presentment and surrender of this
Certificate at the office or agency designated by the Trustee.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the 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 Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
R-PX-2
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor 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 this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any person using Plan Assets to acquire this Certificate shall be
made except in accordance with Section 5.02(c) of the Agreement.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee. Pursuant to the Agreement, the Trustee will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to Disqualified Organizations, if any
Disqualified Organization acquires an Ownership Interest on a Class R-PX
Certificate in violation of the restrictions mentioned above.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
R-PX-3
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November ___, 2002
LONG BEACH MORTGAGE LOAN TRUST 2002-5
By: DEUTSCHE BANK NATIONAL TRUST COMPANY
not in its individual capacity, but solely as Trustee
By _____________________________________________________
This is one of the Class R-PX Certificates
referenced in the within-mentioned Agreement
By_____________________________________________
Authorized Signatory of
Deutsche Bank National Trust Company,
as Trustee
R-PX-4
[Reverse of Class R-PX Certificate]
Long Beach Mortgage Loan Trust 2002-5
Asset-Backed Certificates,
Series 2002-5
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee, the Guarantor and of Holders
of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
R-PX-5
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor, the Master Servicer, the Trustee, the Guarantor or the NIMS Insurer,
if any, may treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Depositor, the Master Servicer,
the Trustee, the Guarantor, the NIMS Insurer, if any, nor any such agent shall
be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Stated Principal Balance of the Mortgage Loans is less than 10% of the Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer or the NIMS Insurer, if any, may purchase, in whole, from the Trust the
Mortgage Loans in the manner and at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balances of the Regular Certificates have been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust, (iii) the Distribution Date for the Certificates other than the
Class S Certificates in November, 2032.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
R-PX-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_______________________
_____________________________________
Signature by or on behalf of assignor
R-PX-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________________________________,
_______________________________________________________________________________,
for the account of________________________________________________________,
account number_______________________________________________________________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by ___________________________________,
the assignee named above, or _____________________________________________,
as its agent.
R-PX-8
EXHIBIT B-1
FORM OF GROUP I CAP AGREEMENT
BankofAmerica
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Tel 000-000-0000
Fax 000-000-0000
Bank of America N.A.
TO: Long Beach Mortgage Loan Trust 2002-5
ATTN: Xxxxxxx Xxxxxxx
TEL: (000) 000-0000
FAX: (000) 000-0000
FROM: Bank of America, N.A.
000 Xxxxx Xxxxxx Xxxxx - Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxx Xxxxxxxx / Xxxxx Xxxxxxxx
Date: 31OCT02 (REVISED 04NOV02)
Our Reference No. 3003419 3003418
Internal Tracking Nos. 475143 475145
The purpose of this letter agreement is to confirm the terms and conditions of
the Transaction entered into between Bank of America, N.A and Long Beach
Mortgage Loan Trust 2002-5 (each a `party" and together "the parties") on the
Trade Date specified below (the "Transaction").
This letter agreement constitutes a "Confirmation" and the definitions and
provisions contained in the 2000 ISDA Definitions, as published by the
International Swaps and Derivatives Association, Inc. (the "Definitions') are
incorporated into this Confirmation. In the event of any inconsistency between
the Definitions and this Confirmation, this Confirmation will govern.
1 This Confirmation evidences a complete binding agreement between the parties
as to the terms of the Transaction to which this Confirmation relates. In
addition, the parties agree that for the purposes of this Transaction, this
Confirmation will supplement, form a part of, and be subject to an agreement in
the form of the 1992 ISDA Master Agreement (Multicurrency-Cross Border) as if
the patties had executed an agreement (the
B-1-1
"Agreement") in such form (but without any Schedule except for the election of
(i) the laws of the State of New York (without reference to choice of law
doctrine) as the governing law and (ii) USD as the Termination Currency) on the
Trade Date of the Transaction, In the event of any inconsistency between the
provisions of that agreement and this Confirmation, this Confirmation will
prevail for the purpose of this Transaction.
Each party represents to the other party and will be deemed to represent to the
other party on the date on which it enters into a Transaction that (absent a
written agreement between the parties that expressly imposes affirmative
obligations to the contrary for that Transaction):
(i) Non-Reliance. It is acting for its own account, and it has made its
own independent decisions to enter into that Transaction and as to whether that
Transaction is appropriate or proper for it based upon its own judgment and upon
advice from such advisors as it has deemed necessary, except as specifically set
forth in paragraph 8 of this Confirmation as to Party B. It is not relying on
any communication (written or oral) of the other party as investment advice or
as a recommendation to enter into that Transaction; it being understood that
information and explanations related to the terms and conditions of a
Transaction shall not be considered investment advice or a recommendation to
enter into that Transaction. Further, such party has not received from the other
party any assurance or guarantee as to the expected results of that Transaction.
(ii) Evaluation and Understanding. It is capable of evaluation and
understanding (on its own behalf or Through independent professional advice),
and understands and accepts, the terms, conditions and risks of that
Transaction. It is also capable of assuming, and assumes, the financial and
other risks of that Transaction.
(iii) Status of Parties. The other party is not acting as an agent,
fiduciary or advisor for it in respect of that Transaction.
In this Confirmation "Party A" means Bank of America, N.A., a national
banking association and `Party B' means Long Beach Mortgage Loan Trust
2002-5.
2 The particular Transaction to which this Confirmation relates is an Interest
Rate Corridor and the terms of the Transaction to which this Confirmation
relates are as follows:
Notional Amount: As set forth in Schedule A.
Trade Date: 29OCT02
Effective Date: 27DEC02
Termination Date: 25MAY05, subject to adjustment in accordance with the
Modified Following Business Day Convention
Amortization: APPLICABLE (See Schedule A attached hereto)
Fixed Rate Amounts:
Fixed Rate Payer Party B
Fixed Rate Payer
Payment Dates: The 05NOV02, subject to
adjustment in accordance with the Modified
Following Business Day Convention.
B-1-2
Fixed Amount: USD 325,000.00
Floating Amounts I:
Floating Rate
Payer: Party A
Cap Rate: 6.90000%
Floating Rate Payer
Payment Dates: Two business days prior to the 25th of each Month, commencing
27JAN03 and ending 25MAY05, subject to adjustment in accordance with the
Modified Convention.
Following Business Day
Floating Rate for the
Initial Calculation Period: TO BE SET
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 1 Month
Spread: None
Floating Rate Day Count
Fraction: Actual/360
Reset Dates: The first day of each Calculation Period
Floating Amounts II:
Floating Rate
Payer: Party B
Cap Rate: 9.25000%
Floating Rate Payer
Payment Dates: Two business days prior to the 25th of each Month, commencing 27JAN02 and
ending 25MAY05, subject to adjustment in accordance with the Modified
Following Business Day Convention.
Floating Rate for the
Initial Calculation Period: TO BE SET
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 1 Month
Spread: None
B-1-3
Floating Rate Day
Count Fraction: Actual/36O
Reset Dates: The first day of each Calculation Period
Business Days: New York, London
Calculation Agent: Party A
3 Recording of Conversations:
Each party to this Transaction acknowledges and agrees to the tape
recording of conversations between the parties to this Transaction whether
by one or other or both of the parties or their agents, and that any such
tape recordings may be submitted in evidence in any Proceedings relating to
the Agreement and/or this Transaction.
4 Account Details:
Payments to Bank of America, N.A.:
USD
NAME: BANK OF AMERICA NA
CITY: NEW YORK
ABA#: 000000000
ATTN: BOFAUS3N
NAME: BANK OF AMERICA NA
CITY: CHARLOTTE
ACCT: 6550219386
ATTN: RATE DERIVATIVE SETTLEMENTS
ATTN: XXXXXX0XXXX
Payments to Deutsche Bank National Trust Company:
USD
Bankers Trust Company
ABA# 000000000
LA Asset Backed Account
Acct# 00000000
Ref: Xxxx Xxxxx 0000-0, cap payment
B-1-4
5 Offices:
The Office of Party A for this
Transaction is: Charlotte, NC
Please send reset notices to fax no. (000-000-0000)
The Office of Party B for this
Transaction is: Santa Ana, California, USA
B-1-5
6 Governing Law: The Laws of the State of New York (without reference to the
conflict of laws provisions thereof other than Section 5.1401 of the New
York General Obligations Law.)
7 Additional Provisions: Notwithstanding the terms of Sections 5 and 6 of the
Agreement, if Party B has satisfied its payment obligations under Section
2(a)(i) of the Agreement, then unless Party A is required pursuant to
appropriate proceedings to return to Party B or otherwise returns to Party
B upon demand of Party B any portion of such payment, (a) the occurrence of
an event described in Section 5(a) of the Agreement with respect to Party B
shall not constitute an Event of Default or Potential Event of Default with
respect to Party B or Asset-Backed Certificates, Series 2002-3 as the
Defaulting Party and (b) Party A shall be entitled to designate an Early
Termination Event pursuant to Section 6 of the Agreement only as a result
of a Termination Event set forth in either Section 5(b)(i) or Section
5(b)(ii) of the Agreement with respect to Party A as the Affected Party or
Section S(b)(iii) of the Agreement with respect to Party A as the Burdened
Party, In addition, the grace period set forth in Section 5(a)(i) of the
Agreement shall be one Business Day rather than three Business Days.
8 Trust Administrator Capacity: It is expressly understood and agreed by the
parties hereto that insofar as this Confirmation is executed by the Trustee
defined herein as Deutsche Bank National Trust Company ("Deutsche Bank"),
not in its individual capacity but solely as Trustee on behalf of Long
Beach Mortgage Loan Trust 2002-5 under the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated November 1, 2002 among Long
Beach Securities Corp. as depositor (the "Depositor"), Long Beach Mortgage
Company as seller, Xxxxxx Xxx and Deutsche Bank as Trustee, (i) this
Confirmation is executed and delivered by Deutsche Bank not in its
individual capacity but solely as Trustee under the Pooling and Servicing
Agreement referred to in this Confirmation in the exercise of the powers
and authority conferred and vested in it thereunder and (ii) under no
circumstances shall Deutsche Bank in its individual capacity be personally
liable for the payment of any indebtedness or expenses or be personally
liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken under this Confirmation.
9 Transfer, Amendment and Assignment: No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of Xxxxx'x
B-1-6
Investor Services, Inc. ("Xxxxx'x), Standard & Poors, a Division of The
XxXxxx-xxxx Companies, Inc. ("S & P") and Fitch, Inc. ("Fitch") has been
provided notice of the same and confirms in writing (including by facsimile
transmission) within five Business Days after such notice is given that it
will not downgrade, withdraw, qualify or otherwise modify its then-current
rating of the certificates issued pursuant to the Pooling and Servicing
Agreement referenced above (the "Certificates ") and the related net
interest margin securities (the "Notes") issued by one or more affiliates
of the Depositor or by one or more entities sponsored by an affiliate of
the Depositor pursuant to an Indenture (the "Indenture"), without regard to
the insurance policies issued by the Note Insurer and the Backup Note
Insurer (each, if any, as defined in the Indenture). Furthermore, no such
transfer, amendment, waiver, supplement, assignment or other modification
shall be permitted by either party unless the Note Insurer and the Backup
Note Insurer shall have been provided notice of the same and the Note
Insurer and the Backup Note Insurer shall have consented thereto, which
consent shall not be unreasonably withheld. The Note Insurer shall not have
any consent rights hereunder if an Insurer Default (if any, as defined in
the Indenture) has occurred and is continuing and the Backup Note Insurer
shall not have any consent rights hereunder if a Backup Insurer Default (if
any, as defined in the Indenture) has occurred and is continuing
10 Proceedings: Party A shall not institute against or cause any other person
to institute against, or join any other person in instituting against Party
B any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy,
dissolution or similar law for a period of one year and one day following
(i) payment in full of the Notes and (ii) satisfaction and discharge of the
Pooling and Servicing Agreement; provided, however, than nothing shall
prevent Party A from joining such a proceeding if commenced by a third
party.
B-1-7
11 Set-off: The provisions for Set-offset forth in Section 6(e) of the
Agreement shall not apply for purposes of this Transaction.
12 Section 1(c): For purposes of section 1(c) of the Agreement, this
Transaction shall be the sole Transaction under the Agreement.
13 Rating Agency If a Ratings Event (as defined below) occurs Downgrade: with
respect to Party A, then Party A shall, at its own expense, (i) assign this
Transactions hereunder to a third party within thirty (30) days of such
Ratings Event that meets or exceeds, or as to which any applicable credit
support provider meets or exceeds, the Approved Ratings Thresholds (as
defined below) on terms substantially similar to this Confirmation or (ii)
deliver collateral, in an amount equal to the Exposure (as defined below),
and an executed ISDA Credit Support Annex within thirty (30) days of such
Ratings Event and subject to S&P's and Xxxxx'x written confirmation that
delivery of such collateral in the context of such downgrade will not
result in a withdrawal, qualification or downgrade of the then current
ratings assigned to the Certificates and the Notes, without regard to the
Insurance Policies, if any, issued by the Note Insurer or the Backup Note
Insurer. For avoidance of doubt, a downgrade of the rating on the
Certificates could occur in the event that Party A does not post sufficient
collateral. For purposes of this Transaction, a "Ratings Event" shall occur
with respect to Party A, if short-term certificates of deposit cease to be
rated at least "A-1" by S&P, and at least "P-1" by Xxxxx'x (including in
connection with a merger, consolidation or other similar transaction by
Party A) such ratings being referred to herein as the "Approved Ratings
Thresholds," (unless, within 30 days after such withdrawal or downgrade,
each of Xxxxx'x and S&P has reconfirmed the rating of the Certificates,
which was in effect immediately prior to such withdrawal or downgrade) Only
with respect to such Ratings Event, "Exposure" shall mean the greater of
the following: (i) the xxxx-to-market value of the Transaction as of the
Valuation Date (as such term is defined in the ISDA Credit Support Annex);
(ii) the amount of the next payment due under the Transaction and (iii) one
percent of the Notional Amount for the respective Calculation Period.
B-1-8
14 Additional Termination Events: Additional Termination Events will apply. If
a Ratings Event has occurred and Party A has not, within 30 days, complied
with Section 14 above, then an Additional Termination Event shall have
occurred with respect to Party A and Party A shall be the sole Affected
Party with respect to such an Additional Termination Event.
15 Representations: With respect in Section 3 of the Agreement, each party
represents to the other party (which representations will be deemed to be
repeated by each party on each date on which a transaction is entered into)
that:
(i) This Confirmation constitutes a "swap agreement' within the meaning of
Commodity Futures Trading Commission ("CFTC") Regulations (the "CFTC
Regulations") Section 35. 1(b)(l), Section 101 (53)(B) of the U.S.
Bankruptcy Code and the CFTC Policies Statement concerning Swap
Transactions, 54 Fed Reg. 30694 (July 21, 1989) (the "CFTC Swap Policies
Statement"). (ii) It is an "eligible contract participant" as defined in
Section la(12) of the Commodity Exchange Act (7 U.S.C. la), as amended by
the Commodity Futures Modernization Act of 2000. (iii) it has entered into
this Confirmation in conjunction with its line of business (including
financial intermediation services) or the financing of its business, within
the meaning of the CFTC Swap Policies Statement.
16 Payer Tax Representation: With respect to Section 3(e) of the Agreement,
Party A will make the foil owing representation and Party B will make the
following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of the
Agreement) to be made by it to the other party under this Confirmation. In
making this representation, it may rely on (I) the accuracy of any
representations made by the other party pursuant to Section 3(f) of the
Agreement, (ii) the satisfaction of the agreement contained in Section
4(a)(i) or 4(a)(iii) of the Agreement and the accuracy and effectiveness of
any document provided by the other party pursuant to Section
4(a)(i) or 4(a)(iii) of the Agreement and (iii) the satisfaction of the
agreement of the other party contained in Section 4(d) of the Agreement,
provided that it shall not be a breach of this representation where
reliance is placed on clause (ii) and the other party does not deliver a
form or document under Section 4(a)(iii) by reason of material prejudice to
its legal or commercial position.
X-0-0
00 Xxxxxxxx Xxxxxxxx: With respect to Section 4(a)(i) and 4(a)(ii) of the
Agreement, Xxxxx A will deliver annual audited financial statements
prepared in accordance with generally accepted accounting principles in the
country in which the party is organized promptly after request. Party A
will also deliver certified copies of the resolution(s) of its board of
directors or other documents authorizing the execution and delivery of this
Confirmation concurrently with the execution of this Confirmation. Party A
will also deliver an incumbency certificate or other documents evidencing
the authority of the party entering into this Confirmation or any other
document executed in connection with this Confirmation concurrently with
the execution of this Confirmation or any other documents executed in
connection with this Confirmation.
18 Third Part Beneficiary Rights: Each of the Note Insurer and the Backup Note
Insurer is a third party beneficiary of this Agreement and is entitled to
the rights and benefits hereunder and may enforce the provisions hereof as
if it were a party hereto.
B-1-10
Please confirm that the foregoing correctly sets forth the terms and
conditions of our agreement by responding within three (3) Business Days by
returning via telecopier an executed copy of this Confirmation to the attention
of Global Derivative Operations at (fax no.(000) 000-0000).
Failure to respond within such period shall not affect the validity or
enforceability of this Transaction, and shall be deemed to be an affirmation of
the terms and conditions contained herein, absent manifest error.
Yours Sincerely,
Bank of America, N.A.
Authorized Signatory
Accepted and confirmed as of the date first written:
Long Beach Mortgage Loan Trust 2002-5
By: Deutsche Bank National Trust Company, not in its individual capacity but
solely as the Trustee
By:_________________________________
Name: ______________________________
Title: ______________________________
By:_________________________________
Name: ______________________________
Title: ______________________________
Our Reference # 3003419/3003418
B-1-11
SCHEDULE A TO CONFIRMATION
AMORTIZATION SCHEDULE
CALCULATION PERIOD NOTIONAL AMOUNT
27 DEC 02 27 JAN 03 (588,537,388.50)
27 JAN 03 25 FEB 03 (574,678,095.65)
25 FEB 03 25 MAR 03 (560,988,247.55)
25 MAR 03 25 APR 03 (547,460,906.12)
25 APR 03 27 MAY 03 (534,090,249.90)
27 MAY 03 25 JUN 03 (520,871,418.76)
25 JUN 03 25 JUL 03 (507,800,611.94)
25 JUL 03 26 AUG 03 (494,874,984.56)
26 AUG 03 25 SEP 03 (482,092,676.61)
25 SEP 03 27 OCT 03 (469,452,757.99)
27 OCT 03 25 NOV 03 (456,954,825.89)
25 NOV 03 29 DEC 03 (444,774,404.29)
29 DEC 03 26 JAN 04 (432,904,173.85)
26 JAN 04 25 FEB 04 (421,336,192.86)
25 FEB 04 25 MAR 04 (410,062,719.55)
25 MAR 04 26 APR 04 (399,076,206.73)
26 APR 04 25 MAY 04 (388,369,296.54)
25 MAY 04 25 JUN 04 (377,934,815.28)
25 JUN 04 26 JUL 04 (367,765,768.34)
26 JUL 04 25 AUG 04 (357,855,335.25)
25 AUG 04 27 SEP 04 (348,196,864.68)
27 SEP 04 25 OCT 04 (338,783,869.64)
25 OCT 04 26 NOV 04 (329,610,022.67)
26 NOV 04 29 DEC 04 (320,669,151.01)
29 DEC 04 25 JAN 05 (311,955,229.30)
25 JAN 05 25 FEB 05 (303,462,382.44)
25 FEB 05 29 MAR 05 (295,184,873.21)
29 MAR 05 25 APR 05 (287,117,099.92)
25 APR 05 25 MAY 05 (279,253,591.45)
X-0-00
XXXXXXX X-0
FORM OF GROUP II CAP AGREEMENT
BankofAmerica
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Tel 000-000-0000
Fax 000-000-0000
Bank of America N.A.
TO: Long Beach Mortgage Loan Trust 2002-5
ATTN: Xxxxxxx Xxxxxxx
TEL: (000) 000-0000
FAX: (000) 000-0000
FROM: Bank of America, N.A.
000 Xxxxx Xxxxxx Xxxxx - Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxx Xxxxxxxx / Xxxxx Xxxxxxxx
Date: 31OCT02 (REVISED 04NOV02)
Our Reference No. 3003417 3003416
Internal Tracking Nos. 475146 475150
The purpose of this letter agreement is to confirm the terms and conditions of
the Transaction entered into between Bank of America, N.A and Long Beach
Mortgage Loan Trust 2002-5 (each a `party" and together "the parties") on the
Trade Date specified below (the "Transaction").
This letter agreement constitutes a "Confirmation" and the definitions and
provisions contained in the 2000 ISDA Definitions, as published by the
International Swaps and Derivatives Association, Inc. (the "Definitions') are
incorporated into this Confirmation. In the event of any inconsistency between
the Definitions and this Confirmation, this Confirmation will govern.
1 This Confirmation evidences a complete binding agreement between the parties
as to the terms of the Transaction to which this Confirmation relates. In
addition, the parties agree that for the purposes of this Transaction, this
Confirmation will supplement, form a part of, and be subject to an agreement in
the form of the 1992 ISDA Master Agreement (Multicurrency-Cross Border) as if
the patties had executed an agreement (the "Agreement") in such form (but
without any Schedule except for the election of (i) the laws of the State of New
B-2-1
York (without reference to choice of law doctrine) as the governing law and (ii)
USD as the Termination Currency) on the Trade Date of the Transaction, In the
event of any inconsistency between the provisions of that agreement and this
Confirmation, this Confirmation will prevail for the purpose of this
Transaction.
Each party represents to the other party and will be deemed to represent to the
other party on the date on which it enters into a Transaction that (absent a
written agreement between the parties that expressly imposes affirmative
obligations to the contrary for that Transaction):
(i) Non-Reliance. It is acting for its own account, and it has made its
own independent decisions to enter into that Transaction and as to whether that
Transaction is appropriate or proper for it based upon its own judgment and upon
advice from such advisors as it has deemed necessary, except as specifically set
forth in paragraph 8 of this Confirmation as to Party B. It is not relying on
any communication (written or oral) of the other party as investment advice or
as a recommendation to enter into that Transaction; it being understood that
information and explanations related to the terms and conditions of a
Transaction shall not be considered investment advice or a recommendation to
enter into that Transaction. Further, such party has not received from the other
party any assurance or guarantee as to the expected results of that Transaction.
(ii) Evaluation and Understanding. It is capable of evaluation and
understanding (on its own behalf or Through independent professional advice),
and understands and accepts, the terms, conditions and risks of that
Transaction. It is also capable of assuming, and assumes, the financial and
other risks of that Transaction.
(iii) Status of Parties. The other party is not acting as an agent,
fiduciary or advisor for it in respect of that Transaction.
In this Confirmation "Party A" means Bank of America, N.A., a national
banking association and `Party B' means Long Beach Mortgage Loan Trust
2002-5.
2 The particular Transaction to which this Confirmation relates is an Interest
Rate Corridor and the terms of the Transaction to which this Confirmation
relates are as follows:
Notional Amount: As set forth in Schedule A
Trade Date: 29OCT02
Effective Date: 27DEC02
Termination Date: 27NOV06, subject to adjustment in accordance with the Modified Following
Business Day Convention
Amortization: APPLICABLE (See Schedule A attached hereto)
Fixed Rate Amounts:
Fixed Rate Payer Party B
Fixed Rate Payer
Payment Dates: 04OCT02, subject to adjustment in accordance with the Modified Following
Business Day Convention.
B-2-2
Fixed Amount: USD 515,000.00
Floating Amounts I:
Floating Rate
Payer: Party A
Cap Rate: 6.100000% (for the period from 27DEC02 to but excluding 25MAY05)
8.250000% (for the period from 25MAY05 to but excluding 27NOV06)
Floating Rate Payer
Payment Dates: Two business days prior to the 25th of each Month, commencing 27JAN02 and
ending 27NOV06, subject to adjustment in accordance with the Modified
Following Business Day Convention.
Floating Rate for the
Initial Calculation Period: TO BE SET
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 1 Month
Spread: None
Floating Rate Day Count
Fraction: Actual/360
Reset Dates: The first day of each Calculation Period
Floating Amounts II:
Floating Rate
Payer: Party B
Cap Rate: 9.25000%
Floating Rate Payer
Payment Dates: Two business days prior to the 25th of each Month, commencing 27JAN03 and
ending 27NOV06, subject to adjustment in accordance with the Modified
Following Business Day Convention.
Floating Rate for the
Initial Calculation Period: TO BE SET
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 1 Month
Spread: None
B-2-3
Floating Rate Day
Count Fraction: Actual/36O
Reset Dates: The first day of each Calculation Period
Business Days: New York, London
Calculation Agent: Party A
3 Recording of Conversations:
Each party to this Transaction acknowledges and agrees to the tape
recording of conversations between the parties to this Transaction whether
by one or other or both of the parties or their agents, and that any such
tape recordings may be submitted in evidence in any Proceedings relating to
the Agreement and/or this Transaction.
4 Account Details:
Payments to Bank of America, N.A.:
USD
NAME: BANK OF AMERICA NA
CITY: NEW YORK
ABA#: 000000000
ATTN: BOFAUS3N
NAME: BANK OF AMERICA NA
CITY: CHARLOTTE
ACCT: 6550219386
ATTN: RATE DERIVATIVE SETTLEMENTS
ATTN: XXXXXX0XXXX
Payments to Deutsche Bank National Trust Company:
USD
Bankers Trust Company
ABA# 000000000
LA Asset Backed Account
Acct# 00000000
Ref: Xxxx Xxxxx 0000-0, cap payment
B-2-4
5 Offices:
The Office of Party A for this
Transaction is: Charlotte, NC
Please send reset notices to fax no. (000-000-0000)
The Office of Party B for this
Transaction is: Santa Ana, California, USA
B-2-5
6 Governing Law: The Laws of the State of New York (without reference to the
conflict of laws provisions thereof other than Section 5.1401 of the New
York General Obligations Law.)
7 Additional Provisions: Notwithstanding the terms of Sections 5 and 6 of the
Agreement, if Party B has satisfied its payment obligations under Section
2(a)(i) of the Agreement, then unless Party A is required pursuant to
appropriate proceedings to return to Party B or otherwise returns to Party
B upon demand of Party B any portion of such payment, (a) the occurrence of
an event described in Section 5(a) of the Agreement with respect to Party B
shall not constitute an Event of Default or Potential Event of Default with
respect to Party B or Asset-Backed Certificates, Series 2002-3 as the
Defaulting Party and (b) Party A shall be entitled to designate an Early
Termination Event pursuant to Section 6 of the Agreement only as a result
of a Termination Event set forth in either Section 5(b)(i) or Section
5(b)(ii) of the Agreement with respect to Party A as the Affected Party or
Section S(b)(iii) of the Agreement with respect to Party A as the Burdened
Party, In addition, the grace period set forth in Section 5(a)(i) of the
Agreement shall be one Business Day rather than three Business Days.
8 Trust Administrator Capacity: It is expressly understood and agreed by the
parties hereto that insofar as this Confirmation is executed by the Trustee
defined herein as Deutsche Bank National Trust Company ("Deutsche Bank"),
not in its individual capacity but solely as Trustee on behalf of Long
Beach Mortgage Loan Trust 2002-5 under the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated November 1, 2002 among Long
Beach Securities Corp. as depositor (the "Depositor"), Long Beach Mortgage
Company as seller, Xxxxxx Xxx and Deutsche Bank as Trustee, (i) this
Confirmation is executed and delivered by Deutsche Bank not in its
individual capacity but solely as Trustee under the Pooling and Servicing
Agreement referred to in this Confirmation in the exercise of the powers
and authority conferred and vested in it thereunder and (ii) under no
circumstances shall Deutsche Bank in its individual capacity be personally
liable for the payment of any indebtedness or expenses or be personally
liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken under this Confirmation.
9 Transfer, Amendment and Assignment: No transfer, amendment, waiver,
supplement, assignment or other modification of this Transaction shall be
permitted by either party unless each of Xxxxx'x Investor Services, Inc.
("Moody's), Standard & Poors, a Division of The XxXxxx-xxxx Companies, Inc.
("S & P") and Fitch, Inc. ("Fitch") has been provided notice of the same
and confirms in writing (including by facsimile transmission) within five
Business Days after such notice is given that it will not downgrade,
B-2-6
withdraw, qualify or otherwise modify its then-current rating of the
certificates issued pursuant to the Pooling and Servicing Agreement
referenced above (the "Certificates ") and the related net interest margin
securities (the "Notes") issued by one or more affiliates of the Depositor
or by one or more entities sponsored by an affiliate of the Depositor
pursuant to an Indenture (the "Indenture"), without regard to the insurance
policies issued by the Note Insurer and the Backup Note Insurer (each, if
any, as defined in the Indenture). Furthermore, no such transfer,
amendment, waiver, supplement, assignment or other modification shall be
permitted by either party unless the Note Insurer and the Backup Note
Insurer shall have been provided notice of the same and the Note Insurer
and the Backup Note Insurer shall have consented thereto, which consent
shall not be unreasonably withheld. The Note Insurer shall not have any
consent rights hereunder if an Insurer Default (if any, as defined in the
Indenture) has occurred and is continuing and the Backup Note Insurer shall
not have any consent rights hereunder if a Backup Insurer Default (if any,
as defined in the Indenture) has occurred and is continuing
10 Proceedings: Party A shall not institute against or cause any other person
to institute against, or join any other person in instituting against Party
B any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy,
dissolution or similar law for a period of one year and one day following
(i) payment in full of the Notes and (ii) satisfaction and discharge of the
Pooling and Servicing Agreement; provided, however, than nothing shall
prevent Party A from joining such a proceeding if commenced by a third
party.
B-2-7
11 Set-off: The provisions for Set-offset forth in Section 6(e) of the
Agreement shall not apply for purposes of this Transaction.
12 Section 1(c): For purposes of section 1(c) of the Agreement, this
Transaction shall be the sole Transaction under the Agreement.
13 Rating Agency Downgrade: If a Ratings Event (as defined below) occurs with
respect to Party A, then Party A shall, at its own expense, (i) assign this
Transactions hereunder to a third party within thirty (30) days of such
Ratings Event that meets or exceeds, or as to which any applicable credit
support provider meets or exceeds, the Approved Ratings Thresholds (as
defined below) on terms substantially similar to this Confirmation or (ii)
deliver collateral, in an amount equal to the Exposure (as defined below),
and an executed ISDA Credit Support Annex within thirty (30) days of such
Ratings Event and subject to S&P's and Moody's written confirmation that
delivery of such collateral in the context of such downgrade will not
result in a withdrawal, qualification or downgrade of the then current
ratings assigned to the Certificates and the Notes, without regard to the
Insurance Policies, if any, issued by the Note Insurer or the Backup Note
Insurer. For avoidance of doubt, a downgrade of the rating on the
Certificates could occur in the event that Party A does not post sufficient
collateral. For purposes of this Transaction, a "Ratings Event" shall occur
with respect to Party A, if short-term certificates of deposit cease to be
rated at least "A-1" by S&P, and at least "P-1" by Moody's (including in
connection with a merger, consolidation or other similar transaction by
Party A) such ratings being referred to herein as the "Approved Ratings
Thresholds," (unless, within 30 days after such withdrawal or downgrade,
each of Moody's and S&P has reconfirmed the rating of the Certificates,
which was in effect immediately prior to such withdrawal or downgrade) Only
with respect to such Ratings Event, "Exposure" shall mean the greater of
the following: (i) the xxxx-to-market value of the Transaction as of the
Valuation Date (as such term is defined in the ISDA Credit Support Annex);
(ii) the amount of the next payment due under the Transaction and (iii) one
percent of the Notional Amount for the respective Calculation Period.
B-2-8
14 Additional Termination Events: Additional Termination Events will apply. If
a Ratings Event has occurred and Party A has not, within 30 days, complied
with Section 14 above, then an Additional Termination Event shall have
occurred with respect to Party A and Party A shall be the sole Affected
Party with respect to such an Additional Termination Event.
15 Representations: With respect in Section 3 of the Agreement, each party
represents to the other party (which representations will be deemed to be
repeated by each party on each date on which a transaction is entered into)
that:
(i) This Confirmation constitutes a "swap agreement' within the meaning of
Commodity Futures Trading Commission ("CFTC") Regulations (the "CFTC
Regulations") Section 35. 1(b)(l), Section 101 (53)(B) of the U.S.
Bankruptcy Code and the CFTC Policies Statement concerning Swap
Transactions, 54 Fed Reg. 30694 (July 21, 1989) (the "CFTC Swap Policies
Statement"). (ii) It is an "eligible contract participant" as defined in
Section la(12) of the Commodity Exchange Act (7 U.S.C. la), as amended by
the Commodity Futures Modernization Act of 2000. (iii) it has entered into
this Confirmation in conjunction with its line of business (including
financial intermediation services) or the financing of its business, within
the meaning of the CFTC Swap Policies Statement.
16 Payer Tax Representation: With respect to Section 3(e) of the Agreement,
Party A will make the foil owing representation and Party B will make the
following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of the
Agreement) to be made by it to the other party under this Confirmation. In
making this representation, it may rely on (I) the accuracy of any
representations made by the other party pursuant to Section 3(f) of the
Agreement, (ii) the satisfaction of the agreement contained in Section
4(a)(i) or 4(a)(iii) of the
B-2-9
Agreement and the accuracy and effectiveness of any document provided by
the other party pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement
and (iii) the satisfaction of the agreement of the other party contained in
Section 4(d) of the Agreement, provided that it shall not be a breach of
this representation where reliance is placed on clause (ii) and the other
party does not deliver a form or document under Section 4(a)(iii) by reason
of material prejudice to its legal or commercial position.
17 Document Delivery: With respect to Section 4(a)(i) and 4(a)(ii) of the
Agreement, Xxxxx A will deliver annual audited financial statements
prepared in accordance with generally accepted accounting principles in the
country in which the party is organized promptly after request. Party A
will also deliver certified copies of the resolution(s) of its board of
directors or other documents authorizing the execution and delivery of this
Confirmation concurrently with the execution of this Confirmation. Party A
will also deliver an incumbency certificate or other documents evidencing
the authority of the party entering into this Confirmation or any other
document executed in connection with this Confirmation concurrently with
the execution of this Confirmation or any other documents executed in
connection with this Confirmation.
18 Third Part Beneficiary Rights: Each of the Note Insurer and the Backup Note
Insurer is a third party beneficiary of this Agreement and is entitled to
the rights and benefits hereunder and may enforce the provisions hereof as
if it were a party hereto.
B-2-10
Please confirm that the foregoing correctly sets forth the terms and
conditions of our agreement by responding within three (3) Business Days by
returning via telecopier an executed copy of this Confirmation to the attention
of Global Derivative Operations at (fax no.(000) 000-0000).
Failure to respond within such period shall not affect the validity or
enforceability of this Transaction, and shall be deemed to be an affirmation of
the terms and conditions contained herein, absent manifest error.
Yours Sincerely,
Bank of America, N.A.
Authorized Signatory
Accepted and confirmed as of the date first written:
Long Beach Mortgage Loan Trust 2002-5
By: Deutsche Bank National Trust Company, not in its individual capacity but
solely as the Trustee
By:_________________________________
Name: ______________________________
Title: ______________________________
By:_________________________________
Name: ______________________________
Title: ______________________________
Our Reference # 3003417/3003416
B-2-11
SCHEDULE A TO CONFIRMATION
AMORTIZATION SCHEDULE
CALCULATION PERIOD NOTIONAL AMOUNT
27 DEC 02 27 JAN 03 (361,622,455.19)
27 JAN 03 25 FEB 03 (353,841,490.02)
25 FEB 03 25 MAR 03 (346,079,420.10)
25 MAR 03 25 APR 03 (338,332,707.88)
25 APR 03 27 MAY 03 (330,598,516.62)
27 MAY 03 25 JUN 03 (322,875,156.39)
25 JUN 03 25 JUL 03 (315,161,223.14)
25 JUL 03 26 AUG 03 (307,456,394.33)
26 AUG 03 25 SEP 03 (299,761,138.54)
25 SEP 03 27 OCT 03 (292,076,696.97)
27 OCT 03 25 NOV 03 (284,407,752.59)
25 NOV 03 29 DEC 03 (276,932,877.04)
29 DEC 03 26 JAN 04 (269,647,177.51)
26 JAN 04 25 FEB 04 (262,547,694.53)
25 FEB 04 25 MAR 04 (255,627,991.48)
25 MAR 04 26 APR 04 (248,884,151.71)
26 APR 04 25 MAY 04 (242,311,775.81)
25 MAY 04 25 JUN 04 (235,906,578.95)
25 JUN 04 26 JUL 04 (229,664,388.37)
26 JUL 04 25 AUG 04 (223,581,140.96)
25 AUG 04 27 SEP 04 (217,652.880.94)
27 SEP 04 25 OCT 04 (211,875,757.74)
25 OCT 04 26 NOV 04 (206,246,023.90)
26 NOV 04 29 DEC 04 (200,760,033.18)
29 DEC 04 25 JAN 05 (195,414,249.89)
25 JAN 05 25 FEB 05 (190,205,213.84)
25 FEB 05 29 MAR 05 (185,129,572.79)
29 MAR 05 25 APR 05 (180,184,069.88)
25 APR 05 25 MAY 05 (175,365,542.68)
25 MAY 05 27 JUN 05 (170,670,922.59)
27 JUN 05 25. JUL 05 (166,097,234.51)
25 JUL 05 25 AUG 05 (161,641,596.91)
25 AUG 05 26 SEP 05 (157,301,222.42)
26 SEP 05 25 OCT 05 (153,073,418.87)
25 OCT 05 25 NOV 05 (148,955,591.15)
25 NOV 05 28 DEC 05 (144,945,570.49)
28 DEC 05 25 JAN 06 (143,290,198.34)
25 JAN 06 21 FEB 06 (139,615.955.59)
27 FEB 06 27 MAR 06 (136,035,290.98)
27 MAR 06 25 APR 06 (132,545,827.37)
25 APR 06 25 MAY 06 (129,145,247.97)
25 MAY 06 26 JUN 06 (125,831,294.85)
26 JUN 06 25 JUL 06 (121,581,091.99)
25 JUL 06 25 AUG 06 (118,468,424.46)
25 AUG 06 25 SEP 06 (115,434,642.02)
25 SEP 06 25 OCT 06 (112,477,753.09)
25 OCT 06 27 NOV 06 (109,595,816.29)
B-2-12
EXHIBIT C
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Mortgage Loan Purchase Agreement (the "Agreement"), dated
October 31, 2002, between Long Beach Securities Corp., a Delaware corporation
(the "Purchaser") and Long Beach Mortgage Company, a Delaware corporation (the
"Seller").
Preliminary Statement
The Seller intends to sell certain mortgage loans to the Purchaser on
the terms and subject to the conditions set forth in this Agreement. The
Purchaser intends to deposit the mortgage loans into a mortgage pool
constituting the trust fund. The trust fund will issue fixed rate and adjustable
rate asset backed certificates designated as Long Beach Mortgage Loan Trust
2002-5 Asset-Backed Certificates, Series 2002-5 (the "Certificates"). The
Certificates will consist of fourteen classes of certificates. The Certificates
will be issued pursuant to a Pooling and Servicing Agreement, dated as of
November 1, 2002 (the "Pooling and Servicing Agreement"), among the Purchaser,
as depositor, Deutsche Bank National Trust Company, as trustee (the "Trustee"),
Xxxxxx Mae, as guarantor with respect to the Class A-1 Certificates and the
Class S-1 Certificates (the "Guarantor"), and the Seller, as master servicer (in
such capacity, the "Master Servicer"). Pursuant to a Commitment Letter, dated as
of October 21, 2002, among the Purchaser, the Seller, Greenwich Capital Markets,
Inc. and the Guarantor, the Class A-1 Certificates and the Class S-1
Certificates will be exchanged for Class A1 and Class S1 Guaranteed Grantor
Trust Pass-Through Certificates to be issued by the Guarantor (the "Guarantor
Certificates"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Pooling and Servicing Agreement.
The parties hereto agree as follows:
SECTION 1. Agreement to Purchase.
The Seller agrees to sell, and the Purchaser agrees to purchase, on or
before November 5, 2002 (the "Closing Date"), certain fixed-rate and
adjustable-rate conventional residential mortgage loans (the "Mortgage Loans").
SECTION 2. Mortgage Loan Schedule.
The Purchaser and the Seller have agreed upon which of the mortgage
loans owned by the Seller are to be purchased by the Purchaser pursuant to this
Agreement on the Closing Date and the Seller will prepare or cause to be
prepared on or prior to the Closing Date a final schedule (the "Closing
Schedule") that shall describe such Mortgage Loans and set forth all of the
Mortgage Loans to be purchased under this Agreement. The Closing Schedule will
conform to the requirements set forth in this Agreement and to the definition of
"Mortgage Loan Schedule" under the Pooling and Servicing Agreement. The Closing
Schedule shall be the Mortgage Loan Schedule under the Pooling and Servicing
Agreement.
C-1
SECTION 3. Consideration.
In consideration for the Mortgage Loans to be purchased hereunder, the
Purchaser shall on the Closing Date, as described in Section 8 hereof, (i) pay
to or upon the order of the Seller in immediately available funds an amount (the
"Purchase Price") equal to the net cash sale proceeds of the Class A-2
Certificates, the Mezzanine Certificates, the Class S-2 Certificates and the
Guarantor Certificates and (ii) deliver to Long Beach Asset Holdings Corp., upon
the order of the Seller, the Class C Certificates, the Class P Certificates, the
Class R Certificates, the Class R-CX Certificates and the Class R-PX
Certificates (the "Long Beach Certificates").
The Purchaser or any assignee, transferee or designee of the Purchaser
shall be entitled to (i) all scheduled payments of principal due after November
1, 2002 (the "Cut-off Date"), (ii) all unscheduled collections in respect of the
Mortgage Loans received after November 1, 2002 (other than the portion of such
collections due on or prior to the Cut-off Date), (iii) all other payments of
principal due and collected after the Cut-off Date, and (iv) all payments of
interest on the Mortgage Loans due after the Cut-off Date. All scheduled
payments of principal and interest due on or before the Cut-off Date and
collected after the Cut-off Date shall belong to the Seller.
Pursuant to the Pooling and Servicing Agreement, the Purchaser will
transfer, assign, set over and otherwise convey to the Trustee without recourse
for the benefit of the Certificateholders, all the right, title and interest of
the Purchaser in and to the Mortgage Loans, together with its rights under this
Agreement (other than Section 17 hereof).
SECTION 4. Transfer of the Mortgage Loans.
(a) Possession of Mortgage Files. The Seller does hereby sell, transfer,
assign, set over and convey to the Purchaser, without recourse, but subject to
the terms of this Agreement, all of its right, title and interest in, to and
under the Mortgage Loans. The contents of each Mortgage File related to a
Mortgage Loan not delivered to the Purchaser or to any assignee, transferee or
designee of the Purchaser on or prior to the Closing Date are and shall be held
in trust by the Seller for the benefit of the Purchaser or any assignee,
transferee or designee of the Purchaser and promptly transferred to the Trustee.
Upon the sale of the Mortgage Loans, the ownership of each related Mortgage
Note, the related Mortgage and the other contents of the related Mortgage File
shall be vested in the Purchaser and the ownership of all records and documents
with respect to the related Mortgage Loan prepared by or that come into the
possession of the Seller on or after the Closing Date shall immediately vest in
the Purchaser and shall be delivered promptly to the Purchaser or as otherwise
directed by the Purchaser.
(b) Delivery of Mortgage Loan Documents. The Seller will, on or prior to
the Closing Date deliver or cause to be delivered to the Purchaser, the Trustee
or their designee each of the following documents for each Mortgage Loan:
(i) the original Mortgage Note, endorsed in blank or in the following form:
"Pay to the order of Deutsche Bank National Trust Company, as Trustee, under the
applicable agreement, without recourse," with all prior and intervening
endorsements, showing a complete chain of endorsement from the originator to the
Person so endorsing to the Trustee or (in the case of not more than 1.00% of the
Mortgage Loans, by aggregate principal balance as of the Cut-off Date) a copy of
such original Mortgage Note with an accompanying Lost Note Affidavit executed by
the Seller;
C-2
(ii) the original Mortgage with evidence of recording thereon, and a copy,
certified by the appropriate recording office, of the recorded power of
attorney, if the Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon;
(iii) an original Assignment in blank;
(iv) the original recorded Assignment or Assignments showing a complete
chain of assignment from the originator to the Person assigning the Mortgage to
the Trustee or in blank;
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy, (or, in the case of any
Washington Mutual Mortgage Loan, a copy thereof) together with all endorsements
or riders issued with or subsequent to the issuance of such policy, insuring the
priority of the Mortgage as a first lien or second lien on the Mortgaged
Property represented therein as a fee interest vested in the Mortgagor, or in
the event such title policy is unavailable, a written commitment or uniform
binder or preliminary report of the title issued by the title insurance or
escrow company.
The Seller shall promptly (and in no event later than thirty (30) Business
Days, subject to extension upon a mutual agreement between the Seller and the
Purchaser) following the later of the Closing Date and the date of receipt by
the Seller of the recording information for a Mortgage, submit or cause to be
submitted for recording, at no expense to the Purchaser, in the appropriate
public office for real property records, each Assignment referred to in (iii)
and (iv) above and shall execute each original Assignment referred to in clause
(iii) above in the following form: "Deutsche Bank National Trust Company, as the
Trustee under the applicable agreement, without recourse." In the event that any
such Assignment is lost or returned unrecorded because of a defect therein, the
Seller shall promptly prepare or cause to be prepared a substitute Assignment or
cure or cause to be cured such defect, as the case may be, and thereafter cause
each such Assignment to be duly recorded. Notwithstanding the foregoing, the
Assignments referred to in (iii) and (iv) above shall not be required to be
completed and submitted for recording with respect to any Mortgage Loan if each
Rating Agency shall have determined that no recordation is required for such
Rating Agency to assign the initial ratings to the Class II-A Certificates, the
Class II-S1 Certificates, the Mezzanine Certificates and the NIM Notes;
provided, however, that each Assignment referred to in (iii) and (iv) above
shall be submitted for recording by the Seller, in the manner described above,
at no expense to the Trust Fund or the Trustee, upon the earliest to occur of:
(i) reasonable direction by Holders of Certificates entitled to at least 25% of
the Voting Rights, (ii) the occurrence of a Master Servicer Event of Default,
(iii) the occurrence of a bankruptcy, insolvency or foreclosure relating to the
C-3
Seller, (iv) the occurrence of a servicing transfer as described in Section 7.02
of the Pooling and Servicing Agreement and (v) if the Seller is not the Master
Servicer and with respect to any one Assignment, the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Mortgagor under the related Mortgage.
If any document referred to in Section 4(b)(ii), Section 4(b)(iii), Section
4(b)(iv), or Section 4(b)(v) above (collectively, the "Recording Documents") has
as of the Closing Date been submitted for recording but either (x) has not been
returned from the applicable public recording office or (y) has been lost or
such public recording office has retained the original of such document, the
obligations of the Seller to deliver such Recording Documents shall be deemed to
be satisfied upon (1) delivery to the Purchaser, the Trustee or their designee
of a copy of each such Recording Document certified by the Seller in the case of
(x) above or the applicable public recording office in the case of (y) above to
be a true and complete copy of the original that was submitted for recording and
(2) if such copy is certified by the Seller, delivery to the Purchaser, the
Trustee or their designee upon receipt thereof, and in any event no later than
one year after the Closing Date (except as provided below), of either the
original or a copy of such document certified by the applicable public recording
office to be a true and complete copy of the original. In instances where, due
to a delay on the part of the applicable recording office where any such
Recording Documents have been delivered for recordation, the Recording Documents
cannot be delivered to the Purchaser, the Trustee or their designee within one
year after the Closing Date, the Seller shall deliver to the Purchaser, the
Trustee or their designee within such time period an Officer's Certificate
stating the date by which the Seller expects to receive such Recording Documents
from the applicable recording office. If the Recording Documents have still not
been received by the Seller and delivered to the Purchaser, the Trustee or their
designee by such date, the Seller shall deliver to the Purchaser, the Trustee or
their designee by such date an additional Officer's Certificate stating a
revised date by which Seller expects to receive the applicable Recording
Documents. This procedure shall be repeated until the Recording Documents have
been received by the Seller and delivered to the Purchaser, the Trustee or their
designee. If the original or copy of the lender's title insurance policy was not
delivered pursuant to Section 4(b)(vi) above, the Seller shall deliver or cause
to be delivered to the Purchaser, the Trustee or their designee promptly after
receipt thereof, and in any event within 120 days after the Closing Date such
title insurance policy. The Seller shall deliver or cause to be delivered to the
Purchaser, the Trustee or their designee promptly upon receipt thereof any other
original documents constituting a part of a Mortgage File received with respect
to any Mortgage Loan, including, but not limited to, any original documents
evidencing an assumption or modification of any Mortgage Loan.
Each original document relating to a Mortgage Loan which is not delivered
to the Purchaser, the Trustee or their designee, if held by the Seller, shall be
so held for the benefit of the Purchaser or its assignee, transferee or
designee. In the event that any such original document is required pursuant to
the terms of this Section to be a part of a Mortgage File, such document shall
be delivered promptly to the Purchaser, the Trustee or their designee. Any such
original document that is not required pursuant to the terms of this Section to
be a part of a Mortgage File shall be held by the Seller in its capacity as
Master Servicer.
C-4
(c) Acceptance of Mortgage Loans. The documents delivered pursuant to
Section 4(b) hereof shall be reviewed by the Purchaser or any assignee,
transferee or designee of the Purchaser at any time before, on and after the
Closing Date (and with respect to each document permitted to be delivered after
the Closing Date within seven days of its delivery) to ascertain that all
required documents have been executed and received and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule.
(d) Transfer of Interest in Agreements. The Purchaser has the right to
assign its interest under this Agreement (other than Section 17 hereof), in
whole or in part, to the Trustee, as may be required to effect the purposes of
the Pooling and Servicing Agreement, without the consent of the Seller, and the
Trustee shall succeed to the rights and obligations hereunder of the Purchaser.
Any expense reasonably incurred by or on behalf of the Purchaser, the Trustee,
or the NIMS Insurer, if any, in connection with enforcing any obligations of the
Seller under this Agreement will be promptly reimbursed by the Seller.
(e) Examination of Mortgage Files. Prior to the Closing Date the Seller
shall either (i) deliver in escrow to the Purchaser or to any assignee,
transferee or designee of the Purchaser, for examination, the Mortgage File
pertaining to each Mortgage Loan, or (ii) make such Mortgage Files available to
the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser or the Trustee, and
their respective designees, upon reasonable notice to the Seller during normal
business hours at any time before or after the Closing Date. If any such person
makes such examination prior to the Closing Date or and identifies any Mortgage
Loans with respect to which the Seller's representations and warranties
contained in this Agreement are not correct, such Mortgage Loans shall be
deleted from the Mortgage Loan Schedule. The Purchaser may, at its option and
without notice to the Seller, purchase all or part of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Purchaser or
any person has conducted or has failed to conduct any partial or complete
examination of the related Mortgage Files shall not affect the rights of the
Purchaser or any assignee, transferee or designee of the Purchaser to demand
repurchase or other relief as provided herein or under the Pooling and Servicing
Agreement.
SECTION 5. Representations, Warranties and Covenants of the Seller.
The Seller hereby represents and warrants and covenants to the Purchaser,
as of the date hereof and as of the Closing Date:
(i) The Seller is a corporation duly organized, 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 and
to service the Mortgage Loans in accordance with the terms of the Pooling and
Servicing Agreement;
C-5
(ii) The Seller had the full corporate power and authority to originate,
hold and sell each Mortgage Loan and has the full corporate power and authority
to service each Mortgage Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on the part of the Seller the
execution, delivery and performance of this Agreement; and this Agreement,
assuming the due authorization, execution and delivery thereof by the Purchaser,
constitutes a legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except to the extent that the
enforceability thereof may be limited by (a) bankruptcy, insolvency, moratorium,
receivership, conservatorship, arrangement, moratorium and other similar laws
relating to creditors' rights generally and (b) the general principles of
equity, whether such enforcement is sought in equity or at law;
(iii) The execution and delivery of this Agreement by the Seller, the
servicing of the Mortgage Loans by the Seller under the Pooling and Servicing
Agreement, the consummation of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof are in
the ordinary course of business of the Seller and does not (A) result in a
breach of any term or provision of the charter or by-laws of the Seller, (B)
conflict with, result in a breach, violation or acceleration of, or result in a
default under, the terms of any other material agreement, instrument or
indenture to which the Seller is a party or by which it may be bound, or any
statute, order or regulation applicable to the Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction over the
Seller or any of its property or (C) result in the creation or imposition of any
lien, charge or encumbrance which would have a material adverse effect upon the
Mortgage Loans or any documents or instruments evidencing or securing the
Mortgage Loans; and the Seller is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to the Seller's knowledge, would in the
future result in the creation or imposition of any lien, charge or encumbrance
which would have a material adverse effect upon the Mortgage Loans or any
documents or instruments evidencing or securing the Mortgage Loans or materially
and adversely affect (x) the ability of the Seller to perform its obligations
under this Agreement or the Pooling and Servicing Agreement or (y) the business,
operations, financial condition, properties or assets of the Seller taken as a
whole;
(iv) 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;
(v) The Seller is an approved seller/servicer for Xxxxxx Xxx or Xxxxxxx Mac
in good standing and is a HUD approved mortgagee pursuant to Section 203 and
Section 211 of the National Housing Act;
C-6
(vi) No litigation or proceeding is pending or, to the best knowledge of
the Seller, threatened, against the Seller that would materially and adversely
affect the execution, delivery or enforceability of this Agreement or the
Pooling and Servicing Agreement or the issuance of the Certificates or the
ability of the Seller to service the Mortgage Loans or to perform any of its
other obligations hereunder in accordance with the terms hereof and the terms of
the Pooling and Servicing Agreement or, that would result in a material adverse
change in the financial or operating conditions of the Seller;
(vii) No certificate of an officer, statement or other information
furnished in writing or report delivered by the Seller to the Purchaser, any
Affiliate of the Purchaser, the Guarantor or the Trustee for use in connection
with the purchase of the Mortgage Loans and the transactions contemplated
hereunder and under the Pooling and Servicing Agreement contains any untrue
statement of a material fact, or omits a material fact necessary to make the
information, certificate, statement or report not misleading in any material
respect;
(viii) The Seller has not dealt with any broker, investment banker, agent
or other person, except for the Purchaser or any of its affiliates, that may be
entitled to any commission or compensation in connection with the sale of the
Mortgage Loans;
(ix) Each Mortgage Note, each Mortgage, each Assignment and any other
document required to be delivered by or on behalf of the Seller under this
Agreement or the Pooling and Servicing Agreement to the Purchaser or any
assignee, transferee or designee of the Purchaser for each Mortgage Loan has
been or will be, in accordance with Section 4(b) hereof, delivered to the
Purchaser or any such assignee, transferee or designee. With respect to each
Mortgage Loan, the Seller is in possession of a complete Mortgage File in
compliance with the Pooling and Servicing Agreement, except for such documents
that have been delivered (1) to the Purchaser or any assignee, transferee or
designee of the Purchaser or (2) for recording to the appropriate public
recording office and have not yet been returned;
(x) The Seller (A) is a solvent entity and is paying its debts as they
become due, (B) immediately after giving effect to the transfer of the Mortgage
Loans, will be a solvent entity and will have sufficient resources to pay its
debts as they become due and (C) did not sell the Mortgage Loans to the
Purchaser with the intent to hinder, delay or defraud any of its creditors;
(xi) The transfer of the Mortgage Loans to the Purchaser at the Closing
Date will be treated by the Seller for financial accounting and reporting
purposes as a sale of assets; and
(xii) Seller currently operates or actively participates in an on-going
business (A) to originate single family mortgage loans, and/or (B) to make
periodic purchases of single family mortgage loans from originators or sellers,
and/or (C) to issue and/or purchase securities or bonds supported by single
family mortgage loans, a portion of which loans are made to borrowers who are
low-income families (families with incomes of 80% or less of area median income)
living in low-income areas (a census tract or block numbering area in which the
median income does not exceed 80 percent of the area median income).
C-7
SECTION 6. Representations and Warranties of the Seller Relating to the
Individual Mortgage Loans.
The Seller hereby represents and warrants to the Purchaser, that as of the
Closing Date with respect to each Mortgage Loan:
(i) The information set forth on the Mortgage Loan Schedule with respect to
each Mortgage Loan is complete, true and correct in all material respects as of
the Cut-off Date, unless another date is set forth on the Mortgage Loan
Schedule;
(ii) [reserved];
(iii) Each Mortgage is a valid and enforceable first lien or second lien on
the Mortgaged Property, including all improvements thereon, subject only to (a)
the lien of non-delinquent current real property taxes and assessments, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection with the
origination of the related Mortgage Loan and which do not materially interfere
with the benefits of the security intended to be provided by such Mortgage, (c)
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 such Mortgage and (d) in the case of a second lien, only to a first lien on
such Mortgaged Property;
(iv) Immediately prior to the assignment of the Mortgage Loans to the
Purchaser, the Seller had good title to, and was the sole legal and beneficial
owner of, each Mortgage Loan, free and clear of any pledge, lien, encumbrance or
security interest and has full right and authority, subject to no interest or
participation of, or agreement with, any other party to sell and assign the
same. The form of endorsement of each Mortgage Note satisfied the requirement,
if any, of endorsement in order to transfer all right, title and interest of the
party so endorsing, as noteholder or assignee thereof, in and to that Mortgage
Note; and each Assignment to be delivered hereunder is in recordable form and is
sufficient to effect the assignment of and to transfer to the assignee
thereunder the benefits of the assignor, as mortgagee or assignee thereof, under
each Mortgage to which that Assignment relates;
(v) To the best of the Seller's knowledge, there is no delinquent tax or
assessment lien against any Mortgaged Property;
(vi) There is no valid offset, defense or counterclaim to any Mortgage Note
(including any obligation of the Mortgagor to pay the unpaid principal of or
interest on such Mortgage Note) or the Mortgage, including but not limited to
claims, offsets, rights of set-off or defenses of the type asserted in Xxxxxxxx
v. Long Beach Mortgage Company (176 F.Supp.2d 714), 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 Note or 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;
C-8
(vii) To the best of the Seller's knowledge, there are no mechanics' liens
or claims for work, labor or material affecting any Mortgaged Property which are
or may be a lien prior to, or equal with, the lien of the related Mortgage,
except those which are insured against by the title insurance policy referred to
in (xi) below;
(viii) To the best of the Seller's knowledge, each Mortgaged Property is
free of material damage and is at least in average repair;
(ix) Each Mortgage Loan at origination complied in all material respects
with applicable local, state and federal laws, including, without limitation,
usury, equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby, including without limitation the receipt of interest does
not involve the violation of any such laws;
(x) Neither the Seller nor any prior holder of any Mortgage has modified
the Mortgage in any material respect, satisfied, canceled or subordinated such
Mortgage in whole or in part; released the related Mortgaged Property in whole
or in part from the lien of such Mortgage; or executed any instrument of
release, cancellation, modification or satisfaction with respect thereto (except
that a Mortgage Loan may have been modified by a written instrument signed by
the Seller or a prior holder of the Mortgage Loan which has been recorded, if
necessary, to protect the interests of the Seller and the Purchaser and which
has been delivered to the Purchaser or any assignee, transferee or designee of
the Purchaser as part of the Mortgage File, and the terms of which are reflected
in the Mortgage Loan Schedule);
(xi) A lender's policy of title insurance together with a condominium
endorsement and extended coverage endorsement, if applicable, and, with respect
to each Adjustable Rate Mortgage Loan, an adjustable rate mortgage endorsement
in an amount at least equal to the balance of the Mortgage Loan as of the
Cut-off Date or a commitment (binder) to issue the same was effective on the
date of the origination of each Mortgage Loan, each such policy is valid and
remains in full force and effect, the transfer of the related Mortgage Loan to
the Purchaser and the Trustee does not affect the validity or enforceability of
such policy and each such policy was issued by a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is located and
acceptable to Xxxxxx Xxx and in a form acceptable to Xxxxxx Mae on the date of
origination of such Mortgage Loan, which policy insures the Seller and successor
owners of indebtedness secured by the insured Mortgage, as to the first or
second, as the case may be, priority lien of the Mortgage; to the best of the
Seller's knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller, has
done, by act or omission, anything which would impair the coverage of such
mortgage title insurance policy;
C-9
(xii) Each Mortgage Loan was originated by, or generated on behalf of, the
Seller, or originated by a savings and loan association, savings bank,
commercial bank, credit union, insurance company or similar institution which is
supervised and examined by a federal or state authority, or by a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to Sections
203 and 211 of the National Housing Act;
(xiii) With respect to each Adjustable Rate Mortgage Loan, on each
Adjustment Date, the Mortgage Rate will be adjusted to equal the Index plus the
Gross Margin, rounded to the nearest 0.125%, subject to the Periodic Rate Cap,
the Maximum Mortgage Rate and the Minimum Mortgage Rate. The related Mortgage
Note is payable on the first day of each month in self-amortizing monthly
installments of principal and interest, with interest payable in arrears, and
requires a Monthly Payment which is sufficient to fully amortize the outstanding
principal balance of the Mortgage Loan over its remaining term and to pay
interest at the applicable Mortgage Rate. No Mortgage Loan is subject to
negative amortization. All rate adjustments have been performed in accordance
with the terms of the related Mortgage Note or subsequent modifications, if any;
(xiv) To the best of the Seller's knowledge, all of the improvements which
were included for the purpose of determining the Value of the Mortgaged Property
lie wholly within the boundaries and building restriction lines of such
property, and no improvements on adjoining properties encroach upon the
Mortgaged Property;
(xv) 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 and to the best of the Seller's knowledge, the Mortgaged Property is
lawfully occupied under applicable law;
(xvi) 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) in compliance with any and all
applicable licensing requirements of the laws of the state wherein the Mortgaged
Property is located;
(xvii) The Mortgage Note and the related Mortgage are genuine, and each is
the legal, valid and binding obligation of the Mortgagor enforceable against the
Mortgagor by the mortgagee or its representative in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by law. To the best of the Seller's knowledge,
all parties to the Mortgage Note and the Mortgage had full legal capacity to
execute all Mortgage Loan documents and to convey the estate purported to be
conveyed by the Mortgage and each Mortgage Note and Mortgage have been duly and
validly executed by such parties;
C-10
(xviii) The proceeds of each Mortgage Loan have been fully disbursed, there
is no requirement for future advances thereunder and any and all requirements as
to completion of any on-site or off-site improvements and as to disbursements of
any escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making, closing or recording the Mortgage Loans were paid;
(xix) The related Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is no
homestead or 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;
(xx) With respect to each Mortgage constituting 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 such Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor;
(xxi) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for repayment
thereof have not been made, and no escrow deposits or payments of other charges
or payments due the Seller have been capitalized under the Mortgage or the
related Mortgage Note;
(xxii) The origination, underwriting and collection practices used by the
Seller with respect to each Mortgage Loan have been in all respects legal,
proper, prudent and customary in the subprime mortgage servicing business. Each
Mortgage Loan is currently being serviced by Washington Mutual Bank, FA;
(xxiii) There is no pledged account or other security other than real
estate securing the Mortgagor's obligations;
(xxiv) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(xxv) None of the Group I Mortgage Loans provide for primary mortgage
insurance;
(xxvi) The improvements upon each Mortgaged Property are covered by a valid
and existing hazard insurance policy with a generally acceptable carrier that
provides for fire extended coverage and coverage of such other hazards as are
customarily covered by hazard insurance policies with extended coverage in the
area where the Mortgaged Property is located representing coverage not less than
the lesser of the outstanding principal balance of the related Mortgage Loan or
the minimum amount required to compensate for damage or loss on a replacement
C-11
cost basis. All individual insurance policies and flood policies referred to in
this clause (xxvi) and in clause (xxvii) below contain a standard mortgagee
clause naming the Seller or the original mortgagee, and its successors in
interest, as mortgagee, and the Seller has received no notice that any premiums
due and payable thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance, including flood insurance, at the
Mortgagor's cost and expense, and upon the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance at
the Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(xxvii) If the Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as subject to special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration is in effect with
respect to such Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (A) the original
outstanding principal balance of the Mortgage Loan, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis or (C) the
maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973;
(xxviii) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note; and neither the Seller
nor any other entity involved in originating or servicing the Mortgage Loan has
waived any default, breach, violation or event of acceleration;
(xxix) Each Mortgaged Property is improved by a one- to four-family
residential dwelling, including condominium units and dwelling units in planned
unit developments, which, to the best of the Seller's knowledge, does not
include cooperatives and does not constitute property other than real property
under state law. Each manufactured housing constituting any portion of any
Mortgaged Property is a "single family residence" as defined in Section
25(e)(10) of the Code;
(xxx) There is no obligation on the part of the Seller or any other party
under the terms of the Mortgage or related Mortgage Note to make payments in
addition to those made by the Mortgagor;
(xxxi) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the related Mortgage Loan Schedule. The
consolidated principal amount does not exceed the original principal amount of
the Mortgage Loan;
C-12
(xxxii) Each Mortgage Loan was underwritten in accordance with the Seller's
underwriting guidelines as described in the Prospectus Supplement and
Information Supplement as applicable to its credit grade;
(xxxiii) Each appraisal of a Mortgage Loan that was used to determine the
appraised value of the related Mortgaged Property was conducted generally in
accordance with the Seller's underwriting guidelines, and included an assessment
of the fair market value of the related Mortgaged Property at the time of the
appraisal. The Mortgage File contains an appraisal of the applicable Mortgaged
Property;
(xxxiv) None of the Mortgage Loans is a graduated payment Mortgage Loan,
nor is any Mortgage Loan subject to a temporary buydown or similar arrangement;
(xxxv) As of the Cut-off Date, there were no Group I Mortgage Loans or
Group II Mortgage Loans with respect to which the monthly payment due thereon in
September, 2002 had not been made, none of the Mortgage Loans has been
contractually delinquent for more than 30 days more than once during the
preceding twelve months and, no Mortgage Loan has ever experienced a delinquency
of 60 or more days since the origination thereof;
(xxxvi) Each Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder;
(xxxvii) To the best of the Seller's knowledge no misrepresentation,
negligence, fraud or similar occurrence with respect to a Mortgage Loan has
taken place on the part of any person, including, without limitation, the
Mortgagor, any appraiser, any builder or developer, or any other party involved
in the origination of the Mortgage Loan or in the application of any insurance
in relation to such Mortgage Loan;
(xxxviii) Each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code;
(xxxix) The information set forth in the Prepayment Charge Schedule is
complete, true and correct in all material respects at the date or dates
respecting which such information is furnished and each Prepayment Charge is
permissible and enforceable in accordance with its terms upon the Mortgagor's
full and voluntary Principal Prepayment (except to the extent that: (1) the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally; (2)
the collectability thereof may be limited due to acceleration in connection with
a foreclosure or other involuntary prepayment; or (3) subsequent changes in
applicable law may limit or prohibit enforceability thereof) under applicable
law. No Mortgage Loan has a Prepayment Charge for a term in excess of five years
from the date of its origination;
C-13
(xl) The Loan-to-Value Ratio for each Mortgage Loan was no greater than
100% at the time of origination;
(xli) The first date on which each Mortgagor must make a payment on the
related Mortgage Note is no later than 60 days from the date of this Agreement;
(xlii) With respect to each Mortgage Loan, the related Mortgagor shall not
fail to make the first Monthly Payment due under the terms of the Mortgage Loan
by the second succeeding Due Date after the Due Date on which such Monthly
Payment was due;
(xliii) The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any relevant
jurisdiction, except any as may have been complied with;
(xliv) There are no defaults in complying with the terms of the Mortgage,
and either (1) any taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges or ground rents which previously became due and
owing have been paid, or (2) an escrow of funds has been established in an
amount sufficient to pay for every such item which remains unpaid and which has
been assessed but is not yet due and payable. Except for payments in the nature
of escrow payments, including without limitation, taxes and insurance payments,
the Seller has not advanced funds, or induced, solicited or knowingly received
any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage Note, except
for interest accruing from the date of the Mortgage Note or date of disbursement
of the Mortgage proceeds, whichever is greater, to the day which precedes by one
month the Due Date of the first installment of principal and interest;
(xlv) There is no proceeding pending, or to best of the Seller's knowledge
threatened, for the total or partial condemnation of the Mortgaged Property or
the taking by eminent domain of any Mortgaged Property;
(xlvi) None of the Mortgage Loans is subject to the Home Ownership and
Equity Protection Act of 1994 and any breach of this representation will be
deemed to materially and adversely affect the value of the related loan;
(xlvii) No proceeds from any Mortgage Loans were used to finance
single-premium credit insurance policies;
(xlviii) The Seller did not select the Mortgage Loans with the intent to
adversely affect the interests of the Purchaser;
(xlix) The Seller has not received any notice that any Mortgagor has field
for any bankruptcy or similar legal protection;
C-14
(l) Each Mortgage Loan was originated in compliance with the following
anti-predatory lending guidelines:
(i) Each Mortgage Loan satisfies the eligibility for purchase requirements
and was originated in compliance with Lender Letter # LL03-00 dated April 11,
2000 for Xxxxxx Xxx Xxxxxxx (the "Lender Letter");
(ii) No borrower was encouraged or required by the Seller to select a
Mortgage Loan product offered by the Mortgage Loan's originator which is a
higher cost product designed for less creditworthy borrowers, unless at the time
of the Mortgage Loan's origination, such borrower did not qualify taking into
account credit history and debt-to-income ratios for a lower-cost credit product
then offered by the Mortgage Loan's originator or any affiliate of the Mortgage
Loan's originator;
(iii) The methodology used in underwriting the extension of credit for each
Mortgage Loan employs objective mathematical principles which relate the
borrower's income, assets and liabilities to the proposed payment and such
underwriting methodology does not rely on the extent of the borrower's equity in
the collateral as the principal determining factor in approving such credit
extension. Such underwriting methodology provided reasonable assurance that at
the time of origination (application/approval) the borrower had a reasonable
ability to make timely payments on the Mortgage Loan;
(iv) With respect to any Mortgage Loan that contains a provision permitting
imposition of a premium upon a prepayment prior to maturity, (i) the Seller's
pricing methods include mortgage loans with and without prepayment premiums;
borrowers selecting Mortgage Loans which include such prepayment premiums
receive a monetary benefit, including but not limited to a rate or fee
reduction, in exchange for selecting a Mortgage Loan with a prepayment premium,
(ii) prior to the Mortgage Loan's origination, the borrower had the opportunity
to choose between an array of mortgage loan products which included mortgage
loan products with prepayment premiums and mortgage loan products that did not
require payment of such a premium, (iii) the prepayment premium is disclosed to
the borrower in the loan documents pursuant to applicable state and federal law,
and (iv) notwithstanding any state or federal law to the contrary, the Master
Servicer shall not impose such prepayment premium in any instance when the
mortgage debt is accelerated as the result of the borrower's default in making
the loan payments;
(v) No borrower was required to purchase any credit life, disability,
accident or health insurance product as a condition of obtaining the extension
of credit. No borrower obtained a prepaid single-premium credit life,
disability, accident or health insurance policy in connection with the
origination of the Mortgage Loan;
C-15
(vi) No Mortgage Loan is subject to the Home Ownership and Equity
Protection Act of 1994 (15 USCss.1602(aa)) or Regulation Z (12 CFR 226.32);
(vii) All points and fees related to each Mortgage Loan were disclosed in
writing to the borrower in accordance with applicable state and federal law.
Except in the case of a Mortgage Loan in an original principal amount of less
than $60,000 which would have resulted in an unprofitable origination, no
borrower was charged "points and fees" (whether or not financed) in an amount
greater than 5% of the principal amount of such loan, such 5% limitation
calculated in accordance with the Lender Letter; and
(viii) All fees and charges (including finance charges) and whether or not
financed, assessed, collected or to be collected in connection with the
origination and servicing of each Mortgage Loan have been disclosed in writing
to the borrower in accordance with applicable state and federal law and
regulation.
(li) No Group I Mortgage Loan had a principal balance at origination in
excess of the Guarantor's conforming loan balance limitations for single family
loans set forth in the Xxxxxx Mae Charter Act and the Xxxxxx Xxx Selling Guide
in effect at the time of such Group I Mortgage Loan's origination.
(lii) Each Group I Mortgage Loan is secured by a first lien on the related
Mortgaged Property.
SECTION 7. Repurchase Obligation for Defective Documentation and for Breach of
Representation and Warranty.
(a) The representations and warranties contained in Section 5 (ix) and
Section 6 shall not be impaired by any review and examination of loan files or
other documents evidencing or relating to the Mortgage Loans or any failure on
the part of the Seller or the Purchaser to review or examine such documents and
shall inure to the benefit of any assignee, transferee or designee of the
Purchaser, including the Trustee for the benefit of holders of asset-backed
certificates evidencing an interest in all or a portion of the Mortgage Loans.
With respect to the representations and warranties contained herein which are
made to the knowledge or the best of knowledge of the Seller, or as to which the
Seller has no knowledge, if it is discovered that the substance of any such
representation and warranty was inaccurate as of the date such representation
and warranty was made or deemed to be made, and such inaccuracy materially and
adversely affects the value of the related Mortgage Loan or the interest therein
of the Purchaser or the Purchaser's assignee, transferee or designee, then
notwithstanding the lack of knowledge by the Seller with respect to the
substance of such representation and warranty being inaccurate at the time the
representation and warranty was made, the Seller shall take such action
described in the following paragraph in respect of such Mortgage Loan.
Upon discovery by the Seller, the Guarantor the Purchaser or any assignee,
transferee or designee of the Purchaser of any materially defective document in,
or that any material document was not transferred by the Seller (as listed on
the Trustee's initial certification), as part of any Mortgage File or of a
C-16
breach of any of the representations and warranties contained in Section 5 or
Section 6 that materially and adversely affects the value of any Mortgage Loan
or the interest of the Purchaser, the Guarantor or the Purchaser's assignee,
transferee or designee in any Mortgage Loan, the party discovering the breach
shall give prompt written notice to the others. Within ninety (90) days of the
earlier of the discovery or the Seller's receipt of notice of any such missing
documentation which was not transferred to the Purchaser as described above or
materially defective documentation or any such breach of a representation and
warranty, the Seller promptly shall deliver such missing document or cure such
defect or breach in all material respects, or in the event the Seller cannot
deliver such missing document or such defect or breach cannot be cured, the
Seller shall, within 90 days of its discovery or receipt of notice, either (i)
repurchase the affected Mortgage Loan at a price equal to the Purchase Price (as
defined in the Pooling and Servicing Agreement) or (ii) pursuant to the
provisions of the Pooling and Servicing Agreement, cause the removal of such
Mortgage Loan from the Trust Fund and substitute one or more Qualified
Substitute Mortgage Loans; provided, however, that in the case of a breach of
the representation and warranty concerning the Mortgage Loan Schedule contained
in Section 6(i), if such breach relates to any field on the Mortgage Loan
Schedule which identifies any Prepayment Charge and such Prepayment Charge has
been triggered pursuant to the terms of the related Mortgage Note, then in lieu
of purchasing such Mortgage Loan from the Trust Fund at the Purchase Price (as
defined in the Pooling and Servicing Agreement), the Seller shall pay the amount
of the incorrectly identified Prepayment Charge (net of any amount previously
collected by or paid to the Trust Fund in respect of such Prepayment Charge),
and the Seller shall have no obligation to repurchase or substitute for such
Mortgage Loan. In the event of a substitution permitted hereunder, the Seller
shall amend the Closing Schedule to reflect the withdrawal of each removed
Mortgage Loan from the terms of this Agreement and the Pooling and Servicing
Agreement and the addition of the Qualified Substitute Mortgage Loan(s). The
Seller shall deliver to the Purchaser such amended Closing Schedule and shall
deliver such other documents as are required by this Agreement or the Pooling
and Servicing Agreement within five (5) days of any such amendment. Any
repurchase pursuant to this Section 7(a) shall be accomplished by deposit in the
Collection Account of the amount of the Purchase Price (as defined in the
Pooling and Servicing Agreement) in accordance with Section 2.03 of the Pooling
and Servicing Agreement. Any repurchase or substitution required by this Section
shall be made in a manner consistent with Section 2.03 of the Pooling and
Servicing Agreement and any remedy by the Seller for a breach of a
representation or warranty that materially and adversely affects the value of
any Prepayment Charge shall be made in a manner consistent with Section 2.03(c)
of the Pooling and Servicing Agreement.
(b) It is understood and agreed that the obligations of the Seller set
forth in this Section 7 to cure, repurchase or substitute for a defective
Mortgage Loan constitute the sole remedies of the Purchaser against the Seller
respecting a missing or defective document or a breach of the representations
and warranties contained in Section 5 or Section 6.
SECTION 8. Closing; Payment for the Mortgage Loans.
The closing of the purchase and sale of the Mortgage Loans shall be held at
the Seattle office of Xxxxxx Xxxxxx White & XxXxxxxxx LLP at 9:30 am New York
time on the Closing Date (or such other location or time as is mutually
agreeable to the parties).
C-17
The Purchaser's obligation to close the transactions contemplated by this
Agreement shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller under this
Agreement shall be true and correct in all material respects as of the date as
of which they are made and no event shall have occurred which, with notice or
the passage of time, would constitute a default under this Agreement;
(b) The Purchaser shall have received, or the attorneys of the Purchaser
shall have received in escrow (to be released from escrow at the time of
closing), all Closing Documents as specified in Section 9 of this Agreement, in
such forms as are agreed upon and acceptable to the Purchaser, duly executed by
all signatories other than the Purchaser as required pursuant to the respective
terms thereof;
(c) The Seller shall have delivered or caused to be delivered and released
to the Purchaser or to its designee, all documents (including without
limitation, the Mortgage Loans) required to be so delivered by the Purchaser
pursuant to Section 2.01 of the Pooling and Servicing Agreement; and
(d) All other terms and conditions of this Agreement to be complied with by
Seller, shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall deliver or cause
to be delivered to the Seller on the Closing Date, against delivery and release
by the Seller to the Trustee of all documents required pursuant to the Pooling
and Servicing Agreement, the consideration for the Mortgage Loans as specified
in Section 3 of this Agreement, by delivery to the Seller of the Purchase Price
in immediately available funds and delivery of the Long Beach Certificates to
Long Beach Asset Holdings Corp.
SECTION 9. Closing Documents.
Without limiting the generality of Section 8 hereof, the closing shall be
subject to delivery of each of the following documents:
(a) An Officers' Certificate of the Seller, dated the Closing Date, upon
which the Purchaser, Greenwich Capital Markets, Inc. and UBS Warburg LLC
(together, Greenwich Capital Markets, Inc. and UBS Warburg LLC are the
"Co-Representatives"), the NIMS Insurer, if any, and the Guarantor may rely and
attached thereto copies of the certificate of incorporation, bylaws and
certificate of good standing of the Seller under the laws of the State of
Delaware;
(b) An Officers' Certificate of the Seller, dated the Closing Date, upon
which the Purchaser, the Co-Representatives, the NIMS Insurer, if any, and the
Guarantor may rely, with respect to certain facts regarding the sale of the
Mortgage Loans, by the Seller to the Purchaser;
C-18
(c) An Opinion of Counsel of the Seller (which may be in-house counsel of
the Seller), dated the Closing Date and addressed to the Purchaser, the
Co-Representatives, the NIMS Insurer, if any, and the Guarantor;
(d) Such opinions of counsel as the Rating Agencies, the
Co-Representatives, the Trustee, the NIMS Insurer, if any, or the Guarantor may
reasonably request in connection with the sale of the Mortgage Loans by the
Seller to the Purchaser or the Seller's execution and delivery of, or
performance under, this Agreement;
(e) A letter from Deloitte & Touche L.L.P., certified public accountants,
dated the date hereof and to the effect that they have performed certain
specified procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature set forth in the
Prospectus Supplement under the captions "Summary of Terms--Mortgage Loans",
"Risk Factors", "The Mortgage Pool" and "Long Beach Mortgage Company" agrees
with the records of the Seller;
(f) The Seller shall deliver to the Purchaser for inclusion in the
Prospectus Supplement under the caption "Long Beach Mortgage Company" or for
inclusion in other offering materials, such publicly available information
regarding the Seller, its financial condition and its mortgage loan delinquency,
foreclosure and loss experience, underwriting standards, lending activities and
loan sales, production, and servicing and collection practices, and any similar
nonpublic, unaudited financial information and a computer tape with respect to
the pool information, as the Co-Representatives may reasonably request;
(g) Letters from at least two nationally recognized statistical rating
agencies rating the Offered Certificates (as defined in the Prospectus
Supplement); and
(h) Such further information, certificates, opinions and documents as the
Purchaser, the Guarantor or the Co-Representatives may reasonably request.
SECTION 10. Costs.
The Seller shall pay (or shall reimburse the Purchaser or any other Person
to the extent that the Purchaser or such other Person shall pay) all costs and
expenses incurred in connection with the transfer and delivery of the Mortgage
Loans, including without limitation, recording fees, fees for title policy
endorsements and continuations and the fees for recording Assignments, the fees
and expenses of the Seller's in-house accountants and in-house attorneys, the
costs and expenses incurred in connection with determining the Seller's loan
loss, foreclosure and delinquency experience, the costs and expenses incurred in
connection with obtaining the documents referred to in Sections 9(d) and 9(e),
the cost of an opinion of counsel regarding the true sale and non-consolidation
of the Mortgage Loans, the costs and expenses of printing (or otherwise
reproducing) and delivering this Agreement, the Pooling and Servicing Agreement,
the Certificates, the prospectus, the Prospectus Supplement, the Information
Supplement, any blue sky filings and private placement memorandum relating to
the Certificates and other related documents, costs and expenses of the Trustee,
the fees and expenses of the Purchaser's counsel in connection with the
preparation of all documents relating to the securitization of the Mortgage
Loans, the filing fee charged by the Securities and Exchange Commission for
C-19
registration of the Certificates, the cost of any opinions of outside special
counsel that may be required for the Seller and the fees charged by any Rating
Agency to rate the Certificates. All other costs and expenses in connection with
the transactions contemplated hereunder shall be borne by the party incurring
such expense.
SECTION 11. Servicing.
The Seller has represented to the Purchaser that the Mortgage Loans are
being serviced in accordance with the terms of the Pooling and Servicing
Agreement, and it is understood and agreed by and between the Seller and the
Purchaser that any interim servicing arrangements with the Seller will be
superseded by the servicing arrangements set forth in the Pooling and Servicing
Agreement.
SECTION 12. Mandatory Delivery; Grant of Security Interest.
The sale and delivery on the Closing Date of the Mortgage Loans in
accordance with the terms and conditions of this Agreement is mandatory. It is
specifically understood and agreed that each Mortgage Loan is unique and
identifiable on the Closing Date and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser in the event of the Seller's failure to deliver the Mortgage Loans
on or before the Closing Date.
The Seller hereby grants to the Purchaser a lien on and a continuing
security interest in the Seller's interest in each Mortgage Loan, and each
document and instrument evidencing each such Mortgage Loan to secure the
performance by the Seller of its obligation hereunder, and the Seller agrees
that it holds such Mortgage Loans in custody for the Purchaser, subject to (i)
the Purchaser's right, prior to the Closing Date, to reject any Mortgage Loan to
the extent permitted by this Agreement and (ii) the Purchaser's obligation to
deliver or cause to be delivered the consideration for the Mortgage Loans
pursuant to Section 8 hereof. Any Mortgage Loan rejected by the Purchaser shall
concurrently therewith be automatically released from the security interest
created hereby. The Seller agrees that, upon acceptance of the Mortgage Loans by
the Purchaser or its designee and delivery of payment to the Seller, that any
security interest held by the Seller in such Mortgage Loans shall be released.
All rights and remedies of the Purchaser under this Agreement are distinct
from, and cumulative with, any other rights or remedies under this Agreement or
afforded by law or equity and all such rights and remedies may be exercised
concurrently, independently or successively. Notwithstanding the foregoing, if
on the Closing Date, each of the conditions set forth in Section 8 hereof shall
have been satisfied and the Purchaser shall not have paid or caused to be paid
the Purchase Price, or shall not have delivered or caused to be delivered the
Long Beach Certificates to Long Beach Asset Holding Corp., or any such condition
shall not have been waived or satisfied and the Purchaser determines not to pay
or cause to be paid the Purchase Price or not to deliver or cause to be
delivered the Long Beach Certificates to Long Beach Asset Holding Corp, the
Purchaser shall immediately effect the re-delivery of the Mortgage Loans, if
delivery to the Purchaser has occurred and any security interest created by this
Section 12 shall be deemed to have been released.
C-20
SECTION 13. Notices.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered to or mailed by
registered mail, postage prepaid, or transmitted by telex or telegraph and
confirmed by a similar mailed writing, if to the Purchaser, addressed to the
Purchaser at 0000 Xxxxx Xxx., XXX0000, Xxxxxxx, Xxxxxxxxxx 00000, Attn: LBSC
Legal Counsel, or such other address as may hereafter be furnished to the Seller
in writing by the Purchaser; if to the Seller, addressed to the Seller at 0000
Xxxxx Xxx., XXX0000, Xxxxxxx, Xxxxxxxxxx 00000, Attn: LBMC Legal Counsel, or to
such other address as the Seller may designate in writing to the Purchaser.
SECTION 14. Severability of Provisions.
Any part, provision, representation or warranty of this Agreement which is
prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof.
SECTION 15. Agreement of Parties.
The Seller and the Purchaser each agree to execute and deliver such
instruments (including UCC financing statements and continuation statements) and
take such actions as either of the others may, from time to time, reasonably
request in order to effectuate the purpose and to carry out the terms of this
Agreement and the Pooling and Servicing Agreement.
SECTION 16. Survival.
The Seller agrees that the representations, warranties and agreements
made by it herein and in any certificate or other instrument delivered pursuant
hereto shall be deemed to be relied upon by the Purchaser and its successors and
assigns, notwithstanding any investigation heretofore or hereafter made by the
Purchaser or on its behalf, and that the representations, warranties and
agreements made by the Seller herein or in any such certificate or other
instrument shall survive the delivery of and payment for the Mortgage Loans and
shall continue in full force and effect, notwithstanding any restrictive or
qualified endorsement on the Mortgage Notes and notwithstanding subsequent
termination of this Agreement, the Pooling and Servicing Agreement or the Trust
Fund.
SECTION 17. Indemnification, Representative.
(a) The Seller indemnifies and holds harmless the Purchaser, the
Purchaser's officers and directors and each person, if any, who controls the
Purchaser within the meaning of Section 15 of the Securities Act of 1933, as
amended (the "1933 Act") or Section 20 of the Exchange Act of 1934, as amended,
(the "Exchange Act"), as follows:
(i) against any and all losses, claims, expenses, damages or liabilities,
joint or several, to which the Purchaser or such controlling person may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof including, but not limited to, any
loss, claim, expense, damage or liability related to purchases and sales of the
Class A-2 Certificates, the Mezzanine Certificates and the Class S-2
C-21
Certificates arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Prospectus Supplement, or
any amendment or supplement thereto, or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein not misleading;
and will reimburse, as incurred, the Purchaser and each such controlling person
for any legal or other expenses reasonably incurred by the Purchaser or such
controlling person in connection with investigating, defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Seller will be liable in any such case only to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or omission, or alleged untrue statement or omission, made therein in
reliance upon and in conformity with written information furnished to the
Purchaser by the Seller specifically for use in the preparation thereof (the
"Seller's Prospectus Supplement Information");
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, to the extent of the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Seller; and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by the Purchaser, subject to Section 17(c)
below), reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under clause (i) or clause (ii) above.
This indemnity agreement will be in addition to any liability which the
Seller may otherwise have.
(b) The Purchaser agrees to indemnify and hold harmless the Seller, each of
its directors, each of its officers and each person, if any, who controls the
Seller within the meaning of Section 15 of the 1933 Act or Section 20 of the
Exchange Act, against any and all losses, claims, expenses, damages or
liabilities to which the Seller or any such director, officer or controlling
person may become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus Supplement, other than in the Seller's
Prospectus Supplement Information, or arise out of, or are based upon, the
omission or the alleged omission to state therein a material fact required to be
C-22
stated therein or necessary to make the statements made therein not misleading,
and will reimburse any legal or other expenses reasonably incurred by the Seller
or any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which the
Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 17 of
notice of the commencement of any action described therein, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 17, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability that it may have to any indemnified
party under this Section 17 unless the indemnifying party is materially
prejudiced by such omission to notify and in any event the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
the indemnified party otherwise than under this Agreement. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and, to the extent that it may wish to do so,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party (such consent not to be
unreasonably withheld, conditioned or delayed), be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
under this Section 17, such indemnifying party shall not be liable for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and
preparation for a defense.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; (iii) a
conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (iv) the indemnifying
party has failed to assume the defense of such action and employ counsel
reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
C-23
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing (i) by the Seller if the indemnified parties
under this Section 17 consist of the Seller or any of its officers, directors or
controlling persons, or (ii) the Purchaser, if the indemnified party under this
Section 17 consist of the Purchaser or any of the Purchaser's directors,
officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 17(a) and Section 17(b), shall use its reasonable efforts
to cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld, conditioned or delayed), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability (to the extent set forth in Section
17(a) or Section 17(b) as applicable) by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless such
settlement (i) includes an unconditional release of such indemnified party from
all liability on any claims that are the subject of such action and (ii) does
not include a statement as to, or an admission of, fault, culpability or failure
to act by or on behalf of an indemnified party.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement.
(d) If the indemnification provided for in Section 17(a) or 17(b) is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Purchaser on the one hand and the Seller on the other from the offering of
the Underwritten Certificates (as defined in the Prospectus Supplement) or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Purchaser on the one hand and the Seller on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. If the
C-24
indemnification provided for in Section 17(b) is unavailable or insufficient to
hold harmless the indemnified party under Section 17(b), then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of the losses, claims, damages or liabilities referred to in Section
17(b) in such proportion as appropriate to reflect the relative fault of the
Purchaser on one hand and the Seller on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The relative
benefits received by the Purchaser on the one hand and the Seller on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Purchaser bear to the total
underwriting discounts and commissions received by the Underwriters (as defined
in the Prospectus Supplement). The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Purchaser or by the Seller and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to above in the first sentence of this subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
SECTION 18. [RESERVED]
SECTION 19. Governing Law.
THIS AGREEMENT AND THE RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF
THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS AND DECISIONS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF
LAW PRINCIPLES. THE PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.
SECTION 20. Miscellaneous.
This Agreement may be executed in two or more counterparts, each of which
when so executed and delivered shall be an original, but all of which together
shall constitute one and the same instrument. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. This Agreement supersedes all prior agreements and
understandings relating to the subject matter hereof. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought. The headings in this
C-25
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans by the Seller to the Purchaser as provided in Section 4 hereof
be, and be construed as, a sale of the Mortgage Loans by the Seller to the
Purchaser and not as a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. However, in the
event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then, (a) it is the
express intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller and (b) (1) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code; (2) the conveyance provided for in Section 4 hereof
shall be deemed to be a grant by the Seller to the Purchaser of a security
interest in all of the Seller's right, title and interest in and to the Mortgage
Loans, all amounts payable to the holders of the Mortgage Loans in accordance
with the terms thereof and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the Collection Account whether
in the form of cash, instruments, securities or other property; (3) the
possession by the Purchaser or its agent of the Mortgage Notes, the related
Mortgages and such other items of property that constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the New York Uniform Commercial Code; and (4) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Purchaser for the purpose of perfecting
such security interest under applicable law. Any assignment of the interest of
the Purchaser pursuant to Section 4(d) hereof shall also be deemed to be an
assignment of any security interest created hereby. The Seller and the Purchaser
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 Mortgage Loans, 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 this Agreement and the Pooling and
Servicing Agreement.
SECTION 21. Third Party Beneficiary.
Each of the Trustee and the NIMS Insurer, if any, shall be a third-party
beneficiary hereof (except with respect to Section 17) and shall be entitled to
enforce the provisions hereof as if a party hereto, except the provisions of
Section 17 hereof. The Co-Representatives, on behalf of the Underwriters (as
defined in the Prospectus Supplement), shall be a third-party beneficiary hereof
solely with respect to Section 17 and shall be entitled to enforce the
provisions of Section 17 as if it were a party hereto.
C-26
IN WITNESS WHEREOF, the Purchaser and the Seller have caused their names to
be signed by their respective officers thereunto duly authorized as of the date
first above written.
LONG BEACH SECURITIES CORP.
By: _________________________
Name: Xxxxxxx X Xxxxxxxx
Title: Vice President
LONG BEACH MORTGAGE COMPANY
By: _________________________
Name: Xxxxxxx X Xxxxxxxx
Title: First Vice President
C-27
EXHIBIT D
MORTGAGE LOAN SCHEDULE
[FILED BY PAPER]
EXHIBIT E-1
REQUEST FOR RELEASE
(for Trustee /Custodian)
Loan Information
Name of Mortgagor:
--------------------------------------------
Master Servicer
Loan No.:
--------------------------------------------
Trustee /Custodian
Name:
--------------------------------------------
Address:
--------------------------------------------
Trustee/
Custodian
Mortgage File No.:
--------------------------------------------
Depositor
Name: LONG BEACH SECURITIES CORP.
Address:
--------------------------------------------
Certificates: Long Beach Mortgage Certificates,
Series 2002-5.
E-1
The undersigned Master Servicer hereby acknowledges that it has received
from _______________________, as Trustee for the Holders of Long Beach Mortgage
Loan Trust 2002-5, Asset-Backed Certificates, Series 2002-5, the documents
referred to below (the "Documents"). All capitalized terms not otherwise defined
in this Request for Release shall have the meanings given them in the Pooling
and Servicing Agreement, dated as of November 1, 2002, among the Trustee, the
Depositor, Federal National Mortgage Association and the Master Servicer (the
"Pooling and Servicing Agreement").
(a) Promissory Note dated _______________, 20__, in the original principal
sum of $__________, made by ___________________, payable to, or endorsed to the
order of, the Trustee.
(b) Mortgage recorded on _____________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of ____________ in book/reel/docket _________________
of official records at page/image _____________.
(c) Deed of Trust recorded on ___________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of ____________________ in book/reel/docket
_________________ of official records at page/image ___________________.
(d) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________________ as instrument no. _________ in the County Recorder's Office
of the County of _______________, State of _______________________ in
book/reel/docket ____________ of official records at page/image ____________.
(e) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
(f) _____________________________________________
(g) _____________________________________________
(h) _____________________________________________
(i) _____________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as follows:
(1) The Master Servicer shall hold and retain possession of the Documents
in trust for the benefit of the Trustee, solely for the purposes provided in the
Agreement.
(2) The Master Servicer shall not cause or permit the Documents to become
subject to, or encumbered by, any claim, liens, security interest, charges,
writs of attachment or other impositions nor shall the Master Servicer assert or
seek to assert any claims or rights of setoff to or against the Documents or any
proceeds thereof.
E-2
(3) The Master Servicer shall return each and every Document previously
requested from the Mortgage File to the Trustee when the need therefor no longer
exists, unless the Mortgage Loan relating to the Documents has been liquidated
and the proceeds thereof have been remitted to the Collection Account and except
as expressly provided in the Agreement.
(4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Master Servicer shall at
all times be ear-marked for the account of the Trustee, and the Master Servicer
shall keep the Documents and any proceeds separate and distinct from all other
property in the Master Servicer's possession, custody or control.
Dated:
LONG BEACH MORTGAGE COMPANY
By: ________________________
Name:
Title:
E-3
EXHIBIT E-2
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICERS' CERTIFICATE AND TRUST RECEIPT
MORTGAGE LOAN PASS-THROUGH CERTIFICATES
SERIES 2002-5
____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH
BENEATH HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER:______________________ BORROWER'S NAME:_____________________
COUNTY:__________________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
DATED:______________________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
E-4
EXHIBIT F-1
FORM OF TRUSTEE'S INITIAL CERTIFICATION
[Date]
Long Beach Securities Corp. Long Beach Mortgage Company
0000 Xxxx & Xxxxxxx Xxxx 0000 Xxxx & Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000 Xxxxxx, Xxxxxxxxxx 00000
Federal National Mortgage Association
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of November 1, 2002 among Long Beach Securities
Corp., Long Beach Mortgage Company, Federal National Mortgage
Association and Deutsche Bank National Trust Company, Long Beach
Mortgage Loan Trust 2002-5, Asset-Backed Certificates, Series 2002-5
Ladies and Gentlemen:
Pursuant to Section 2.02 of the Pooling and Servicing Agreement, the
undersigned, as Trustee, hereby acknowledges receipt of each Mortgage File and
certifies that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in the exception report annexed hereto as not being covered by this
certification), (i) all documents constituting part of such Mortgage File (other
than such documents described in Section 2.01(e) of the Pooling and Servicing
Agreement) required to be delivered to it pursuant to the Pooling and Servicing
Agreement are in its possession, (ii) such documents have been reviewed by it
and are not mutilated, torn or defaced unless initialed by the related borrower
and relate to such Mortgage Loan and (iii) based on its examination and only as
to the foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i), (ii), (ix), (xii), (xiv) (to the extent of the
Periodic Rate Cap for the first Adjustment Date and subsequent Adjustment Dates)
and (xvi) of the definition of "Mortgage Loan Schedule" of the Pooling and
Servicing Agreement accurately reflects information set forth in the Mortgage
File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
due authorization, recordability or genuineness of any of the documents
contained in the Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan.
F-1
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee
By:____________________________________
Name:__________________________________
Title:_________________________________
F-2
EXHIBIT F-2
FORM OF TRUSTEE'S FINAL CERTIFICATION
[Date]
Long Beach Securities Corp. Long Beach Mortgage Company
0000 Xxxx & Xxxxxxx Xxxx 0000 Xxxx & Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000 Xxxxxx, Xxxxxxxxxx 00000
Federal National Mortgage Association
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of November 1, 2002 among Long Beach
Securities Corp., Long Beach Mortgage Company, Federal National
Mortgage Association and Deutsche Bank National Trust Company,
Long Beach Mortgage Loan Trust 2002-5, Asset-Backed Certificates,
Series 2002-5
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto), it or a Custodian on its
behalf has received:
(a) the original Mortgage Note, endorsed in blank or in the following form:
"Pay to the order of Deutsche Bank National Trust Company, as Trustee under the
applicable agreement, without recourse," with all prior and intervening
endorsements showing a complete chain of endorsement from the originator to the
Person so endorsing to the Trustee or a copy of such original Mortgage Note with
an accompanying Lost Note Affidavit executed by the Seller;
(b) the original Mortgage with evidence of recording thereon, and a copy,
certified by the appropriate recording office, of the recorded power of
attorney, if the Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon;
(c) an original Assignment in blank;
(d) the original recorded Assignment or Assignments showing a complete
chain of assignment from the originator to the Person assigning the Mortgage to
the Trustee or in blank;
F-3
(e) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(f) the original lender's title insurance policy, together with all
endorsements or riders issued with or subsequent to the issuance of such policy,
insuring the priority of the Mortgage as a first lien or second lien on the
Mortgaged Property represented therein as a fee interest vested in the
Mortgagor, or in the event such original title policy is unavailable, a written
commitment or uniform binder or preliminary report of title issued by the title
insurance or escrow company.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
F-4
EXHIBIT G-1
SPECIAL INFORMATION WORKSHEET
VII, Ch 3, Exhibit 1: Special Information Worksheet (for Military Indulgence)
(09/30/96)
Check One: ________ Initial Submission _______ Supplemental Submission
Servicer's Xxxxxx Xxx Identification Number (9-digits):________________________
Xxxxxx Mae Loan Number (10 digits):____________________________________________
Lender Loan Number:____________________________________________________________
Remittance Option (Check one):
_________ Actual/Actual (A/A)
_________ Scheduled/Actual (S/A)
_________ Scheduled/Scheduled (Portfolio), also called MRS or MBS-Acquired
_________ Scheduled/Scheduled (MBS), also called MBS Swaps
Amortization Method (Check one):
_________ Standard
_________ Interest Subsidy
_________ Other (Prior Approval Required)
Temporary Interest Rate: ________% Temporary P&I Installment______________
Effective Start Date (MMYY):_____ Current Pass-Through Rate: _______[____]%
LPI Date (MMYY):_________________
UPB: $___________________________
Expected End Date (MMYY):________ Actual End Date (MMYY):_______________
Next Scheduled ARM Adjustment Date, if applicable (MMYY):
Has additional forbearance been extended? _____ Yes _____ No
If so, describe the terms of the agreement, including when it begins and ends.
[Attach Request for Military Indulgence (Form 180) if one was obtained.
Servicer Name & Address
Signed: ______________________________________________________________________
G-1
Typed Name and Title:_________________________________________________________
Contact Phone No.:____________________________________________________________
G-2
EXHIBIT G-2
REQUEST FOR MILITARY INDULGENCE
Request For Military Indulgence
----------------------------------------------------------------------------------------------------------------------
This Form Does Not Affect Your Rights Under The Soldiers' and Sailors' Civil Relief Act
------------------------------------------------------------ ---------------------------------------------------------
Loan Number FHA/VA/MI Case Number
------------------------------------------------------------ ---------------------------------------------------------
Mortgagor (or Trustee)
----------------------------------------------------------------------------------------------------------------------
Address of Property
----------------------------------------------------------------------------------------------------------------------
and
-------------------------------------------------------- -------------------------------------------------------
mortgagors, trustors or present owners, hereinafter referred to as "Mortgagor," make the following statement:
1. Name of Person in Military Service _____________________________ Date of Birth ____________
2. If the person in Military Service is not the Mortgagor, what is his or her relationship to the Mortgagor?
3. Date of Induction Order or Entry into 4. Service Number 5. Approximate Years of any Previous
Military Service Military Service
From To
From To
----------------------------------------------------------------------------------------------------------------------
6. Present Military Address 7. Rank and Branch Service 8. Pay Grade
----------------------------------------------------------------------------------------------------------------------
9. Present Address of Mortgagor's Family 10. Relationship and Age of Each
Dependent
----------------------------------------------------------------------------------------------------------------------
11. Name and Address of Employer immediately prior to Military Service. 12. Total Monthly Earnings and Income of
Mortgagor immediately prior to
Military Service.
----------------------------------------------------------------------------------------------------------------------
13. Total Monthly Earnings and Income of Mortgagor (Including Spouse, Other
Members of Household, Other Persons Liable for Payment of Mortgage
Indebtedness) After Entry into Military Service:
a. Base Service Pay b. Contribution to Family Allotment c. Net Pay ("a" minus "b")
----------------------------------------------------------------------------------------------------------------------
d Family Allotment (same as "b" e. Government Allowance for Dependent f. Subtotal ("d" minus "e")
above
----------------------------------------------------------------------------------------------------------------------
g. Other Income, including Allowance for Quarters and Subsistence, and Income of Members
of Household $
h. Total Income ("c" plus "f" plus "g") $
----------------------------------------------------------------------------------------------------------------------
14. Describe other obligations and state Monthly Payments Required and what modifications will be made.
------------------------------------------------------------ ---------------------------------------------------------
15. Present Occupants of Property and Relationship to 16. If Property is Rented, Monthly Rental.
Mortgagor.
----------------------------------------------------------------------------------------------------------------------
17. Effect of Military Service on Family Income is as Follows:
----------------------------------------------------------------------------------------------------------------------
18. Present mortgage installment
$____________ Deposit, $______________ Interest, $______________ Principal, $_______________ Total
----------------------------------------------------------------------------------------------------------------------
G-3
By reason of the foregoing, the Mortgagor represents to the Federal National
Mortgage Association (hereinafter referred to as the "Mortgagee"), that he or
she is unable to meet the regular monthly installments or other obligations, if
any, now due on the mortgage to the Mortgagee, or to become due during the
period of military service (as defined by the Soldiers' and Sailors' Civil
Relief Act, as amended,) and requests indulgence to the extent of being
permitted during such period, unless previously notified to the contrary by the
Mortgagee or the servicer of the Mortgage, to make monthly payments of
$_______________ commencing on _____________________ to apply on such mortgage
indebtedness, inclusive of any sums required to be paid to the Tax and Insurance
Account.
The Mortgagor will (1) promptly notify the servicer of the Mortgage of any
increase in his or her income from the property or from any other source, or any
increase in the income of members of his or her household, or of other persons
liable for the payment of the Mortgage, and pay a commensurate portion of such
increases toward the reduction of the balance due upon the Mortgage; (2)
increase the monthly payments proposed hereby to the extent that the Mortgagee
or said servicer may hereafter determine to be necessary to cover any increase
of taxes, assessments, insurance and other similar items; and (3) promptly
notify said servicer, in writing, of the data of termination of such period of
military service.
It is clearly understood that by the submission of the "Request for Military
Indulgence", the Mortgagor does not waive any rights or benefits under the
provision of the Soldiers' & Sailors' Civil Relief Act of 1940, as amended.
______________________________________
Mortgagor
______________________________________
Mortgagor
Dated_________________________________________
Approved for Federal National Mortgage Association
By:____________________________________________
(Servicer's Authorized Representative)
____________________________________________
(Servicer's Name)
____________________________________________
(Servicer's Address)
____________________________________________
G-4
H-1
EXHIBIT H
FORM OF LOST NOTE AFFIDAVIT
Personally appeared before me the undersigned authority to administer oaths
__________________________, who first being duly sworn deposes and says:
Deponent is __________ of _______________, successor by merger to
______________________ ("Seller") and who has personal knowledge of the facts
set out in this affidavit.
On __________________, __________________________ did execute and deliver a
promissory note in the principal amount of $ ___________________________.
That said note has been misplaced or lost through causes unknown and is
presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.
Seller executes this Affidavit for the purpose of inducing Deutsche
Bank National Trust Company, as Trustee on behalf of Long Beach Mortgage Loan
Trust 2002-5, to accept the transfer of the above described loan from Seller.
Seller agrees to indemnify Deutsche Bank National Trust Company, Long
Beach Securities Corp. and Long Beach Mortgage Company harmless for any losses
incurred by such parties resulting from the above described promissory note has
been lost or misplaced.
By:________________________________________
________________________________________
STATE OF )
) SS:
COUNTY OF )
On this ______ day of ______________, 20_, before me, a Notary Public, in
and for said County and State, appeared ____________________, who acknowledged
the extension of the foregoing and who, having been duly sworn, states that any
representations therein contained are true.
Witness my hand and Notarial Seal this _________ day of 20__.
_____________________________________________
_____________________________________________
My commission expires _______________________.
H-1
EXHIBIT I
FORM OF ERISA REPRESENTATION
[DATE]
Long Beach Securities Corp.
0000 Xxxx & Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Long Beach Mortgage Company
0000 Xxxx & Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Deutsche Bank National Trust Company
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Federal National Mortgage Association
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Re: Long Beach Mortgage Loan Trust 2002-5,
Asset-Backed Certificates, Series 2002-5
Ladies and Gentlemen:
___________________ (the "Transferee") intends to acquire from
__________________ (the "Transferor") $____________ Initial Certificate
Principal Balance of the Class [____] Certificate of Long Beach Mortgage Loan
Trust 2002-5, Asset-Backed Certificates, Series 2002-5, (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement dated as of November 1,
2002 (the "Agreement") among Long Beach Securities Corp., as depositor (the
"Depositor"), Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Deutsche Bank
National Trust Company, as trustee (the "Trustee"). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned thereto in the
Pooling and Servicing Agreement. The Transferee hereby certifies, represents and
warrants to, and covenants with the Depositor, the Trustee, Federal National
Mortgage Association and the Master Servicer that the following statements in
either (1) or (2) are accurate:
_____ (1) The Certificates (i) are not being acquired by, and will not
be transferred to, any employee benefit plan within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or other retirement arrangement, including
individual retirement accounts and annuities, Xxxxx plans and bank
collective investment funds and insurance company general or separate
accounts in which such plans, accounts or arrangements are invested,
that is subject to Section 406 of ERISA or Section 4975 of the Internal
Revenue Code of 1986 (the "Code") (any of the foregoing, a "Plan"),
(ii) are not being acquired with "plan assets" of a Plan within the
meaning of the Department of Labor ("DOL") regulation, 29 C.F.R. ss.
2510.3-101, and (iii) will not be transferred to any entity that is
deemed to be investing in plan assets within the meaning of the DOL
regulation at 29 C.F.R. ss. 2510.3-101; or
I-1
_____ (2) The Transferee will provide an Opinion of Counsel to the
Depositor, the Trustee and the Master Servicer which establishes to the
satisfaction of the Depositor, the Trustee and the Master Servicer that
the purchase of such Certificates is permissible under applicable law,
will not constitute or result in any prohibited transaction under ERISA
or Section 4975 of the Code and will not subject the Depositor, the
Trustee, the Master Servicer, or the Trust Fund to any obligation or
liability (including obligations or liabilities under ERISA or Section
4975 of the Code) in addition to those undertaken in this Agreement.
IN WITNESS WHEREOF, the Transferee executed this certificate.
____________________________________________
[Transferee]
By:_________________________________________
Name:_______________________________________
Title:______________________________________
I-2
EXHIBIT J
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Long Beach Securities Corp.
0000 Xxxx & Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Deutsche Bank National Trust Company
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: Long Beach Mortgage Loan Trust 2002-5,
Asset-Backed Certificates Series 2002-5
Ladies and Gentlemen:
In connection with our acquisition of $______ Initial Certificate
Principal Balance of the Class [__] Certificate of Long Beach Mortgage Loan
Trust 2002-5 Asset-Backed Certificates, Series 2002-5 (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement dated as of November 1,
2002 (the "Agreement") among Long Beach Securities Corp., as depositor (the
"Depositor"), Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Deutsche Bank
National Trust Company, as trustee (the "Trustee"), we certify that (a) we
understand that the Certificates are not being registered under the Securities
Act of 1933, as amended (the "Act"), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we are an "accredited investor,"
as defined in Regulation D under the Act, and have such knowledge and experience
in financial and business matters that we are capable of evaluating the merits
and risks of investments in the Certificates, (c) we have had the opportunity to
ask questions of and receive answers from the Depositor concerning the purchase
of the Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates, (d)
we are not an employee benefit plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended, or a plan that is subject to Section
4975 of the Internal Revenue Code of 1986, as amended, nor are we acting on
behalf of any such plan, (e) we are acquiring the Certificates for investment
for our own account and not with a view to any distribution of such Certificates
(but without prejudice to our right at all times to sell or otherwise dispose of
the Certificates in accordance with clause (g) below), (f) we have not offered
or sold any Certificates to, or solicited offers to buy any Certificates from,
any person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this certificate that
such sale, transfer or other disposition may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of such Certificate has
J-1
executed and delivered to you a certificate to substantially the same effect as
this certificate, and (3) the purchaser or transferee has otherwise complied
with any conditions for transfer set forth in the Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By:_______________________
Authorized Officer
J-2
FORM OF RULE 144A INVESTMENT LETTER
[DATE]
Long Beach Securities Corp.
0000 Xxxx & Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Deutsche Bank National Trust Company
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: Long Beach Mortgage Loan Trust 2002-5,
Asset-Backed Certificates Series 2002-5
Ladies and Gentlemen:
In connection with our acquisition of $______ Initial Certificate
Principal Balance of the Class [__] Certificate of Long Beach Mortgage Loan
Trust 2002-5 Asset-Backed Certificates, Series 2002-5 (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement dated as of November 1,
2002 (the "Agreement") among Long Beach Securities Corp., as depositor (the
"Depositor"), Long Beach Mortgage Company, as master servicer (the "Master
Servicer"), Federal National Mortgage Association, as guarantor with respect to
the Class A-1 Certificates and the Class S-1 Certificates and Deutsche Bank
National Trust Company, as trustee (the "Trustee"), we certify that (a) we
understand that the Certificates are not being registered under the Securities
Act of 1933, as amended (the "Act"), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we have had the opportunity to
ask questions of and receive answers from the Depositor concerning the purchase
of the Certificates and all matters relating thereto or any additional
information deemed necessary to our decision to purchase the Certificates, (c)
we are not an employee benefit plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended, or a plan that is subject to Section
4975 of the Internal Revenue Code of 1986, as amended, nor are we acting on
behalf of any such plan, (d) we have not, nor has anyone acting on our behalf
offered, transferred, pledged, sold or otherwise disposed of the Certificates,
any interest in the Certificates or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, (e) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed either of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
J-3
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Securities Act.
Very truly yours,
[NAME OF TRANSFEREE]
By:_______________________
Authorized Officer
J-4
ANNEX 1 TO EXHIBIT J
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $________(1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
_____ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or charitable organization described
in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
_____ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking and is
supervised by the State or territorial banking commission or similar
official or is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto.
_____ Savings and Loan. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association or
similar institution, which is supervised and examined by a State or Federal
authority having supervision over any such institutions or is a foreign
savings and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto.
_____ Broker-dealer. The Buyer is a dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934.
--------------------
(1) Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
J-5
_____ Insurance Company. The Buyer is an insurance company whose primary
and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a similar official
or agency of a State, territory or the District of Columbia.
_____ State or Local Plan. The Buyer is a plan established and maintained
by a State, its political subdivisions, or any agency or instrumentality of
the State or its political subdivisions, for the benefit of its employees.
_____ ERISA Plan. The Buyer is an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act of 1974.
_____ Investment Advisor. The Buyer is an investment advisor registered
under the Investment Advisors Act of 1940.
_____ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958.
_____ Business Development Company. Buyer is a business development company
as defined in Section 202(a)(22) of the Investment Advisors Act of 1940.
3. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer, (ii) securities that are part of an
unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
J-6
6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
______________________________________
Print Name of Buyer
By: __________________________________
Name: ________________________________
Title: _______________________________
Date: ________________________________
J-7
ANNEX 2 TO EXHIBIT J
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyers Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
_____ The Buyer owned $_________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule
144A).
_____ The Buyer is part of a Family of Investment Companies which owned
in the aggregate $___________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule
144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
J-8
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
Print Name of Buyer or Adviser
By:___________________________________________
Name:_________________________________________
Title:________________________________________
IF AN ADVISER:
______________________________________________
Print Name of Buyer
Date: ________________________________________
J-9
EXHIBIT K
TRANSFER AFFIDAVIT AND AGREEMENT
LONG BEACH MORTGAGE LOAN TRUST 2002-5,
ASSET-BACKED CERTIFICATES, SERIES 2002-5
STATE OF ____________ )
) ss.:
COUNTY OF __________ )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of ________________________, the
proposed Transferee of an Ownership Interest in the Class [___] Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement") among Long Beach Securities Corp., as depositor (the "Depositor"),
Long Beach Mortgage Company, as master servicer (the "Master Servicer"), Federal
National Mortgage Association, as guarantor with respect to the Class A-1
Certificates and Class S-1 Certificates and Deutsche Bank National Trust
Company, as trustee (the "Trustee"). Capitalized terms used, but not defined
herein shall have the meanings ascribed to such terms in the Agreement. The
Transferee has authorized the undersigned to make this affidavit on behalf of
the Transferee.
2. The Transferee is, as of the date hereof and will be, as of the date
of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) of
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.
4. The Transferee has been advised and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
K-1
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 5.02(d) of the
Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit L to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is _____________.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be "noneconomic
residual interests" within the meaning of Treasury regulations promulgated
pursuant to the Code and that the transferor of a noneconomic residual interest
will remain liable for any taxes due with respect to the income on such residual
interest, if a significant purpose of the transfer was to impede the assessment
or collection of tax. The Transferee understands that, as the holder of a
noneconomic residual interest, the Transferee may incur tax liabilities in
excess of any cash flows generated by the Certificate. The Transferee intends to
pay taxes associated with holding the Certificate as they become due.
11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor is it acting on
behalf of such a plan.
K-2
[Transferee NAME]
By: _____________________________
Name: ___________________________
Title: __________________________
[Corporate Seal]
ATTEST:
___________________________
[Assistant] Secretary
Personally appeared before me the above-named ____________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the ____________________ of the Transferee, and
acknowledged that he executed the same as his free act and deed and the free act
and deed of the Transferee.
Subscribed and sworn before me this ___ day of November, 2002.
_______________________________________________
NOTARY PUBLIC
My Commission expires the __ day of ____, 20__.
K-3
EXHIBIT L
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Long Beach Securities Corp.
0000 Xxxx & Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Deutsche Bank National Trust Company
0000 Xxxx Xx. Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: Long Beach Mortgage Loan Trust 2002-5,
Asset-Backed Certificates Series 2002-5
Ladies and Gentlemen:
In connection with our disposition of the Class [__] Certificates (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement dated as
of November 1, 2002 (the "Agreement") among Long Beach Securities Corp., as
depositor (the "Depositor"), Long Beach Mortgage Company, as master servicer
(the "Master Servicer"), Federal National Mortgage Association, as guarantor
with respect to the Class A-1 Certificates and the Class S-1 Certificates and
Deutsche Bank National Trust Company, as trustee (the "Trustee") we certify that
(a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of the Class [__] Certificate, we have no knowledge
that the Transferee is not a Permitted Transferee and (d) no purpose of the
proposed disposition of the Class [__] Certificate is to impede the assessment
or collection of tax.
Very truly yours,
TRANSFEROR
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
L-1
SCHEDULE I
PREPAYMENT CHARGE SCHEDULE
AVAILABLE UPON REQUEST
SCHEDULE II
CAP PREMIUM SCHEDULES
NOT APPLICABLE
SCHEDULE III
[RESERVED]
SCHEDULE IV
PMI MORTGAGE LOAN SCHEDULE
NOT APPLICABLE
