EXHIBIT 4
Pooling and Servicing Agreement
EXECUTION COPY
CHASE FUNDING, INC.,
Depositor
CHASE MANHATTAN MORTGAGE CORPORATION,
Servicer
and
WACHOVIA BANK, N.A.,
Trustee
______________________________________
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 2003
______________________________________
CHASE FUNDING
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2003-C2
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS................................................................................1
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES..............................31
SECTION 2.01. Conveyance of Mortgage Loans................................................31
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.................................35
SECTION 2.03. Representations, Warranties and Covenants of the Depositor..................36
SECTION 2.04. Representations and Warranties of the Servicer..............................44
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which are not
"Qualified Mortgages".......................................................45
SECTION 2.06. Authentication and Delivery of Certificates.................................46
SECTION 2.07. REMIC Elections.............................................................46
SECTION 2.08. Covenants of the Servicer...................................................48
SECTION 2.09. [RESERVED]..................................................................48
SECTION 2.10. [RESERVED]..................................................................48
SECTION 2.11. Permitted Activities of the Trust...........................................48
SECTION 2.12. Qualifying Special Purpose Entity...........................................48
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...........................................49
SECTION 3.01. Servicer to Service Mortgage Loans..........................................49
SECTION 3.02. Servicing and Subservicing; Enforcement of the Obligations of Servicer......50
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the Servicer..........50
SECTION 3.04. Trustee to Act as Servicer..................................................50
SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Distribution Account........................................................51
SECTION 3.06. Collection of Taxes, Assessments and Similar Items; Escrow Accounts.........53
SECTION 3.07. Access to Certain Documentation and Information Regarding the
Mortgage Loans..............................................................53
SECTION 3.08. Permitted Withdrawals from the Collection Account and Distribution
Account.....................................................................54
SECTION 3.09. [RESERVED]..................................................................55
SECTION 3.10. Maintenance of Hazard Insurance.............................................55
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements...................56
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination of Excess
Proceeds....................................................................57
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SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.............................59
SECTION 3.14. Documents, Records and Funds in Possession of Servicer to be Held for
the Trustee.................................................................60
SECTION 3.15. Servicing Compensation......................................................60
SECTION 3.16. Access to Certain Documentation.............................................61
SECTION 3.17. Annual Statement as to Compliance...........................................61
SECTION 3.18. Annual Independent Public Accountants' Servicing Statement; Financial
Statements..................................................................61
SECTION 3.19. [RESERVED]..................................................................61
SECTION 3.20. Periodic Filings............................................................61
ARTICLE IV DISTRIBUTIONS; ADVANCES BY THE SERVICER..................................................62
SECTION 4.01. Advances....................................................................62
SECTION 4.02. Reduction of Servicing Compensation in Connection with Prepayment
Interest Shortfalls.........................................................63
SECTION 4.03. Distributions on the REMIC Interests........................................63
SECTION 4.04. Distributions...............................................................64
SECTION 4.05. Monthly Statements to Certificateholders....................................69
ARTICLE V THE CERTIFICATES..........................................................................72
SECTION 5.01. The Certificates............................................................72
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange of
Certificates................................................................73
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...........................76
SECTION 5.04. Persons Deemed Owners.......................................................77
SECTION 5.05. Access to List of Certificateholders' Names and Addresses...................77
SECTION 5.06. Book-Entry Certificates.....................................................77
SECTION 5.07. Notices to Depository.......................................................78
SECTION 5.08. Definitive Certificates.....................................................78
SECTION 5.09. Maintenance of Office or Agency.............................................78
SECTION 5.10. Authenticating Agents.......................................................79
SECTION 5.11. Appointment of Paying Agent.................................................79
ARTICLE VI THE DEPOSITOR AND THE SERVICER............................................................80
SECTION 6.01. Respective Liabilities of the Depositor and the Servicer....................80
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer....................80
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and Others...........80
SECTION 6.04. Limitation on Resignation of Servicer.......................................81
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds..............................81
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ARTICLE VII DEFAULT; TERMINATION OF SERVICER..........................................................81
SECTION 7.01. Events of Default...........................................................81
SECTION 7.02. Trustee to Act; Appointment of Successor....................................82
SECTION 7.03. Notification to Certificateholders..........................................83
ARTICLE VIII CONCERNING THE TRUSTEE....................................................................83
SECTION 8.01. Duties of Trustee...........................................................83
SECTION 8.02. Certain Matters Affecting the Trustee.......................................84
SECTION 8.03. Trustee Not Liable for Mortgage Loans.......................................85
SECTION 8.04. Trustee May Own Certificates................................................86
SECTION 8.05. Servicer to Pay Certain Trustee's Fees and Expenses.........................86
SECTION 8.06. Eligibility Requirements for Trustee........................................86
SECTION 8.07. Resignation and Removal of Trustee..........................................86
SECTION 8.08. Successor Trustee...........................................................87
SECTION 8.09. Merger or Consolidation of Trustee..........................................87
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee...............................88
SECTION 8.11. Tax Matters.................................................................89
ARTICLE IX TERMINATION...............................................................................91
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage Loans............91
SECTION 9.02. Final Distribution on the Certificates......................................91
SECTION 9.03. Additional Termination Requirements.........................................92
ARTICLE X MISCELLANEOUS PROVISIONS..................................................................93
SECTION 10.01. Amendment...................................................................93
SECTION 10.02. Counterparts................................................................94
SECTION 10.03. Governing Law...............................................................94
SECTION 10.04. Intention of Parties........................................................95
SECTION 10.05. Notices.....................................................................95
SECTION 10.06. Severability of Provisions..................................................96
SECTION 10.07. Assignment..................................................................96
SECTION 10.08. Limitation on Rights of Certificateholders..................................96
SECTION 10.09. Inspection and Audit Rights.................................................97
SECTION 10.10. Certificates Nonassessable and Fully Paid...................................97
SECTION 10.11. [RESERVED]..................................................................97
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EXHIBIT A FORM OF CLASS A CERTIFICATES
EXHIBIT B FORM OF CLASS X-0, X-0 AND B-3 CERTIFICATES
EXHIBIT C FORM OF CLASS B-4, B-5 AND B-6 CERTIFICATES
EXHIBIT D FORM OF CLASS R CERTIFICATE
EXHIBIT E [RESERVED]
EXHIBIT F-1 MORTGAGE LOAN SCHEDULE - GROUP ONE
EXHIBIT F-2 MORTGAGE LOAN SCHEDULE - GROUP TWO
EXHIBIT G FORM OF OFFICER'S CERTIFICATE (PAYING AGENT)
EXHIBIT H FORM OF TRUSTEE CERTIFICATION
EXHIBIT I FORM OF TRANSFEREE'S LETTER
EXHIBIT J FORM OF TRANSFEROR CERTIFICATE
EXHIBIT K FORM OF INVESTMENT LETTER
EXHIBIT L FORM OF RULE 144A INVESTMENT LETTER
EXHIBIT M REQUEST FOR RELEASE OF DOCUMENTS
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POOLING AND SERVICING AGREEMENT, dated as of December 1, 2003, among
CHASE FUNDING, INC., a New York corporation, as depositor (the "Depositor"),
CHASE MANHATTAN MORTGAGE CORPORATION, a New Jersey corporation, as servicer (the
"Servicer") and WACHOVIA BANK, N.A., a national banking association, as trustee
(the "Trustee").
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. For federal income tax purposes, the
Trust Fund will include two REMICs.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer and the Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: The Servicer's normal servicing
practices, which will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgages Loans in the jurisdictions in which the
related Mortgaged Properties (or Underlying Mortgaged Properties, in the case of
Co-op Loans) are located.
Accrual Period: With respect to any Distribution Date, the calendar
month immediately preceding the calendar month in which such Distribution Date
occurs.
Advance: The aggregate of the advances required to be made by the
Servicer with respect to any Servicer Remittance Date pursuant to Section 4.01,
the amount of any such advances being equal to the sum of (A) the aggregate of
payments of principal (except with respect to the final Scheduled Payment on any
Balloon Loan) and interest (net of the Servicing Fees) on the Mortgage Loans
that were due on the related Due Date and not received as of the close of
business on the related Servicer Remittance Date (including monthly interest on
the Stated Principal Balance of a Balloon Loan remaining outstanding after the
Due Date with respect to the final Scheduled Payment for such Balloon Loan) and
(B) with respect to each REO Property that has not been liquidated, an amount
equal to the excess, if any, of (x) one month's interest (adjusted to the Net
Mortgage Rate) on the Stated Principal Balance of the related Mortgage Loan over
(y) the net monthly rental income (if any) from such REO Property deposited in
the Collection Account for such Distribution Date pursuant to Section 3.12, less
the aggregate amount of any such Delinquent payments that the Servicer has
determined would constitute a Non-Recoverable Advance were an advance to be made
with respect thereto.
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
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 the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Class A Interest Accrual Amount: On any Distribution Date, an
amount equal to the sum of the Class IA Interest Accrual Amount, the Class IA-X
Interest Accrual Amount, the Class IIA Interest Accrual Amount, the Class IIA-X
Interest Accrual Amount and the Class R Interest Accrual Amount.
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Aggregate Class A Interest Shortfall: On any Distribution Date, an
amount equal to the sum of the Class IA Shortfall, the Class IA-X Shortfall, the
Class IIA Shortfall, the Class IIA-X Shortfall and the Class R Shortfall.
Aggregate Cut-Off Date Principal Balance: $300,000,332.58.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
Amount Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the Collection Account at the close of business on the
immediately preceding Determination Date on account of (i) all Scheduled
Payments or portions thereof received in respect of the Mortgage Loans due after
the related Due Date and (ii) Principal Prepayments and Liquidation Proceeds
together with any prepayment penalties and late payment charges received in
respect of such Mortgage Loans after the last day of the related Prepayment
Period (or Due Period, in the case of Liquidation Proceeds).
Appraised Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgage Property (or the related residential
dwelling unit in the Underlying Mortgaged Property in the case of a Co-op Loan),
the "Appraised Value" of a Mortgaged Property (or the related residential
dwelling unit in the Underlying Mortgaged Property, in the case of a Co-op Loan)
is the lesser of (x) the appraised value based on an appraisal made for the
originator by an independent fee appraiser at the time of the origination of the
related Mortgage Loan, and (y) the sales price of such Mortgaged Property (or
the related residential dwelling unit in the Underlying Mortgaged Property, in
the case of a Co-op Loan) at such time of origination. With respect to a
Mortgage Loan the proceeds of which were used to refinance an existing mortgage
loan, the "Appraised Value" is the appraised value of the Mortgaged Property (or
the residential dwelling unit in the Underlying Mortgaged Property, in the case
of a Co-op Loan) based upon the appraisal obtained at the time of refinancing.
Assertion of Non-Compliance: Any potentially valid assertion by or on
behalf of a Mortgagor that a Mortgage Loan was not originated in compliance with
applicable local, state and federal laws or with the originator's policies and
procedures.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer (or UCC-3 assignment (or equivalent instrument) with respect to each
Co-op Loan) or equivalent instrument, in recordable form (except in the case of
a Co-op Loan), sufficient under the laws of the jurisdiction where the related
Mortgaged Property (or Underlying Mortgaged Property, in the case of a Co-op
Loan) is located to reflect of record the sale and assignment of the Mortgage
Loan to the Trustee, which assignment, notice of transfer or equivalent
instrument may, if permitted by law, be in the form of one or more blanket
assignments covering Mortgages secured by Mortgaged Properties located in the
same county.
Available Distribution Amount: For any Distribution Date, the sum of
the Group One Available Distribution Amount and the Group Two Available
Distribution Amount.
Authenticating Agent: As defined in Section 5.10 hereof.
Balloon Loan: A Mortgage Loan having an original term to stated
maturity of approximately 15 years which provides for level monthly payments of
principal and interest based on a 30-year amortization schedule, with a balloon
payment of the remaining outstanding principal balance due on such Mortgage Loan
at its stated maturity.
Bankruptcy Amount: As of any date of determination, $150,000 minus all
Bankruptcy Losses on the Mortgage Loans, if any, previously allocated to the
Certificates in accordance with Section 4.04(f).
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Bankruptcy Code: Title 11 of the United States Code, as the same may be
amended from time to time.
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 5.06). As of the Closing
Date, each of Class IA, Class IIA, Class IA-X, Class IIA-X, Class IA-P, Class
IIA-P, Class B-1, Class B-2 and Class B-3 Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in the State of California and in the City of
New York, New York or the city in which the Servicer is located are authorized
or obligated by law or executive order to be closed.
Carry-Over Subordinated Principal Amount: As of any Distribution Date,
with respect to any Class of Subordinated Certificates, an amount, if any, equal
to the amount of principal distributable to such Class on any prior Distribution
Date that has not been so distributed.
Certificate: Any one of the certificates of any Class executed by the
Depositor and authenticated by the Authenticating Agent in substantially the
forms attached hereto as Exhibits A through E.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Rate: The per annum rate of interest borne by each Class of
Certificates (other than the Class A-P Certificates), which rate shall equal (i)
4.75% with respect to the Class IA, Class R and Class IA-X Certificates and (ii)
5.50% with respect to the Class IIA and Class IIA-X Certificates. With respect
to any Distribution Date, the Certificate Rate on each Class of Subordinated
Certificates shall equal the fraction, expressed as a percentage, the numerator
of which shall equal the sum of (i) the product of (x) 4.75% and (y) the Group
One Subordinated Amount and (ii) the product of (x) 5.50% and (y) the Group Two
Subordinated Amount and the denominator of which shall equal the sum of the
Group One Subordinated Amount and the Group Two Subordinated Amount. Interest
with respect to each Class of Certificates at the Certificate Rate shall be
calculated based on a year of 360 days comprised of twelve 30-day months.
Certificate Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository), in the case of any Class of Regular Certificates, except that
solely for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Depositor or any Affiliate of the
Depositor shall be deemed not to be Outstanding and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite amount of Percentage Interests necessary to effect such consent has
been obtained; provided, however, that if any such Person (including the
Depositor) owns 100% of the Percentage Interests evidenced by a Class of
Certificates, such Certificates shall be deemed to be Outstanding for purposes
of any provision hereof that requires the consent of the Holders of Certificates
of a particular Class as a condition to the taking of any action hereunder. The
Trustee is entitled to rely conclusively on a certification of the Depositor or
any Affiliate of the Depositor in determining which Certificates are registered
in the name of an Affiliate of the Depositor.
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Certification: As defined in Section 3.20(b) hereof.
Chase: JPMorgan Chase Bank, a New York state banking corporation, or
its successor in interest.
Class: Pertaining to the Class IA, Class IA-P, Class IA-X, Class R,
Class IIA, Class IIA-P, Class IIA-X, Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates or any Lower-Tier REMIC Interest, as the
case may be.
Class A Certificates: The Class IA, Class IA-P, Class IA-X, Class IIA,
Class IIA-P, Class IIA-X and Class R Certificates, referred to collectively.
Class A Principal Balance: As of any Distribution Date, (a) the Class A
Principal Balance for the immediately preceding Distribution Date less (b)
amounts distributed (or deemed distributed) to the Class A Certificateholders on
such preceding Distribution Date allocable to principal (including the principal
portion of Advances made pursuant to 4.01) and less (c) Realized Losses
allocated to the Class A Certificates pursuant to Section 4.04(f); provided that
the Class A Principal Balance on the first Distribution Date shall be the
Original Class A Principal Balance.
Class A-P Certificates: The IA-P and Class IIA-P Certificates, referred
to collectively.
Class A-P Shortfall Amount: With respect to any Distribution Date prior
to and including the Credit Support Depletion Date, to the extent of amounts
available to pay the Subordinated Optimal Principal Amount (without regard to
clause (b)(2) of the definition of such term), an amount equal to the sum of (i)
the applicable PO Percentage of the principal portion of any Realized Loss
(other than an Excess Loss) with respect to a Discount Mortgage Loan in Mortgage
Group One (with respect to Class IA-P) or Mortgage Group Two (with respect to
Class IIA-P) and (ii) the sum of amounts, if any, by which the amounts specified
in clause (i) with respect to each prior Distribution Date exceeded the amount
actually distributed in respect thereof on such prior Distribution Date and not
subsequently distributed to the Class IA-P or Class IIA-P Certificateholders, as
applicable.
Class A-X Certificates: The Class IA-X and Class IIA-X Certificates,
referred to collectively.
Class B Certificates: The Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates, referred to collectively.
Class B Principal Balance: As of any Distribution Date, the excess of
the Mortgage Pool Principal Balance (together with the principal portion of any
Scheduled Payment due but not paid with respect to which an Advance has not been
made) over the Class A Principal Balance.
Class B-1 Certificate: Any one of the Class B-1 Certificates executed
by the Depositor and authenticated by the Trustee, subordinated in right of
payment to the Class A Certificates, substantially in the form of the Class B
Certificate set forth in Exhibit B hereto.
Class B-1 Interest Accrual Amount: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Outstanding
Certificate Principal Balance of the Class B-1 Certificates minus (i) any
Non-Supported Interest Shortfall allocated to the Class B-1 Certificates on such
Distribution Date pursuant to Section 4.02 and (ii) any Realized Loss Interest
Shortfall allocated to the Class B-1 Certificates on such Distribution Date
pursuant to Section 4.04(f).
Class B-1 Shortfall: With respect to any Distribution Date, the amount
equal to the excess, if any, of the Class B-1 Interest Accrual Amount over the
amount actually distributed to the Class B-1 Certificates on such Distribution
Date pursuant to Section 4.04(d)(1) (A) and (B).
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Class B-2 Certificate: Any one of the Class B-2 Certificates executed
by the Depositor and authenticated by the Trustee, subordinated in right of
payment to the Class A and Class B-1 Certificates, substantially in the form of
the Class B Certificate set forth in Exhibit B hereto.
Class B-2 Interest Accrual Amount: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Outstanding
Certificate Principal Balance of the Class B-2 Certificates minus (i) any
Non-Supported Interest Shortfall allocated to the Class B-2 Certificates on such
Distribution Date pursuant to Section 4.02 and (ii) any Realized Loss Interest
Shortfall allocated to the Class B-2 Certificates on such Distribution Date
pursuant to Section 4.04(f).
Class B-2 Shortfall: With respect to any Distribution Date, the amount
equal to the excess, if any, of the Class B-2 Interest Accrual Amount over the
amount actually distributed to the Class B-2 Certificates on such Distribution
Date pursuant to Section 4.04(d)(2) (A) and (B).
Class B-3 Certificate: Any one of the Class B-3 Certificates executed
by the Depositor and authenticated by the Trustee, subordinated in right of
payment to the Class A, Class B-1 and Class B-2 Certificates, substantially in
the form of the Class B Certificate set forth in Exhibit B hereto.
Class B-3 Interest Accrual Amount: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Outstanding
Certificate Principal Balance of the Class B-3 Certificates minus (i) any
Non-Supported Interest Shortfall allocated to the Class B-3 Certificates on such
Distribution Date pursuant to Section 4.02 and (ii) any Realized Loss Interest
Shortfall allocated to the Class B-3 Certificates on such Distribution Date
pursuant to Section 4.04(f).
Class B-3 Shortfall: With respect to any Distribution Date, the amount
equal to the excess, if any, of the Class B-3 Interest Accrual Amount over the
amount actually distributed to the Class B-3 Certificates on such Distribution
Date pursuant to Section 4.04(d)(3) (A) and (B).
Class B-4 Certificate: Any one of the Class B-4 Certificates executed
by the Depositor and authenticated by the Trustee, subordinated in right of
payment to the Class A, Class B-1, Class B-2 and Class B-3 Certificates,
substantially in the form of the Class B Certificate set forth in Exhibit C
hereto.
Class B-4 Interest Accrual Amount: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Outstanding
Certificate Principal Balance of the Class B-4 Certificates minus (i) any
Non-Supported Interest Shortfall allocated to the Class B-4 Certificates on such
Distribution Date pursuant to Section 4.02 and (ii) any Realized Loss Interest
Shortfall allocated to the Class B-4 Certificates on such Distribution Date
pursuant to Section 4.04(f).
Class B-4 Shortfall: With respect to any Distribution Date, the amount
equal to the excess, if any, of the Class B-4 Interest Accrual Amount over the
amount actually distributed to the Class B-4 Certificates on such Distribution
Date pursuant to Section 4.04(d)(4) (A) and (B).
Class B-5 Certificate: Any one of the Class B-5 Certificates executed
by the Depositor and authenticated by the Trustee, subordinated in right of
payment to the Class A, Class B-1, Class B-2, Class B-3 and Class B-4
Certificates, substantially in the form of the Class B Certificate set forth in
Exhibit C hereto.
Class B-5 Interest Accrual Amount: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Outstanding
Certificate Principal Balance of the Class B-5 Certificates minus (i) any
Non-Supported Interest Shortfall allocated to the Class B-5 Certificates on such
Distribution Date pursuant to Section 4.02 and (ii) any Realized Loss Interest
Shortfall allocated to the Class B-5 Certificates on such Distribution Date
pursuant to Section 4.04(f).
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Class B-5 Shortfall: With respect to any Distribution Date, the amount
equal to the excess, if any, of the Class B-5 Interest Accrual Amount over the
amount actually distributed to the Class B-5 Certificates on such Distribution
Date pursuant to Section 4.04(d)(5) (A) and (B).
Class B-6 Certificate: Any one of the Class B-6 Certificates executed
by the Depositor and authenticated by the Trustee, subordinated in right of
payment to the Class A, Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5
Certificates, substantially in the form of the Class B Certificate set forth in
Exhibit C hereto.
Class B-6 Interest Accrual Amount: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Outstanding
Certificate Principal Balance of the Class B-6 Certificates minus (i) any
Non-Supported Interest Shortfall allocated to the Class B-6 Certificates on such
Distribution Date pursuant to Section 4.02 and (ii) any Realized Loss Interest
Shortfall allocated to the Class B-6 Certificates on such Distribution Date
pursuant to Section 4.04(f).
Class B-6 Shortfall: With respect to any Distribution Date, the amount
equal to the excess, if any, of the Class B-6 Interest Accrual Amount over the
amount actually distributed to the Class B-6 Certificates on such Distribution
Date pursuant to Section 4.04(d)(6) (A) and (B).
Class R Certificate: The Class R Certificate executed by the Depositor
and authenticated by the Trustee, which represents the residual interest in the
Trust, substantially in the form of the Class R Certificate set forth in Exhibit
D hereto.
Class R Interest Accrual Amount: With respect to any Distribution Date,
one month's interest at the Certificate Rate on the Outstanding Certificate
Principal Balance of the Class R Certificates minus (i) any Non-Supported
Interest Shortfall allocated to the Class R Certificates on such Distribution
Date pursuant to Section 4.02 and (ii) any Realized Loss Interest Shortfall
allocated to the Class R Certificates on such Distribution Date pursuant to
Section 4.04(f).
Class R Shortfall: With respect to any Distribution Date, the amount
equal to the excess, if any, of the Class R Interest Accrual Amount over the
amount actually distributed to the Class R Certificateholders on such
Distribution Date pursuant to Section 4.04(b)(i)(E).
Class IA Certificate: Any Certificate designated as a "Class IA
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IA Outstanding Certificate Principal Balance: As of any date of
determination, the aggregate Outstanding Certificate Principal Balance of the
Class IA Certificates.
Class IA Principal Balance: As of any Distribution Date, (a) the Non-PO
Class IA Principal Balance for the preceding Distribution Date less (b) amounts
distributed (or deemed distributed) to the Class IA and Class R
Certificateholders on such preceding Distribution Date allocable to principal
(including the principal portion of Advances of the Servicer made pursuant to
4.01) and less (c) Realized Losses allocated to the Class IA and Class R
Certificates pursuant to Section 4.04(f); provided that the Non-PO Class IA
Principal Balance on the first Distribution Date shall be the Original Non-PO
Class IA Principal Balance.
Class IA Interest Accrual Amount: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Outstanding
Certificate Principal Balance of the Class IA Certificates minus (i) any
Non-Supported Interest Shortfall allocated to the Class IA Certificates on such
Distribution Date pursuant to Section 4.02 and (ii) any Realized Loss Interest
Shortfall allocated to the Class IA Certificates on such Distribution Date
pursuant to Section 4.04(f).
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Class IA Shortfall: With respect to any Distribution Date, the amount
equal to the excess, if any, of the Class IA Interest Accrual Amount over the
amount actually distributed to the Class IA Certificateholders on such
Distribution Date pursuant to Section 4.04(b)(i)(A).
Class IA-X Certificate: Any one of the Class IA-X Certificates executed
by the Depositor and authenticated by the Trustee, senior in right of payment to
the Class B Certificates, substantially in the form of the Class A Certificate
set forth in Exhibit A hereto.
Class IA-X Interest Accrual Amount: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Class IA-X Notional
Amount minus (i) any Non-Supported Interest Shortfall allocated to Class IA-X on
such Distribution Date pursuant to Section 4.05 and (ii) any Realized Loss
Interest Shortfall allocated to Class IA-X on such Distribution Date pursuant to
Section 4.04(f).
Class IA-X Notional Amount: With respect to any Distribution Date, an
amount equal to the product of the aggregate Scheduled Principal Balance of the
Non-Discount Mortgage Loans in Mortgage Group One and a fraction the numerator
of which is the weighted average of the Stripped Interest Rates of the
Non-Discount Mortgage Loans in Mortgage Group One and the denominator of which
is 4.75%.
Class IA-X Shortfall: With respect to any Distribution Date the amount
equal to the excess, if any, of the Class IA-X Interest Accrual Amount over the
amount actually distributed to the Class IA-X Certificateholders on such
Distribution Date pursuant to Section 4.04(b)(i)(C).
Class IA-P Certificate: Any one of the Class IA-P Certificates executed
by the Depositor and authenticated by the Trustee, senior in right of payment to
the Class B Certificates, substantially in the form of the Class A Certificate
set forth in Exhibit A hereto.
Class IIA Certificate: Any Certificate designated as a "Class IIA
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IIA Outstanding Certificate Principal Balance: As of any date of
determination, the aggregate Outstanding Certificate Principal Balance of the
Class IIA Certificates.
Class IIA Principal Balance: As of any Distribution Date, (a) the
Non-PO Class IIA Principal Balance for the preceding Distribution Date less (b)
amounts distributed (or deemed distributed) to the Class IIA Certificateholders
on such preceding Distribution Date allocable to principal (including the
principal portion of Advances of the Servicer made pursuant to 4.01) and less
(c) Realized Losses allocated to the Class IIA Certificates pursuant to Section
4.04(f); provided that the Non-PO Class IIA Principal Balance on the first
Distribution Date shall be the Original Non-PO Class IIA Principal Balance.
Class IIA Interest Accrual Amount: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Outstanding
Certificate Principal Balance of the Class IIA Certificates minus (i) any
Non-Supported Interest Shortfall allocated to the Class IIA Certificates on such
Distribution Date pursuant to Section 4.02 and (ii) any Realized Loss Interest
Shortfall allocated to the Class IIA Certificates on such Distribution Date
pursuant to Section 4.04(f).
Class IIA Shortfall: With respect to any Distribution Date, the amount
equal to the excess, if any, of the Class IIA Interest Accrual Amount over the
amount actually distributed to the Class IIA Certificateholders on such
Distribution Date pursuant to Section 4.04(b)(i)(B).
Class IIA-P Certificate: Any one of the Class IIA-P Certificates
executed by the Depositor and authenticated by the Trustee, senior in right of
payment to the Class B Certificates, substantially in the form of the Class A
Certificate set forth in Exhibit A hereto.
7
Class IIA-X Certificate: Any one of the Class IIA-X Certificates
executed by the Depositor and authenticated by the Trustee, senior in right of
payment to the Class B Certificates, substantially in the form of the Class A
Certificate set forth in Exhibit A hereto.
Class IIA-X Interest Accrual Amount: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Class IIA-X Notional
Amount minus (i) any Non-Supported Interest Shortfall allocated to Class IIA-X
on such Distribution Date pursuant to Section 4.02 and (ii) any Realized Loss
Interest Shortfall allocated to Class IIA-X on such Distribution Date pursuant
to Section 4.04(f).
Class IIA-X Notional Amount: With respect to any Distribution Date, an
amount equal to the product of the aggregate Scheduled Principal Balance of the
Non-Discount Mortgage Loans in Mortgage Group Two and a fraction the numerator
of which is the weighted average of the Stripped Interest Rates of the
Non-Discount Mortgage Loans in Mortgage Group Two and the denominator of which
is 5.50%.
Class IIA-X Shortfall: With respect to any Distribution Date the amount
equal to the excess, if any, of the Class IIA-X Interest Accrual Amount over the
amount actually distributed to the Class IIA-X Certificateholders on such
Distribution Date pursuant to Section 4.04(b)(i)(D).
Class LT-R Interest: The sole class of "residual interest" in the
Lower-Tier REMIC. The Class LT-R Interest shall not have a principal amount or
an interest rate. The Class LT-R Interest shall be represented by the Class R
Certificate.
Class UT-R Interest: The sole class of "residual interest" in the
Upper-Tier REMIC. The Class UT-R Interest shall consist of all rights associated
with the Class R Certificates other than the rights to payments in respect of
the Class LT-R Interest.
Closing Date: December 19, 2003.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(b) in the name of the
Trustee for the benefit of the Certificateholders and designated "Wachovia Bank,
N.A., as trustee, in trust for registered holders of Chase Funding Mortgage Loan
Asset-Backed Certificates, Series 0000-X0, Xxxxx Xxxxxxxxx Mortgage Corporation
as Servicer". Funds in the Collection Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Compensating Interest: With respect to any Mortgage Loan, an amount
equal to the amount set forth in Section 4.02 hereof, to be applied to the
interest portion of a Prepayment Interest Shortfall on such Mortgage Loan
pursuant to Section 4.02 hereof.
Co-op Lease: With respect to a Co-op Loan, the lease with respect to a
dwelling unit occupied by the Mortgagor and relating to the stock allocated to
the related dwelling unit.
Co-op Loan: A Mortgage Loan secured by the pledge of stock allocated to
a dwelling unit in a residential cooperative housing corporation and a
collateral assignment of the related Co-op Lease.
Corporate Trust Office: The designated office of the Trustee where at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
Agreement is located at Wachovia Bank, N.A., 000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx, 00000-0000.
8
Credit Support: With respect to each Class of Subordinated Certificates
(other than the Class B-6 Certificates), the level of credit support supporting
such Class, expressed as a percentage of the aggregate Outstanding Certificate
Principal Balance of all Classes of Certificates (other than the Class A-P
Certificates). With respect to each Distribution Date, Credit Support for each
such Class will equal in each case the percentage, rounded to two decimal
places, obtained by dividing the aggregate Outstanding Certificate Principal
Balances immediately prior to such Distribution Date of all Classes of
Subordinated Certificates having higher numerical class designations than such
Class by the aggregate Outstanding Certificate Principal Balance of all Classes
of Certificates (other than the Class A-P Certificates) immediately prior to
such Distribution Date.
Credit Support Depletion Date: The first Distribution Date on which the
aggregate Outstanding Certificate Principal Balance of the Subordinated
Certificates has been or will be reduced to zero.
Custodian: The custodian for the Mortgage Files appointed by the
Trustee. The initial Custodian shall be JPMorgan Document Custody Services Inc.
Cut-off Date: With respect to each Mortgage Loan, December 1, 2003.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates after
the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
in the Scheduled Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, other than such a
reduction resulting from a Deficient Valuation.
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 Stated Principal Balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.
Definitive Certificates: As defined in Section 5.06. Initially, the
Class B-4, Class B-5, Class B-6 and Class R Certificates.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of business
on the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate."
Depositor: Chase Funding, Inc., a New York corporation, or its
successor in interest.
9
Depository: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Exchange Act.
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 Agreement: With respect to Classes of Book-Entry
Certificates, the agreement among the Depository, the Trustee and the initial
Paying Agent.
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.
Designated Transaction: A transaction in which the assets underlying
the Certificates consist of single-family residential, multi-family residential,
home equity, manufactured housing and/or commercial mortgage obligations that
are secured by single-family residential, multi-family residential, commercial
real property or leasehold interests therein.
Determination Date: With respect to any Distribution Date, the 15th day
of the month of such Distribution Date or, if such 15th day is not a Business
Day, the immediately preceding Business Day.
Discount Mortgage Loan: Any Mortgage Loan having a Net Mortgage Rate
less than the applicable Remittance Rate.
Distribution Account: The separate Eligible Account created and
maintained by the Servicer or any Paying Agent pursuant to Section 3.05(d) in
the name of the Trustee for the benefit of the Certificateholders and designated
"Wachovia Bank, N.A., as trustee, in trust for registered holders of Chase
Funding Mortgage Loan Asset-Backed Certificates, Series 2003-C2". Funds in the
Distribution Account shall be held in trust for the Certificateholders for the
uses and purposes set forth in this Agreement.
Distribution Date: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in January 2004.
Due Date: With respect to any Distribution Date and any Mortgage Loan,
the day during the related Due Period on which a Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period beginning
on the second day of the calendar month preceding the calendar month in which
such Distribution Date occurs (or, in the case of the first Distribution Date,
beginning on the Cut-off Date) and ending on the first day of the month in which
such Distribution Date occurs.
Eligible Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (ii) maintained
with the corporate trust department of a bank which (a) has a rating of at least
Baa3 or P-3 by Xxxxx'x and (b) is either Chase or the corporate trust department
of a national bank or banking corporation which has a rating of at least A-1 by
S&P or F1 by Fitch, or (iii) an account or accounts the deposits in which are
fully insured by the FDIC, or (iv) an account or accounts, acceptable to each
Rating Agency without reduction or withdrawal of the rating of any Class of
Certificates, as evidenced in writing in a depository institution in which such
accounts are insured by the FDIC (to the limit established by the FDIC), the
uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee
and each Rating Agency, the Certificateholders have a claim with respect to the
funds in such account and a perfected first security interest against any
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, or (v) maintained
at an eligible institution whose commercial paper, short-term debt or other
short-term deposits are rated at least A-1+ by S&P and F-1+ by Fitch, or (vi)
maintained with a federal or state chartered depository institution the deposits
in which are insured by the FDIC to the applicable limits and the short-term
unsecured debt obligations of which (or, in the case of a depository institution
that is a subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated A-1 by S&P or Prime-1 by Xxxxx'x
at the time any deposits are held on deposit therein, or (vii) otherwise
acceptable to each Rating Agency, as evidenced by a letter from each Rating
Agency.
10
ERISA: The Employee Retirement Income Security Act of 1974, including
any successor or amendatory provisions.
ERISA Restricted Certificate: The Class B-4, Class B-5, Class B-6 and
Class R Certificates and any other Certificate, unless such other Certificate
shall have received a rating from a Rating Agency at the time of a transfer of
such other Certificate that is in one of the three (or in the case of Designated
Transactions, four) highest generic rating categories.
Escrow Account: As defined in Section 3.06 hereof.
Event of Default: As defined in Section 7.01 hereof.
Excess Bankruptcy Loss: Any Bankruptcy Loss, or portion thereof, which
exceeds the then applicable Bankruptcy Amount.
Excess Fraud Loss: Any Fraud Loss, or portion thereof, which exceeds
the then applicable Fraud Loss Amount.
Excess Losses: Excess Bankruptcy Losses, Excess Fraud Losses and Excess
Special Hazard Losses, referred to collectively.
Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (i) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (ii) interest at
the Mortgage Rate from the Due Date as to which interest was last paid or
advanced to Certificateholders (and not reimbursed to the Servicer) up to the
Due Date in the month in which such Liquidation Proceeds are required to be
distributed on the unpaid principal balance of such Liquidated Loan outstanding
during each Due Period as to which such interest was not paid or advanced.
Excess Special Hazard Loss: Any Special Hazard Loss, or portion
thereof, that exceeds the then applicable Special Hazard Amount.
Exchange Act: The Securities Exchange Act of 1934, including any
successor or amendatory provisions.
External Life Event: Any event outside the control of a Mortgagor which
has caused the Mortgagor financial hardship or otherwise makes it necessary or
advisable that the Mortgagor sell the related Mortgaged Property, including
death of the Mortgagor or a family member living in the Mortgaged Property,
medical condition, job status, acts of God, terrorism, or deterioration of
physical or mental health.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
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FHLMC: Xxxxxxx Mac, a corporate instrumentality of the United States
created and existing under Title III of the Emergency Home Finance Act of 1970,
as amended, or any successor thereto.
Fitch: Fitch Ratings, or its successor in interest.
FNMA: Xxxxxx Xxx, a federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.
Fraud Loss: Any Realized Loss or portion thereof sustained by reason of
a default arising from fraud, dishonesty or misrepresentation in connection with
the related Mortgage Loan, including by reason of the denial of coverage under
any related primary policy of mortgage guaranty insurance.
Fraud Loss Amount: Initially, $9,000,010 and as of any date of
determination after the Cut-off Date, an amount equal to: (X) prior to the first
anniversary of the Cut-off Date, (1) 3.00% of the aggregate outstanding Stated
Principal Balance of all of the Mortgage Loans as of the Cut-off Date minus (2)
the aggregate amount of Fraud Losses on the Mortgage Loans allocated to the
Certificates in accordance with Section 4.04(f) since the Cut-off Date up to
such date of determination, (Y) from and including the first and to and
excluding the third anniversary of the Cut-off Date, (1) 2.00% of the aggregate
outstanding Stated Principal Balance of all of the Mortgage Loans as of the
Cut-off Date minus (2) the aggregate amount of Fraud Loss on the Mortgage Loans
allocated to the Certificates in accordance with Section 4.04(f) since the most
recent anniversary of the Cut-off Date up to such date of determination and (Z)
from and including the third and to and excluding the fifth anniversary of the
Cut-off Date, (1) 1.00% of the aggregate outstanding Stated Principal Balance of
all of the Mortgage Loans as of the most recent anniversary of the Cut-off Date
minus (2) the Fraud Losses allocated to the Certificates in accordance with
Section 4.04(f) since the most recent anniversary of the Cut-off Date up to such
date of determination. On and after the fifth anniversary of the Cut-off Date,
the Fraud Loss Amount shall be zero.
Group One Available Distribution Amount: With respect to any
Distribution Date, the sum of Group I Principal Funds and Group I Interest
Funds.
Group One Class A-P Amount: With respect to any Distribution Date, the
applicable PO Percentage of (i) all principal received on or in respect of each
Discount Mortgage Loan in Mortgage Group One (exclusive of any amounts in
respect of any Scheduled Payment) during the related Prepayment Period and (ii)
all principal received as part of a Scheduled Payment on or in respect of a
Discount Mortgage Loan in Mortgage Group One during the related Due Period.
Group One Mortgage Loans: The pool of Mortgage Loans identified in the
Group One Mortgage Loan Schedule attached hereto as Exhibit F-1, including any
Mortgage Loans delivered in replacement thereof.
Group One Mortgage Pool Principal Balance: As of any date of
determination, the aggregate of the Stated Principal Balances of each
Outstanding Mortgage Loan in Mortgage Group One on such date of determination
less the principal portion of any Scheduled Payment due but not paid with
respect to which an Advance has not been made.
Group One Non-PO Allocated Amount: At the time of any determination,
the amount derived by (i) multiplying the Outstanding Certificate Principal
Balance of each Mortgage Loan in Mortgage Group One on such date of
determination by the Non-PO Percentage with respect to such Mortgage Loan and
(ii) summing the results.
Group One Remittance Rate: 4.75% per annum.
12
Group One Stripped Interest Rate: The excess of the weighted average
Net Mortgage Rate of the Group One Mortgage Loans that are Non Discount Mortgage
Loans over the Group One Remittance Rate.
Group One Subordinated Amount: For any Distribution Date, the excess of
the aggregate Stated Principal Balance of the Group One Mortgage Loans as of the
preceding Distribution Date over the sum of (i) the aggregate Outstanding
Certificate Principal Balance of the Class IA Certificates and Class R
Certificate immediately prior to the current Distribution Date and (ii) the
aggregate of the PO Portions as of the preceding Distribution Date of the
Discount Mortgage Loans that are Group One Mortgage Loans.
Group Two Available Distribution Amount: With respect to any
Distribution Date, the sum of Group II Principal Funds and Group II Interest
Funds.
Group Two Class A-P Amount: With respect to any Distribution Date, the
applicable PO Percentage of (i) all principal received on or in respect of each
Discount Mortgage Loan in Mortgage Group Two (exclusive of any amounts in
respect of any Scheduled Payment) during the related Prepayment Period and (ii)
all principal received as part of a Scheduled Payment on or in respect of a
Discount Mortgage Loan in Mortgage Group Two during the related Due Period.
Group Two Mortgage Loans: The pool of Mortgage Loans identified in the
Group Two Mortgage Loan Schedule attached hereto as Exhibit F-2, including any
Mortgage Loans delivered in replacement thereof.
Group Two Mortgage Pool Principal Balance: As of any date of
determination, the aggregate of the Principal Balances of each Outstanding
Mortgage Loan in Mortgage Group Two on such date of determination less the
principal portion of any Scheduled Payment due but not paid with respect to
which an Advance has not been made.
Group Two Non-PO Allocated Amount: At the time of any determination,
the amount derived by (i) multiplying the Outstanding Certificate Principal
Balance of each Mortgage Loan in Mortgage Group Two on such date of
determination by the Non-PO Percentage with respect to such Mortgage Loan and
(ii) summing the results.
Group Two Remittance Rate: 5.50% per annum.
Group Two Stripped Interest Rate: The excess of the weighted average
Net Mortgage Rate of the Group Two Mortgage Loans that are Non Discount Mortgage
Loans over the Group Two Remittance Rate.
Group Two Subordinated Amount: For any Distribution Date, the excess of
the aggregate Stated Principal Balance of the Group Two Mortgage Loans as of the
preceding Distribution Date over the sum of (i) the aggregate Outstanding
Certificate Principal Balance of the Class IIA Certificates immediately prior to
the current Distribution Date and (ii) the aggregate of the PO Portions as of
the preceding Distribution Date of the Discount Mortgage Loans that are Group
Two Mortgage Loans.
Group I Interest Funds: With respect to Group One Mortgage Loans and
any Distribution Date, the sum, without duplication, of (i) all scheduled
interest due during the related Due Period and received before the related
Servicer Remittance Date or advanced on or before the related Servicer
Remittance Date less the Servicing Fee with respect to the Group One Mortgage
Loans, (ii) all Advances relating to interest with respect to the Group One
Mortgage Loans, (iii) all Compensating Interest with respect to the Group One
Mortgage Loans, (iv) Liquidation Proceeds with respect to the Group One Mortgage
Loans (to the extent such Liquidation Proceeds relate to interest), (v) proceeds
of any purchase pursuant to Sections 2.02, 2.03, 3.12 or 9.01 (to the extent
such proceeds relate to interest), and (vi) prepayment penalties and late
payment fees received with respect to the Group One Mortgage Loans during the
related Prepayment Period, less all Non-Recoverable Advances with respect to the
Group One Mortgage Loans relating to interest reimbursed during the related Due
Period.
13
Group I Principal Funds: With respect to the Group One Mortgage Loans
and any Distribution Date, the sum, without duplication, of (i) the scheduled
principal due during the related Due Period and received before the related
Servicer Remittance Date or advanced on or before the related Servicer
Remittance Date, (ii) prepayments collected in the related Prepayment Period,
(iii) the Stated Principal Balance of each Mortgage Loan that was purchased by
the Depositor or the Servicer during the related Prepayment Period or in the
case of a purchase pursuant to Section 9.01, on the Business Day prior to such
Distribution Date, (iv) the amount, if any, by which the aggregate unpaid
principal balance of any Replacement Mortgage Loan is less than the aggregate
unpaid principal balance of the related Deleted Mortgage Loans delivered by the
Depositor in connection with a substitution of a Mortgage Loan pursuant to
Section 2.03(c) and (v) all Liquidation Proceeds collected during the related
Due Period (to the extent such Liquidation Proceeds related to principal), less
all Non-Recoverable Advances relating to principal with respect to the Group One
Mortgage Loans and all Non-Recoverable Advances reimbursed during the related
Due Period.
Group II Interest Funds: With respect to Group Two Mortgage Loans and
any Distribution Date, the sum, without duplication, of (i) all scheduled
interest due during the related Due Period and received before the related
Servicer Remittance Date or advanced on or before the related Servicer
Remittance Date less the Servicing Fee with respect to the Group Two Mortgage
Loans, (ii) all Advances relating to interest with respect to the Group Two
Mortgage Loans, (iii) all Compensating Interest with respect to the Group Two
Mortgage Loans, (iv) Liquidation Proceeds with respect to the Group Two Mortgage
Loans (to the extent such Liquidation Proceeds relate to interest), (v) proceeds
of any purchase pursuant to Sections 2.02, 2.03, 3.12 or 9.01 (to the extent
such proceeds relate to interest) and (vi) prepayment penalties and late payment
fees received with respect to the Group Two Mortgage Loans during the related
Prepayment Period, less all Non-Recoverable Advances with respect to the Group
Two Mortgage Loans relating to interest reimbursed during the related Due
Period.
Group II Principal Funds: With respect to the Group Two Mortgage Loans
and any Distribution Date, the sum, without duplication, of (i) the scheduled
principal due during the related Due Period and received before the related
Servicer Remittance Date or advanced on or before the related Servicer
Remittance Date, (ii) prepayments collected in the related Prepayment Period,
(iii) the Stated Principal Balance of each Mortgage Loan that was purchased by
the Depositor or the Servicer during the related Prepayment Period or, in the
case of a purchase pursuant to Section 9.01, on the Business Day prior to such
Distribution Date, (iv) the amount, if any, by which the aggregate unpaid
principal balance of any Replacement Mortgage Loan is less than the aggregate
unpaid principal of the related Deleted Mortgage Loans delivered by the
Depositor in connection with a substitution of a Mortgage Loan pursuant to
Section 2.03(c) and (v) all Liquidation Proceeds collected during the related
Due Period (to the extent such Liquidation Proceeds related to principal), less
all Non-Recoverable Advances relating to principal with respect to the Group Two
Mortgage Loans and all Non-Recoverable Advances reimbursed during the related
Due Period.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect with respect to such Mortgage Loan, including any replacement policy
or policies for any insurance policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property (or the Underlying
Mortgaged Property, in the case of a Co-op Loan) or released to the Mortgagor in
accordance with the procedures that the Servicer would follow in servicing
mortgage loans held for its own account, in each case other than any amount
included in such Insurance Proceeds in respect of Insured Expenses.
14
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Latest Possible Maturity Date: The first Distribution Date following
the anniversary of the scheduled maturity date of the Mortgage Loan in the Trust
Fund having the latest scheduled maturity date as of the Cut-off Date which
shall be with respect to the Class IA, Class IA-X, Class IA-P and Class R
Certificates, the Distribution Date in December 2019, and with respect to the
Class IIA, Class IIA-X, Class IIA-P Certificates and Class B Certificates, the
Distribution Date in August 2034.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Servicer has certified (in accordance with
Section 3.12) in the related Prepayment Period that it has received all amounts
it expects to receive in connection with such liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of Mortgage Loans,
whether through trustee's sale, foreclosure sale, sale by the Servicer pursuant
to this Agreement or otherwise or amounts received in connection with any
condemnation or partial release of a Mortgaged Property and any other proceeds
received in connection with an REO Property, less the sum of related
unreimbursed Advances, Servicing Fees, Servicing Advances and any other expenses
related to such Mortgage Loan.
Loan Group: Either of the Group One Mortgage Loans or the Group Two
Mortgage Loans.
Loan Group I: The Group One Mortgage Loans.
Loan Group II: The Group Two Mortgage Loans.
Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (x) the Appraised Value of the related Mortgaged Property (or applicable
dwelling unit, in the case of a Co-op Loan) and (y) the sales price of the
related Mortgaged Property (or applicable dwelling unit, in the case of a Co-op
Loan) at the time of origination.
Loss Mitigation: A circumstance where a default by the Mortgagor has
occurred or is imminent and the Servicer is likely to collect more funds with
respect to a Mortgage Loan by waiving a prepayment penalty than by not waiving a
prepayment penalty.
Lower-Tier REMIC: The REMIC described in Section 2.07 hereof which is
the issuer of the Lower-Tier REMIC Regular Interests and the Class LT-R
Interest.
Lower-Tier REMIC Interest: Any one of the classes of Lower-Tier REMIC
Interests described in Section 2.07.
Lower-Tier REMIC Regular Interest: Any one of the Lower-Tier REMIC
Interests other than the Class LT-R Interest.
Lower-Tier REMIC Subordinated Balance Ratio: The ratio among the
Uncertificated Principal Balances of each of the Lower-Tier REMIC Regular
Interests ending with the designation "A" that is equal to the ratio among, with
respect to each such Lower-Tier REMIC Regular Interest, the excess of (x) the
aggregate Stated Principal Balance of the Mortgage Loans in the related Mortgage
Group over (y) the aggregate class principal amounts of the (i) in the case of
the Class LTIA Interest, the Class IA and Class R Certificates and, in the case
of the Class LTIIA Interest, the Class IIA Certificates and (ii) the Lower-Tier
REMIC Regular Interest ending with the designation "P" related to such Mortgage
Group.
15
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage,
or an Assignment of Mortgage, has been or will be recorded in the name of MERS
or otherwise assigned to MERS, as agent for the holder from time to time of the
Mortgage Note.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
Moody's: Xxxxx'x Investors Service, Inc., or its successor in interest.
Mortgage: With respect to a Mortgage Loan that is not a Co-op Loan, the
mortgage, deed of trust or other instrument creating a first lien or a first
priority ownership interest in an estate in fee simple in real property securing
a Mortgage Note. With respect to a Co-op Loan, the security agreement creating a
security interest in the stock allocated to a dwelling unit in a residential
cooperative housing corporation and pledged to secure such Co-op Loan and the
related Co-op Lease.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Group: Pertaining to Mortgage Group One or Mortgage Group Two,
as the case may be.
Mortgage Group One: The Mortgage Loans in the Trust Fund that are
designated in the Mortgage Loan Schedule as comprising Mortgage Group One.
Mortgage Group One Subordinated Percentage: As of any Distribution
Date, the difference between 100% and the Non-PO Class IA Percentage.
Mortgage Group One Subordinated Prepayment Percentage: As of any
Distribution Date, the difference between 100% and the Non-PO Class IA
Prepayment Percentage.
Mortgage Group Two: The Mortgage Loans in the Trust Fund that are
designated in the Mortgage Loan Schedule as comprising Mortgage Group Two.
Mortgage Group Two Subordinated Percentage: As of any Distribution
Date, the difference between 100% and the Non-PO Class IIA Percentage.
Mortgage Group Two Subordinated Prepayment Percentage: As of any
Distribution Date, the difference between 100% and the Non-PO Class IIA
Prepayment Percentage.
Mortgage Loans: Such of the Group One Mortgage Loans and Group Two
Mortgage Loans transferred and assigned to the Trustee pursuant to the
provisions hereof as from time to time are held as a part of the Trust Fund
(including any REO Property), the mortgage loans so held being identified in the
Mortgage Loan Schedule, notwithstanding foreclosure or other acquisition of
title of the related Mortgaged Property. Any mortgage loan that was intended by
the parties hereto to be transferred to the Trust Fund as indicated by such
Mortgage Loan Schedule which is in fact not so transferred for any reason shall
continue to be a Mortgage Loan hereunder until the Purchase Price with respect
thereto has been paid to the Trust Fund.
16
Mortgage Loan Schedule: The lists of Mortgage Loans (as from time to
time amended by the Trustee to reflect the deletion of Deleted Mortgage Loans
and the addition of Replacement Mortgage Loans pursuant to the provisions of
this Agreement) transferred to the Trustee as part of the Trust Fund and from
time to time subject to this Agreement, attached hereto as Exhibits F-1 and F-2,
setting forth the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Appraised Value;
(iii) the Mortgage Rate;
(iv) the maturity date and the months remaining before maturity
date;
(v) the original principal balance;
(vi) the Cut-off Date Principal Balance;
(vii) the first payment date of the Mortgage Loan;
(viii) the Scheduled Payment in effect as of the Cut-off Date;
(ix) the Loan-to-Value Ratio at origination;
(x) a code indicating whether the residential dwelling at the time
of origination was represented to be owner-occupied;
(xi) a code indicating the property type;
(xii) location of the related Mortgaged Property (or Underlying
Mortgaged Property, in the case of a Co-op Loan).
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all amendments, modifications and attachments thereto.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgage Pool Principal Balance: As of any date of determination, the
sum of the Group One Mortgage Pool Principal Balance and the Group Two Mortgage
Pool Principal Balance.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from time to time.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: With respect to each Mortgage Loan, a per annum rate
of interest for the applicable period equal to the Mortgage Rate less the
Servicing Fee Rate.
Non-Discount Mortgage Loans: Any Mortgage Loan having a Net Mortgage
Rate in excess of the applicable Remittance Rate.
17
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage
Loan.
Non-PO Class IA Optimal Principal Amount: With respect to any
Distribution Date, the lesser of (a) the Non-PO Class IA Principal Balance and
(b) the sum of:
(i) the Non-PO Class IA Percentage of the applicable Non-PO Percentage
of the principal portion of all Scheduled Payments, whether or not received,
which were due during the related Due Period on Group One Mortgage Loans which
were outstanding during such Due Period;
(ii) the Non-PO Class IA Prepayment Percentage of the applicable Non-PO
Percentage of all Principal Prepayments made on any Group One Mortgage Loan
during the related Principal Prepayment Period;
(iii) with respect to each Mortgage Loan not described in (iv) below,
the Non-PO Class IA Percentage of the applicable Non-PO Percentage of the
principal portion of all Insurance Proceeds, condemnation awards and any other
cash proceeds from a source other than the applicable Mortgagor, to the extent
required to be deposited in the Collection Account, which were received during
the related Principal Prepayment Period with respect to a Group One Mortgage
Loan, net of related unreimbursed Servicing Advances and net of any portion
thereof which, as to any such Mortgage Loan, constitutes collections that have
been the subject of an Advance on any prior Distribution Date;
(iv) with respect to each Group One Mortgage Loan which has become a
Liquidated Loan during the related Prepayment Period, the lesser of (A) the
Non-PO Class IA Percentage of the applicable Non-PO Percentage of an amount
equal to the Stated Principal Balance of such Liquidated Loan as of the Due Date
immediately preceding the date on which it became a Liquidated Loan and (B) the
Non-PO Class IA Prepayment Percentage of the applicable Non-PO Percentage of the
Liquidation Proceeds with respect to such liquidated Mortgage Loan (net of any
unreimbursed Advances);
(v) with respect to each Group One Mortgage Loan repurchased during the
related Principal Prepayment Period, an amount equal to the Non-PO Class IA
Prepayment Percentage of the applicable Non-PO Percentage of the principal
portion of the Purchase Price (net of amounts with respect to which a
distribution of principal has previously been made to the Non-PO Class IA
Certificateholders); and
(vi) on or after the Credit Support Depletion Date, the excess of the
Non-PO Class IA Principal Balance (calculated after giving effect to reductions
thereof on such Distribution Date with respect to the amounts described in (i) -
(v) above) over the Group One Non-PO Allocated Amount, if any, as of the
preceding Distribution Date.
Non-PO Class IIA Optimal Principal Amount: With respect to any
Distribution Date, the lesser of (a) the Non-PO Class IIA Principal Balance and
(b) the sum of:
(i) the Non-PO Class IIA Percentage of the applicable Non-PO Percentage
of the principal portion of all Scheduled Payments, whether or not received,
which were due during the related Due Period on Group Two Mortgage Loans which
were outstanding during such Due Period;
(ii) the Non-PO Class IIA Prepayment Percentage of the applicable
Non-PO Percentage of all Principal Prepayments made on any Group Two Mortgage
Loan during the related Principal Prepayment Period;
18
(iii) with respect to each Mortgage Loan not described in (iv) below,
the Non-PO Class IIA Percentage of the applicable Non-PO Percentage of the
principal portion of all Insurance Proceeds, condemnation awards and any other
cash proceeds from a source other than the applicable Mortgagor, to the extent
required to be deposited in the Collection Account, which were received during
the related Principal Prepayment Period with respect to a Group Two Mortgage
Loan, net of related unreimbursed Servicing Advances and net of any portion
thereof which, as to any such Mortgage Loan, constitutes collections that have
been the subject of an Advance on any prior Distribution Date;
(iv) with respect to each Group Two Mortgage Loan which has become a
Liquidated Loan during the related Prepayment Period, the lesser of (A) the
Non-PO Class IIA Percentage of the applicable Non-PO Percentage of an amount
equal to the Stated Principal Balance of such Liquidated Loan as of the Due Date
immediately preceding the date on which it became a Liquidated Loan and (B) the
Non-PO Class IIA Prepayment Percentage of the applicable Non-PO Percentage of
the Liquidation Proceeds with respect to such liquidated Mortgage Loan (net of
any unreimbursed Advances);
(v) with respect to each Group Two Mortgage Loan repurchased during the
related Principal Prepayment Period, an amount equal to the Non-PO Class IIA
Prepayment Percentage of the applicable Non-PO Percentage of the principal
portion of the Purchase Price (net of amounts with respect to which a
distribution of principal has previously been made to the Non-PO Class IIA
Certificateholders); and
(vi) on or after the Credit Support Depletion Date, the excess of the
Non-PO Class IIA Principal Balance (calculated after giving effect to reductions
thereof on such Distribution Date with respect to the amounts described in (i) -
(v) above) over the Group Two Non-PO Allocated Amount, if any, as of the
preceding Distribution Date.
Non-PO Class IA Percentage: As of any Distribution Date, a fraction,
expressed as a percentage (which shall never exceed 100%), the numerator of
which is the Non-PO Class IA Principal Balance and the denominator of which is
the Group One Non-PO Allocated Amount as of the immediately preceding Due Date.
Non-PO Class IIA Percentage: As of any Distribution Date, a fraction,
expressed as a percentage (which shall never exceed 100%), the numerator of
which is the Non-PO Class IIA Principal Balance and the denominator of which is
the Group Two Non-PO Allocated Amount of the immediately preceding Due Date.
Non-PO Class IA Prepayment Percentage: As of any Distribution Date up
to and including the Distribution Date in December 2008, 100%; as of any
Distribution Date in the first year thereafter, the Non-PO Class IA Percentage
plus 70% of the Mortgage Group One Subordinated Percentage for such Distribution
Date; as of any Distribution Date in the second year thereafter, the Non-PO
Class IA Percentage plus 60% of the Mortgage Group One Subordinated Percentage
for such Distribution Date; as of any Distribution Date in the third year
thereafter, the Non-PO Class IA Percentage plus 40% of the Mortgage Group One
Subordinated Percentage for such Distribution Date; as of any Distribution Date
in the fourth year thereafter, the Non-PO Class IA Percentage plus 20% of the
Mortgage Group One Subordinated Percentage for such Distribution Date; and as of
any Distribution Date after the fourth year thereafter, the Non-PO Class IA
Percentage; provided that, if the Non-PO Class IA Percentage as of any such
Distribution Date is greater than the Non-PO Class IA Percentage on the first
Distribution Date or the Non-PO Class IIA Percentage as of any such Distribution
Date is greater than the Non-PO Class IIA Percentage on the first Distribution
Date, the Non-PO Class IA Prepayment Percentage shall be 100%; and provided
further, however, that whenever the Non-PO Class IA Percentage equals 0%, the
Non-PO Class IA Prepayment Percentage shall equal 0%; and provided further that
no reduction of the Non-PO Class IA Prepayment Percentage below the level in
effect for the most recent period shall occur with respect to any Distribution
Date unless, as of the last day of the month preceding such Distribution Date,
(i) the aggregate outstanding Stated Principal Balance of Mortgage Loans with
respect to both Mortgage Groups, each taken individually, delinquent 60 days or
more (including for this purpose any Mortgage Loans in foreclosure and Mortgage
Loans with respect to which the related Mortgaged Property has been acquired by
the Trust Fund) does not exceed 50% of the Mortgage Group One Subordinated
Percentage of the Mortgage Pool Principal Balance with respect to Mortgage Group
One as of such date and (ii) cumulative Realized Losses with respect to both
19
Mortgage Groups, each taken individually, do not exceed (a) 30% of the related
Subordinated Percentage of the Mortgage Pool Principal Balance with respect to
the related Mortgage Group as of the date of issuance of the Certificates (the
related "Original Subordinated Principal Balance") if such Distribution Date
occurs between and including January 2009 and December 2009, (b) 35% of the
related Original Subordinated Principal Balance if such Distribution Date occurs
between and including January 2010 and December 2010, (c) 40% of the related
Original Subordinated Principal Balance if such Distribution Date occurs between
and including January 2011 and December 2011, (d) 45% of the related Original
Subordinated Principal Balance if such Distribution Date occurs between and
including January 2012 and December 2012, and (e) 50% of the related Original
Subordinated Principal Balance if such Distribution Date occurs during or after
January 2013.
Non-PO Class IIA Prepayment Percentage: As of any Distribution Date up
to and including the Distribution Date in December 2008, 100%; as of any
Distribution Date in the first year thereafter, the Non-PO Class IIA Percentage
plus 70% of the Mortgage Group Two Subordinated Percentage for such Distribution
Date; as of any Distribution Date in the second year thereafter, the applicable
Non-PO Class IIA Percentage plus 60% of the Mortgage Group Two Subordinated
Percentage for such Distribution Date; as of any Distribution Date in the third
year thereafter, the Non-PO Class IIA Percentage plus 40% of the Mortgage Group
Two Subordinated Percentage for such Distribution Date; as of any Distribution
Date in the fourth year thereafter, the applicable Non-PO Class IIA Percentage
plus 20% of the Mortgage Group Two Subordinated Percentage for such Distribution
Date; and as of any Distribution Date after the fourth year thereafter, the
Non-PO Class IIA Percentage; provided that, if the Non-PO Class IIA Percentage
on the first Distribution Date is greater than the Non-PO Class IIA Percentage
or the Non-PO Class IA Percentage as of any such Distribution Date is greater
than the Non-PO Class IA Percentage on the first Distribution Date, the Non-PO
Class IIA Prepayment Percentage shall be 100%; and provided further, however,
that whenever the Non-PO Class IIA Percentage equals 0%, the Non-PO Class IIA
Prepayment Percentage shall equal 0%; and provided further that no reduction of
the Non-PO Class IIA Prepayment Percentage below the level in effect for the
most recent period shall occur with respect to any Distribution Date unless, as
of the last day of the month preceding such Distribution Date, (i) the aggregate
outstanding Stated Principal Balance of Mortgage Loans with respect to both
Mortgage Groups, each taken individually, delinquent 60 days or more (including
for this purpose any Mortgage Loans in foreclosure and Mortgage Loans with
respect to which the related Mortgaged Property has been acquired by the Trust
Fund) does not exceed 50% of the Mortgage Group Two Subordinated Percentage of
the Mortgage Pool Principal Balance with respect to Mortgage Group Two as of
such date and (ii) cumulative Realized Losses with respect to both Mortgage
Groups, each taken individually, do not exceed (a) 30% of the related
Subordinated Percentage of the Mortgage Pool Principal Balance with respect to
the related Mortgage Group as of the date of issuance of the Certificates (the
related "Original Subordinated Principal Balance") if such Distribution Date
occurs between and including January 2009 and December 2009, (b) 35% of the
related Original Subordinated Principal Balance if such Distribution Date occurs
between and including January 2010 and December 2010, (c) 40% of the related
Original Subordinated Principal Balance if such Distribution Date occurs between
and including January 2011 and December 2011, (d) 45% of the related Original
Subordinated Principal Balance if such Distribution Date occurs between and
including January 2012 and December 2012, and (e) 50% of the related Original
Subordinated Principal Balance if such Distribution Date occurs during or after
January 2013.
Non-PO Class IA Principal Balance: As of any Distribution Date, (a) the
Non-PO Class IA Principal Balance for the immediately preceding Distribution
Date less (b) amounts distributed (or deemed distributed) to the Class IA and
Class R Certificateholders on such preceding Distribution Date allocable to
principal (including the principal portion of Advances of the Servicer made
pursuant to Section 4.01) and less (c) Realized Losses allocated to the Class IA
and Class R Certificates pursuant to Section 4.04(f); provided that the Non-PO
Class IA Principal Balance on the first Distribution Date shall be the Original
Non-PO Class IA Principal Balance.
20
Non-PO Class IIA Principal Balance: As of any Distribution Date, (a)
the Non-PO Class IIA Principal Balance for the immediately preceding
Distribution Date less (b) amounts distributed (or deemed distributed) to the
Class IIA Certificateholders on such preceding Distribution Date allocable to
principal (including the principal portion of Advances of the Servicer made
pursuant to Section 4.01) and less (c) Realized Losses allocated to the Class
IIA Certificates pursuant to Section 4.04(f); provided that the Non-PO Class IIA
Principal Balance on the first Distribution Date shall be the Original Non-PO
Class IIA Principal Balance.
Non-PO Class IA Principal Payment Rules: On each Distribution Date,
distributions to the Non-PO Class IA Certificateholders pursuant to Section
4.04(b)(ii)(A) shall be made sequentially, first to the Class R Certificates and
then to the Class IA Certificates, until the Outstanding Certificate Principal
Balance of each such Class has been reduced to zero.
Non-PO Class IIA Principal Payment Rules: On each Distribution Date,
distributions to the Non-PO Class IIA Certificateholders pursuant to Section
4.04(b)(ii)(B) shall be made to the Class IIA Certificates, until the
Outstanding Certificate Principal Balance of such Class has been reduced to
zero.
Non-PO Percentage: With respect to each Mortgage Loan, the fraction,
expressed as a percentage (but not greater than 100%), the numerator of which
equals the applicable Net Mortgage Rate and the denominator of which equals the
applicable Remittance Rate:
Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise.
Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not be ultimately recoverable by the Servicer
from the related Mortgagor, related Liquidation Proceeds or otherwise.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Officer's Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Servicer (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (ii), if provided for
in this Agreement, signed by a Servicing Officer, as the case may be, and
delivered to the Depositor, the Servicer and the Trustee, as the case may be, as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor or the Servicer, reasonably acceptable to each addressee of
such opinion; provided, however, that with respect to Section 6.04 or 10.01, or
the interpretation or application of the REMIC Provisions, such counsel must (i)
in fact be independent of the Depositor and the Servicer, (ii) not have any
direct financial interest in the Depositor or the Servicer or in any affiliate
of either, and (iii) not be connected with the Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
21
Optional Termination: The termination of the Trust Fund hereunder
pursuant to the purchase of the Mortgage Loans pursuant to the last sentence of
Section 9.01 hereof.
Optional Termination Amounts: The Repurchase Price paid by the Servicer
in connection with any repurchase of all of the Mortgage Loans pursuant to
Section 9.01.
Optional Termination Date: The Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage Loans is less than or equal to 10% of
the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off
Date.
Original Certificate Principal Balance: With respect to any Class of
Certificates, the amount specified for such Class in Section 5.01.
Original Class A Principal Balance: $280,499,721.00
Original Class B Principal Balance: $19,500,610.36
Original Credit Support: With respect to any Class of Subordinated
Certificates (other than the Class B-6 Certificates), the level of Credit
Support indicated below:
Class A: 6.50%
Class B-1: 4.50%
Class B-2: 3.00%
Class B-3: 1.70%
Class B-4: 1.00%
Class B-5: 0.85%
Original Non-PO Class IA Principal Balance: $89,455,100.00
Original Non-PO Class IIA Principal Balance: $181,211,000.00
Original Subordinated Principal Balance: The aggregate Original
Certificate Principal Balance of the Subordinated Certificates.
22
Outstanding Certificate Principal Balance: With respect to any Class
(other than the Class A-X Certificates) of Certificates and any Distribution
Date, the Original Certificate Principal Balance of such Class minus the sum of
(i) any distributions of principal made on such Class prior to such Distribution
Date and (ii) any Realized Losses allocated to such Class prior to such
Distribution Date; provided, however, that with respect to the Class of Class B
Certificates then outstanding having the highest numerical class designation,
the Outstanding Certificate Principal Balance of such Class shall equal the
excess of the Mortgage Pool Principal Balance (together with the principal
portion of any Scheduled Payment due but not paid with respect to which an
Advance has not been made) over the sum of the Outstanding Certificate Principal
Balances of all Classes of Certificates (other than the Class of Class B
Certificates then outstanding having the highest numerical class designation).
Original Mortgage Loan: The mortgage loan refinanced in connection with
the origination of a Refinancing Mortgage Loan.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (i) Certificates theretofore canceled by the Servicer or
delivered to the Servicer for cancellation; and (ii) Certificates in exchange
for which or in lieu of which other Certificates have been executed by the
Depositor and delivered by the Servicer pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.
Ownership Interest: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
Pass-Through Rate: With respect to any Certificate, the interest rate
borne by such Certificate.
Paying Agent: As defined in Section 5.11 hereof.
Percentage Interest: With respect to any Certificate, the Percentage
Interest evidenced thereby of the related Class shall equal the percentage
obtained by dividing the Denomination of such Certificate by the aggregate of
the Denominations of all Certificates of such Class; except that in the case of
Class R Certificate, the Percentage Interest with respect to such Certificate
shall be that shown on the face of such Certificate.
Permitted Activities: The primary activities of the trust created
pursuant to this Agreement which shall be:
(i) holding Mortgage Loans transferred from the Depositor
and other assets of the Trust Fund, including any
credit enhancement and passive derivative financial
instruments that pertain to beneficial interests
issued or sold to parties other than the Depositor,
its Affiliates, or its agents;
(ii) issuing Certificates and other interests in the
assets of the Trust Fund;
(iii) receiving collections on the Mortgage Loans and
making payments on such Certificates and interests in
accordance with the terms of this Agreement; and
(iv) engaging in other activities that are necessary or
incidental to accomplish these limited purposes,
which activities cannot be contrary to the status of
the Trust Fund as a qualified special purpose entity
under existing accounting literature.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency
thereof, provided such obligations are backed by the
full faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by
any state of the United States or the District of
Columbia receiving the highest long-term debt rating
of each Rating Agency rating the Certificates;
(iii) commercial or finance company paper, other than
commercial or finance company paper issued by Chase
or any of its Affiliates, which is then receiving the
highest commercial or finance company paper rating of
each such Rating Agency;
23
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances (other than banker's acceptances
issued by Chase or any of its Affiliates) issued by
any depository institution or trust company
incorporated under the laws of the United States or
of any state thereof and subject to supervision and
examination by federal and/or state banking
authorities, provided that the commercial paper
and/or long term unsecured debt obligations of such
depository institution or trust company are then
rated one of the two highest long-term and the
highest short-term ratings of each such Rating Agency
for such securities;
(v) demand or time deposits or certificates of deposit
issued by any bank or trust company or savings
institution to the extent that such deposits are
fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation rated in
the two highest long-term or the highest short-term
ratings of each Rating Agency containing, at the time
of the issuance of such agreements, such terms and
conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the
Certificates by any such Rating Agency as evidenced
by a letter from each Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either
case entered into with a depository institution or
trust company (acting as principal) described in
clause (v) above;
(viii) securities (other than stripped bonds, stripped
coupons or instruments sold at a purchase price in
excess of 115% of the face amount thereof) bearing
interest or sold at a discount issued by any
corporation, other than Chase or any of its
Affiliates, incorporated under the laws of the United
States or any state thereof which, at the time of
such investment, have one of the two highest long
term ratings of each Rating Agency;
(ix) interests in any money market fund which at the date
of acquisition of the interests in such fund and
throughout the time such interests are held in such
fund has the highest applicable long term rating by
each such Rating Agency; and
(x) short term investment funds sponsored by any trust
company or national banking association incorporated
under the laws of the United States or any state
thereof, other than Chase or any of its Affiliates,
which on the date of acquisition has been rated by
each such Rating Agency in their respective highest
applicable rating category;
24
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, that (x) no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer shall receive an Opinion of Counsel, at the
expense of the party requesting that such investment be made, to the effect that
such investment will not adversely affect the status of either the Lower-Tier
REMIC or the Upper-Tier REMIC as a REMIC under the Code or result in imposition
of a tax on any of the Trust Fund, the Lower-Tier REMIC or the Upper-Tier REMIC
and (y) each Permitted Investment must be a "permitted investment" under Section
860G(a)(5) of the Code. Permitted Investments that are subject to prepayment or
call may not be purchased at a price in excess of par.
Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to any
Class R Certificate, (iv) rural electric and telephone cooperatives described in
section 1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or
resident of the United States, a corporation or partnership (or other entity
treated as a corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United States or any
State thereof or the District of Columbia or an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless such Person has furnished the
transferor, the Servicer and the Trustee with a duly completed Internal Revenue
Service Form W-8ECI or applicable successor form. The terms "United States,"
"State" and "International Organization" shall have the meanings set forth in
section 7701 of the Code. A corporation will not be treated as an
instrumentality of the United States or of any State thereof for these purposes
if all of its activities are subject to tax and, with the exception of the
Federal Home Loan Mortgage Corporation, a majority of its board of directors is
not selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
PO Percentage: The PO Percentage with respect to each Mortgage Loan as
identified on the Mortgage Loan Schedule, such percentage being equal to the
fraction, expressed as a percentage (but not less than 0%), the numerator of
which equals the excess of the applicable Remittance Rate over the applicable
Net Mortgage Rate and the denominator of which equals the applicable Remittance
Rate.
PO Portion: For each Discount Mortgage Loan, the product of (i) such
Discount Mortgage Loan's PO Percentage and (ii) the Stated Principal Balance of
such Discount Mortgage Loan.
Pool Stated Principal Balance: As to any Distribution Date the
aggregate of the Stated Principal Balances, as of such Distribution Date, of the
Mortgage Loans that were Outstanding Mortgage Loans as of such date.
Prepayment Assumption: A rate of prepayment, as described in the
Prospectus Supplement in the definition of "Modeling Assumptions," relating to
the Mortgage Loans in a Mortgage Group.
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Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment or
a Principal Prepayment in full (other than a Principal Prepayment in full
resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03,
3.12 or 9.01 hereof), the amount, if any, by which (i) one month's interest at
the applicable Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan as of the preceding Distribution Date or in the case of a partial
Principal Prepayment on the amount of such prepayment exceeds (ii) the amount of
interest paid or collected in connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, with respect to any
partial Principal Prepayment the period beginning with the opening of business
on the first day of the calendar month preceding the month in which such
Distribution Date occurs and ending on the close of business on the last day of
such month and with respect to any Principal Prepayment in full the period from
the 16th calendar day of the prior calendar month through the 15th calendar day
of the month of such Distribution Date.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03, 3.12 and 9.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Servicer in accordance with the terms of the
related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement dated December 17,
2003, relating to the public offering of certain of the Certificates.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan (x) required to be
repurchased by the Seller, pursuant to Section 2.02 or, 2.03 hereof or (y) that
the Servicer has a right to purchase pursuant to Section 3.12 hereof, an amount
equal to the sum of (i) 100% of the unpaid principal balance of the Mortgage
Loan as of the date of such purchase together with any unreimbursed Servicing
Advances, (ii) accrued interest thereon at the applicable Net Mortgage Rate from
(a) the date through which interest was last paid by the Mortgagor to (b) the
Due Date in the month in which the Purchase Price is to be distributed to
Certificateholders and (iii) any unreimbursed costs, penalties and/or damages
incurred by the Trust Fund and/or the Trustee in connection with any violation
relating to such Mortgage Loan of any predatory or abusive lending law.
Rating Agency: Xxxxx'x, S&P and Fitch. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to (i) a Liquidated Loan, the amount, if
any, by which the Stated Principal Balance and accrued interest thereon at the
Net Mortgage Rate exceeds the amount actually recovered by the Servicer with
respect thereto (net of reimbursement of Advances and Servicing Advances) at the
time such Mortgage Loan became a Liquidated Loan or (ii) with respect to a
Mortgage Loan which is not a Liquidated Loan, any amount of principal that the
Mortgagor is no longer legally required to pay (except for the extinguishment of
debt that results from the exercise of remedies due to default by the
Mortgagor).
Realized Loss Interest Shortfall: The meaning specified in Section
4.04(f).
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Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs.
Refinancing Mortgage Loan: Any Mortgage Loan originated in connection
with the refinancing of an existing mortgage loan.
Regular Certificate: Any one of the Certificates other than the Class
B-4, Class B-5, Class B-6 and Class R Certificates.
Remittance Rate: The Group One Remittance Rate or the Group Two
Remittance Rate as applicable.
REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code. References herein to "the REMIC" shall mean either
of (or, as the context requires, both of) the Lower-Tier REMIC and the
Upper-Tier REMIC.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REMIC Regular Interests: Each Class of Certificates other than the
Class R Certificate.
REO Property: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor
for a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit M, (i)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (ii)
with respect to any fixed rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, (iii) have the same or higher credit quality characteristics
than that of the Deleted Mortgage Loan; (iv) have a Loan-to-Value Ratio no
higher than that of the Deleted Mortgage Loan; (v) have a remaining term to
maturity no greater than (and not more than one year less than) that of the
Deleted Mortgage Loan; (vi) provide for a prepayment charge on terms
substantially similar to those of the prepayment charge, if any, of the Deleted
Mortgage Loan; (vii) have the same lien priority as the Deleted Mortgage Loan;
(viii) constitute the same occupancy type as the Deleted Mortgage Loan; and (ix)
comply with each representation and warranty set forth in Section 2.03 hereof.
Repurchase Price: As defined in Section 9.01.
Request for Release: The Request for Release of Documents submitted by
the Servicer to the Trustee or its custodian as applicable, substantially in the
form of Exhibit M hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
Responsible Officer: When used with respect to the Trustee or Servicer,
any Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee or Servicer
customarily performing functions similar to those performed by any of the above
designated officers and also to whom, with respect to a particular matter, such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
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S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.,
or its successor in interest.
Sale Agreement: The Mortgage Loan Sale Agreement, dated as of December
19, 2003 between the Depositor and the Seller.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.
Scheduled Principal Balance: With respect to any Mortgage Loan as of
any Distribution Date, the unpaid principal balance of such Mortgage Loan as
specified in the amortization schedule at the time relating thereto (before any
adjustment to such schedule by reason of bankruptcy or similar proceeding or any
moratorium or similar waiver or grace period) as of the first day of the month
preceding the month of such Distribution Date, or as of the Cut-off Date, with
respect to the first Distribution Date, after giving effect to any previously
applied prepayments, the payment of principal due on such first day of the month
and any reduction of the principal balance of such Mortgage Loan by a bankruptcy
court, irrespective of any delinquency in payment by the related Mortgagor.
Section 302 Requirements: Any rules or regulations promulgated pursuant
to the Xxxxxxxx-Xxxxx Act of 2002 (as such may be amended from time to time).
Securities Act: The Securities Act of 1933, including any amendatory
provisions.
Seller: Chase Manhattan Mortgage Corporation, a New Jersey corporation,
or its successor in interest.
Servicer: Chase Manhattan Mortgage Corporation, a New Jersey
corporation, or its successor in interest.
Servicer Advance Date: As to any Distribution Date, the related
Servicer Remittance Date.
Servicer Remittance Date: With respect to any Distribution Date, the
day which is two Business Days prior to such Distribution Date.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations hereunder, including, but not limited to, the cost of (i)
the preservation, restoration and protection of a Mortgaged Property (or
Underlying Mortgaged Property, in the case of a Co-op Loan), including without
limitation advances in respect of real estate taxes and assessments, (ii) any
collection, enforcement or judicial proceedings, including without limitation
foreclosures, collections and liquidations, (iii) the conservation, management,
sale and liquidation of any REO Property and (iv) compliance with the
obligations under Section 3.10.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to one month's interest at the Servicing Fee Rate on the Stated
Principal Balance of such Mortgage Loan as of the preceding Distribution Date
or, in the event of any payment of interest that accompanies a Principal
Prepayment in full made by the Mortgagor, interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date for the period covered by such payment of interest.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.2595% per
annum.
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Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date pursuant to this Agreement, as
such lists may from time to time be amended.
SFAS 140: Statement of Financial Accounting Standard No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.
Special Hazard Amount: Initially, $3,000,004. As of the first
anniversary of the Cut-off Date, the Special Hazard Amount shall be reduced, but
not increased, to the lesser of (i) the initial Special Hazard Amount less the
sum of all amounts allocated to the Subordinated Certificates in respect of
Special Hazard Losses on the Mortgage Loans during such year or (ii) the
Adjustment Amount for such anniversary. As of each subsequent anniversary of the
Cut-off Date, the Special Hazard Amount shall be reduced, but not increased, to
the lesser of (i) the Special Hazard Amount on the immediately preceding
anniversary of the Cut-off Date less the sum of all amounts allocated to the
Subordinated Certificates in respect of Special Hazard Losses on the Mortgage
Loans during such year and (ii) the Adjustment Amount for such anniversary. The
"Adjustment Amount" with respect to each anniversary of the Cut-off Date will be
equal the greatest of (i) 1.00% multiplied by the aggregate outstanding Stated
Principal Balance of the Mortgage Loans, (ii) the aggregate outstanding Stated
Principal Balance of the Mortgage Loans secured by Mortgaged Properties located
in the California postal zip code area in which the highest percentage of
Mortgage Loans by Stated Principal Balance are located and (iii) twice the
outstanding Stated Principal Balance of the Mortgage Loan having the largest
outstanding Stated Principal Balance.
Special Hazard Loss: With respect to any Mortgage Loan, any Realized
Loss or portion thereof resulting from direct physical loss or damage to the
related Mortgaged Property (or Underlying Mortgaged Property, in the case of a
Co-op Loan), which is not insured against under the Standard Hazard Policy
required to be maintained hereunder.
Standard Hazard Policy: Each standard hazard insurance policy or
replacement therefor referred to in Section 5.16.
Startup Date: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property (i) as of the Cut-off Date, the Cut-off Date Principal Balance
thereof, and (ii) as of any Distribution Date, such Cut-off Date Principal
Balance, minus the sum of (a) the principal portion of the Scheduled Payments
(x) due with respect to such Mortgage Loan during each Due Period ending prior
to such Distribution Date and (y) that were received by the Servicer as of the
close of business on the Determination Date related to such Distribution Date or
with respect to which Advances were made on each Servicer Advance Date prior to
such Distribution Date and (b) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.
Stripped Interest Rate: The Group One Stripped Interest Rate or Group
Two Stripped Interest Rate, as applicable.
Subordinated Certificates: The Class B Certificates, referred to
collectively.
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Subordinated Optimal Principal Amount: With respect to any Distribution
Date, the lesser of (a) the aggregate Outstanding Certificate Principal Balance
of the Subordinated Certificates (before giving effect to any distributions of
principal on such Distribution Date) and (b)(1) the sum of: (i) the applicable
Subordinated Percentage of the applicable Non PO Percentage of the principal
portion of all Scheduled Payments, whether or not received, which were due
during the related Due Period on Mortgage Loans which were outstanding during
such Due Period; (ii) the applicable Subordinated Prepayment Percentage of the
applicable Non PO Percentage of all Principal Prepayments made on any Mortgage
Loan during the related Prepayment Period; (iii) with respect to each Mortgage
Loan not described in (iv) below, the applicable Subordinated Percentage of the
applicable Non PO Percentage of the principal portion of all Insurance Proceeds,
condemnation awards and any other cash proceeds from a source other than the
applicable Mortgagor, to the extent required to be deposited in the Collection
Account pursuant to Section 5.08(iv) and (v), which were received during the
related Prepayment Period, net of related unreimbursed Servicing Advances and
net of any portion thereof which, as to any such Mortgage Loan, constitutes
collections that have been the subject of an Advance on any prior Distribution
Date; (iv) with respect to each Mortgage Loan which has become a Liquidated Loan
during the related Prepayment Period, an amount equal to the portion (if any) of
the Liquidation Proceeds with respect to such liquidated Mortgage Loan (net of
any unreimbursed Advances) that was not included in the Group One Class A-P
Amount, the Group Two Class A-P Amount, the Non-PO Class IA Optimal Principal
Amount or Non-PO Class IIA Optimal Principal Amount with respect to such
Distribution Date; and (v) with respect to each Mortgage Loan repurchased or
purchased during the related Prepayment Period, an amount equal to the
applicable Subordinated Prepayment Percentage of the applicable Non PO
Percentage of the principal portion of the Purchase Price (net of amounts with
respect to which a distribution of principal has previously been made to the
Subordinated Certificateholders) minus (2) the Class A-P Shortfall Amount with
respect to such Distribution Date.
Subordinated Percentage: The Mortgage Group One Subordinated Percentage
or the Mortgage Group Two Subordinated Percentage, as the case may be.
Subordinated Prepayment Percentage: The Mortgage Group One Subordinated
Prepayment Percentage or the Mortgage Group Two Subordinated Prepayment
Percentage, as the case may be.
Subservicing Agreement: As defined in Section 3.02(a).
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(c).
Substitution Amount: With respect to any Mortgage Loan substituted
pursuant to Section 2.03(c), the excess of (x) the principal balance of the
Mortgage Loan that is substituted for, over (y) the principal balance of the
related substitute Mortgage Loan, each balance being determined as of the date
of substitution.
Tax Matters Person: The Person designated as "tax matters person" in
the manner provided under Treasury Regulation Section 1.860F-4(d) and temporary
Treasury regulation Section 301.6231(a)(7)-1T.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Trust Fund: The corpus of the trust (the "Chase Funding Loan
Acquisition Trust, Series 2003-C2") created hereunder consisting of (i) the
Mortgage Loans and all interest and principal received on or with respect
thereto on and after the Cut-off Date to the extent not applied in computing the
Cut-off Date Principal Balance thereof, exclusive of interest not required to be
deposited in the Collection Account pursuant to Section 3.05(b)(ii); (ii) the
Collection Account, the Distribution Account and all amounts deposited therein
pursuant to the applicable provisions of this Agreement; (iii) property that
secured a Mortgage Loan and has been acquired by foreclosure, deed in lieu of
foreclosure or otherwise; (iv) the mortgagee's rights under the Insurance
Policies with respect to the Mortgage Loans; and (v) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash or other
liquid property.
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Trustee: Wachovia Bank, N.A., a national banking association, not in
its individual capacity, but solely in its capacity as trustee for the benefit
of the Certificateholders under this Agreement, and any successor thereto, and
any corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.
Trustee and Agency Fee: As to each Mortgage Loan and any Distribution
Date, an amount equal to one month's interest at the Trustee and Agency Fee Rate
on the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date, payable to the Trustee and its agent(s) if any.
Trustee and Agency Fee Rate: With respect to each Mortgage Loan,
0.0095% per annum.
Uncertificated Principal Balance: As to each Class of Lower-Tier REMIC
Regular Interests (other than the Class LTIA-X and Class LTIIA-X Interests), the
initial principal balance of such Class, reduced by all prior distributions
deemed made in respect of principal on such Class and by all Realized Losses
with respect to principal previously allocated to such Class.
Underlying Mortgaged Property: With respect to each Co-op Loan, the
underlying real property owned by the related residential cooperative housing
corporation.
Upper-Tier REMIC: The REMIC described in Section 2.07 that issues the
REMIC Regular Interests and the Class UT-R Interest.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be in proportion to the Outstanding Certificate Principal Balance of each
Class relative to the Outstanding Certificate Principal Balance of all other
Classes. Voting Rights will be allocated among the Certificates of each such
Class in accordance with their respective Percentage Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans
The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).
In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned:
With respect to each Mortgage Loan which is not a Co-op Loan:
(A) (i) The Original Mortgage Note (or a lost note affidavit
(including a copy of the original Mortgage Note)) or (ii) original
Consolidation, Extension and Modification Agreement (or a lost note
affidavit (including a copy of the original Consolidation, Extension
and Modification Agreement)), in either case endorsed, "Pay to the
order of Wachovia Bank, N.A., as trustee, without recourse."
31
(B) The original Mortgage (including all riders thereto) with
evidence of recording thereon, or a copy thereof certified by the
public recording office in which such mortgage has been recorded or, if
the original Mortgage has not been returned from the applicable public
recording office, a true certified copy, certified by the Seller, of
the original Mortgage together with a certificate of the Seller
certifying that the original Mortgage has been delivered for recording
in the appropriate public recording office of the jurisdiction in which
the Mortgaged Property is located.
With respect to each Non-MERS Mortgage Loan which is not a Co-op Loan:
(A) The original Assignment of Mortgage to "Wachovia Bank,
N.A., as trustee," which assignment shall be in form and substance
acceptable for recording, or a copy certified by the Seller as a true
and correct copy of the original Assignment which has been sent for
recordation. Subject to the foregoing, such assignments may, if
permitted by law, be by blanket assignments for Mortgage Loans covering
Mortgaged Properties situated within the same county. If the Assignment
of Mortgage is in blanket form, a copy of the Assignment of Mortgage
shall be included in the related individual Mortgage File.
(B) The original policy of title insurance, including riders
and endorsements thereto, or if the policy has not yet been issued, a
written commitment or interim binder or preliminary report of title
issued by the title insurance or escrow company.
(C) Originals of all recorded intervening Assignments of
Mortgage, or copies thereof, certified by the public recording office
in which such Assignments or Mortgage have been recorded showing a
complete chain of title from the originator to the Depositor, with
evidence of recording thereon, or a copy thereof certified by the
public recording office in which such Assignment of Mortgage has been
recorded or, if the original Assignment of Mortgage has not been
returned from the applicable public recording office, a true certified
copy, certified by the Seller of the original Assignment of Mortgage
together with a certificate of the Seller certifying that the original
Assignment of Mortgage has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located.
(D) Originals, or copies thereof certified by the public
recording office in which such documents have been recorded, of each
assumption, extension, modification, written assurance or substitution
agreements, if applicable, or if the original of such document has not
been returned from the applicable public recording office, a true
certified copy, certified by the Seller, of such original document
together with a certificate of Seller certifying that the original of
such document has been delivered for recording in the appropriate
recording office of the jurisdiction in which the Mortgaged Property is
located.
(E) If the Mortgaged Note or Mortgage or any other material
document or instrument relating to the Mortgaged Loan has been signed
by a person on behalf of the Mortgagor, the original power of attorney
or other instrument that authorized and empowered such person to sign
bearing evidence that such instrument has been recorded, if so required
in the appropriate jurisdiction where the Mortgaged Property is located
(or, in lieu thereof, a duplicate or conformed copy of such instrument,
together with a certificate of receipt from the recording office,
certifying that such copy represents a true and complete copy of the
original and that such original has been or is currently submitted to
be recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the
original power of attorney or other such instrument has been delivered
for recording in the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located.
32
In connection with such assignment, the Depositor does hereby
deliver to, and deposit with, the Trustee the following documents or
instruments with respect to each Mortgage Loan so assigned which is a
Co-op Loan:
(A) (i) The Original Mortgage Note (or a lost note affidavit
(including a copy of the original Mortgage Note)) or (ii) original
consolidation, extension and modification agreement (or a lost note
affidavit (including a copy of the original consolidation, extension
and modification agreement)), in either case endorsed, "Pay to the
order of Wachovia Bank, N.A., as trustee, without recourse."
(B) The original Mortgage entered into by the Mortgagor with
respect to such Co-op Loan.
(C) The original Assignment of Mortgage to "Wachovia Bank,
N.A. as trustee".
(D) Original assignments of Mortgage showing a complete chain
of assignment from the originator of the related Co-op Loan to the
Seller.
(E) Original Form UCC-1 and any continuation statements with
evidence of filing thereon entered into by the Mortgagor with respect
to such Co-op Loan.
(F) Form UCC-3 (or copy thereof) by the Seller or its agent
assigning the security interest covered by such Form UCC-1 to "Wachovia
Bank, N.A. as trustee", together with all Forms UCC-3 (or copies
thereof) showing a complete chain of assignment from the originator of
the related Co-op Loan to the Seller, with evidence of recording
thereon.
(G) Stock certificate representing the stock allocated to the
related dwelling unit in the related residential cooperative housing
corporation and pledged by the related Mortgagor to the originator of
such Co-op Loan with a stock power in blank attached.
(H) Original proprietary lease.
(I) Original assignment of proprietary lease, to the Trustee,
and all intervening assignments thereof.
(J) Original recognition agreement of the interests of the
mortgagee with respect to the Co-op Loan by the residential cooperative
housing corporation, the stock of which was pledged by the related
Mortgagor to the originator of such Co-op Loan.
(K) Originals of any assumption, consolidation or modification
agreements relating to any of the items specified in (A) through (F)
above with respect to such Co-op Loan.
If in connection with any Mortgage Loan which is not a Co-op Loan, the
Depositor cannot deliver the Mortgage, Assignments of Mortgage or assumption,
consolidation or modification, as the case may be, with evidence of recording
thereon concurrently with the execution and delivery of this Agreement solely
because of a delay caused by the public recording office where such Mortgage,
Assignments of Mortgage or assumption, consolidation or modification, as the
case may be, has been delivered for recordation, the Depositor shall deliver or
cause to be delivered to the Trustee written notice stating that such Mortgage,
Assignments of Mortgage or assumption, consolidation or modification, as the
case may be, has been delivered to the appropriate public recording office for
recordation. Thereafter, the Depositor shall deliver or cause to be delivered to
the Trustee such Mortgage, Assignments of Mortgage or assumption, consolidation
or modification, as the case may be, with evidence of recording indicated
thereon upon receipt thereof from the public recording office.
33
With respect to any Non-MERS Mortgage Loans which are not Co-op Loans
as to which the related Mortgaged Property is located in the State of Florida,
the Servicer shall cause to be recorded in the appropriate public recording
office for real property records each Assignment of Mortgage referred to in this
Section 2.01 as soon as practicable. With respect to any Non-MERS Mortgage Loans
which are not Co-op Loans as to which the related Mortgaged Property is located
outside the State of Florida, the Servicer shall not be obligated to cause to be
recorded the Assignment of Mortgage referred to in this Section 2.01. With
respect to Co-op Loans as to which the related dwelling unit is located in
Florida, the Servicer shall cause to be filed in the appropriate filing office
the Form UCC-3 referred to in this Section 2.01 as soon as practicable. With
respect to any Co-op Loans as to which the related dwelling unit is located
outside Florida, the Servicer shall not be obligated to cause to be filed the
Form UCC-3 referred to in this Section 2.01. While each Assignment of Mortgage
or Form UCC-3 to be recorded is being recorded, the Servicer shall deliver to
the Trustee a photocopy of such document. If any such Assignment of Mortgage or
Form UCC-3 is returned unrecorded to the Servicer because of any defect therein,
the Servicer shall cause such defect to be cured and such document to be
recorded in accordance with this paragraph. The Servicer shall deliver or cause
to be delivered, as required, each original recorded Assignment of Mortgage and
intermediate assignment or Form UCC-3 to the Trustee within 270 days of the
Closing Date or shall deliver to the Trustee on or before such date an Officer's
Certificate stating that such document has been delivered to the appropriate
public recording office for recordation, but has not been returned solely
because of a delay caused by such recording office. In any event, the Depositor
shall use all reasonable efforts to cause each such document with evidence of
recording thereon to be delivered to the Trustee within 300 days of the Closing
Date.
With respect to each MERS Mortgage Loan, the Trustee, or the Custodian
on its behalf, at the expense of the Depositor and at the direction and with the
cooperation of the Servicer, shall cause to be taken such actions as are
necessary to cause the Trustee to be clearly identified as the owner of each
such Mortgage Loan on the records of MERS for purposes of the system of
recording transfers of beneficial ownership of mortgages maintained by MERS.
The ownership of each Mortgage Note, the Mortgage and the contents of
the related Mortgage File is vested in the Trustee. Neither the Depositor nor
the Servicer shall take any action inconsistent with such ownership and shall
not claim any ownership interest therein. The Depositor and the Servicer shall
respond to any third party inquiries with respect to ownership of the Mortgage
Loans by stating that such ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage documents relating to the Mortgage Loans not
delivered to the Trustee are and shall be held in trust by the Servicer, for the
benefit of the Trustee as the owner thereof, and the Servicer's possession of
the contents of each Mortgage File so retained is for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Servicer is in a custodial capacity only. The Depositor agrees to take no action
inconsistent with the Trustee's ownership of the Mortgage Loans, to promptly
indicate to all inquiring parties that the Mortgage Loans have been sold and to
claim no ownership interest in the Mortgage Loans.
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It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee for the benefit of the Certificateholders all of its right, title and
interest in those representations and warranties of the Seller contained in the
Sale Agreement and the benefit of the repurchase obligations and the obligation
of the Seller contained in the Sale Agreement to take, at the request of the
Depositor or the Trustee, all action on its part which is reasonably necessary
to ensure the enforceability of a Mortgage Loan.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Seller to repurchase
any Mortgage Loan to which an exception was taken in the Exception Report unless
such exception is cured to the satisfaction of the Trustee within 45 Business
Days of the Closing Date.
The Trustee agrees, for the benefit of Certificateholders, to review
each Mortgage File delivered to it within 270 days after the Closing Date to
ascertain that all documents required by Section 2.01 have been executed and
received, and that such documents relate to the Mortgage Loans identified in
Exhibit F that have been conveyed to it. If the Trustee finds any document or
documents constituting a part of a Mortgage File to be missing or defective
(that is, mutilated, damaged, defaced or unexecuted) in any material respect,
the Trustee shall promptly (and in any event within no more than five Business
Days) after such finding so notify the Servicer, the Seller and the Depositor.
In addition, the Trustee shall also notify the Servicer, the Seller and the
Depositor, if (a) in examining the Mortgage Files, the documentation shows on
its face (i) any adverse claim, lien or encumbrance, (ii) that any Mortgage Note
was overdue or had been dishonored, (iii) any evidence on the face of any
Mortgage Note or Mortgage of any security interest or other right or interest
therein, or (iv) any defense against or claim to the Mortgage Note by any party
or (b) the original Mortgage with evidence of recording thereon with respect to
a Mortgage Loan is not received within 270 days of the Closing Date; provided,
however, that if the Depositor cannot deliver the original Mortgage with
evidence of recording thereon because of a delay caused by the public recording
office where such Mortgage has been delivered for recordation, the Depositor
shall deliver or cause to be delivered to the Trustee written notice stating
that such Mortgage has been delivered to the appropriate public recording
officer for recordation and thereafter the Depositor shall deliver or cause to
be delivered such Mortgage with evidence of recording thereon upon receipt
thereof from the public recording office. The Trustee shall request that the
Seller correct or cure such omission, defect or other irregularity, or
substitute a Mortgage Loan pursuant to the provisions of Section 2.03(c), within
90 days from the date the Seller was notified of such omission or defect and, if
the Seller does not correct or cure such omission or defect within such period,
that the Seller purchase such Mortgage Loan from the Trustee within 90 days from
the date the Trustee notified the Seller of such omission, defect or other
irregularity at the Purchase Price of such Mortgage Loan. The Purchase Price for
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any Mortgage Loan purchased pursuant to this Section 2.02 shall be paid to the
Servicer and deposited by the Servicer in the Collection Account promptly upon
receipt, and, upon receipt by the Trustee of written notification of such
deposit signed by a Servicing Officer, the Trustee shall promptly release to the
Seller the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, without recourse, as shall be necessary
to vest in the Seller or its designee, as the case may be, any Mortgage Loan
released pursuant hereto, and the Trustee shall have no further responsibility
with regard to such Mortgage Loan. It is understood and agreed that the
obligation of the Seller to purchase, cure or substitute any Mortgage Loan as to
which a material defect in or omission of a constituent document exists shall
constitute the sole remedy respecting such defect or omission available to the
Trustee on behalf of Certificateholders. The Trustee shall be under no duty or
obligation to inspect, review and examine such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable or
appropriate to the represented purpose, or that they have actually been
recorded, or that they are other than what they purport to be on their face. The
Trustee shall keep confidential the name of each Mortgagor and the Trustee shall
not solicit any such Mortgagor for the purpose of refinancing the related
Mortgage Loan. It is understood and agreed that all rights and benefits relating
to the solicitation of any Mortgagors and the attendant rights, title and
interest in and to the list of Mortgagors and data relating to their Mortgages
shall be retained by the Servicer.
Within 280 days of the Closing Date, the Trustee shall deliver to the
Depositor and the Servicer the Trustee's certificate substantially in the form
of Exhibit H attached hereto, setting forth the status of the Mortgage Files as
of such date.
Notwithstanding anything herein to the contrary, the parties hereto
acknowledge that the functions of the Trustee with respect to the custody
acceptance, inspection and release of the Mortgage Files pursuant to Sections
2.01, 2.02, 2.03 and 2.13 and the preparation and delivery of the Certification
in the form of Exhibit H shall be performed by the Custodian. The fees and
expenses of the Custodian shall be paid by the Servicer.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.
(a) The Depositor hereby represents and warrants to the Servicer and
the Trustee as follows, as of the date hereof:
(i) The Depositor is duly organized and is validly existing as
a corporation in good standing under the laws of the State of New York
and has full power and authority (corporate and other) necessary to own
or hold its properties and to conduct its business as now conducted by
it and to enter into and perform its obligations under this Agreement.
(ii) The Depositor has the full corporate power and authority
to execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and has duly authorized,
by all necessary corporate action on its part, the execution, delivery
and performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its
terms, subject, as to enforceability, to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (ii) general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement by the
Depositor, the consummation of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Depositor and will not
(A) result in a material breach of any term or provision of the charter
or by-laws of the Depositor or (B) materially conflict with, result in
a violation or acceleration of, or result in a material default under,
the terms of any other material agreement or instrument to which the
Depositor is a party or by which it may be bound or (C) constitute a
material violation of any statute, order or regulation applicable to
the Depositor of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Depositor; and the
Depositor is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which breach or
violation may materially impair the Depositor's ability to perform or
meet any of its obligations under this Agreement.
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(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Depositor to
perform its obligations under this Agreement in accordance with the
terms hereof.
(v) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same. The Depositor
hereby represents and warrants to the Trustee with respect to each
Mortgage Loan as of the Closing Date, and following the transfer of the
Mortgage Loans to it by the Seller, the Depositor had good title to the
Mortgage Loans and the Mortgage Notes were subject to no offsets,
claims, defenses or counterclaims.
(vi) The Depositor hereby represents and warrants to the
Trustee for the benefit of the Certificateholders that on the Closing
Date it has entered into the Sale Agreement with the Seller, that the
Seller has made the following representations and warranties with
respect to each Mortgage Loan in the Sale Agreement as of the Closing
Date, which representations and warranties run to and are for the
benefit of the Depositor and the Trustee for the benefit of the
Certificateholders, and as to which the Depositor has assigned to the
Trustee for the benefit of the Certificateholders, pursuant to Section
2.01 hereof, the right to cause the Seller to repurchase a Mortgage
Loan as to which there has occurred an uncured breach of
representations and warranties in accordance with the provisions of the
Sale Agreement.
(1) The Seller is an approved seller of conventional mortgage
loans for FNMA or FHLMC and is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to
sections 203 and 211 of the National Housing Act, as
amended.
(2) The information set forth on the Mortgage Loan Schedule is
true and correct in all material respects as of the
Closing Date.
(3) The Seller will treat the transfer of the Mortgage Loans
to the Depositor as a sale of the Mortgage Loans for all
accounting and tax purposes.
(4) No Mortgage Loan is more than 59 days Delinquent in
payment of principal and interest, and no more than 1.5%
of the Mortgage Loans are 30-59 days Delinquent in the
payment of principal and interest.
(5) No Mortgage Loan had a Loan-to-Value Ratio at origination
in excess of 95.00%.
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(6) With respect to Mortgages Loans that are not Co-op Loans,
each Mortgage is a valid and enforceable first lien on
the Mortgaged Property subject only to (a) the lien of
non-delinquent real property taxes and assessments not
yet due and payable, (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,
specifically referred to in the lender's title insurance
policy referred to in (14) below or referred to or
otherwise considered in the appraisal made in connection
with the origination of the related Mortgage Loan, and
(c) other matters to which like properties are commonly
subject that do not materially interfere with the
benefits of the security intended to be provided by such
Mortgage. With respect to each Mortgage Loan that is a
Co-op Loan, the related Mortgage is a valid, enforceable
and subsisting first security interest on the related
cooperative shares securing the related Mortgage Note,
subject only to (a) liens of the related residential
cooperative housing corporation for unpaid assessments
representing the Mortgagor's pro rata share of the
related residential cooperative housing corporation's
payments for its blanket mortgage, current and future
real property taxes, insurance premiums, maintenance fees
and other assessments to which like collateral is
commonly subject and (b) other matters to which like
collateral is provided by the related security agreement.
There are no liens against or security interest in the
cooperative shares relating to each Co-op Loan (except
for unpaid maintenance , assessments and other amounts
owed to the related cooperative which individually or in
the aggregate will not have a material adverse effect on
such Co-op Loan), which have priority over the Trustee's
security interest in such cooperative shares.
(7) Immediately prior to the assignment of the Mortgage Loans
to the Depositor, the Seller had good title to, and was
the sole owner of, each Mortgage Loan free and clear of
any pledge, lien, encumbrance or security interest and
had full right and authority, subject to no interest or
participation of, or agreement with, any other party, to
sell and assign the same pursuant to this Agreement.
(8) There is no delinquent tax or assessment lien against any
Mortgaged Property.
(9) There is no valid offset, claim, defense or counterclaim
to any Mortgage Note or Mortgage, including the
obligation of the Mortgagor to pay the unpaid principal
of or interest on such Mortgage Note.
(10) There are no mechanics' liens or claims for work, labor
or material affecting any Mortgaged Property (or the
related residential dwelling unit in the Underlying
Mortgaged Property, in the case of a Co-op Loan) that are
or may be a lien prior to, or equal with, the lien of
such Mortgage, except those that are insured against by
the title insurance policy referred to in item (14)
below.
(11) As of the Closing Date, to the best of the Seller's
knowledge, each Mortgaged Property (or the related
residential dwelling unit in the Underlying Mortgaged
Property, in the case of a Co-op Loan) is undamaged by
waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty so as to affect
adversely the value of the Mortgaged Property as security
for the Mortgage Loan or the use for which the premises
were intended.
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(12) Each Mortgage Loan at origination complied in all
material respects with applicable state and federal laws
and all applicable predatory and abusive lending laws,
including, without limitation, usury, equal credit
opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws and laws governing
prepayment penalties, and consummation of the
transactions contemplated hereby will not involve the
violation of any such laws.
(13) As of the Closing Date, neither the Seller nor any prior
holder of any Mortgage has modified the Mortgage Loan in
any material respect including as to prepayment penalties
(except that a Mortgage Loan may have been modified by a
written instrument that has been recorded or submitted
for recordation, if necessary, to protect the interests
of the Certificateholders and the original or a copy of
which has been delivered to the Trustee and is reflected
in the Mortgage Loan Schedule); satisfied, canceled or
subordinated such Mortgage Loan in whole or in part;
released the related Mortgaged Property in whole or in
part from the lien of such Mortgage Loan; or executed any
instrument of release, cancellation, modification (except
as expressly permitted above) or satisfaction with
respect thereto.
(14) With respect to Mortgage Loans which are not Co-op Loans,
a lender's policy of title insurance together with a
condominium endorsement and extended coverage
endorsement, if applicable (subject to exceptions
acceptable in the industry, including exceptions with
respect to surveys and endorsements), in an amount at
least equal to the Cut-off Date Principal Balance of each
such Mortgage Loan 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, and each such policy was issued by
a title insurer qualified to do business in the
jurisdiction where the related Mortgaged Property is
located and acceptable to FNMA or FHLMC and is in a form
acceptable to FNMA or FHLMC, which policy insures the
Seller and successor owners of indebtedness secured by
the related insured Mortgage, as to the first priority
lien, of the related Mortgage subject to the exceptions
set forth in paragraph (6) above; 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 that would impair the coverage
of such mortgage title insurance policy.
(15) With respect to Mortgage Loans that are not Co-op Loans,
to the best of the Seller's knowledge, as of the date of
origination all of the improvements that were included
for the purpose of determining the Appraised 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.
(16) To the best of the Seller's knowledge, as of the date of
origination no improvement located on or being part of
the Mortgaged Property is in violation of any applicable
zoning law or regulation. To the best of the Seller's
knowledge, as of the date of origination 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 and fire underwriting certificates, have been
made or obtained from the appropriate authorities, unless
the lack thereof would not have a material adverse effect
on the value of such Mortgaged Property, and the
Mortgaged Property is lawfully occupied under applicable
law.
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(17) The Mortgage Note and the related Mortgage are genuine,
and each is the legal, valid and binding obligation of
the maker thereof, enforceable (including as to any
prepayment penalty) in accordance with its terms and
under applicable law, except 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 equitable defenses and
to the discretion of the court before which any
proceeding therefor may be brought. To the best of the
Seller's knowledge, all parties to the Mortgage Note and
the Mortgage had legal capacity to execute the Mortgage
Note and the Mortgage and each Mortgage Note and Mortgage
have been duly and properly executed by such parties.
(18) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances
thereunder and 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, or closing or recording the
Mortgage Loans were paid.
(19) The related Mortgage contains customary and enforceable
provisions that 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.
(20) 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
Certificateholders to the trustee under the deed of
trust, except in connection with a trustee's sale after
default by the Mortgagor.
(21) 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 to the Seller have been
capitalized under the Mortgage or the related Mortgage
Note.
(22) The origination and underwriting practices used by the
Seller with respect to each Mortgage Loan have been in
all respects legal and customary in the mortgage lending
business.
(23) There is no pledged account or other security other than
real estate securing the Mortgagor's obligations.
(24) Each Mortgage Loan contains a customary "due on sale"
clause.
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(25) With respect to Mortgage Loans that are not Co-op Loans,
at the Cut-off Date, 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 and extended coverage and coverage for
such other hazards as are customary in the area where the
Mortgaged Property is located in an amount that is at
least equal to the lesser of (i) the maximum insurable
value of the improvements securing such Mortgage Loan or
(ii) the greater of (a) the outstanding principal balance
of the Mortgage Loan and (b) an amount such that the
proceeds of such policy shall be sufficient to prevent
the Mortgagor and/or the mortgagee from becoming a
co-insurer. If the Mortgaged Property is a condominium
unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. All such
individual insurance policies and all flood policies
referred to in item (26) below contain a standard
mortgagee clause naming the Seller or the original
mortgagee, or 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.
(26) With respect to Mortgage Loans that are not Co-op Loans,
if the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management
Agency as having 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, as amended.
(27) To the best of the Seller's knowledge, there is no
proceeding occurring, pending or threatened for the total
or partial condemnation of the Mortgaged Property (or
Underlying Mortgage Property, in the case of a Co-op
Loan).
(28) There is no material monetary default existing under any
Mortgage or the related Mortgage Note and, to the best of
the Seller's knowledge, there is no material event that,
with the passage of time or with notice and the
expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration
under the Mortgage or the related Mortgage Note; and the
Seller has not waived any default, breach, violation or
event of acceleration.
(29) Each Mortgaged Property (or Underlying Mortgage Property,
in the case of a Co-op Loan) is of a type described in
the Prospectus Supplement.
(30) Each Mortgage Loan is being serviced by the Servicer.
(31) With respect to any escrow advances associated with
delinquent property taxes and force placed hazard
insurance made prior to the Cut-Off Date, an amount
necessary to amortize such amounts has been added to the
monthly payment due each month on the related Mortgage
Note.
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(32) Prior to the approval of the Mortgage Loan application,
an appraisal of the related Mortgaged Property (or the
related residential dwelling unit in the Underlying
Mortgaged Property, in the case of a Co-op Loan) was
obtained from a qualified appraiser, duly appointed by
the originator, who had no interest, direct or indirect,
in the Mortgaged Property (or Underlying Mortgage
Property, in the case of a Co-op Loan) or in any loan
made on the security thereof, and whose compensation is
not affected by the approval or disapproval of the
Mortgage Loan; such appraisal is in a form acceptable to
FNMA and FHLMC.
(33) The Mortgage Loans were selected from among the
outstanding one- to four-family mortgage loans in the
Seller's portfolio at the Closing Date as to which the
representations and warranties made as to the Mortgage
Loans set forth in this Section 2.03(a)(vi) can be made.
(34) None of the Mortgage Loans is a graduated payment
mortgage loan or a growing equity mortgage loan, and no
Mortgage Loan is subject to a buydown or similar
arrangement.
(35) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions
thereof in the Prospectus Supplement.
(36) Each Mortgage Loan represents a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code (but
without regard to the rule in Treasury Regulation Section
1.860G-2(f)(2) that treats a defective obligation as a
qualified mortgage, or any substantially similar
successor provision) and applicable Treasury regulations
promulgated thereunder.
(37) With respect to each Co-op Loan, the stock that is
pledged as security for the Mortgage Loan is held by a
person as a tenant-stockholder (as defined in Section 216
of the Code) in a cooperative housing corporation (as
defined in Section 216 of the Code).
(38) Each prepayment penalty 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.
(39) The Seller has caused the servicer for each Mortgage Loan
to accurately and fully report its borrower credit files
(including favorable and unfavorable information) to
Equifax, Trans Union and Experian, or their successors,
in a timely manner.
(40) The Seller did not offer or arrange for proceeds from any
Mortgage Loan to be used to finance single-premium credit
insurance policies.
(41) No Mortgage Loan provides for a prepayment charge to be
paid following the fifth anniversary of the origination
date of such Mortgage Loan.
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(42) No Mortgage Loan is the subject of pending or final
foreclosure proceedings.
(43) No Mortgage Loan provides for interest other than at
either (i) a single fixed rate in effect throughout the
term of the Mortgage Loan or (ii) a "variable rate"
(within the meaning of Treasury Regulation Section
1.860G-1(a)(3)) in effect throughout the term of the
Mortgage Loan.
(44) As of the Closing Date, the Seller would not institute
foreclosure proceedings with respect to any of the
Mortgage Loans prior to the next scheduled payment date
for such Mortgage Loan based on such Mortgage Loan's
delinquency status.
(45) No Mortgage Loan is a "covered loan" within the meaning
of the Georgia Fair Lending Act of 2002, as amended.
(46) None of the Mortgage Loans are classified as (a) "high
cost" loans under the Home Ownership and Equity
Protection Act of 1994 or (b) a similarly classified loan
using different terminology under a law imposing
heightened regulatory scrutiny or additional legal
liability for residential mortgage loans having high
interest rates, points and/or fees.
(b) [RESERVED].
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(a) that materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the party discovering such breach shall give prompt notice thereof to the other
parties and to the Seller. Pursuant to the Sale Agreement, the Seller thereunder
shall within 90 days of the earlier of the discovery by or receipt of written
notice by the Seller from any party of a breach of any representation or
warranty set forth herein made that materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, it shall cure such
breach in all material respects and, if such breach is not so cured, shall, (i)
if such 90-day period expires prior to the second anniversary of the Closing
Date, remove such Deleted Mortgage Loan from the Trust Fund and substitute in
its place a Replacement Mortgage Loan, in the manner and subject to the
conditions set forth in this Section; or (ii) repurchase the affected Mortgage
Loan or Mortgage Loans from the Trustee at the Purchase Price in the manner set
forth below; provided, however, that any such substitution pursuant to (i) above
shall not be effected prior to the additional delivery to the Trustee of a
Request for Release substantially in the form of Exhibit M and shall not be
effected unless it is within two years of the Startup Date. The Seller shall
promptly reimburse the Trustee for any expenses reasonably incurred by the
Trustee in respect of enforcing the remedies for such breach. To enable the
Servicer to amend the Mortgage Loan Schedule, unless it cures such breach in a
timely fashion pursuant to this Section 2.03, the Seller shall promptly notify
the Servicer whether the Seller intends either to repurchase, or to substitute
for, the Mortgage Loan affected by such breach. With respect to the
representations and warranties described in this Section that are made to the
best of the Seller's knowledge, if it is discovered by any of the Seller, the
Servicer or the Trustee that the substance of such representation and warranty
is inaccurate and such inaccuracy materially and adversely affects the value of
the related Mortgage Loan, notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation or warranty, such inaccuracy
shall be deemed a breach of the applicable representation or warranty.
43
With respect to any Replacement Mortgage Loan or Loans, the Seller
shall deliver to the Trustee for the benefit of the Certificateholders the
related Mortgage Note, Mortgage and assignment of the Mortgage, and such other
documents and agreements as are required by Section 2.01, with the Mortgage Note
endorsed and the Mortgage assigned as required by Section 2.01. No substitution
will be made in any calendar month after the Determination Date for such month.
Scheduled Payments due with respect to Replacement Mortgage Loans in the Due
Period related to the Distribution Date on which such proceeds are to be
distributed shall not be part of the Trust Fund and will be retained by the
Seller on such Distribution Date. For the month of substitution,
Certificateholders are entitled to the Scheduled Payment due on any Deleted
Mortgage Loan for the related Due Period and thereafter the Seller shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The Trustee shall amend the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Replacement Mortgage Loan or Loans. Upon such substitution,
the Replacement Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the Seller shall be deemed to have made with
respect to such Replacement Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties set forth in Section 2.03(a)
with respect to such Mortgage Loan. No Replacement Mortgage Loan or Loans is a
"covered loan" within the meaning of the Georgia Fair Lending Act of 2002, as
amended. Upon any such substitution and the deposit to the Collection Account of
the amount required to be deposited therein in connection with such substitution
as described in the following paragraph, the Trustee shall release to the Seller
the Mortgage File relating to such Deleted Mortgage Loan and held for the
benefit of the Certificateholders and shall execute and deliver at the Seller's
direction such instruments of transfer or assignment as have been prepared by
the Seller, in each case without recourse, as shall be necessary to vest in the
Seller, or its respective designee, title to the Trustee's interest in any
Deleted Mortgage Loan substituted for pursuant to this Section 2.03.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
prepayment penalties with respect to such Replacement Mortgage Loans is less
than the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
prepayment penalties of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") shall be deposited into the Collection
Account by the Seller on the Determination Date for the Distribution Date
relating to the Prepayment Period during which the related Mortgage Loan became
required to be purchased or replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited in the Collection Account
pursuant to Section 3.08 on the Determination Date for the Distribution Date in
the month following the month during which the Seller became obligated to
repurchase or replace such Mortgage Loan and upon such deposit of the Purchase
Price and the receipt of a Request for Release in the form of Exhibit M hereto,
the Trustee shall release the related Mortgage File held for the benefit of the
Certificateholders to the Seller, and the Trustee shall execute and deliver at
such Person's direction the related instruments of transfer or assignment
prepared by the Seller, in each case without recourse, as shall be necessary to
transfer title from the Trustee for the benefit of the Certificateholders and
transfer the Trustee's interest to the Seller to any Mortgage Loan purchased
pursuant to this Section 2.03. It is understood and agreed that the obligation
under this Agreement of a Seller to cure, repurchase or replace any Mortgage
Loan as to which a breach has occurred and is continuing shall constitute the
sole remedy against the Depositor respecting such breach available to
Certificateholders, the Depositor or the Trustee.
(d) The representations and warranties set forth in this Section 2.03
shall survive delivery of the respective Mortgage Files to the Trustee for the
benefit of the Certificateholders.
SECTION 2.04. Representations and Warranties of the Servicer.
The Servicer hereby represents and warrants to the Depositor and the
Trustee as follows, as of the date hereof:
44
(i) The Servicer is a duly organized corporation and is
validly existing and in good standing under the laws of the state of
its incorporation and is duly authorized and qualified to transact any
and all business contemplated by this Agreement to be conducted by the
Servicer in any state in which a Mortgaged Property (or Underlying
Mortgaged Property, in the case of a Co-op Loan) is located or is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure its
ability to enforce each Mortgage Loan to service the Mortgage Loans in
accordance with the terms of this Agreement and to perform any of its
other obligations under this Agreement in accordance with the terms
hereof.
(ii) The Servicer has the full corporate power and authority
to service each Mortgage Loan, and to execute, deliver and perform, and
to enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action on
the part of the Servicer the execution, delivery and performance of
this Agreement; and this Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto, constitutes
a legal, valid and binding obligation of the Servicer, enforceable
against the Servicer in accordance with its terms, except that (a) the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Servicer and will not (A)
result in a material breach of any term or provision of the charter or
by-laws of the Servicer or (B) materially conflict with, result in a
material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument
to which the Servicer is a party or by which it may be bound, or (C)
constitute a material violation of any statute, order or regulation
applicable to the Servicer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Servicer; and the Servicer is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Servicer's
ability to perform or meet any of its obligations under this Agreement.
(iv) The Servicer is an approved servicer of conventional
mortgage loans for FNMA or FHLMC.
(v) No litigation is pending or, to the best of the Servicer's
knowledge, threatened, against the Servicer that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Servicer to service the Mortgage Loans
or to perform any of its other obligations under this Agreement in
accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Servicer of, or compliance by the Servicer with,
this Agreement or the consummation of the transactions contemplated
hereby, or if any such consent, approval, authorization or order is
required, the Servicer has obtained the same.
45
SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which are
not "Qualified Mortgages".
Upon discovery by the Depositor, the 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 promptly
(and in any event within 5 Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Depositor shall, at
the Depositor's option, either (i) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan
within 90 days of such discovery in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 2.03. The
Trustee shall reconvey to the Depositor the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty
contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, has caused to be
authenticated and delivered to or upon the order of the Depositor, in exchange
for the Mortgage Loans, Certificates duly authenticated by the Authenticating
Agent in authorized denominations evidencing ownership of the entire Trust Fund.
The Trustee agrees to hold the Trust Fund and exercise the rights referred to
above for the benefit of all present and future Holders of the Certificates and
to perform the duties set forth in this Agreement to the best of its ability, to
the end that the interests of the Holders of the Certificates may be adequately
and effectively protected.
SECTION 2.07. REMIC Elections.
(a) The Depositor hereby instructs and authorizes the Trustee to make
appropriate elections to treat the Trust Fund as comprising two REMICs (the
Lower-Tier REMIC and the Upper-Tier REMIC). This Agreement shall be construed so
as to carry out the intention of the parties that each REMIC created hereunder
be treated as a REMIC at all times prior to the date on which the Trust Fund is
terminated. The Closing Date is hereby designated as the "startup day" of each
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
The Lower-Tier REMIC shall hold as assets all property of the Trust Fund other
than the Lower-Tier REMIC Interests. Each of the Lower-Tier REMIC Regular
Interests is hereby designated a "regular interest" (within the meaning of
Section 860G(a)(1) of the Code) in the Lower-Tier REMIC. The Upper-Tier REMIC
shall hold as assets the several classes of uncertificated Lower-Tier REMIC
Regular Interests. Each Class of the Certificates (other than the Class R
Certificate) is hereby designated a "regular interest" (within the meaning of
Section 860G(a)(1) of the Code) in the Upper-Tier REMIC. The Class LT-R Interest
is hereby designated as the sole residual interest (within the meaning of
Section 860G(a)(2) of the Code) in the Lower-Tier REMIC. The Class UT-R Interest
is hereby designated as the sole residual interest (within the meaning of
Section 860G(a)(2) of the Code) in the Upper-Tier REMIC. The Class R Certificate
evidences ownership of the Class LT-R Interest and the Class UT-R Interest. All
interests described in this Section 2.07(a) shall be designated as such on the
Startup Day. Neither the Upper-Tier REMIC nor the Lower Tier REMIC shall issue
any interest other than the regular and residual interests designated in this
paragraph.
(b) Lower-Tier REMIC
46
The following table specifies the class designation, interest rate and
principal amount for each class of Lower-Tier REMIC Interest.
-------------------------------------------------------------------------------------------------------------------
Lower-Tier REMIC Interest Initial Balance Pass-Through Rate Related Mortgage Group
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
LTIA $63,905.00870931 4.75% Mortgage Group One
-------------------------------------------------------------------------------------------------------------------
LTIB $95,781,695.86222206 4.75% Mortgage Group One
-------------------------------------------------------------------------------------------------------------------
LTIA-X (1) 4.75% Mortgage Group One
-------------------------------------------------------------------------------------------------------------------
LTIA-P $2,464,396.79906863 (2) Mortgage Group One
-------------------------------------------------------------------------------------------------------------------
LTIIA $131,101.09485126 5.50% Mortgage Group One
-------------------------------------------------------------------------------------------------------------------
LTIIB $194,190,008.39027551 5.50% Mortgage Group One
-------------------------------------------------------------------------------------------------------------------
LTIIA-X (3) 5.50% Mortgage Group Two
-------------------------------------------------------------------------------------------------------------------
LTIIA-P $7,369,225.42487323 (2) Mortgage Group Two
-------------------------------------------------------------------------------------------------------------------
LT-R (4) (4) N/A
-------------------------------------------------------------------------------------------------------------------
(1) The Class LTIA-X Interest is an interest only interest, has no principal
balance, is not entitled to payments of principal and will bear interest on its
notional amount. The notional amount of the Class LTIA-X Interest shall equal
the Class IA-X Notional Amount.
(2) The Class LTIA-P Interest and Class LTIIA-P Interest are principal only
interests and are not entitled to payments of interest.
(3) The Class LTIIA-X Interest is an interest only interest, has no principal
balance, is not entitled to payments of principal and will bear interest on its
notional amount. The notional amount of the Class LTIIA-X Interest shall equal
the Class IIA-X Notional Amount.
(4) The Class LT-R Interest shall represent the sole class of residual interest
in the Lower-Tier REMIC. The Class LT-R Interest will not have a principal
amount or an interest rate. The Class LT-R Interest shall be represented by the
Class R Certificate.
Principal and interest shall be payable to, and shortfalls, losses and
prepayments are allocable to, the Class LTIA-P Interest as such amounts are
payable or allocable to the Class IA-P Certificates (determined as though the
aggregate Original Principal Balance of the Class IA-P Certificates was
$2,464,396.79906863).
Interest shall be payable to, and shortfalls and losses are allocable to, the
Class LTIA-X Interest as such amounts are payable or allocable to the Class IA-X
Certificates.
Principal and interest shall be payable to, and shortfalls, losses and
prepayments are allocable to, the Class LTIIA-P Interest as such amounts are
payable or allocable to the Class IIA-P Certificates (determined as though the
aggregate Original Principal Balance of the Class IIA-P Certificates was
$7,369,225.42487323).
47
Distributions shall be deemed to be made to the other Lower-Tier REMIC Regular
Interests first, so as to keep the Uncertificated Principal Balance of each
Lower-Tier REMIC Regular Interest ending with the designation "A" equal to 1% of
the excess of (x) the aggregate Stated Principal Balance of the Mortgage Loans
in the related Mortgage Group over (y) the aggregate class principal amounts of
(i) in the case of the Class LTIA Interest, the Class IA and Class R
Certificates, and, in the case of the Class LTIIA Interest, the Class IIA
Certificates and (ii) the Lower-Tier Regular Interest ending with the
designation "P" related to such Mortgage Group (except that if 1% of any such
excess is greater than the principal amount of the corresponding Lower-Tier
REMIC Regular Interest ending with the designation "A", the least amount of
principal shall be distributed to such Lower-Tier REMIC Regular Interests such
that the Lower-Tier REMIC Subordinated Balance Ratio is maintained); and second,
any remaining principal to the Lower-Tier REMIC Regular Interests ending with
the designation "B" in such a manner that the remaining principal balance of
each such Lower-Tier REMIC Regular Interest equals the excess of the aggregate
Stated Principal Balance of the Mortgage Loans in the related Mortgage Group
over the sum of the Uncertificated Principal Balances of the Lower-Tier REMIC
Regular Interests ending with the designation "A" or "P" which are related to
such Mortgage Group.
Realized Losses shall be applied after all distributions have been made on each
Distribution Date first, so as to keep the Uncertificated Principal Balance of
each Lower-Tier REMIC Regular Interest ending with the designation "A" equal to
1% of the excess of (x) the aggregate Stated Principal Balance of the Mortgage
Loans in the related Mortgage Group over (y) the aggregate class principal
amounts of (i) in the case of the Class LTIA Interest, the Class IA and Class R
Certificates, and, in the case of the Class LTIIA Interest, the Class IIA
Certificates and (ii) the Lower-Tier Regular Interest ending with the
designation "P" related to such Mortgage Group (except that if 1% of any such
excess is greater than the principal amount of the corresponding Lower-Tier
REMIC Regular Interest ending with the designation "A", the least amount of
Realized Losses shall be allocated to such Lower-Tier REMIC Regular Interests
such that the Lower-Tier REMIC Subordinated Balance Ratio is maintained); and
second, the remaining Realized Losses shall be allocated to the Lower-Tier REMIC
Regular Interests ending with the designation "B" in such a manner that the
remaining principal balance of each such Lower-Tier REMIC Regular Interest
equals the excess of the aggregate Stated Principal Balance of the Mortgage
Loans in the related Mortgage Group over the sum of the Uncertificated Principal
Balances of the Lower-Tier REMIC Regular Interests ending with the designation
"A" or "P" which are related to such Mortgage Group. All computations with
respect to the Lower-Tier REMIC Interests shall be taken out to eight decimal
places.
(c) Solely for the purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury Regulations, the "latest possible maturity date" of each "regular
interest" in each REMIC created hereunder is the Distribution Date immediately
following the latest scheduled maturity of any Mortgage Loan.
(d) The "tax matters person" with respect to each REMIC created
hereunder for purposes of the REMIC Provisions shall be the beneficial owner of
the Class R Certificate having the largest Percentage Interest of such Class;
provided, however, that such largest beneficial owner and, to the extent
relevant, each other Holder of a Class R Certificate, by its acceptance thereof,
irrevocably appoints the Servicer as its agent and attorney-in-fact to act as
"tax matters person" with respect to each REMIC created hereunder for purposes
of the REMIC provisions.
SECTION 2.08. Covenants of the Servicer.
The Servicer hereby covenants to each of the other parties to this
Agreement as follows:
(a) the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy;
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor or the
Trustee, any affiliate of the Depositor or the Trustee and prepared by the
Servicer pursuant to this Agreement will be inaccurate in any material respect;
48
SECTION 2.09. [RESERVED].
SECTION 2.10. [RESERVED].
SECTION 2.11. Permitted Activities of the Trust. The Trust is created
for the object and purpose of engaging in the Permitted Activities.
SECTION 2.12. Qualifying Special Purpose Entity. For purposes of SFAS
140, the parties hereto intend that the Trust shall be treated as a "qualifying
special purpose entity" as such term is used in SFAS 140 and any successor rule
thereto and its power and authority as stated in Section 2.11 of this Agreement
shall be limited in accordance with paragraph 35 thereof.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Servicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Servicer shall service
and administer the Mortgage Loans in accordance with Accepted Servicing
Practices. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property (or the stock allocated to a dwelling unit related to a Co-op Loan) and
assumptions of the Mortgage Notes and related Mortgages (but only in the manner
provided in this Agreement), (iii) to collect any Insurance Proceeds and other
Liquidation Proceeds and (iv) subject to Section 3.12(a), to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property (or
the stock allocated to a dwelling unit related to a Co-op Loan) securing any
Mortgage Loan; provided that, subject to Section 6.03, the Servicer shall not
take any action that is inconsistent with or prejudices the interests of the
Trust Fund or the Certificateholders in any Mortgage Loan serviced by it under
this Agreement or the rights and interests of the other parties to this
Agreement. The Servicer shall represent and protect the interest of the Trust
Fund in the same manner as it currently protects its own interest in mortgage
loans in its own portfolio in any claim, proceeding or litigation regarding a
Mortgage Loan, but in any case not in any manner that is a lesser standard than
that provided in the first sentence of this Section 3.01, and shall not make or
permit any modification, waiver or amendment of any term of any Mortgage Loan
which would cause either the Lower-Tier REMIC or the Upper-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of any tax under Section 860G(a)
or 860G(d) of the Code. Without limiting the generality of the foregoing, the
Servicer, in its own name or in the name of the Depositor and the Trustee, is
hereby authorized and empowered by the Depositor and the Trustee, when the
Servicer believes it appropriate in its reasonable judgment, to execute and
deliver, on behalf of the Trustee, the Depositor, the Certificateholders or any
of them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge and all other comparable instruments, with respect
to the Mortgage Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders. The Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery by
any or all of them as are necessary or appropriate to enable the Servicer to
service and administer the Mortgage Loans, including without limitation, any
powers of attorney. Upon receipt of such documents, the Depositor and/or the
Trustee shall execute such documents and deliver them to the Servicer.
49
In accordance with the standards of the preceding paragraph, the
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. All costs incurred by the Servicer, if any, in
effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balance under the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.
The Servicer shall deliver a list of Servicing Officers to the Trustee
by the Closing Date.
SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer.
(a) The Servicer may arrange for the subservicing of any Mortgage Loan
by a subservicer, which may be an affiliate (each, a "subservicer") pursuant to
a subservicing agreement (each, a "Subservicing Agreement"); provided, however,
that such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder.
Notwithstanding the provisions of any subservicing agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a subservicer or reference to actions taken through a subservicer
or otherwise, the Servicer shall remain obligated and liable to the Depositor,
the Trustee and the Certificateholders for the servicing and administration of
the Mortgage Loans in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such subservicing
agreements or arrangements or by virtue of indemnification from the subservicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Mortgage Loans. Every
subservicing agreement entered into by the Servicer shall contain a provision
giving any successor Servicer the option to terminate such agreement in the
event a successor Servicer is appointed. All actions of the each subservicer
performed pursuant to the related subservicing agreement shall be performed as
an agent of the Servicer with the same force and effect as if performed directly
by the Servicer.
(b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by a subservicer regardless of whether such
payments are remitted by the subservicer to the Servicer.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.
Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.
SECTION 3.04. Trustee to Act as Servicer.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its designee shall thereupon assume all of the rights and obligations of the
Servicer hereunder arising thereafter (except that the Trustee shall not be (i)
liable for losses of the Servicer pursuant to Section 3.10 hereof or any acts or
omissions of such predecessor Servicer hereunder, (ii) obligated to make
Advances if it is prohibited from doing so by applicable law, (iii) obligated to
effectuate repurchases or substitutions of Mortgage Loans hereunder, including
pursuant to Section 2.02 or 2.03 hereof, (iv) responsible for expenses of the
Servicer pursuant to Section 2.03 or (v) deemed to have made any representations
and warranties hereunder, including pursuant to Section 2.03 or the first
paragraph of Section 6.02 hereof). If the Servicer shall for any reason no
longer be the Servicer (including by reason of any Event of Default), the
Trustee (or any other successor servicer) may, at its option, succeed to any
rights and obligations of the Servicer under any subservicing agreement in
accordance with the terms thereof; provided, however, that the Trustee (or any
other successor servicer) shall not incur any liability or have any obligations
in its capacity as servicer under a subservicing agreement arising prior to the
date of such succession unless it expressly elects to succeed to the rights and
obligations of the Servicer thereunder; and the Servicer shall not thereby be
relieved of any liability or obligations under the subservicing agreement
arising prior to the date of such succession.
50
The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each subservicing agreement and the Mortgage Loans then being serviced and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.
SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Distribution Account.
(a) The Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing and subject to the
provisions of Section 3.01 hereof, the Servicer may in its discretion extend the
due dates for payments due on a Mortgage Note for a period not greater than 270
days. The Servicer shall waive a prepayment penalty in connection with the
prepayment of a Mortgage Loan in response to a request for such a waiver under
the following circumstances (but only under the following circumstances): (i)
Loss Mitigation; (ii) Assertion of Non-Compliance; (iii) Mortgagor hardship due
to an External Life Event; or (iv) to avoid or resolve active, pending or
threatened litigation involving the related Mortgage Loan. The Servicer shall
not be required to institute or join in litigation with respect to collection of
any payment (whether under a Mortgage, Mortgage Note or otherwise or against any
public or governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law.
(b) The Servicer shall establish and initially maintain, on behalf of
the Certificateholders, the Collection Account. The Servicer shall deposit into
the Collection Account daily, within two Business Days of receipt thereof, in
immediately available funds, the following payments and collections received or
made by it on and after the Cut-Off Date with respect to the Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on the
Mortgage Loans on or prior to the Cut-off Date;
(ii) all payments on account of interest on the Mortgage Loans
net of the related Servicing Fee permitted under Section 3.15, other
than interest due on the Mortgage Loans on or prior to the Cut-off
Date;
(iii) all Liquidation Proceeds, other than proceeds to be
applied to the restoration or repair of the Mortgaged Property (or
Underlying Mortgaged Property, in the case of a Co-op Loan) or released
to the Mortgagor in accordance with the Servicer's normal servicing
procedures;
(iv) all Compensating Interest;
(v) any amount required to be deposited by the Servicer
pursuant to Section 3.05(e) in connection with any losses on Permitted
Investments;
(vi) any amounts required to be deposited by the Servicer
pursuant to Section 3.10 hereof;
51
(vii) the Purchase Price and any Substitution Adjustment
Amount;
(viii) all Advances made by the Servicer pursuant to Section
4.01;
(ix) all prepayment penalties and late payment charges; and
(x) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of
assumption fees (i.e. fees related to the assumption of a Mortgage Loan upon the
purchase of the related Mortgaged Property or stock allocated to a dwelling unit
in the case of a Co-op Loan) if collected, need not be remitted by the Servicer.
In the event that the Servicer shall remit any amount not required to be
remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time withdraw or direct the Trustee, or such other
institution maintaining the Collection Account, to withdraw such amount from the
Collection Account, any provision herein to the contrary notwithstanding. Such
withdrawal or direction may be accomplished by delivering written notice thereof
to the Trustee, or such other institution maintaining the Collection Account,
that describes the amounts deposited in error in the Collection Account. The
Servicer shall maintain adequate records with respect to all withdrawals made
pursuant to this Section. All funds deposited in the Collection Account shall be
held in trust for the Certificateholders until withdrawn in accordance with
Section 3.08. In no event shall the Trustee incur liability for withdrawals from
the Collection Account at the direction of the Servicer.
The Servicer shall give notice to the Paying Agent and the Trustee of
the location of the Collection Account maintained by it when established and
prior to any change thereof.
(c) [RESERVED].
(d) The Paying Agent on behalf of the Servicer shall establish and
maintain, on behalf of the Certificateholders, the Distribution Account. The
Servicer shall, promptly upon receipt, deposit in the Distribution Account and
retain therein the following:
(i) the aggregate amount withdrawn by the Servicer pursuant to
the second paragraph of Section 3.08(b);
(ii) any amount required to be deposited by the Servicer
pursuant to Section 3.05(e) in connection with any losses on Permitted
Investments; and
(iii) the Repurchase Price paid by the Servicer pursuant to
Section 9.01.
The foregoing requirements for remittance by the Servicer and deposit
by the Servicer into the Distribution Account shall be exclusive. In the event
that the Servicer shall remit any amount not required to be remitted and not
otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may at any
time withdraw such amount from the Distribution Account, any provision herein to
the contrary notwithstanding. All funds deposited in the Distribution Account
shall be held by the Trustee or any Paying Agent, as applicable, in trust for
the Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Distribution Account at the direction of the
Servicer or any Paying Agent, as applicable. The Servicer or any Paying Agent,
as applicable, shall give notice to the Trustee of the location of the
Distribution Account when established and prior to any change thereof.
52
(e) The institution that maintains the Collection Account shall invest
the funds in such account, as directed by the Servicer in writing, in Permitted
Investments, which shall mature not later than the Business Day preceding the
related Servicer Remittance Date (except that if such Permitted Investment is an
obligation of the institution that maintains such Collection Account or is
otherwise immediately available, then such Permitted Investment shall mature not
later than the Servicer Remittance Date). All such Permitted Investments shall
be made in the name of the Trustee, for the benefit of the Certificateholders.
All income and gain net of any losses realized from amounts on deposit in the
Collection Account shall be for the benefit of the Servicer as servicing
compensation and shall be remitted to it monthly as provided herein. The amount
of any losses incurred in the Collection Account in respect of any such
investments shall be deposited by the Servicer in the Collection Account out of
the Servicer's own funds immediately as realized. The institution that maintains
the Distribution Account shall invest the funds in such account, as directed by
the Servicer in writing, in Permitted Investments, which shall mature not later
than the Business Day preceding the related Distribution Date (except that if
such Permitted Investment is an obligation of the institution that maintains
such Distribution Account or is otherwise immediately available, then such
Permitted Investment shall mature not later than the Distribution Date). All
such Permitted Investments shall be made in the name of the Trustee, for the
benefit of the Certificateholders. All income and gain net of any losses
realized from amounts on deposit in the Distribution Account shall be for the
benefit of the Servicer as servicing compensation and shall be remitted to it
monthly as provided herein. The amount of any losses incurred in the
Distribution Account in respect of any such investments shall be deposited by
the Servicer in the Distribution Account out of the Servicer's own funds
immediately as realized. The Trustee or the Paying Agent shall not be liable for
the amount of any loss incurred in respect of any investment or lack of
investment of funds held in the Collection Account or the Distribution Account
and made in accordance with this Section 3.05.
(f) The Servicer shall cause the party maintaining the Collection
Account or the Distribution Account, as the case may be, shall give at least 30
days advance notice to each of the other parties to this Agreement and each
Rating Agency of any proposed change of the location of the Collection Account
or the Distribution Account prior to any change thereof.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
To the extent required by the related Mortgage Note, the Servicer shall
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Servicer to compel a Mortgagor to establish an Escrow Account in
violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Servicer out of related collections for any payments made pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.10 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required by law or the terms of the related Mortgage or Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and terminate the
Escrow Account at the termination of this Agreement in accordance with Section
9.01 hereof. The Escrow Accounts shall not be a part of the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The Servicer shall afford the Depositor and the Trustee and their
counsel, agents and accountants reasonable access to all records and
documentation regarding the Mortgage Loans and all accounts, insurance policies
and other matters relating to this Agreement, such access being afforded without
charge, but only upon reasonable request and during normal business hours at the
offices of the Servicer designated by it.
53
Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.
SECTION 3.08. Permitted Withdrawals from the Collection Account and
Distribution Account.
(a) The Servicer (or the Depositor in the case of clauses (vi) and
(vii) below) may from time to time, make withdrawals from the related Collection
Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously paid
to or withheld by the Servicer), as servicing compensation in
accordance with Section 3.15, that portion of any payment of interest
that equals the Servicing Fee for the period with respect to which such
interest payment was made, and, as additional servicing compensation,
those other amounts set forth in Section 3.15;
(ii) to reimburse the Servicer for Advances made by it with
respect to the Mortgage Loans, such right of reimbursement pursuant to
this subclause (ii) being limited to amounts received on particular
Mortgage Loan(s) (including, for this purpose, Liquidation Proceeds)
that represent late recoveries of payments of principal and/or interest
on such particular Mortgage Loan(s) in respect of which any such
Advance was made;
(iii) to reimburse the Servicer for any Non-Recoverable
Advance previously made and, to the extent that such Non-Recoverable
Servicing Advance would constitute an "unanticipated expense" of the
Trust Fund within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii), any Non-Recoverable Servicing Advance;
(iv) to reimburse the Servicer from Insurance Proceeds for
Insured Expenses covered by the related Insurance Policy;
(v) pay the Servicer any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances, the Servicer's
right to reimbursement of Servicing Advances pursuant to this subclause
(v) with respect to any Mortgage Loan being limited to amounts received
on particular Mortgage Loan(s)(including, for this purpose, Liquidation
Proceeds and purchase and repurchase proceeds) that represent late
recoveries of the payments for which such advances were made pursuant
to Section 3.01 or Section 3.06;
(vi) to pay to the Depositor or the Servicer, as applicable,
with respect to each Mortgage Loan or property acquired in respect
thereof that has been purchased pursuant to Section 2.02, 2.03 or 3.12,
all amounts received thereon and not taken into account in determining
the related Stated Principal Balance of such repurchased Mortgage Loan;
(vii) to reimburse the Servicer or the Depositor for expenses
incurred by any of them in connection with the Mortgage Loans or
Certificates and reimbursable pursuant to Section 6.03 hereof;
(viii) to withdraw pursuant to Section 3.05 any amount
deposited in the Collection Account and not required to be deposited
therein; and
54
(ix) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 12:00 noon Pacific Standard Time on the
Servicer Remittance Date (or such earlier time on the Servicer Remittance Date
as the Servicer or the Paying Agent requires as specified in writing not later
than two Business Days prior to the Servicer Remittance Date, such earlier time
requirement being due to the operations of the Servicer's or Paying Agent's
designated Permitted Investment closing early on the Servicer Remittance Date),
the Servicer shall cause to be withdrawn from the Collection Account the Group I
Interest Funds (other than the amounts subtracted from such funds in such
definition) and the Group I Principal Funds (other than Non-Recoverable Advances
specified in item (v) of such definition), the Group II Interest Funds (other
than the amounts subtracted from such funds in such definition), the Group II
Principal Funds (other than Non-Recoverable Advances specified in item (v) of
such definition), to the extent on deposit, and such amount shall be deposited
in the Distribution Account.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account.
(b) The Servicer or the Paying Agent shall withdraw funds from the
Distribution Account for distribution to the Certificateholders in the manner
specified in this Agreement (and to withhold from the amounts so withdrawn, the
amount of any taxes that it is authorized to retain pursuant to the last
paragraph of Section 8.11). In addition, the Servicer may from time to time make
withdrawals from the Distribution Account for the following purposes:
(i) to withdraw pursuant to Section 3.05 any amount deposited
in the Distribution Account and not required to be deposited therein;
and
(ii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
SECTION 3.09. [RESERVED].
SECTION 3.10. Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, for each Mortgage Loan
(other than a Co-op Loan), hazard insurance with extended coverage in an amount
that is at least equal to the lesser of (i) the replacement value of the
improvements that are part of such Mortgaged Property and (ii) the greater of
(a) the outstanding principal balance of the Mortgage Loan and (b) an amount
such that the proceeds of such policy shall be sufficient to prevent the related
Mortgagor and/or mortgagee from becoming a co-insurer. Each such policy of
standard hazard insurance shall contain, or have an accompanying endorsement
that contains, a standard mortgagee clause. The Servicer shall also cause flood
insurance to be maintained on property acquired upon foreclosure or deed in lieu
of foreclosure of any Mortgage Loan, to the extent described below. Pursuant to
Section 3.05 hereof, any amounts collected by the Servicer under any such
policies (other than the amounts to be applied to the restoration or repair of
the related Mortgaged Property or property thus acquired or amounts released to
the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the Collection Account. Any cost incurred by the Servicer
in maintaining any such insurance shall not, for the purpose of calculating
monthly distributions to the Certificateholders or remittances to the Trustee
for their benefit, be added to the principal balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Servicer out of late payments by the related Mortgagor or
out of Liquidation Proceeds to the extent permitted by Section 3.08 hereof. It
is understood and agreed that no earthquake or other additional insurance is to
be required of any Mortgagor or maintained on property acquired in respect of a
Mortgage other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance. If the
Mortgaged Property is located at the time of origination of the Mortgage Loan in
a federally designated special flood hazard area and such area is participating
in the national flood insurance program, the Servicer shall cause flood
insurance to be maintained with respect to such Mortgage Loan. Such flood
insurance shall be in an amount equal to the lesser of (i) the original
principal balance of the related Mortgage Loan, (ii) the replacement value of
the improvements that are part of such Mortgaged Property, or (iii) the maximum
amount of such insurance available for the related Mortgaged Property under the
Flood Disaster Protection Act of 1973, as amended.
55
In the event that the Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Servicer shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Servicer is not required to exercise such
rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) has been conveyed or is proposed to be conveyed satisfies the terms
and conditions contained in the Mortgage Note and Mortgage related thereto and
the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Servicer is prohibited by law from
enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Servicer is authorized, subject to Section 3.11(b), to
take or enter into an assumption and modification agreement from or with the
Person to whom such property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Servicer
enters such agreement) by the applicable Required Insurance Policies. The
Servicer, subject to Section 3.11(b), is also authorized with the prior approval
of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Servicer shall not be deemed to be in default under this Section
3.11(a) by reason of any transfer or assumption that the Servicer reasonably
believes it is restricted by law from preventing.
56
(b) Subject to the Servicer's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.11(a) hereof, in any case in which a Mortgaged
Property (or stock allocated to a dwelling unit, in the case of Co-op Loan) has
been conveyed to a Person by a Mortgagor, and such Person is to enter into an
assumption agreement or modification agreement or supplement to the Mortgage
Note or Mortgage that requires the signature of the Trustee, or if an instrument
of release signed by the Trustee is required releasing the Mortgagor from
liability on the Mortgage Loan, the Servicer shall prepare and deliver or cause
to be prepared and delivered to the Trustee for signature and shall direct, in
writing, the Trustee to execute the assumption agreement with the Person to whom
the Mortgaged Property (or the stock allocated to a dwelling unit, in the case
of a Co-op Loan) is to be conveyed and such modification agreement or supplement
to the Mortgage Note or Mortgage or other instruments as are reasonable or
necessary to carry out the terms of the Mortgage Note or Mortgage or otherwise
to comply with any applicable laws regarding assumptions or the transfer of the
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) to such Person. In connection with any such assumption, no material
term of the Mortgage Note (including, but not limited to, the Mortgage Rate, the
amount of the Scheduled Payment, any prepayment penalty and any other term
affecting the amount or timing of payment on the Mortgage Loan) may be changed.
The Servicer shall notify the Trustee that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement, which in the case of the original shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Servicer as additional servicing compensation.
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds.
(a) The Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of Delinquent payments. In
connection with such foreclosure or other conversion, the Servicer shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration of any property
unless it shall determine (i) that such restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Collection Account pursuant to Section 3.08
hereof). The Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property (or stock allocated to a dwelling unit, in the case
of a Co-op Loan), as contemplated in Section 3.08 hereof. If the Servicer has
knowledge that a Mortgaged Property (or Underlying Mortgaged Property, in the
case of a Co-op Loan) that the Servicer is contemplating acquiring in
foreclosure or by deed-in-lieu of foreclosure is located within a one-mile
radius of any site with environmental or hazardous waste risks known to the
Servicer, the Servicer will, prior to acquiring the Mortgaged Property (or stock
allocated to a dwelling unit, in the case of a Co-op Loan), consider such risks
and only take action in accordance with Accepted Servicing Practices.
57
With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of "Wachovia Bank, N.A. as trustee." Pursuant to its
efforts to sell such REO Property, the Servicer shall either itself or through
an agent selected by the Servicer protect and conserve such REO Property in the
same manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Servicer and the
Certificateholders for the period prior to the sale of such REO Property. The
Servicer shall prepare a statement with respect to each REO Property that has
been rented showing the aggregate rental income received and all expenses
incurred in connection with the management and maintenance of such REO Property
at such times as is necessary to enable the Servicer to comply with the
reporting requirements of the REMIC Provisions. The net monthly rental income,
if any, from such REO Property shall be deposited in the Collection Account no
later than the close of business on each Determination Date. The Servicer shall
perform the tax reporting and withholding related to foreclosures, abandonments
and cancellation of indebtedness income as specified by Sections 1445, 6050J and
6050P of the Code by preparing and filing such tax and information returns, as
may be required.
In the event that the Trust Fund acquires any Mortgaged Property (or
stock allocated to a dwelling unit, in the case of a Co-op Loan) as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Servicer shall dispose of such Mortgaged Property (or stock allocated to a
dwelling unit, in the case of a Co-op Loan) prior to the expiration of three
years from the end of the year of its acquisition by the Trust Fund or, at the
expense of the Trust Fund, request, in accordance with applicable procedures for
obtaining an automatic extension, more than 60 days prior to the day on which
such three-year period would otherwise expire, an extension of the three-year
grace period, in which case the Servicer shall dispose of such Mortgaged
Property before such extension expires, unless the Trustee shall have been
supplied with an Opinion of Counsel (such Opinion of Counsel not to be an
expense of the Trustee) to the effect that the holding by the Trust Fund of such
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) subsequent to such three-year period or extension will not result in
the imposition of taxes on "prohibited transactions," as defined in section 860F
of the Code, of any of the Trust Fund, the Lower-Tier REMIC or the Upper-Tier
REMIC or cause either the Lower-Tier REMIC or the Upper-Tier REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding, in which
case the Trust Fund may continue to hold such Mortgaged Property (or stock
allocated to a dwelling unit, in the case of Co-op Loan) (subject to any
conditions contained in such Opinion of Counsel). Notwithstanding any other
provision of this Agreement, no Mortgaged Property (or stock allocated to a
dwelling unit, in the case of Co-op Loan) acquired by the Trust Fund shall be
rented (or allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the Trust Fund in such a manner or
pursuant to any terms that would (i) cause such Mortgaged Property(or stock
allocated to a dwelling unit, in the case of Co-op Loan) to fail to qualify as
"foreclosure property" within the meaning of section 860G(a)(8) of the Code or
(ii) subject any of the Trust Fund, the Lower-Tier REMIC or the Upper-Tier REMIC
to the imposition of any federal, state or local income taxes on the income
earned from such Mortgaged Property (or stock allocated to a dwelling unit, in
the case of Co-op Loan) under section 860G(c) of the Code or otherwise, unless
the Servicer or the Depositor has agreed to indemnify and hold harmless the
Trust Fund with respect to the imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property (or stock allocated to a
dwelling unit, in the case of Co-op Loan), shall be applied to the payment of
principal of, and interest on, the related defaulted Mortgage Loans (with
interest accruing as though such Mortgage Loans were still current) and all such
income shall be deemed, for all purposes in this Agreement, to be payments on
account of principal and interest on the related Mortgage Notes and shall be
deposited into the Collection Account. To the extent the income received during
a Prepayment Period is in excess of the amount attributable to amortizing
principal and accrued interest at the related Mortgage Rate on the related
Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
58
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of
any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.
The proceeds of any Liquidated Loan, as well as any recovery resulting from
a partial collection of Liquidation Proceeds or any income from an REO Property,
will be applied in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and Servicing Fees,
pursuant to Section 3.08(a)(v) or this Section 3.12; second, to reimburse the
Servicer for any unreimbursed Advances, pursuant to Section 3.08(a)(ii) or this
Section 3.12; third, to any prepayment penalties and then to accrued and unpaid
interest (to the extent no Advance has been made for such amount) on the
Mortgage Loan or related REO Property, at the Net Mortgage Rate to the Due Date
occurring in the month in which such amounts are required to be distributed; and
fourth, as a recovery of principal of the Mortgage Loan.
(b) On each Determination Date, the Servicer shall determine the respective
aggregate amounts of Excess Proceeds, if any, that occurred in the related
Prepayment Period.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit M. Upon receipt of such request, the Trustee or its designee shall
promptly release the related Mortgage File to the Servicer, and the Trustee or
its designee shall at the Servicer's written direction execute and deliver to
the Servicer the request for reconveyance, deed of reconveyance or release or
satisfaction of mortgage or such instrument releasing the lien of the Mortgage
in each case provided by the Servicer, together with the Mortgage Note with
written evidence of cancellation thereon. No expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be chargeable
to the Collection Account, the Distribution Account or the related subservicing
account. From time to time and as shall be appropriate for the servicing or
foreclosure of any Mortgage Loan, including for such purpose, collection under
any policy of flood insurance, any fidelity bond or errors or omissions policy,
or for the purposes of effecting a partial release of any Mortgaged Property (or
stock allocated to a dwelling unit, in the case of Co-op Loan) from the lien of
the Mortgage or the making of any corrections to the Mortgage Note or the
Mortgage or any of the other documents included in the Mortgage File, the
Trustee or its designee shall, upon delivery to the Trustee or its designee of a
Request for Release in the form of Exhibit M signed by a Servicing Officer,
release the Mortgage File to the Servicer. Subject to the further limitations
set forth below, the Servicer shall cause the Mortgage File or documents so
released to be returned to the Trustee or its designee when the need therefor by
the Servicer no longer exists, unless the Mortgage Loan is liquidated and the
proceeds thereof are deposited in the Collection Account, in which case the
Trustee or its designee shall deliver the Request for Release to the Servicer.
Each Request for Release may be delivered to the Trustee or its designee
(i) via mail or courier, (ii) via facsimile or (iii) by such other means,
including, without limitation, electronic or computer readable medium, as the
Servicer and the Trustee or its designee shall mutually agree. The Trustee or
its designee shall promptly release the related Mortgage File(s) within five (5)
to seven (7) Business Days of receipt of a properly completed Request for
Release pursuant to clauses (i), (ii) or (iii) above. Receipt of a properly
completed Request for Release shall be authorization to the Trustee or its
designee to release such Mortgage Files, provided the Trustee or its designee
has determined that such Request for Release has been executed, with respect to
clauses (i) or (ii) above, or approved, with respect to clause (iii) above, by
an authorized Servicing Officer of the Servicer, and so long as the Trustee or
its designee complies with its duties and obligations under the agreement. If
the Trustee or its designee is unable to release the Mortgage Files within the
period previously specified, the Trustee or its designee shall immediately
notify the Servicer indicating the reason for such delay, but in no event shall
such notification be later than five Business Days after receipt of a Request
for Release. If the Servicer is required to pay penalties or damages due to the
Trustee or its designee's negligent failure to release the related Mortgage File
or the Trustee or its designee's negligent failure to execute and release
documents in a timely manner, the Trustee or its designee, shall be liable for
such penalties or damages respectively caused by it.
59
On each day that the Servicer remits to the Trustee or its designee
Requests for Releases pursuant to clauses (ii) or (iii) above, the Servicer
shall also submit to the Trustee or its designee a summary of the total amount
of such Requests for Releases requested on such day by the same method as
described in such clauses (ii) and (iii) above.
If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property (or stock allocated to a dwelling unit, in the
case of Co-op Loan) as authorized by this Agreement, the Servicer shall deliver
or cause to be delivered to the Trustee or its designee, for signature, as
appropriate, any court pleadings, requests for trustee's sale or other documents
necessary to effectuate such foreclosure or any legal action brought to obtain
judgment against the Mortgagor on the Mortgage Note or the Mortgage or to obtain
a deficiency judgment or to enforce any other remedies or rights provided by the
Mortgage Note or the Mortgage or otherwise available at law or in equity.
Notwithstanding the foregoing, the Servicer shall cause possession of any
Mortgage File or of the documents therein that shall have been released by the
Trustee or its designee to be returned to the Custodian promptly after
possession thereof shall have been released by the Trustee or its designee
unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to the Mortgage Loan have been deposited in the Collection Account, and
the Servicer shall have delivered to the Trustee or its designee a Request for
Release in the form of Exhibit M or (ii) the Mortgage File or document shall
have been delivered to an attorney or to a public trustee or other public
official as required by law for purposes of initiating or pursuing legal action
or other proceedings for the foreclosure of the Mortgaged Property (or stock
allocated to a dwelling unit, in the case of Co-op Loan) and the Servicer shall
have delivered to the Trustee or its designee an Officer's Certificate of a
Servicing Officer certifying as to the name and address of the Person to which
the Mortgage File or the documents therein were delivered and the purpose or
purposes of such delivery.
SECTION 3.14. Documents, Records and Funds in Possession of Servicer to be
Held for the Trustee.
All Mortgage Files and funds collected or held by, or under the control of,
the Servicer in respect of any Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds, including but not
limited to, any funds on deposit in the Collection Account, shall be held by the
Servicer for and on behalf of the Trustee and shall be and remain the sole and
exclusive property of the Trustee, subject to the applicable provisions of this
Agreement. The Servicer also agrees that it shall not create, incur or subject
any Mortgage File or any funds that are deposited in the Collection Account or
Distribution Account or in any Escrow Account, or any funds that otherwise are
or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, a Mortgage Loan, except, however, that the Servicer shall
be entitled to set off against and deduct from any such funds any amounts that
are properly due and payable to the Servicer under this Agreement.
SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date,
plus any sums due to the Servicer pursuant to clause (ii) of the definition of
"Servicing Fee."
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Additional servicing compensation in the form of any Excess Proceeds,
assumption fees (i.e. fees related to the assumption of a Mortgage Loan upon the
purchase of the related Mortgaged Property (or stock allocated to a dwelling
unit, in the case of Co-op Loan)), and all income and gain net of any losses
realized from Permitted Investments in the Collection Account shall be retained
by the Servicer to the extent not required to be deposited in the Collection
Account pursuant to Sections 3.05, or 3.12(a) hereof. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance, as
required by Section 3.10 hereof and maintenance of the other forms of insurance
coverage required by Section 3.10 hereof) and shall not be entitled to
reimbursement therefor except as specifically provided in Sections 3.08 and 3.12
hereof.
SECTION 3.16. Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices of the Servicer designated by it. Nothing in this
Section shall limit the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of the Servicer to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
SECTION 3.17. Annual Statement as to Compliance.
The Servicer shall deliver to the Depositor, the Trustee on or before March
31 of each year beginning in 2004 or such other date in order to remain in
compliance with the Section 302 Requirements, an Officer's Certificate stating,
as to the signer thereof, that (i) a review of the activities of the Servicer
during the preceding calendar year and of the performance of the Servicer under
this Agreement has been made under such officer's supervision and (ii) to the
best of such officer's knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof and
(iii) to the best of such officer's knowledge, each subservicer has fulfilled
all its obligations under its Subservicing Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation specifying
each such default known to such officer and the nature and status thereof. The
Trustee shall forward a copy of each such statement to each Rating Agency.
Copies of such statement shall be provided by the Trustee to any
Certificateholder upon written request at the Certificateholder's expense,
provided such statement is delivered by the Servicer to the Trustee.
SECTION 3.18. Annual Independent Public Accountants' Servicing Statement;
Financial Statements.
On or before March 31 of each year beginning in 2004 or such other date in
order to remain in compliance with the Section 302 Requirements, the Servicer at
its expense shall cause a nationally recognized firm of independent public
accountants (who may also render other services to the Servicer or any affiliate
thereof) that is a member of the American Institute of Certified Public
Accountants to furnish a report to the Depositor and the Trustee in compliance
with the Uniform Single Attestation Program for Mortgage Bankers. Copies of such
report shall be provided by the Trustee to any Certificateholder upon written
request at the Certificateholder's expense, provided such report is delivered by
the Servicer to the Trustee.
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SECTION 3.19. [RESERVED].
SECTION 3.20. Periodic Filings.
(a) Promptly upon receipt of any report of the independent public
accountants required pursuant to Section 3.18, the Servicer shall review such
report. As part of the Form 10-K required to be filed pursuant to the terms of
this Agreement, the Servicer shall include such accountants report as well as a
report of any significant deficiencies relating to the Servicer's performance of
its obligations under this Agreement and any significant deficiencies relating
to the Servicer's compliance set forth in the report of the Servicer's certified
independent accountants described above.
(b) The Servicer shall prepare for filing, and execute, on behalf of the
Trust Fund, and file with the Securities and Exchange Commission, (i) within 15
days after each Distribution Date in each month, each Monthly Statement on Form
8-K under the Exchange Act, (ii) on or before March 31 of each year beginning in
2004 or such other date in order to remain in compliance with the Section 302
Requirements, a Form 10-K under the Exchange Act, including any certification
(the "Certification") required by the Section 302 Requirements, and (iii) any
and all reports, statements and information respecting the Trust Fund and/or the
Certificates required to be filed on behalf of the Trust Fund under the Exchange
Act. The Certification shall be executed by the senior officer in charge of
servicing of the Servicer. Upon such filing with the Securities and Exchange
Commission, the Servicer shall promptly deliver to the Trustee a copy of any
such executed report, statement or information. Prior to making any such filings
and certifications, the Servicer shall comply with the provisions set forth in
this Section. If permitted by applicable law and unless the Depositor otherwise
directs, the Servicer shall file a Form 15 under the Exchange Act as soon as it
is able to do so.
(c) It is the parties intent that compliance by the Servicer with
provisions of this Section will constitute compliance with the review required
by the Section 302 Requirements. In no event shall the provisions set forth in
this Section limit the ability of the Servicer (or the Trustee) to conduct
additional procedures or investigations determined by it to be necessary or
appropriate to comply with the Section 302 Requirements.
(d) The obligations set forth in paragraphs (a) through (c) of this Section
shall only apply with respect to periods for which the Servicer is obligated to
file Form 8-Ks and 10-Ks pursuant to paragraph (b) of this Section. In the event
a Form 15 is properly filed pursuant to paragraph (b) of this Section, there
shall be no further obligations under paragraphs (a) through (c) of this Section
commencing with the fiscal year in which the Form 15 is filed (other than the
obligations in paragraphs (a) and (b) of this Section to be performed in such
fiscal year that relate back to the prior fiscal year).
(e) The Servicer shall prepare, file and deliver Form 8-Ks required to be
filed under the Exchange Act and the Paying Agent shall execute on behalf of the
Depositor so long as no certification in respect of such Form 8-K is required by
the SEC. In no event shall the Trustee or any of its agents be obligated or
responsible for preparing, executing, filing or delivering in respect of the
Trust Fund or another party, either (A) any report or filing required by the SEC
to be prepared, executed, filed or delivered in respect of the Trust Fund or
another party (other than in the circumstances described in the previous
sentence) or (B) any certification in respect of a report or filing required by
the SEC.
(f) Not later than 15 calendar days before the date on which the Trust
Fund's annual report on Form 10-K is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission (or, if such day is
not a Business Day, the immediately preceding Business Day), the Paying Agent
will deliver to the Depositor an officer's certificate for the prior calendar
year substantially in the form of Exhibit G hereto.
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ARTICLE IV
DISTRIBUTIONS;
ADVANCES BY THE SERVICER
SECTION 4.01. Advances.
Subject to the conditions of this Article IV, the Servicer, as required
below, shall make an Advance and deposit such Advance in the Collection Account.
Each such Advance shall be remitted to the Collection Account no later than 1:00
p.m. Pacific Standard time on the Servicer Advance Date in immediately available
funds. The Servicer shall be obligated to make any such Advance only to the
extent that such advance would not be a Non-Recoverable Advance. If the Servicer
shall have determined that it has made a Non-Recoverable Advance or that a
proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee or the
Paying Agent for the benefit of the Certificateholders funds constituting the
remaining portion of such Advance, if applicable, and (ii) to the Depositor,
each Rating Agency and the Trustee or the Paying Agent an Officer's Certificate
setting forth the basis for such determination. The Servicer may, in its sole
discretion, make an Advance with respect to the principal portion of the final
Scheduled Payment on a Balloon Loan, but the Servicer is under no obligation to
do so; provided, however, that nothing in this sentence shall affect the
Servicer's obligation under this Section 4.01 to Advance the interest portion of
the final Scheduled Payment with respect to a Balloon Loan as if such Balloon
Loan were a fully amortizing Mortgage Loan. If a Mortgagor does not pay its
final Scheduled Payment on a Balloon Loan when due, the Servicer shall Advance
(unless it determines in its good faith judgment that such amounts would
constitute a Non-Recoverable Advance) a full month of interest (net of the
Servicing Fee) on the Stated Principal Balance thereof each month until its
Stated Principal Balance is reduced to zero.
In lieu of making all or a portion of such Advance from its own funds, the
Servicer may (i) cause to be made an appropriate entry in its records relating
to the Collection Account that any Amount Held for Future Distribution has been
used by the Servicer in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Collection Account to the Distribution
Account. Any funds so applied and transferred shall be replaced by the Servicer
by deposit in the Collection Account no later than the close of business on the
Servicer Advance Date on which such funds are required to be distributed
pursuant to this Agreement. The Servicer shall be entitled to be reimbursed from
the Collection Account for all Advances of its own funds made pursuant to this
Section as provided in Section 3.08. The obligation to make Advances with
respect to any Mortgage Loan shall continue until such Mortgage Loan is paid in
full or the related Mortgaged Property (or stock allocated to a dwelling unit,
in the case of Co-op Loan) or related REO Property has been liquidated or until
the purchase or repurchase thereof (or substitution therefor) from the Trust
Fund pursuant to any applicable provision of this Agreement, except as otherwise
provided in this Section 4.01.
SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment Interest
Shortfall, the Servicer shall, from amounts in respect of the Servicing Fee for
such Distribution Date, deposit into the Collection Account, as a reduction of
the Servicing Fee for such Distribution Date, no later than the Servicer Advance
Date immediately preceding such Distribution Date, an amount up to the
Prepayment Interest Shortfall; provided, however, that with respect to any
Distribution Date, the Servicer's obligation to deposit any such amount is
limited to an amount equal to the product of (i) one-twelfth of 0.125% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans with respect to
such Distribution Date; and in case of such deposit, the Servicer shall not be
entitled to any recovery or reimbursement from the Depositor, the Trustee, the
Trust Fund or the Certificateholders. With respect to any Distribution Date, to
the extent that the Prepayment Interest Shortfall exceeds Compensating Interest
(such excess, a "Non-Supported Interest Shortfall"), such Non-Supported Interest
Shortfall shall reduce the amount of interest payable to each Class of
Certificates, pro rata based upon the amount of interest each such Class would
otherwise be entitled to receive on such Distribution Date.
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SECTION 4.03. Distributions on the REMIC Interests.
On each Distribution Date, amounts on deposit in the Distribution Account
shall be treated for federal income tax purposes as applied to distributions on
the interests in the Lower-Tier REMIC in an amount sufficient to make the
distributions on the respective Certificates on such Distribution Date in
accordance with the provisions of Section 4.04.
SECTION 4.04. Distributions.
(a) On each Distribution Date, the Paying Agent shall apply an amount on
deposit in the Certificate Account equal to the Available Distribution Amount in
the following order of priority:
(i) [Reserved]
(ii) (A) the Group One Available Distribution Amount (other
than the Group One Class A-P Amount) shall be distributed to the Class IA
Certificateholders, Class IA-X Certificateholders (only with respect to
clause first) and the Class R Certificateholders, in respect of the Class
UT-R Interest, first, in the amounts distributable pursuant to clauses
(b)(i)(A), (C) and (E) below up to the amounts payable thereunder and
second, in the amounts distributable pursuant to (b)(ii)(A) below up to the
Non-PO Class IA Optimal Principal Amount and (b)(iii) below up to the
amounts payable thereunder and to the Class IA-P Certificates, the Group
One Class A-P Amount pursuant to (b)(ii)(A) below and (B) the Group Two
Available Distribution Amount (other than the Group Two Class A-P Amount)
shall be distributed to the Class IIA Certificateholders and Class IIA-X
Certificateholders (only with respect to clause first) first, in the
amounts distributable pursuant to clauses (b)(i)(B) and (D) below up to the
amounts payable thereunder and second, in the amounts distributable
pursuant to (b)(ii)(B) below up to the Non-PO Class IIA Optimal Principal
Amount and (b)(iv) below up to the amounts payable thereunder and to the
Class IIA-P Certificates, the Group Two Class A-P Amount pursuant to
(b)(ii)(B) below;
(iii) (A) the balance, if any, of the Group One Available
Distribution Amount shall be distributed, first, to the Class IA-P
Certificates, the portion of the Class A-P Shortfall Amount relating to the
Group One Mortgage Loans and second, to the Class IIA-P Certificates, the
portion of the Class A-P Shortfall Amount relating to the Group Two
Mortgage Loans, in accordance with paragraph (b)(v) below and (B) the
balance, if any, of the Group Two Available Distribution Amount shall be
distributed, first, to the Class IIA-P Certificates, the portion of the
Class A-P Shortfall Amount relating to the Group Two Mortgage Loans and
second, to the Class IA-P Certificates, the portion of the Class A-P
Shortfall Amount relating to the Group One Mortgage Loans, in accordance
with paragraph (b)(v) below;
(iv) subject to paragraph (b) below, to the Class B
Certificateholders, the balance, if any, of the Available Distribution
Amount after making the distributions provided for in paragraphs (i)
through (iii) above, in accordance with, and up to the amounts calculated
pursuant to, Section 4.04(d) below; and
(v) subject to paragraph (b) below, to the Class R
Certificateholders the balance, if any, of the Available Distribution
Amount remaining after the distributions provided for in paragraphs (i)
through (iv) above.
(b) Amounts payable to the Class A Certificateholders on any
Distribution Date shall be distributed as follows:
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(i) to the extent the amounts available for distribution
pursuant to paragraph (a)(ii)(A) clause first or (a)(ii)(B) clause
first, as applicable, are sufficient:
(A) to the Class IA Certificateholders, (1) the Class IA
Interest Accrual Amount plus (2) the Class IA Shortfall from
the preceding Distribution Date;
(B) to the Class IIA Certificateholders, (1) the Class IIA
Interest Accrual Amount plus (2) the Class IIA Shortfall from
the preceding Distribution Date;
(C) to the Class IA-X Certificateholders, (1) the Class
IA-X Interest Accrual Amount plus (2) the Class IA-X Shortfall
from the preceding Distribution Date;
(D) to the Class IIA-X Certificateholders, (1) the Class
IIA-X Interest Accrual Amount plus (2) the Class IIA-X
Shortfall from the preceding Distribution Date;
(E) to the Class R Certificateholders, (1) the Class R
Interest Accrual Amount plus (2) the Class R Shortfall from
the preceding Distribution Date;
(ii) (A) to the Class IA and Class R Certificateholders,
solely from the Group One Available Distribution Amount up to the
Non-PO Class IA Optimal Principal Amount, allocated among the Class IA
and Class R Certificates in accordance with the Non-PO Class IA
Principal Payment Rules and to the Class IA-P Certificates, the Group
One Class A-P Amount and (B) to the Class IIA Certificateholders,
solely from the Group Two Available Distribution Amount up to the
Non-PO Class IIA Optimal Principal Amount, allocated among the Class
IIA Certificates in accordance with the Non-PO Class IIA Principal
Payment Rules and to the Class IIA-P Certificates, the Group Two Class
A-P Amount;
(iii) to the extent that the Group One Available Distribution
Amount allocable to the Class IA, Class IA-X and Class R Certificates
is insufficient to make distributions pursuant to paragraphs (b)(i)(A),
(C) and (E) or the portion of the Group One Available Distribution
Amount remaining after giving effect to the distributions in (b)(i)
above is insufficient to distribute in full to the Class IA and Class R
Certificateholders amounts described in (b)(ii)(A) above (such
shortfall, the "Class IA Deficiency Amount") and the Group Two
Available Distribution Amount remaining after giving effect to the
distributions in (b)(i) above exceeds the amount required to distribute
in full to the Class IIA Certificateholders the amounts described in
(b)(ii)(B) above, such excess shall be distributed in reduction of the
Class IA Deficiency Amount in application first to amounts payable
pursuant to paragraph (b)(i) and second to amounts payable pursuant to
paragraph (b)(ii);
(iv) to the extent that the Group Two Available Distribution
Amount allocable to the Class IIA and Class IIA-X Certificates is
insufficient to make distributions pursuant to paragraphs (b)(i)(B) and
(D) or the portion of the Group Two Available Distribution Amount
remaining after giving effect to the distributions in (b)(i) above is
insufficient to distribute in full to the Class IIA Certificateholders
amounts described in (b)(ii)(B) above (such shortfall, the "Class IIA
Deficiency Amount") and the Group One Available Distribution Amount
remaining after giving effect to the distributions in (b)(i) above
exceeds the amount required to distribute in full to the Class IA and
Class R Certificateholders the amounts described in (b)(ii)(A) above,
such excess shall be distributed in reduction of the Class IIA
Deficiency Amount in application first to amounts payable pursuant to
paragraph (b)(i) and second to amounts payable pursuant to paragraph
(b)(ii);
(v) to the Class IA-P Certificates from amounts available
pursuant to paragraph (a)(iii) the portion of the Class A-P Shortfall
Amount relating to the Group One Mortgage Loans and to the Group IIA-P
Certificates from amounts available pursuant to paragraph (a)(iii) the
portion of the Class A-P Shortfall Amount relating to the Group Two
Mortgage Loans; provided, however, that any amount distributed pursuant
to this Section 4.04(b)(v) shall not cause a further reduction in the
principal balance of the Class IA-P Certificates or the Class IIA-P
Certificates, as applicable;
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(vi) If the Group One Available Distribution Amount is
insufficient to make the distributions set forth in paragraphs
(b)(i)(A), (C) and (E) above, the Paying Agent shall distribute the
Group One Available Distribution Amount to the Class IA, Class IA-X and
Class R Certificateholders pro rata in accordance with the amounts
otherwise distributable to them pursuant to paragraphs (b)(i)(A), (C)
and (E) above. If the Group Two Available Distribution Amount is
insufficient to make the distributions set forth in paragraphs
(b)(i)(B) and (D) above, the Paying Agent shall distribute the Group
Two Available Distribution Amount to the Class IIA and Class IIA-X
Certificateholders pro rata in accordance with the amounts otherwise
distributable to them pursuant to paragraphs (b)(i)(B) and (D) above;
and
(vii) In addition to the foregoing distributions, the Class IA
or Class IIA Certificates or the Class R Certificates (in respect of
the Class UT-R Interest) may receive additional principal distributions
on any Distribution Date prior to the Credit Support Depletion Date
under the circumstances specified in (A) and (B) below:
(A) On any Distribution Date on or after the date on which
the aggregate Outstanding Certificate Principal Balance of the
Class IA and Class R Certificates or the Outstanding Certificate
Principal Balance of the Class IIA Certificates has been reduced
to zero, all principal (in excess of that needed to reduce the
aggregate Outstanding Certificate Principal Balance of the Class
IA and Class R Certificates or the Outstanding Certificate
Principal Balance of the Class IIA Certificates to zero and
excluding any amounts payable to the Class A-P Certificates) on
the Mortgage Loans in the Mortgage Group relating to such Class A
Certificates that are no longer outstanding will be paid as
principal to the remaining Class A Certificates (other than the
Class A-P Certificates) in accordance with Section 4.04(b)(ii)(A)
or 4.04(b)(ii)(B), as applicable, in reduction of the Outstanding
Certificate Principal Balances thereof, provided that on such
Distribution Date either (a) the Aggregate Subordinated
Percentage for such Distribution Date is less than 200% of the
initial Aggregate Subordinate Percentage, or (b) the average
outstanding Stated Principal Balance of the Mortgage Loans in
either Mortgage Group delinquent 60 days or more over the prior
six months, as a percentage of the corresponding Group One or
Group Two Subordinated Amount, is greater than or equal to 50%.
For purposes of the foregoing, the "Aggregate Subordinated
Percentage" for any Distribution Date is equal to the aggregate
Outstanding Certificate Principal Balance of the Subordinated
Certificates immediately prior to such Distribution Date divided
by the aggregate Scheduled Principal Balance of all of the
Mortgage Loans immediately prior to such Distribution Date.
(B) If on any Distribution Date on which the aggregate
Outstanding Certificate Principal Balance of the Class IA and
Class R or Class IIA Certificates would be greater than the
excess of the Group One Mortgage Pool Principal Balance or the
Group Two Mortgage Pool Principal Balance, as applicable, over
the Outstanding Certificate Principal Balance of the Class A-P
Certificates corresponding to the related Mortgage Group (the
"Undercollateralized Group"), after giving effect to
distributions to be made on such Distribution Date, the portion
of the Available Distribution Amount in respect of principal on
the Mortgage Loans in other Mortgage Group (the
"Overcollateralized Group") otherwise allocable to the
Subordinated Certificates will be distributed to the Classes of
Class A Certificates (other than the Class A-P Certificates)
relating to the Undercollateralized Group (in accordance with the
priorities set forth in Section 4.04(b)(ii)), in reduction of the
principal balances thereof, until the aggregate principal balance
of the Certificates included in the Undercollateralized Group is
equal to the related Mortgage Pool Principal Balance. Moreover,
the Available Distribution Amount with respect to the
Overcollateralized Group will be further reduced (after
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distributions of interest to the Class A Certificates included in
the Overcollateralized Group) in an amount equal to one month's
interest on the amount by which the Undercollateralized Group is
undercollateralized at 4.75% per annum (if Mortgage Group One is
the Undercollateralized Group) or 5.50% per annum (if Mortgage
Group Two is the Undercollateralized Group), plus any shortfall
of such amounts from prior Distribution Dates; provided, however,
that in no event shall the Available Distribution Amount with
respect to the Overcollateralized Group on any Distribution Date
be reduced by more than the sum of (i) the overcollateralized
amount with respect to the Overcollateralized Group and (ii)
interest thereon at the applicable Remittance Rate. Such amounts
will be distributed to the applicable Classes of Certificates in
the priority of interest payable on such Distribution Date.
(c) [Reserved]
(d) Amounts payable on any Distribution Date to the Class B
Certificateholders pursuant to Section 4.04(a)(iv) shall be distributed in the
following priority:
(1) first, to the Class B-1 Certificateholders, up to an
amount equal to (A) the Class B-1 Interest Accrual Amount plus (B) the Class B-1
Shortfall from the preceding Distribution Date plus (C) the pro rata portion, if
any, of the Subordinated Optimal Principal Amount allocable to the Class B-1
Certificates in accordance with Section 4.04(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-1 Certificates;
(2) second, to the Class B-2 Certificateholders, up to an
amount equal to (A) the Class B-2 Interest Accrual Amount plus (B) the Class B-2
Shortfall from the preceding Distribution Date plus (C) the pro rata portion, if
any, of the Subordinated Optimal Principal Amount allocable to the Class B-2
Certificates in accordance with Section 4.04(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-2 Certificates plus
(E) any portion of the Subordinated Optimal Principal Amount allocated to the
Class B-1 Certificates in excess of the Outstanding Certificate Principal
Balance of such Class;
(3) third, to the Class B-3 Certificateholders, up to an
amount equal to (A) the Class B-3 Interest Accrual Amount plus (B) the Class B-3
Shortfall from the preceding Distribution Date plus (C) the pro rata portion, if
any, of the Subordinated Optimal Principal Amount allocable to the Class B-3
Certificates in accordance with Section 4.04(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-3 Certificates plus
(E) any portion of the Subordinated Optimal Principal Amount allocated to the
Class B-2 Certificates in excess of the Outstanding Certificate Principal
Balance of such Class;
(4) fourth, to the Class B-4 Certificateholders, up to an
amount equal to (A) the Class B-4 Interest Accrual Amount plus (B) the Class B-4
Shortfall from the preceding Distribution Date plus (C) the pro rata portion, if
any, of the Subordinated Optimal Principal Amount allocable to the Class B-4
Certificates in accordance with Section 4.04(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-4 Certificates plus
(E) any portion of the Subordinated Optimal Principal Amount allocated to the
Class B-3 Certificates in excess of the Outstanding Certificate Principal
Balance of such Class;
(5) fifth, to the Class B-5 Certificateholders, up to an
amount equal to (A) the Class B-5 Interest Accrual Amount plus (B) the Class B-5
Shortfall from the preceding Distribution Date plus (C) the pro rata portion, if
any, of the Subordinated Optimal Principal Amount allocable to the Class B-5
Certificates in accordance with Section 4.04(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-5 Certificates plus
(E) any portion of the Subordinated Optimal Principal Amount allocated to the
Class B-4 Certificates in excess of the Outstanding Certificate Principal
Balance of such Class; and
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(6) sixth, to the Class B-6 Certificateholders, up to an
amount equal to (A) the Class B-6 Interest Accrual Amount plus (B) the Class B-6
Shortfall from the preceding Distribution Date plus (C) the pro rata portion, if
any, of the Subordinated Optimal Principal Amount allocable to the Class B-6
Certificates in accordance with Section 4.04(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-6 Certificates plus
(E) any portion of the Subordinated Optimal Principal Amount allocated to the
Class B-5 Certificates in excess of the Outstanding Certificate Principal
Balance of such Class.
(e) On each Distribution Date, the Subordinated Optimal Principal Amount
shall be allocated among the Classes of Subordinated Certificates entitled,
pursuant to the next succeeding sentence, to an allocation of principal on such
Distribution Date, pro rata based upon the Outstanding Certificate Principal
Balances of all such Classes so entitled. With respect to the Subordinated
Certificates, on each Distribution Date, principal shall be distributable to (1)
any Class of Subordinated Certificates which has current Credit Support (before
giving effect to any distribution of principal and any Realized Losses allocable
on such Distribution Date) greater than or equal to the Original Credit Support
for such Class; (2) the Class having the lowest numerical class designation of
any outstanding Class of Subordinated Certificates which does not meet the
criteria in (1) above; and (3) the Class B-6 Certificates if all other
outstanding Classes of Subordinated Certificates meet the criteria in (1) above
or if no other Class of Subordinated Certificates is outstanding; provided,
however, that no Class of Subordinated Certificates shall receive any
distributions of principal if any Class of Subordinated Certificates having a
lower numerical class designation than such Class fails to meet the criteria in
(1) above.
(f) Allocation of Realized Losses.
(A) Prior to each Determination Date, the Servicer shall
determine (i) the total amount of Realized Losses, if any, incurred
during the related Prepayment Period; (ii) whether and to what
extent such Realized Losses constitute Excess Losses; and (iii) the
respective portions of such Realized Losses allocable to interest
and to principal.
(B) The principal portion of any Realized Losses other than
Excess Losses shall be allocated as follows: first, to the Class B-6
Certificates until the Outstanding Certificate Principal Balance of
the Class B-6 Certificates has been reduced to zero; second, to the
Class B-5 Certificates until the Outstanding Certificate Principal
Balance of the Class B-5 Certificates has been reduced to zero;
third, to Class B-4 Certificates until the Outstanding Certificate
Principal Balance of the Class B-4 Certificates has been reduced to
zero; fourth, to the Class B-3 Certificates until the Outstanding
Certificate Principal Balance of the Class B-3 Certificates has been
reduced to zero; fifth, to the Class B-2 Certificates until the
Outstanding Certificate Principal Balance of the Class B-2
Certificates has been reduced to zero; sixth, to the Class B-1
Certificates until the Outstanding Certificate Principal Balance of
the Class B-1 Certificates has been reduced to zero; and seventh,
(X) if the Realized Loss has occurred with respect to a Group One
Mortgage Loan, to the Class IA and Class R Certificates on a pro
rata basis until the Outstanding Certificate Principal Balance of
each such Class has been reduced to zero or (Y) if the Realized Loss
has occurred with respect to a Group Two Mortgage Loan, to the Class
IIA Certificates, until the aggregate Outstanding Certificate
Principal Balance of the Class IIA Certificates has been reduced to
zero; provided, however, that if a Realized Loss occurs with respect
to a Discount Mortgage Loan (a) the amount of such Realized Loss
equal to the product of (i) the amount of such Realized Loss and
(ii) the PO Percentage with respect to such Discount Mortgage Loan
will be allocated to the Class IA-P Certificates (if the Realized
Loss occurred with respect to a Group One Mortgage Loan), or to the
Class IIA-P Certificates (if the Realized Loss occurred with respect
to the Group Two Mortgage Loan) and (b) the remainder of such
Realized Loss will be allocated as described above. The principal
portion of any Excess Losses shall be allocated without priority
among (i) all Classes of Subordinated Certificates and (ii) (a) the
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Class IA and Class R Certificates (if the Excess Loss occurred with
respect to a Group One Mortgage Loan), or (b) the Class IIA
Certificates (if the Excess Loss occurred with respect to a Group
Two Mortgage Loan), pro rata based upon their respective Outstanding
Certificate Principal Balances; provided, however, that the
applicable PO Percentage of any Excess Losses on the Discount
Mortgage Loans shall be allocated to the Class IA-P Certificates (if
the Excess Loss occurred with respect to a Group One Mortgage Loan),
or to the Class IIA-P Certificates (if the Excess Loss occurred with
respect to a Group Two Mortgage Loan). For purposes of the foregoing
sentence, each Class of Subordinated Certificates will be deemed to
have an Outstanding Certificate Principal Balance (and to accrue
interest thereon) equal to the actual Outstanding Certificate
Principal Balance thereof times a fraction, the numerator of which
is the Group One Subordinated Amount (for a loss on a Group One
Mortgage Loan) or the Group Two Subordinated Amount (for a loss on a
Group Two Mortgage Loan), and the denominator of which is the
aggregate of the Group One Subordinated Amount and the Group Two
Subordinated Amount.
(C) As used herein, an allocation of a Realized Loss on a "pro
rata basis" among two or more specified Classes of Certificates
means an allocation on a pro rata basis, among the various Classes
so specified, to each such Class of Certificates on the basis of
their Outstanding Certificate Principal Balances prior to giving
effect to distributions to be made on such Distribution Date. All
Realized Losses and all other losses allocated to a Class of
Certificates hereunder will be allocated among the Certificates of
such Class in proportion to the Percentage Interests evidenced
thereby.
(D) In the event that a recovery is made with respect to any
Realized Loss, the amount of such recovery shall be treated as a
Principal Prepayment and deposited into the Collection Account and
distributed on the applicable Distribution Date.
(g) Subject to Section 9.02 hereof respecting the final distribution, on
each Distribution Date the Paying Agent shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if (i) such Holder has so
notified the Paying Agent at least 5 Business Days prior to the related Record
Date and (ii) such Holder shall hold 100% of a Class of Regular Certificates or
Certificates with an aggregate Initial Certificate Balance of $1,000,000 or
more, or, if not, by check mailed by first Class mail to such Certificateholder
at the address of such holder appearing in the Certificate Register.
Notwithstanding the foregoing, but subject to Section 9.02 hereof respecting the
final distribution, distributions with respect to Certificates registered in the
name of a Depository shall be made to such Depository in immediately available
funds.
Not later than the earlier of (i) three Business Days after the
Determination Date and (ii) the second Business Day prior to each Distribution
Date, the Servicer shall prepare and deliver a report to the Paying Agent in the
form of a computer readable magnetic tape (or by such other means as the
Servicer and Paying Agent may agree from time to time) containing such data and
information such as to permit the Servicer or the Paying Agent to prepare the
Monthly Statement to Certificateholders and make the required distributions for
the related Distribution Date (the "Remittance Report").
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SECTION 4.05. Monthly Statements to Certificateholders.
(a) Not later than the earlier of (i) three Business Days after the
Determination Date and (ii) the second Business Day prior to each Distribution
Date, the Servicer shall send to the Paying Agent (in such format as may be
mutually agreed) the relevant information for purposes of this Section 4.05. Not
later than the Distribution Date, the Paying Agent shall prepare and cause to be
made available on its website located at xxx.xxxxxxxx.xxx/xxx or upon request
shall send to each Holder of a Class of Certificates of the Trust Fund, the
Servicer and the Depositor a statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the aggregate
amount of any Principal Prepayments included therein and (B) the
aggregate of all scheduled payments of principal included therein and
(C) the aggregate amount of prepayment penalties, if any and (E) the
aggregate amount of late payment charges;
(ii) the amount of such distribution to Holders of each Class
allocable to interest, together with any Non-Supported Interest
Shortfalls allocated to each Class;
(iii) [Reserved];
(iv) the Outstanding Certificate Principal Balance of each
Class after giving effect (i) to all distributions allocable to
principal on such Distribution Date and (ii) the allocation of any
Realized Loss for such Distribution Date;
(v) the Pool Stated Principal Balance for such Distribution
Date;
(vi) the related amount of the Servicing Fee paid to or
retained by the Servicer;
(vii) the Pass-Through Rate for each Class of Certificates for
such Distribution Date;
(viii) the Net Mortgage Rates for each of the Group One
Mortgage Loans and the Group Two Mortgage Loans;
(ix) the amount of Advances (calculated as of the related
Determination Date) for each Class of Certificates included in the
distribution on such Distribution Date;
(x) the cumulative amount of Realized Losses;
(xi) the amount of Realized Losses applied to each class of
Certificates Group with respect to such Distribution Date;
(xii) the number and aggregate principal amounts of Mortgage
Loans in each Loan Group (A) Delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
days, and (B) in foreclosure and Delinquent (1) 31 to 60 days, (2) 61
to 90 days and (3) 91 or more days, in each case as of the close of
business on the last day of the calendar month preceding such
Distribution Date;
(xiii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month in each Loan Group, the
loan number and Stated Principal Balance of such Mortgage Loan as of
the close of business on the last day of the calendar month preceding
such Distribution Date and the date of acquisition thereof;
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(xiv) the total number and principal balance of any REO
Properties in each Loan Group as of the close of business on the last
day of the calendar month preceding such Distribution Date;
(xv) the aggregate Stated Principal Balance of all Liquidated
Loans in each Loan Group as of the preceding Distribution Date;
(xvi) with respect to any Liquidated Loan in each Loan Group,
the loan number and Stated Principal Balance relating thereto as of the
preceding Distribution Date;
(xvii) [Reserved]
(xviii) [Reserved]
(xix) the number and Stated Principal Balance (as of the
preceding Distribution Date) of any Mortgage Loans with respect to each
Loan Group which were purchased or repurchased during the preceding Due
Period and since the Cut-off Date;
(xx) the aggregate number of Mortgage Loans (a) which have
been modified, (b) which are subject to a deed-in-lieu of foreclosure
and (c) for which a short-payoff has occurred;
(xxi) the year-to-date numbers for 4.05(a)(xx)(a), (b) and (c)
above, by number of loans;
(xxii) [Reserved]
(xxiii) the amount and purpose of any withdrawal from the
Collection Account pursuant to Section 3.08(a)(vii);
(xxiv) the number of Mortgage Loans with respect to which (A)
a reduction in the Mortgage Rate has occurred or (B) the related
Mortgagor's obligation to repay principal and interest on a monthly
basis has been suspended or reduced pursuant to the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended, or the California
Military and Veterans Code, as amended; and the amount of interest and
principal not required to be paid with respect to any such Mortgage
Loans during the related Due Period as a result of such reductions,
both in the aggregate and for each Class of Certificates.
(b) The Servicer, either directly or through any Paying Agent, will make
available a copy of each statement provided pursuant to this Section 4.05 to
each Rating Agency.
(c) Within a reasonable period of time after the end of each calendar year
and upon written request, the Servicer, either directly or through any Paying
Agent, shall cause to be furnished to each Person who at any time during the
calendar year was a Certificateholder, a statement containing the information
set forth in clauses (a)(i), (a)(ii) and (a)(xxiv) of this Section 4.05
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Servicer, either
directly or through any Paying Agent, shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by the
Servicer, either directly or through any Paying Agent, pursuant to any
requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Servicer, either
directly or through any Paying Agent, shall furnish to the Holders of the Class
R Certificate the Forms 1066 and each Form 1066Q and shall respond promptly to
written requests made not more frequently than quarterly by any Holder of Class
R Certificate with respect to the following matters:
71
(i) The original projected principal and interest cash flows
on the Closing Date on each Class of regular and residual interests
created hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(ii) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each Class of
regular and residual interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and interest
cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each Class of
regular or residual interests created hereunder and to the Mortgage
Loans, together with each constant yield to maturity used in computing
the same;
(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of the
REMICs with respect to such regular interests or bad debt deductions
claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the
REMICs; and
(vii) Any taxes (including penalties and interest) imposed on
the REMICs, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above shall
be provided by the Depositor pursuant to Section 8.11.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:
Original Certificate
Minimum Integral Multiples in Principal Balance or
Class Denomination Excess of Minimum Original Notional Balance CUSIP
------- -------------- ----------------------- ------------------------- -----
IA $25,000.00 $1.00 $ 89,455,000.00 161542 CY 9
IA-X $25,000.00 $1.00 $ 4,999,051.00 161542 CZ 6
IA-P $25,000.00 $1.00 $ 2,464,396.00 161542 DA 0
IIA $25,000.00 $1.00 $181,211,000.00 161542 DB 8
IIA-X $25,000.00 $1.00 $ 5,975,909.00 161542 DC 6
IIA-P $25,000.00 $1.00 $ 7,369,225.00 161542 DD 4
B-1 $25,000.00 $1.00 $ 6,000,000.00 161542 DF 9
72
[STUBBED]
Original Certificate
Minimum Integral Multiples in Principal Balance or
Class Denomination Excess of Minimum Original Notional Balance CUSIP
------- -------------- ----------------------- ------------------------- -----
B-2 $25,000.00 $1.00 $ 4,500,000.00 161542 DG 7
B-3 $25,000.00 $1.00 $ 3,900,000.00 161542 DH 5
B-4 $25,000.00 $1.00 $ 2,100,000.00 161542 DJ 1
B-5 $25,000.00 $1.00 $ 450,000.00 161542 DK 8
B-6 $25,000.00 $1.00 $ 2,550,610.36 000000 XX 0
R $100 N/A $100.00 161542 DE 2
__________________
The Certificates shall be executed by manual or facsimile signature on
behalf of the Depositor by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Depositor shall
bind the Depositor, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication, substantially in the form set forth in the forms
of Certificates attached hereto as exhibits, executed by the Authenticating
Agent by manual signature, and such certificate of authentication upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. On the Closing
Date, the Authenticating Agent shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any affiliate thereof.
SECTION 5.02. Certificate Register; Registration of Transfer and Exchange
of Certificates.
(a) The Servicer shall maintain, or cause to be maintained with the Paying
Agent in accordance with the provisions of Section 5.09 hereof, a Certificate
Register for the Trust Fund in which, subject to the provisions of subsections
(b) and (c) below and to such reasonable regulations as it may prescribe, the
Servicer shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Authenticating Agent shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Paying Agent. Whenever any Certificates
are so surrendered for exchange, the Depositor shall execute and the
Authenticating Agent shall authenticate and deliver the Certificates that the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of Transfer or exchange shall be
accompanied by a written instrument of Transfer in form satisfactory to the
Servicer duly executed by the holder thereof or his attorney duly authorized in
writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by the Servicer in accordance with the
Servicer's customary procedures.
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(b) No Transfer of a Class B-4, Class B-5 or Class B-6 Certificate shall be
made unless such Transfer is made pursuant to an effective registration
statement under the Securities Act and any applicable state securities laws or
is exempt from the registration requirements under the Securities Act and such
state securities laws. In the event that a Transfer is to be made in reliance
upon an exemption from the Securities Act and such laws, in order to assure
compliance with the Securities Act and such laws, the Certificateholder desiring
to effect such Transfer and such Certificateholder's prospective transferee
shall each certify to the Servicer in writing the facts surrounding the Transfer
in substantially the forms set forth in Exhibit J (the "Transferor Certificate")
and (i) deliver a letter in substantially the form of either Exhibit K (the
"Investment Letter") or Exhibit L (the "Rule 144A Letter") or (ii) there shall
be delivered to the Servicer an Opinion of Counsel that such Transfer may be
made pursuant to an exemption from the Securities Act, which Opinion of Counsel
shall not be an expense of the Depositor, the Servicer or the Trustee. The
Depositor shall provide to any Holder of a Class B-4, Class B-5 or Class B-6
Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and such
other information as shall be necessary to satisfy the condition to eligibility
set forth in Rule 144A(d)(4) for Transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A. The Servicer shall cooperate with the Depositor
in providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Class B-4, Class B-5 or Class B-6
Certificate desiring to effect such Transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor and the Servicer against any liability that
may result if the Transfer is not so exempt or is not made in accordance with
such federal and state laws.
No Transfer of an ERISA Restricted Certificate shall be made unless the
Servicer shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Servicer, to the effect that either (A) such transferee is not an employee
benefit plan subject to Title I of ERISA or a plan subject to Section 4975 of
the Code or any applicable Federal, state or local law materially similar to the
foregoing provisions of ERISA and the Code ("Similar Law"), or a Person acting
on behalf of any such plan or using the assets of any such plan or (B) in the
case of an ERISA Restricted Certificate other than a Class R Certificate, such
transferee is an insurance company and the source of funds for the purchase of
such Certificate is an "insurance company general account" within the meaning of
Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"), 60
Fed. Reg. 35925 (July 12, 1995), and the acquisition and holding of such
Certificate are covered under Sections I and III of PTCE 95-60, or (ii) in the
case of any such ERISA Restricted Certificate, other than a Class R Certificate,
presented for registration in the name of an employee benefit plan subject to
Title I of ERISA, a plan subject to Section 4975 of the Code, or a plan subject
to Similar Law (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or any other Person acting on behalf of any such plan,
an Opinion of Counsel satisfactory to the Servicer to the effect that the
purchase and holding of such ERISA Restricted Certificate will not result in the
assets of the Trust Fund being deemed to be "plan assets" pursuant to the
Department of Labor regulations set forth in 29 C.F.R. ss.2510.3-101 or to be
subject to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of the Code or to cause a violation under Similar Law,
will not constitute or result in a prohibited transaction under ERISA or the
Code or Similar Law and will not subject the Servicer to any obligation in
addition to those expressly undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Servicer. For purposes of clause (i) of
the preceding sentence, such representation shall be deemed to have been made to
the Servicer by the transferee's acceptance of an ERISA Restricted Certificate
(or the acceptance by a Certificate Owner of the beneficial interest in any
Class of ERISA Restricted Certificates) unless the Servicer shall have received
74
from the transferee an alternative representation acceptable in form and
substance to the Servicer. Notwithstanding anything else to the contrary herein,
any purported transfer of an ERISA Restricted Certificate to or on behalf of an
employee benefit plan subject to Title I of ERISA, a plan subject to Section
4975 of the Code, or a plan subject to Similar Law without the delivery to the
Servicer of an Opinion of Counsel satisfactory to the Servicer as described
above shall be void and of no effect. The Servicer shall be under no liability
to any Person for any registration of transfer of any ERISA Restricted
Certificate that is in fact not permitted by this Section 5.02(b) or for making
any payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the transfer was registered by the Servicer in accordance with the
foregoing requirements. In the case of any purported Transfer in violation of
the requirements of this Section 5.02(b), the Servicer shall be entitled, but
not obligated, to recover from any Holder of any ERISA Restricted Certificate
that was in fact an employee benefit plan subject to Title I of ERISA, a plan
subject to Section 4975 of the Code, or a plan subject to Similar Law or a
Person acting on behalf of any such plan at the time it became a Holder or, at
such subsequent time as it became such a plan or Person acting on behalf of such
a plan, all payments made on such ERISA Restricted Certificate at and after
either such time. Any such payments so recovered by the Servicer shall be paid
and delivered by the Servicer to the last preceding Holder of such Certificate
that is not such a plan or Person acting on behalf of a plan.
(c) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions, and the rights
of each Person acquiring any Ownership Interest in a Class R Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Servicer of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the Servicer
shall not register the Transfer of any Class R Certificate unless, in
addition to the certificates required to be delivered to the Servicer under
subparagraph (b) above, the Servicer shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit I. In the absence of a
contrary instruction from the transferor of a Class R Certificate,
declaration (11) in Appendix A of the Transfer Affidavit may be left blank.
If the transferor requests by written notice to the Servicer prior to the
date of the proposed transfer that one of the two other forms of
declaration (11) in Appendix A of the Transfer Affidavit be used, then the
requirements of this Section 5.02(c)(ii) shall not have been satisfied
unless the Transfer Affidavit includes such other form of declaration.
(iii) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall agree (A) to obtain a Transfer Affidavit
from any other Person to whom such Person attempts to Transfer its
Ownership Interest in a Class R Certificate, (B) to obtain a Transfer
Affidavit from any Person for whom such Person is acting as nominee,
trustee or agent in connection with any Transfer of a Class R Certificate
and (C) not to Transfer its Ownership Interest in a Class R Certificate or
to cause the Transfer of an Ownership Interest in a Class R Certificate to
any other Person if it has actual knowledge that such Person is not a
Permitted Transferee. Further, no transfer, sale or other disposition of
any Ownership Interest in a Class R Certificate may be made to a person who
is not a U.S. Person (within the meaning of section 7701 of the Code)
unless such person furnishes the transferor and the Trustee with a duly
completed and effective Form W-8ECI (or any successor thereto) or an
Opinion of Counsel to the effect that the transfer is in accordance with
the requirements of the Code and the regulations promulgated thereunder and
will not be disregarded for federal income tax purposes.
75
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of this
Section 5.02(c) shall be absolutely null and void and shall vest no rights
in the purported Transferee. If any purported transferee shall become a
Holder of a Class R Certificate in violation of the provisions of this
Section 5.02(c), then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of
registration of Transfer of such Class R Certificate. The Servicer shall be
under no liability to any Person for any registration of Transfer of a
Class R Certificate that is in fact not permitted by Section 5.02(b) and
this Section 5.02(c) or for making any payments due on such Certificate to
the Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was
registered after receipt of the related Transfer Affidavit, Transferor
Certificate and either the Rule 144A Letter or the Investment Letter. The
Servicer shall be entitled but not obligated to recover from any Holder of
a Class R Certificate that was in fact not a Permitted Transferee at the
time it became a Holder or, at such subsequent time as it became other than
a Permitted Transferee, all payments made on such Class R Certificate at
and after either such time. Any such payments so recovered by the Servicer
shall be paid and delivered by the Servicer to the last preceding Permitted
Transferee of such Certificate.
(v) At the option of the Holder of the Class R Certificate,
the LT-R Interest and the Class UT-R Interest may be severed and
represented by separate certificates; provided, however, that such separate
certification may not occur until the Trustee receives an Opinion of
Counsel to the effect that separate certification in the form and manner
proposed would not result in the imposition of federal tax upon either the
Lower-Tier REMIC or the Upper-Tier REMIC or cause either the Lower-Tier
REMIC or the Upper-Tier REMIC to fail to qualify as a REMIC; and provided
further, that the provisions of Sections 5.02(b) and (c) will apply to each
such separate certificate as if the separate certificate were a Class R
Certificate. If, as evidenced by an Opinion of Counsel, it is necessary to
preserve the REMIC status of either the Lower-Tier REMIC or the Upper-Tier
REMIC, the Class LT-R Interest and the Class UT-R Interest shall be severed
and represented by separate Certificates.
The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend
on a Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Servicer of an Opinion of Counsel, which Opinion of
Counsel shall not be an expense of the Servicer or the Depositor to the effect
that the elimination of such restrictions will not cause either the Lower-Tier
REMIC or the Upper-Tier REMIC to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the Trust
Fund, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Class R Certificate hereby consents to any amendment
of this Agreement that, based on an Opinion of Counsel furnished to the
Servicer, is reasonably necessary (a) to ensure that the record ownership of, or
any beneficial interest in, a Class R Certificate is not transferred, directly
or indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class R Certificate that is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
(d) The transferor of the Class R Certificate shall notify the Servicer in
writing upon the transfer of the Class R Certificate.
(e) The preparation and delivery of all certificates, opinions and other
writings referred to above in this Section 5.02 shall not be an expense of the
Trust Fund, the Depositor, the Trustee or the Servicer. Notwithstanding anything
herein to the contrary, the parties hereto acknowledge that the functions of the
Servicer with respect to Transfers, including, without limitation, maintaining
the Certificate Register, receiving certificates and/or opinions of counsel, and
the transfer and exchange of the Certificates pursuant to Sections 5.02, 5.03,
5.05 and 5.08 shall be performed by the Paying Agent.
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SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Servicer, or the
Servicer receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Servicer, the Authenticating Agent such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Servicer that such Certificate has been acquired by a bona fide
purchaser, the Depositor shall execute and the Trustee or any Authenticating
Agent shall authenticate and deliver in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Servicer and the Authenticating Agent
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 Servicer and the Authenticating
Agent) connected therewith. Any replacement Certificate issued pursuant to this
Section 5.03 shall constitute complete and indefeasible evidence of ownership in
the Trust Fund, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time. All Certificates surrendered
to the Servicer under the terms of this Section 5.03 shall be canceled and
destroyed by the Servicer in accordance with its standard procedures without
liability on its part.
SECTION 5.04. Persons Deemed Owners.
The Servicer, the Paying Agent, and any agent of the Servicer or the Paying
Agent may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions as provided
in this Agreement and for all other purposes whatsoever, and neither the
Servicer, the Paying Agent, nor any agent of the Servicer shall be affected by
any notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in writing
from the Servicer, (b) state that such Certificateholders desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates, and (c) provide a copy of the communication that such
Certificateholders propose to transmit or if the Depositor shall request such
information in writing from the Servicer, then the Servicer shall, within ten
Business Days after the receipt of such request, provide the Depositor, or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Trust Fund held by the Servicer, if any. The Depositor
and every Certificateholder, by receiving and holding a Certificate, agree that
the Servicer shall not be held accountable by reason of the disclosure of any
such information as to the list of the Certificateholders hereunder, regardless
of the source from which such information was derived.
SECTION 5.06. Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
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(b) the Depositor, the Servicer, the Paying Agent and the Trustee may deal
with the Depository and the Depository Participants for all purposes (including
the making of distributions) as the authorized representative of the respective
Certificate Owners of the Book-Entry Certificates;
(c) registration of the Book-Entry Certificates may not be transferred by
the Servicer except to another Depository;
(d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants;
(f) the Servicer, the Trustee and the Paying Agent may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants; and
(g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.
SECTION 5.07. Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners, the Servicer, the Paying Agent and the
Trustee shall give all such notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Servicer that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Servicer or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Servicer that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an Event
of Default, Certificate Owners of such Book-Entry Certificates having not less
than 51% of the Voting Rights evidenced by any Class of Book-Entry Certificates
advise the Servicer and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Servicer shall notify all Certificate Owners of such Book-Entry Certificates,
through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners of such Class
requesting the same. The Depositor shall provide the Servicer with an adequate
inventory of certificates to facilitate the issuance and transfer of Definitive
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Certificates. Upon surrender to the Servicer of any such Certificates by the
Depository, accompanied by registration instructions from the Depository for
registration, the Authenticating Agent shall authenticate at the written
direction of the Depositor and the Servicer shall deliver such Definitive
Certificates. Neither the Depositor nor the Servicer shall be liable for any
delay in delivery of such instructions and each may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates, all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon and performed
by the Servicer, to the extent applicable with respect to such Definitive
Certificates and the Servicer shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
The Servicer will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in New York City where Certificates may
be surrendered for registration of transfer or exchange. The Servicer initially
designates its offices at c/o JPMorgan Chase Bank, 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, as offices for such purposes. The Servicer will give
prompt written notice to the Certificateholders of any change in such location
of any such office or agency.
SECTION 5.10. Authenticating Agents.
(a) The Trustee may appoint one or more Authenticating Agents (each, an
"Authenticating Agent") which shall be authorized to act on behalf of the
Trustee in authenticating the Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be an entity organized and
doing business under the laws of the United States of America or of any state,
having a combined capital and surplus of at least $15,000,000, authorized under
such laws to do a trust business and subject to supervision or examination by
federal or state authorities. If the Authenticating Agent is a party other than
the Trustee, the Trustee shall have no liability in connection with the
performance or failure of performance of the Authenticating Agent. The Trustee
hereby appoints Chase as the initial Authenticating Agent. The Trustee shall be
the Authenticating Agent during any such time as no other Authenticating Agent
has been appointed.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance within the provisions of this Section 5.10, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 5.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee or the Depositor. Any
Authenticating Agent shall be entitled to reasonable compensation for its
services and any such compensation shall be payable solely by the Trustee,
without any right of reimbursement from the Depositor, the Servicer or the Trust
Fund.
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SECTION 5.11. Appointment of Paying Agent.
The Servicer may appoint a Paying Agent hereunder (the "Paying Agent"). In
the event of any such appointment, the Servicer shall cause the Paying Agent to
perform each of the obligations of the Paying Agent set forth herein and shall
be liable to the Trustee and the Certificateholders for failure of the Paying
Agent to perform such obligations. If the Paying Agent is a party other than the
Trustee, the Trustee shall have no liability in connection with the performance
or failure of performance of the Paying Agent. The Servicer designates the
Global Debt Department of Chase as the initial Paying Agent.
The Servicer shall cause each Paying Agent other than the Trustee and the
Paying Agent appointed hereunder to execute and deliver to the Servicer and the
Trustee on the Closing Date or, if subsequently appointed, on the date of
appointment, a written instrument executed by an officer of the Paying Agent in
which such Paying Agent shall agree with the Servicer and the Trustee that such
Paying Agent will hold all sums held by it for the payment to Certificateholders
in trust for the benefit of the Certificateholders entitled thereto until such
sums shall be paid to such Certificateholders.
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.
The Depositor and the Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.
The Depositor and the Servicer will each keep in full effect its existence,
rights and franchises as a corporation under the laws of the United States or
under the laws of one of the States thereof and will each obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.
Any Person into which the Depositor or Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or Servicer shall be a party, or any Person succeeding to the
business of the Depositor or Servicer, shall be the successor of the Depositor
or 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 (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Depositor, the Servicer and
Others.
None of the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the 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 Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
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and duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense related to any specific Mortgage Loan or Mortgage Loans (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) and any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder. None of the
Depositor nor the Servicer shall be under any obligation to appear in, prosecute
or defend any legal action that is not incidental to its respective duties
hereunder and that in its opinion may involve it in any expense or liability;
provided, however, that any of the Depositor or the Servicer may, in its
discretion undertake any such action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be, expenses, costs and liabilities of the Trust Fund, and the
Depositor and the Servicer shall be entitled to be reimbursed therefor out of
the Collection Account as provided by Section 3.08 hereof.
SECTION 6.04. Limitation on Resignation of Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of a Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a successor servicer appointed in accordance with section
7.02 shall have assumed the Servicer's responsibilities, duties, liabilities and
obligations hereunder.
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of FNMA or FHLMC for Persons performing servicing
for mortgage loans purchased by FNMA or FHLMC. In the event that any such policy
or bond ceases to be in effect, the Servicer shall use its reasonable best
efforts to obtain a comparable replacement policy or bond from an insurer or
issuer meeting the requirements set forth above as of the date of such
replacement.
ARTICLE VII
DEFAULT; TERMINATION OF SERVICER
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events:
(i) any failure by the Servicer to deposit in the Collection
Account or the Distribution Account or remit to the Trustee or any Paying
Agent any payment (excluding a payment required to be made under Section
4.01 hereof) required to be made under the terms of this Agreement, which
failure shall continue unremedied for five calendar days and, with respect
to a payment required to be made under Section 4.01 hereof, for one
calendar day, after the date on which written notice of such failure shall
have been given to the Servicer by the Trustee or the Depositor, or the
Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates; or
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(ii) any failure by the Servicer to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Servicer contained in this Agreement or any representation or warranty
shall prove to be untrue, which failure or breach shall continue unremedied
for a period of 60 days after the date on which written notice of such
failure shall have been given to the Servicer by the Trustee or the
Depositor, or to the Trustee by the Holders of Certificates evidencing not
less than 25% of the Voting Rights evidenced by the Certificates; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged or
unstayed for a period of 60 consecutive days; or
(iv) consent by the Servicer to the appointment of a receiver
or liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings of or relating to the Servicer or
all or substantially all of the property of the Servicer; or
(v) admission by a Servicer in writing of its inability to pay
its debts generally as they become due, file a petition to take advantage
of, or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations.
If an Event of Default shall occur with respect to the Servicer, then, and
in each and every such case, so long as such Event of Default shall not have
been remedied, the Trustee may, or at the direction of the Holders of
Certificates evidencing not less than 25% of the Voting Rights evidenced by the
Certificates, shall, by notice in writing to the Servicer (with a copy to each
Rating Agency), terminate all of the rights and obligations of the Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Certificateholder hereunder. On or after the receipt
by the Servicer of such written notice, all authority and power of the Servicer
hereunder, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee. The Trustee shall thereupon make any Advance
described in Section 4.01 hereof subject to Section 3.04 hereof. The Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. Unless expressly provided in such written
notice, no such termination shall affect any obligation of the Servicer to pay
amounts owed pursuant to Article VIII. The Servicer agrees to cooperate with the
Trustee in effecting the termination of the Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to the Trustee of
all cash amounts which shall at the time be credited to the Collection Account,
or thereafter be received with respect to the Mortgage Loans. The Servicer and
the Trustee shall promptly notify the Rating Agencies of the occurrence of an
Event of Default or an event that, with notice, passage of time, other action or
any combination of the foregoing would be an Event of Default, such notice to be
provided in any event within two Business Days of such occurrence.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections 3.08(a)(i) through (viii), and any other
amounts payable to the Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder.
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SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof and applicable law
including the obligation to make advances pursuant to Section 4.01. As
compensation therefor, subject to the last paragraph of Section 7.01, the
Trustee shall be entitled to all fees, costs and expenses relating to the
Mortgage Loans that the Servicer would have been entitled to if the Servicer had
continued to act hereunder. Notwithstanding the foregoing, if the Trustee has
become the successor to the Servicer in accordance with Section 7.01 hereof, the
Trustee may, if it shall be unwilling to so act, or shall, if it is prohibited
by applicable law from making Advances pursuant to Section 4.01 hereof or if it
is otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current rating of the
Certificates by each Rating Agency as the successor to the Servicer hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder. Any successor Servicer shall be an institution that
is a FNMA and FHLMC approved seller/servicer in good standing, that has a net
worth of at least $15,000,000, and that is willing to service the Mortgage Loans
and executes and delivers to the Depositor and the Trustee an agreement
accepting such delegation and assignment, that contains an assumption by such
Person of the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer (other than liabilities of the Servicer under
Section 6.03 hereof incurred prior to termination of the Servicer under Section
7.01), with like effect as if originally named as a party to this Agreement; and
provided further that each Rating Agency acknowledges that its rating of the
Certificates in effect immediately prior to such assignment and delegation will
not be qualified or reduced as a result of such assignment and delegation. No
appointment of a successor to the Servicer hereunder shall be effective until
the Trustee shall have consented thereto, and written notice of such proposed
appointment shall have been provided by the Trustee to each Certificateholder.
The Trustee shall not resign as servicer until a successor servicer has been
appointed and has accepted such appointment. Pending appointment of a successor
to the Servicer hereunder, the Trustee, unless the Trustee is prohibited by law
from so acting, shall, subject to Section 3.04 hereof, act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Servicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor servicer shall be deemed
to be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Servicer to deliver or provide, or
any delay in delivering or providing, any cash, information, documents or
records to it.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the Servicer,
the Trustee shall give prompt written notice thereof to Certificateholders, the
Paying Agent and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they conform to the
requirements of this Agreement. If any such instrument is found not to conform
to the requirements of this Agreement in a material manner, the Trustee shall
take action as it deems appropriate to have the instrument corrected.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct, its negligent failure to perform its obligations in
compliance with this Agreement, or any liability that would be imposed by reason
of its willful misfeasance or bad faith; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default that may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable, individually
or as Trustee, except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement that it reasonably believed in good faith to be genuine and
to have been duly executed by the proper authorities respecting any matters
arising hereunder;
(ii) the Trustee shall not be liable, individually or as
Trustee, for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee, unless the Trustee was
negligent or acted in bad faith or with willful misfeasance; and
(iii) the Trustee shall not be liable, individually or as
Trustee, with respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the direction of Holders of each
Class of Certificates evidencing not less than 25% of the Voting Rights of
such Class relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee under this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
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(i) the Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel of its choice and
any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel;
(iii) the Trustee shall not be liable, individually or as
Trustee, for any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(iv) prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing so to do by Holders of each
Class of Certificates evidencing not less than 25% of the Voting Rights of
such Class;
(v) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, accountants or attorneys;
(vi) the Trustee shall not be required to expend its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such liability is not
assured to it;
(vii) the Trustee shall not be liable, individually or as
Trustee, for any loss on any investment of funds pursuant to this Agreement
(other than as issuer of the investment security);
(viii) the Trustee shall not be deemed to have knowledge of an
Event of Default until a Responsible Officer of the Trustee shall have
received written notice thereof;
(ix) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to the provisions
of this Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; and
(x) if requested by the Servicer, the Trustee may appoint the
Servicer as the trustee's attorney-in-fact in order to carry out and
perform certain activities that are necessary or appropriate for the
servicing and administration of the Mortgage Loans pursuant to this
Agreement. Such appointment shall be evidenced by a power of attorney in
such form as may be agreed to by the Trustee and the Servicer.
(xi) the Paying Agent and the Authenticating Agent and any
agent of the Trustee shall be afforded the same rights, protections,
immunities and indemnities of the Trustee as set forth herein.
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(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee
without the possession of any of the Certificates, or the production
thereof at the trial or other proceeding relating thereto, and any such
suit, action or proceeding instituted by the Trustee shall be brought in
its name for the benefit of all the Holders of the Certificates, subject to
the provisions of this Agreement.
SECTION 8.03. Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement or of any Mortgage Loan or related
document other than with respect to the Trustee's execution and authentication
of the Certificates. The Trustee shall not be accountable for the use or
application by the Depositor or the Servicer of any funds paid to the Depositor
or the Servicer in respect of the Mortgage Loans or deposited in or withdrawn
from the Collection Account or Distribution Account by the Depositor or the
Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights as it would have if it were not the
Trustee.
SECTION 8.05. Servicer to Pay Certain Trustee's Fees and Expenses.
The Servicer covenants and agrees (i) to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation as shall be agreed
in writing by the Servicer and the Trustee (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by it in the execution of the trusts hereby created
and in the exercise and performance of any of the powers and duties hereunder of
the Trustee and (ii) to pay or reimburse the Trustee, upon its request, for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
on behalf of the Trust Fund in accordance with any of the provisions of this
Agreement (including, without limitation: (A) the reasonable compensation and
the expenses and disbursements of its counsel, but only for representation of
the Trustee acting in its capacity as Trustee hereunder and (B) to the extent
that the Trustee must engage persons not regularly in its employ to perform acts
or services on behalf of the Trust Fund, which acts or services are not in the
ordinary course of the duties of a trustee, paying agent or certificate
registrar, in the absence of a breach or default by any party hereto, the
reasonable compensation, expenses and disbursements of such persons, except any
such expense, disbursement or advance as may arise from its negligence, bad
faith or willful misconduct. The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Servicer and held harmless
against any loss, liability or expense (i) incurred in connection with any legal
action relating to this Agreement or the Certificates, or in connection with the
performance of any of the Trustee's duties hereunder, other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of any of the Trustee's duties hereunder or by
reason of reckless disregard of the Trustee's obligations and duties hereunder
and (ii) resulting from any error in any tax or information return prepared by
the Servicer. Such indemnity shall survive the termination of this Agreement or
the resignation or removal of the Trustee hereunder.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers having a
combined capital and surplus of at least $50,000,000, subject to supervision or
examination by federal or state authority and with a credit rating that would
not cause any of the Rating Agencies to reduce their respective ratings of any
Class of Certificates below the ratings issued on the Closing Date (or having
provided such security from time to time as is sufficient to avoid such
reduction). If such corporation or association publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 8.06
the combined capital and surplus of such corporation or association shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 8.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
8.07 hereof. The corporation or national banking association serving as Trustee
may have normal banking and trust relationships with the Depositor and the
Servicer and their respective Affiliates; provided, however, that such
corporation cannot be an affiliate of the Servicer other than the Trustee in its
role as successor to a Servicer.
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SECTION 8.07. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by (1) giving written notice of resignation to the Depositor, the
Servicer, and by mailing notice of resignation by first Class mail, postage
prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register and each Rating Agency, not less than 60 days before the
date specified in such notice when, subject to Section 8.08, such resignation is
to take effect, and (2) acceptance of appointment by a successor trustee in
accordance with Section 8.08 and meeting the qualifications set forth in Section
8.06. If no successor trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice or resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 hereof and shall fail to resign after
written request thereto by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor may remove the
Trustee and appoint a successor trustee by written instrument, in triplicate,
one copy of which instrument shall be delivered to the Trustee, one copy of
which shall be delivered to the Servicer and one copy of which shall be
delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered by the successor Trustee to the Servicer, one complete set to
the Trustee so removed and one complete set to the successor so appointed.
Notice of any removal of the Trustee shall be given to each Rating Agency by the
Successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.07 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.08 hereof.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
and the Servicer an instrument accepting such appointment hereunder and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein.
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No successor trustee shall accept appointment as provided in this Section
8.08 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.08, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates. If the Depositor fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to substantially all of the corporate trust business of
the Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under the provisions of Section 8.06 hereof
without the execution or filing of any paper or further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding (except
for the execution of an assumption agreement where such succession is not
effected by operation of law).
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the 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 to act as co-trustee or co-trustees jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. The Trustee shall
be ultimately liable for the actions of any co-trustee. If the Servicer shall
not have joined in such appointment within 15 days after the receipt by it of a
request to do so, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee, except for the obligation of the Trustee under this
Agreement to advance funds on behalf of the Servicer, shall be conferred or
imposed upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Fund or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
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(ii) No trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicers and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the Trustee
its agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 8.11. Tax Matters.
It is intended that the Lower-Tier REMIC and the Upper-Tier REMIC shall
each constitute, and that the affairs of the Trust Fund shall be conducted so as
to allow the Lower-Tier REMIC and the Upper-Tier REMIC to each qualify as, a
"real estate mortgage investment conduit" as defined in and in accordance with
the REMIC Provisions. In furtherance of such intention, the Servicer covenants
and agrees that it shall act as agent (and the Servicer is hereby appointed to
act as agent) on behalf of both the Lower-Tier REMIC and the Upper-Tier REMIC
and that in such capacity it shall: (a) prepare and file, or cause to be
prepared and filed, in a timely manner, a U.S. Real Estate Mortgage Investment
Conduit Income Tax Return (Form 1066 or any successor form adopted by the
Internal Revenue Service) and prepare and file or cause to be prepared and filed
with the Internal Revenue Service and applicable state or local tax authorities
income tax or information returns for each taxable year with respect to both the
Lower-Tier REMIC and the Upper-Tier REMIC, containing such information and at
the times and in the manner as may be required by the Code or state or local tax
laws, regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) within thirty days of the Closing
Date, furnish or cause to be furnished to the Internal Revenue Service, on Forms
8811 or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update, for both the Lower-Tier REMIC and
the Upper-Tier REMIC, such information at the time or times in the manner
required by the Code; (c) make or cause to be made elections, on behalf of each
the Lower-Tier REMIC and the Upper-Tier REMIC to be treated as a REMIC on the
federal tax returns of each of the Lower-Tier REMIC and the Upper-Tier REMIC for
its first taxable year (and, if necessary, under applicable state law); (d)
prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions, including without
limitation, the calculation of any original issue discount using the Prepayment
Assumption;
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(e) provide information necessary for the computation of tax imposed on
the transfer of a Class R Certificate to a Person that is not a Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax); (f) to the extent that they are under its control conduct the affairs of
the Lower-Tier REMIC and the Upper-Tier REMIC at all times that any Certificates
are outstanding so as to maintain the status of each of the Lower-Tier REMIC and
the Upper-Tier REMIC as a REMIC under the REMIC Provisions; (g) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of the Lower-Tier REMIC or the Upper-Tier REMIC;
(h) pay, from the sources specified in the last paragraph of this Section 8.11,
the amount of any federal, state and local taxes, including prohibited
transaction taxes as described below, imposed on either the Lower-Tier REMIC or
the Upper-Tier REMIC prior to the termination of the Trust Fund when and as the
same shall be due and payable (but such obligation shall not prevent the Trustee
or any other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Trustee from withholding payment of such
tax, if permitted by law, pending the outcome of such proceedings); (i) sign or
cause to be signed federal, state or local income tax or information returns;
(j) maintain records relating to each of the Lower-Tier REMIC and the Upper-Tier
REMIC, including but not limited to the income, expenses, assets and liabilities
of each of the Lower-Tier REMIC and the Upper-Tier REMIC, and the fair market
value and adjusted basis of the Trust Fund property determined at such intervals
as may be required by the Code, as may be necessary to prepare the foregoing
returns, schedules, statements or information; and (k) as and when necessary and
appropriate, represent each of the Lower-Tier REMIC and the Upper-Tier REMIC in
any administrative or judicial proceedings relating to an examination or audit
by any governmental taxing authority, request an administrative adjustment as to
any taxable year of either the Lower-Tier REMIC or the Upper-Tier REMIC, enter
into settlement agreements with any governmental taxing agency, extend any
statute of limitations relating to any tax item of either of the Lower-Tier
REMIC or the Upper-Tier REMIC, and otherwise act on behalf of the Lower-Tier
REMIC and the Upper-Tier REMIC in relation to any tax matter involving either
the Lower-Tier REMIC or the Upper-Tier REMIC or controversy involving the Trust
Fund. The Trustee shall sign any tax returns of the Trust, the Lower-Tier REMIC
and the Upper-Tier REMIC that the Servicer or the Paying Agent is not permitted
to sign under applicable law.
In order to enable the Servicer to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Servicer within 10
days after the Closing Date all information or data that the Servicer requests
in writing and determines to be relevant for tax purposes to the valuations and
offering prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flows of the Certificates and
the Mortgage Loans. Thereafter, the Depositor shall provide to the Servicer
promptly upon written request therefor, any such additional information or data
that the Servicer may, from time to time, request in order to enable the
Servicer to perform its duties as set forth herein. The Depositor hereby agrees
to indemnify the Servicer and any Paying Agent acting on the Servicer's behalf
for any losses, liabilities, damages, claims or expenses of the Servicer and any
Paying Agent acting on the Servicer's behalf arising from any errors or
miscalculations of the Servicer that result from any failure of the Depositor to
provide, or to cause to be provided, accurate information or data to the
Servicer and any Paying Agent acting on the Servicer's behalf on a timely basis.
In the event that any tax is imposed on "prohibited transactions," as
defined in Section 860F(a)(2) of the Code, of either the Lower-Tier REMIC or the
Upper-Tier REMIC, on the "net income from foreclosure property" of the
Lower-Tier REMIC or the Upper-Tier REMIC as defined in Section 860G(c) of the
Code,or on any contribution to the Trust Fund after the Startup Day pursuant to
Section 860G(d) of the Code, or any other tax is imposed, if not paid as
otherwise provided for herein, such tax shall be paid by (i) the Servicer, if
any such tax arises out of or results from a breach by the Servicer of any of
its obligations under this Agreement, (ii) any party hereto (other than the
Servicer) to the extent any such tax arises out of or results from a breach by
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such other party of any of its obligations under this Agreement or (iii) in all
other cases, or in the event that any liable party here fails to honor its
obligations under the preceding clauses (i) or (ii), any such tax will be paid
first with amounts otherwise to be distributed to the Class R Certificateholders
(pro rata), and second with amounts otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class B6
Certificates (pro rata), second, to the Class B5 Certificates (pro rata), third,
to the Class B4 Certificates (pro rata), fourth, to the Class B3 Certificates
(pro rata), fifth, to the Class B2 Certificates (pro rata), sixth, to the Class
B1 Certificates (pro rata) and seventh, to the Class A Certificates (pro rata in
accordance with their rights to receive distributions from the Trust Fund on
each Distribution Date. Notwithstanding anything to the contrary contained
herein, to the extent that such tax is payable by the Class R Certificate, the
Servicer is hereby authorized to instruct the Trustee or Paying Agent, as
applicable and the Trustee or Paying Agent, as applicable is hereby authorized
pursuant to such instruction to retain on any Distribution Date, from the
Holders of the Class R Certificate (and, if necessary, second, from the Holders
of all other Certificates in the priority specified in the preceding sentence),
funds otherwise distributable to such Holders in an amount sufficient to pay
such tax. The Servicer agrees to promptly notify in writing the party liable for
any such tax of the amount thereof and the due date for the payment thereof. The
Paying Agent is hereby appointed to act as the agent of the Servicer with
respect to any duties of the Servicer set forth in (a), (b), (c), (d), (e), (i)
and (j) of the first paragraph of this Section 8.11.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans.
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the repurchase by the Servicer of
all of the Mortgage Loans (and REO Properties) at the price (the "Repurchase
Price") equal to the sum of (i) 100% of the Stated Principal Balance of each
Mortgage Loan (other than in respect of REO Property), (ii) accrued interest
thereon at the applicable Mortgage Rate through the Due Date in the Due Period
preceding the Distribution Date on which the proceeds of such repurchase shall
be distributed to Certificateholders, (iii) the appraised value of any REO
Property, such appraisal to be conducted by an appraiser mutually agreed upon by
the Depositor and the Trustee and (iv) any unreimbursed Servicing Fees, Advances
and Servicing Advances with respect to the Mortgage Loans prior to the exercise
of such repurchase, together with any unreimbursed Servicing Fees; and (b) the
later of (i) the maturity or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all REO Property and (ii) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor of
the descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States
to the Court of St. James's, living on the date hereof and (ii) the Latest
Possible Maturity Date.
The right to repurchase all Mortgage Loans and REO Properties pursuant to
clause (a) above shall be conditioned upon the aggregate Stated Principal
Balance of the Mortgage Loans, at the time of any such repurchase, aggregating
ten percent or less of the aggregate Stated Principal Balance of the Mortgage
Loans as of the Cut-off Date.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Servicer determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Trustee, the Servicer or Paying
Agent shall send a final distribution notice promptly to each Certificateholder
or (ii) the Servicer determines that a Class of Certificates shall be retired
after a final distribution on such Class, the Servicer shall notify the Trustee
and any Paying Agent and the Trustee shall notify the Certificateholders within
seven (7) Business Days after such Determination Date that the final
distribution in retirement of such Class of Certificates is scheduled to be made
on the immediately following Distribution Date. Any final distribution made
pursuant to the immediately preceding sentence will be made only upon
presentation and surrender of the Certificates at the office of the Paying
Agent. If the Servicer elects to terminate the Trust Fund pursuant to clause (a)
of Section 9.01, at least 10 days prior to the date notice is to be mailed to
the affected Certificateholders, the Servicer shall notify the Depositor, any
Paying Agent and the Trustee of the date such electing party intends to
terminate the Trust Fund and of the applicable repurchase price of the Mortgage
Loans and REO Properties.
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Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
or the Servicer or Paying Agent by letter to Certificateholders mailed not
earlier than the 10th day and no later than the 15th day of the month
immediately preceding the month of such final distribution. Any such notice
shall specify (a) the Distribution Date upon which final distribution on the
Certificates will be made upon presentation and surrender of Certificates at the
office therein designated, (b) the location of the office or agency at which
such presentation and surrender must be made, and (c) that the Record Date
otherwise applicable to such Distribution Date is not applicable, distributions
being made only upon presentation and surrender of the Certificates at the
office therein specified. The Servicer will give such notice to each Rating
Agency at the time such notice is given to Certificateholders.
In the event such notice is given, the Servicer shall cause all funds in
the Collection Account to be deposited in the Distribution Account on the
Business Day prior to the applicable Distribution Date in an amount equal to the
final distribution in respect of the Certificates. Upon such final deposit with
respect to the Trust Fund and the receipt by the Trustee of a Request for
Release therefor, the Trustee shall promptly release to the Servicer the
Mortgage Files for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee or any
Paying Agent shall cause to be distributed to Certificateholders of each Class
the amounts allocable to such Certificates held in the Distribution Account in
the order and priority set forth in Section 4.04 hereof on the final
Distribution Date and in proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee or any Paying Agent shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee or
any Paying Agent may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that remain a part of the Trust Fund. If within one year
after the second notice all Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to and, upon
written direction to the Trustee or any Paying Agent, shall receive all
unclaimed funds and other assets of the Trust Fund that remain subject hereto.
Upon payment to the Class R Certificateholders of such funds and assets, the
Trustee or any Paying Agent shall have no further duties or obligations with
respect thereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Servicer exercises its purchase option as provided
in Section 9.01, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has been supplied with an
Opinion of Counsel, at the expense of the Servicer, to the effect that the
failure of the Trust Fund to comply with the requirements of this Section 9.03
will not (i) result in the imposition of taxes on "prohibited transactions," as
defined in Section 860F of the Code, of either the Lower-Tier REMIC or the
Upper-Tier REMIC or (ii) cause either the Lower-Tier REMIC or the Upper-Tier
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
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(i) The Depositor shall establish a 90-day liquidation period
and notify the Trustee and any Paying Agent and the Servicer thereof, which
shall in turn specify the first day of such period in a statement attached
to the Trust Fund's final Tax Return pursuant to Treasury Regulation
Section 1.860F-1. The Depositor shall satisfy all the requirements of a
qualified liquidation under Section 860F of the Code and any regulations
thereunder, as evidenced by an Opinion of Counsel obtained at the expense
of the Servicer;
(ii) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Depositor as
agent of the Trustee shall sell all of the assets of the Trust Fund for
cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee, any Paying Agent or the Servicer shall
distribute or credit, or cause to be distributed or credited, to the Class
R Certificateholders all cash on hand (other than cash retained to meet
outstanding claims known to the Trustee), and the Trust Fund shall
terminate at that time, whereupon the Trustee and any Paying Agent shall
have no further duties or obligations with respect to sums distributed or
credited to the Class R Certificateholders.
(b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.
(c) The Servicer as agent for each REMIC hereby agrees to adopt and
sign such a plan of complete liquidation upon the written request of the
Depositor, and the receipt of the Opinion of Counsel referred to in Section
9.03, and to take such other action in connection therewith as may be reasonably
requested by the Depositor.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders
to cure any ambiguity, to correct or supplement any provisions herein, or to
make such other provisions with respect to matters or questions arising under
this Agreement, as shall not be inconsistent with any other provisions herein if
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Certificateholder; provided,
however, that any such amendment shall be deemed not to adversely affect in any
material respect the interests of the Certificateholders and no such Opinion of
Counsel shall be required if the Person requesting such amendment obtains a
letter from each Rating Agency stating that such amendment would not result in
the downgrading or withdrawal of the respective ratings then assigned to the
Certificates, it being understood and agreed that any such letter in and of
itself will not represent a determination as to the materiality of any such
amendment and will represent a determination only as to the credit issues
affecting any such rating.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Trustee, the Depositor and the Servicer may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the qualification of each of the Lower-Tier REMIC and the Upper-Tier REMIC as a
REMIC under the Code or to avoid or minimize the risk of the imposition of any
tax on the Trust Fund pursuant to the Code that would be a claim against the
Trust Fund at any time prior to the final redemption of the Certificates,
provided that the Trustee has been provided an Opinion of Counsel, which opinion
shall be an expense of the party requesting such opinion but in any case shall
not be an expense of the Trustee or the Servicer, to the effect that such action
is necessary or appropriate to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.
93
This Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee and the Holders of each Class of Certificates affected
thereby evidencing not less than 66 2/3% of the Voting Rights of such Class for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Holders of Certificates; provided, however, that no such amendment shall
(i) reduce in any manner the amount of, or delay the timing of, payments
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, (ii) adversely affect in any material respect the interests
of the Holders of any Class of Certificates in a manner other than as described
in (i), without the consent of the Holders of Certificates of such Class
evidencing 66 2/3% or more of the Voting Rights of such Class or (iii) reduce
the aforesaid percentages of Certificates the Holders of which are required to
consent to any such amendment without the consent of the Holders of all such
Certificates then outstanding.
Notwithstanding anything to the contrary in this Agreement, this Agreement
may be amended from time to time by the Depositor, the Servicer and the Trustee
with the consent of Certificateholders evidencing not less than 66 2/3% of the
Voting Rights of each Class of Certificates (excluding the Voting Rights of the
Depositor, its Affiliates or its agents) for the purpose of significantly
changing the Permitted Activities of the Trust.
Notwithstanding any contrary provision of this Agreement, the Trustee shall
not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not cause the imposition of any
federal tax on any of the Trust Fund, the Lower-Tier REMIC or the Upper-Tier
REMIC or the Certificateholders or cause either the Lower-Tier REMIC or the
Upper-Tier REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee or upon the written request of
the Trustee to the Servicer, the Servicer shall furnish written notification of
the substance of such amendment to each Certificateholder and each Rating
Agency.
It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.
The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.
94
SECTION 10.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.
SECTION 10.05. Notices.
(a) The Servicer shall use its best efforts to promptly provide notice
to each Rating Agency with respect to each of the following of which it has
actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Servicer, the
Servicer or the Trustee and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant
to Sections 2.02, 2.03 and 3.12; and
(v) The final payment to Certificateholders.
95
The Servicer shall promptly furnish to each Rating Agency copies of the
following:
(i) Each report to Certificateholders described in Section
4.05;
(ii) Each annual statement as to compliance described in
Section 3.17; and
(iii) Each annual independent public accountants' servicing
report described in Section 3.18.
(b) All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when delivered to (a) in the case of
the Depositor, Chase Funding, Inc., 000 Xxxx Xxxxxxxxx, 0xx Xxxxx Xxxxx,
Xxxxxxxxx Lake, New Jersey 07675, Attention: Structured Finance; (b) in the case
of the Trustee, Wachovia Bank, N.A., 000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000 (with a copy to JPMorgan Chase Bank, 4 New
Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Chase Funding
Loan Acquisition Trust, Series 2003-C2); (c) in the case of the Servicer, Chase
Manhattan Mortgage Corporation, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000,
Attention: Structured Finance (with a copy to JPMorgan Chase Bank, 4 New York
Plaza, 6th Floor, New York, New York 10004-2413, Attention: Chase Funding Loan
Acquisition Trust, Series 2003-C2); (d) in the case of the Rating Agencies, (i)
Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000; (ii) Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc., 00
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and (iii) Fitch Ratings, Xxx Xxxxx
Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and (e) and in the case of any of the
foregoing Persons, such other addresses as may hereafter be furnished by any
such Persons to the other parties to this Agreement. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.
SECTION 10.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
96
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as hereinbefore provided,
the Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates r, or to obtain or
seek to obtain priority over or preference to any other such Holder or to
enforce any right under this Agreement, except in the manner herein provided and
for the common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 10.08, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 10.09. Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit any
representative of the Depositor or the Trustee during the Servicer's normal
business hours, to examine all the books of account, records, reports and other
papers of the Servicer relating to the Mortgage Loans, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants selected by the Depositor or the Trustee and to discuss its
affairs, finances and accounts relating to the Mortgage Loans with its officers,
employees, agents, counsel and independent public accountants (and by this
provision the Servicer hereby authorizes such accountants to discuss with such
representative such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Any out-of-pocket expense
incident to the exercise by the Depositor or the Trustee of any right under this
Section 10.09 shall be borne by the party requesting such inspection; all other
such expenses shall be borne by the Servicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Authenticating Agent pursuant to this Agreement, are and shall be deemed fully
paid.
SECTION 10.11. [RESERVED]
* * *
97
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
CHASE FUNDING, INC.,
as Depositor
By:_______________________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
CHASE MANHATTAN MORTGAGE CORPORATION,
as Servicer
By:_______________________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
WACHOVIA BANK, N.A.,
not in its individual capacity,
but solely as Trustee
By:_______________________________________________
Name: Xxxxxxxxx X. Xxxxx
Title: Assistant Vice President
98
EXHIBIT A
FORM OF CLASS A CERTIFICATES
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS 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.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
FUNDING, INC. ("CHASE FUNDING"), THE SERVICER, OR THE TRUSTEE REFERRED TO BELOW
OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR INTEREST
REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED
BY CHASE FUNDING, CHASE MANHATTAN MORTGAGE CORPORATION, THE TRUSTEE OR BY ANY OF
THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE SERVICER.
CLASS IA CERTIFICATE
Number: 03-C2-IA-1 Original Denomination:
$
Cut-off Date: December 1, 2003 Latest Possible
Maturity Date:[December 25, 2019
(for Group I Certificates)]
[August 25, 2034 (for Group II
Certificates)]
First Distribution Date: Aggregate Initial Certificate
January 25, 2004 Balance of all Class IA
Certificates: $
Pass-Through Rate: CUSIP:
A-1
CHASE FUNDING LOAN ACQUISITION TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
Series 2003-C2
evidencing an ownership interest in distributions allocable to the Class IA
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
CHASE FUNDING, INC.
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Servicer 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 certifies that CEDE & CO. is the registered owner of the ownership
interest (the "Ownership Interest") evidenced by this Certificate (obtained by
dividing the Original Denomination of this Certificate by the aggregate Initial
Certificate Balance of all Class IA Certificates) in certain distributions with
respect to a pool of conventional, sub-prime mortgage loans (the "Mortgage
Loans") formed and sold by Chase Funding, Inc. (hereinafter called the
"Depositor"), and certain other property held in trust for the benefit of
Certificateholders (collectively, the "Trust Fund"). The Mortgage Loans are
serviced by Chase Manhattan Mortgage Corporation (the "Servicer") and are
secured by first mortgages on Mortgaged Properties. The Trust Fund was created
pursuant to a pooling and servicing agreement (the "Agreement"), dated as of
December 1, 2003, among the Depositor, the Servicer and Wachovia Bank, N.A., as
trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Loan Acquisition Trust, Mortgage Loan Asset-Backed
Certificates, Series 2003-C2, Class IA (the "Class IA Certificates") and 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 Agreement such Holder is bound.
The Class A Certificates, the Class R Certificate and Class B Certificates
are collectively referred to herein as the "Certificates".
Pursuant to the terms of the Agreement, the Paying Agent will distribute
from funds in the Distribution Account the amounts described in the Agreement on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on
January 25, 2004. Such distributions will be made to the Person in whose name
this Certificate is registered at the close of business on the last Business Day
of the month preceding the month in which such payment is made, or if such last
day is not a Business Day, the Business Day immediately preceding such last day.
Distributions on this Certificate will be made either by check mailed to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Servicer in writing at least 5 Business Days prior to the first
Distribution Date for which distribution by wire transfer is to be made, and
such Holder's Certificates evidence an aggregate original principal balance of
not less than $1,000,000 or such Holder holds a 100% Percentage Interest of such
Class. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Servicer, of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office of the Servicer or at such other office as may be designated by such
notice of final distribution.
A-2
100
The Servicer will maintain or cause to be maintained a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Servicer will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Servicer, or, if an Authenticating
Agent has been appointed under the Agreement, the Authenticating Agent,
maintained for such purpose, the Servicer, or, if an Authenticating Agent has
been appointed under the Agreement, the Authenticating Agent, will, subject to
the limitations set forth in the Agreement, authenticate and deliver, in the
name of the designated transferee or transferees, a Certificate of a like class
and dated the date of authentication by the Authenticating Agent.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Servicer, of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Servicer, for that purpose and specified in such notice of
final distribution.
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.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-3
IN WITNESS WHEREOF, the Depositor has caused this Class ___ Certificate to
be duly executed.
Dated: CHASE FUNDING, INC.
By:_____________________________
Authorized Officer
A-4
Dated: CERTIFICATE OF AUTHENTICATION
This is one of the Class ___
Certificates referred to
in the within-mentioned
Agreement.
JPMORGAN CHASE BANK
as Authenticating Agent
By:_____________________________
Authorized Signatory
A-5
REVERSE OF CERTIFICATE
CHASE FUNDING LOAN ACQUISITION TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
SERIES 2003-C2
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Loan Acquisition Trust, Mortgage Loan Asset-Backed
Certificates, Series 2003-C2, issued in one or more Classes of Class A
Certificates, Class R Certificate and Class B Certificates, each evidencing an
interest in certain distributions with respect to a pool of conventional,
sub-prime Mortgage Loans formed and sold by the Depositor and certain other
property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current principal
balance by inquiry of the Servicer.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that the Trustee is not liable to the Holders 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 hereby, and the rights, duties and
immunities of the Trustee.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Servicer 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 the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer and the
Trustee may treat the person in whose name any Certificate is registered as the
owner of such Certificate and the Percentage Interest in the Trust Fund
evidenced thereby for the purpose of receiving distributions pursuant to the
Agreement and for all other purposes whatsoever, and neither the Depositor, the
Servicer nor the Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC included in the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such action does not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66 2/3% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (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 clause (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) change the percentage specified in clause (ii) of the third
paragraph of Section 10.01 of the Agreement, without the consent of the Holders
of all Certificates of such Class then outstanding. In addition, all amendments
to the Agreement will require delivery of an Opinion of Counsel to the effect
that such amendment will not cause any REMIC included in the Trust Fund to fail
to qualify as a REMIC.
A-6
For federal income tax purposes, the Trust Fund will include segregated
asset pools. The Depositor intends to make elections to treat each as a "real
estate mortgage investment conduit" (each a "REMIC"). The Certificates (other
than the Class R Certificate) will represent "regular interests" in the
upper-tier REMIC. The Class R Certificate will represent the sole class of
"residual interest" in each of the REMICs.
The respective obligations and responsibilities of the Depositor, the
Servicer and the Trustee under the Agreement will terminate upon (i) the later
of the final payment or other liquidation (or any Advance with respect thereto)
of the last Mortgage Loan or the disposition of all property acquired upon the
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due thereunder; or (ii) at the option of the Servicer,
on any Distribution Date on which the aggregate Stated Principal Balances of all
Outstanding Mortgage Loans is less than or equal to 10% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-Off Date, so long as the
Servicer deposits or causes to be deposited in the Distribution Account during
the Principal Prepayment Period related to such Distribution Date an amount
equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage
Loan (other than in respect of REO Property), (ii) accrued interest thereon at
the applicable Mortgage Rate, (iii) the appraised value of any REO Property),
such appraisal to be conducted by an appraiser mutually agreed upon by the
Depositor and the Trustee and (iv) any unreimbursed Servicing Fees, Advances and
Servicing Advances, and the principal portion of any unreimbursed Advances, made
on the Mortgage Loans prior to such termination; provided, however, that in no
event shall the trust created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the Court of St.
James's, living on the date hereof and (ii) the Latest Possible Maturity Date.
A-7
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
________________________________________________________Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty) ______________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon
the face of the within Certificate in every
particular, without alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
A-8
EXHIBIT B
FORM OF CLASS X-0, X-0 AND B-3 CERTIFICATES
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS 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.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
FUNDING, INC. ("CHASE FUNDING"), THE SERVICER, OR THE TRUSTEE REFERRED TO BELOW
OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR INTEREST
REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED
BY CHASE FUNDING, CHASE MANHATTAN MORTGAGE CORPORATION, THE TRUSTEE OR BY ANY OF
THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE SERVICER.
CLASS B-1 CERTIFICATE
Number: 03-C2-B-1-1 Original Denomination:
$
Cut-off Date: December 1, 2003 Latest Possible
Maturity Date: August 25, 2034
First Distribution Date: Aggregate Initial Certificate
January 25, 2004 Balance of all Class B-1
Certificates: $
Pass-Through Rate: CUSIP:
B-1
CHASE FUNDING LOAN ACQUISITION TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
Series 2003-C2
evidencing an ownership interest in distributions allocable to the Class B-1
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
CHASE FUNDING, INC.
Unless this Certificate is presented by an authorized representative of the
Depository Trust Company, a New York corporation ("DTC"), to the Servicer 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 certifies that CEDE & CO. is the registered owner of the ownership
interest (the "Ownership Interest") evidenced by this Certificate (obtained by
dividing the Original Denomination of this Certificate by the aggregate Initial
Certificate Balance of all Class B-1 Certificates) in certain distributions with
respect to a pool of conventional, sub-prime mortgage loans (the "Mortgage
Loans") formed and sold by Chase Funding, Inc. (hereinafter called the
"Depositor"), and certain other property held in trust for the benefit of
Certificateholders (collectively, the "Trust Fund"). The Mortgage Loans are
serviced by Chase Manhattan Mortgage Corporation (the "Servicer") and are
secured by first mortgages on Mortgaged Properties. The Trust Fund was created
pursuant to a pooling and servicing agreement (the "Agreement"), dated as of
December 1, 2003, among the Depositor, the Servicer and Wachovia Bank, N.A., as
trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Loan Acquisition Trust, Mortgage Loan Asset-Backed
Certificates, Series 2003-C2, Class B-1 (the "Class B-1 Certificates") and 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 Agreement such Holder is bound.
The Class A Certificates, Class R Certificate and Class B Certificates are
collectively referred to herein as the "Certificates".
Pursuant to the terms of the Agreement, the Paying Agent will distribute
from funds in the Distribution Account the amounts described in the Agreement on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on
January 25, 2004. Such distributions will be made to the Person in whose name
this Certificate is registered at the close of business on the last Business Day
of the month preceding the month in which such payment is made, or if such last
day is not a Business Day, the Business Day immediately preceding such last day.
Distributions on this Certificate will be made either by check mailed to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Servicer in writing at least 5 Business Days prior to the first
Distribution Date for which distribution by wire transfer is to be made, and
such Holder's Certificates evidence an aggregate original principal balance of
not less than $1,000,000 or such Holder holds a 100% Percentage Interest of such
Class. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Servicer, of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office of the Servicer or at such other office as may be designated by such
notice of final distribution.
B-2
The Servicer will maintain or cause to be maintained a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Servicer will provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of transfer of any
Certificate at any office or agency of the Servicer, or, if an Authenticating
Agent has been appointed under the Agreement, the Authenticating Agent,
maintained for such purpose, the Servicer, or, if an Authenticating Agent has
been appointed under the Agreement, the Authenticating Agent, will, subject to
the limitations set forth in the Agreement, authenticate and deliver, in the
name of the designated transferee or transferees, a Certificate of a like class
and dated the date of authentication by the Authenticating Agent.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Servicer, of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Servicer, for that purpose and specified in such notice of
final distribution.
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.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
B-3
IN WITNESS WHEREOF, the Depositor has caused this Class B-__ Certificate to
be duly executed.
Dated: CHASE FUNDING, INC.
By:_______________________
Authorized Officer
B-4
Dated: CERTIFICATE OF AUTHENTICATION
This is one of the Class B-__
Certificates referred to
in the within-mentioned
Agreement.
JPMORGAN CHASE BANK
as Authenticating Agent
By:_____________________________
Authorized Signatory
B-5
REVERSE OF CERTIFICATE
CHASE FUNDING LOAN ACQUISITION TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
SERIES 2003-C2
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Loan Acquisition Trust, Mortgage Loan Asset-Backed
Certificates, Series 2003-C2, issued in one or more Classes of Class A
Certificates, Class R Certificate and Class B Certificates, each evidencing an
interest in certain distributions with respect to a pool of conventional,
sub-prime Mortgage Loans formed and sold by the Depositor and certain other
property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal balance
of this Certificate will be different from the Original Denomination shown
above. Anyone acquiring this Certificate may ascertain its current principal
balance by inquiry of the Servicer.
The Holder, by its acceptance of this Certificate, agrees that it will look
solely to the Trust Fund and certain amounts resulting from credit enhancements
for payment hereunder and that the Trustee is not liable to the Holders 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 hereby, and the rights, duties and
immunities of the Trustee.
No service charge will be made to the Holder for any transfer or exchange
of the Certificate, but the Servicer 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 the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer and the
Trustee may treat the person in whose name any Certificate is registered as the
owner of such Certificate and the Percentage Interest in the Trust Fund
evidenced thereby for the purpose of receiving distributions pursuant to the
Agreement and for all other purposes whatsoever, and neither the Depositor, the
Servicer nor the Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC included in the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such action does not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder.
The Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66 2/3% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (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 clause (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) change the percentage specified in clause (ii) of the third
paragraph of Section 10.01 of the Agreement, without the consent of the Holders
of all Certificates of such Class then outstanding. In addition, all amendments
to the Agreement will require delivery of an Opinion of Counsel to the effect
that such amendment will not cause any REMIC included in the Trust Fund to fail
to qualify as a REMIC.
B-6
For federal income tax purposes, the Trust Fund will include segregated
asset pools. The Depositor intends to make elections to treat each as a "real
estate mortgage investment conduit" (each a "REMIC"). The Certificates (other
than the Class R Certificate) will represent "regular interests" in the
upper-tier REMIC. The Class R Certificate will represent the sole class of
"residual interest" in each of the REMICs.
The respective obligations and responsibilities of the Depositor, the
Servicer and the Trustee under the Agreement will terminate upon (i) the later
of the final payment or other liquidation (or any Advance with respect thereto)
of the last Mortgage Loan or the disposition of all property acquired upon the
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due thereunder; or (ii) at the option of the Servicer,
on any Distribution Date on which the aggregate Stated Principal Balances of all
Outstanding Mortgage Loans is less than or equal to 10% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-Off Date, so long as the
Servicer deposits or causes to be deposited in the Distribution Account during
the Principal Prepayment Period related to such Distribution Date an amount
equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage
Loan (other than in respect of REO Property), (ii) accrued interest thereon at
the applicable Mortgage Rate, (iii) the appraised value of any REO Property,
such appraisal to be conducted by an appraiser mutually agreed upon by the
Depositor and the Trustee and (iv) any unreimbursed Servicing Fees, Advances and
Servicing Advances, and the principal portion of any unreimbursed Advances, made
on the Mortgage Loans prior to such termination; provided, however, that in no
event shall the trust created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the Court of St.
James's, living on the date hereof and (ii) the Latest Possible Maturity Date.
B-7
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
--------------------------------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
___________________________________________-Attorney to transfer the within
Certificate on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated:
(Signature guaranty)
----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
X-0
XXXXXXX X
XXXX XX XXXXX X-0, X-0 AND B-6 CERTIFICATES
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS 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.
THIS CLASS B-4 CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS SOLD OR TRANSFERRED IN TRANSACTIONS
WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT OR UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
FUNDING, INC. ("CHASE FUNDING"), THE SERVICER, OR THE TRUSTEE REFERRED TO BELOW
OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR INTEREST
REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED
BY CHASE FUNDING, CHASE MANHATTAN MORTGAGE CORPORATION, THE TRUSTEE OR BY ANY OF
THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE CODE OR MATERIALLY SIMILAR
PROVISIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAW ("SIMILAR LAW") (A "PLAN"),
AND IS NOT DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS
INVESTMENT MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A
PLAN OR, IN THE CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE
ACCOUNTS TO EFFECT SUCH ACQUISITION OR (B) is an insurance company and THE
SOURCE OF FUNDS FOR THE PURCHASE OF THE CERTIFICATES IS AN "INSURANCE COMPANY
GENERAL ACCOUNT" WITHIN THE MEANING OF SECTION V(E) UNDER PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG. 35925 (JULY 12, 1995), AND
THE PURCHASE AND HOLDING OF THE CERTIFICATES are COVERED BY SECTIONS I AND III
UNDER PTCE 95-60, OR (ii) IF THIS CERTIFICATE IS PRESENTED FOR REGISTRATION IN
THE NAME OF A PLAN SUBJECT TO TITLE I OF ERISA, OR SECTION 4975 OF THE CODE OR
SIMILAR LAW (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), OR A
TRUSTEE OF ANY SUCH PLAN, OR ANY OTHER PERSON WHO IS USING THE ASSETS OF ANY
SUCH PLAN TO EFFECT SUCH ACQUISITION, AN OPINION OF COUNSEL acceptable to the
depositor TO THE EFFECT THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE WILL
NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE "PLAN ASSETS"
PURSUANT TO THE DEPARTMENT OF LABOR REGULATIONS SET FORTH IN 29 C.F.R.
ss.2510.3-101 or TO BE SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF
ERISA OR THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR THE CODE OR SIMILAR
LAW, WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE
MEANING OF SECTION 406 OR 407 OF ERISA OR SECTION 4975 OF THE CODE OR SIMILAR
LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER, THE COMPANY OR ANY OF THEIR
AFFILIATES TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES
UNDER ERISA OR SECTION 4975 OF THE CODE OR SIMILAR LAW) RELATING TO THE
CERTIFICATES, WHICH OPINION OF COUNSEL OR OTHER REPRESENTATION SHALL NOT BE AN
EXPENSE OF THE TRUSTEE, THE DEPOSITOR OR THE SERVICER.
C-1
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE SERVICER.
-
CLASS B-4 CERTIFICATE
Number: 03-C2-B-4-1 Original Denomination:
$
Cut-off Date: December 1, 2003 Latest Possible
Maturity Date: August 25, 2034
First Distribution Date: Aggregate Initial Certificate
January 25, 2004 Balance of all Class B-4
Certificates: $
Pass-Through Rate: CUSIP:
C-2
CHASE FUNDING LOAN ACQUISITION TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
Series 2003-C2
evidencing an ownership interest in distributions allocable to the Class B-4
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
CHASE FUNDING, INC.
This certifies that _________________________ is the registered owner
of the ownership interest (the "Ownership Interest") evidenced by this
Certificate (obtained by dividing the Original Denomination of this Certificate
by the aggregate Initial Certificate Balance of all Class B-4 Certificates) in
certain distributions with respect to a pool of conventional, sub-prime mortgage
loans (the "Mortgage Loans") formed and sold by Chase Funding, Inc. (hereinafter
called the "Depositor"), and certain other property held in trust for the
benefit of Certificateholders (collectively, the "Trust Fund"). The Mortgage
Loans are serviced by Chase Manhattan Mortgage Corporation (the "Servicer") and
are secured by first mortgages on Mortgaged Properties. The Trust Fund was
created pursuant to a pooling and servicing agreement (the "Agreement"), dated
as of December 1, 2003, among the Depositor, the Servicer and Wachovia Bank,
N.A., as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Loan Acquisition Trust, Mortgage Loan Asset-Backed
Certificates, Series 2003-C2, Class B-4 (the "Class B-4 Certificates") and 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 Agreement such Holder is bound.
The Class A Certificates, Class R Certificate and Class B Certificates
are collectively referred to herein as the "Certificates".
Pursuant to the terms of the Agreement, the Paying Agent will
distribute from funds in the Distribution Account the amounts described in the
Agreement on the 25th day of each month or, if such 25th day is not a Business
Day, the Business Day immediately following (the "Distribution Date"),
commencing on January 25, 2004. Such distributions will be made to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month preceding the month in which such payment is made, or
if such last day is not a Business Day, the Business Day immediately preceding
such last day.
Distributions on this Certificate will be made either by check mailed
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Servicer in writing at least 5 Business Days prior to the first
Distribution Date for which distribution by wire transfer is to be made, and
such Holder's Certificates evidence an aggregate original principal balance of
not less than $1,000,000 or such Holder holds a 100% Percentage Interest of such
Class. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Servicer, of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office of the Servicer or at such other office as may be designated by such
notice of final distribution.
The Servicer will maintain or cause to be maintained a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Servicer will provide for the registration of Certificates and of transfers
and exchanges of Certificates. Upon surrender for registration of transfer of
any Certificate at any office or agency of the Servicer, or, if an
Authenticating Agent has been appointed under the Agreement, the Authenticating
Agent, maintained for such purpose, the Servicer, or, if an Authenticating Agent
has been appointed under the Agreement, the Authenticating Agent, will, subject
to the limitations set forth in the Agreement, authenticate and deliver, in the
name of the designated transferee or transferees, a Certificate of a like class
and dated the date of authentication by the Authenticating Agent.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Servicer, of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Servicer, for that purpose and specified in such notice of
final distribution.
C-3
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.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-4
IN WITNESS WHEREOF, the Depositor has caused this Class B-__
Certificate to be duly executed.
Dated: CHASE FUNDING, INC.
By:
------------------------------
Authorized Officer
C-5
Dated: CERTIFICATE OF AUTHENTICATION
This is one of the Class B-__
Certificates referred to
in the within-mentioned
Agreement.
JPMORGAN CHASE BANK
as Authenticating Agent
By:
--------------------------------
Authorized Signatory
C-6
REVERSE OF CERTIFICATE
CHASE FUNDING LOAN ACQUISITION TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
SERIES 2003-C2
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Loan Acquisition Trust, Mortgage Loan Asset-Backed
Certificates, Series 2003-C2, issued in one or more Classes of Class A
Certificates, Class R Certificate and Class B Certificates, each evidencing an
interest in certain distributions with respect to a pool of conventional,
sub-prime Mortgage Loans formed and sold by the Depositor and certain other
property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal
balance of this Certificate will be different from the Original Denomination
shown above. Anyone acquiring this Certificate may ascertain its current
principal balance by inquiry of the Servicer.
The Holder, by its acceptance of this Certificate, agrees that it will
look solely to the Trust Fund and certain amounts resulting from credit
enhancements for payment hereunder and that the Trustee is not liable to the
Holders 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 hereby, and the rights,
duties and immunities of the Trustee.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Servicer 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 the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Depositor, the
Servicer and the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate and the Percentage Interest in the
Trust Fund evidenced thereby for the purpose of receiving distributions pursuant
to the Agreement and for all other purposes whatsoever, and neither the
Depositor, the Servicer nor the Trustee will be affected by notice to the
contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC included in the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such action does not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder.
C-7
The Agreement may also be amended from time to time by the Depositor,
the Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66 2/3% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (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 clause (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) change the percentage specified in clause (ii) of the third
paragraph of Section 10.01 of the Agreement, without the consent of the Holders
of all Certificates of such Class then outstanding. In addition, all amendments
to the Agreement will require delivery of an Opinion of Counsel to the effect
that such amendment will not cause any REMIC included in the Trust Fund to fail
to qualify as a REMIC.
For federal income tax purposes, the Trust Fund will include segregated
asset pools. The Depositor intends to make elections to treat each as a "real
estate mortgage investment conduit" (each a "REMIC"). The Certificates (other
than the Class R Certificate) will represent "regular interests" in the
upper-tier REMIC. The Class R Certificate will represent the sole class of
"residual interest" in each of the REMICs.
The respective obligations and responsibilities of the Depositor, the
Servicer and the Trustee under the Agreement will terminate upon (i) the later
of the final payment or other liquidation (or any Advance with respect thereto)
of the last Mortgage Loan or the disposition of all property acquired upon the
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due thereunder; or (ii) at the option of the Servicer,
on any Distribution Date on which the aggregate Stated Principal Balances of all
Outstanding Mortgage Loans is less than or equal to 10% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-Off Date, so long as the
Servicer deposits or causes to be deposited in the Distribution Account during
the Principal Prepayment Period related to such Distribution Date an amount
equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage
Loan (other than in respect of REO Property), (ii) accrued interest thereon at
the applicable Mortgage Rate, (iii) the appraised value of any REO Property,
such appraisal to be conducted by an appraiser mutually agreed upon by the
Depositor and the Trustee and (iv) any unreimbursed Servicing Fees, Advances and
Servicing Advances, and the principal portion of any unreimbursed Advances, made
on the Mortgage Loans prior to such termination; provided, however, that in no
event shall the trust created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the Court of St.
James's, living on the date hereof and (ii) the Latest Possible Maturity Date.
C-8
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
--------------------------------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
__________________________________Attorney to transfer the within Certificate on
the books kept for the registration thereof, with full power of substitution in
the premises.
Dated:
(Signature guaranty)
----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
C-9
EXHIBIT D
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A "RESIDUAL
INTEREST" IN A TWO "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.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
FUNDING, INC. ("CHASE FUNDING"), THE SERVICER, OR THE TRUSTEE REFERRED TO BELOW
OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR INTEREST
REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED
BY CHASE FUNDING, CHASE MANHATTAN MORTGAGE CORPORATION, THE TRUSTEE OR BY ANY OF
THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS CERTIFICATE TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED OR SECTION
4975 OF THE CODE OR MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE
OR LOCAL LAW (A "PLAN"), AND IS NOT DIRECTLY OR INDIRECTLY PURCHASING ANY
CERTIFICATE ON BEHALF OF, AS INVESTMENT MANAGER OF, AS NAMED FIDUCIARY OF, AS
TRUSTEE OF OR WITH ASSETS OF A PLAN.
TRANSFERABILITY OF THIS CERTIFICATE IS RESTRICTED UNDER THE PROVISIONS OF
SECTION 5.02 OF THE AGREEMENT.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE SERVICER.
CLASS R CERTIFICATE
Number: 03-C2-R-1 Original Denomination:
$100.00
Cut-off Date: December 1, 2003 Latest Possible
Maturity Date: August 25, 2034
First Distribution Date: Aggregate Initial Certificate
January 25, 2004 Balance of all Class R
Certificates: $100.00
Pass-Through Rate: CUSIP:
D-1
CHASE FUNDING LOAN ACQUISITION TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
Series 2003-C2
evidencing an ownership interest in distributions allocable to the Class R
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
CHASE FUNDING, INC.
This certifies that ______________________ is the registered owner of
the ownership interest (the "Ownership Interest") evidenced by this Certificate
in certain distributions with respect to a pool of conventional, sub-prime
mortgage loans (the "Mortgage Loans") formed and sold by Chase Funding, Inc.
(hereinafter called the "Depositor"), and certain other property held in trust
for the benefit of Certificateholders (collectively, the "Trust Fund"). The
Mortgage Loans are serviced by Chase Manhattan Mortgage Corporation (the
"Servicer") and are secured by first mortgages on Mortgaged Properties. The
Trust Fund was created pursuant to a pooling and servicing agreement (the
"Agreement"), dated as of December 1, 2003, among the Depositor, the Servicer
and Wachovia Bank, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Loan Acquisition Trust, Mortgage Loan Asset-Backed
Certificates, Series 2003-C2, Class R (the "Class R Certificates") and 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 Agreement such Holder is bound.
The Class A Certificates, the Class R Certificate and Class B
Certificates are collectively referred to herein as the "Certificates".
Pursuant to the terms of the Agreement, the Paying Agent will
distribute from funds in the Distribution Account the amounts described in the
Agreement on the 25th day of each month or, if such 25th day is not a Business
Day, the Business Day immediately following (the "Distribution Date"),
commencing on January 25, 2004. Such distributions will be made to the Person in
whose name this Certificate is registered at the close of business on the last
Business Day of the month preceding the month in which such payment is made, or
if such last day is not a Business Day, the Business Day immediately preceding
such last day.
Distributions on this Certificate will be made either by check mailed
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Servicer in writing at least 5 Business Days prior to the first
Distribution Date for which distribution by wire transfer is to be made, and
such Holder's Certificates evidence an aggregate original principal balance of
not less than $1,000,000 or such Holder holds a 100% Percentage Interest of such
Class. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Servicer, of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office of the Servicer or at such other office as may be designated by such
notice of final distribution.
D-2
The Servicer will maintain or cause to be maintained a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Servicer will provide for the registration of Certificates and of transfers
and exchanges of Certificates. Upon surrender for registration of transfer of
any Certificate at any office or agency of the Servicer, or, if an
Authenticating Agent has been appointed under the Agreement, the Authenticating
Agent, maintained for such purpose, the Servicer, or, if an Authenticating Agent
has been appointed under the Agreement, the Authenticating Agent, will, subject
to the limitations set forth in the Agreement, authenticate and deliver, in the
name of the designated transferee or transferees, a Certificate of a like class
and dated the date of authentication by the Authenticating Agent.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Servicer, of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Servicer, for that purpose and specified in such notice of
final distribution.
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.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
D-3
IN WITNESS WHEREOF, the Depositor has caused this Class R Certificate
to be duly executed.
Dated: CHASE FUNDING, INC.
By:
-------------------------------
Authorized Officer
D-4
Dated: CERTIFICATE OF AUTHENTICATION
This is the Class R
Certificate referred to
in the within-mentioned
Agreement.
JPMORGAN CHASE BANK
as Authenticating Agent
By:
-------------------------------
Authorized Signatory
D-5
REVERSE OF CERTIFICATE
CHASE FUNDING LOAN ACQUISITION TRUST
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
SERIES 2003-C2
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Loan Acquisition Trust, Mortgage Loan Asset-Backed
Certificates, Series 2003-C2, issued in one or more Classes of Class A
Certificates, Class R Certificate and Class B Certificates, each evidencing an
interest in certain distributions with respect to a pool of conventional,
sub-prime Mortgage Loans formed and sold by the Depositor and certain other
property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal
balance of this Certificate will be different from the Original Denomination
shown above. Anyone acquiring this Certificate may ascertain its current
principal balance by inquiry of the Servicer.
The Holder, by its acceptance of this Certificate, agrees that it will
look solely to the Trust Fund and certain amounts resulting from credit
enhancements for payment hereunder and that the Trustee is not liable to the
Holders 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 hereby, and the rights,
duties and immunities of the Trustee.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Servicer 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 the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Depositor, the
Servicer and the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate and the Percentage Interest in the
Trust Fund evidenced thereby for the purpose of receiving distributions pursuant
to the Agreement and for all other purposes whatsoever, and neither the
Depositor, the Servicer nor the Trustee will be affected by notice to the
contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC included in the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such action does not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder.
D-6
The Agreement may also be amended from time to time by the Depositor,
the Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66 2/3% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (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 clause (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) change the percentage specified in clause (ii) of the third
paragraph of Section 10.01 of the Agreement, without the consent of the Holders
of all Certificates of such Class then outstanding. In addition, all amendments
to the Agreement will require delivery of an Opinion of Counsel to the effect
that such amendment will not cause any REMIC included in the Trust Fund to fail
to qualify as a REMIC.
For federal income tax purposes, the Trust Fund will include segregated
asset pools. The Depositor intends to make elections to treat each as a "real
estate mortgage investment conduit" (each a "REMIC"). The Certificates (other
than the Class R Certificate) will represent "regular interests" in the
upper-tier REMIC. The Class R Certificate will represent the sole class of
"residual interest" in each of the REMICs.
The respective obligations and responsibilities of the Depositor, the
Servicer and the Trustee under the Agreement will terminate upon (i) the later
of the final payment or other liquidation (or any Advance with respect thereto)
of the last Mortgage Loan or the disposition of all property acquired upon the
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due thereunder; or (ii) at the option of the Servicer,
on any Distribution Date on which the aggregate Stated Principal Balances of all
Outstanding Mortgage Loans is less than or equal to 10% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-Off Date, so long as the
Servicer deposits or causes to be deposited in the Distribution Account during
the Principal Prepayment Period related to such Distribution Date an amount
equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage
Loan (other than in respect of REO Property), (ii) accrued interest thereon at
the applicable Mortgage Rate, (iii) the appraised value of any REO Property,
such appraisal to be conducted by an appraiser mutually agreed upon by the
Depositor and the Trustee and (iv) any unreimbursed Servicing Fees, Advances and
Servicing Advances, and the principal portion of any unreimbursed Advances, made
on the Mortgage Loans prior to such termination; provided, however, that in no
event shall the trust created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the Court of St.
James's, living on the date hereof and (ii) the Latest Possible Maturity Date.
D-7
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
--------------------------------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
________________________________Attorney to transfer the within Certificate on
the books kept for the registration thereof, with full power of substitution in
the premises.
Dated:
(Signature guaranty)
---------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
D-8
EXHIBIT E
[RESERVED]
E-1
EXHIBIT F-1
MORTGAGE LOAN SCHEDULE - GROUP ONE
[INTENTIONALLY OMITTED]
F-1-1
EXHIBIT F-2
MORTGAGE LOAN SCHEDULE - GROUP TWO
[INTENTIONALLY OMITTED]
F-2-1
EXHIBIT G
FORM OF OFFICER'S CERTIFICATE (PAYING AGENT)
[DATE]
Chase Funding, Inc.
000 Xxxx Xxxxxxxxx, 0xx Xxxxx Xxxxx
Xxxxxxxxx Lake, New Jersey 07675
Reference is made to each pooling and servicing agreement listed on
Exhibit A hereto (each, an "Agreement") in which JPMorgan Chase Bank has been
appointed the paying agent (the "Paying Agent") by Chase Manhattan Mortgage
Corporation. I, [Name of Officer], a vice president of JPMorgan Chase Bank,
hereby certify to you that:
1. I have reviewed the annual report on Form 10-K, and all reports on Form 8-K
containing distribution or servicing reports filed in respect of periods
included in the year covered by the annual report, of each of the trusts created
pursuant to each Agreement;
2. Based on my knowledge, the information in these reports, taken as a whole,
does not contain any untrue statement of a material fact or omit to state a
material fact required by the respective pooling and servicing agreement to be
included therein and necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by the annual reports; and
3. Based on my knowledge, the distribution or servicing information required to
be provided to the Paying Agent by the Servicer under each Agreement for
inclusion in the reports is included in the reports.
4. In compiling the distribution information, the Paying Agent has relied upon
information furnished to it by the Servicer under each pooling and servicing
agreement. The Paying Agent shall have no responsibility or liability for any
inaccuracy in such reports resulting from information so provided by the
Servicer.
_______________________
[Name of Officer]
Vice President
JPMorgan Chase Bank
G-1
EXHIBIT H
FORM OF TRUSTEE CERTIFICATION
[DATE]
Chase Funding, Inc.
300 Xxxx Boulevard, 0xx Xxxxx Xxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Re: Pooling and Servicing Agreement dated as of December 1, 2003 among
Chase Funding, Inc. as depositor, Chase Manhattan Mortgage Corporation,
as servicer, and Wachovia Bank, N.A., as trustee, Chase Funding
Mortgage Loan Asset-Backed Certificates, Series 2003-C2
-------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;
(ii) In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing Date, it
has received evidence of such recording; and
(iii) Such documents have been reviewed by it and such documents do not
contain any material omissions or defects within the meaning of Section 2.01 or
2.02.
The Trustee further certifies that as to each Mortgage Loan, the
Trustee holds the Mortgage Note without any Responsible Officer of the Trustee
having received written notice (a) of any adverse claims, liens or encumbrances,
(b) that any Mortgage Note was overdue or has been dishonored, (c) of evidence
on the face of any Mortgage Note or Mortgage of any security interest therein,
or (d) of any defense against or claim to the Mortgage Note by any other party.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond confirming (i) that the Mortgage Loan
number and the name of the Mortgagor in each Mortgage File conform to the
respective Mortgage Loan number and name listed on the Mortgage Loan Schedule
and (ii) the existence in each Mortgage File of each of the documents listed in
subparagraphs (i)(A) through (F), inclusive, of Section 2.01 in the Agreement.
The Trustee makes no representations or warranties as to the validity, legality,
sufficiency, enforceability or genuineness of any of the documents contained in
each Mortgage Loan or the collectibility, 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.
H-1
Wachovia Bank, N.A.,
as Trustee
By:
------------------------
Name:
----------------------
Title:
---------------------
H-2
EXHIBIT I
FORM OF TRANSFEREE'S LETTER
CHASE FUNDING
MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2003-C2
[DATE]
Chase Funding, Inc.
000 Xxxx Xxxxxxxxx, 0xx Xxxxx Xxxxx
Xxxxxxxxx Lake, New Jersey 07675
Ladies and Gentlemen:
We propose to purchase the Chase Funding Mortgage Loan Asset-Backed
Certificates, Series 2003-C2, Class R Certificate, described in the Prospectus
Supplement, dated December 17, 2003, and Prospectus, dated December 17, 2003.
1. We certify that (a) we are not a disqualified organization, (b) we
are not purchasing such Class R Certificate on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and (c) we
are not an employee benefit plan subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or Section 4975 of the Code or
any applicable federal, state or local law materially similar to the foregoing
provisions of ERISA and the Code, and are not directly or indirectly purchasing
any certificate on behalf of, as investment manager of, as named fiduciary of,
as trustee of or with assets of a plan or, in the case of an insurance company,
the assets of any separate accounts or general accounts containing any "plan
assets" pursuant to the Department of Labor plan asset regulations set forth in
29 C.F.R. ss.2510.3-101. We understand that any breach by us of this
certification may cause us to be liable for an excise tax imposed upon transfers
to disqualified organizations.
2. We certify that (a) we have historically paid our debts as they
became due, (b) we intend, and believe that we will be able, to continue to pay
our debts as they become due in the future, (c) we understand that, as
beneficial owner of the Class R Certificate, we may incur tax liabilities in
excess of any cash flows generated by the Class R Certificate, (d) we intend to
pay any taxes associated with holding the Class R Certificate as they become
due, and (e) we will not cause income from the Class R Certificate to be
atttributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of ours or another U.S. taxpayer.
I-1
3. We acknowledge that we will be the beneficial owner of the Class R
Certificate and:1/
______ The Class R Certificate will be registered in our name.
______ The Class R Certificate will be held in the name of
our nominee, _________________, which is not a
disqualified organization.
4. Unless Chase Funding, Inc. ("Chase Funding") has consented to the
transfer to us by executing the form of Consent affixed hereto as Appendix B, we
certify that we are a U.S. person; for this purpose the term "U.S. person" means
a citizen or resident of the United States, a corporation, or partnership
(unless, in the case of a partnership, Treasury regulations are adopted that
provide otherwise) created or organized in or under the laws of the United
States, any State thereof or the District of Columbia, including an entity
treated as a corporation or partnership for federal income tax purposes, an
estate whose income is subject to United States federal income tax regardless of
the source of its income, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more such U.S. persons have the authority to control all substantial decisions
of the trust (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons). We agree that any breach by us of this certification
shall render the transfer of any interest in the Class R Certificate to us
absolutely null and void and shall cause no rights in the Class R Certificate to
vest in us.
5. We agree that in the event that at some future time we wish to
transfer any interest in the Class R Certificate, we will transfer such interest
in the Class R Certificate only (a) to a transferee that (i) is not a
disqualified organization and is not purchasing such interest in the Class R
Certificate on behalf of a disqualified organization, (ii) is a U.S. person and
(iii) has delivered to Chase Funding a letter in the form of this letter
(including the affidavit appended hereto) and, if requested by Chase Funding, an
opinion of counsel (in a form acceptable to Chase Funding) that the proposed
transfer will not cause the interest in the Class R Certificate to be held by a
disqualified organization or a person who is not a U.S. person or (b) with the
written consent of Chase Funding.
--------
1/ Check appropriate box and if necessary fill in the name of the Transferee's
nominee
I-2
6. We hereby designate Chase Manhattan Mortgage Corporation as our
fiduciary to act as the tax matters person for the Chase Funding Mortgage Loan
Asset-Backed Certificates, Series 2003-C2 REMICs.
Very truly yours,
[PURCHASER]
By:
------------------------
Name:
Title:
Accepted as of __________ __, 200__
CHASE FUNDING, INC.
By:
------------------------
Name:
Title:
I-3
APPENDIX A
Affidavit pursuant to (i) Section
860E(e)(4) of the Internal Revenue Code
of 1986, as amended, and (ii) certain
provisions of the Pooling and Servicing
Agreement
Under penalties of perjury, the undersigned declares that the following is true:
(1) He or she is an officer of _________________________ (the
"Transferee"),
(2) the Transferee's Employer Identification number is __________,
(3) the Transferee is not a "disqualified organization" (as defined below),
has no plan or intention of becoming a disqualified organization, and
is not acquiring any of its interest in the Chase Funding, Inc., Chase
Funding Loan Acquisition Trust, Mortgage Loan Asset-Backed
Certificates, Series 2003-C2, Class R on behalf of a disqualified
organization or any other entity,
(4) unless Chase Funding, Inc. ("Chase Funding") has consented to the
transfer to the Transferee by executing the form of Consent affixed as
Appendix B to the Transferee's Letter to which this Certificate is
affixed as Appendix A, the Transferee is a "U.S. person" (as defined
below),
(5) that no purpose of the transfer is to avoid or impede the assessment or
collection of tax,
(6) the Transferee has historically paid its debts as they became due,
(7) the Transferee intends, and believes that it will be able, to continue
to pay its debts as they become due in the future,
(8) the Transferee understands that, as beneficial owner of the Class R
Certificate, it may incur tax liabilities in excess of any cash flows
generated by the Class R Certificate,
(9) the Transferee intends to pay any taxes associated with holding the
Class R Certificate as they become due,
(10) the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by Chase Funding (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the
Class R Certificate will not be owned directly or indirectly by a
disqualified organization, and
(11) IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the
transfer is not a direct or indirect transfer of the Class R
Certificate to a foreign permanent establishment or fixed base (within
the meaning of an applicable income tax treaty) of the Transferee, and
as to each of the residual interests represented by the Class R
Certificates, the present value of the anticipated tax liabilities
associated with holding such residual interest does not exceed the sum
of:
(A) the present value of any consideration given to the Transferee
to acquire such residual interest;
I-4
(B) the present value of the expected future distributions on such
residual interest; and
(C) the present value of the anticipated tax savings associated
with holding such residual interest as the related REMIC
generates losses.
For purposes of this declaration, (i) the Transferee is assumed to pay
tax at a rate equal to the highest rate of tax specified in Section
11(b)(1) of the Code, but the tax rate specified in Section 55(b)(1)(B)
of the Code may be used in lieu of the highest rate specified in
Section 11(b)(1) of the Code if the Transferee has been subject to the
alternative minimum tax under Section 55 of the Code in the preceding
two years and will compute its taxable income in the current taxable
year using the alternative minimum tax rate, and (ii) present values
are computed using a discount rate equal to the Federal short-term rate
prescribed by Section 1274(d) of the Code for the month of the transfer
and the compounding period used by the Transferee;]
[(11) (A) at the time of the transfer, and at the close of each of the
Transferee's two fiscal years preceding the Transferee's
fiscal year of transfer, the Transferee's gross assets for
financial reporting purposes exceed $100 million and its net
assets for financial reporting purposes exceed $10 million;
and
(B) the Transferee is an eligible corporation as defined in
Treasury regulation section 1.860E-1(c)(6)(i) and has agreed
in writing that any subsequent transfer of the Class R
Certificate will be to another eligible corporation in a
transaction that satisfies Treasury regulation sections
1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii), 1.860E-1(c)(4)(iii) and
1.860E-1(c)(5) and such transfer will not be a direct or
indirect transfer to a foreign permanent establishment (within
the meaning of an applicable income tax treaty) of a domestic
corporation.
For purposes of this declaration, the gross assets and net assets of the
Transferee do not include any obligation of any related person (as defined in
Treasury regulation section 1.860E-1(c)(6)(ii)) or any other asset if a
principal purpose for holding or acquiring the other asset is to permit the
Transferee to make this declaration or to satisfy the requirements of Treasury
regulation section 1.860E-1(c)(5)(i);]
(12) the Transferee represents that it will not cause income from the Class
R Certificate to be attributable to a foreign permanent establishment
or fixed base (within the meaning of an applicable income tax treaty)
of the Transferee or another U.S. taxpayer;
I-5
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions
of such trust, (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons).
_________________________________
By: ______________________________
_________________________________
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
__________________________________
__________________________________, Secretary
I-6
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 Investor, and acknowledged to me that he executed the same as his
free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this day of , 200_ .
__________________________
Notary Public
County of ___________________
State of _____________________
My commission expires the ________ day of ______________
By: ____________________________
Name: ____________________
Title: ____________________
Dated: _____________
I-7
APPENDIX B
CONSENT
_________________________ (Transferee)
_________________________
_________________________
Ladies and Gentlemen:
Chase Funding, Inc. ("Chase Funding") hereby consents to the transfer
to, and registration in the name of, the Transferee (or, if applicable,
registration in the name of such Transferee's nominee of the Chase Funding,
Mortgage Loan Asset-Backed Certificates, Series 2003-C2, Class R Certificate
described in the Transferee's Letter to which this Consent is appended,
notwithstanding Chase Funding's knowledge that the Transferee is not a U.S.
person (as defined in such Transferee's Letter).
CHASE FUNDING, INC.
Dated:__________________________ By:_______________________________
I-8
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS R CERTIFICATE
Chase Funding, Inc.
000 Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Wachovia Bank, N.A., as Trustee
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
RE: Chase Funding, Inc., Chase Funding Mortgage Loan Asset-Backed
Certificates, Series 2003-C2
-------------------------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the Class R Certificate, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any Person, or otherwise approached or negotiated
with any Person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act and
(c) if we are disposing of a Class R Certificate, we have no knowledge the
Transferee is not a Permitted Transferee. All capitalized terms used herein but
not defined herein shall have the meanings assigned to them in the Pooling and
Servicing Agreement dated as of December 1, 2003, among Chase Funding, Inc., as
depositor, Chase Manhattan Mortgage Corporation, as servicer, and Wachovia Bank,
N.A., as trustee.
Very truly yours,
_______________________________
Name of Transferor
By: ___________________________
Name:
Title
J-1
EXHIBIT K
FORM OF INVESTMENT LETTER
(Accredited Investor)
[DATE]
Chase Funding, Inc.
300 Xxxx Boulevard, 0xx Xxxxx Xxxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Re: Pooling and Servicing Agreement dated as of December 1, 2003 among
Chase Funding, Inc. as depositor, Chase Manhattan Mortgage
Corporation, as servicer, and Wachovia Bank, N.A., as trustee, Chase
Funding, Inc., Chase Funding Mortgage Loan Asset-Backed
Certificates, Series 2003-C2 [Class R]
-------------------------------------------------------------------
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
________________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of Mortgage Loan Asset-Backed Certificates, Series
2003-C2, [Class R] (the "Certificates"), issued pursuant to a pooling and
servicing agreement, dated as of December 1, 2003 (the "Pooling and Servicing
Agreement"), among Chase Funding, Inc. as depositor (the "Depositor"), Chase
Manhattan Mortgage Corporation, as servicer (the "Servicer"), and Wachovia Bank,
N.A., as trustee (the "Trustee"). [The Purchaser intends to register the
Transferred Certificate in the name of ____________________, as nominee for
_________________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS,
AND MAY NOT, DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED,
OR OFFERED FOR SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO
REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO
TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE SERVICER SHALL
HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE SERVICER (A)
AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND (B)
REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE OF
THE CERTIFICATES.
K-1
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL
HAVE RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF
THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT
AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF
THE CODE OR MATERIALLY SIMILAR PROVISIONS OF APPLICABLE FEDERAL, STATE
OR LOCAL LAW ("SIMILAR LAW") (A "PLAN"), AND IS NOT DIRECTLY OR
INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT
MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A
PLAN OR, IN THE CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY
SEPARATE ACCOUNTS TO EFFECT SUCH ACQUISITION OR (B) SUCH TRANSFEREE IS
an insurance company and THE SOURCE OF FUNDS FOR THE PURCHASE OF THE
CERTIFICATES IS AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE
MEANING OF SECTION V(E) UNDER PROHIBITED TRANSACTION CLASS EXEMPTION
95-60 ("PTCE 95-60"), 60 FED. REG. 35925 (JULY 12, 1995), AND THE
PURCHASE AND HOLDING OF THE CERTIFICATES ARE COVERED BY SECTIONS I AND
III UNDER PTCE 95-60, OR (ii) IF THIS CERTIFICATE IS PRESENTED FOR
REGISTRATION IN THE NAME OF A PLAN SUBJECT TO TITLE I OF ERISA, OR
SECTION 4975 OF THE CODE OR SIMILAR LAW (OR COMPARABLE PROVISIONS OF
ANY SUBSEQUENT ENACTMENTS), OR A TRUSTEE OF ANY SUCH PLAN, OR ANY OTHER
PERSON WHO IS USING THE ASSETS OF ANY SUCH PLAN TO EFFECT SUCH
ACQUISITION, AN OPINION OF COUNSEL acceptable to the depositor TO THE
EFFECT THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE WILL NOT
RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE "PLAN ASSETS"
PURSUANT TO THE DEPARTMENT OF LABOR REGULATIONS SET FORTH IN 29 C.F.R.
ss.2510.3-101 or TO BE SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA OR THE PROHIBITED TRANSACTION PROVISIONS OF ERISA
OR THE CODE OR SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A
PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR 407 OF
ERISA OR SECTION 4975 OF THE CODE OR SIMILAR LAW, AND WILL NOT SUBJECT
THE TRUSTEE, THE SERVICER, THE COMPANY OR ANY OF THEIR AFFILIATES TO
ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER
ERISA OR SECTION 4975 OF THE CODE OR SIMILAR LAW) RELATING TO THE
CERTIFICATES, WHICH OPINION OF COUNSEL OR OTHER REPRESENTATION SHALL
NOT BE AN EXPENSE OF THE TRUSTEE, THE DEPOSITOR OR THE SERVICER.
3. The Purchaser is acquiring the Transferred Certificates for its own
account [for investment only]**/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
---------
**/ Not required of a broker/dealer purchaser.
K-2
4. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Securities Act.
5. The Purchaser will not nor has it authorized nor will it authorize
any person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
6. Either (A) the Purchaser is not an employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or a plan within the meaning of Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code") or a plan subject to
federal state or local law materially similar to the foregoing provisions of
ERISA and the Code (each, a "Plan"), and is not directly or indirectly
purchasing any Certificate on behalf of, as investment manager of, as named
fiduciary of, as trustee of or with assets of a Plan or directly or indirectly
purchasing any certificates with the assets of any insurance company separate
account or general account containing any "plan assets" or of any Plan or (B)
the Purchaser is an insurance company and the source of funds for the purchase
of such Certificate is an "insurance company general account" within the meaning
of Section V(e) of Prohibited Transaction Class Exemption 96-60 ("PTCE 95-60"),
60 Fed. Reg. 35925 (July 12, 1995), and the acquisition and holding of such
Certificate are covered under Sections I and III of PTCE 95-60.
7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit L to the Pooling and Servicing Agreement.
8. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.
Very truly yours,
[PURCHASER]
By:_______________________________
Name:
Title:
K-3
EXHIBIT L
FORM OF RULE 144A INVESTMENT LETTER
(Qualified Institutional Buyer)
[DATE]
Chase Funding, Inc.
000 Xxxx Xxxxxxxxx, 0xx Xxxxx Xxxxx
Xxxxxxxxx Lake, New Jersey 07675
Chase Manhattan Mortgage Corporation
c/o JPMorgan Chase Bank
Global Trust Services
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Pooling and Servicing Agreement dated as of December 1, 2003 among
Chase Funding, Inc. as depositor, Chase Manhattan Mortgage
Corporation, as servicer, and Wachovia Bank, N.A., as trustee, Chase
Funding, Inc., Chase Funding Mortgage Loan Asset-Backed
Certificates, Series 2003-C2 [Class R]
--------------------------------------------------------------------
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
________________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of Mortgage Loan Asset-Backed Certificates, Series
2003-C2, [Class R] (the "Certificates"), issued pursuant to a pooling and
servicing agreement, dated as of December 1, 2003 (the "Pooling and Servicing
Agreement"), among Chase Funding, Inc. as depositor (the "Depositor"), Chase
Manhattan Mortgage Corporation, as servicer (the "Servicer"), and Wachovia Bank,
N.A., as trustee (the "Trustee"). [The Purchaser intends to register the
Transferred Certificate in the name of ____________________, as nominee for
__________________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Trust Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Transferred
Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Transferred Certificates, (d)
either (A) we are not an employee benefit plan within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended, or a
plan within the meaning of Section 4975 of the Internal Revenue Code of 1986, as
amended or a plan subject to federal, state or local law materially similar to
the foregoing provisions of ERISA and the Code (each, a "Plan"), nor are we
directly or indirectly purchasing any Certificate on behalf of, as investment
manager of, as named fiduciary of, as trustee of or with assets of a Plan or
directly or indirectly purchasing any certificates with the assets of any
insurance company separate account or general account containing any "plan
assets" or of any Plan, or (B) we are an insurance company and the source of
funds for the purchase of the Certificates is an "insurance company general
account" within the meaning of Section V(e) of Prohibited Transaction Class
Exemption 96-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12, 1995), and the
L-1
acquisition and holding of such Certificates are covered under Sections I and
III of PTCE 95-60, (e) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, (f) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed one of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale of the Transferred Certificates to us is being made in
reliance on Rule 144A. We are acquiring the Transferred Certificates for our own
account or for resale pursuant to Rule 144A and further understand that such
Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed by us, based upon certifications of such purchaser or
information we have in our possession, 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.
We agree to indemnify the Trustee, the Servicer and the Depositor
against any liability that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:______________________________
Name:
Title:
L-2
ANNEX 1
-------
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 the 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 $____________*/ 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 Federal, 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.
____________________
* 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.
____ 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
such institution 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, as amended.
____ 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 the State,
territory or the District of Columbia.
L-3
____ 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, as amended.
____ Investment Advisor. The Buyer is an investment
advisor registered under the Investment Advisors Act
of 1940, as amended.
____ 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,
as amended.
____ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (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.
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 as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
L-4
By:______________________________
Name:
Title:
Date:____________________________
ANNEX 2
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 Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
____ The Buyer owned $___________ in securities (other
than the excluded securities referred to below) as of
the end of the Buyer's most recent fiscal year (such
amount being calculated in accordance with Rule
144A).
____ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $__________ in
securities (other than the excluded securities
referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) 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.
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.
L-6
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.
By:__________________________________
Name:
Title:
IF AN ADVISER:
_____________________________________
Print Name of Buyer
Date:________________________________
L-7
EXHIBIT M
REQUEST FOR RELEASE OF DOCUMENTS
To: Wachovia Bank, N.A.
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Re:
In connection with the administration of the Mortgage Loans held by
you, as Trustee, pursuant to the above-captioned Pooling and Servicing
Agreement, we request the release, and hereby acknowledge receipt, of the
Mortgage File for the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_______ 1. Mortgage Loan Paid in Full (Servicer hereby certifies that all
amounts received in connection therewith have been credited to the
Collection Account)
_______ 2. Mortgage Loan Liquidated (Servicer hereby certifies that all
proceeds of foreclosure, insurance or other liquidation have been
received and credited to the Collection Account
_______ 3. Mortgage Loan Repurchased pursuant to Section 2.03(c) of the
Pooling and Servicing Agreement
_______ 4. Mortgage Loan in Foreclosure
_______ 5. Other
Reason: ________________________
By:______________________________
(authorized signer)
Address:_________________________
Date:____________________________
If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.
If box 3, 4, or 5 above is checked, upon our return of all of the above
documents to you as Trustee [or Trustee's designee], please acknowledge your
receipt by signing in the space indicated below, and returning this form.
M-1
Trustee
Wachovia Bank, N.A.
Please acknowledge the execution of the above request by your signature and date
below:
_________________________________ _________________________________
Signature Date
Documents returned to Trustee:
_________________________________ _________________________________
Trustee Date
M-2
