ASSET BACKED SECURITIES CORPORATION
Depositor
FAIRBANKS CAPITAL CORP.
Servicer
LONG BEACH MORTGAGE COMPANY
Servicer
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
_________________________________________
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 2002
_________________________________________
Asset Backed Securities Corporation Home Equity Loan Trust 2002-HE1
Asset Backed Pass-Through Certificates, Series 2002-HE1
Table of Contents
Page
ARTICLE I DEFINITIONS
SECTION 1.01. Defined Terms.............................................................................3
SECTION 1.02. Allocation of Certain Interest Shortfalls................................................43
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.............................................................48
SECTION 2.02. Acceptance of REMIC I by the Trustee.....................................................53
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the Originators, the Seller
or the Depositor; Payment of Prepayment Charges in the event of breach...................55
SECTION 2.04. Representations and Warranties of the Depositor..........................................59
SECTION 2.05. Representations, Warranties and Covenants of the Servicers...............................61
SECTION 2.06. Issuance of Class R-I Certificates.......................................................63
SECTION 2.07. Conveyance of REMIC I Regular Interests; Acceptance of REMIC II by the Trustee...........63
SECTION 2.08. Conveyance of REMIC II Regular Interests; Acceptance of REMIC III by the Trustee.........63
SECTION 2.09. Conveyance of the REMIC III Regular Interest; Acceptance of the REMIC III by the
Trustee..................................................................................64
SECTION 2.10. Conveyance of REMIC IV Regular Interests; Acceptance of REMIC V by the Trustee...........64
SECTION 2.11. Conveyance of REMIC IV Regular Interests; Acceptance of REMIC V by the Trustee...........64
ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
SECTION 3.01. Servicers to Act as Servicers............................................................64
SECTION 3.02. Sub-Servicing Agreements Between the Servicers and Sub-Servicers.........................66
SECTION 3.03. Successor Sub-Servicers..................................................................67
SECTION 3.04. Liability of the Servicers...............................................................68
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and Trustee or Certificateholders......68
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by Trustee.........................68
SECTION 3.07. Collection of Certain Mortgage Loan Payments.............................................69
SECTION 3.08. Sub-Servicing Accounts...................................................................69
SECTION 3.09. Collection of Taxes, Assessments and Similar Items; Servicing Accounts...................70
SECTION 3.10. Collection Account; Distribution Account and Pre-Funding Account.........................70
SECTION 3.11. Withdrawals from the Collection Account and Distribution Account.........................73
SECTION 3.12. Investment of Funds in the Collection Account and the Distribution Account...............75
SECTION 3.13. RESERVED.................................................................................76
SECTION 3.14. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage...........76
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements................................78
SECTION 3.16. Realization Upon Defaulted Mortgage Loans................................................79
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files..........................................81
SECTION 3.18. Servicing Compensation...................................................................82
SECTION 3.19. Reports to the Trustee; Collection Account Statements and Other Reports..................83
SECTION 3.20. Statement as to Compliance...............................................................83
SECTION 3.21. Independent Public Accountants' Servicing Report.........................................84
SECTION 3.22. Access to Certain Documentation..........................................................84
SECTION 3.23. Title, Management and Disposition of REO Property........................................85
SECTION 3.24. Obligations of the Servicers in Respect of Prepayment Interest Shortfalls................88
SECTION 3.25. Obligations of the Servicers in Respect of Mortgage Rates and Monthly Payments...........88
SECTION 3.26. Net WAC Fund; Yield Maintenance Agreement................................................89
SECTION 3.27. Fairbanks Servicing Performance Evaluations..............................................90
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions............................................................................91
i
SECTION 4.02. Statements to Certificateholders.........................................................96
SECTION 4.03. Remittance Reports; P&I Advances........................................................100
SECTION 4.04. Allocation of Realized Losses...........................................................101
SECTION 4.05. Compliance with Withholding Requirements................................................102
SECTION 4.06. Commission Reporting....................................................................102
SECTION 4.07. Early Termination Fund..................................................................103
ARTICLE V THE CERTIFICATES
SECTION 5.01. The Certificates........................................................................104
SECTION 5.02. Registration of Transfer and Exchange of Certificates...................................106
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.......................................111
SECTION 5.04. Persons Deemed Owners...................................................................111
SECTION 5.05. Certain Available Information...........................................................111
ARTICLE VI THE DEPOSITOR AND THE SERVICERS
SECTION 6.01. Liability of the Depositor and the Servicers............................................112
SECTION 6.02. Merger or Consolidation of the Depositor or the Servicers...............................112
SECTION 6.03. Limitation on Liability of the Depositor, the Servicers and Others......................113
SECTION 6.04. Limitation on Resignation of the Servicers..............................................113
SECTION 6.05. Rights of the Depositor in Respect of the Servicers.....................................114
ARTICLE VII DEFAULT
SECTION 7.01. Servicer Events of Default..............................................................115
SECTION 7.02. Trustee to Act; Appointment of Successor................................................117
SECTION 7.03. Notification to Certificateholders......................................................119
SECTION 7.04. Waiver of Servicer Events of Default....................................................119
ARTICLE VIII CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.......................................................................119
SECTION 8.02. Certain Matters Affecting the Trustee...................................................120
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans...................................122
SECTION 8.04. Trustee May Own Certificates............................................................122
SECTION 8.05. Fees and Expenses of the Trustee........................................................122
SECTION 8.06. Eligibility Requirements for Trustee....................................................123
SECTION 8.07. Resignation and Removal of the Trustee..................................................124
SECTION 8.08. Successor Trustee.......................................................................124
SECTION 8.09. Merger or Consolidation of Trustee......................................................125
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee...........................................125
SECTION 8.11. [Reserved]..............................................................................126
SECTION 8.12. Appointment of Office or Agency.........................................................126
SECTION 8.13. Representations and Warranties..........................................................126
SECTION 8.14. Yield Maintenance Agreement.............................................................127
ARTICLE IX TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans........................127
SECTION 9.02. Additional Termination Requirements.....................................................129
ARTICLE X REMIC PROVISIONS
SECTION 10.01. REMIC Administration....................................................................130
SECTION 10.02. Prohibited Transactions and Activities..................................................133
SECTION 10.03. Servicers and Trustee Indemnification...................................................134
ARTICLE XI MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment...............................................................................134
SECTION 11.02. Recordation of Agreement; Counterparts..................................................135
SECTION 11.03. Limitation on Rights of Certificateholders..............................................136
ii
SECTION 11.04. Governing Law...........................................................................136
SECTION 11.05. Notices.................................................................................137
SECTION 11.06. Severability of Provisions..............................................................137
SECTION 11.07. Notice to Rating Agencies and the Counterparty..........................................137
SECTION 11.08. Article and Section References..........................................................138
SECTION 11.09. Third Party Rights......................................................................139
SECTION 11.10. Grant of Security Interest..............................................................139
SECTION 11.11. Protection of Assets....................................................................139
iii
Exhibits
Exhibit A-1 Form of Class A1 Certificates
Exhibit A-2 Form of Class A2 Certificates
Exhibit A-3 Form of Class M1, M2 Certificates
Exhibit A-4 Form of Class B Certificate
Exhibit A-5 Form of Class X Certificate
Exhibit A-6 Form of Class P Certificate
Exhibit A-7 Form of Class A-IO Certificate
Exhibit A-8 Form of Class B-IO Certificate
Exhibit A-9 Form of Class R Certificate
Exhibit B (Reserved)
Exhibit C-1 Form of Initial Certification of Trustee
Exhibit C-2 Form of Final Certification of Trustee
Exhibit D Form of Mortgage Loan Purchase Agreement
Exhibit E-1 Form of Request for Release
Exhibit E-2 Form of Request for Release
Exhibit F-1 Forms of Transferor/Transferee Representation Letter
Exhibit F-2 Form of Transfer Affidavit and Agreement
Exhibit G Form of ERISA Certification
Exhibit H Form of Subsequent Transfer Agreement
Exhibit I Letter Agreement
Exhibit J Performance Standards
Schedules
Schedule 1 Mortgage Loan Schedule
Part A - New Century Mortgage Corporation
Part B - Long Beach Mortgage Company
Part C - WMC Mortgage Corp.
iv
This Pooling and Servicing Agreement, is dated and effective as of January 1,
2002, among ASSET BACKED SECURITIES CORPORATION, as Depositor, FAIRBANKS
CAPITAL CORP., as a Servicer, LONG BEACH MORTGAGE COMPANY, as a Servicer and
U.S. BANK NATIONAL ASSOCIATION, as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates (collectively,
the "Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in multiple
REMICs (as defined herein) created hereunder. The Trust Fund will consist of a
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement.
As of the Cut-off Date, the Initial Mortage Loans had an aggregate Stated
Principal Balance equal to $797,977,950.
Set forth below are designations of Classes of Certificates to the categories
used herein.
LIBOR Certificates.................................... Class A and Subordinated Offered Certificates.
Book-Entry Certificates............................... All Classes of Certificates other than the Physical
Certificates.
Class A Certificates.................................. Class A1 and Class A2 Certificates.
Mezzanine Certificates................................ Class M1 and Class M2 Certificates.
Non-Offered Certificates.............................. Class B-IO, Class X, Class P and Residual Certificates.
Offered Certificates.................................. Class A, Class A-IO and Subordinated Offered
Certificates.
Physical Certificates................................. Class B-IO, Class X, Class P and Residual Certificates.
Regular Certificates.................................. All Classes of Certificates other than the Residual
Certificates.
Residual Certificates................................. Class R Certificates.
Subordinated Certificates............................. Class X, Class B-IO and Subordinated Offered
Certificates.
Subordinated Offered Certificates..................... Mezzanine Certificates and Class B Certificates.
2
In consideration of the mutual agreements herein contained, the
Depositor, the Servicers and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without limitation, in
the Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
"Accepted Servicing Practices": With respect to any Mortgage Loan,
those mortgage servicing practices of prudent mortgage lending institutions
which service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.
"Accrued Certificate Interest": With respect to any Class of Offered
Certificates or the Class B-IO Certificates and any Distribution Date,
interest accrued during the related Interest Accrual Period at the related
Pass-Through Rate for such Class for such Distribution Date on the Certificate
Principal Balance, in the case of the Class A Certificates and the
Subordinated Offered Certificates, or on the respective Notional Amount, in
the case of the Class A-IO and Class B-IO Certificates, of such Class
immediately prior to such Distribution Date. With respect to the Class X
Certificates and any Distribution Date, the Accrued Certificate Interest shall
equal the amount of interest that accrues during the related Interest Accruel
Period which is equal to the product of (i) a notional amount, equal to the
aggregate Stated Principal Balance of the Mortgage Loans as of that
Distribution Date, and (ii) the Pass-Through Rate for such Class for such
Distribution Date as set forth in footnote (3) to "REMIC V" under Section 1.03
herein. The Class P and Class R Certificates are not entitled to distributions
in respect of interest and, accordingly, will not accrue interest. To the
extent the Interest Remittance Amount on any Distribution Date is less than
the aggregate Accrued Certificate Interest on such Distribution Date for the
Offered Certificates and the Class B-IO Certificates, Accrued Certificate
Interest with respect to such Distribution Date for such Classes of
Certificates shall be reduced by an amount equal to the portion allocable to
such Certificate pursuant to Section 1.02 hereof of the sum of (a) the
aggregate Prepayment Interest Shortfall, if any, for such Distribution Date to
the extent not covered by payments pursuant to Section 3.24 and (b) the
aggregate amount of any Relief Act Interest Shortfall, if any, for such
Distribution Date.
"Adjustable Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.
"Adjusted Net WAC": As to any Distribution Date, will be a per annum
rate equal to the weighted average of the Net Mortgage Rates of the Mortgage
Loans as of the first day of the related Due Period for such date less the
Strip Amount Rate for such date. This rate will be adjusted to correspond with
the day counting convention used for the Certificates. For federal income tax
purposes, a per annum rate equal to the weighted average of the REMIC I
3
Regular Interest where the Class T1-A Interest is equal to Net WAC and each
Class T1-SA Regualr Interest has a rate equal to, from the Closing Date until
the rate change date, Net WAC minus 0.0219605% and thereafter, Net WAC.
"Adjustment Date": With respect to each Adjustable Rate Mortgage
Loan, the day of the month on which the Mortgage Rate of such Mortgage Loan
changes pursuant to the related Mortgage Note. The first Adjustment Date
following the Cut-off Date as to each Mortgage Loan is set forth in the
Mortgage Loan Schedule.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Collateral Balance": As of any date of determination will
be equal to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO Properties owned by the Trust plus the amount, if any, then on deposit
in the Pre-Funding Account.
"Aggregate Subsequent Transfer Amount": With respect to any
Subsequent Transfer Date, the aggregate Stated Principal Balances as of the
applicable Cut-off Date of the Subsequent Mortgage Loans conveyed on such
Subsequent Transfer Date, as listed on the revised Mortgage Loan Schedule
delivered pursuant to Section 2.01(d); provided, however, that such amount
shall not exceed the amount on deposit in the Pre-Funding Account.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"Applicable Regulations" : As to any Mortgage Loan, all federal,
state and local laws, statutes, rules and regulations applicable thereto.
"Applied Realized Loss Amount": With respect to any Distribution
Date, the amount, if any, by which, (i) the aggregate Certificate Principal
Balance of the LIBOR Certificates after distributions of principal on such
Distribution Date exceeds the Aggregate Collateral Balance as of the last day
of the immediately preceding Due Period.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form (excepting therefrom, if applicable,
the mortgage recordation information which has not been required pursuant to
Section 2.01 hereof or returned by the applicable recorder's office and/or the
assignee's name), which is sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect of record the
sale of the Mortgage, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.
4
"Assignment and Assumption Agreement": That certain assignment and
assumption agreement dated as of the Cut-off Date, by and between the Seller,
as assignor and the Depositor, as assignee, relating to the Mortgage Loans.
"Available Distribution Amount": With respect to any Distribution
Date, an amount equal to (1) the sum of (a) the aggregate of the amounts on
deposit in the Collection Account and Distribution Account as of the close of
business on the related Determination Date, (b) the aggregate of any amounts
received in respect of an REO Property withdrawn from any REO Account and
deposited in the Distribution Account for such Distribution Date pursuant to
Section 3.23, (c) the aggregate of any amounts deposited in the Distribution
Account by the Servicers in respect of Prepayment Interest Shortfalls for such
Distribution Date pursuant to Section 3.24, (d) the aggregate of any P&I
Advances made by the Servicers for such Distribution Date pursuant to Section
4.03, and (e) the aggregate of any advances made by the Trustee for such
Distribution Date pursuant to Section 7.02(b) reduced (to not less than zero)
by (2) the sum of (x) the portion of the amount described in clause (1)(a)
above that represents (i) Monthly Payments on the Mortgage Loans received from
a Mortgagor on or prior to the Determination Date but due during any Due
Period subsequent to the related Due Period, (ii) Principal Prepayments on the
Mortgage Loans received after the related Prepayment Period (together with any
interest payments received with such Principal Prepayments to the extent they
represent the payment of interest accrued on the Mortgage Loans during a
period subsequent to the related Prepayment Period), (iii) Liquidation
Proceeds and Insurance Proceeds received in respect of the Mortgage Loans
after the related Prepayment Period, (iv) amounts reimbursable or payable to
the Depositor, an Originator, the Servicers, the Trustee, the Seller or any
Sub-Servicer pursuant to Section 3.11 or Section 3.12 or otherwise payable in
respect of Extraordinary Trust Fund Expenses, (v) Stayed Funds, (vi) amounts
deposited in the Collection Account or the Distribution Account in error, and
(vii) the amount of any Prepayment Charges collected by the Servicers in
connection with the voluntary Principal Prepayment in full of any of the
Mortgage Loans or the Servicer Prepayment Charge Payment Amount, and (y)
amounts reimbursable to the Trustee for an advance made pursuant to Section
7.02(b) which advance the Trustee has determined to be nonrecoverable from the
Stayed Funds in respect of which it was made.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of
the United States Code), as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a Realized
Loss resulting from a Deficient Valuation (i.e. "principal cramdown") or Debt
Service Reduction (i.e. "interest cramdown").
"Book-Entry Certificate": As specified in the Preliminary Statement.
"Book-Entry Custodian": The custodian appointed pursuant to Section
5.01.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking or savings and loan institutions in the State of California, the
State of New York, the State of Washington, the State of Delaware, the State
of Texas, the State of Utah or the city in which the Corporate Trust Office of
the Trustee is located, are authorized or obligated by law or executive order
to be closed.
5
"Carryover Termination Payment": For any Distribution Date, the
portion of any Termination Payment payable by the Trust to the Counterparty
previously due on a prior Distribution Date that remains unpaid on such
Distribution Date plus interest thereon at the Default Rate for the period
from the date such Termination Payment was due but unpaid to but excluding the
date such amount has been paid (such interest to be compounded daily).
"Certificate": Any one of the certificates issued under this
Agreement in substantially the forms attached hereto as Exhibits A-1 through
A-9.
"Certificate Factor": With respect to any Class of LIBOR
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance of such Class of Certificates on such Distribution Date
(after giving effect to any distributions of principal and allocations of
Realized Losses in reduction of the Certificate Principal Balance of such
Class of Certificates to be made on such Distribution Date), and the
denominator of which is the initial aggregate Certificate Principal Balance of
such Class of Certificates as of the Closing Date.
"Certificate Margin": As to any Class of LIBOR Certificates, the
respective amount set forth below:
Certificate Margin
Class (1) (2)
------------ ------------- -----------
A1 0.420% 0.840%
A2 0.380% 0.760%
M1 1.100% 1.650%
M2 1.650% 2.475%
B 2.650% 3.975%
(1) To and including the Optional Termination Date.
(2) After the Optional Termination Date.
"Certificate Owner": With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to any Class of
Certificates, other than the Class R, Class X, Class A-IO and Class B-IO
Certificates, as of any date of
6
determination, the Certificate Principal Balance of such Class on the
Distribution Date immediately prior to such date of determination, minus all
distributions allocable to principal made thereon and Realized Losses
allocated thereto on the immediately prior Distribution Date (or, in the case
of any date of determination up to and including the first Distribution Date,
the initial Certificate Principal Balance of such Class, as stated on the face
thereof). The Class A-IO, Class B-IO, Class X and the Class R Certificates do
not have a Certificate Principal Balance.
"Certificate Register" and "Certificate Registrar": The register
maintained and the registrar appointed pursuant to Section 5.02.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder
of a Residual Certificate for any purposes hereof and, solely for the purposes
of giving any consent pursuant to this Agreement, any Certificate registered
in the name of the Depositor or any Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled
shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 11.01. The Trustee may
conclusively rely upon a certificate of the Depositor or any Servicer in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the
rights of Certificate Owners as they may indirectly exercise such rights
through the Depository and participating members thereof, except as otherwise
specified herein; provided, however, that the Trustee shall be required to
recognize as a "Holder" or "Certificateholder" only the Person in whose name a
Certificate is registered in the Certificate Register.
"Class": All of the Certificates bearing the same class designation
as set forth in the Preliminary Statement.
"Class A1 Percentage": As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the Principal Remittance
Amount calculated solely with respect to the Mortgage Loans in Subgroup 1 for
such Distribution Date and the denominator of which is the Principal
Remittance Amount for such Distribution Date.
"Class A2 Percentage": As to any Distribution Date, 100% minus the
Class A1 Percentage for such Distribution Date.
"Class A Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the aggregate Certificate Principal
Balance of the Class A Certificates immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (i) 61.00% and (ii) the
Aggregate Collateral Balance as of the last day of the related Due Period and
(B) the Aggregate Collateral Balance as of the last day of the related Due
Period minus $4,750,001.
"Class B Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution
Date), (ii) the Certificate Principal Balance of the Class M1 Certificates
7
(after taking into account the payment of the Class M1 Principal Distribution
Amount on such Distribution Date), (iii) the Certificate Principal Balance of
the Class M2 Certificates (after taking into account the payment of the Class
M2 Principal Distribution Amount on such Distribution Date) and (iv) the
Certificate Principal Balance of the Class B Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 97.00%
and (ii) the Aggregate Collateral Balance as of the last day of the related
Due Period and (B) the Aggregate Collateral Balance as of the last day of the
related Due Period minus $4,750,001.
"Class Exemption": A class exemption granted by the U.S. Department
of Labor, which provides relief from certain of the prohibited transaction
provisions of ERISA and the related excise tax provisions of the Code.
"Class M1 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution
Date) and (ii) the Certificate Principal Balance of the Class M1 Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 75.00% and (ii) the Aggregate Collateral Balance as of the last
day of the related Due Period and (B) the Aggregate Collateral Balance as of
the last day of the related Due Period minus $4,750,001.
"Class M2 Principal Distribution Amount": With respect to any
Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates (after taking into account the
payment of the related Class A Principal Distribution Amount on such
Distribution Date), (ii) the Certificate Principal Balance of the Class M1
Certificates (after taking into account the payment of the Class M1 Principal
Distribution Amount on such Distribution Date) and (iii) the Certificate
Principal Balance of the Class M2 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 86.50% and
(ii) the Aggregate Collateral Balance as of the last day of the related Due
Period and (B) the Aggregate Collateral Balance as of the last day of the
related Due Period minus $4,750,001.
"Class X Distribution Amount": With respect to any Distribution Date
the sum of (i) the Overcollateralization Reduction Amount for that
Distribution Date, if any, remaining after the making of all applications,
transfers and disbursements described in Section 4.01(a)(3)(i)-(xiv) and (ii)
the product of (i) a notional amount, equal to the aggregate Stated Principal
Balance of the Mortgage Loans as of that Distribution Date, and (ii) the
Pass-Through Rate for such Class for such Distribution Date as set forth in
footnote (3) to "REMIC V" under Section 1.03 herein.
"Closing Date": January 30, 2002.
"Code": The Internal Revenue Code of 1986, including any successor
or amendatory provisions.
"Collection Account": With respect to each Servicer, the account or
accounts created and maintained by such Servicer pursuant to Section 3.10(a),
which shall be entitled, as appropriate either "Fairbanks Capital Corp., as a
Servicer for U.S. Bank National Association as
8
Trustee, in trust for the registered holders of Asset Backed Securities
Corporation Home Equity Loan Trust 2002-HE1, Series 2002-HE1" or "Long Beach
Mortgage Company, as a Servicer for U.S. Bank National Association as Trustee,
in trust for the registered holders of Asset Backed Securities Corporation
Home Equity Loan Trust 2002-HE1, Series 2002-HE1". The Collection Account must
be an Eligible Account.
"Commission": The Securities and Exchange Commission.
"Compensating Interest": As defined in Section 3.24 hereof.
"Controlling Person": The majority of the Percentage Interest of the
Holders of Class X Certificates.
"Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which offices at the
date of the execution of this instrument is located at 000 Xxxx Xxxxx Xxxxxx,
Xx. Xxxx, Xxxxxxxxx 00000, Attention: Structured Finance Ref: ABSC 2002-HE1,
or at such other address as the Trustee may designate from time to time by
notice to the Certificateholders, the Depositor, the Servicers, and the
Trustee.
"Corresponding Classes of Certificates": With respect to each REMIC
Regular Interest, any Class of Certificates appearing opposite such REMIC
Regular Interest in Section 1.03 hereof.
"Counterparty": Credit Suisse First Boston International, or any
successor in interest thereto under the Yield Maintenance Agreement.
"Credit Enhancement Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balances of the Subordinated Offered Certificates (after giving
effect to the distribution of the Principal Distribution Amount on such
Distribution Date) and (ii) the Overcollateralized Amount by (y) the Aggregate
Collateral Balance as of the last day of the related Due Period.
"Custodian": A custodian which is appointed pursuant to a Custodian
Agreement. Any Custodian so appointed shall act as agent on behalf of the
Trustee, and shall be compensated by the Trustee or, in the case of the Long
Beach Serviced Loans, the Depositor. The Trustee shall remain at all times
responsible under the terms of this Agreement, notwithstanding the fact that
certain duties have been assigned to a Custodian. The initial Custodians are,
with respect to the Mortgage Loans other than the Mortgage Loans originated by
Long Beach, US Bank National Association, and, with respect to the Mortgage
Loans originated by Long Beach, JPMorgan Chase Bank.
"Custodial Agreement": The custodial agreements among the Trustee
and the Custodians providing for the safekeeping of any documents or
instruments referred to in Section 2.01 on behalf of the Certificateholders.
"Cut-off Date": With respect to each Initial Mortgage Loan, January
1, 2002. With respect to each Mortgage Loan that is a Subsequent Mortgage
Loan, the applicable
9
Subsequent Transfer Date. With respect to all Qualified Substitute Mortgage
Loans, their respective dates of substitution. References herein to the
"Cut-off Date," when used with respect to more than one Mortgage Loan, shall
be to the respective Cut-off Dates for such Mortgage Loans.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court
of competent jurisdiction in a proceeding under the Bankruptcy Code, except
such a reduction resulting from a Deficient Valuation.
"Default Rate": As defined in the Yield Maintenance Agreement.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent
jurisdiction in an amount less than the then outstanding principal balance of
the Mortgage Loan, which valuation results from a proceeding initiated under
the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
by a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": With respect to the last day of a Due
Period, the percentage equivalent of a fraction, the numerator of which is the
aggregate Stated Principal Balance of all Mortgage Loans that, as of the last
day of the previous calendar month, are 60 or more days Delinquent, are in
foreclosure, have been converted to REO Properties or have been discharged by
reason of bankruptcy, and the denominator of which is the sum of (x) the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties of
the last day of the previous calendar month and (y) the amount on deposit in
the Pre-Funding Account on such date.
"Delinquent": A Mortgage Loan is "Delinquent" if any monthly payment
due on a Due Date is not made by the close of business on the next scheduled
Due Date for that Mortgage Loan. A Mortgage Loan is "30 days Delinquent" if
the monthly payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which that
monthly payment was due or, if there was no corresponding date (e.g., as when
a 30-day month follows a 31-day month in which the payment was due on the 31st
day of that month), then on the last day of that immediately preceding month;
and similarly for "60 days Delinquent" and "90 days Delinquent," etc.
"Depositor": Asset Backed Securities Corporation, a Delaware
corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for
purposes of registering those Certificates that are to be Book-Entry
Certificates, is CEDE & Co. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial
10
Code of the State of New York and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Securities Exchange Act of 1934, as
amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee, that (i)(a) is incorporated under the laws of
the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and (c)
has outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated F-1 (if rated by Fitch), A-1+ by S&P and P-1 by
Moody's (or comparable ratings if Fitch and Moody's are not the Rating
Agencies) or (ii) is Washington Mutual Bank, FA.
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to each Distribution Date, the
fifth Business Day prior to such Distribution Date.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation
of such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust Fund other than
through an Independent Contractor; provided, however, that the Trustee (or the
related Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the related Servicer on
behalf of the Trustee) establishes rental terms, chooses tenants, enters into
or renews leases, deals with taxes and insurance, or makes decisions as to
repairs or capital expenditures with respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the United
States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all of its activities are
subject to tax and, except for Xxxxxxx Mac, a majority of its board of
directors is not selected by such governmental unit), (ii) any foreign
government, any international organization, or any agency or instrumentality
of any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the
tax imposed by Chapter 1 of the Code (including the tax imposed by Section 511
of the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an
"electing large partnership" within the meaning of Section 775 of the Code and
(vi) any other Person so designated by the Trustee based upon an Opinion of
Counsel that the holding of an Ownership Interest in a Residual Certificate by
such Person may cause any REMIC created hereunder, or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a
Residual Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
11
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, U.S. Bank National Association, as Trustee, in trust
for the registered holders of Asset Backed Securities Corporation Home Equity
Loan Trust 2002-HE1, Series 2002-HE1". The Distribution Account must be an
Eligible Account.
"Distribution Date": The 15th day of any month, or if such 15th day
is not a Business Day, the Business Day immediately following such 15th day,
commencing in February 2002.
"Double Adjusted Net WAC": As to any Distribution Date, will be a per
annum rate equal to (a) the Adjusted Net WAC less (b) the Current Interest for
the Class A-IO Certificate for such date multiplied by a fraction, the
numerator of which is twelve and the denominator is the Aggregate Collateral
Balance as of the first day of the related Due Period. This rate will be
adjusted to correspond with the day counting convention used for the
applicable Class of Certificates. For federal income tax purposes, a per annum
rate equal to the weighted average rate of the Class T2-2 Regular Interest and
the Class T2-4 Regular Interest, where the Class T2-2 Regular Interest has a
rate equal to Adjusted Net WAC, and the Class T2-Y Regular Interest has a rate
equal to (i) from the Closing Date to November 15, 2002, Net WAC minus 6.50%,
(ii) from November 15, 2002 through September 15, 2003, Net WAC minus 5.05%,
(iii) from September 15, 2003 through July 15, 2004, Net WAC minus 3.60%, and
(iv) thereafter, Net WAC.
"Due Date": With respect to each Distribution Date, the day of the
month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any
days of grace in the related Due Period.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month
in which such Distribution Date occurs.
"Early Termination Date": As defined in the Yield Maintenance
Agreement.
"Early Termination Fund": The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 4.07 in the name of
the Trustee for the benefit of the Certificateholders and designated "U.S.
Bank National Association in trust for registered holders of Asset Backed
Securities Corp., Asset Backed Pass-Through Certificates, Series 2002-HE1."
The Early Termination Fund shall not be part of any REMIC. Funds in the Early
Termination Fund shall be held in trust for the Class X Certificateholders for
the uses and purposes set forth in this Agreement.
"Eligible Account": Any of (i) an account or accounts maintained with
a Depository Institution, (ii) an account or accounts the deposits in which
are fully insured by the FDIC or (iii) a trust account or accounts maintained
with the corporate trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity. Eligible
Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
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"Estate in Real Property": A fee simple estate in a parcel of land.
"Excess Overcollateralized Amount": With respect to any Distribution
Date, the excess, if any, of (i) the Overcollateralized Amount for such
Distribution Date over (ii) the Required Overcollateralized Amount for such
Distribution Date.
"Extraordinary Trust Fund Expense": Any amounts reimbursable to the
Trustee, or any director, officer, employee or agent of the Trustee, from the
Trust Fund pursuant to Section 2.02, 3.02(b) or 8.05(a) and any amounts
payable from the Distribution Account in respect of taxes pursuant to Section
10.01(g)(iii), any amounts payable from the Distribution Account in respect of
any REMIC Administration pursuant to Section 10.01(c).
"Fairbanks": Fairbanks Capital Corp., or any successor in interest
thereto.
"Fairbanks Serviced Loans": The Mortgage Loans serviced by Fairbanks.
"Xxxxxx Xxx": Xxxxxx Xxx, formally known as the Federal National
Mortgage Association, or any successor thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Seller, the Depositor or any Servicer pursuant to or as
contemplated by Section 2.03, Section 3.16(c) or Section 9.01), a
determination made by the related Servicer that all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which such Servicer, in
its reasonable good faith judgment, expects to be finally recoverable in
respect thereof have been so recovered. Each Servicer shall maintain records,
prepared by a Servicing Officer, of each Final Recovery Determination made
thereby.
"Fitch": Fitch, Inc., or its successor in interest thereto.
"Formula Rate": As to any Class of LIBOR Certificates and any
Distribution Date, the sum of One-Month LIBOR and the applicable Certificate
Margin.
"Xxxxxxx Mac": Xxxxxxx Mac, formally known as the Federal Home Loan
Mortgage Corporation, or any successor thereto.
"Gross Margin": With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage set forth in the related Mortgage Note that is added to
the Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
"Independent": When used with respect to any specified Person, any
such Person who (a) is in fact independent of the Depositor, each Servicer and
their respective Affiliates, (b) does not have any direct financial interest
in or any material indirect financial interest in the Depositor, any Servicer
or any Affiliate thereof, and (c) is not connected with the Depositor, any
Servicer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner,
13
director or Person performing similar functions; provided, however, that a
Person shall not fail to be Independent of the Depositor, any Servicer or any
Affiliate thereof merely because such Person is the beneficial owner of 1% or
less of any Class of securities issued by the Depositor or such Servicer or
any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the
Servicers) that would be an "independent contractor" with respect to the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund
were a real estate investment trust (except that the ownership tests set forth
in that section shall be considered to be met by any Person that owns,
directly or indirectly, 35% or more of any Class of Certificates), so long as
the Trust Fund does not receive or derive any income from such Person and
provided that the relationship between such Person and the Trust Fund is at
arm's length, all within the meaning of Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person (including the Servicers) if the
Trustee has received an Opinion of Counsel to the effect that the taking of
any action in respect of any REO Property by such Person, subject to any
conditions therein specified, that is otherwise herein contemplated to be
taken by an Independent Contractor will not cause such REO Property to cease
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8)
of the Code (determined without regard to the exception applicable for
purposes of Section 860D(a) of the Code), or cause any income realized in
respect of such REO Property to fail to qualify as Rents from Real Property.
"Index": With respect to each Adjustable Rate Mortgage Loan and each
related Adjustment Date, the average of the interbank offered rates for
six-month United States dollar deposits in the London market as published by
the Western Edition of The Wall Street Journal and as most recently available
as of a date as specified in the related Mortgage Note.
"Initial Cut-off Date": January 1, 2002.
"Initial Mortgage Loan": A Mortgage Loan conveyed to the Trust Fund
on the Closing Date pursuant to this Agreement as identified on the Mortgage
Loan Schedule delivered to the Trustee on the Closing Date.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan, to the extent such proceeds
are not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the related
Servicer would follow in servicing Mortgage Loans held for its own account,
subject to the terms and conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": For any Distribution Date and (a) the
Class A-IO Certificates for a given Distribution Date will be the calendar
month preceding the month of such Distribution Date based on a 360-day year
consisting of twelve 30-day months, (b) the LIBOR Certificates for a given
Distribution Date will be the actual number of days (based on a 360-day year)
included in the period commencing on the immediately preceding Distribution
Date (or, in the case of the first such Interest Accrual Period, commencing on
the Closing Date) and ending on the day immediately preceding such
Distribution Date, and (c) the Class B-IO Certificates, the period commencing
on the prior Distribution Date of the month preceding the month in which the
Distribution Date occurs and ending on the day immediately preceeding the day
of the month
14
in which such Distribution Date occurs (or, in the case of the first such
Interest Accrual Period, commencing on the Closing Date) based on a 360-day
year consisting of twelve 30-day months. All distributions of interest on the
LIBOR Certificates will be based on a 360-day year and the actual number of
days in the applicable Interest Accrual Period.
"Interest Determination Date": With respect to the LIBOR
Certificates and any Interest Accrual Period therefor, the second London
Business Day preceding the commencement of such Interest Accrual Period.
"Interest Distribution Amount": With respect to any Distribution
Date and any Class of Offered Certificates and the Class B-IO Certificates,
the sum of the aggregate Accrued Certificate Interest on the Certificates of
such Class for such Distribution Date and the related Unpaid Interest
Shortfall Amount.
"Interest Remittance Amount": With respect to any Distribution Date,
that portion of the Available Distribution Amount for such Distribution Date
allocable to interest for such Distribution Date.
"Late Collections": With respect to any Mortgage Loan and any Due
Period, all amounts received subsequent to the Determination Date immediately
following such Due Period, whether as late payments of Monthly Payments or as
Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to
any acceleration of payments under the related Mortgage and Mortgage Note) but
Delinquent for such Due Period and not previously recovered.
"Letter Agreement": With respect to the Long Beach Serviced Loans,
the Letter Agreement dated as of January 28, 2002 among Long Beach Mortgage
Company, U.S. Bank National Association and Credit Suisse First Boston
Mortgage Capital LLC and attached as Exhibit I hereto.
"LIBOR Certificates": As specified in the Preliminary Statement.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such
Mortgage Loan is removed from the Trust Fund by reason of its being purchased,
sold or replaced pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01. With respect to any REO Property, either of the
following events: (i) a Final Recovery Determination is made as to such REO
Property; or (ii) such REO Property is removed from the Trust Fund by reason
of its being purchased pursuant to Section 9.01.
"Liquidation Proceeds": The amount (other than Insurance Proceeds or
amounts received in respect of the rental of any REO Property prior to REO
Disposition) received by the related Servicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property
pursuant to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23
or Section 9.01.
15
"Loan-to-Value Ratio" or "LTV" : As of any date of determination,
the fraction, expressed as a percentage, the numerator of which is the
principal balance of the related Mortgage Loan at such date and the
denominator of which is the Value of the related Mortgaged Property.
"London Business Day": Any day on which banks in the City of London
and The City of New York are open and conducting transactions in United States
dollars.
"Long Beach": Long Beach Mortgage Company, or its successor in
interest thereto.
"Long Beach Serviced Loans": The Mortgage Loans serviced by Long
Beach as indicated on Schedule 1, Part B attached hereto.
"Master REMIC": REMIC V.
"Maximum Mortgage Rate": With respect to each Adjustable Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.
"Minimum Mortgage Rate": With respect to each Adjustable Rate
Mortgage Loan, the greater of (a) the Gross Margin set forth in the related
Mortgage Note and (b) the percentage set forth in the related Mortgage Note as
the minimum Mortgage Rate thereunder.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is
payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation
and/or Debt Service Reduction with respect to such Mortgage Loan and (ii) any
reduction in the amount of interest collectible from the related Mortgagor
pursuant to the Relief Act; (b) without giving effect to any extension granted
or agreed to by the related Servicer pursuant to Section 3.07; and (c) on the
assumption that all other amounts, if any, due under such Mortgage Loan are
paid when due.
"Moody's": Xxxxx'x Investors Service, Inc. or its successor in
interest.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each Mortgage Loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03(c) of this Agreement, as held
from time to time as a part of the Trust Fund, the Initial Mortage Loans so
held being identified in the Mortgage Loan Schedule, including each REO
Property unless the context otherwise requires. For the avoidance of doubt a
Mortgage Loan may be either an Initial Mortgage Loan or a Subsequent Mortgage
Loan.
16
"Mortgage Loan Purchase Agreement": Any one of the agreements
between an Originator and the Seller, regarding the sale of the related
Mortgage Loans by such Originator to the Seller.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust Fund on such date, attached hereto as Schedule 1. The
Mortgage Loan Schedule shall set forth by Subgroup the following information
with respect to each Mortgage Loan in such Subgroup:
(i) the Mortgagor's name and the related Originator's Mortgage
Loan identifying number;
(ii) the street address of the Mortgaged Property including the
state and zip code;
(iii) a code indicating whether the Mortgaged Property is
owner-occupied;
(iv) the type of Residential Dwelling constituting the
Mortgaged Property;
(v) the original months to maturity;
(vi) the Loan-to-Value Ratio at origination;
(vii) the Mortgage Rate in effect immediately following the
Cut-off Date;
(viii) the date on which the first Monthly Payment was due on
the Mortgage Loan;
(ix) the stated maturity date;
(x) the amount of the Monthly Payment due on the first Due Date
after the Cut-off Date;
(xi) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;
(xii) the original principal amount of the Mortgage Loan;
(xiii) the Stated Principal Balance of the Mortgage Loan as of
the close of business on the Cut-off Date;
(xiv) with respect to each Adjustable Rate Mortgage Loan, the
Gross Margin;
(xv) a code indicating the purpose of the Mortgage Loan (i.e.,
purchase financing, rate/term refinancing, cash-out refinancing);
17
(xvi) with respect to each Adjustable Rate Mortgage Loan, the
Maximum Mortgage Rate;
(xvii) with respect to each Adjustable Rate Mortgage Loan, the
Minimum Mortgage Rate;
(xviii) the Mortgage Rate at origination;
(xix) with respect to each Adjustable Rate Mortgage Loan, the
Periodic Rate Cap and the maximum first Adjustment Date Mortgage Rate
adjustment;
(xx) a code indicating the documentation program;
(xxi) with respect to each Adjustable Rate Mortgage Loan, the
first Adjustment Date immediately following the Cut-off Date;
(xxii) the Value of the Mortgaged Property; and
(xxiii) the sale price of the Mortgaged Property, if
applicable.
The Mortgage Loan Schedule shall be comprised of three parts, Part
A, Part B and Part C relating to the Mortgage Loans originated by each
Originator and set forth the following information with respect to the
Mortgage Loans in the aggregate as of the Cut-off Date: (1) the number of
Mortgage Loans; (2) the current principal balance of the Mortgage Loans; (3)
the weighted average Mortgage Rate of the Mortgage Loans; and (4) the weighted
average maturity of the Mortgage Loans. The Mortgage Loan Schedule shall set
forth the aggregate Stated Principal Balance of the Mortgage Loans. The
Mortgage Loan Schedule shall be amended from time to time by the Depositor in
accordance with the provisions of this Agreement. With respect to any
Qualified Substitute Mortgage Loan, the Cut-off Date shall refer to the
related Cut-off Date for such Mortgage Loan, determined in accordance with the
definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Schedule
1 from time to time, and any REO Properties acquired in respect thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note. With respect to
each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property or
a leasehold interest improved by a Residential Dwelling.
18
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any Distribution
Date, the sum of (i) any Overcollateralization Reduction Amount for such
Distribution Date and (ii) the excess of (x) the Available Distribution Amount
for such Distribution Date over (y) the sum for such Distribution Date of (A)
the aggregate Interest Distribution Amount payable to the holders of the Class
A and Class A-IO Certificates, the Accrued Certificate Interest payable to the
holders of the Subordinated Offered Certificates and any Strip Amount, each
pursuant to Section 4.01(a)(1) and (B) the sum of the amounts described in
clauses (b)(i) through (iii) of the definition of Principal Distribution
Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property) as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan
minus the Servicing Fee Rate.
"Net WAC Carryover Amount": With respect to each Class of LIBOR
Certificates and a Distribution Date, an amount equal to the sum of (A) the
excess of (1) the amount of interest such Class of Certificates would
otherwise be entitled to receive on the Distribution Date had the related
Pass-Through Rate been calculated at the related Formula Rate for such
Distribution Date over (2) the amount of interest payable on such Class of
Certificates at Triple Adjusted Net WAC for such Distribution Date and (B) the
Net WAC Carryover Amount for such Class of Certificates for all previous
Distribution Dates not previously paid to such Certificateholders (including
any interest accrued on such amount during the most recently ended Interest
Accrual Period at the related Formula Rate).
"Net WAC Fund": The Eligible Account established pursuant to Section
3.26.
"New Lease": Any lease of REO Property entered into on behalf of the
Trust Fund, including any lease renewed or extended on behalf of the Trust
Fund, if the Trust Fund has the right to renegotiate the terms of such lease.
"Nonrecoverable P&I Advance": Any P&I Advance previously made or
proposed to be made in respect of a Mortgage Loan or REO Property that, in the
good faith business judgment of the related Servicer using Accepted Servicing
Practices, will not or, in the case of a proposed P&I Advance, would not be
ultimately recoverable from related late collections, Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.
"Nonrecoverable Servicing Advance": Any Servicing Advance previously
made or proposed to be made in respect of a Mortgage Loan or REO Property
that, in the good faith business judgment of the related Servicer using
Accepted Servicing Practices, will not or, in the case of a proposed Servicing
Advance, would not be ultimately recoverable from related Late Collections,
Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or REO
Property as provided herein.
"Non-United States Person": Any Person other than a United States
Person.
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"Notional Amount": With respect to the Class A-IO Certificates will
equal (x) on or prior to the Distribution Date in July 2004, the lesser of (i)
$233,000,000 and (ii) the aggregate principal balance of the Mortgage Loans as
of the first day of the month of such Distribution Date (prior to giving
effect to Monthly Payments due on such date) and (y) on any Distribution Date
after the Distribution Date in July 2004, zero. The "Notional Amount" for the
Class B-IO Certificates will equal (x) on or prior to the Distribution Date in
January 2004, the lesser of (i) $31,500,000 and (ii) the aggregate principal
balance of the Mortgage Loans as of the first day of the month of such
Distribution Date (prior to giving effect to Monthly Payments due on such
date) and (y) on any Distribution Date after the Distribution Date in January
2004, zero.
"Offered Certificates" : As defined in the Preliminary Statement.
"Officers' Certificate": With respect to the Depositor and the
Seller, a certificate signed by the Chairman of the Board, the Vice Chairman
of the Board, the President, a vice president (however denominated) or an
authorized agent, and by the Treasurer, the Secretary, or one of the assistant
treasurers or assistant secretaries of the Depositor or Seller, as applicable.
With respect to any Servicer, any officer who is authorized to act for such
Servicer in matters relating to this Agreement, and whose action is binding
upon such Servicer, initially including those individuals whose names appear
on the list of authorized officers delivered at the closing.
"One-Month LIBOR": With respect to the LIBOR Certificates and any
Interest Accrual Period therefor, the rate determined by the Trustee on the
related Interest Determination Date (or with respect to the initial Interest
Accrual Period, on the Closing Date based on information available on the
related Interest Determination Date) on the basis of the offered rate for
one-month U.S. dollar deposits, as such rate appears on Telerate Page 3750 as
of 11:00 a.m. (London time) on such Interest Determination Date; provided that
if such rate does not appear on Telerate Page 3750, the rate for such date
will be determined on the basis of the offered rates of the Reference Banks
for one-month U.S. dollar deposits, as of 11:00 a.m. (London time) on such
Interest Determination Date. In such event, the Trustee will request the
principal London office of each of the Reference Banks to provide a quotation
of its rate. If on such Interest Determination Date, two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole multiple of
1/16%). If on such Interest Determination Date, fewer than two Reference Banks
provide such offered quotations, One-Month LIBOR for the related Interest
Accrual Period shall be the higher of (i) LIBOR as determined on the previous
Interest Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, if, under the priorities described above, LIBOR
for an Interest Determination Date would be based on LIBOR for the previous
Interest Determination Date for the third consecutive Interest Determination
Date, the Trustee shall select an alternative comparable index (over which the
Trustee has no control), used for determining one-month Eurodollar lending
rates that is calculated and published (or otherwise made available) by an
independent party.
"Operative Documents": The Mortgage Loan Purchase Agreements, the
Reconstitution Agreements, the Assignment and Assumption Agreement and any
other documents related hereto or thereto.
20
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be salaried counsel for the Depositor or any Servicer and which
shall be acceptable to the Trustee (which acceptance shall not be unreasonably
withheld), except that any opinion of counsel relating to (a) the
qualification of any REMIC created hereunder or (b) compliance with the REMIC
Provisions must be an opinion of Independent counsel.
"Optional Termination Date": The first Distribution Date that the
Servicers shall be permitted to purchase the Mortgage Loans and REO Properties
pursuant to Section 9.01(b).
"Originators": Any of New Century Mortgage Corporation, or its
successor in interest, Long Beach Mortgage Company, or its successor in
interest, or WMC Mortgage Corp., or its successor in interest.
"Overcollateralized Amount": As of any Distribution Date, the
excess, if any, of (a) the aggregate Stated Principal Balances of the Mortgage
Loans and REO Properties as of the last day of the related Due Period plus the
Pre-Funded Amount on such Distribution Date over (b) the sum of the aggregate
Certificate Principal Balances of the LIBOR Certificates and the Class P
Certificates as of such Distribution Date (after taking into account the
payment of the amounts described in clauses (b)(i) through (iv) of the
definition of Principal Distribution Amount on such Distribution Date).
"Overcollateralization Deficiency Amount": With respect to any
Distribution Date, the excess, if any, of (a) the Required Overcollateralized
Amount applicable to such Distribution Date over (b) the Overcollateralized
Amount applicable to such Distribution Date (after taking into account the
payment of the Principal Distribution Amount, exclusive of the payment of any
Overcollateralization Increase Amount on such Distribution Date).
"Overcollateralization Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Overcollateralization Deficiency
Amount as of such Distribution Date (after taking into account the payment of
the Principal Distribution Amount, exclusive of the payment of any
Overcollateralization Increase Amount on such Distribution Date) and (b) Net
Monthly Excess Cash Flow available for distribution on that Distribution Date
pursuant to Section 4.01(a)(3)(ii).
"Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralized Amount and (b) the sum of the amounts available for
distribution specified in clauses (b)(i) through (iii) of the definition of
Principal Distribution Amount.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": For any Distribution Date and any Class of
LIBOR Certificates, the lesser of (i) the related Formula Rate and (ii) Triple
Adjusted Net WAC for such Distribution Date. As to the Class B-IO Certificates
(a) for any Distribution Date on of prior to the Distribution Date in January
2004, the lesser of (x) 6.00% per annum and (y) the Double Adjusted Net WAC,
and (b) any Distribution Date after the Distribution Date in January 2004,
21
0.00%. As to the Class A-IO Certificates and any Distribution Date, the related
per annum rate listed below:
Pass-Through
Distribution Date Rate
February 2002 through November 2002 6.50%
December 2002 through September 2003 5.05%
October 2003 through July 2004 3.60%
August 2004 and thereafter 0.00%
"Percentage Interest": As to any Certificate, either the percentage
set forth on the face thereof or the percentage obtained by dividing the
initial Certificate Principal Balance or initial Notional Amount represented
by such Certificate by the aggregate initial Certificate Principal Balance or
aggregate initial Notional Amount of all of the Certificates of such Class.
"Performance Standards": The standards set forth in Exhibit J
herein.
"Periodic Rate Cap": With respect to each Adjustable Rate Mortgage
Loan and any Adjustment Date therefor, the fixed percentage set forth in the
related Mortgage Note, which is the maximum amount by which the Mortgage Rate
for such Mortgage Loan may increase or decrease (without regard to the Maximum
Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from the
Mortgage Rate in effect immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than
par, regardless of whether issued by the Depositor, any Servicer, the Trustee
or any of their respective Affiliates:
(a) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States
or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the
United States;
(b) demand and time deposits in, certificates of deposit of, or
bankers' acceptances (which shall each have an original
maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of
more than 365 days or a remaining maturity of more than 30
days) denominated in United States dollars and issued by, any
Depository Institution;
(c) repurchase obligations with respect to any security described
in clause (i) above entered into with a Depository Institution
(acting as principal);
(d) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of the
United States of America
22
or any state thereof and that are rated by each Rating Agency
that rates such securities in its highest long-term unsecured
rating categories at the time of such investment or contractual
commitment providing for such investment;
(e) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand
or on a specified date not more than 30 days after the date of
acquisition thereof) that is rated by each Rating Agency that
rates such securities in its highest short-term unsecured debt
rating available at the time of such investment;
(f) units of money market funds, including money market funds
managed or advised by the Trustee or an Affiliate thereof, that
have been rated "AAA" by Fitch (if rated by Fitch), "Aaa" by
Xxxxx'x and "AAA" by S&P (if rated by S&P); and
(g) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation,
security or investment, as may be acceptable to the Rating
Agencies as a permitted investment of funds backing securities
having ratings equivalent to its highest initial rating of the
Class A Certificates;
provided, however, that no instrument described hereunder shall evidence
either the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying
obligations.
"Permitted Transferee": Any Transferee of a Residual Certificate
other than a Disqualified Organization or Non-United States Person.
"Person": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"P&I Advance": As to any Mortgage Loan or REO Property, any advance
made by the related Servicer in respect of any Distribution Date representing
the aggregate of all payments of principal and interest, net of the Servicing
Fee, that were due during the related Due Period on the Mortgage Loans and
that were Delinquent on the related Determination Date, plus certain amounts
representing assumed payments not covered by any current net income on the
Mortgaged Properties acquired by foreclosure or deed in lieu of foreclosure as
determined pursuant to Section 4.03. Neither of the Servicers will be required
to make any Nonrecoverable P&I Advances as described in Section 4.03.
"Plan": Any employee benefit plan (as defined in Section 3(3) of
ERISA) or other plan as defined in Section 4975(e)(1) of the Code, including
individual retirement accounts and annuities and, Xxxxx plans, that is subject
to Title I of ERISA or Section 4975 of the Code.
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"Pool Principal Balance": As of any Distribution Date, the aggregate
Stated Principal Balance of the Mortgage Loans.
"Pre-Funded Amount": The amount on deposit in the Pre-Funding
Account, which shall equal $152,022,050 on the Closing Date.
"Pre-Funding Account": The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.10(e) in the name of the
Trustee for the benefit of the Certificateholders and designated "U.S. Bank
National Association, in trust for registered holders of in trust for the
registered holders of Asset Backed Securities Corporation Home Equity Loan
Trust 2002-HE1, Series 2002-HE1." Funds in the Pre-Funding Account shall be
held in trust for the Certificateholders for the uses and purposes set forth
in this Agreement and shall not be a part of any REMIC created hereunder;
provided, however, that any investment income earned from Permitted
Investments made with funds in the Pre-Funding Account shall be for the
account of the Depositor.
"Pre-Funding Period": The period from the Closing Date until the
earlier of (i) the date on which the amount on deposit in the Pre-Funding
Account is reduced to zero, or (ii) an Event of Default occurs or (iii) March
15, 2002.
"Prepayment Assumption": A constant prepayment rate ("CPR") of 26%
per annum of the then unpaid Stated Principal Balance of the Mortgage Loans.
The Prepayment Assumption is used solely for determining the accrual of
original issue discount on the Certificates for federal income tax purposes. A
CPR (or Constant Prepayment Rate) represents an annualized constant assumed
rate of prepayment each month of a pool of Mortgage Loans relative to its
outstanding principal balance for the life of such pool.
"Prepayment Charge": With respect to any Mortgage Loan and
Prepayment Period, any prepayment premium, penalty or charge collected by the
related Servicer from a Mortgagor in connection with any voluntary Principal
Prepayment and held from time to time as a part of the Trust Fund. The related
Servicer shall calculate, in good faith using Accepted Servicing Practices,
the amount of any Prepayment Charge solely pursuant to the terms of the
related Mortgage Note.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment in full or in part, an amount equal to
interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the number of days commencing on the date on which the
prepayment is applied and ending on the last day of the related Prepayment
Period. The obligations of each Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date, the
calendar month preceding the calendar month in which such Distribution Date
occurs.
"Prime Rate": The rate of interest equal to the prime rate as
reported in The Wall Street Journal.
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"Principal Distribution Amount": With respect to any Distribution
Date, the lesser of:
(a) the excess of the Available Distribution Amount over the amount
payable on the Certificates pursuant to Section 4.01(a)(1); and
(b) (i) the sum of the principal portion of each Monthly Payment on
the Mortgage Loans due during the related Due Period, whether
or not received on or prior to the related Determination Date;
(ii) the Stated Principal Balance of any Mortgage Loan that was
purchased during the related Prepayment Period pursuant to or
as contemplated by Section 2.03, Section 3.16(c) or Section
9.01 and the amount of any shortfall deposited in the
Collection Account in connection with the substitution of a
Deleted Mortgage Loan pursuant to Section 2.03 during the
related Prepayment Period;
(iii) the principal portion of all other unscheduled
collections (including, without limitation, Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds and REO
Principal Amortization) received during the related Prepayment
Period, net of any portion thereof that represents a recovery
of principal for which an advance was made by any Servicer
pursuant to Section 4.03 in respect of a preceding Distribution
Date;
(iv) the principal portion of any Realized Losses incurred on
the Mortgage Loans during the related Prepayment Period to the
extent covered by Net Monthly Excess Cashflow for such
Distribution Date; and
(v) the amount of any Overcollateralization Increase Amount for
such Distribution Date to the extent covered by Net Monthly
Excess Cashflow for such Distribution Date;
minus:
(c) the amount of any Overcollateralization Reduction Amount for
such Distribution Date.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest (without regard to
any Prepayment Charge that may have been collected by the related Servicer in
connection with such payment of principal) representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.
"Principal Remittance Amount" : With respect to any Distribution
Date, the sum of: (i) all scheduled payments of principal collected or
advanced on the Mortgage Loans by the Servicers that were due during the
related Due Period, (ii) the principal portion of all partial and full
Principal Prepayments of the Mortgage Loans applied by the Servicers during
the related
25
Prepayment Period, (iii) the principal portion of all related Net Liquidation
Proceeds and Insurance Proceeds received during the related Prepayment Period,
(iv) that portion of the Purchase Price representing principal of any
repurchased Mortgage Loan, deposited to the Collection Account during the
related Prepayment Period, (v) the principal portion of any related
Substitution Adjustments deposited in the Collection Account during the
related Prepayment Period, (vi) with respect to the April 2002 Distribution
Date, any amounts remaining in the Pre-Funding Account (other than investment
earnings thereon) and (vii) on the Distribution Date on which the Trust is to
be terminated in accordance with this Agreement, that portion of the
Termination Price in respect of principal.
"PTCE": A Prohibited Transaction Class Exemption.
"Purchase Price": With respect to any Mortgage Loan or REO Property
to be purchased pursuant to or as contemplated by Section 2.03, Section
3.16(c) or Section 9.01, and as confirmed by an Officers' Certificate from the
related Servicer to the Trustee, an amount equal to the sum of (i) 100% of the
Stated Principal Balance thereof as of the date of purchase (or such other
price as provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan,
accrued interest on such Stated Principal Balance at the applicable Mortgage
Rate in effect from time to time from the Due Date as to which interest was
last covered by a payment by the Mortgagor or an advance by the related
Servicer through the end of the calendar month in which the purchase is to be
effected and (y) an REO Property, the sum of (1) accrued interest on such
Stated Principal Balance at the applicable Mortgage Rate in effect from time
to time from the Due Date as to which interest was last covered by a payment
by the Mortgagor or an advance by the related Servicer through the end of the
calendar month immediately preceding the calendar month in which such REO
Property was acquired, plus (2) REO Imputed Interest for such REO Property for
each calendar month commencing with the calendar month in which such REO
Property was acquired and ending with the calendar month in which such
purchase is to be effected, net of the total of all net rental income,
Insurance Proceeds, Liquidation Proceeds and P&I Advances that as of the date
of purchase had been distributed as or to cover REO Imputed Interest pursuant
to Section 4.01, (iii) any unreimbursed Servicing Advances and P&I Advances
and any unpaid Servicing Fees allocable to such Mortgage Loan or REO Property
and any P&I Advances previously reimbursed to the related Servicer pursuant to
Section 3.11(a)(vi), (iv) any amounts previously withdrawn from the Collection
Account in respect of such Mortgage Loan or REO Property pursuant to Section
3.11(a)(ix) and Section 3.16(b), and (v) in the case of a Mortgage Loan
required to be purchased pursuant to Section 2.03, expenses reasonably
incurred or to be incurred by the related Servicer or the Trustee in respect
of the breach or defect giving rise to the purchase obligation.
"Qualified Plan Investor": A plan investor or group of plan
investors on whose behalf the decision to purchase Offered Certificates is
made by an independent fiduciary that is (i) qualified to analyze and
understand the terms and conditions of the Yield Maintenance Agreement and the
effect of the Yield Maintenance Agreement on the credit ratings of the Offered
Certificates, and (ii) a "qualified professional asset manager", as defined in
Part V(a) of PTCE 84-14, an "in-house asset manager" as defined in Part IV(a)
of PTCE 96-23, or a plan fiduciary with total Plan and non-Plan assets under
management of at least $100 million at the time of the acquisition of the
Offered Certificates.
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"Qualified Substitute Mortgage Loan": A Mortgage Loan substituted
for a Deleted Mortgage Loan pursuant to the terms of this Agreement which
must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of and not
more than 5% less than the Stated Principal Balance of the Deleted Mortgage
Loan as of the Due Date in the calendar month during which the substitution
occurs, (ii) have a Mortgage Rate not less than (and not more than one
percentage point in excess of) the Mortgage Rate of the Deleted Mortgage Loan,
(iii) with respect to each Adjustable Rate Mortgage Loan have a Maximum
Mortgage Rate not less than the Maximum Mortgage Rate on the Deleted Mortgage
Loan, (iv) with respect to each Adjustable Rate Mortgage Loan have a Minimum
Mortgage Rate not less than the Minimum Mortgage Rate of the Deleted Mortgage
Loan, (v) with respect to each Adjustable Rate Mortgage Loan have a Gross
Margin equal to or greater than the Gross Margin of the Deleted Mortgage Loan,
(vi) with respect to each Adjustable Rate Mortgage Loan, adjust in accordance
with the Index and have a next Adjustment Date not more than two months later
than the next Adjustment Date on the Deleted Mortgage Loan, and have the same
intervals between Adjustment Dates as the Deleted Mortgage Loan, (vii) have a
remaining term to maturity not greater than (and not more than one year less
than) that of the Deleted Mortgage Loan, (viii) have the same Due Date as the
Due Date on the Deleted Mortgage Loan, (ix) have a Loan-to-Value Ratio as of
the date of substitution equal to or lower than the Loan-to-Value Ratio of the
Deleted Mortgage Loan as of such date, (x) have a risk grading determined by
the related Servicer at least equal to the risk grading assigned on the
Deleted Mortgage Loan, (xi) have been underwritten or reunderwritten by the
Originator in accordance with the same underwriting criteria and guidelines as
the Mortgage Loans being replaced; (xii) be of the same or better credit
quality as the Mortgage Loan being replaced and (xiii) conform to each
representation and warranty in the applicable Mortgage Loan Purchase
Agreement. In the event that one or more Mortgage Loans are substituted for
one or more Deleted Mortgage Loans, the amounts described in clause (i) hereof
shall be determined on the basis of aggregate principal balances, the Mortgage
Rates described in clause (ii) hereof shall be determined on the basis of
weighted average Mortgage Rates, the terms described in clause (vii) hereof
shall be determined on the basis of weighted average remaining term to
maturity, the Loan-to-Value Ratios described in clause (ix) hereof shall be
satisfied as to each such Mortgage Loan, the risk gradings described in clause
(x) hereof shall be satisfied as to each such Mortgage Loan and, except to the
extent otherwise provided in this sentence, the representations and warranties
described in clause (xiii) hereof must be satisfied as to each Qualified
Substitute Mortgage Loan or in the aggregate, as the case may be.
"Rating Agency or Rating Agencies": S&P, Xxxxx'x and Fitch or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Servicers.
"Realized Loss": With respect to each Mortgage Loan as to which a
Final Recovery Determination has been made, an amount (not less than zero)
equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination
was made, plus (ii) accrued interest from the Due Date as to which interest
was last paid by the Mortgagor through the end of the calendar month in
27
which such Final Recovery Determination was made, calculated in the case of
each calendar month during such period (A) at an annual rate equal to the
annual rate at which interest was then accruing on such Mortgage Loan and (B)
on a principal amount equal to the Stated Principal Balance of such Mortgage
Loan as of the close of business on the Distribution Date during such calendar
month, plus (iii) any amounts previously withdrawn from the Collection Account
in respect of such Mortgage Loan pursuant to Section 3.11(a)(ix) and Section
3.16(b), minus (iv) the proceeds, if any, received in respect of such Mortgage
Loan during the calendar month in which such Final Recovery Determination was
made, net of amounts that are payable therefrom to the related Servicer with
respect to such Mortgage Loan pursuant to Section 3.11(a)(iii).
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of the Trust Fund, plus (ii)
accrued interest from the Due Date as to which interest was last paid by the
Mortgagor in respect of the related Mortgage Loan through the end of the
calendar month immediately preceding the calendar month in which such REO
Property was acquired, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest
was then accruing on the related Mortgage Loan and (B) on a principal amount
equal to the Stated Principal Balance of the related Mortgage Loan as of the
close of business on the Distribution Date during such calendar month, plus
(iii) REO Imputed Interest for such REO Property for each calendar month
commencing with the calendar month in which such REO Property was acquired and
ending with the calendar month in which such Final Recovery Determination was
made, plus (iv) any amounts previously withdrawn from the Collection Account
in respect of the related Mortgage Loan pursuant to Section 3.11(a)(ix) and
Section 3.16(b), minus (v) the aggregate of all P&I Advances made by the
related Servicer in respect of such REO Property or the related Mortgage Loan
for which such Servicer has been or, in connection with such Final Recovery
Determination, will be reimbursed pursuant to Section 3.23 out of rental
income, Insurance Proceeds and Liquidation Proceeds received in respect of
such REO Property, minus (vi) the total of all net rental income, Insurance
Proceeds and Liquidation Proceeds received in respect of such REO Property
that has been, or in connection with such Final Recovery Determination, will
be transferred to the Distribution Account pursuant to Section 3.23.
With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and
the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan which has become the subject of a
Debt Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a
court of competent jurisdiction. Each such Realized Loss shall be deemed to
have been incurred on the Due Date for each affected Monthly Payment.
"Realized Loss Percentage": For purposes of the Servicer Termination
Test and with respect to the Long Beach Serviced Loans and the Fairbanks
Serviced Loans, as applicable, the percentage produced by the following
calculation: (i) the aggregate amount of cumulative
28
Realized Losses incurred on the related Mortgage Loans since the Cut-off Date
through the last day of the related Due Period, minus (ii) any amount received
with respect to Realized Losses on the related Mortgage Loans subsequent to a
Final Recovery Determination being made with respect to such Mortgage Loans,
divided by (iii) the aggregate Cut-off Date Principal Balance of the related
Mortgage Loans.
"Reconstitution Agreement" : Those certain reconstitution agreements
dated as of the Closing Date by and among the Seller, the Depositor and each
Originator (except Long Beach Mortgage Company) related to the applicable
Mortgage Loan Purchase Agreement by and between the Seller and the applicable
Originator.
"Record Date": With respect to any Distribution Date and any
Definitive Certificates, other than the Class X Certificates and the first
Distribution Date, the close of business on the last Business Day of the month
immediately preceding the month in which such applicable Distribution Date
occurs. With respect to any Distribution Date and the Offered Certificates
(other than any Definitive Certificates) the Business Day prior to such
Distribution Date. Notwithstanding the foregoing, the holder of record for the
first Distribution Date and the Class X Certificates is Credit Suisse First
Boston Corporation.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The
Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors
in interest; provided, however, that if any of the foregoing banks are not
able to serve as a Reference Bank, then any leading banks selected by the
Trustee which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control
with the Depositor or any Affiliate thereof and (iii) which have been
designated as such by the Trustee.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which
were not used to purchase the related Mortgaged Property.
"Regular Certificate": As specified in the Preliminary Statement.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
"Relief Act Interest Shortfall": With respect to any Distribution
Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month
as a result of the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered
hereunder, with respect to which a REMIC election is to be made, consisting
of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together
with all
29
collections thereon and proceeds thereof, (ii) any REO Property, together with
all collections thereon and proceeds thereof, (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under each Mortgage Loan Purchase Agreement and each
Reconstitution Agreement (including any security interest created thereby) and
(v) the Collection Account (other than any amounts representing any Servicer
Prepayment Charge Payment Amount), the Distribution Account (other than any
amounts representing any Servicer Prepayment Charge Payment Amount) and any
REO Account and such assets that are deposited therein from time to time and
any investments thereof, together with any and all income, proceeds and
payments with respect thereto. Notwithstanding the foregoing, however, REMIC I
specifically excludes all payments and other collections of principal and
interest due on the Mortgage Loans on or before the Cut-off Date and all
Prepayment Charges payable in connection with Principal Prepayments made on or
before the Cut-off Date, the Net WAC Fund, the Yield Maintenance Agreement and
the Pre-Funding Account.
"REMIC II": The segregated pool of assets consisting of all of the
REMIC I Regular Interests conveyed in trust to the Trustee for the benefit of
REMIC III, as holder of the REMIC II Regular Interests, and the Class R-II
Certificateholders pursuant to Section 2.07, and all amounts deposited
therein, with respect to which a separate REMIC election is to be made.
"REMIC II Regular Interest": Any of the separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as
a "regular interest" in REMIC II.
"REMIC III": The segregated pool of assets consisting of all of the
REMIC II Regular Interests conveyed in trust to the Trustee for the benefit of
REMIC IV, as holder of the REMIC IV Regular Interests, and the Class R-III
residual interest pursuant to Section 2.07, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.
"REMIC III. Regular Interest": Any of the separate non-certificated
beneficial ownership interests in REMIC IV issued hereunder and designated as
a "regular interest" in REMIC IV
"REMIC IV": The segregated pool of assets consisting of all of the
REMIC III Regular Interests conveyed in trust to the Trustee for the benefit
of REMIC V, as holder of the REMIC N Regular Interests, and the Class R-IV
residual interest pursuant to Section 2.07, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.
"REMIC IV Regular Interest": Any of the separate non-certificated
beneficial ownership interests in REMIC IV issued hereunder and designated as
a "regular interest" in REMIC IV
"REMIC V": The segregated pool of assets consisting of all of the
REMIC IV Regular Interests conveyed in trust to the Trustee for the benefit of
the Certificateholders pursuant to Section 2.09, the Class R-V residual
interest and all amounts deposited therein, with respect to which a separate
REMIC election is to be made.
"REMIC IV Certificate": Any Regular Certificate.
30
"REMIC IV Certificateholder": The Holder of any REMIC IV
Certificate.
"REMIC IV Accretion Directed Class": As set forth in the Preliminary
Statement.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G 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.
"Remittance Report": A report in form mutually agreed to between the
Trustee and the related Servicer on a magnetic disk or tape or in electronic
format prepared by the related Servicer pursuant to Section 4.03 with such
additions, deletions and modifications as agreed to by the Trustee and such
Servicer.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."
"REO Account": Each of the accounts maintained, or caused to be
maintained, by the related Servicer in respect of an REO Property pursuant to
Section 3.23.
"REO Disposition": The sale or other disposition of an REO Property
on behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar
month during which such REO Property was at any time part of the Trust Fund,
one month's interest at the applicable Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar
month, of the related Mortgage Loan, if appropriate) as of the close of
business on the Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for
any calendar month, the excess, if any, of (a) the aggregate of all amounts
received in respect of such REO Property during such calendar month, whether
in the form of rental income, sale proceeds (including, without limitation,
that portion of the Termination Price paid in connection with a purchase of
all of the Mortgage Loans and REO Properties pursuant to Section 9.01 that is
allocable to such REO Property) or otherwise, net of any portion of such
amounts (i) payable pursuant to Section 3.23(c) in respect of the proper
operation, management and maintenance of such REO Property or (ii) payable or
reimbursable to the related Servicer pursuant to Section 3.23(d) for unpaid
Servicing Fees in respect of the related Mortgage Loan and unreimbursed
Servicing Advances and P&I Advances in respect of such REO Property or the
related Mortgage Loan, over (b) the REO Imputed Interest in respect of such
REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the related
Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.23.
31
"Request for Release": A release signed by a Servicing Officer, or
in a mutually agreeable electronic format which will, in lieu of a signature
on its face, originate from a Servicing Officer, in the form of Exhibit E-1 or
Exhibit E-2 attached hereto.
"Required Net WAC Fund Deposit": With respect to any Distribution
Date on which the excess of Triple Adjusted Net WAC over the weighted average
Pass-Through Rates of the LIBOR Certificates is less than 0.25%, the excess,
if any, of (i) the product of 0.50% and the aggregate Stated Principal Balance
of the Mortgage Loans over (ii) the amount of funds on deposit in the Net WAC
Fund prior to deposits thereto on such Distribution Date. With respect to any
Distribution Date on which the related excess of Triple Adjusted Net WAC over
the weighted average Pass-Through Rates of the LIBOR Certificates is equal to
or greater than 0.25%, the excess, if any, of (i) $5,000 over (ii) the amount
of funds on deposit in the Net WAC Fund prior to deposits thereto on such
Distribution Date. The Depositor shall cause the deposit of $5,000 to the Net
WAC Fund on the Closing Date.
"Required Overcollateralized Amount": With respect to the first
Distribution Date, $0.00 and any other Distribution Date (i) prior to the
Stepdown Date, $14,250,002 (ii) on or after the Stepdown Date provided a
Trigger Event is not in effect, the greater of (x) 3.00% of the Aggregate
Collateral Balance as of the last day of the related Due Period and (y)
$4,750,001 and (iii) on or after the Stepdown Date if a Trigger Event is in
effect, the Required Overcollateralized Amount for the immediately preceding
Distribution Date.
"Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
1/16%) of the one-month U.S. dollar lending rates which New York City banks
selected by the Trustee are quoting on the relevant Interest Determination
Date to the principal London offices of leading banks in the London interbank
market or (ii) in the event that the Trustee can determine no such arithmetic
mean, the lowest one-month U.S. dollar lending rate which New York City banks
selected by the Trustee are quoting on such Interest Determination Date to
leading European banks.
"Residential Dwelling": Any one of the following: (i) an attached or
detached one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a condominium project or (iv) a detached
one-family dwelling in a planned unit development, none of which is a
co-operative, mobile or manufactured home (unless such mobile or manufactured
home is treated as real property under applicable state law).
"Residual Certificates": As specified in the Preliminary Statement.
"Residual Interest": The sole class of "residual interests" in a
REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, the
President, any vice president, any assistant vice president, the Secretary,
any assistant secretary, the Treasurer, any assistant treasurer, any trust
officer or assistant trust officer, the Controller and any assistant
controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and, with respect to a particular matter, to
32
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"S&P": Standard and Poor's, a division of The XxXxxx-Xxxx Companies,
Inc., or its successor in interest.
"Seller": Credit Suisse First Boston Mortgage Capital LLC, or its
successor in interest, in its capacity as seller.
"Servicers": Fairbanks Capital Corp. ("Fairbanks") or any successor
Servicer appointed as herein provided, in its capacity as Servicer hereunder
with respect to the Mortgage Loans identified on Part A and Part C of Schedule
1 and Long Beach Mortgage Company ("Long Beach") or any successor Servicer
appointed as herein provided, in its capacity as Servicer hereunder with
respect to the Mortgage Loans identified on Part B of Schedule 1 hereto.
References to "related Servicer", "applicable Servicer" and similar terms
shall mean the Servicer only with respect to the Mortgage Loans serviced by
it.
"Servicer Evaluation Trigger Date": With respect to Fairbanks and
the Fairbanks Serviced Loans, any date on which subsection (b) of the related
Servicer Termination Test occurs.
"Servicer Event of Default": One or more of the events described in
Section 7.01(a).
"Servicer Performance Evaluation": The performance evaluation set
forth in Section 3.27 herein.
"Servicer Prepayment Charge Payment Amount": The amounts payable by
any Servicer in respect of any waived Prepayment Charges pursuant to Section
2.03(b)(ii).
"Servicer Remittance Date": With respect to any Distribution Date,
3:00 p.m. New York time on the second Business Day preceding such Distribution
Date.
"Servicer Termination Test": With respect to the Long Beach Serviced
Loans and any Distribution Date, the Servicer Termination Test will be failed
if the Realized Loss Percentage for the Long Beach Serviced Loans exceeds the
applicable percentages set forth below with respect to such Distribution Date:
Distribution Date Occurring In Percentage
February 2002 through January 2004 2.50%
February 2004 through January 2005 3.00%
February 2005 through January 2006 3.50%
February 2006 and thereafter 4.50%
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With respect to the Fairbanks Serviced Loans and any Distribution
Date, Fairbanks will fail the Servicer Termination Test if (a) Fairbanks fails
the Servicer Performance Evaluation as set forth in Section 3.27 herein and
(b) the Realized Loss Percentage for the Fairbanks Serviced Loans exceeds the
applicable percentages set forth below with respect to such Distribution Date:
Distribution Date Occurring In Percentage
February 2002 through January 2004 2.50%
February 2004 through January 2005 3.00%
February 2005 through January 2006 3.50%
February 2006 and thereafter 4.50%
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by a Servicer in the performance of its servicing
obligations (including the reasonable fees of counsel) in connection with a
default, delinquency or other unanticipated event, including, but not limited
to, the cost of (i) the inspection, preservation, restoration and protection
of a Mortgaged Property, (ii) any enforcement or judicial proceedings,
including foreclosures, in respect of a particular Mortgage Loan, (iii) the
management (including reasonable fees in connection therewith) and liquidation
of any REO Property and (iv) the performance of its obligations under Section
3.01, Section 3.09, Section 3.14, Section 3.16 and Section 3.23. Neither of
the Servicers shall be required to make any Nonrecoverable Servicing Advances.
"Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of
any payment of interest which accompanies a Principal Prepayment in full made
by the Mortgagor during such calendar month, interest for the number of days
covered by such payment of interest) at the Servicing Fee Rate on the same
principal amount on which interest on such Mortgage Loan accrues for such
calendar month. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing File": With respect to each Fairbanks Serviced Loan, the
Servicing File for such Mortgage Loan shall consist of copies of each item
required to be in the Mortgage File (for the avoidance of doubt, the original
of each such document shall be maintained in the Mortgage File for such
Mortgage Loan unless otherwise permitted to be released in accordance with
this Agreement) and the following documents:
(i) Residential loan application.
34
(ii) Mortgage Loan closing statement.
(iii) Verification of employment and income, if applicable.
(iv) Verification of acceptable evidence of source and amount of
downpayment.
(v) Credit report on Mortgagor.
(vi) Residential appraisal report.
(vii) Photograph of the Mortgaged Property.
(viii) Survey of the Mortgaged Property.
(ix) Copy of each instrument necessary to complete identification of
any exception set forth in the exception schedule in the title policy,
i.e., map or plat, restrictions, easements, sewer agreements, home
association declarations, etc.
(x) All required disclosure statements.
(xi) If required in an appraisal, termite report, structural
engineer's report, water potability and septic certification.
(xii) Sales Contract, if applicable.
"Servicing Officer": Any employee of a Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans, whose
name and specimen signature appear on a list of Servicing Officers furnished
by such Servicer to the Trustee and the Depositor on the Closing Date, as such
list may from time to time be amended.
"Single Certificate": With respect to any Class of Certificates
(other than the Class P Certificates and the Residual Certificates), a
hypothetical Certificate of such Class evidencing a Percentage Interest for
such Class corresponding to an initial Certificate Principal Balance or
Notional Amount of $1,000. With respect to the Class P Certificates and the
Residual Certificates, a hypothetical Certificate of such Class evidencing a
20% Percentage Interest in such Class.
"Startup Day": With respect to each of REMIC I, REMIC II and REMIC
III, the day designated as such pursuant to Section 10.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a)
as of any date of determination up to but not including the Distribution Date
on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the principal balance of such Mortgage
Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the
sum of (i) the principal portion of each Monthly Payment due on a Due Date
subsequent to the Cut-off Date, to the extent received from the Mortgagor or
advanced by the
35
related Servicer and distributed pursuant to Section 4.01 on or before such
date of determination, (ii) all Principal Prepayments received after the
Cut-off Date, to the extent distributed pursuant to Section 4.01 on or before
such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds applied by the related Servicer as recoveries of principal in
accordance with the provisions of Section 3.16, to the extent distributed
pursuant to Section 4.01 on or before such date of determination and (iv) any
Realized Loss incurred with respect thereto as a result of a Deficient
Valuation made during or prior to the Prepayment Period for the most recent
Distribution Date coinciding with or preceding such date of determination; and
(b) as of any date of determination coinciding with or subsequent to the
Distribution Date on which the proceeds, if any, of a Liquidation Event with
respect to such Mortgage Loan would be distributed, zero. With respect to any
REO Property: (a) as of any date of determination up to but not including the
Distribution Date on which the proceeds, if any, of a Liquidation Event with
respect to such REO Property would be distributed, an amount (not less than
zero) equal to the Stated Principal Balance of the related Mortgage Loan as of
the date on which such REO Property was acquired on behalf of the Trust Fund,
minus the sum of (i) if such REO Property was acquired before the Distribution
Date in any calendar month, the principal portion of the Monthly Payment due
on the Due Date in the calendar month of acquisition, to the extent advanced
by the related Servicer and distributed pursuant to Section 4.01 on or before
such date of determination, and (ii) the aggregate amount of REO Principal
Amortization in respect of such REO Property for all previously ended calendar
months, to the extent distributed pursuant to Section 4.01 on or before such
date of determination; and (b) as of any date of determination coinciding with
or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed,
zero.
"Stayed Funds": If a Servicer is the subject of a proceeding under
the federal Bankruptcy Code and the making of a Remittance (as defined in
Section 7.02(b)) is prohibited by Section 362 of the federal Bankruptcy Code,
funds that are in the custody of such Servicer, a trustee in bankruptcy or a
federal bankruptcy court and should have been the subject of such Remittance
absent such prohibition.
"Stepdown Date": The earlier to occur of (1) the Distribution Date
on which the aggregate Certificate Principal Balance of the Class A
Certificates has been reduced to zero and (2) the later to occur of (x) the
Distribution Date occurring in February 2005 and (y) the first Distribution
Date on which the Credit Enhancement Percentage is greater than or equal to
39.00%.
"Strip Amount": With respect to any Distribution Date on or prior to
the Distribution Date in July 2004, the product of 0.2635% per annum and the
Scheduled Notional Amount indicated on Schedule II to the Yield Maintenance
Agreement for that Distribution Date, and after the Distribution Date in July
2004, zero.
"Strip Amount Rate": With respect to any Distribution Date on or
prior to the Distribution Date in July 2004, the Strip Amount for that
Distribution Date multiplied by a fraction, the numerator of which is twelve
and the denominator of which is the aggregate outstanding Principal Balance of
the Mortgage Loans as of the first day of the related Due Period.
Notwithstanding anything to the contrary herein, the Strip Amount Rate shall
be
36
adjusted to be an effective rate reflecting accrued interest calculated on the
basis of a 360-day year and the actual number of days elapsed.
"Subgroup": Either Subgroup 1 or Subgroup 2, as applicable.
"Subgroup 1": Those certain Mortgage Loans identified as belonging
to Subgroup 1 on the Mortgage Loan Schedule.
"Subgroup 2": Those certain Mortgage Loans identified as belonging
to Subgroup 2 on the Mortgage Loan Schedule.
"Subordinated Offered Certificates": As specified in the Preliminary
Statement.
"Subsequent Mortgage Loan": Any Mortgage Loan other than an Initial
Mortgage Loan conveyed to the Trust Fund pursuant to Section 2.01 hereof and
to a Subsequent Transfer Agreement, which Mortgage Loan shall be listed on the
revised Mortgage Loan Schedule delivered pursuant to this Agreement and on
Schedule A to such Subsequent Transfer Agreement. When used with respect to a
single Subsequent Transfer Date, Subsequent Mortgage Loan shall mean a
Subsequent Mortgage Loan conveyed to the Trust on that Subsequent Transfer
Date.
"Subsequent Transfer Agreement": A Subsequent Transfer Agreement
substantially in the form of Exhibit H hereto, executed and delivered by the
Depositor, the Servicers and the Trustee as provided in Section 2.01 hereof.
"Subsequent Transfer Date": For any Subsequent Transfer Agreement,
the date the related Subsequent Mortgage Loans are transferred to the Trust
pursuant to the related Subsequent Transfer Agreement.
"Sub-Servicer": Any Person with which a Servicer has entered into a
Sub-Servicing Agreement and which meets the qualifications of a Sub-Servicer
pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a Sub-Servicer
which meets the requirements set forth in Section 3.08 and is otherwise
acceptable to the applicable Servicer.
"Sub-Servicing Agreement": The written contract between the
applicable Servicer and a Sub-Servicer relating to servicing and
administration of certain Mortgage Loans as provided in Section 3.02.
"Substitution Shortfall Amount": As defined in Section 2.03(c).
"Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor
forms, to be filed on behalf of the Trust Fund due to its classification as a
REMIC under the REMIC Provisions, together with any and all other information
reports or returns that may be required to be furnished to the
Certificateholders or
37
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws.
"Telerate Page 3750": The display designated as page "3750" on the
Dow Xxxxx Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank
offered rates of major banks).
"Termination Payment": As defined in the Yield Maintenance
Agreement.
"Termination Price": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger Event": A Trigger Event has occurred with respect to a
Distribution Date if the Delinquency Percentage exceeds 40% of the Credit
Enhancement Percentage.
"Triple Adjusted Net WAC": As to any Distribution Date, will be a
per annum rate equal to (a) the Double Adjusted Net WAC less (b) the Current
Interest for the Class B-IO Certificate for such date multiplied by a
fraction, the numerator of which is twelve and the denominator is the
Aggregate Collateral Balance as of the first day of the related Due Period.
This rate will be adjusted to correspond with the day counting convention used
for the applicable Class of Certificates. For federal income tax purposes, a
per annum rate equal to the weighted average of the Class T3-A Regular
Interest and the Class T3-B Regular Interest where the Class T3-A Regular
Interest has a rate equal to Double Net WAC, and the Class T3-B has a rate
equal to (i) from the Closing Date to January 15, 2004, Double Net WAC minus
6.00% (but in no case less than 0%), and (ii) thereafter, Net WAC.
"Trust": Asset Backed Securities Corporation Home Equity Loan Trust
2002-HE1, Series 2002-HE1, the trust created under this Agreement.
"Trust Fund": The corpus of the trust created hereunder consisting
of (i) the Mortgage Loans and all interest and principal received on or with
respect thereto after the related Cut-off Date, other than such amounts which
were due on the Mortgage Loans on or before the related Cut-off Date; (ii) the
Collection Account, the Distribution Account, the Pre-Funding Account and the
Net WAC Fund and all amounts deposited therein pursuant to the applicable
provisions of this Agreement (including, without limitation, amounts received
from the Seller on the Closing Date which shall be deposited by the Trustee in
the Collection Account pursuant to Section 2.01); (iii) the Depositor's rights
under each Mortgage Loan Purchase Agreement, the Assignment and Assumption
Agreement and each Reconstitution Agreement, (iv) the Trust's rights under the
Yield Maintenance Agreement; (v) property that secured a Mortgage Loan and
38
has been acquired by foreclosure, deed-in-lieu of foreclosure or otherwise;
and (vi) all proceeds of the conversion, voluntary or involuntary, of any of
the foregoing.
"Trustee": U.S. Bank National Association, a national banking
association, or its successor in interest, or any successor trustee appointed
as herein provided.
"Underwriters": Credit Suisse First Boston Corporation, X.X. Xxxxxx
Securities Inc. and The Xxxxxxxx Capital Group.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.
"United States Person": A citizen or resident of the United States,
a corporation, partnership or other entity created or organized in, or under
the laws of, the United States, or any State thereof or the District of
Columbia (except, in the case of a partnership, to the extent provided in
regulations) or an estate whose income is subject to United 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 the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. To the extent prescribed in regulations by
the Secretary of the Treasury, which have not yet been issued, a trust which
was in existence on September 20, 1996 (other than a trust treated as owned by
the grantor under subpart E of part I of subchapter J of chapter 1 of the
Code), and which was treated as a United States person on September 20, 1996
may elect to continue to be treated as a United States person notwithstanding
the previous sentence. The term "United States" shall have the meaning set
forth in Section 7701 of the Code.
"Unpaid Interest Shortfall Amount": With respect to any Distribution
Date and any Class of Offered Certificates, the sum of (i) the amount, if any,
by which (a) the Accrued Certificate Interest for such Class of Certificates
as of the immediately preceding Distribution Date exceeded (b) the actual
amount distributed on such Class of Certificates in respect of interest on
such immediately preceding Distribution Date and (ii) the amount of any Unpaid
Interest Shortfall Amount for such Class of Certificates remaining unpaid from
the previous Distribution Date, plus accrued interest on such sum calculated
at the related Pass-Through Rate for the most recently ended Interest Accrual
Period such amount remained outstanding.
"Unpaid Realized Loss Amount": With respect to any Class of
Subordinated Offered Certificates and as to any Distribution Date, the excess
of (i) Applied Realized Loss Amounts with respect to that Class over (ii) the
sum of all distributions in reduction of Applied Realized Loss Amounts on all
previous Distribution Dates. Any amounts distributed to a Class of
Subordinated Offered Certificates in respect of any Unpaid Realized Loss
Amount will not be applied to reduce the Certificate Principal Balance of that
Class.
"Value": With respect to any Mortgaged Property related to a
Mortgage Loan other than a Long Beach Serviced Loan, the lesser of (i) the
lesser of (a) the value thereof as determined by an appraisal made for the
Originator of the Mortgage Loan at the time of origination of the Mortgage
Loan by an appraiser who met the minimum requirements of Fannie
39
Mae and Xxxxxxx Mac and (b) the value thereof as determined by a review
appraisal conducted by the Originator in the event any such review appraisal
determines an appraised value more than ten percent lower than the value
thereof as determined by the appraisal referred to in clause (i)(a) above in
the case of a Mortgage Loan with an LTV less than or equal to 80%, or more
than five percent lower than the value thereof as determined by the appraisal
referred to in clause (i)(a) above, in the case of a Mortgage Loan with an LTV
greater than 80%, as determined by an appraisal referred to in clause (i)(a),
and (ii) the purchase price paid for the related Mortgaged Property by the
Mortgagor with the proceeds of the Mortgage Loan, provided, however, (A) in
the case of a Refinanced Mortgage Loan, such value of the Mortgaged Property
is based solely upon the lesser of (1) the value determined by an appraisal
made for the originator of such Refinanced Mortgage Loan at the time of
origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of Xxxxxx Mae and Xxxxxxx Mac and (2) the value thereof
as determined by a review appraisal conducted by the Originator in the event
any such review appraisal determines an appraised value more than ten percent
lower than the value thereof as determined by the appraisal referred to in
clause (ii)(A)(1) above, in the case of a Mortgage Loan with an LTV less than
or equal to 80%, or more than five percent lower than the value thereof as
determined by the appraisal referred to in clause (ii)(a)(1) above, in the
case of a Mortgage Loan with an LTV greater than 80%, as determined by the
appraisal referred to in clause (ii)(A)(1) and (B) in the case of a Mortgage
Loan originated in connection with a "lease-option purchase", such value of
the Mortgaged Property is based on the lower of the value determined by an
appraisal made for the Originator of such Mortgage Loan at the time or
origination or the sale price of such Mortgaged Property if the "lease option
purchase price" was set less than 12 months prior to origination, and is based
on the value determined by an appraisal made for the originator of such
Mortgage Loan at the time of origination if the "lease option purchase price"
was set 12 months or more prior to origination. With respect to any Mortgaged
Property related to a Long Beach Serviced Loan, the lesser of (i) the value
thereof as determined by an appraisal made for Long Beach as the Originator of
such Mortgage Loan at the time of origination of such Mortgage Loan by an
appraiser who met the minimum requirements of Xxxxxx Mae or Xxxxxxx Mac, and
(ii) the purchase price paid for the related Mortgaged Property by the related
Mortgagor with the proceeds of such Mortgage Loan, provided, however, in the
case of a Refinanced Mortgage Loan, such value of the Mortgaged Property is
based solely upon the value determined by an appraisal made for Long Beach as
the Originator of such Refinanced Mortgage Loan at the time of origination of
such Refinanced Mortgage Loan by an appraiser who met the minimum requirements
of Xxxxxx Mae or Xxxxxxx Mac.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. With respect to any date
of determination, 95% of all voting rights will be allocated among all Holders
of the Offered Certificates, other than the Class A-IO Certificates, in
proportion to their then outstanding Certificate Principal Balances, 1% of all
voting rights will be allocated among the Holders of the Class X Certificates;
1% of all voting rights will be allocated among the Holders of the Class A-IO
Certificates; 1% of all voting rights will be allocated among the Holders of
the Class B-IO Certificates;1% of all voting rights will be allocated among
the Holders of the Class P Certificates, and 1% of all voting rights will be
allocated among Holders of the Residual Certificates, in each case in
proportion to the Percentage Interests evidenced by their respective
Certificates.
40
"Yield Maintenance Agreement": The interest rate yield maintenance
agreement consisting of the ISDA Master Agreement and the Schedule dated as of
the Closing Date and the Confirmation thereto, between the Trustee on behalf
of the Trust and the Counterparty, as such agreement may be amended and
supplemented in accordance with its terms and any replacement interest yield
maintenance agreement acceptable to the Depositor and the Trustee.
SECTION 1.02. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Accrued Certificate
Interest for the Class A Certificates, the A-IO Certificates, the Subordinated
Certificates and the Class X Certificates for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the Servicers pursuant to Section 3.24) and any Relief
Act Interest Shortfall incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated to the Class X Certificates in reduction
of the Class X Distribution Amount and thereafter, among the Class A
Certificates, Class A-IO Certificates and the other Classes of Subordinated
Certificates on a pro rata basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Certificate Principal Balance or Notional Amount of each such Certificate.
SECTION 1.03. Designation of Interests in REMIC
The Trustee shall elect that each of REMIC I, REMIC II, REMIC III,
REMIC IV and REMIC V shall be treated as a REMIC under Section 860D of the
Code. Any inconsistencies or ambiguities in this Agreement or in the
administration of this Agreement shall be resolved in a manner that preserves
the validity of such REMIC elections. The assets of REMIC I shall include the
Mortgage Loans, the accounts (other than the Net WAC Fund and the Pre-Funding
Account), any REO Property, and any proceeds of the foregoing. The REMIC I
Regular Interests shall constitute the assets of REMIC II. The REMIC II
Regular Interests shall constitute the assets of REMIC III. The REMIC III
Regular Interests shall constitute the assets of REMIC IV. The REMIC IV
Regular Interests shall constitute the assets of REMIC V.
REMIC I:
The REMIC I Regular Interests shall have the following principal balances, and
the pass-through rates in the manner set forth in the following table:
Initial Initial Rate
REMIC Interests Interest Corresponding Change
Interest Balance Rate REMIC II Interest Date
T1-A (1) Net WAC T2-A N/A
T1-SA(1) 18,038,000 Net WAC T2-SA-IO(1) Feb 15, 2002
T1-SA(2) 17,702,000 Net WAC T2-SA-IO(2) Mar 15, 2002
T1-SA(3) 17,368,000 Net WAC T2-SA-IO(3) Apr 15, 2002
T1-SA(4) 17,044,000 Net WAC T2-SA-IO(4) May 15, 2002
T1-SA(5) 16,730,000 Net WAC T2-SA-IO(5) Jun 15, 2002
T1-SA(6) 16,418,000 Net WAC T2-SA-IO(6) Jul 15, 2002
T1-SA(7) 16,113,000 Net WAC T2-SA-IO(7) Aug 15, 2002
41
T1-SA(8) 15,809,000 Net WAC T2-SA-IO(8) Sep 15, 2002
T1-SA(9) 15,514,000 Net WAC T2-SA-IO(9) Oct 15, 2002
T1-SA(10) 15,224,000 Net WAC T2-SA-IO(10) Nov 15, 2002
T1-SA(11) 14,942,000 Net WAC T2-SA-IO(11) Dec 15, 2002
T1-SA(12) 14,662,000 Net WAC T2-SA-IO(12) Jan 15, 2003
T1-SA(13) 14,390,000 Net WAC T2-SA-IO(13) Feb 15, 2003
T1-SA(14) 14,120,000 Net WAC T2-SA-IO(14) Mar 15, 2003
T1-SA(15) 13,854,000 Net WAC T2-SA-IO(15) Apr 15, 2003
T1-SA(16) 13,593,000 Net WAC T2-SA-IO(16) May 15, 2003
T1-SA(17) 13,338,000 Net WAC T2-SA-IO(17) Jun 15, 2003
T1-SA(18) 13,087,000 Net WAC T2-SA-IO(18) Jul 15, 2003
T1-SA(19) 12,842,000 Net WAC T2-SA-IO(19) Aug 15, 2003
T1-SA(20) 12,600,000 Net WAC T2-SA-IO(20) Sep 15, 2003
T1-SA(21) 12,363,000 Net WAC T2-SA-IO(21) Oct 15, 2003
T1-SA(22) 12,129,000 Net WAC T2-SA-IO(22) Nov 15, 2003
T1-SA(23) 11,903,000 Net WAC T2-SA-IO(23) Dec 15, 2003
T1-SA(24) 11,677,000 Net WAC T2-SA-IO(24) Jan 15, 2004
T1-SA(25) 11,473,000 Net WAC T2-SA-IO(25) Feb 15, 2004
T1-SA(26) 11,280,000 Net WAC T2-SA-IO(26) Mar 15, 2004
T1-SA(27) 11,067,000 Net WAC T2-SA-IO(27) Apr 15, 2004
T1-SA(28) 10,858,000 Net WAC T2-SA-IO(28) May 15, 2004
T1-SA(29) 10,653,000 Net WAC T2-SA-IO(29) Jun 15, 2004
T1-SA(30) 543,209,000 Net WAC T2-SA-IO(30) Jul 15, 2004
T1-P $100 (2) N/A N/A
(1) Pool Principal Balance less the Class of the Class T1-SA
Regular Interests.
(2) The Class LT-P Interests will not be entitled to payments of
interest, but will be entitled to all prepayment penalties.
On each Distribution Date, all Realized Losses, payments of principal will be
allocated to Class T1-A until such class is reduced to zero. Subsequent
realized losses, payments of principal will first be allocated to Class T1-SA1
(until reduced to zero), and then to the Class T1-SA with the lowest numerical
denomination until such class is reduced to zero.
REMIC II:
The REMIC II Regular Interests shall have the following principal balances,
and the pass-through rates in the manner set forth in the following table:
Initial Initial Corresponding Corresponding T2-BIO
REMIC Interests Interest REMIC III Regular Interest
Interest Balance Rate Regular Interest Rate Change Date
T2-Z (1) Adjusted Net WAC N/A N/A
T2-Y 233,000,000 Adjusted Net WAC T3-AIO(1), T3-AIO(2), (2)
and T3-
42
AIO(3)
T2-SA-IO (3) (3) T3-SA N/A
T2-P $100 (4) N/A N/A
(1) Principal balance equal to the REMIC I Regular Interests less
the balance of the T2-Y Regular Interest, and the T2-P Regular
Interest.
(2) The T3-AIO(1) will have a Rate Change Date of the Distribution
Date in November 2002. The T3-AIO(2) will have a Rate Change
Date of the Distribution Date in September 2003. The T3-AIO(3)
will have a Rate Change Date of the Distribution Date in July
2004
(3) The Class T2-SA-IO will represent 30 REMIC regular interests.
Each regular interest will not have a principal balance, but
will receive interest according to a notional balance equal to
its corresponding T1-SA REMIC regular interest and pass-through
rate equal to (a) for the period beginning on the Closing Date,
and ending on the Rate Change Date for said T2-BIO regular
interest, 0.0219605%, and (b) thereafter, 0%.
(4) The Class T2-P Interests will not be entitled to payments of
interest, but will be entitle to all prepayments penalties. For
federal income tax purposes, the Class T2-P will represent 100%
of the interest of the Class T1-P.
On each Distribution Date, all Realized Losses, payments of principal will be
allocated to Class T2-Z until such class is reduced to zero. Subsequent
realized losses, payments of principal will first be allocated to Class T2-Y
until such class is reduced to zero.
REMIC III:
The REMIC III Regular Interests shall have the following principal balances,
and pass-through rates in the manner set forth in the following table:
REMIC Initial Interest
Interests Balance Rate
T3-A (1) Double Adjusted Net WAC
T3-B $31,500,000 Double Adjusted Net WAC
T3-SA (2) (2)
T3-AIO (3) (3)
T3-P $100 (4)
(1) Principal balance equal to the principal balance of all REMIC
II Regular Interest less the principal balance of the Class
T3-B Regular Interest and the Class T3-P Regular Interest.
(2) The Class T3-SA will not have a principal balance, but will be
entitled to receive 100% of the interest of all of the Class
T2-SA.
43
(3) The Class T3-AIO will not have a principal balance, but will
have a notional balance equal to the balance of all of the
Class T2-Y Regular Interests and will accrue interest at the
Pass-Through Rate for the Class A-IO.
(4) The Class T3-P Interests will not be entitled to payments of
interest, but will be entitled all prepayment penalties. For
federal income tax purposes, the T3-P will be entitle to 100%
of the payments received from the T2-P regular interest..
On each Distribution Date, all Realized Losses, payments of principal will be
allocated to Class T3-A until such class is reduced to zero . Subsequent
realized losses, payments of principal will first be allocated to Class T3-B
until such class is reduced to zero.
REMIC IV:
The REMIC IV Regular Interests, each of which (expect for the Class R-IV
Interests) is hereby designated a regular interest in REMIC IV, shall have the
following principal balances, pass-through rates and Corresponding Classes of
Certificates in the manner set forth in the following table:
Corresponding
REMIC Initial Interest Class of Master
Interests Balance Rate REMIC Interest
T4-A1 (1) 1/2 Corresponding Class Triple Adjusted Net WAC A1
balance
T4-A2 (1) 1/2 Corresponding Class Triple Adjusted Net WAC A2
balance
T4-M1(1) 1/2 Corresponding Class Triple Adjusted Net WAC M1
balance
T4-M2(1) 1/2 Corresponding Class Triple Adjusted Net WAC M2
balance
T4-B(1) 1/2 Corresponding Class Triple Adjusted Net WAC B
balance
1/2 Corresponding Class
T4-P balance (2) P
T4-Accrual Interest 1/2 Pool Principal Balance Triple Adjusted Net WAC N/A
plus1/2the
Overcollateralized Amount
less $100
T4-A-IO (3) (4) N/A
T4-B-IO (3) (4) N/A
T4-Strip Amount (5) (5) X/X
X-XX X/X X/X X/X
__________________
(1) Intermediate REMIC Accretion Directed Class.
(2) The Class T4-P Interests will not be entitled to payments of
interest, but will be entitled to all prepayment premiums. For
federal income tax purposes, the Class
44
T4-P will be entitle to 100% of all payments received by the
Class T3-P Regular Interest.
(3) The Class T4-A-IO Interest will have a notional balance equal
to the notional balance of the T3-A-IO Interest. The Class
T4-B-IO Interest will have a notional balance equal to the
principal balance of the T3-B Interest.
(4) For any Distribution Date and Class of Certificates, see the
corresponding Pass-Through Rate indicated in the definition of
"Pass-Through Rate" in Section 1.01 hereof.
(5) The Class T4-Strip Amount will not have a principal balance,
but will receive 100% of the interest from Class T3-Strip
Amount.
On each Distribution Date, 50% of the increase in the
Overcollateralized Amount will be payable as a reduction of the principal
balances of the REMIC IV Accretion Directed Classes (each such Class will be
reduced by an amount equal to 50% of any increase in the Overcollateralized
Amount that is attributable to a reduction in the principal balance of its
Corresponding Class) and will be accrued and added to the principal balance of
the REMIC IV Accrual Class. On each Distribution Date, the increase in the
principal balance of the REMIC IV Accrual Class may not exceed interest
accruals for such Distribution Date for the REMIC IV Accrual Class. In the
event that: (i) 50% of the increase in the Overcollateralized Amount exceeds
(ii) interest accruals on the REMIC IV Accrual Class for such Distribution
Date, the excess for such Distribution Date (accumulated with all such
excesses for all prior Distribution Dates) will be added to any increase in
the Overcollateralized Amount for purposes of determining the amount of
interest accrual on the REMIC IV Accrual Class payable as principal on the
REMIC IV Accretion Directed Class on the next Distribution Date pursuant to
the first sentence of this paragraph. All payments of principal generated by
the Mortgage Loans shall be allocated 50% to the REMIC IV Accrual Class, and
50% to the REMIC IV Accretion Directed Classes (in an amount equal to 50% of
the principal amounts allocated to their respective Corresponding Classes),
until paid in full. Notwithstanding the above, principal payments allocated to
the Class X Certificates that result in the reduction in the
Overcollateralized Amount shall be allocated to the REMIC IV Accrual Class
(until paid in full). Realized losses shall be applied so that after all
distributions have been made on each Distribution Date (i) the principal
balances of each of the REMIC IV Accretion Directed Class is equal to 50% of
the principal balance of its respective Corresponding Class, and (ii) the
REMIC IV Accrual Class is equal to 50% of the aggregate principal balance of
the Mortgage Pool plus 50% of the Overcollateralized Amount.
REMIC V:
The following table sets forth characteristics of the Certificates, each of
which, except for the Class R Certificates, is hereby designated as a "regular
interest" in the REMIC V:
Original Certificate
Principal Pass-Through
Balance Rate
45
Class A1 $235,258,000 (1)
Class A2 $543,742,000 (1)
Class A-IO (2) (2)
Class M1 $66,500,000 (1)
Class M2 $54,625,000 (1)
Class B $49,875,000 (1)
Class B-IO (2) (2)
Class X (3) (3)
Class P $100 (4)
Strip Amount (5) (5)
Class R (6) N/A N/A
(1) The lesser of the related Formula Rate and Triple Adjusted
Net WAC. Any entitlement to Net WAC Carryover Amounts will
not be an obligation of any REMIC created hereunder.
(2) The Class A-IO and Class B-IO Certificates will be
entitled to 100% of the interest distributions in respect
of the Class T4-A-IO and Class T4-B-IO Interests,
respectively.
(3) The Class X Certificates will be a notional balance equal
to the aggregate Stated Principal Balance of the Mortgage
Loans. The Pass-Through Rate in respect of the Class X
Certificates will be the excess of: (i) Triple Adjusted
Net WAC over (ii) the product of: (A) two and (B) the
weighted average Pass-Through Rate of the REMIC IV
Interests, where the REMIC IV Accrual Class is subject to
a cap equal to zero and each REMIC IV Accretion Directed
Classes is subject to a cap equal to the Pass-Through Rate
on its Corresponding Class.
(4) The Class P Certificates will not be entitled to payments
of interest, but will be entitle to receive all prepayment
penalties. For federal income tax purposes, the Class P
Certificate will have the right to receive 100% of the
amounts received from Class T4-P regular interests.
(5) The Strip Amount will be a REMIC regular interest of REMIC
V. The Strip Amount will not have a principal balance, but
will receive 100% of the amount received from Class T4-SA.
(6) The Class R Certificates will represent the beneficial
ownership of the R-I, R-II, R-III, R-IV and R-V Interests,
which will represent the sole class of residual interest
in each of REMIC I, REMIC II, REMIC III, REMIC IV and
REMIC V.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse for the
46
benefit of the Certificateholders all the right, title and interest of the
Depositor, including any security interest therein for the benefit of the
Depositor, in and to the Initial Mortgage Loans identified on the Mortgage
Loan Schedule, the rights of the Depositor under the Assignment and Assumption
Agreement, each Mortgage Loan Purchase Agreement and each Reconstitution
Agreement, and all other assets included or to be included in the Trust Fund.
Such assignment includes all interest and principal received by the Seller,
the Depositor or any Servicer on or with respect to the Initial Mortage Loans
(other than payments of principal and interest due on such Initial Mortgage
Loans on or before the Initial Cut-off Date). The Depositor herewith delivers
to the Trustee an executed copy of each Reconstitution Agreement. In addition,
on or prior to the Closing Date, the Trustee shall execute the Yield
Maintenance Agreement. With respect to any Initial Mortgage Loan that does not
have a first payment date during the Due Period related to the first
Distribution Date or any Subsequent Mortgage Loan that does not have a first
payment date during the Due Period related to the first Distribution Date
following the related Subsequent Transfer Date, the Depositor shall deposit
into the Distribution Account on or before the Servicer Remittance Date
relating to the applicable Distribution Date, an amount equal to one month's
interest at the related Net Mortgage Rate on the Cut-off Date Principal
Balance of such Mortgage Loan.
If the assignment and transfer of the Initial Mortage Loans and the
other property specified in this Section 2.01 from the Depositor to the
Trustee pursuant to this Agreement is held or deemed not to be a sale or is
held or deemed to be a pledge of security for a loan, the Depositor intends
that the rights and obligations of the parties shall be established pursuant
to the terms of this Agreement and that, in such event, (i) the Depositor
shall be deemed to have granted and does hereby grant to the Trustee as of the
Closing Date a perfected, first priority security interest in the entire
right, title and interest of the Depositor in and to the Initial Mortage Loans
and all other property conveyed to the Trust Fund pursuant to this Section
2.01 and all proceeds thereof, and (ii) this Agreement shall constitute a
security agreement under applicable law.
In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with the Trustee or the Custodian, the
following documents or instruments with respect to each Initial Mortage Loan
so transferred and assigned the following documents or instruments with
respect to each Subsequent Mortgage Loan (each, a "Mortgage File"):
(i) the related electronic Mortgage Loan Schedule, if available;
(ii) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of U.S. Bank National Association,
as Trustee under the applicable agreement, without recourse," with
all prior and intervening endorsements showing a complete chain of
endorsement from the originator to the Person so endorsing to the
Trustee or a copy of such original Mortgage Note with an
accompanying lost note affidavit executed by the Seller;
(iii) the original Mortgage with evidence of recording thereon, and
a copy, certified by the appropriate recording office, of the
recorded power of attorney, if the Mortgage was executed pursuant to
a power of attorney, with evidence of recording thereon;
47
(iv) an original Assignment of the Mortgage in blank;
(v) the original recorded Assignment or Assignments of the Mortgage
showing a complete chain of assignment from the originator to the
Person assigning the Mortgage to the Trustee or as contemplated by
the preceding clause (iv);
(vi) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vii) the original lender's title insurance policy, if available,
together with all endorsements or riders which were issued with or
subsequent to the issuance of such policy, insuring the priority of
the Mortgage as a first lien on the Mortgaged Property represented
therein as a fee interest vested in the Mortgagor, or in the event
such original title policy is unavailable, a written commitment or
uniform binder or preliminary report of title issued by the title
insurance or escrow company, if available.
The Depositor hereby represents that, on the Closing Date (i) no
more than 1% of the Initial Mortage Loans by Stated Principal Balance as of
the Cut-off Date may have lost note affidavits in lieu of the original
Mortgage Notes and (ii) the applicable Originator or, in the case of the Long
Beach Serviced Loans, the Seller shall deliver to the Trustee or the Custodian
a copy of the original Mortgage Note for each Mortgage Loan with respect to
which a lost note affidavit is delivered.
The Depositor shall cause the related Originator or, in the case of
the Long Beach Serviced Loans, the Seller to promptly (and in no event later
than thirty (30) Business Days, subject to extension upon a mutual agreement
among the Depositor, the related Servicer and the Trustee, following the later
of the Closing Date and the date of receipt by such Servicer or the Trustee,
as the case may be, of the recording information for a Mortgage) submit or
cause to be submitted to the Custodian for recording, at no expense to the
Trust Fund, the related Servicer or the Trustee, in the appropriate public
office for real property records, each Assignment referred to in clauses (iv)
and (v) above in this Section 2.01(a) and shall execute each original
Assignment in the following form: "U.S. Bank National Association, as Trustee
under the applicable agreement, without recourse." In the event that any such
Assignment is lost or returned unrecorded because of a defect therein, the
Depositor shall or shall cause the related Originator or Seller, as the case
may be, to promptly prepare or cause to be prepared a substitute Assignment or
cure or cause to be cured such defect, as the case may be, and thereafter
cause each such Assignment to be duly recorded.
If any of the documents referred to in clauses (ii), (iv) or (vi)
above in this Section 2.01(a) has as of the Closing Date been submitted for
recording but either (x) has not been returned from the applicable public
recording office or (y) has been lost or such public recording office has
retained the original of such document, the obligations of the Depositor to
deliver such documents shall be deemed to be satisfied upon (1) delivery to
the Trustee or the Custodian of a copy of each such document certified by the
Originator or, in the case of Long Beach Serviced Loans, the Seller, in the
case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for
recording and (2) if such copy is certified by the related Originator or, in
the case of Long Beach Serviced
48
Loans, the Seller, delivery to the Trustee or the Custodian promptly upon
receipt thereof of either the original or a copy of such document certified by
the applicable public recording office to be a true and complete copy of the
original. If the original lender's title insurance policy was not delivered
pursuant to clause (vii) above in this Section 2.01(a), the Depositor shall
deliver or cause to be delivered to the Trustee or the Custodian promptly
after receipt thereof, the original lender's title insurance policy, if
available. The Depositor shall deliver or cause to be delivered to the Trustee
or the Custodian promptly upon receipt thereof any other original documents
constituting a part of a Mortgage File received with respect to any Mortgage
Loan, including, but not limited to, any original documents evidencing an
assumption or modification of any Mortgage Loan.
All original documents relating to the Mortgage Loans that are not
delivered to the Trustee or the Custodian are and shall be held by or on
behalf of the Seller, the Depositor or the applicable Servicer, as the case
may be, in trust for the benefit of the Trustee on behalf of the
Certificateholders. In the event that any such original document is required
pursuant to the terms of this Section to be a part of a Mortgage File, such
document shall be delivered promptly to the Trustee or the Custodian. Any such
original document delivered to or held by the Depositor that is not required
pursuant to the terms of this Section to be a part of a Mortgage File, shall
be delivered promptly to the related Servicer.
(b) The Depositor hereby sells, transfers, assigns, sets over and
otherwise conveys to the Trustee in trust for the benefit of the
Certificateholders, without recourse, all right title and interest in such
Subsequent Mortgage Loans, including all interest and principal due on or with
respect to such Subsequent Mortgage Loans on or after the related Cut-off Date
and all interest and principal payments on such Subsequent Mortgage Loans
received prior to the Cut-off Date in respect of installments of interest and
principal due thereafter, but not including principal and interest due on such
Subsequent Mortgage Loans prior to the related Cut-off Date, any insurance
policies in respect of such Subsequent Mortgage Loans and all proceeds of any
of the foregoing.
(c) Upon three Business Day's prior written notice to the Custodian,
the Trustee, the Servicer of the Subsequent Mortgage Loans and the Rating
Agencies, on any Business Day during the Pre-Funding Period designated by the
Depositor, the Depositor, the Servicer of the Subsequent Mortgage Loans and
the Trustee shall complete, execute and deliver a Subsequent Transfer
Agreement so long as no Rating Agency has provided notice that the execution
and delivery of such Subsequent Transfer Agreement will result in a reduction
or withdrawal of the ratings assigned to the Certificates.
The transfer of Subsequent Mortgage Loans and the other property and
rights relating to them on a Subsequent Transfer Date is subject to the
satisfaction of each of the following conditions:
(i) each Subsequent Mortgage Loan conveyed on such Subsequent
Transfer Date satisfies the representations and warranties
applicable to it under this Agreement as of the applicable
Subsequent Transfer Date; provided, however, that with respect
to a breach of a representation and warranty with respect to a
Subsequent Mortgage Loan, the obligation under Section 2.03(c)
of this Agreement of the Seller to cure, repurchase or replace
such Subsequent
49
Mortgage Loan shall constitute the sole remedy against the
Seller respecting such breach available to Certificateholders,
the Depositor or the Trustee;
(ii) the Trustee and the Rating Agencies are provided with an
Opinion of Counsel or Opinions of Counsel, at the expense of
the Depositor, with respect to the qualification of the Trust
Fund as a REMIC, to be delivered as provided pursuant to
Section 2.01(d);
(iii) the Rating Agencies and the Trustee are provided with an
Opinion of Counsel or Opinions of Counsel, at the expense of
the Depositor, with respect to the characterization of the
transfer of the Subsequent Mortgage Loans conveyed on such
Subsequent Transfer Date as a sale, to be delivered as
provided pursuant to Section 2.01(d); and
(iv) the execution and delivery of such Subsequent Transfer
Agreement or conveyance of the related Subsequent Mortgage
Loans does not result in a reduction or withdrawal of any
ratings assigned to the Certificates by the Rating Agencies;
(v) no Subsequent Mortgage Loan conveyed on such Subsequent
Transfer Date was 30 or more days contractually Delinquent as
of such date;
(vi) the remaining term to stated maturity of such Subsequent
Mortgage Loan will not exceed 30 years;
(vii) such Subsequent Mortgage Loan will not have a Mortgage Rate
less than 6.150% per annum;
(viii) the Depositor shall have deposited in the Collection Account
all principal and interest collected with respect to the
related Subsequent Mortgage Loans on or after the related
Cut-off Date;
(ix) such Subsequent Mortgage Loan will not have a Loan-to-Value
Ratio greater than 95.00%;
(x) no Subsequent Mortgage Loan shall have a maturity date after
February 2032;
(xi) such Subsequent Mortgage Loan will not have an original
Loan-to-Value Ratio greater than 95.00%;
(xii) such Subsequent Mortgage Loan will have a principal balance
not greater than $600,000;
(xiii) such Subsequent Mortgage Loan will be secured by a first lien
on a mortgaged property; and
(xiv) such Subsequent Mortgage Loan will be otherwise acceptable to
the Rating Agencies;
50
(xv) following the conveyance of the Subsequent Mortgage Loans on
such Subsequent Transfer Date the characteristics of the
Mortgage Loans in the Mortgage Pool will be as follows:
(A) weighted average current Loan Rate of at least 9.500% per
annum;
(B) a weighted average remaining term to stated maturity of
less than 351 months;
(C) a weighted average Loan-to-Value Ratio of not more than
79.00%;
(D) no more than 42.00% of the Mortgage Loans by aggregate
Stated Principal Balance at the end of the Pre-Funding
Period will be concentrated in one state; and
(E) no more than 8.00% of the Mortgage Loans by aggregate
Cut-off Date Principal Balance will relate to non-owner
occupied properties;
(F) neither the Seller nor the Depositor shall be insolvent
or shall be rendered insolvent as a result of such
transfer;
(G) no Event of Default has occurred hereunder;
(H) the Depositor shall have delivered to the Trustee an
Officer's Certificate confirming the satisfaction of each
of these conditions precedent; and
(I) each Mortgage Loan constitutes a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code.
(d) Upon (1) delivery to the Trustee by the Depositor of the
Opinions of Counsel referred to in Sections 2.01(c)(ii) and (iii), (2)
delivery to the Trustee by the Depositor of a revised Mortgage Loan Schedule
reflecting the Subsequent Mortgage Loans conveyed on such Subsequent Transfer
Date and the related Subsequent Mortgage Loans and (3) delivery to the Trustee
by the Depositor of an Officer's Certificate confirming the satisfaction of
each of the conditions precedent set forth in Section 2.01(c), the Trustee
shall remit to the Depositor the Aggregate Subsequent Transfer Amount related
to the Subsequent Mortgage Loans transferred by the Depositor on such
Subsequent Transfer Date from funds in the Pre-Funding Account.
The Trustee shall not be required to investigate or otherwise verify
compliance with the conditions set forth in the preceding paragraph, except
for its own receipt of documents specified above, and shall be entitled to
rely on the required Officer's Certificate.
SECTION 2.02. Acceptance of REMIC I by the Trustee.
Subject to the provisions of Section 2.01 and subject to any
exceptions noted on the exception report described in the next paragraph
below, the Trustee acknowledges receipt of the documents referred to in
Section 2.01 (other than such documents described in Section
51
2.01(a)(v)) above and all other assets included in the definition of "REMIC I"
under clauses (i), (iii), (iv) and (v) (to the extent of amounts deposited
into the Distribution Account) and declares that the Trustee through the
Custodian holds and will hold such documents and the other documents delivered
to it constituting the Mortgage File on behalf of the Trust, and that it holds
or will hold all such assets and such other assets included in the definition
of "REMIC I" in trust for the exclusive use and benefit of all present and
future Certificateholders. The Trustee also acknowledges receipt of the
amounts on deposit in the Net WAC Fund and the Pre-Funding Account in trust
for the exclusive use and benefit of all present and future
Certificateholders.
The Trustee, agrees, for the benefit of the Certificateholders, on
or before the Closing Date, to or to cause the Custodian to review each
related Mortgage File and to certify in substantially the form attached hereto
as Exhibit C-1 that, as to each Initial Mortage Loan listed in the Mortgage
Loan Schedule (other than any Initial Mortage Loan paid in full or any Initial
Mortage Loan specifically identified in the exception report annexed thereto
as not being covered by such certification), (i) all documents constituting
part of such Mortgage File (other than such documents described in Section
2.01(a)(v)) required to be delivered to it pursuant to this Agreement are in
its possession, (ii) such documents have been reviewed by it and are not
mutilated, torn or defaced unless initialed by the related borrower and relate
to such Initial Mortage Loan and (iii) based on its examination and only as to
the foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i) through (iii), (ix), (xii) and (xviii) through (xx)
of the definition of "Mortgage Loan Schedule" accurately reflects information
set forth in the Mortgage File. It is herein acknowledged that, in conducting
such review, neither the Trustee nor the Custodian was under any duty or
obligation (i) to inspect, review or examine any such documents, instruments,
certificates or other papers to determine whether they are genuine,
enforceable, or appropriate for the represented purpose (including with
respect to Section 2.01(a)(vii), whether such title insurance policy insures
the priority of the Mortgage as a first lien) or whether they have actually
been recorded or that they are other than what they purport to be on their
face or (ii) to determine whether any Mortgage File should include any of the
documents specified in Section 2.01(a)(v).
Prior to the first anniversary date of this Agreement, the Trustee
shall cause the Custodian to deliver to the Depositor and the applicable
Servicer a final certification in the form annexed hereto as Exhibit C-2
evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the
Trustee or the Custodian finds any document or documents constituting a part
of a Mortgage File to be missing or defective in any material respect, at the
conclusion of its review the Trustee shall so notify the Depositor, the Seller
and the applicable Servicer. In addition, upon the discovery by the Depositor,
any Servicer, the Custodian or the Trustee of a breach of any of the
representations and warranties made by any Originator or the Seller in the
related Mortgage Loan Purchase Agreement or the Letter Agreement,
respectively, in respect of any Initial Mortage Loan which materially
adversely affects such Initial Mortage Loan or the interests of the related
Certificateholders in such Initial Mortage Loan, the party discovering such
breach shall give prompt written notice to the other parties.
52
Enforcement of each Mortgage Loan Purchase Agreement or the Letter
Agreement against the related Originator or the Seller, respectively, shall be
effected by the Trustee. The Trustee shall pay the costs of such enforcement
at its own expense, and shall be reimbursed therefor only (i) from a general
recovery resulting from such enforcement, to the extent, if any, that such
recovery exceeds all amounts due in respect of the related Mortgage Loans or
(ii) from a specific recovery of costs, expenses or attorneys' fees against
the Person against which such enforcement is directed; provided, however, if
the sources of reimbursement described in clauses (i) and (ii) are
insufficient, the Trustee may seek reimbursement for any remaining
unreimbursed costs of such enforcement from the Trust Fund as an Extraordinary
Trust Fund Expense.
The Trustee agrees to cause the Custodian to execute and deliver on
each Subsequent Transfer Date to the Depositor and the applicable Servicer a
Subsequent Certification in the form annexed hereto as Exhibit C-1. Based on
its or the Custodian's review and examination, and only as to the documents
identified in such Subsequent Certification, the Trustee shall cause the
Custodian to acknowledge that such documents appear regular on their face and
relate to such Subsequent Mortgage Loan. The Trustee and the Custodian shall
be under no duty or obligation to or to cause the Custodian to inspect, review
or examine said documents, instruments, certificates or other papers to
determine that the same are genuine, enforceable or appropriate for the
represented purpose or that they have actually been recorded in the real
estate records or that they are other than what they purport to be on their
face.
Not later than one year following the Closing Date, the Trustee
shall cause the Custodian to deliver to the Depositor and the applicable
Servicer a Final Certification with respect to the Subsequent Mortgage Loans
in the form annexed hereto as Exhibit C-2 with any applicable exceptions noted
thereon.
If, in the course of such review of the Mortgage Files relating to
the Subsequent Mortgage Loans, the Trustee or the Custodian finds any document
constituting a part of a Mortgage File which does not meet the requirements of
Section 2.01, the Custodian (upon discovery of such Mortgage File or at the
direction of the Trustee) shall list the exception in the Final Certification;
provided, however that neither the Trustee nor the Custodian shall make any
determination as to whether (i) any endorsement is sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note or (ii) any assignment is in recordable
form or is sufficient to effect the assignment of and transfer to the assignee
thereof under the mortgage to which the assignment relates. The Depositor
shall cure any such defect or repurchase or substitute for any such Mortgage
Loan in accordance with Section 2.03(a).
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by
the Originators, the Seller or the Depositor; Payment
of Prepayment Charges in the event of breach.
(a) Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, the Mortgage File or of the
breach by any Originator or the Seller of any representation, warranty or
covenant under each Mortgage Loan Purchase Agreement or the Letter Agreement,
as applicable, in respect of any Mortgage Loan which
53
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders (in the case of any such representation or
warranty made in each Mortgage Loan Purchase Agreement or the Letter
Agreement, as applicable, to the knowledge or the best of knowledge of such
Originator or the Seller, as to which such Originator or the Seller has no
knowledge, without regard to the Originator's or the Seller's lack of
knowledge with respect to the substance of such representation or warranty
being inaccurate at the time it was made), the Trustee shall promptly notify
the Seller and the related Servicer of such defect, missing document or breach
and cause such Originator or Seller, as applicable, to deliver such missing
document or cure such defect or breach within 90 days from the date the
Originator or Seller, as applicable, was notified of such missing document,
defect or breach; provided that such missing document was not previously
delivered by the Originator under the applicable Mortgage Loan Purchase
Agreement. If such Originator or the Seller, as the case may be, does not
deliver such missing document or cure such defect or breach in all material
respects during such period, the Trustee shall enforce the obligations of such
Originator or the Seller, as applicable, under the related Mortgage Loan
Purchase Agreement or the Letter Agreement, as the case may be, to repurchase
such Mortgage Loan from the Trust Fund at the Purchase Price within 90 days
after the date on which such Originator or the Seller, as applicable, was
notified (subject to Section 2.03(d)) of such missing document, defect or
breach, if and to the extent that such Originator or the Seller, as
applicable, is obligated to do so under the related Mortgage Loan Purchase
Agreement or the Letter Agreement, as applicable. In the event that the
Originator or the Seller, as the case may be, shall fail to cure the
applicable breach or repurchase a Mortgage Loan in accordance with the
preceding sentence, the Depositor shall do so. The Purchase Price for the
repurchased Mortgage Loan shall be deposited in the Distribution Account, and
the Trustee, upon receipt of such deposit, shall release or cause the
Custodian to release to such Originator or the Seller, as applicable, the
related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as such
Originator or the Seller, as applicable, shall furnish to it and as shall be
necessary to vest in such Originator or the Seller, as the case may be, any
Mortgage Loan released pursuant hereto, and the Trustee shall have no further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, if so provided in the related Mortgage
Loan Purchase Agreement or the Letter Agreement, as applicable, the related
Originator, the Seller or the Depositor, as applicable, may cause such
Mortgage Loan to be removed from the Trust Fund (in which case it shall become
a Deleted Mortgage Loan) and substitute one or more Qualified Substitute
Mortgage Loans in the manner and subject to the limitations set forth in
Section 2.03(c). It is understood and agreed that the obligation of the
related Originator, the Seller or the Depositor, as applicable, to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a constituent document exists or as to which
such a breach has occurred and is continuing shall constitute the sole remedy
respecting such omission, defect or breach available to the Trustee on behalf
of the Certificateholders.
(b) (i) As promptly as practicable (and no later than 90 days) after
the earlier of discovery by the related Servicer or receipt of notice by the
related Servicer of the breach of any representation, warranty or covenant of
such Servicer set forth in Section 2.05 which materially and adversely affects
the interests of the Certificateholders in any Mortgage Loan, the related
Servicer shall cure such breach in all material respects.
54
(ii) Within 90 days of the earlier of discovery by a Servicer or
receipt of notice by a Servicer of the breach of any representation, warranty
or covenant of such Servicer set forth in Section 2.05 which materially and
adversely affects the interests of the Holders of the Class P Certificates to
any Prepayment Charge, the related Servicer shall cure such breach in all
material respects. If the covenant made by the such Servicer in Section
2.05(viii) is breached, such Servicer must pay into the Collection Account the
amount of the waived Prepayment Charge.
(c) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the date which is two years after the Closing Date for the Trust Fund.
As to any Deleted Mortgage Loan for which an Originator, the Seller
or the Depositor substitutes a Qualified Substitute Mortgage Loan or Loans,
such substitution shall be effected by such Originator, the Seller or the
Depositor, as the case may be, delivering to the Custodian on behalf of the
Trustee, for such Qualified Substitute Mortgage Loan or Loans, the Mortgage
Note, the Mortgage, the Assignment to the Trustee, and such other documents
and agreements, with all necessary endorsements thereon, as are required by
Section 2.01, together with an Officers' Certificate providing that each such
Qualified Substitute Mortgage Loan satisfies the definition thereof and
specifying the Substitution Shortfall Amount (as described below), if any, in
connection with such substitution. The Trustee or the Custodian shall
acknowledge receipt for such Qualified Substitute Mortgage Loan or Loans and,
within ten Business Days thereafter, review such documents as specified in
Section 2.02 and deliver to the Trustee, the Depositor and the related
Servicer, with respect to such Qualified Substitute Mortgage Loan or Loans, a
certification substantially in the form attached hereto as Exhibit C-1, with
any applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee or the Custodian shall deliver to the Depositor and
the related Servicer a certification substantially in the form of Exhibit C-2
hereto with respect to such Qualified Substitute Mortgage Loan or Loans, with
any applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part
of the Trust Fund and will be retained by the related Originator, the Seller
or the Depositor, as the case may be. For the month of substitution,
distributions to Certificateholders will reflect the Monthly Payment due on
such Deleted Mortgage Loan on or before the Due Date in the month of
substitution, and the related Originator, the Seller or the Depositor, as the
case may be, shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Depositor shall give or
cause to be given written notice to the Certificateholders that such
substitution has taken place, shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the
Trustee. Upon such substitution, such Qualified Substitute Mortgage Loan or
Loans shall constitute part of the Mortgage Pool and shall be subject in all
respects to the terms of this Agreement, including, in the case of a
substitution effected by an Originator, all applicable representations and
warranties thereof included in the related Mortgage Loan Purchase Agreement,
and in the case of a substitution effected by the Depositor, all applicable
representations and warranties thereof set forth in Section 2.04, and in the
case of a substitution effected by the Seller, all applicable representations
and warranties thereof included in the Letter Agreement, in each case as of
the date of substitution.
55
For any month in which an Originator, the Seller or the Depositor
substitutes one or more Qualified Substitute Mortgage Loans for one or more
Deleted Mortgage Loans, the related Servicer will determine the amount (the
"Substitution Shortfall Amount"), if any, by which the aggregate Purchase
Price of all such Deleted Mortgage Loans exceeds the aggregate of, as to each
such Qualified Substitute Mortgage Loan, the Stated Principal Balance thereof
as of the date of substitution, together with one month's interest on such
Stated Principal Balance at the applicable Net Mortgage Rate, plus all
outstanding P&I Advances and Servicing Advances. On the date of such
substitution, which shall be on or prior to the next succeeding Determination
Date, the related Originator, the Seller or the Depositor, as the case may be,
will deliver or cause to be delivered to the applicable Servicer for deposit
in the Collection Account an amount equal to the Substitution Shortfall
Amount, if any, and the Trustee, upon receipt of the related Qualified
Substitute Mortgage Loan or Loans and certification by the applicable Servicer
of such deposit, shall release to the related Originator, the Depositor or the
Seller, as the case may be, the related Mortgage File or Files and the Trustee
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as the related Originator, the Depositor or the Seller,
as the case may be, shall deliver to it and as shall be necessary to vest
therein any Deleted Mortgage Loan released pursuant hereto.
In addition, the related Originator, the Depositor or the Seller, as
the case may be, shall obtain at its own expense and deliver to the Trustee an
Opinion of Counsel to the effect that such substitution will not cause (a) any
federal tax to be imposed on any of the REMICs, created hereunder, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on "contributions after the startup date"
under Section 860G(d)(1) of the Code, or (b) any REMIC hereunder to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
(d) Upon discovery by the Depositor, the Seller, a Servicer, or the
Trustee that any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party discovering
such fact shall within two Business Days give written notice thereof to the
other parties. In connection therewith, the related Originator, the Seller or
the Depositor, as the case may be shall repurchase or, subject to the
limitations set forth in Section 2.03(c), substitute one or more Qualified
Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Loan. The Depositor shall cause such repurchase or substitution to be
made by (i) the related Originator, if the affected Mortgage Loan's status as
a non-qualified mortgage is or results from a breach of any representation,
warranty or covenant made by the related Originator under the applicable
Mortgage Loan Purchase Agreement, (ii) the Seller, if the affected Mortgage
Loan's status as a non-qualified mortgage is or results from a breach of any
representation, warranty or covenant made by the Seller under the Letter
Agreement, or (iii) the Depositor, if the affected Mortgage Loan's status as a
non-qualified mortgage is a breach of any representation or warranty of the
Depositor set forth in Section 2.04, or if its status as a non-qualified
mortgage is a breach of any representation or warranty. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a).
The Trustee shall reconvey to the related Originator, the Seller or the
Depositor, as the case may be, 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.
56
SECTION 2.04. Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the
Trustee that as of the Closing Date:
(i) The Depositor is a corporation duly formed and validly existing
under the laws governing its creation and existence, is in
compliance with the laws of each state in which any Mortgaged
Property or the Depositor is located or doing business and is in
good standing in each jurisdiction in which the nature of its
business, or the properties owned or leased by it make such
qualification necessary. The Depositor has all requisite authority
to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party.
(ii) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Depositor and its
performance and compliance with the terms of this Agreement and the
other Operative Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of the
Depositor and will not violate the Depositor's Charter or Bylaws or
constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in a
breach of, any material contract, agreement or other instrument to
which the Depositor is a party or by which the Depositor is bound or
violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction
over the Depositor or any of its properties.
(iii) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Depositor, enforceable
against it in accordance with the terms hereof and thereof, except
as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at
law).
(iv) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default
could materially and adversely affect the condition (financial or
other) or operations of the Depositor or its properties or the
consequences of which could materially and adversely affect its
performance hereunder and under the other Operative Documents to
which the Depositor is a party.
(v) No litigation, proceeding or investigation is pending with
respect to which the Depositor has received service of process or,
to the best of the Depositor's knowledge, threatened against the
Depositor which litigation,
57
proceeding or investigation might have consequences that would
prohibit its entering into this Agreement or any other Operative
Documents to which it is a party or that would materially and
adversely affect the condition (financial or otherwise) or
operations of the Depositor or its properties or might have
consequences that would materially and adversely affect the validity
or enforceability of the Mortgage Loans or the Depositor's
performance hereunder and under the other Operative Documents to
which the Depositor is a party.
(vi) [reserved].
(vii) Immediately prior to the sale and assignment by the Depositor
to the Trustee on behalf of the Trust Fund of each Mortgage Loan,
the Depositor had good and equitable title to each Mortgage Loan
subject to no prior lien, claim, participation interest, mortgage,
security interest, pledge, charge or other encumbrance or other
interest of any nature.
(viii) As of the Closing Date, the Depositor has transferred all
right, title and interest in the Initial Mortage Loans to the
Trustee on behalf of the Trust Fund.
(ix) The Depositor is solvent and will not be made insolvent by the
transfer of the Mortgage Loans, and the Depositor is not aware of
any impending insolvency. The Depositor has not transferred the
Mortgage Loans to the Trustee on behalf of the Trust Fund with any
intent to hinder, delay or defraud any of its creditors.
(x) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may
be, by or from any federal, state or other governmental authority or
agency (other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as
to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and
sale of the Certificates and the execution and delivery by the
Depositor of the Operative Documents to which it is a party, have
been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to authorize
the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Depositor and
the performance by the Depositor of its obligations under this
Agreement and such of the other Operative Documents to which it is a
party.
(xi) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Depositor hereunder are not subject to the
bulk transfer laws of any similar statutory provisions in effect in
any applicable jurisdiction.
58
(xii) [reserved].
SECTION 2.05. Representations, Warranties and Covenants of the
Servicers.
Each Servicer hereby represents, warrants and covenants to the
Trustee, the Certificateholders and to the Depositor that as of the Closing
Date or as of such date specifically provided herein:
(i) Such Servicer is a corporation duly organized, 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 such Servicer in any
state in which a Mortgaged Property related to a Mortgage Loan serviced
by such Servicer 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 serviced such Servicer
and to service the Mortgage Loans in accordance with the terms of this
Agreement;
(ii) Such Servicer has the full power and authority to service each
Mortgage Loan which such Servicer is required to service hereunder, 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 action on the part of such Servicer the execution, delivery
and performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery thereof by the Depositor, the
Trustee and the other Servicer, constitutes a legal, valid and binding
obligation of such Servicer, enforceable against such Servicer in
accordance with its terms, except to the extent that (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(iii) The execution and delivery of this Agreement by such Servicer,
the servicing of the Mortgage Loans by such Servicer hereunder, the
consummation by such Servicer of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of such Servicer and will not (A)
result in a breach of any term or provision of the organizational
documents of such Servicer or (B) conflict with, result in a breach,
violation or acceleration of, or result in a default under, the terms of
any other material agreement or instrument to which such Servicer is a
party or by which it may be bound, or any statute, order or
59
regulation applicable to such Servicer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over such
Servicer; and such Servicer is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument, or subject
to or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects or, to such
Servicer's knowledge, would in the future materially and adversely
affect, (x) the ability of such Servicer to perform its obligations under
this Agreement or (y) the business, operations, financial condition,
properties or assets of such Servicer taken as a whole;
(iv) Such Servicer is an approved seller/servicer for Xxxxxx Xxx and
an approved servicer for Xxxxxxx Mac in good standing and is a HUD
approved non-supervised mortgagee pursuant to Section 203 and Section 211
of the National Housing Act, and no event has occurred, including but not
limited to a change in insurance coverage, that would make such Servicer
unable to comply with HUD, Xxxxxx Xxx or Xxxxxxx Mac eligibility
requirements or which would require notification to any of HUD, Xxxxxx
Mae or Xxxxxxx Mac;
(v) No litigation is pending or, to the best knowledge of such
Servicer, threatened against such Servicer that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of such Servicer to service the Mortgage Loans
or to perform any of its other obligations hereunder in accordance with
the terms hereof;
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by such Servicer of, or compliance by such Servicer with,
this Agreement or the consummation by such Servicer of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations or orders, if any, that have been obtained prior to the
Closing Date; and
(vii) [reserved].
(viii) Such Servicer will not waive any Prepayment Charge or part of
a Prepayment Charge unless such waiver would maximize recovery of total
proceeds taking into account the value of such Prepayment Charge and
related Mortgage Loan and doing so is standard and customary in servicing
mortgage loans similar to the Mortgage Loans (including any waiver of a
Prepayment Charge in connection with a refinancing of a Mortgage Loan
that is related to a default or an imminent default), and in no event
will it waive a Prepayment Charge in connection with a refinancing of a
Mortgage Loan that is not related to a default or an imminent default.
Notwithstanding the previous sentence, if such Servicer obtains an
Opinion of Counsel opining that any Prepayment Charge is not legally
enforceable under the circumstances in which the related Principal
Prepayment occurs, then such Servicer shall not be required to attempt to
collect the applicable Prepayment Charge, and shall have no liability or
obligation with respect to such Prepayment Charge pursuant to Section
2.03(b)(ii) hereof.
60
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the
Mortgage Files to the Trustee, and shall inure to the benefit of the Trustee,
the Depositor and the Certificateholders. Upon discovery by any of the
Depositor, a Servicer or the Trustee of a breach of any of the foregoing
representations, warranties and covenants which materially and adversely
affects the value of any Mortgage Loan, Prepayment Charge or the interests
therein of the Certificateholders, the party discovering such breach shall
give prompt written notice (but in no event later than two Business Days
following such discovery) to the Trustee. The obligation of each Servicer set
forth in Section 2.03(b) to cure breaches (or, in the case of Section
2.05(viii), to pay the amount of the waived Prepayment Charge) shall
constitute the sole remedy against the related Servicer available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders respecting a breach of the representations, warranties and
covenants contained in this Section 2.05.
SECTION 2.06. Issuance of Class R-I Certificates.
The Trustee acknowledges the assignment to it of the Initial Mortage
Loans and the delivery to the Custodian on its behalf of the Mortgage Files,
subject to the provisions of Section 2.01 and Section 2.02, together with the
assignment to the Trustee of all other assets included in REMIC I, receipt of
which is hereby acknowledged. Concurrently with such assignment and delivery
and in exchange therefor, the Trustee, pursuant to the written request of the
Depositor executed by an officer of the Depositor, has executed, authenticated
and delivered to or upon the order of the Depositor, the Class R-I
Certificates in authorized denominations. The interests evidenced by the Class
R-I Certificates, together with the REMIC I Regular Interests, constitute the
entire beneficial ownership interest in REMIC I.
SECTION 2.07. Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by the Trustee.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC I Regular Interests for the benefit of the Class R-II and REMIC III
Certificateholders. The Trustee acknowledges receipt of the REMIC I Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit of REMIC II.
SECTION 2.08. Conveyance of REMIC II Regular Interests; Acceptance
of REMIC III by the Trustee.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC II Regular Interests for the benefit of the REMIC III Regular
Interests and Class R-III Residual Interest. The Trustee acknowledges receipt
of the REMIC II Regular Interests and declares that it holds and will hold the
same in trust for the exclusive use and benefit of REMIC III.
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SECTION 2.09. Conveyance of the REMIC III Regular Interest;
Acceptance of the REMIC III by the Trustee.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC III Regular Interests for the benefit of the REMIC IV Regular
Interests. The Trustee acknowledges receipt of the REMIC III Regular Interests
and declares that it holds and will hold the same in trust for the exclusive
use and benefit of REMIC IV.
SECTION 2.10. Conveyance of REMIC IV Regular Interests; Acceptance
of REMIC V by the Trustee.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC IV Regular Interests for the benefit of the Class R-V and REMIC V
Regular Interests. The Trustee acknowledges receipt of the REMIC IV Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit REMIC IV.
SECTION 2.11. Conveyance of REMIC IV Regular Interests; Acceptance
of REMIC V by the Trustee.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse all the right, title and interest of the Depositor in and to
the REMIC IV Regular Interests for the benefit of the Class R-V and REMIC V
Certificateholders. The Trustee acknowledges receipt of the REMIC IV Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit REMIC V.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Servicers to Act as Servicers.
Each Servicer shall service and administer the Mortgage Loans on
behalf of the Trust Fund and in the best interests of and for the benefit of
the Certificateholders (as determined by such Servicer in accordance with
Accepted Servicing Practices) in accordance with the terms of this Agreement
and the respective Mortgage Loans and, to the extent consistent with such
terms, in the same manner in which it services and administers similar
mortgage loans for its own portfolio, giving due consideration to customary
and usual standards of practice of mortgage lenders and loan servicers
administering similar mortgage loans but without regard to:
(i) any relationship that such Servicer, any related Sub-Servicer or
any Affiliate of such Servicer or any related Sub-Servicer may have with
the related Mortgagor;
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(ii) the ownership or non-ownership of any Certificate by such
Servicer or any Affiliate of such Servicer;
(iii) such Servicer's obligation to make P&I Advances or Servicing
Advances; or
(iv) such Servicer's or any related Sub-Servicer's right to receive
compensation for its services hereunder or with respect to any particular
transaction.
To the extent consistent with the foregoing, each Servicer shall seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and
the terms of this Agreement and of the respective Mortgage Loans, each
Servicer shall have full power and authority, acting alone or through a
Sub-Servicer as provided in Section 3.02, to do or cause to be done any and
all things in connection with such servicing and administration which it may
deem necessary or desirable. Without limiting the generality of the foregoing,
each Servicer in its own name or in the name of a Sub-Servicer is hereby
authorized and empowered by the Trustee when such Servicer believes it
appropriate in its best judgment in accordance with the servicing standards
set forth above, to execute and deliver, on behalf of the Certificateholders
and the Trust Fund, and upon notice to the Trustee, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Mortgage Loans and the
Mortgaged Properties and to institute foreclosure proceedings or obtain a
deed-in-lieu of foreclosure so as to convert the ownership of such properties,
and to hold or cause to be held title to such properties, on behalf of the
Trust Fund and Certificateholders. Each Servicer shall service and administer
the Mortgage Loans in accordance with applicable law and shall provide to the
Mortgagors any reports required to be provided to them thereby. Each Servicer
shall also comply in the performance of this Agreement with all reasonable
rules and requirements of each insurer under any standard hazard insurance
policy. Within fifteen (15) days of the Closing Date, but subject to Section
3.17, the Trustee shall execute and furnish to the Servicers and any
Sub-Servicer such documents as are necessary or appropriate to enable the
Servicers or any Sub-Servicer to carry out their servicing and administrative
duties hereunder, and the Trustee hereby grants to each Servicer a special or
limited power of attorney to carry out such duties including a power of
attorney for each county in which a related Mortgaged Property is located to
enable each Servicer to take title to related Mortgaged Properties after
foreclosure on behalf of the Trustee and the Certificateholders. The Trustee
shall execute a separate power of attorney in favor of a Servicer to the
extent furnished to the Trustee by such Servicer for the purposes described
herein to the extent necessary or desirable to enable such Servicer to perform
its duties hereunder. The Trustee shall not be liable for the actions of any
Servicer or any Sub-Servicer under such powers of attorney.
Subject to Section 3.09 hereof, in accordance with the standards of
the preceding paragraph, each Servicer shall advance or cause to be advanced
funds as necessary for the purpose of effecting the timely payment of taxes
and assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 3.09, and further as provided in Section 3.11.
Any cost incurred by a Servicer or by a Sub-Servicer in effecting the timely
payment of
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taxes and assessments on a Mortgaged Property shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the
Servicers may not make any future advances with respect to a related Mortgage
Loan (except as provided in Section 4.03) nor shall any Servicer (i) permit
any modification with respect to any related Mortgage Loan that would change
the related Mortgage Rate, reduce or increase the principal balance (except
for reductions resulting from actual payments of principal) or change the
final maturity date on such Mortgage Loan (unless, as provided in Section
3.07, the related Mortgagor is in default with respect to such Mortgage Loan
or such default is, in the judgment of such Servicer, reasonably foreseeable)
or (ii) permit any modification, waiver or amendment of any term of any
related Mortgage Loan that would both (A) effect an exchange or reissuance of
such Mortgage Loan under Section 1001 of the Code (or final, temporary or
proposed Treasury regulations promulgated thereunder) and (B) cause any REMIC
to fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions after the startup date" under the
REMIC Provisions.
Each Servicer may delegate its responsibilities under this
Agreement; provided, however, that no such delegation shall release such
Servicer from the responsibilities or liabilities arising under this
Agreement.
SECTION 3.02. Sub-Servicing Agreements Between the Servicers and
Sub-Servicers.
(a) Each Servicer may enter into Sub-Servicing Agreements (provided
that such agreements would not result in a withdrawal or a downgrading by any
Rating Agency of the ratings on any Class of Certificates, as evidenced by a
letter to that effect delivered by each Rating Agency to the Depositor and the
Trustee) with one or more Sub-Servicers, for the servicing and administration
of the related Mortgage Loans. The Trustee is hereby authorized to
acknowledge, at the request of a Servicer, any Sub-Servicing Agreement that
meets the requirements applicable to Sub-Servicing Agreements set forth in
this Agreement and that is otherwise permitted under this Agreement.
Each Sub-Servicer shall be (i) authorized to transact business in
the state or states in which the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law to enable such
Sub-Servicer to perform its obligations hereunder and under the related
Sub-Servicing Agreement, (ii) an institution approved as a mortgage loan
originator by the Federal Housing Administration or an institution the deposit
accounts in which are insured by the FDIC and (iii) a Xxxxxxx Mac or Xxxxxx
Mae approved mortgage servicer. Each Sub-Servicing Agreement must impose on
the related Sub-Servicer requirements conforming to the provisions set forth
in Section 3.08 and provide for servicing of the related Mortgage Loans
consistent with the terms of this Agreement. The related Servicer will examine
each Sub-Servicing Agreement to which such Servicer is a party and will be
familiar with the terms thereof. The terms of any Sub-Servicing Agreement will
not be inconsistent with any of the provisions of this Agreement. The related
Servicer and Sub-Servicer may enter into and make amendments to the applicable
Sub-Servicing Agreement or enter into different forms of
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Sub-Servicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of
this Agreement, and that no such amendment or different form shall be made or
entered into which could be reasonably expected to be materially adverse to
the interests of the Certificateholders, without the consent of the Holders of
Certificates entitled to at least 66% of the Voting Rights. Any variation
without the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights from the provisions set forth in Section 3.08 relating to
insurance or priority requirements of Sub-Servicing Accounts, or credits and
charges to the Sub-Servicing Accounts or the timing and amount of remittances
by the a Sub-Servicer to the related Servicer, are conclusively deemed to be
inconsistent with this Agreement and therefore prohibited. Each Servicer shall
deliver to the Trustee copies of all Sub-Servicing Agreements, and any
amendments or modifications thereof, promptly upon such Servicer's execution
and delivery of such instruments.
(b) As part of its servicing activities hereunder, each Servicer
(except as otherwise provided in the last sentence of this paragraph), for the
benefit of the Trust Fund and the Certificateholders, shall enforce the
obligations of each related Sub-Servicer servicing the related Mortgage Loans
under the related Sub-Servicing Agreement, including, without limitation, any
obligation to make advances in respect of Delinquent payments as required by
the applicable Sub-Servicing Agreement. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Sub-Servicing
Agreements, and the pursuit of other appropriate remedies, shall be in such
form and carried out to such an extent and at such time as the related
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. Each Servicer, as applicable, shall pay the
costs of such enforcement at its own expense, and shall be reimbursed therefor
only (i) from a general recovery resulting from such enforcement, to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans or (ii) from a specific recovery of costs, expenses or
attorneys' fees against the party against whom such enforcement is directed.
SECTION 3.03. Successor Sub-Servicers.
Each Servicer shall be entitled to terminate any related
Sub-Servicing Agreement and the rights and obligations of any related
Sub-Servicer pursuant to the related Sub-Servicing Agreement in accordance
with the terms and conditions of such Sub-Servicing Agreement. In the event of
termination of any Sub-Servicer, all servicing obligations of such
Sub-Servicer shall be assumed simultaneously by the related Servicer without
any act or deed on the part of such Sub-Servicer or such Servicer, and such
Servicer either shall service directly the related Mortgage Loans or shall
enter into a Sub-Servicing Agreement with a successor Sub-Servicer which
qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, in the event that the related
Servicer shall, for any reason, no longer be a Servicer (including termination
due to a Servicer Event of Default).
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SECTION 3.04. Liability of the Servicers.
Notwithstanding any Sub-Servicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between a Servicer
and a related Sub-Servicer or reference to actions taken through a
Sub-Servicer or otherwise, each Servicer shall remain obligated and primarily
liable to the Trust Fund and the Certificateholders for the servicing and
administering of the related Mortgage Loans in accordance with the provisions
of Section 3.01 without diminution of such obligation or liability by virtue
of such Sub-Servicing Agreements or arrangements or by virtue of
indemnification from the related Sub-Servicer and to the same extent and under
the same terms and conditions as if such Servicer alone were servicing and
administering the related Mortgage Loans. Each Servicer shall be entitled to
enter into any agreement with a Sub-Servicer for indemnification of the
related Servicer by such Sub-Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and
Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a
Sub-Servicer in its capacity as such shall be deemed to be between the related
Sub-Servicer and the related Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the related
Sub-Servicer except as set forth in Section 3.06. Each Servicer shall be
solely liable for all fees owed by it to any related Sub-Servicer,
irrespective of whether such Servicer's compensation pursuant to this
Agreement is sufficient to pay such fees.
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements
by Trustee.
In the event that a Servicer shall for any reason no longer be a
Servicer (including by reason of the occurrence of a Servicer Event of
Default), the Trustee or its designee shall thereupon assume all of the rights
and obligations of such Servicer subject to Section 7.02 under each related
Sub-Servicing Agreement that such Servicer may have entered into, unless the
Trustee elects to terminate any related Sub-Servicing Agreement in accordance
with its terms as provided in Section 3.03. Upon such assumption, the Trustee,
its designee or the successor servicer for the Trustee appointed pursuant to
Section 7.02 shall be deemed, subject to Section 3.03, to have assumed all of
the related Servicer's interest therein and to have replaced such Servicer as
a party to each Sub-Servicing Agreement to the same extent as if each
Sub-Servicing Agreement had been assigned to the assuming party, except that
(i) the related Servicer shall not thereby be relieved of any liability or
obligations under any related Sub-Servicing Agreement that arose before it
ceased to be a Servicer and (ii) none of the Trustee, its designee or any
successor servicer shall be deemed to have assumed any liability or obligation
of such Servicer that arose before it ceased to be a Servicer.
Each Servicer at its expense shall, upon request of the Trustee,
deliver to the assuming party all documents and records relating to each
related Sub-Servicing Agreement and
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the related Mortgage Loans then being serviced and an accounting of amounts
collected and held by or on behalf of it, and otherwise use its best efforts
to effect the orderly and efficient transfer of the related Sub-Servicing
Agreements to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
Each Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the related Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the related Mortgage Loans and held for its own account.
Consistent with the foregoing, each Servicer may in its discretion (i) waive
any late payment charge or, if applicable, any penalty interest, or (ii)
extend the due dates for the Monthly Payments due on a related Mortgage Note
for a period of not greater than 180 days; provided that any extension
pursuant to clause (ii) above shall not affect the amortization schedule of
any related Mortgage Loan for purposes of any computation hereunder, except as
provided below. In the event of any such arrangement pursuant to clause (ii)
above, each Servicer shall make timely P&I Advances on such Mortgage Loan
during such extension pursuant to Section 4.03 and in accordance with the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangements, subject to Section 4.03(d) pursuant to which the
related Servicer shall not be required to make any such P&I Advances that are
Nonrecoverable P&I Advances. Notwithstanding the foregoing, in the event that
any related Mortgage Loan is in default or, in the judgment of the applicable
Servicer, such default is reasonably foreseeable, the related Servicer,
consistent with the standards set forth in Section 3.01, may also waive,
modify or vary any term of such Mortgage Loan (including modifications that
would change the related Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan (such payment, a "Short
Pay-off") or consent to the postponement of strict compliance with any such
term or otherwise grant indulgence to any related Mortgagor.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a Sub-Servicing Agreement, the related Sub-Servicer will be
required to establish and maintain one or more accounts (each such account or
accounts, a "Sub-Servicing Account"). The related Sub-Servicing Account shall
be an Eligible Account. Each Sub-Servicer shall deposit in the related
clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after such Sub-Servicer's receipt thereof, all
proceeds of the related Mortgage Loans received by such Sub-Servicer less its
servicing compensation to the extent permitted by the related Sub-Servicing
Agreement, and shall thereafter deposit such amounts in the related
Sub-Servicing Account, in no event more than two Business Days after the
deposit of such funds into the clearing account. Each Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the related Servicer for deposit in the Collection Account not
later than two Business Days after the deposit of such amounts in the related
Sub-Servicing Account. For purposes of
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this Agreement, a Servicer shall be deemed to have received payments on the
related Mortgage Loans when the related Sub-Servicer receives such payments.
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
Each Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (each such account or
accounts, a "Servicing Account"). The Servicing Accounts shall be Eligible
Accounts. Each Servicer shall deposit in the related clearing account (which
account must be an Eligible Account) in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan
servicing activities on a daily basis, and in no event more than one Business
Day after such Servicer's receipt thereof, all collections from the related
Mortgagors (or related advances from a related Sub-Servicer) for the payment
of taxes, assessments, hazard insurance premiums and comparable items for the
account of the related Mortgagors ("Escrow Payments") collected on account of
the related Mortgage Loans and shall thereafter deposit such Escrow Payments
in the related Servicing Accounts, in no event more than two Business Days
after the deposit of good funds in the related clearing account, for the
purpose of effecting the payment of any such items as required under the terms
of this Agreement. Withdrawals of amounts from a Servicing Account may be made
only to (i) effect payment of taxes, assessments, hazard insurance premiums,
and comparable items; (ii) reimburse the related Servicer (or a related
Sub-Servicer to the extent provided in the related Sub-Servicing Agreement)
out of related collections for any advances made pursuant to Section 3.01
(with respect to taxes and assessments) and Section 3.14 (with respect to
hazard insurance); (iii) refund to related Mortgagors any sums as may be
determined to be overages; (iv) pay interest, if required and as described
below, to related Mortgagors on balances in the related Servicing Account; (v)
clear and terminate the related Servicing Account at the termination of the
related Servicer's obligations and responsibilities in respect of the related
Mortgage Loans under this Agreement in accordance with Article IX or (vi)
recover amounts deposited in error. As part of its servicing duties, each
Servicer or Sub-Servicer shall pay to the related Mortgagors interest on funds
in related Servicing Accounts, to the extent required by law and, to the
extent that interest earned on funds in the related Servicing Accounts is
insufficient, to pay such interest from its or their own funds, without any
reimbursement therefor. Each Servicer will be responsible for the
administration of the related Servicing Accounts and will be obligated to make
Servicing Advances to the related Servicing Account in respect of its
obligations under this Section 3.09, reimbursable from the related Servicing
Accounts or related Collection Account, when and as necessary to avoid the
lapse of insurance coverage on the related Mortgaged Property, or which the
related Servicer knows, or in the exercise of the required standard of care of
such Servicer hereunder should know, is necessary to avoid the loss of the
related Mortgaged Property due to a tax sale or the foreclosure as a result of
a tax lien.
SECTION 3.10. Collection Account; Distribution Account and
Pre-Funding Account.
(a) On behalf of the Trust Fund, each Servicer shall establish and
maintain, or cause to be established and maintained, one or more accounts
(each such account or accounts, a "Collection Account"), held in trust for the
benefit of the Trustee and the Certificateholders. On
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behalf of the Trust Fund, each Servicer shall deposit or cause to be deposited
in the related clearing account (which account must be an Eligible Account) in
which it customarily deposits payments and collections on mortgage loans in
connection with its mortgage loan servicing activities on a daily basis, and
in no event more than one Business Day after the related Servicer's receipt
thereof, and shall thereafter deposit in the related Collection Account, in no
event more than two Business Days after the deposit of good funds into the
related clearing account, as and when received or as otherwise required
hereunder, the following payments and collections received or made by it
subsequent to the related Cut-off Date (other than in respect of principal or
interest on the related Mortgage Loans due on or before the related Cut-off
Date), or payments (other than Principal Prepayments) received by it on or
prior to the related Cut-off Date but allocable to a Due Period subsequent
thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the related Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee) on each related Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds (other
than proceeds collected in respect of any particular REO Property
and amounts paid by the related Servicer in connection with a
purchase of related Mortgage Loans and REO Properties pursuant to
Section 9.01);
(iv) any amounts required to be deposited pursuant to Section
3.12 in connection with any losses realized on Permitted Investments
with respect to funds held in the related Collection Account;
(v) any amounts required to be deposited by the related
Servicer pursuant to the second paragraph of Section 3.14(a) in
respect of any blanket policy deductibles;
(vi) all proceeds of any related Mortgage Loan repurchased or
purchased in accordance with Section 2.03, Section 3.16(c) or
Section 9.01;
(vii) all related Substitution Shortfall Amounts; and
(viii) all Prepayment Charges collected by the related
Servicer.
For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the
date of substitution.
The foregoing requirements for deposit in the related Collection
Accounts shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late
payment charges, non sufficient funds fees, reconveyance fees, assumption fees
and other similar fees and charges need not be deposited by the related
Servicer in the Collection Account and shall, upon collection, belong to such
Servicer as additional compensation for its servicing activities. In the event
a Servicer shall deposit in the related Collection Account any amount not
required to be deposited therein, it may at any time withdraw
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such amount from such Collection Account, any provision herein to the contrary
notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Trust Fund and the
Certificateholders. On behalf of the Trust Fund, each Servicer shall deliver
to the Trustee in immediately available funds for deposit in the Distribution
Account on or before 3:00 p.m. New York time (i) on the Servicer Remittance
Date, that portion of the Available Distribution Amount (calculated without
regard to the references in clause (2) of the definition thereof to amounts
that may be withdrawn from the Distribution Account) for the related
Distribution Date then on deposit in the related Collection Account, the
amount of all Prepayment Charges on the related Mortgage Loans collected by
the related Servicer in connection with the voluntary Principal Prepayment in
full or in part of any of the related Mortgage Loans then on deposit in the
related Collection Account (other than any such Prepayment Charges received
after the related Prepayment Period), and (ii) on each Business Day as of the
commencement of which the balance on deposit in the related Collection Account
exceeds $75,000 following any withdrawals pursuant to the next succeeding
sentence, the amount of such excess, but only if such Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the
definition of "Eligible Account." If the balance on deposit in the related
Collection Account exceeds $75,000 as of the commencement of business on any
Business Day and such Collection Account constitutes an Eligible Account
solely pursuant to clause (ii) of the definition of "Eligible Account," the
related Servicer shall, on or before 3:00 p.m. New York time on such Business
Day, withdraw from such Collection Account any and all amounts payable or
reimbursable to itself, the Depositor, the Trustee, the Seller or any related
Sub-Servicer pursuant to Section 3.11 and shall pay such amounts to the
Persons entitled thereto.
(c) Funds in the related Collection Account, the Distribution
Account and the Pre-Funding Account may be invested in Permitted Investments
in accordance with the provisions set forth in Section 3.12. Each Servicer
shall give notice to the Trustee and the Depositor of the location of the
related Collection Account maintained by it when established and prior to any
change thereof. The Trustee shall give notice to the Servicers and the
Depositor of the location of the Distribution Account and the Pre-Funding
Account when established and prior to any change thereof.
(d) Funds held in a Collection Account at any time may be delivered
by the related Servicer to the Trustee for deposit in an account (which may be
the Distribution Account and must satisfy the standards for the Distribution
Account as set forth in the definition thereof) and for all purposes of this
Agreement shall be deemed to be a part of such Collection Account until the
Servicer Remittance Date when such amounts are required to be deposited into
the Distribution Account; provided, however, that the Trustee shall have the
sole authority to withdraw any funds held pursuant to this subsection (d). In
the event that a Servicer shall deliver to the Trustee for deposit in the
Distribution Account any amount not required to be deposited therein, it may
at any time request that the Trustee withdraw such amount from the
Distribution Account and remit to it any such amount, any provision herein to
the contrary notwithstanding. In addition, each Servicer shall deliver to the
Trustee from time to time for deposit and in any event shall remit all such
amounts no later than the Servicer Remittance Date, and the Trustee shall so
deposit, in the Distribution Account:
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(i) any related P&I Advances, as required pursuant to Section
4.03;
(ii) any amounts required to be deposited pursuant to Section
3.23(d) or (f) in connection with any related REO Property;
(iii) any amounts to be paid by such Servicer in connection
with a purchase of the related Mortgage Loans and related REO
Properties pursuant to Section 9.01;
(iv) any related amounts required to be deposited pursuant to
Section 3.24 in connection with any Prepayment Interest Shortfalls;
and
(v) any related Stayed Funds, as soon as permitted by the
federal bankruptcy court having jurisdiction in such matters.
(e) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Pre-Funding Account. On the Closing Date the Depositor
shall remit the Pre-funded Amount to the Trustee for deposit in the
Pre-Funding Account. On each Subsequent Transfer Date, upon satisfaction of
the conditions for such Subsequent Transfer Date set forth in Sections 2.01(c)
and (d), the Trustee shall remit to the Depositor the applicable Aggregate
Subsequent Transfer Amount as payment of the purchase price for the related
Subsequent Mortgage Loans.
If any funds remain in the Pre-Funding Account on March 15, 2002, to
the extent that they represent earnings on the amounts originally deposited
into the Pre-Funding Account, the Trustee shall distribute them to the order
of the Depositor. The remaining funds shall be transferred to the Distribution
Account to be included as part of principal distributions to the Certificates
on the April 2002 Distribution Date.
(f) Promptly upon receipt of any Stayed Funds, whether from a
Servicer, a trustee in bankruptcy, federal bankruptcy court or other source,
the Trustee shall deposit such funds in the Distribution Account, subject to
withdrawal thereof pursuant to Section 7.02(b) or as otherwise permitted
hereunder.
SECTION 3.11. Withdrawals from the Collection Account and
Distribution Account.
(a) Each Servicer shall, from time to time, make withdrawals from
the related Collection Account for any of the following purposes or as
described in Section 4.03:
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to Section
3.10(b) or permitted to be so remitted pursuant to the first
sentence of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse itself for,
without duplication, (a) P&I Advances, but only to the extent of
amounts received which represent Late Collections (net of the
related Servicing Fees) of Monthly Payments, Liquidation Proceeds,
condemnation proceeds or Insurance Proceeds on the related Mortgage
Loans with respect to which such P&I Advances were made in
accordance with
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the provisions of Section 4.03 or (b) any xxxxxxxxxxxx X&X Advances
remaining after the final liquidation of a related Mortgage Loan
that are Nonrecoverable P&I Advances not otherwise recoverable to
subsection (ii)(a) hereof;
(iii) subject to Section 3.16(d), to pay itself or any related
Sub-Servicer (a) any unpaid Servicing Fees or (b) any unreimbursed
Servicing Advances with respect to each related Mortgage Loan, but
only to the extent of any Late Collections, Liquidation Proceeds,
condemnation proceeds, Insurance Proceeds or other amounts as may be
collected by such Servicer from a related Mortgagor, or otherwise
received with respect to such Mortgage Loan or (c) any unreimbursed
Servicing Advances made remaining after the final liquidation of a
related Mortgage Loan that are Nonrecoverable Servicing Advances,
but only to the extent that Late Collections, Liquidation Proceeds,
condemnation proceeds and Insurance Proceeds received with respect
to such Mortgage Loan are insufficient to reimburse such Servicer or
any related Sub-Servicer for Servicing Advances;
(iv) to pay itself as servicing compensation (in addition to
the Servicing Fee) on the Servicer Remittance Date any interest or
investment income earned on funds deposited in the related
Collection Account;
(v) to pay itself, the related Originator, the Depositor or the
Seller, as the case may be, with respect to each Mortgage Loan that
has previously been purchased or replaced pursuant to Section 2.03
or Section 3.16(c) all amounts received thereon subsequent to the
date of purchase or substitution, as the case may be;
(vi) to reimburse itself for any P&I Advance or Servicing
Advance previously made which such Servicer has determined to be a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance in
accordance with the provisions of Section 4.03;
(vii) to reimburse itself or the Depositor for expenses
incurred by or reimbursable to such Servicer or the Depositor, as
the case may be, pursuant to Section 6.03;
(viii) to reimburse itself or the Trustee, as the case may be,
for expenses reasonably incurred in respect of the breach or defect
giving rise to the purchase obligation under Section 2.03 or Section
2.04 of this Agreement that were included in the Purchase Price of
the Mortgage Loan, including any expenses arising out of the
enforcement of the purchase obligation;
(ix) to pay, or to reimburse itself for advances in respect of,
expenses incurred in connection with any Mortgage Loan pursuant to
Section 3.16(b);
(x) to withdraw funds deposited in error and to clear and
terminate the related Collection Account pursuant to Section 9.01.
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Each Servicer shall keep and maintain separate accounting, on a
related Mortgage Loan by Mortgage Loan basis, for the purpose of justifying
any withdrawal from the related Collection Account, to the extent held by or
on behalf of it, pursuant to subclauses (ii), (iii), (v), (vi), (viii) and
(ix) above. Each Servicer shall provide written notification to the Trustee on
or prior to the next succeeding Servicer Remittance Date, upon making any
withdrawals from the related Collection Account pursuant to subclause (vii)
above.
(b) The Trustee shall, from time to time, make withdrawals from the
Distribution Account, for any of the following purposes, without priority:
(i) to make distributions to Certificateholders and the
Depositor in accordance with Section 4.01;
(ii) to pay any Extraordinary Trust Fund Expenses;
(iii) [reserved];
(iv) to reimburse itself pursuant to Section 7.02(b) or
pursuant to Section 7.01 to the extent such amounts in Section 7.01
were not reimbursed by the related Servicer;
(v) to pay any amounts in respect of taxes pursuant to Section
10.01(g)(iii);
(vi) to remit to the related Servicer any amount deposited in
the Distribution Account by such Servicer but not required to be
deposited therein in accordance with Section 3.10(d); and
(vii) to clear and terminate the Distribution Account pursuant
to Section 9.01.
SECTION 3.12. Investment of Funds in the Collection Account and the
Distribution Account.
(a) Each Servicer may direct any depository institution maintaining
the related Collection Account (for purposes of this Section 3.12, an
"Investment Account"), and the Trustee, in its individual capacity, may direct
any depository institution maintaining the Distribution Account (for purposes
of this Section 3.12, also an "Investment Account"), to invest the funds in
such Investment Account in one or more Permitted Investments bearing interest
or sold at a discount, and maturing, unless payable on demand, (i) no later
than the Business Day immediately preceding the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if a
Person other than the Trustee is the obligor thereon and (ii) no later than
the date on which such funds are required to be withdrawn from such account
pursuant to this Agreement, if the Trustee is the obligor thereon. All such
Permitted Investments shall be held to maturity, unless payable on demand. Any
investment of funds in an Investment Account shall be made in the name of the
Trustee (in its capacity as such) or in the name of a nominee of the Trustee,
in each case, for the benefit of the Certificateholders. The Trustee shall be
entitled to sole control (except with respect to investment direction of funds
held in the Collection Account and any income and gain realized thereon) over
each such investment, and any certificate or other instrument evidencing any
such investment shall be delivered directly to
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the Trustee or its agent, together with any document of transfer necessary to
transfer title to such investment to the Trustee or its nominee. In the event
amounts on deposit in an Investment Account are at any time invested in a
Permitted Investment payable on demand, the Trustee shall:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Permitted
Investment may otherwise mature hereunder in an amount equal to the
lesser of (1) all amounts then payable thereunder and (2) the amount
required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that such
Permitted Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds
deposited in the related Collection Account and any REO Account held by or on
behalf of the related Servicer, shall be for the benefit of such Servicer and
shall be subject to its withdrawal in accordance with Section 3.11 or Section
3.23, as applicable or withdrawal by the Trustee in accordance with Section
3.11. Each Servicer shall deposit in the related Collection Account or any REO
Account, as applicable, the amount of any loss of principal incurred in
respect of any such Permitted Investment made with funds in such Collection
Account or REO Account immediately upon realization of such loss.
(c) All income and gain realized from the investment of funds
deposited in the Distribution Account held by or on behalf of the Trustee
shall be for the benefit of the Trustee and shall be subject to withdrawal by
the Trustee at any time. The Trustee shall deposit in the Distribution
Account, the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon
realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment,
or if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates, shall take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings.
SECTION 3.13. RESERVED.
SECTION 3.14. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.
(a) Each Servicer shall cause to be maintained for each related
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the least of (i) the current
principal balance of such Mortgage Loan, (ii) the
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amount necessary to fully compensate for any damage or loss to the
improvements that are a part of such property on a replacement cost basis and
(iii) the maximum insurable value of the improvements which are a part of such
Mortgaged Property, in each case in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each Servicer shall also cause to be
maintained fire insurance with extended coverage on each REO Property in an
amount which is at least equal to the lesser of (i) the maximum insurable
value of the improvements which are a part of such property and (ii) the
outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property, plus accrued interest at the related Mortgage Rate and
related Servicing Advances. Each Servicer will comply in the performance of
this Agreement with all reasonable rules and requirements of each insurer
under any such hazard policies. Any amounts to be collected by the related
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage Loan or
amounts to be released to the related Mortgagor in accordance with the
procedures that such Servicer would follow in servicing loans held for its own
account, subject to the terms and conditions of the related Mortgage Loan and
related Mortgage Note) shall be deposited in the related Collection Account,
subject to withdrawal pursuant to Section 3.11, if received in respect of a
related Mortgage Loan, or in the related REO Account, subject to withdrawal
pursuant to Section 3.23, if received in respect of an REO Property. Any cost
incurred by a Servicer in maintaining any such insurance shall not, for the
purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit. Any insurance premiums not paid by
the related Mortgagor and advanced by the related Servicer shall constitute a
Servicing Advance. It is understood and agreed that no earthquake or other
additional insurance is to be required of any Mortgagor other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. If the related Mortgaged Property or
related REO Property is at any time in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards and flood insurance has been made available, the related Servicer will
cause to be maintained a flood insurance policy in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (i) the unpaid
principal balance of the related Mortgage Loan and (ii) the maximum amount of
such insurance available for the related Mortgaged Property under the national
flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
In the event that a Servicer shall obtain and maintain a
blanket policy with an insurer having a General Policy Rating of B:III or
better in Best's Key Rating Guide (or such other rating that is comparable to
such rating) insuring against hazard losses on all of the related Mortgage
Loans, it shall conclusively be deemed to have satisfied its obligations as
set forth in the first two sentences of this Section 3.14, it being understood
and agreed that such policy may contain a deductible clause, in which case
such Servicer shall, in the event that there shall not have been maintained on
the related Mortgaged Property or related REO Property a policy complying with
the first two sentences of this Section 3.14, and there shall have been one or
more losses which would have been covered by such policy, deposit to the
related Collection Account from its own funds the amount not otherwise payable
under the blanket policy because of such deductible clause. In connection with
its activities as administrator and servicer of the related Mortgage Loans,
each Servicer agrees to prepare and present, on behalf of itself, the
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Trustee and Certificateholders, claims under any such blanket policy in a
timely fashion in accordance with the terms of such policy.
(b) Each Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of such Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that
would meet the requirements of Xxxxxx Xxx or Xxxxxxx Mac if it were the
purchaser of the related Mortgage Loans, unless such Servicer has obtained a
waiver of such requirements from Xxxxxx Mae or Xxxxxxx Mac. Each Servicer
shall also maintain a fidelity bond in the form and amount that would meet the
requirements of Xxxxxx Mae or Xxxxxxx Mac, unless such Servicer has obtained a
waiver of such requirements from Xxxxxx Mae or Xxxxxxx Mac. Each Servicer
shall provide the Trustee (upon its reasonable request) with copies of any
such insurance policies and fidelity bond. Each Servicer shall be deemed to
have complied with this provision if an Affiliate of such Servicer has such
errors and omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder extends to
such Servicer. Any such errors and omissions policy and fidelity bond shall by
its terms not be cancelable without thirty days' prior written notice to the
Trustee. Each Servicer shall also cause each related Sub-Servicer to maintain
a policy of insurance covering errors and omissions and a fidelity bond which
would meet such requirements.
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
Each Servicer will, to the extent it has knowledge of any conveyance
or prospective conveyance of any related Mortgaged Property by any related
Mortgagor (whether by absolute conveyance or by contract of sale, and whether
or not such Mortgagor remains or is to remain liable under the applicable
Mortgage Note and/or the related Mortgage), exercise its rights to accelerate
the maturity of such Mortgage Loan under the "due-on-sale" clause, if any,
applicable thereto; provided, however, that the a Servicer shall not be
required to take such action if in its sole business judgment such Servicer
believes it is not in the best interests of the Trust Fund and shall not
exercise any such rights if prohibited by law from doing so. If a Servicer
reasonably believes it is unable under applicable law to enforce such
"due-on-sale" clause, or if any of the other conditions set forth in the
proviso to the preceding sentence apply, such Servicer will enter into an
assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which
such person becomes liable under the related Mortgage Note and, to the extent
permitted by applicable state law, the related Mortgagor remains liable
thereon. Each Servicer is also authorized to enter into a substitution of
liability agreement with such person, pursuant to which the related original
Mortgagor is released from liability and such person is substituted as the
related Mortgagor and becomes liable under the applicable Mortgage Note,
provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the related Servicer and has a credit
risk rating at least equal to that of the related original Mortgagor. In
connection with any assumption, modification or substitution, each Servicer
shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. Each
Servicer shall not take or enter into any assumption and modification
agreement, however, unless (to the extent practicable in the circumstances) it
shall have received
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confirmation, in writing, of the continued effectiveness of any applicable
hazard insurance policy, or a new policy meeting the requirements of this
Section is obtained. Any fee collected by a Servicer in respect of an
assumption, modification or substitution of liability agreement will be
retained by such Servicer as additional servicing compensation. In connection
with any such assumption, no material term of the related Mortgage Note
(including but not limited to the related Mortgage Rate and the amount of the
related Monthly Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. Each Servicer shall notify the Trustee
that any such substitution, modification or assumption agreement has been
completed by forwarding to the Trustee the executed original of such
substitution, modification or assumption agreement, which document shall be
added to the related Mortgage File and shall, for all purposes, be considered
a part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Notwithstanding the foregoing, the
related Servicer may enforce the due on sale clause, or the assumption and
modification, or the substitution if it reasonably believes that it is in the
best interest of the Trust Fund.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, a Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
related Mortgage Loan by operation of law or by the terms of the related
Mortgage Note or any assumption which such Servicer may be restricted by law
from preventing, for any reason whatever. For purposes of this Section 3.15,
the term "assumption" is deemed to also include a sale (of the Mortgaged
Property) subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.
SECTION 3.16. Realization Upon Defaulted Mortgage Loans.
(a) Each Servicer shall use its commercially reasonable efforts
consistent with the servicing standard set forth in Section 3.01, to foreclose
upon or otherwise comparably convert the ownership of properties securing such
of the related Mortgage Loans (including selling any such Mortgage Loan rather
than converting the ownership of the related properties if such sale would
maximize the timely and complete recovery of principal and interest on the
related Mortgage Note in accordance with the servicing standard set forth in
Section 3.01) as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of Delinquent payments
pursuant to Section 3.07. Each Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that such
costs and expenses will be recoverable as Servicing Advances or Nonrecoverable
Servicing Advances by such Servicer as contemplated in Section 3.11 and
Section 3.23. The foregoing is subject to the provision that, in any case in
which a Mortgaged Property shall have suffered damage from an Uninsured Cause,
the related Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its sole and
absolute discretion that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan after reimbursement to itself for
such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the related Servicer has received actual notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the related
Mortgaged Property, such Servicer shall not, on behalf of the Trust Fund,
either (i) obtain title to such Mortgaged Property as a result of or in lieu
of foreclosure or
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otherwise or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Fund or the Certificateholders would be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
from time to time, or any comparable law, unless such Servicer has also
previously determined, based on its reasonable judgment and a report prepared
by a Person who regularly conducts environmental audits using customary
industry standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Fund to take such actions as are necessary to
bring such Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any
hazardous substances, hazardous materials, hazardous wastes, or
petroleum-based materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be required
under any federal, state or local law or regulation, or that if any
such materials are present for which such action could be required,
that it would be in the best economic interest of the Trust Fund to
take such actions with respect to such affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section 3.16 shall be advanced by the related Servicer, subject to such
Servicer's right to be reimbursed therefor from the related Collection Account
as provided in Section 3.11(a)(ix), such right of reimbursement being prior to
the rights of Certificateholders to receive any amount in the related
Collection Account received in respect of the affected Mortgage Loan or other
related Mortgage Loans. It is understood by the parties hereto that any such
advance will be deemed a Servicing Advance.
If a Servicer determines, as described above, that it is in the best
economic interest of the Trust Fund to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials,
hazardous wastes or petroleum-based materials affecting any such Mortgaged
Property, then such Servicer shall take such action as it deems to be in the
best economic interest of the Trust Fund. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the related Servicer,
subject to such Servicer's right to be reimbursed therefor from the related
Collection Account as provided in Section 3.11(a)(ix), such right of
reimbursement being prior to the rights of Certificateholders to receive any
amount in such Collection Account received in respect of the affected Mortgage
Loan or other related Mortgage Loans. It is understood by the parties hereto
that any such advance will be deemed a Servicing Advance.
(c) Each Servicer may at its option purchase from the Trust Fund any
related Mortgage Loan or related REO Property that is 90 days or more
Delinquent, which such Servicer determines in good faith will otherwise become
subject to foreclosure proceedings (evidence of
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such determination to be delivered in writing to the Trustee prior to
purchase), at a price equal to the Purchase Price; provided, however, that
such Servicer shall purchase any such Mortgage Loans or related REO Properties
on the basis of delinquency, purchasing the most Delinquent Mortgage Loans or
related REO Properties first. The Purchase Price for any Mortgage Loan or
related REO Property purchased hereunder shall be deposited in the related
Collection Account, and the Trustee, upon receipt of written certification
from the related Servicer of such deposit, shall release or cause to be
released to such Servicer the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as such Servicer shall furnish and as shall be necessary to
vest in such Servicer title to any Mortgage Loan or related REO Property
released pursuant hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
related Servicer or any related Sub-Servicer for any related unreimbursed
Servicing Advances and P&I Advances, pursuant to Section 3.11(a)(ii) or
Section 3.11(a)(iii); second, to accrued and unpaid interest on the related
Mortgage Loan, to the date of the Final Recovery Determination, or to the Due
Date prior to the Distribution Date on which such amounts are to be
distributed if not in connection with a Final Recovery Determination; and
third, as a recovery of principal of such Mortgage Loan. If the amount of the
recovery so allocated to interest is less than the full amount of accrued and
unpaid interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the related Servicer as follows: first, to unpaid related
Servicing Fees; and second, to the balance of the interest then due and owing.
The portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the related Servicer or any related Sub-Servicer pursuant to
Section 3.11(a)(iii).
(e) Each Servicer shall accurately and fully report its borrower
credit files to all three credit repositories in a timely manner.
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any related Mortgage Loan, or the
receipt by the related Servicer of a notification that payment in full shall
be escrowed in a manner customary for such purposes, such Servicer will
promptly notify the Trustee or the Custodian by a certification in the form of
Exhibit E-2 (which certification shall include a statement to the effect that
all amounts received or to be received in connection with such payment which
are required to be deposited in the related Collection Account pursuant to
Section 3.10 have been or will be so deposited) signed by a related Servicing
Officer and shall request delivery to it of the related Mortgage File. Upon
receipt of such certification and request, the Trustee or the Custodian shall,
within five Business Days, release or cause the release and mailing by
overnight mail of the related Mortgage File to the related Servicer. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection
under any insurance policy relating to the Mortgage Loans, the Trustee shall,
upon request of the related Servicer and delivery to the
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Trustee or the Custodian, if permitted by the related custodial agreement, of
a Request for Release in the form of Exhibit E-1, cause the release of the
related Mortgage File to such Servicer, and the Trustee shall, at the
direction of such Servicer, execute such documents as shall be necessary to
the prosecution of any such proceedings and such Servicer shall retain such
Mortgage File in trust for the benefit of the Certificateholders. Such Request
for Release shall obligate the related Servicer to return each and every
document previously requested from such Mortgage File to the Trustee or the
Custodian when the need therefor by such Servicer no longer exists, unless the
related Mortgage Loan has been liquidated and the Liquidation Proceeds
relating to such Mortgage Loan have been deposited in the related Collection
Account or the related Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for
the foreclosure of the related Mortgaged Property either judicially or
non-judicially, and such Servicer has delivered to the Trustee a certificate
of a related Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. Upon receipt of a certificate of such
Servicing Officer stating that such Mortgage Loan was liquidated and that all
amounts received or to be received in connection with such liquidation that
are required to be deposited into the related Collection Account have been so
deposited, or that such Mortgage Loan has become an REO Property, such
Mortgage Loan shall be released by the Trustee or the Custodian to the
applicable Servicer or its designee.
(c) Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the related Servicer any court pleadings,
requests for trustee's sale or other documents reasonably necessary to the
foreclosure or trustee's sale in respect of a related Mortgaged Property or to
any legal action brought to obtain judgment against any related Mortgagor on
the related Mortgage Note or related Mortgage or to obtain a deficiency
judgment, or to enforce any other remedies or rights provided by such Mortgage
Note or Mortgage or otherwise available at law or in equity, or shall exercise
and deliver to such Servicer a power of attorney sufficient to authorize such
Servicer to execute such documents on its behalf, provided that the Trustee
shall be obligated to execute the documents identified above if necessary to
enable such Servicer to perform its duties hereunder. Each such certification
shall include a request that such pleadings or documents be executed by the
Trustee and a statement as to the reason such documents or pleadings are
required and that the execution thereof by the Trustee and delivery thereof by
the Trustee or the Custodian as applicable will not invalidate or otherwise
affect the lien of the related Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
SECTION 3.18. Servicing Compensation.
As compensation for the activities of the Servicers hereunder, each
Servicer shall be entitled to the Servicing Fee with respect to each related
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.24. In addition, the Servicers shall be
entitled to recover unpaid Servicing Fees out of related Late Collections,
related Insurance Proceeds, related condemnation proceeds or related
Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii) and out
of amounts derived from the operation and sale of an related REO Property to
the extent permitted by Section 3.23. The right to receive the Servicing Fee
may not be transferred in whole or in part except in connection with the
transfer of
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all of the related Servicer's responsibilities and obligations
under this Agreement; provided, however, that such Servicer may pay from the
related Servicing Fee any amounts due to a related Sub-Servicer pursuant to a
Sub-Servicing Agreement entered into under Section 3.02.
Additional servicing compensation in the form of assumption or
modification fees, late payment charges, insufficient funds fees, reconveyance
fees and other ancillary fees (other than Prepayment Charges) shall be
retained by the related Servicer (subject to Section 3.24) only to the extent
such fees or charges are received by such Servicer. Each Servicer shall also
be entitled pursuant to Section 3.11(a)(iv) to withdraw from the related
Collection Account, and pursuant to Section 3.23(b) to withdraw from any
related REO Account, as additional servicing compensation, interest or other
income earned on deposits therein, subject to Section 3.12 and Section 3.24.
Each Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including premiums for the
insurance required by Section 3.14, to the extent such premiums are not paid
by the related Mortgagors or by a related Sub-Servicer, it being understood
however, that payment of such premiums by the related Servicer shall
constitute Servicing Advances), servicing compensation of any related
Sub-Servicer and to the extent provided herein in Section 8.05, the
indemnification of the Trustee, and shall not be entitled to reimbursement
therefor except as specifically provided herein.
SECTION 3.19. Reports to the Trustee; Collection Account Statements
and Other Reports.
Not later than thirty days after each Distribution Date, each
Servicer shall forward to the Trustee and the Depositor a statement prepared
by such Servicer setting forth the status of the related Collection Account as
of the close of business on such Distribution Date and showing, for the period
covered by such statement, the aggregate amount of deposits into and
withdrawals from such Collection Account of each category of deposit specified
in Section 3.10(a) and each category of withdrawal specified in Section
3.11(a). Such statement may be in the form of the then current Xxxxxx Mae
Monthly Accounting Report for its Guaranteed Mortgage Pass-Through Program
with appropriate additions and changes, and shall also include information as
to the aggregate of the outstanding principal balances of all of the related
Mortgage Loans as of the last day of the calendar month immediately preceding
such Distribution Date. Copies of such statement shall be provided by the
Trustee to any Certificateholder and to any Person identified to the Trustee
as a prospective transferee of a Certificate, upon request and at the expense
of the requesting party, provided such statement is delivered by the related
Servicer to the Trustee. In addition, each Servicer shall provide such
statement and all other loan level information relating to the related
Mortgage Loans that the Holder of the Residual Certificates may reasonably
request, provided, however, that such request will be at the expense of such
Holder of the Residual Certificates.
SECTION 3.20. Statement as to Compliance.
Each Servicer will deliver to the Trustee, the Depositor, each
Rating Agency and the Counterparty on or before 90 days following the end of
such Servicer's fiscal year commencing in 2003, an Officers' Certificate
stating, as to each signatory thereof, that (i) a review of the activities of
such Servicer during the preceding year and of performance under this
Agreement has been made under such officers' supervision and (ii) to the best
of such officers'
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knowledge, based on such review, such Servicer has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. Copies of any
such statement shall be provided by the Trustee to any Certificateholder upon
the request and at the expense of the requesting party, provided that such
statement is delivered by the related Servicer to the Trustee.
As of the Closing Date, the Servicers' fiscal years end on December
31st.
SECTION 3.21. Independent Public Accountants' Servicing Report.
Not later than 90 days following the end of the related Servicer's
fiscal year commencing in 2003, each Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to such Servicer a report stating that (i) it has obtained a letter of
representation regarding certain matters from the management of such Servicer
which includes an assertion that such Servicer has complied with certain
minimum residential mortgage loan servicing standards, identified in the
Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America, with respect to the servicing of
residential mortgage loans during the most recently completed fiscal year and
(ii) on the basis of an examination conducted by such firm in accordance with
standards established by the American Institute of Certified Public
Accountants, such representation is fairly stated in all material respects,
subject to such exceptions and other qualifications that may be appropriate.
In rendering its report such firm may rely, as to matters relating to the
direct servicing of residential mortgage loans by a Sub-Servicer, upon
comparable reports of firms of independent certified public accountants
rendered on the basis of examinations conducted in accordance with the same
standards (rendered within one year of such report) with respect to such
Sub-Servicer. Promptly upon receipt of such report, the related Servicer shall
furnish a copy of such report to the Trustee and each Rating Agency. Copies of
such statement shall be provided by the Trustee to any Certificateholder upon
request at the related Servicer's expense, provided that such statement is
delivered by such Servicer to the Trustee. In the event such firm of
independent certified public accountants requires the Trustee to agree to the
procedures performed by such firm, each Servicer shall direct the Trustee in
writing to so agree; it being understood and agreed that the Trustee will
deliver such letter of agreement in conclusive reliance upon the direction of
the related Servicer, and the Trustee has not made any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.
SECTION 3.22. Access to Certain Documentation.
Each Servicer shall provide to the Office of Thrift Supervision, the
FDIC, and any other federal or state banking or insurance regulatory authority
that may exercise authority over any Certificateholder, access to the
documentation regarding the Mortgage Loans serviced by it under this
Agreement, as may be required by applicable laws and regulations. Such access
shall be afforded without charge, but only upon reasonable request and during
normal business hours at the offices of the related Servicer designated by it.
In addition, access to the documentation regarding the Mortgage Loans serviced
by the related Servicer under this Agreement will be provided to any
Certificateholder, the Trustee and to any Person identified to such Servicer
as a
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prospective transferee of a Certificate, upon reasonable request during
normal business hours at the offices of such Servicer designated by it at the
expense of the Person requesting such access.
SECTION 3.23. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be
taken in the name of the Trustee, or its nominee, in trust for the benefit of
the Certificateholders. The related Servicer, on behalf of the Trust Fund (and
on behalf of the Trustee for the benefit of the Certificateholders), shall
either sell any related REO Property before the close of the third taxable
year after the year the Trust Fund acquires ownership of such REO Property for
purposes of Section 860G(a)(8) of the Code or request from the Internal
Revenue Service, no later than 60 days before the day on which the three-year
grace period would otherwise expire, an extension of the three-year grace
period, unless the related Servicer shall have delivered to the Trustee and
the Depositor an Opinion of Counsel, addressed to the Trustee and the
Depositor, to the effect that the holding by the Trust Fund of such REO
Property subsequent to three years after its acquisition will not result in
the imposition on any REMIC created hereunder of taxes on "prohibited
transactions" thereof, as defined in Section 860F of the Code, or cause any of
REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC under Federal law
at any time that any Certificates are outstanding. Each Servicer shall manage,
conserve, protect and operate each related REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale
in a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by any REMIC created hereunder of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code,
or any "net income from foreclosure property" which is subject to taxation
under the REMIC Provisions.
(b) Each Servicer shall segregate and hold all funds collected and
received in connection with the operation of any related REO Property separate
and apart from its own funds and general assets and shall establish and
maintain, or cause to be established and maintained, with respect to such REO
Properties an account held in trust for the Trustee for the benefit of the
Certificateholders (the "REO Account"), which shall be an Eligible Account.
Each Servicer shall be permitted to allow the related Collection Account to
serve as an REO Account, subject to separate ledgers for each related REO
Property. Each Servicer shall be entitled to retain or withdraw any interest
income paid on funds deposited in the related REO Account.
(c) The Servicers shall have full power and authority, subject only
to the specific requirements and prohibitions of this Agreement, to do any and
all things in connection with any related REO Property as are consistent with
the manner in which the related Servicer manages and operates similar property
owned by such Servicer or any of its Affiliates, all on such terms and for
such period as such Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the related Servicer shall
deposit, or cause to be deposited in the related clearing account (which
account must be an Eligible Account) in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan
servicing activities on a daily basis, and in no event more than one Business
Day after such Servicer's receipt thereof, and shall thereafter deposit in the
related REO Account, in no event more than two Business Days after the deposit
of such funds into the clearing account, all revenues received by it with
respect to a related REO Property and shall withdraw therefrom funds necessary
for
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the proper operation, management and maintenance of such REO Property
including, without limitation:
(i) all insurance premiums due and payable in respect of such
REO Property;
(ii) all real estate taxes and assessments in respect of such
REO Property that may result in the imposition of a lien thereon;
and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the related REO Account with respect
to a related REO Property are insufficient for the purposes set forth in
clauses (i) through (iii) above with respect to such REO Property, the related
Servicer shall advance from its own funds as Servicing Advances such amount as
is necessary for such purposes if, but only if, such Servicer would make such
advances if it owned the REO Property and if in such Servicer's sole judgment,
the payment of such amounts will be recoverable from the rental or sale of the
related REO Property.
Notwithstanding the foregoing, no Servicer shall:
(i) authorize the Trust Fund to enter into, renew or
extend any New Lease with respect to any related REO
Property, if the New Lease by its terms will give rise to
any income that does not constitute Rents from Real
Property;
(ii) authorize any amount to be received or accrued under
any New Lease other than amounts that will constitute
Rents from Real Property;
(iii) authorize any construction on any related REO
Property, other than the completion of a building or other
improvement thereon, and then only if more than ten
percent of the construction of such building or other
improvement was completed before default on the related
Mortgage Loan became imminent, all within the meaning of
Section 856(e)(4)(B) of the Code; or
(iv) authorize any Person to Directly Operate any related
REO Property on any date more than 90 days after its date
of acquisition by the Trust Fund;
unless, in any such case, such Servicer has obtained an Opinion of Counsel,
provided to the Trustee, to the effect that such action will not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning
of Section 860G(a)(8) of the Code at any time that it is held by the Trust
Fund, in which case such Servicer may take such actions as are specified in
such Opinion of Counsel.
Each Servicer may contract with any Independent Contractor for the
operation and management of any related REO Property, provided that:
(i) the terms and conditions of any such contract shall
not be inconsistent herewith;
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(ii) any such contract shall require, or shall be
administered to require, that the Independent Contractor
pay all costs and expenses incurred in connection with the
operation and management of such REO Property, including
those listed above and remit all related revenues (net of
such costs and expenses) to the related Servicer as soon
as practicable, but in no event later than thirty days
following the receipt thereof by such Independent
Contractor;
(iii) none of the provisions of this Section 3.23(c)
relating to any such contract or to actions taken through
any such Independent Contractor shall be deemed to relieve
the related Servicer of any of its duties and obligations
to the Trustee on behalf of the Certificateholders with
respect to the operation and management of any such REO
Property; and
(iv) the related Servicer shall be obligated with respect
thereto to the same extent as if it alone were performing
all duties and obligations in connection with the
operation and management of such REO Property.
Each Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of such Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. Each Servicer shall be solely liable for all fees owed
by it to any such Independent Contractor, irrespective of whether such
Servicer's compensation pursuant to Section 3.18 is sufficient to pay such
fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by such
Servicer, such amounts shall be reimbursable as Servicing Advances made by
such Servicer.
(d) In addition to the withdrawals permitted under Section 3.23(c),
a Servicer may from time to time make withdrawals from the related REO Account
for any related REO Property: (i) to pay itself or any related Sub-Servicer
unpaid Servicing Fees in respect of the related Mortgage Loan; and (ii) to
reimburse itself or any related Sub-Servicer for unreimbursed Servicing
Advances and P&I Advances made in respect of such REO Property or the related
Mortgage Loan. On the Servicer Remittance Date, each Servicer shall withdraw
from each related REO Account maintained by it and deposit into the
Distribution Account in accordance with Section 3.10(d)(ii), for distribution
on the related Distribution Date in accordance with Section 4.01, the income
from the related REO Property received during the prior calendar month, net of
any withdrawals made pursuant to Section 3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a),
each REO Disposition shall be carried out by the related Servicer at such
price and upon such terms and conditions as such Servicer shall deem necessary
or advisable, as shall be normal and usual in its general servicing activities
for similar properties.
(f) The proceeds from the related REO Disposition, net of any amount
required by law to be remitted to the related Mortgagor under the related
Mortgage Loan and net of any payment or reimbursement to the related Servicer
or any related Sub-Servicer as provided above,
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shall be deposited in the Distribution Account in accordance with Section
3.10(d)(ii) on the Servicer Remittance Date in the month following the receipt
thereof for distribution on the related Distribution Date in accordance with
Section 4.01. Any REO Disposition shall be for cash only (unless changes in
the REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
(g) Each Servicer shall file information returns with respect to the
receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any related Mortgaged Property and
cancellation of indebtedness income with respect to such Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code, respectively. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.
SECTION 3.24. Obligations of the Servicers in Respect of Prepayment
Interest Shortfalls.
Each Servicer shall deliver to the Trustee for deposit into the
Distribution Account on or before 3:00 p.m. New York time on the Servicer
Remittance Date from its own funds an amount (such amount, "Compensating
Interest") equal to the lesser of (i) the aggregate of the related Prepayment
Interest Shortfalls for the related Distribution Date resulting solely from
voluntary Principal Prepayments in full or in part for any Mortgage Loan,
other than a Long Beach Serviced Loan, and only voluntary Principal
Prepayments in full with respect to a Long Beach Serviced Loan, in each case,
during the related Prepayment Period and (ii) up to the amount of its
aggregate Servicing Fee for the most recently ended calendar month. Neither
Servicer shall have the right to reimbursement for any amounts remitted to the
Trustee in respect of Compensating Interest. Such amounts remitted shall be
included in the Available Distribution Amount and distributed therewith on the
related Distribution Date. The Servicers shall not be obligated to pay
Compensating Interest with respect to Relief Act Interest Shortfalls.
SECTION 3.25. Obligations of the Servicers in Respect of Mortgage
Rates and Monthly Payments.
On each Adjustment Date, each Servicer shall make Mortgage Rate
adjustments for each Adjustable Rate Mortgage Loan in compliance with the
requirements of the related Mortgage and related Mortgage Note and Applicable
Regulations. Each Servicer shall execute and deliver the notices required by
each related Mortgage and related Mortgage Note and Applicable Regulations
regarding Mortgage Rate adjustments. The Servicers shall maintain all data and
information regarding such Mortgage Rate adjustments and the related
Servicer's methods of implementing such Mortgage Rate adjustments and shall
provide such information to the Trustee upon request.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Monthly Payments or Stated Principal Balances that were made
by the related Servicer in a manner not consistent with the terms of the
related Mortgage Note and this Agreement, such Servicer, upon discovery or
receipt of notice thereof, immediately shall deliver to the Trustee for
deposit in the Distribution Account from its own funds the amount of any such
shortfall and shall indemnify
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and hold harmless the Trust Fund, the Trustee, the Depositor and any successor
servicer in respect of any such liability. Such indemnities shall survive the
termination or discharge of this Agreement. Notwithstanding the foregoing,
this Section 3.25 shall not limit the ability of any Servicer to seek recovery
of any such amounts from the related Mortgagor under the terms of the related
Mortgage Note, as permitted by law.
SECTION 3.26. Net WAC Fund; Yield Maintenance Agreement.
(a) On the Closing Date, the Depositor will deposit, or cause to be
deposited, into the Net WAC Fund, $5,000. On each Distribution Date as to
which there is Net WAC Carryover Amount for any Class of LIBOR Certificates,
the Trustee is hereby directed to, and shall therefore, deposit into the Net
WAC Fund an amount equal to the Net WAC Carryover Amount for each affected
Class of LIBOR Certificates pursuant to Section 4.01(a)(3)(xiii). If no Net
WAC Carryover Amount is payable on a Distribution Date, the Trustee shall
deposit into the Net WAC Fund the Required Net WAC Fund Deposit. For federal
and state income tax purposes, the Class X Certificateholders will be deemed
to be the owners of the Net WAC Fund and all amounts deposited into the Net
WAC Fund. Any monies held in the Net WAC Fund in excess of the Required Net
WAC Fund Deposit on any Distribution Date shall be distributed to the Class X
Certificateholders. Amounts held in the Net WAC Fund and not distributable to
the Holders of LIBOR Certificates on any Distribution Date will be invested by
the Trustee in investments identified in clause (f) of the definition of
Permitted Investments having maturities on or prior to the next succeeding
Distribution Date on which such amounts will be distributable to the Holders
of the Classes of LIBOR Certificates. Upon the termination of the Trust Fund,
or the payment in full of the LIBOR Certificates, all amounts remaining on
deposit in the Net WAC Fund will be released from the lien of the Trust Fund
and distributed to the Class X Certificateholders or their designees. The Net
WAC Fund will be part of the Trust Fund but not part of any REMIC and any
payments to the LIBOR Certificates of Net WAC Carryover Amount with respect to
any Class of LIBOR Certificates will not be payments with respect to a
"regular interest" in a REMIC within the meaning of Code Section 860G(a)(1).
(b) The Depositor hereby directs the Trustee, to execute and deliver
on behalf of the Trust the Yield Maintenance Agreement and authorizes the
Trustee to perform its obligations thereunder on behalf of the Trust in
accordance with the terms of the Yield Maintenance Agreement. On the Closing
Date, the Trustee shall enter into the Yield Maintenance Agreement, on behalf
of the Trust, with the Counterparty. The Trustee shall deposit all amounts
received with respect to the Yield Maintenance Agreement in the Net WAC Fund.
The Yield Maintenance Agreement shall be part of the Trust Fund but not part
of any REMIC.
(c) If any payments are owed to the Counterparty beginning with the
Distribution Date in July 2004, the Depositor shall direct the Trustee to
request and the Trustee shall request, the Counterparty to furnish IRS Form W
8ECI to the Trustee.
(d) If the Counterparty no longer has a long-term credit rating of
at least A (or its equivalent) from at least one of the Rating Agencies, the
Trustee, shall within 30 days after the reduction or withdrawal of the credit
rating, (i) obtain a replacement Yield Maintenance Agreement with a
counterparty that is a bank or other financial institution that has a rating
that is in one of the three highest long-term credit rating categories from at
least one of the Rating
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Agencies rating the Certificates; (ii) obtain a guaranty of or a contingent
agreement of another person with a long-term credit rating of at least A (or
its equivalent) from at least one of the Rating Agencies to honor the
Counterparty's obligations under the Yield Maintenance Agreement; (iii) cause
the Counterparty to post xxxx-to-market collateral with the Trustee in an
amount sufficient to restore the immediately prior ratings of the Offered
Certificates; (iv) establish any other arrangement satisfactory to the Rating
Agencies to restore the ratings of the Offered Certificates; or (v) terminate
the Yield Maintenance Agreement in accordance with its terms.
SECTION 3.27. Fairbanks Servicing Performance Evaluations
Within 60 days after a Servicer Evaluation Trigger Date, the Trustee
shall select and engage a nationally recognized independent auditor, approved
in writing by the Rating Agencies, unless such Rating Agencies specifically
waive such approval right (provided, however, that if the Trustee does not
receive the written approval of any Rating Agency within 20 days of selecting
an independent auditor, such Rating Agency will be deemed to have approved of
such auditor), to evaluate the performance of Fairbanks. Such engagement by
the Trustee shall require the auditor to select a statistical sample of
Delinquent Fairbanks Serviced Loans (comprising a percentage (determined by
the independent auditor in its sole discretion, which percentage shall not
exceed 50%) of all Delinquent Fairbanks Serviced Loans by unpaid principal
balance as of the Servicer Evaluation Trigger Date) and to examine the
Fairbanks' servicing practices with respect to such Mortgage Loans (including,
without limitation, examining payment histories, documentation relating to
Fairbanks' contacts with the related Mortgagors and documents contained in the
related Servicing File) for the period of 24 months prior to such examination
or, with respect to an examination taking place within 24 months of the
Closing Date, the period beginning on the Closing Date and ending on the date
of such examination. Such engagement by the Trustee shall also require the
auditor to compare such servicing practices of Fairbanks with respect to the
selected Fairbanks Serviced Loans to the Performance Standards set forth on
Exhibit J hereto and to evaluate the Fairbanks' compliance with the
Performance Standards. The evaluation process described above in this Section
3.27 is referred to herein as a "Servicer Performance Evaluation" and is
subject in all respects to the approval of the Rating Agencies with such
approval right the option of each Rating Agency. In the engagement, the
Trustee shall require the auditor to deliver the results of its Servicer
Performance Evaluation to the Trustee, the Rating Agencies and the
Counterparty and the Trustee shall report such Servicer Performance Evaluation
results to Certificateholders in its monthly statement, made pursuant to
Section 4.02.
After receipt of the results of the Servicer Performance Evaluation,
the Holders of the Certificates entitled to 51% of the Voting Rights may make
a written request to the Trustee to terminate Fairbanks as Servicer under this
Agreement. If such a written request is made to the Trustee, Fairbanks will be
deemed to have "failed" the Servicer Performance Evaluation for purposes of
the related Servicer Termination Test.
At their option, each Rating Agency shall have the right to review
all of the information provided to the independent auditor in connection with
a Servicer Performance Evaluation so as to allow such Rating Agency to
evaluate Fairbanks' compliance with the Performance Standards.
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Fairbanks shall cooperate with all reasonable requests of the
Trustee, the independent auditor and the Rating Agencies in connection with a
Servicer Performance Evaluation, including, without limitation, making
available to the auditor payment histories, documentation relating to the
Fairbanks' contacts with the related Mortgagors and documents contained in the
related Servicing File. Fairbanks shall pay all costs and expenses of the
independent auditor or any Rating Agency (including the costs of any Rating
Agency review pursuant to the foregoing paragraph) associated with a Servicer
Performance Evaluation.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a)(1) On each Distribution Date, the Trustee shall withdraw from
the Distribution Account an amount equal to the Interest Remittance Amount and
distribute to the Certificateholders and the Counterparty the following
amounts, in the following order of priority in each case, to the extent of the
Interest Remittance Amount remaining:
(i) concurrently to the Counterparty, the Strip Amount for such
Distribution Date;
(ii) concurrently to the Holders of the Class A Certificates
and the Class A-IO Certificates, the related Interest Distribution
Amount, on a pro rata basis based on such Interest Distribution
Amounts (such amounts distributed to such Class being first applied
against the related Accrued Certificate Interest for such
Distribution Date and then to any Unpaid Interest Shortfall Amount);
(iii) to the Holders of the Class M1 Certificates, the Accrued
Certificate Interest allocable to such Class of Certificates;
(iv) to the Holders of the Class M2 Certificates, the Accrued
Certificate Interest allocable to such Class of Certificates; and
(v) concurrently to the Holders of the Class B Certificates and
the Class B-IO Certificates, on a pro rata basis, the related
Accrued Certificate Interest allocable to each such Class of
Certificates.
(2) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account an amount equal to the Principal Distribution Amount and
distribute to the Certificateholders the following amounts, in the following
order of priority:
(A) On each Distribution Date (a) prior to the Stepdown Date or
(b) on which a Trigger Event is in effect, the Principal
Distribution Amount shall be distributed sequentially, to the Class
A, Class M1, Class M2 and Class B Certificates, in that order, until
their respective Certificate Principal Balances have been reduced to
zero.
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(B) On each Distribution Date (a) on or after the Stepdown Date
and (b) on which a Trigger Event is not in effect, the Principal
Distribution Amount shall be distributed in the following order of
priority:
1. the lesser of (x) the Principal Distribution Amount and (y) the
Class A Principal Distribution Amount, shall be distributed to the Holders of
the Class A1 Certificates, allocated in accordance with Section 4.01(f), until
the aggregate Certificate Principal Balance thereof has been reduced to zero;
2. the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amounts distributed to the Holders of the
Class A Certificates pursuant to clause (B)(1) above and (y) the Class M1
Principal Distribution Amount, shall be distributed to the Holders of the
Class M1 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero;
3. the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amounts distributed to the Holders of the
Class A Certificates pursuant to clause (B)(1) above and to the Holders of the
Class M1 Certificates pursuant to clause (B)(2) above, and (y) the Class M2
Principal Distribution Amount, shall be distributed to the Holders of the
Class M2 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; and
4. the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amounts distributed to the Holders of the
Class A Certificates pursuant to clause (B)(1) above, to the Holders of the
Class M1 Certificates pursuant to clause (B)(2) above and to the Holders of
the Class M2 Certificates pursuant to clause (B)(3) above, and (y) the Class B
Principal Distribution Amount, shall be distributed to the Holders of the
Class B Certificates, until the Certificate Principal Balance thereof has been
reduced to zero.
(3) On each Distribution Date, other than the first Distribution
Date, the Net Monthly Excess Cashflow (or, in the case of clause (i) below,
the Net Monthly Excess Cashflow exclusive of any Overcollateralization
Reduction Amount) shall be distributed as follows:
(i) to the Holders of the Class or Classes of Certificates then
entitled to receive distributions in respect of principal, in an amount
equal to the principal portion of any Realized Losses incurred or deemed
to have been incurred on the Mortgage Loans during the related Prepayment
Period, applied in the same order of priority as payments of principal
would otherwise be applied on such Distribution Date to reduce the
Certificate Principal Balance of such Classes of Certificates;
(ii) to the Holders of the Class or Classes of Certificates then
entitled to receive distributions in respect of principal, in an amount
equal to the Overcollateralization Increase Amount, applied in the same
order of priority as payments of principal would otherwise be applied on
such Distribution Date to reduce the Certificate Principal Balance of
such Certificates until the aggregate Certificate Principal Balance of
such Classes of Certificates is reduced to zero;
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(iii) to the Holders of the Class M1 Certificates, any Unpaid
Interest Shortfall Amount allocable to such Class of Certificates;
(iv) to the Holders of the Class M1 Certificates, any Unpaid
Realized Loss Amount for such Class of Certificates;
(v) to the Holders of the Class M2 Certificates, any Unpaid
Interest Shortfall Amount allocable to such Class of Certificates;
(vi) to the Holders of the Class M2 Certificates, any Unpaid
Realized Loss Amount for such Class of Certificates;
(vii) concurrently to the Holders of the Class B and Class B-IO
Certificates, pro rata based on Unpaid Interest Shortfall Amounts,
any Unpaid Interest Shortfall Amount allocable to each such Class of
Certificates;
(viii) to the Holders of the Class B Certificates, any Unpaid
Realized Loss Amount for such Class of Certificates;
(ix) concurrently to the Holders of each Class of Class A and
Class A-IO Certificates, pro rata, in an amount equal to such
Holders allocated share of any Prepayment Interest Shortfalls (to
the extent not covered by payments pursuant to Section 3.24) and any
Relief Act Interest Shortfall allocated to each such Certificates;
(x) to the Holders of the Class M1 Certificates, in an amount
equal to such Holders allocated share of any Prepayment Interest
Shortfalls (to the extent not covered by payments pursuant to
Section 3.24) and any Relief Act Interest Shortfall allocated to
such Certificates;
(xi) to the Holders of the Class M2 Certificates, in an amount
equal to such Holders allocated share of any Prepayment Interest
Shortfalls (to the extent not covered by payments pursuant to
Section 3.24) and any Relief Act Interest Shortfall allocated to
such Certificates;
(xii) concurrently, to the Holders of the Class B and Class
B-IO Certificates, pro rata, in an amount equal to such Holders
allocated share of any Prepayment Interest Shortfalls (to the extent
not covered by payments pursuant to Section 3.24) and any Relief Act
Interest Shortfall allocated to each such Class of Certificates;
(xiii) to the Class X Certificate, the lesser of (i) the Class
X Distribution Amount attributable to the Class X Certificates
(computed without regard to this subparagraph (xiii)) and (ii) the
Net WAC Carryover Amount for each Class of LIBOR Certificates
provided that, pursuant to Section 3.26 hereof, on any Distribution
Date as to which there is any Net WAC Carryover Amount for any Class
of LIBOR Certificates, the Trustee will transfer, from amounts that
would otherwise be distributable to the Class X Certificates
pursuant to this clause, the amount of any Net WAC Carryover Amount
for the LIBOR Certificates into the Net WAC Fund, for immediate
transfer pursuant to this clause to the related LIBOR Certificates
as payment of Net WAC Carryover Amount for the LIBOR Certificates;
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(xiv) to the Trustee, any amounts payable pursuant to Section
8.05(b) hereof;
(xv) to the Holders of the Class X Certificates, the Class X
Distribution Amount net of the amount, if any, distributed pursuant
to subparagraph (xiii);
(xvi) to the Counterparty, if an Early Termination Date has
been designated under the Yield Maintenance Agreement, any
Termination Payments or Carryover Termination Payments owed by the
Trust; and
(xvii) to the Holders of the Class R-I Certificates, any
remaining amounts; provided that if such Distribution Date is the
Distribution Date immediately following the expiration of the latest
Prepayment Charge term as identified on the Mortgage Loan Schedule or
any Distribution Date thereafter, then any such remaining amounts
will be distributed first, to the Holders of the related Class P
Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; and second, to the Holders of the Class R-I
Certificates.
(4) The Trustee shall distribute the Net Monthly Excess Cash
Flow on the first Distribution Date to Credit Suisse First Boston
Corporation.
(b) On each Distribution Date, the Trustee shall withdraw any
amounts then on deposit in the Distribution Account that represent Prepayment
Charges collected by the Servicers in connection with the Principal Prepayment
of any of the Mortgage Loans or any Servicer Prepayment Charge Payment Amount
and shall distribute such amounts to the Holders of the Class P Certificates.
Such distributions shall not be applied to reduce the Certificate Principal
Balance of the Class P Certificates. On the first Distribution on which the
aggregate Certificate Principal Balance of the Class A and the Subordinated
Offered Certificates is reduced to zero, the Class P Certificates shall be
entitled to its Certificate Principal Balance prior to any distributions being
made pursuant to Section 4.01(a)(3) on such Distribution Date.
(c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated pro rata among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of
record on the related Record Date (except as otherwise provided in Section
4.01(e) or Section 9.01 respecting the final distribution on such Class),
based on the aggregate Percentage Interest represented by their respective
Certificates, and shall be made by wire transfer of immediately available
funds to the account of any such Holder at a bank or other entity having
appropriate facilities therefor, if such Holder shall have so notified the
Trustee in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date or otherwise by check mailed by
first class mail to the address of such Holder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office or such other location specified in the notice to
Certificateholders of such final distribution.
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Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of
its Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution
to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible
for disbursing funds to the Certificate Owners that it represents. None of the
Trustee, the Certificate Registrar, the Depositor or a Servicer shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(d) The rights of the Certificateholders to receive distributions in
respect of the Certificates, and all interests of the Certificateholders in
such distributions, shall be as set forth in this Agreement. None of the
Holders of any Class of Certificates, the Trustee or a Servicer shall in any
way be responsible or liable to the Holders of any other Class of Certificates
in respect of amounts properly previously distributed on the Certificates.
(e) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than five (5) days after the related Determination Date, mail to each
Holder on such date of such Class of Certificates a notice to the effect that:
(i) the Trustee expects that the final distribution with respect to
such Class of Certificates will be made on such Distribution Date, but only
upon presentation and surrender of such Certificates at the office of the
Trustee therein specified, and
(ii) no interest shall accrue on such Certificates from and after
the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of Certificates of such
Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and
held in trust by the Trustee and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has
been given pursuant to this Section 4.01(e) shall not have been surrendered
for cancellation within six months after the time specified in such notice,
the Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order
to receive the final distribution with respect thereto. If within one year
after the second notice all such Certificates shall not have been surrendered
for cancellation, the Trustee shall, directly or through an agent, mail a
final notice to remaining non-tendering Certificateholders concerning
surrender of their Certificates but shall continue to hold any remaining funds
for the benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to the Depositor all such amounts, and all
rights of non-tendering Certificateholders in or to such amounts shall
thereupon cease. No interest shall accrue or be payable to any
Certificateholder on any amount held in trust by the
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Trustee as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section
4.01(e).
(f) Amounts distributed to the Class A1 and Class A2 Certificates on
any Distribution Date pursuant to Section 4.01(a)(2) shall be distributed as
follows:
(1) (x) The Class A1 Percentage of such amounts, to the Class A1
Certificates, until the Certificate Principal Balance is
reduced to zero; and (y) the Class A2 Percentage of such
amounts, to the Class A2 Certificates, until the Certificate
Principal Balance is reduced to zero;
(2) If the Certificate Principal Balance of either the Class A1
or Class A2 Certificates is reduced to zero, the portion of
such amount that would have been distributed to such Class
pursuant to the preceding subclause shall be distributed to
the remaining Class of Class A Certificates, until the
Certificate Principal Balance thereof is reduced to zero.
SECTION 4.02. Statements to Certificateholders.
On each Distribution Date, the Trustee shall prepare and make
available to each Holder of the Regular Certificates, a statement with respect
to information regarding the Mortgage Loans, based solely on, and to the
extent of, information provided to the Trustee by the Servicers as to the
distributions made on such Distribution Date for such Certificate Group
setting forth:
(i) the amount of the distribution made on such Distribution Date to
the Holders of the Certificates of each Class allocable to principal, and
the amount of distribution made on such Distribution Date to the Holders
of the related Class P Certificates allocable to Prepayment Charges;
(ii) the amount of the distribution made on such Distribution Date
to the Holders of the Certificates of each Class allocable to interest;
(iii) the aggregate Servicing Fee received by the each Servicer
during the related Due Period and such other customary information as the
Trustee deems necessary or desirable, or which a Certificateholder
reasonably requests, to enable Certificateholders to prepare their tax
returns;
(iv) the aggregate amount of P&I Advances for such Distribution
Date;
(v) the aggregate Stated Principal Balance of the Mortgage Loans and
any REO Properties as of the close of business on such Distribution Date;
(vi) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage Rate of the
Mortgage Loans as of the related Due Date;
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(vii) separately by Servicer, the number and aggregate unpaid
principal balance of the Mortgage Loans originated by each Servicer (a)
Delinquent 30-59 days, (b) Delinquent 60-89 days, (c) Delinquent 90 or
more days in each case, as of the last day of the preceding calendar
month, (d) as to which foreclosure proceedings have been commenced and
(e) with respect to which the related Mortgagor has filed for protection
under applicable bankruptcy laws, with respect to whom bankruptcy
proceedings are pending or with respect to whom bankruptcy protection is
in force;
(viii) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number of such Mortgage
Loan, the unpaid principal balance and the Stated Principal Balance of
such Mortgage Loan as of the date it became an REO Property;
(ix) the aggregate of the Stated Principal Balances of all REO
Properties as of the close of business on the last Business Day of the
calendar month preceding the Distribution Date;
(x) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xi) the aggregate amount of Realized Losses incurred during the
related Prepayment Period (or, in the case of Bankruptcy Losses allocable
to interest, during the related Due Period), separately identifying
whether such Realized Losses constituted Bankruptcy Losses and the
aggregate amount of Realized Losses incurred since the Closing Date;
(xii) the aggregate amount of Extraordinary Trust Fund Expenses
withdrawn from the Collection Account or the Distribution Account for
such Distribution Date;
(xiii) the aggregate Certificate Principal Balance of each Class of
Certificates, after giving effect to the distributions, and allocations
of Realized Losses, made on such Distribution Date, separately
identifying any reduction thereof due to allocations of such Realized
Losses;
(xiv) the Certificate Factor for each such Class of Certificates
applicable to such Distribution Date;
(xv) the Accrued Certificate Interest in respect of the Class A
Certificates, the Class A-IO Certificates and the Subordinated
Certificates for such Distribution Date and the Unpaid Interest Shortfall
Amount, if any, with respect to each such Class of Certificates on such
Distribution Date, separately identifying any reduction thereof due to
allocations of Realized Losses, Prepayment Interest Shortfalls and Relief
Act Interest Shortfalls, as applicable;
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(xvi) the aggregate amount of any Prepayment Interest Shortfall for
such Distribution Date, to the extent not covered by payments by the
Servicers pursuant to Section 3.24;
(xvii) the aggregate amount of Relief Act Interest Shortfalls for
such Distribution Date;
(xviii) the Required Overcollateralized Amount and the Credit
Enhancement Percentage for such Distribution Date;
(xix) the Overcollateralization Increase Amount, if any, for such
Distribution Date;
(xx) the Overcollateralization Reduction Amount, if any, for such
Distribution Date;
(xxi) with respect to any Mortgage Loan as to which foreclosure
proceedings have been concluded, the loan number and unpaid principal
balance of such Mortgage Loan as of the date of such conclusion of
foreclosure proceedings;
(xxii) with respect to Mortgage Loans as to which a Liquidation
Event has occurred, the number of such Mortgage Loans, the unpaid
principal balance of such Mortgage Loans as of the date of such
Liquidation Event and the amount of proceeds (including Liquidation
Proceeds and Insurance Proceeds) collected in respect of such Mortgage
Loans;
(xxiii) the respective Pass-Through Rates applicable to the LIBOR
Certificates, for such Distribution Date and the Pass-Through Rate
applicable to the LIBOR Certificates for the immediately succeeding
Distribution Date;
(xxiv) the amount of any payment made by the Counterparty under the
Yield Maintenance Agreement;
(xxv) the amount on deposit in the Pre-Funding Account (including
subsequent transfer amounts or amounts included in the Principal
Remittance Amount on March 15, 2002);
(xxvi) the amount of any Net Monthly Excess Cash Flow on such
Distribution Date and the allocation thereof to the Certificateholders
with respect to Applied Realized Loss Amounts and Unpaid Realized Loss
Amounts; and
(xxvii) whether a Trigger Event has occurred and is continuing
(including the calculation thereof and the aggregate outstanding balance
of all Mortgage Loans that are Delinquent for 60 days or longer).
The Trustee will make such statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, the Servicers, the Rating Agencies
and the Counterparty via the Trustee's
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internet website. All information from which the Trustee makes such statement
will be based solely on information provided by the Servicers. The Trustee's
internet website shall initially be located at "http:\\xxx.xxxxxx.xxx/xxx.
Assistance in using the website can be obtained by calling the Trustee's
customer service desk at 800-934-6802. Parties that are unable to use the
above distribution options are entitled to have a paper copy mailed to them
via first class mail by calling the customer service desk and indicating such.
The Trustee shall have the right to change the way such statements are
distributed in order to make such distribution more convenient and/or more
accessible to the above parties and the Trustee shall provide timely and
adequate notification to all above parties regarding any such changes.
In the case of information furnished pursuant to subclauses (i)
through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.
Within a reasonable period of time after the end of each calendar
year, upon written request or request by facsimile, the Trustee shall furnish
to each Person who at any time during the calendar year was a Holder of a
Regular Certificate a statement containing the information set forth in
subclauses (i) through (iii) above, aggregated for such calendar year or
applicable portion thereof during which such person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Code as from time to time are in
force.
On each Distribution Date, the Trustee shall forward to the
Depositor, each Holder of a Non-Offered Certificate, and the Servicers, a copy
of the reports forwarded to the Regular Certificateholders on such
Distribution Date and a statement setting forth the amounts, if any, actually
distributed with respect to the Residual Certificates, respectively, on such
Distribution Date.
Within a reasonable period of time after the end of each calendar
year, upon written request or request by facsimile, the Trustee shall furnish
to each Person who at any time during the calendar year was a Holder of a
Residual Certificate a statement setting forth the amount, if any, actually
distributed with respect to the Residual Certificates, as appropriate,
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be prepared by the Trustee and furnished to such Holders
pursuant to the rules and regulations of the Code as are in force from time to
time.
The Trustee shall, upon request, furnish to each Certificateholder,
during the term of this Agreement, such periodic, special, or other reports or
information, whether or not provided for herein, as shall be reasonable with
respect to the Certificateholder, or otherwise with respect to the purposes of
this Agreement, all such reports or information to be provided at the expense
of the Certificateholder in accordance with such reasonable and explicit
instructions and directions as the Certificateholder may provide. For purposes
of this Section 4.02, the Trustee's duties are limited to the extent that the
Trustee receives timely reports as required from the Servicers.
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On each Distribution Date the Trustee shall provide Bloomberg
Financial Markets, L.P. ("Bloomberg") loan level data with respect to all of
the Mortgage Loans and CUSIP level factors for each Class of Certificates as
of such Distribution Date, using a format and media mutually acceptable to the
Trustee and Bloomberg. In addition if so requested by an Originator, on each
Distribution Date the Trustee shall provide to such Originator and at the
expense of such Originator, the loan level data with respect to the Mortgage
Loans originated by such Originator.
SECTION 4.03. Remittance Reports; P&I Advances.
(a) No later than four Business Days prior to each Distribution
Date, each Servicer shall deliver to the Trustee by telecopy (or such other
means as the related Servicer and the Trustee may agree from time to time) a
Remittance Report with respect to each related Mortgage Loan for the prior
calendar month. In addition, no later than four Business Days prior to each
Distribution Date, each Servicer shall deliver to the Trustee delinquency
information with respect to each related Mortgage Loan and P&I Advances
including: (i) the amount of P&I Advances to be made by the related Servicer
in respect of the related Distribution Date, the aggregate amount of P&I
Advances outstanding after giving effect to such P&I Advances, and the
aggregate amount of Nonrecoverable P&I Advances in respect of such
Distribution Date and (ii) such other information with respect to the Mortgage
Loans as the Trustee may reasonably require to perform the calculations
necessary to make the distributions contemplated by Section 4.01 and to
prepare the statements to Certificateholders contemplated by Section 4.02. The
Trustee shall not be responsible to recompute, recalculate or verify any
information provided to it by the related Servicer.
(b) The amount of P&I Advances to be made by each Servicer for any
Distribution Date shall equal, subject to Section 4.03(d), the sum of (i) the
aggregate amount of Monthly Payments (with each interest portion thereof net
of the related Servicing Fee), due on the related Due Date in respect of the
related Mortgage Loans, which Monthly Payments were Delinquent as of the close
of business on the related Determination Date, plus (ii) with respect to each
related REO Property, which REO Property was acquired during or prior to the
related Prepayment Period and as to which such REO Property an REO Disposition
did not occur during the related Prepayment Period, an amount equal to the
excess, if any, of the Monthly Payments (with each interest portion thereof
net of the related Servicing Fee) that would have been due on the related Due
Date in respect of the related Mortgage Loans, over the net income from such
REO Property transferred to the Distribution Account pursuant to Section 3.23
for distribution on such Distribution Date.
On or before 3:00 p.m. New York time on the Servicer Remittance
Date, each Servicer shall remit in immediately available funds to the Trustee
for deposit in the Distribution Account an amount equal to the aggregate
amount of P&I Advances, if any, to be made in respect of the related Mortgage
Loans and REO Properties for the related Distribution Date either (i) from its
own funds or (ii) from the Collection Account, to the extent of funds held
therein for future distribution (in which case, it will cause to be made an
appropriate entry in the records of the Collection Account that amounts held
for future distribution have been, as permitted by this Section 4.03, used by
such Servicer in discharge of any such P&I Advance) or (iii) in the form of
any combination of (i) and (ii) aggregating the total amount of P&I Advances
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to be made by such Servicer with respect to the Mortgage Loans and REO
Properties. Any amounts held for future distribution and so used shall be
appropriately reflected in the related Servicer's records and replaced by such
Servicer by deposit in the Collection Account on or before the next succeeding
Servicer Remittance Date. The Trustee will provide notice to the applicable
Servicer by telecopy by the close of business on any Servicer Remittance Date
in the event that the amount remitted by such Servicer to the Trustee on such
date is less than the P&I Advances required to be made by such Servicer for
such Distribution Date. Nothing in this Section 4.03(b) shall be construed to
prohibit the related Servicer from reimbursing itself at any time from the
Collection Account to the extent provided in Section 3.11 herein.
(c) The obligation of each Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject
to (d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from the Trust Fund pursuant to any applicable provision of
this Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I Advance
or Servicing Advance shall be required to be made hereunder by any Servicer if
such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance. The
determination by the related Servicer that it has made a Nonrecoverable P&I
Advance or a Nonrecoverable Servicing Advance or that any proposed P&I Advance
or Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance
or a Nonrecoverable Servicing Advance, respectively, shall be evidenced by an
Officers' Certificate of such Servicer delivered to the Depositor and the
Trustee.
SECTION 4.04. Allocation of Realized Losses.
(a) Prior to each Determination Date, each Servicer shall determine
as to each Mortgage Loan and REO Property: (i) the total amount of Realized
Losses, if any, incurred in connection with any Final Recovery Determinations
made during the related Prepayment Period; (ii) whether and the extent to
which such Realized Losses constituted Bankruptcy Losses and (iii) the
respective portions of such Realized Losses allocable to interest and
allocable to principal. Prior to each Determination Date, each Servicer shall
also determine as to each related Mortgage Loan: (A) the total amount of
Realized Losses, if any, incurred in connection with any Deficient Valuations
made during the related Prepayment Period and (B) the total amount of Realized
Losses, if any, incurred in connection with Debt Service Reductions in respect
of Monthly Payments due during the related Due Period. The information
described in the two preceding sentences that is to be supplied by each
Servicer shall be evidenced by an Officers' Certificate delivered to the
Trustee by such Servicer prior to the Determination Date immediately following
the end of (x) in the case of Bankruptcy Losses allocable to interest, the Due
Period during which any such Realized Loss was incurred, and (y) in the case
of all other Realized Losses, the Prepayment Period during which any such
Realized Loss was incurred.
(b) Realized Losses on the Mortgage Loans shall be allocated by the
Trustee on each Distribution Date as follows: first, to Net Monthly Excess
Cashflow; and second, to the Class X Certificates, until the
Overcollateralized Amount thereof has been reduced to zero. Thereafter, any
Applied Realized Loss Amounts shall be allocated; first, to the Class B
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Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; second, to the Class M2 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and third, to the Class M1
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero. All Realized Losses to be allocated to the Certificate Principal
Balances of all Classes on any Distribution Date shall be so allocated after
the actual distributions to be made on such date as provided above. All
references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof
by any Realized Losses, in each case to be allocated to such Class of
Certificates, on such Distribution Date.
Any allocation of Realized Losses to a Subordinated Certificate on
any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated, or in the case of a Class X
Certificate, by reducing the amount otherwise payable in respect thereof
pursuant to Section 4.01(a)(3)(xv). No allocations of any Realized Losses
shall be made to the Certificate Principal Balances of the Class A
Certificates or the Class P Certificates. 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
then 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.
SECTION 4.05. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event
the Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to
such Certificateholders.
SECTION 4.06. Commission Reporting.
Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards, file with the Commission via the
Electronic Data Gathering and Retrieval System, a Form 8-K with a copy of the
statement to Certificateholders for such Distribution Date as an exhibit
thereto. Prior to January 31, 2003, the Trustee shall in accordance with
industry standards file a Form 15 Suspension Notification with respect to the
Trust Fund, if applicable. Prior to March 31, 2003, the Trustee shall file a
Form 10-K, in substance conforming to industry standards, with respect to the
Trust Fund. The Depositor hereby grants to the Trustee a limited power of
attorney to execute and file each such document on behalf of the Depositor.
Such power of attorney shall continue until the earlier of (i) receipt by the
Trustee from the Depositor of written termination of such power of attorney
and (ii) the termination of the Trust Fund. The Depositor agrees to promptly
furnish to the Trustee, from time to time upon request, such further
information, reports and financial statements within its control related to
this Agreement and the
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Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Trustee shall have no
responsibility to file any items other than those specified in this Section.
SECTION 4.07. Early Termination Fund.
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Class X Certificates,
the Early Termination Fund. The Early Termination Fund shall be an Eligible
Account, and funds on deposit therein shall be held separate and apart from,
and shall not be commingled with, any other moneys, including without
limitation, other moneys held by the Trustee pursuant to this Agreement.
(b) On the Closing Date, $1,000 will be deposited by the Depositor
into the Early Termination Fund. On each Distribution Date, the Trustee shall
transfer from the Distribution Account to the Early Termination Fund pursuant
to Section 4.01(a)(3)(xvi) any amount required to be deposited therein.
Amounts on deposit in the Early Termination Fund can be withdrawn by the
Trustee and paid to the Counterparty to the extent of any Termination Payments
or Carryover Termination Payments owed by the Trust to the Counterparty
resulting solely from a default of the Trust under the Yield Maintenance
Agreement where the Trust is the sole affected party.
(c) Funds in the Early Termination Fund may be invested in Eligible
Investments by the Trustee at the direction of the holders of the Class X
Certificates maturing on or prior to the next succeeding Distribution Date.
Any net investment earnings on such amounts shall be payable to the holders of
the Class X Certificates. The Trustee shall account for the Early Termination
Fund as an outside reserve fund within the meaning of Treasury regulation
1.860G-2(h) and not an asset of any REMIC created pursuant to this Agreement.
The Class X Certificates shall evidence ownership of the Early Termination
Fund for federal tax purposes and the Holders thereof shall direct the Trustee
in writing as to the investment of amounts therein. The Trustee shall treat
amounts transferred by the Master REMIC to the Early Termination Fund as
distributions to the Class X Certificateholder for all Federal tax purposes.
In the absence of such written direction, all funds in the Early Termination
Fund shall remain uninvested. The Trustee shall have no liability for losses
on investments in Eligible Investments made pursuant to the Section 4.07(c)
(other than as obligor on such investments). Upon termination of the Trust
Fund, any amounts remaining in the Early Termination Fund shall be distributed
to the Holders of the Class X Certificates.
(d) On the Distribution Date immediately after the Distribution Date
on which the Yield Maintenance Agreement is terminated, any amounts on deposit
in the Early Termination Fund not payable to the Counterparty shall be
distributed to the Holders of the Class X Certificates.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in the Trust Fund. The Certificates of each Class will be
substantially in the forms annexed hereto as Exhibits A-1 through A-9 and will
be issuable in registered form only. Each Certificate will share ratably in
all rights of the related Class.
The LIBOR Certificates are issuable only in minimum denominations
corresponding to minimum initial Certificate Principal Balances of $50,000 and
integral multiples of $1,000 in excess thereof, except that one investor in
each Class of such Certificates may hold a beneficial interest in that Class
of Certificates that is not an integral multiple of $1,000. The Class P
Certificates are issuable only in minimum denominations corresponding to
minimum initial Certificate Principal Balances of $20 and integral multiples
thereof. The Class X Certificates are issuable only in minimum denominations
corresponding to a minimum initial Notional Amount of $100,000 and integral
multiples of $1,000 in excess thereof. The Class A-IO and Class B-IO
Certificates are each issuable only in minimum denominations corresponding to
the respective minimal initial Notional Amount of $100,000 and integral
multiples of $1,000 in excess thereof, except that one investor in the Class
A-IO Certificates may hold a beneficial interest in the Class A-IO
Certificates that is not an intergral multiple of $1,000. The Residual
Certificates are issuable in minimum denominations corresponding to minimum
Percentage Interests of 20% and multiples thereof.
Upon original issue, the Certificates shall be executed and
delivered by the Trustee and the Trustee shall cause the Certificates to be
authenticated by the Certificate Registrar to or upon the order of the
Depositor. The Certificates shall be executed and attested by manual or
facsimile signature on behalf of the Trustee by an authorized signatory.
Certificates bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such Certificates. No Certificate shall
be entitled to any benefit under this Agreement or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided herein executed by the Certificate
Registrar by manual signature, and such certificate of authentication shall be
conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication.
(b) The Offered Certificates shall initially be issued as one or
more Certificates held by the Book-Entry Custodian or, if appointed to hold
such Certificates as provided below, the Depository and registered in the name
of the Depository or its nominee and, except as provided below, registration
of such Certificates may not be transferred by the Trustee except to another
Depository that agrees to hold such Certificates for the respective
Certificate Owners with Ownership Interests therein. The Certificate Owners
shall hold their respective Ownership
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Interests in and to such Certificates through the book-entry facilities of the
Depository and, except as provided below, shall not be entitled to definitive,
fully registered Certificates ("Definitive Certificates") in respect of such
Ownership Interests. All transfers by Certificate Owners of their respective
Ownership Interests in the Book-Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage
firm representing such Certificate Owner. Each Depository Participant shall
only transfer the Ownership Interests in the Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures. The Trustee is
hereby initially appointed as the Book-Entry Custodian and hereby agrees to
act as such in accordance herewith and in accordance with the agreement that
it has with the Depository authorizing it to act as such. The Book-Entry
Custodian may, and if it is no longer qualified to act as such, the Book-Entry
Custodian shall, appoint, by a written instrument delivered to the Depositor,
each Servicer, the Trustee (if the Trustee is not the Book-Entry Custodian)
and any other transfer agent (including the Depository or any successor
Depository) to act as Book-Entry Custodian under such conditions as the
predecessor Book-Entry Custodian and the Depository or any successor
Depository may prescribe, provided that the predecessor Book-Entry Custodian
shall not be relieved of any of its duties or responsibilities by reason of
any such appointment of other than the Depository. If the Trustee resigns or
is removed in accordance with the terms hereof, the successor trustee or, if
it so elects, the Depository shall immediately succeed to its predecessor's
duties as Book-Entry Custodian. The Depositor shall have the right to inspect,
and to obtain copies of, any Certificates held as Book-Entry Certificates by
the Book-Entry Custodian.
The Trustee, each Servicer and the Depositor may for all purposes
(including the making of payments due on the Book-Entry Certificates) deal
with the Depository as the authorized representative of the Certificate Owners
with respect to the Book-Entry Certificates for the purposes of exercising the
rights of Certificateholders hereunder. The rights of Certificate Owners with
respect to the Book-Entry Certificates shall be limited to those established
by law and agreements between such Certificate Owners and the Depository
Participants and brokerage firms representing such Certificate Owners.
Multiple requests and directions from, and votes of, the Depository as Holder
of the Book-Entry Certificates with respect to any particular matter shall not
be deemed inconsistent if they are made with respect to different Certificate
Owners. The Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and shall give
notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository or (iii) after the occurrence of a Servicer Event of Default,
Certificate Owners representing in the aggregate not less than 51% of the
Ownership Interests of the Book-Entry Certificates advise the Trustee through
the Depository, in writing, that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Certificate
Owners, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Book-Entry
Custodian or the Depository, as
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applicable, accompanied by registration instructions from the Depository for
registration of transfer, the Trustee shall issue the Definitive Certificates.
Such Definitive Certificates will be issued in minimum denominations of
$50,000, except that any beneficial ownership that was represented by a
Book-Entry Certificate in an amount less than $50,000 immediately prior to the
issuance of a Definitive Certificate shall be issued in a minimum denomination
equal to the amount represented by such Book-Entry Certificate. None of the
Depositor, any Servicer or the Trustee shall be liable for any delay in the
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed
by the Trustee, to the extent applicable with respect to such Definitive
Certificates, and the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
SECTION 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register for the Certificates in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee will initially serve as
Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided. The Certificate
Registrar may appoint, by a written instrument delivered to the Trustee, each
Servicer and the Depositor, any other bank or trust company to act as
Certificate Registrar under such conditions as the predecessor Certificate
Registrar may prescribe, provided that the predecessor Certificate Registrar
shall not be relieved of any of its duties or responsibilities hereunder by
reason of such appointment. If the Trustee shall at any time not be the
Certificate Registrar, the Trustee shall have and maintain the right to
inspect the Certificate Register or to obtain a copy thereof at all reasonable
times, and to rely conclusively upon a certificate of the Certificate
Registrar as to the information set forth in the Certificate Register.
(b) No transfer of any Class X Certificate, Class B-IO Certificates,
Class P Certificate or Residual Certificate shall be made unless that transfer
is made pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of a Class X Certificate, Class B-IO Certificates,
Class P Certificate or Residual Certificate is to be made without registration
or qualification (other than in connection with the initial transfer of any
such Certificate by the Depositor to the Seller or by the Seller to an
affiliate of the Seller or to a trust, the depositor of which is an affiliate
of the Seller), the Trustee and the Certificate Registrar shall each require
receipt of: either (i) written certifications from the Certificateholder
desiring to effect the transfer and from such Certificateholder's prospective
transferee, substantially in the forms attached hereto as Exhibit F-1 or (ii)
an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration or qualification (which Opinion of Counsel shall not
be an expense of the Depositor, the Trustee, any Servicer, the Certificate
Registrar or the Trust Fund). None of the Depositor, the Certificate Registrar
or the Trustee is obligated to register or qualify the Class X Certificates,
Class B-IO Certificates, the Class P Certificates or the Residual Certificates
under the 1933 Act or any other securities laws
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or to take any action not otherwise required under this Agreement to permit
the transfer of such Certificates without registration or qualification. Any
Certificateholder desiring to effect the transfer of a Class X Certificate, a
Class B-IO Certificate, a Class P Certificate or a Residual Certificate shall,
and does hereby agree to, indemnify the Trustee, the Depositor, the
Certificate Registrar and each 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.
(c) (i) No transfer of a Class X Certificate, a Class B-IO
Certificate, Class P Certificate or Residual Certificate or any interest
therein shall be made to any Plan, any Person acting, directly or indirectly,
on behalf of any such Plan or any Person (other than in connection with the
initial transfer of any such Certificate by the Depositor to the Seller or by
the Seller to an affiliate of the Seller or to a trust, the depositor of which
is an affiliate of the Seller) acquiring such Certificates with "plan assets"
of a Plan within the meaning of the Department of Labor regulation promulgated
at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") or as determined under other
applicable law unless the Depositor, the Trustee and each Servicer are
provided with an Opinion of Counsel which establishes to the satisfaction of
the Depositor, the Trustee and the Servicers that the purchase of such
Certificates is permissible under applicable law, will not constitute or
result in any prohibited transaction under ERISA or Section 4975 of the Code
and will not subject the Depositor, any Servicer, the Trustee or the Trust
Fund to any obligation or liability (including obligations or liabilities
under ERISA or Section 4975 of the Code) in addition to those undertaken in
this Agreement, which Opinion of Counsel shall not be an expense of the
Depositor, any Servicer, the Trustee or the Trust Fund. Neither an Opinion of
Counsel nor any certification will be required in connection with the initial
transfer of any such Certificate by the Depositor to an affiliate of the
Depositor (in which case, the Depositor or any affiliate thereof shall be
deemed to have represented that such affiliate is not a Plan or a Person
investing Plan Assets) and the Trustee shall be entitled to conclusively rely
upon a representation (which, upon the request of the Trustee, shall be a
written representation) from the Depositor of the status of such transferee as
an affiliate of the Depositor.
(ii) No transfer of a Class A, Class A-IO, Class M-1, Class M-2 or
Class B Certificate or any interest therein shall be made to any Plan, any
Person acting, directly or indirectly on behalf of any Plan or any Person
acquiring such Certificates with "Plan Assets" of a Plan unless such Plan is a
Qualified Plan Investor. Each Person that acquires a Class A, Class A-IO,
Class M-1, Class M-2 or Class B Certificate that is a Book Entry Certificate
will be deemed to represent that either (a) it is not a Plan or a Person
acting, directly or indirectly, on behalf of a Plan, and is not acquiring the
Certificates with "plan assets" of a Plan, or (b) it, or each Plan on behalf
of which it is acquiring a Certificate or an interest therein, is a Qualified
Plan Investor.
(iii) If any Certificate or any interest therein is acquired or held
in violation of the provisions of Section 5.02(c)(i) or (ii), the next
preceding permitted beneficial owner will be treated as the beneficial owner
of that Certificate retroactive to the date of transfer to the purported
beneficial owner. Any purported beneficial owner whose acquisition or holding
of any such Certificate or interest therein was effected in violation of the
provisions of the preceding paragraph shall indemnify and hold harmless the
Depositor, any Servicer, the Trustee, the Certificate Registrar, the
Underwriters and the Trust Fund from and against any and all liabilities,
claims, costs or expenses incurred by those parties as a result of that
acquisition or holding.
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(d) (i) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following provisions
and to have irrevocably authorized the Trustee or its designee under clause
(iii)(A) below to deliver payments to a Person other than such Person and to
negotiate the terms of any mandatory sale under clause (iii)(B) below and to
execute all instruments of Transfer and to do all other things necessary in
connection with any such sale. The rights of each Person acquiring any
Ownership Interest in a Residual Certificate are expressly subject to the
following provisions:
(A) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall be a Permitted
Transferee and shall promptly notify the Trustee of any change
or impending change in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any
Ownership Interest in a Residual Certificate, the Trustee shall
require delivery to it and shall not register the Transfer of
any Residual Certificate until its receipt of an affidavit and
agreement (a "Transfer Affidavit and Agreement"), in the form
attached hereto as Exhibit F-2 from the proposed Transferee,
representing and warranting, among other things, that such
Transferee is a Permitted Transferee, that it is not acquiring
its Ownership Interest in the Residual Certificate that is the
subject of the proposed Transfer as a nominee, trustee or agent
for any Person that is not a Permitted Transferee, that for so
long as it retains its Ownership Interest in a Residual
Certificate, it will endeavor to remain a Permitted Transferee,
and that it has reviewed the provisions of this Section 5.02(d)
and agrees to be bound by them.
(C) Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee under clause (B) above,
if a Responsible Officer of the Trustee who is assigned to this
transaction has actual knowledge that the proposed Transferee
is not a Permitted Transferee, no Transfer of an Ownership
Interest in a Residual Certificate to such proposed Transferee
shall be effected.
(D) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall agree (x) to require a
Transfer Affidavit and Agreement in the form attached hereto as
Exhibit F-2 ) from any other Person to whom such Person
attempts to transfer its Ownership Interest in a Residual
Certificate and (y) not to transfer its Ownership Interest
unless it provides a Transferor Affidavit (in the form attached
hereto as Exhibit F-2) to the Trustee stating that, among other
things, it has no actual knowledge that such other Person is
not a Permitted Transferee.
(E) Each Person holding or acquiring an Ownership Interest
in a Residual Certificate, by purchasing an Ownership Interest
in such Certificate, agrees to give the Trustee written notice
that it is a "pass-through interest holder" within the meaning
of temporary Treasury regulation Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring an Ownership Interest in a Residual
Certificate, if it
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is, or is holding an Ownership Interest in a Residual
Certificate on behalf of, a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any Residual
Certificate only if it shall have received the Transfer Affidavit and
Agreement and all of such other documents as shall have been reasonably
required by the Trustee as a condition to such registration. In addition, no
Transfer of a Residual Certificate shall be made unless the Trustee shall have
received a representation letter from the Transferee of such Certificate to
the effect that such Transferee is a Permitted Transferee.
(iii) (A) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the provisions of this Section 5.02(d),
then the last preceding Permitted Transferee shall be restored, to the extent
permitted by law, to all rights as holder thereof retroactive to the date of
registration of such Transfer of such Residual Certificate. The Trustee shall
be under no liability to any Person for any registration of Transfer of a
Residual Certificate that is in fact not permitted by this Section 5.02(d) or
for making any payments due on such Certificate to the holder thereof or for
taking any other action with respect to such holder under the provisions of
this Agreement.
(B) If any purported Transferee shall become a holder of a
Residual Certificate in violation of the restrictions in
this Section 5.02(d) and to the extent that the
retroactive restoration of the rights of the holder of
such Residual Certificate as described in clause (iii)(A)
above shall be invalid, illegal or unenforceable, then the
Trustee shall have the right, without notice to the holder
or any prior holder of such Residual Certificate, to sell
such Residual Certificate to a purchaser selected by the
Trustee on such terms as the Trustee may choose. Such
purported Transferee shall promptly endorse and deliver
each Residual Certificate in accordance with the
instructions of the Trustee. Such purchaser may be the
Trustee itself or any Affiliate of the Trustee. The
proceeds of such sale, net of the commissions (which may
include commissions payable to the Trustee or its
Affiliates), expenses and taxes due, if any, will be
remitted by the Trustee to such purported Transferee. The
terms and conditions of any sale under this clause
(iii)(B) shall be determined in the sole discretion of the
Trustee, and the Trustee shall not be liable to any Person
having an Ownership Interest in a Residual Certificate as
a result of its exercise of such discretion.
(iv) The Trustee shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions all information
necessary to compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Residual Certificate to any Person who is a
Disqualified Organization, including the information described in Treasury
regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the
"excess inclusions" of such Residual Certificate and (B) as a result of any
regulated investment company, real estate investment trust, common trust fund,
partnership, trust, estate or organization described in Section 1381 of the
Code that holds an Ownership Interest in a Residual Certificate having as
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among its record holders at any time any Person which is a Disqualified
Organization. Such information shall be provided by the Trustee upon receipt
of reasonable compensation.
(v) The provisions of this Section 5.02(d) set forth prior to this
subsection (v) may be modified, added to or eliminated, provided that there
shall have been delivered to the Trustee and the Certificate Registrar at the
expense of the party seeking to modify, add to or eliminate any such provision
the following:
(A) written notification from each Rating Agency to the
effect that the modification, addition to or elimination of
such provisions will not cause such Rating Agency to downgrade
its then-current ratings of any Class of Certificates; and
(B) an Opinion of Counsel, in form and substance
satisfactory to the Trustee and the Certificate Registrar, to
the effect that such modification of, addition to or
elimination of such provisions will not cause any REMIC created
hereunder to cease to qualify as a REMIC and will not cause any
REMIC created hereunder, as the case may be, to be subject to
an entity-level tax caused by the Transfer of any Residual
Certificate to a Person that is not a Permitted Transferee or
(y) a Person other than the prospective transferee to be
subject to a REMIC-tax caused by the Transfer of a Residual
Certificate to a Person that is not a Permitted Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.12, the Trustee
shall execute and the Certificate Registrar shall authenticate and deliver, in
the name of the designated Transferee or Transferees, one or more new
Certificates of the same Class of a like aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may be
exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.12. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and the Certificate
Registrar shall authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder thereof or his attorney
duly authorized in writing.
(g) No service charge to the Certificateholders shall be made for
any transfer or exchange of Certificates, but the Trustee may require payment
of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange shall be
canceled and destroyed by the Certificate Registrar in accordance with its
customary procedures.
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(i) The Trustee will cause the Certificate Registrar (unless the
Trustee is acting as Certificate Registrar) to provide notice to the Trustee
of each transfer of a Certificate and to provide the Trustee with an updated
copy of the Certificate Registrar on the first Business Day in January of each
year, commencing in January 2003.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee or
the Certificate Registrar, or the Trustee and the Certificate Registrar
receive evidence to their satisfaction of the destruction, loss or theft of
any Certificate, and (ii) there is delivered to the Trustee and the
Certificate Registrar such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of actual knowledge by the
Trustee or the Certificate Registrar that such Certificate has been acquired
by a bona fide purchaser, the Trustee shall execute and the Certificate
Registrar shall deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the same Class and
of like denomination and Percentage Interest. Upon the issuance of any new
Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Certificate Registrar) connected therewith. Any replacement Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the applicable REMIC created hereunder, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Depositor, each Servicer, the Trustee, the Certificate Registrar
and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Depositor, any Servicer, the Trustee, the
Certificate Registrar or any agent of any of them shall be affected by notice
to the contrary.
SECTION 5.05. Certain Available Information.
On or prior to the date of the first sale of any Class X
Certificate, Class B-IO, Class P Certificate or Residual Certificate to an
Independent third party, the Depositor shall provide to the Trustee ten copies
of any private placement memorandum or other disclosure document used by the
Depositor in connection with the offer and sale of such Certificates. In
addition, if any such private placement memorandum or disclosure document is
revised, amended or supplemented at any time following the delivery thereof to
the Trustee, the Depositor promptly shall inform the Trustee of such event and
shall deliver to the Trustee ten copies of the private placement memorandum or
disclosure document, as revised, amended or supplemented. The Trustee shall
maintain at its Corporate Trust Office and shall make available free of charge
during normal business hours for review by any Holder of a Certificate or any
Person identified to the Trustee as a prospective transferee of a Certificate,
originals or copies of the following items: (i) in the case of a Holder or
prospective transferee of a Class X Certificate, a Class B-IO Certificate, a
Class P Certificate or a Residual Certificate, the related private placement
memorandum or other disclosure document relating to such Certificates, if any,
in the
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form most recently provided to the Trustee; and (ii) in all cases, (A)
this Agreement and any amendments hereof entered into pursuant to Section
11.01, (B) all monthly statements required to be delivered to
Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class
pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trustee since the Closing Date
pursuant to Section 10.01(h), (D) any and all Officers' Certificates delivered
to the Trustee by a Servicer since the Closing Date to evidence such
Servicer's determination that any P&I Advance was, or if made, would be a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively,
and (E) any and all Officers' Certificates delivered to the Trustee by any
Servicer since the Closing Date pursuant to Section 4.04(a). Copies and
mailing of any and all of the foregoing items will be available from the
Trustee upon request at the expense of the person requesting the same.
ARTICLE VI
THE DEPOSITOR AND THE SERVICERS
SECTION 6.01. Liability of the Depositor and the Servicers.
The Depositor and each Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed by this
Agreement and undertaken hereunder by the Depositor and such Servicer herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the
Servicers.
Subject to the following paragraph, the Depositor will keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation. Subject to the following paragraph,
each Servicer will keep in full effect its existence, rights and franchises as
a corporation under the laws of the jurisdiction of its incorporation and its
qualification as an approved conventional seller/servicer for Xxxxxx Xxx or
Xxxxxxx Mac in good standing. The Depositor and each Servicer will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect
the validity and enforceability of this Agreement, the Certificates or any of
the Mortgage Loans and to perform its respective duties under this Agreement.
The Depositor or any Servicer may be merged or consolidated with or
into any Person, or transfer all or substantially all of its assets to any
Person, in which case any Person resulting from any merger or consolidation to
which the Depositor or such Servicer shall be a party, or any Person
succeeding to the business of the Depositor or such Servicer, shall be the
successor of the Depositor or such Servicer, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to such Servicer
shall be a servicer of Mortgage Loans on behalf of Xxxxxx Mae or Xxxxxxx Mac;
and provided further that the Rating Agencies' ratings of the Certificates in
effect immediately prior
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to such merger or consolidation will not be qualified, reduced or withdrawn as
a result thereof (as evidenced by a letter to such effect from the Rating
Agencies).
SECTION 6.03. Limitation on Liability of the Depositor, the
Servicers and Others.
None of the Depositor, any Servicer or any of the directors,
officers, employees or agents of the Depositor or any 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, any Servicer or any such person against any
breach of warranties, representations or covenants made herein, or against any
specific liability imposed on any Servicer pursuant hereto, or against any
liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, any Servicer and
any director, officer, employee or agent of the Depositor or any Servicer may
rely in good faith on any document of any kind which, prima facie, is properly
executed and submitted by any Person respecting any matters arising hereunder.
The Depositor, any Servicer and any director, officer, employee or agent of
the Depositor or any Servicer shall be indemnified and held harmless by the
Trust Fund against any loss, liability or expense incurred in connection with
any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense relating to any specific Mortgage Loan or
Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) or any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor any Servicer shall
be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under this Agreement
and, in its opinion, does not involve it in any expense or liability;
provided, however, that each of the Depositor and either Servicer may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, unless
the Depositor or any Servicer acts without the consent of Holders of
Certificates entitled to at least 51% of the Voting Rights (which consent
shall not be necessary in the case of litigation or other legal action by
either to enforce their respective rights or defend themselves hereunder), the
legal expenses and costs of such action and any liability resulting therefrom
(except any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder) shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor and each
Servicer shall be entitled to be reimbursed therefor from the Collection
Account as and to the extent provided in Section 3.11, any such right of
reimbursement being prior to the rights of the Certificateholders to receive
any amount in the Collection Account.
SECTION 6.04. Limitation on Resignation of the Servicers.
No Servicer shall resign from the obligations and duties hereby
imposed on it except (i) upon determination that its duties hereunder are no
longer permissible under applicable law or (ii) with the written consent of
the Trustee and written confirmation from each Rating
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Agency (which confirmation shall be furnished to the Depositor and the
Trustee) that such resignation will not cause such Rating Agency to reduce the
then current rating of the Offered Certificates. Any such determination
pursuant to clause (i) of the preceding sentence permitting the resignation of
any Servicer shall be evidenced by an Opinion of Counsel to such effect
obtained at the expense of the related Servicer and delivered to the Trustee.
No resignation of a Servicer shall become effective until the Trustee or a
successor servicer shall have assumed the related Servicer's responsibilities,
duties, liabilities (other than those liabilities arising prior to the
appointment of such successor) and obligations under this Agreement.
Except as expressly provided herein, no Servicer shall assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, nor delegate to or subcontract with, nor authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by such Servicer hereunder. The foregoing prohibition on assignment
shall not prohibit any Servicer from designating a Sub-Servicer as payee of
any indemnification amount payable to such Servicer hereunder; provided,
however, that as provided in Section 3.06 hereof, no Sub-Servicer shall be a
third-party beneficiary hereunder and the parties hereto shall not be required
to recognize any Sub-Servicer as an Indemnitee under this Agreement. If,
pursuant to any provision hereof, the duties of any Servicer are transferred
to a successor Servicer, the entire amount of the Servicing Fee and other
compensation payable to such Servicer pursuant hereto shall thereafter be
payable to such successor Servicer.
SECTION 6.05. Rights of the Depositor in Respect of the Servicers.
Each Servicer shall afford (and any Sub-Servicing Agreement shall
provide that each Sub-Servicer shall afford) the Depositor and the Trustee,
upon reasonable notice, during normal business hours, access to all records
maintained by such Servicer (and any such Sub-Servicer) in respect of such
Servicer's rights and obligations hereunder and access to officers of such
Servicer (and those of any such Sub-Servicer) responsible for such
obligations. Upon request, each Servicer shall furnish to the Depositor and
the Trustee its (and any such Sub-Servicer's) most recent financial statements
and such other information relating to such Servicer's capacity to perform its
obligations under this Agreement that it possesses. To the extent such
information is not otherwise available to the public, the Depositor and the
Trustee shall not disseminate any information obtained pursuant to the
preceding two sentences without the related Servicer's (or any such
Sub-Servicer's) written consent, except as required pursuant to this Agreement
or to the extent that it is necessary to do so (i) in working with legal
counsel, auditors, taxing authorities or other governmental agencies, rating
agencies or reinsurers or (ii) pursuant to any law, rule, regulation, order,
judgment, writ, injunction or decree of any court or governmental authority
having jurisdiction over the Depositor, the Trustee or the Trust Fund, and in
either case, the Depositor or the Trustee, as the case may be, shall use its
best efforts to assure the confidentiality of any such disseminated non-public
information. The Depositor may, but is not obligated to, enforce the
obligations of any Servicer under this Agreement and may, but is not obligated
to, perform, or cause a designee to perform, any defaulted obligation of any
Servicer under this Agreement or exercise the rights of any Servicer under
this Agreement; provided that no Servicer shall be relieved of any of its
obligations under this Agreement by virtue of such performance by the
Depositor or its designee. The Depositor shall not have any responsibility or
liability for any action or failure to act by any Servicer and is not
obligated to supervise the performance of any Servicer under this Agreement or
otherwise.
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ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Default.
(a) "Servicer Event of Default," means any one of the following
events with respect to the related Servicer:
(i) any failure by a Servicer to remit to the Trustee for
distribution to the Certificateholders any payment (other than
Advances that are required to be made from its own funds) which
continues unremedied for a period of one Business Day after the date
upon which written notice of such failure, requiring the same to be
remedied, shall have been given to such Servicer by the Depositor or
the Trustee, or to such Servicer, the Depositor and the Trustee by
the Holders of Certificates entitled to at least 25% of the Voting
Rights; or
(ii) any failure on the part of a Servicer duly to observe or
perform in any material respect any of the covenants or agreements
on the part of such Servicer contained this Agreement which
continues unremedied for a period of 45 days after the earlier of
(x) the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to such Servicer by the
Depositor or the Trustee, or to such Servicer, the Depositor and the
Trustee by the Holders of Certificates entitled to at least 25% of
the Voting Rights and (y) actual knowledge of such failure by a
Servicing Officer of such Servicer; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency
or similar law or the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceeding, or for the winding-up
or liquidation of its affairs, shall have been entered against a
Servicer and if such proceeding is being contested by such Servicer
in good faith, such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days or results in the
entry of an order for relief or any such adjudication or
appointment; or
(iv) a Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to it or of or relating to all or
substantially all of its property; or
(v) a Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations;
(vi) any failure by a Servicer of the related Servicer
Termination Test; or
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(vii) any failure of a Servicer to make any P&I Advance on the
Servicer Remittance Date required to be made from its own funds
pursuant to Section 4.03 which continues unremedied until 3:00 p.m.
New York time on the Business Day immediately following the date
upon which written notice of such failure, requiring the same to be
remedied, has been given to such Servicer by the Depositor or the
Trustee (in which case notice shall be provided by telecopy).
If a Servicer Event of Default described in clauses (i) through (vi)
of this Section shall occur with respect to a Servicer, then, and in each and
every such case, so long as a Servicer Event of Default shall not have been
remedied, the Depositor or the Trustee may, and at the written direction of
the Holders of Certificates entitled to at least 51% of Voting Rights, the
Trustee shall, by notice in writing to the defaulting Servicer (and to the
Depositor if given by the Trustee or to the Trustee if given by the
Depositor), terminate all of the rights and obligations of such Servicer in
its capacity as a Servicer under this Agreement, to the extent permitted by
law, and in and to the Mortgage Loans and the proceeds thereof. If a Servicer
Event of Default described in clause (vii) hereof shall occur, the Trustee
shall, by notice in writing to the defaulting Servicer, the Depositor and the
Trustee, terminate all of the rights and obligations of such Servicer in its
capacity as a Servicer under this Agreement and in and to the Mortgage Loans
and the proceeds thereof, provided, however, that such Servicer shall continue
to be entitled to receive all amounts accrued or owing to it under this
Agreement and shall be reimbursed, prior to the transfer of servicing, all
outstanding P&I Advances, Servicing Advances and accrued and unpaid Servicing
Fees owed to it prior to the date of termination and shall continue to be
entitled to the benefits of Section 6.03, notwithstanding any such
termination, with respect to events occurring prior to such termination.
(b) [reserved].
(c) On or after the receipt by the defaulting Servicer of such
written notice, all authority and power of such Servicer under this Agreement,
whether with respect to the Certificates (other than as a Holder of any
Certificate) or the Mortgage Loans or otherwise, shall pass to and be vested
in the Trustee pursuant to and under this Section and, without limitation, the
Trustee is hereby authorized and empowered, as attorney-in-fact or otherwise,
to execute and deliver on behalf of and at the expense of such Servicer, any
and all documents and other instruments and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. The defaulting
Servicer agrees, at its sole cost and expense, promptly (and in any event no
later than ten Business Days subsequent to such notice) to provide the Trustee
with all documents and records requested by it to enable it to assume such
Servicer's functions under this Agreement, and to cooperate with the Trustee
in effecting the termination of such Servicer's responsibilities and rights
under this Agreement, including, without limitation, the transfer within one
Business Day to the Trustee for administration by it of all cash amounts which
at the time shall be or should have been credited by such Servicer to the
Collection Account held by or on behalf of such Servicer, the Distribution
Account or any REO Account or Servicing Account held by or on behalf of such
Servicer or thereafter be received with respect to the Mortgage Loans or any
REO Property. For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of a Servicer Event of Default unless a Responsible
Officer of the Trustee assigned to and working in the
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Corporate Trust Office has actual knowledge thereof or unless written notice
of any event which is in fact such a Servicer Event of Default is received by
the Trustee and such notice references the Certificates, the Trust Fund or
this Agreement.
The Trustee shall be entitled to be reimbursed by the defaulting
Servicer (or by the Trust Fund if such Servicer is unable to fulfill its
obligations hereunder) for all costs associated with the transfer of servicing
from the predecessor Servicer (or if the predecessor Servicer is the Trustee,
from the applicable Servicer immediately preceding the Trustee), including
without limitation, any costs or expenses associated with the complete
transfer of all servicing data and the completion, correction or manipulation
of such servicing data as may be required by the Trustee to correct any errors
or insufficiencies in the servicing data or otherwise to enable the Trustee to
service the Mortgage Loans properly and effectively, upon presentation of
reasonable documentation of such costs and expenses.
SECTION 7.02. Trustee to Act; Appointment of Successor.
(a) On and after the time a defaulting Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to such
Servicer in its capacity as a Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto and arising
thereafter placed on such Servicer (except for any representations or
warranties of such Servicer under this Agreement, the responsibilities, duties
and liabilities contained in Section 2.03(b) and its obligation to deposit
amounts in respect of losses pursuant to Section 3.12) by the terms and
provisions hereof including, without limitation, such Servicer's obligations
to make P&I Advances pursuant to Section 4.03; provided, however, that if the
Trustee is prohibited by law or regulation from obligating itself to make
advances regarding Delinquent Mortgage Loans, then the Trustee shall not be
obligated to make P&I Advances pursuant to Section 4.03; and provided further,
that any failure to perform such duties or responsibilities caused by such
Servicer's failure to provide information required by Section 7.01 shall not
be considered a default by the Trustee as successor to such Servicer
hereunder; provided, however, it is understood and acknowledged by the parties
that there will be a period of transition (not to exceed 90 days) before the
servicing transfer is fully effected, during which time the terminated
Servicer shall continue all servicing (other than making any required Advance,
which the Trustee shall be required to do, subject to the limitations of this
sentence) of the Mortgage Loans. As compensation therefor, the Trustee shall
be entitled to the Servicing Fee and all funds relating to the Mortgage Loans
to which such Servicer would have been entitled if it had continued to act
hereunder (other than amounts which were due or would become due to such
Servicer prior to its termination or resignation). Notwithstanding anything
herein to the contrary, in no event shall the Trustee be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any successor Servicer to act as
successor Servicer under this Agreement and the transactions set forth or
provided for herein. Notwithstanding the above and subject to the next
paragraph, the Trustee shall, if it is unable to so act or if it is prohibited
by law from making advances regarding Delinquent Mortgage Loans, or if the
Holders of Certificates entitled to at least 51% of the Voting Rights so
request in writing to the Trustee, promptly appoint or petition a court of
competent jurisdiction to appoint, an established Mortgage Loan servicing
institution acceptable to each Rating Agency, having a net worth of not less
than $15,000,000 as the successor to such defaulting Servicer under this
Agreement in the assumption
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of all or any part of the responsibilities, duties or liabilities of such
Servicer under this Agreement. No appointment of a successor to the related
Servicer under this Agreement shall be effective until the assumption by the
successor of all of such Servicer's responsibilities, duties and liabilities
hereunder. In connection with such appointment and assumption described
herein, the Trustee may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the related Servicer as such hereunder. The Depositor, the Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. Pending appointment of a
successor to the defaulting Servicer under this Agreement, the Trustee shall
act in such capacity as hereinabove provided.
Upon removal or resignation of any Servicer, the Trustee, with the
cooperation of the Depositor, (x) may solicit bids for a successor Servicer as
described below and (y) pending the appointment of a successor Servicer as a
result of soliciting such bids, shall serve as Servicer of the Mortgage Loans
serviced by such predecessor Servicer. The Trustee may solicit bids from
housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above (including the Trustee
or any affiliate thereof). Such successor Servicer shall be entitled to the
servicing compensation agreed upon between the Trustee, the successor Servicer
and the Depositor; provided, however, that no such fee shall exceed the
Servicing Fee. The Trustee upon receipt of the purchase price shall pay such
purchase price to the related Servicer being so removed, after deducting from
any sum received by the Trustee from the successor to such Servicer in respect
of such sale, transfer and assignment all costs and expenses of any sale,
transfer and assignment of the servicing rights and responsibilities
reasonably incurred hereunder. After such deductions, the remainder of such
sum shall be paid by the Trustee to such defaulting Servicer at the time of
such sale.
(b) If any Servicer fails to remit to the Trustee for distribution
to the Certificateholders any payment required to be made under the terms of
this Agreement (for purposes of this Section 7.02(b), a "Remittance") because
the related Servicer is the subject of a proceeding under the federal
Bankruptcy Code and the making of such Remittance is prohibited by Section 362
of the federal Bankruptcy Code, the Trustee shall upon notice of such
prohibition, regardless of whether it has received a notice of termination
under Section 7.01, advance the amount of such Remittance by depositing such
amount in the Distribution Account on the related Distribution Date. The
Trustee shall be obligated to make such advance only if (i) such advance, in
the good faith judgment of the Trustee, can reasonably be expected to be
ultimately recoverable from Stayed Funds and (ii) the Trustee is not
prohibited by law from making such advance or obligating itself to do so. Upon
remittance of the Stayed Funds to the Trustee or the deposit thereof in the
Distribution Account by the related Servicer, a trustee in bankruptcy or a
federal bankruptcy court, the Trustee may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trustee's
rights to recover from the related Servicer's own funds interest on the amount
of any such advance. If the Trustee at any time makes an advance under this
Subsection which it later determines in its good faith judgment will not be
ultimately recoverable from the Stayed Funds with respect to which such
advance was made, the Trustee shall be entitled to reimburse itself for such
advance, without interest, by
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withdrawing from the Distribution Account, out of amounts on deposit therein,
an amount equal to the portion of such advance attributable to the Stayed
Funds.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of any Servicer pursuant to Section 7.01
above or any appointment of a successor to such Servicer pursuant to Section
7.02 above, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Not later than the later of 60 days after the occurrence of any
event, which constitutes or which, with notice or lapse of time or both, would
constitute a Servicer Event of Default or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Servicer Event of Default shall have
been cured or waived.
SECTION 7.04. Waiver of Servicer Events of Default.
The Holders representing at least 66% of the Voting Rights evidenced
by all Classes of Certificates affected by any default or Servicer Event of
Default hereunder may waive such default or Servicer Event of Default;
provided, however, that a default or Servicer Event of Default under clause
(i) or (vii) of Section 7.01 may be waived only by all of the Holders of the
Regular Certificates. Upon any such waiver of a default or Servicer Event of
Default, such default or Servicer Event of Default shall cease to exist and
shall be deemed to have been remedied for every purpose hereunder. No such
waiver shall extend to any subsequent or other default or Servicer Event of
Default or impair any right consequent thereon except to the extent expressly
so waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of Default
and after the curing of all Servicer Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Servicer Event of Default,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to it which are specifically required to be furnished pursuant to
any provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take
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such action as it deems appropriate to have the instrument corrected, and if
the instrument is not corrected to its satisfaction, it will provide notice
thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) Prior to the occurrence of a Servicer Event of Default, and
after the curing of all such Servicer Events of Default which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions
furnished to it that conform to the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Certificates entitled to
at least 25% of the Voting Rights relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely conclusively upon and shall be
fully protected in acting or refraining from acting upon any resolution,
Officers' Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) The Trustee shall not be under any obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend
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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 it
security or indemnity satisfactory to it against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of a Servicer Event of Default (which has not been cured or
waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) Prior to the occurrence of a Servicer Event of Default hereunder
and after the curing of all Servicer Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
the Holders of Certificates entitled to at least 25% of the Voting
Rights; provided, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of
the Trustee, not reasonably assured to the Trustee by such
Certificateholders, the Trustee may require reasonable indemnity against
such expense, or liability from such Certificateholders as a condition to
taking any such action;
(vi) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
custodians, nominees or attorneys and shall not be responsible for any
willful misconduct or negligence of such agents, custodians, nominees or
attorneys (as long as such agents, custodians, nominees or attorneys are
appointed with due and proper care);
(vii) The Trustee shall not be personally liable for any loss
resulting from the investment of funds held in the related Collection
Account at the direction of the related Servicer pursuant to Section
3.12; and
(viii) Except as otherwise expressly provided herein, none of the
provisions of this Agreement shall require the Trustee to expend or risk
its own funds or otherwise to incur any liability, financial or
otherwise, in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or indemnity
satisfactory to it against such risk or liability is not assured to it
(not including expenses, disbursements and advances incurred or made by
the Trustee, including the compensation and the expenses and
disbursements of its agents and counsel,
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in the ordinary course of its performance in accordance with the
provisions of this Agreement.)
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial
or other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than
the signature of the Trustee, the authentication of the Certificate Registrar
on the Certificates, the acknowledgments of the Trustee contained in Article
II and the representations and warranties of the Trustee in Section 8.13)
shall be taken as the statements of the Depositor and the Trustee does not
assume any responsibility for their correctness. The Trustee makes no
representations or warranties as to the validity or sufficiency of this
Agreement (other than as specifically set forth in Section 8.13) or of the
Certificates (other than the signature of the Trustee and authentication of
the Certificate Registrar on the Certificates) or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or any Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by any Servicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity may
become the owner or pledgee of Certificates with the same rights it would have
if it were not Trustee.
SECTION 8.05. Fees and Expenses of the Trustee.
(a) As compensation for its duties hereunder, the Trustee shall
withdraw from the Distribution Account on each Distribution Date all income
and gains (net of losses) on amounts on deposit in the Distribution Account.
Subject to Section 8.05(b), the Trustee, or any director, officer, employee or
agent of it, shall be indemnified by the Trust Fund and held harmless against
any loss, liability or expense (not including expenses, disbursements and
advances incurred or made by the Trustee, including the reasonable
compensation and the expenses and disbursements of its agents and counsel, in
the ordinary course of its performance in accordance with the provisions of
this Agreement) incurred by the Trustee in connection with any claim or legal
action or any pending or threatened claim or legal action arising out of or in
connection with the acceptance or administration of its obligations and duties
under this Agreement, other than any loss, liability or expense (i) resulting
from any Servicer's actions or omissions in connection with this Agreement and
the Mortgage Loans, (ii) that constitutes a specific liability of the Trustee
pursuant to Section 10.01(c) or (iii) any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance
of duties hereunder or by reason of reckless disregard of obligations and
duties hereunder or as a result of a breach of the its obligations under
Article X hereof. Any amounts payable to the Trustee, or any director,
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officer, employee or agent of the Trustee, in respect of the indemnification
provided by this paragraph (a), or pursuant to any other right of
reimbursement from the Trust Fund that the Trustee, or any director, officer,
employee or agent of the Trustee, may have hereunder in its capacity as such,
may be withdrawn by the Trustee from the Distribution Account at any time.
Such indemnity shall survive the termination of this Agreement and the
resignation of the Trustee.
(b) As a limitation on the foregoing with respect to certain
expenses of the Trustee in its capacity as Trustee, the Trustee shall receive
from the Trust Fund amounts with respect to indemnification for reasonable
counsel fees and expenses (collectively, "Legal Fees") in connection with any
third-party litigation or other claims alleging violations of laws or
regulations relating to consumer lending and/or servicing of the Trust
(collectively, "Third Party Claims") in an amount not greater than $25,000 per
month, and $600,000 in the aggregate (with amounts in excess of $25,000 for
any month carried-forward to subsequent months, until the $600,000 aggregate
maximum is reached). The amounts, if any, described in the preceding sentence,
shall be paid on each Distribution Date in accordance with the priorities set
forth in Section 4.01(a)(3)(xiv) hereof to the extent of the Available
Distribution Amount. The Trustee shall not have any obligation to incur
additional expenses for which reimbursement is limited pursuant to this
paragraph in excess of the aggregate limit set forth above unless it has
received reasonable security or indemnity for such additional expenses. The
Certificateholders shall hold the Trustee harmless for any consequences to
such Certificateholders resulting from any failure of the Trustee to incur any
such additional expenses in excess of the aforementioned aggregate limit.
(c) Each Servicer agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense resulting from a breach of
the related Servicer's obligations and duties under this Agreement. Such
indemnity shall survive the termination or discharge of this Agreement and the
resignation or removal of the Trustee. Any payment hereunder made by any
Servicer to the Trustee shall be from such Servicer's own funds, without
reimbursement from the Trust Fund therefor.
(d) The Depositor shall pay any annual rating agency fees of S&P,
Xxxxx'x and Fitch for ongoing surveillance from its own funds without right of
reimbursement.
(e) The Trustee shall deliver to the Depositor and each Holder of a
Non-Offered Certificate a report detailing all payments from the Trust Fund
made with respect to Legal Fees on account of Third-Party Claims. The report
shall be delivered monthly, promptly following any month in which such
payments were made.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or an
association (other than the Depositor, the Seller, any Servicer or any
Affiliate of the foregoing) organized and doing business under the laws of any
state or the United States of America, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions
at least annually, pursuant to law or to
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the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of conditions so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 8.07.
SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Depositor, each
Servicer and the Certificateholders. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument
shall be delivered to the Certificateholders and each Servicer by the
Depositor. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Depositor
may remove the Trustee and appoint a successor by written instrument, in
duplicate, which instrument shall be delivered to the Trustee so removed and
to the successor. A copy of such instrument shall be delivered to the
Certificateholders and each Servicer by the Depositor.
The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee and appoint a successor 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 to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Certificateholders and each Servicer by the
Depositor.
Any resignation or removal of the Trustee and appointment of a
successor pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor as provided in
Section 8.08.
SECTION 8.08. Successor Trustee.
Any successor appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor and to its predecessor an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor shall become effective and such successor, 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
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if originally named as trustee herein. The predecessor trustee shall deliver
to its successor all Mortgage Files and related documents and statements, as
well as all moneys, held by it hereunder, and the Depositor and the
predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers,
duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor shall be eligible
under the provisions of Section 8.06 and the appointment of such successor
shall not result in a downgrading of any Class of Certificates by either
Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Depositor shall mail notice of the succession to all Holders
of Certificates at their addresses as shown in the Certificate Register. If
the Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor, the successor shall cause such notice to be
mailed at the expense of the Depositor.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation or association into which the Trustee may be merged
or converted or with which it may be consolidated or any corporation or
association resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation or association succeeding to
the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation or association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing the same may at the time be
located, the applicable 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,
such title to the Trust Fund, or any part thereof, and, subject to the other
provisions of this Section 8.10, such powers, duties, obligations, rights and
trusts as the applicable Servicer and the Trustee may consider necessary or
desirable. If the applicable Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or
in case a Servicer Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 8.06 hereunder and no notice to Holders
of Certificates of the appointment of co-trustee(s) or separate trustee(s)
shall be required under Section 8.08 hereof. Any reasonable and necessary
expense of the Trustee related to the appointment of a co-trustee or a
separate trustee for the limited purpose of performing the Trustee's duties
pursuant to this Section 8.10 shall be reimbursable from the Trust Fund.
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In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or
imposed upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed by the
Trustee (whether as Trustee hereunder or as successor to the defaulting
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 by such
separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VIII. Each separate trustee and co-trustee,
upon its acceptance of the trust conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 8.11. [Reserved].
SECTION 8.12. Appointment of Office or Agency.
The Trustee designates its office at 000 Xxxx Xxxxx Xxxxxx, Xx. Xxxx
Xxxxxxxxx 00000 as its agency where the Certificates may be surrendered for
registration of transfer or exchange and presented for final distribution. The
Trustee designates its offices at 000 Xxxx Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx
00000, as the office at which notices and demands to or upon the Trustee in
respect of the Certificates may be served and will notify the
Certificateholders of any change in the location of such office or agency.
SECTION 8.13. Representations and Warranties.
The Trustee hereby represents and warrants to each Servicer and the
Depositor, as of the Closing Date, that:
(i) It is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States.
(ii) The execution and delivery of this Agreement by it, and
the performance and compliance with the terms of this Agreement by
it, will not violate its charter
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or articles of association or bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute
a default) under, or result in the breach of, any material agreement
or other instrument to which it is a party or which is applicable to
it or any of its assets.
(iii) It has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement.
This Agreement, assuming due authorization, execution and delivery by
the other parties, constitutes a valid, legal and binding obligation of it,
enforceable against it in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, receivership, reorganization, moratorium
and other laws affecting the enforcement of creditors' rights generally, and
(B) general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
SECTION 8.14. Yield Maintenance Agreement.
The Trustee shall not designate an Early Termination Date under the
Yield Maintenance Agreement without the consent of the Controlling Person.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, each Servicer and the
Trustee (other than the obligations of each Servicer to the Trustee pursuant
to Section 8.05 and of each Servicer to provide for and the Trustee to make
payments in respect of the REMIC I Regular Interests, the REMIC II Regular
Interests, the REMIC III Regular Interests, the REMIC IV Regular Interests, or
the Classes of Certificates as hereinafter set forth) shall terminate upon
payment to the Certificateholders and the deposit of all amounts held by or on
behalf of the Trustee and required hereunder to be so paid or deposited on the
Distribution Date coinciding with or following the earlier to occur of (i) the
purchase by the Servicers of all Mortgage Loans and each REO Property
remaining in the Trust Fund, (ii) the final payment or other liquidation (or
any advance with respect thereto) of the last Mortgage Loan or REO Property
remaining in the Trust Fund; provided, however, that in no event shall the
trust created hereby continue beyond the expiration of 21 years from the death
of the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the late
ambassador of the United States to the Court of St. Xxxxx, living on the date
hereof and (iii) the Distribution Date in March 2032. The purchase by the
Servicers of all of the Mortgage Loans and each REO Property remaining in the
Trust Fund shall be at a price (the "Termination Price") equal to the sum of
(1) 100% of the Stated Principal Balance of each Mortgage Loan (other than in
respect of REO Property) plus one month's accrued interest thereon at the
applicable Mortgage Rate, (2) with
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respect to any REO Property, the lesser of (x) the appraised value of any REO
Property as determined by the higher of two appraisals completed by two
independent appraisers selected by the Depositor at the expense of the
Depositor and (y) the Stated Principal Balance of each Mortgage Loan related
to any REO Property, in each case plus accrued and unpaid interest thereon at
the applicable Mortgage Rate.
(b) Solely upon the unanimous consent of the Servicers, each
Servicer shall have the right to purchase all of the Mortgage Loans and each
REO Property remaining in the Trust Fund serviced by it pursuant to clause (i)
of the preceding paragraph no later than the Determination Date in the month
immediately preceding the Distribution Date on which the Certificates will be
retired; provided, however, that the Servicers may jointly elect to purchase
all of the Mortgage Loans and each REO Property remaining in the Trust Fund
pursuant to clause (i) above only if the Aggregate Collateral Balance
remaining in the Trust Fund at the time of such election is less than 10% of
the Aggregate Collateral Balance as of the Initial Cut-off Date. By acceptance
of the Residual Certificates, the Holders of the Residual Certificates agree,
in connection with any termination hereunder, to assign and transfer any
amounts in excess of par, and to the extent received in respect of such
termination, to pay any such amounts to the Holders of the Class X
Certificates.
(c) Notice of the liquidation of the REMIC I Regular Interests shall
be given promptly by the Trustee by letter to Certificateholders mailed (a) in
the event such notice is given in connection with the purchase of the Mortgage
Loans and each REO Property by the related Servicer, not earlier than the 15th
day and not later than the 25th day of the month next preceding the month of
the final distribution on the Certificates or (b) otherwise during the month
of such final distribution on or before the Determination Date in such month,
in each case specifying (i) the Distribution Date upon which the Trust Fund
will terminate and final payment in respect of the REMIC I Regular Interests,
the REMIC II Regular Interests, the REMIC III Regular Interests, the REMIC IV
Regular Interests, and the Certificates will be made upon presentation and
surrender of the related Certificates at the office of the Trustee therein
designated, (ii) the amount of any such final payment, (iii) that no interest
shall accrue in respect of the REMIC I Regular Interests, the REMIC II Regular
Interests, the REMIC III Regular Interests, the REMIC IV Regular Interests, or
the Certificates from and after the Interest Accrual Period relating to the
final Distribution Date therefor and (iv) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made
only upon presentation and surrender of the Certificates at the office of the
Trustee. The Trustee shall give such notice to the Certificate Registrar at
the time such notice is given to Certificateholders. In the event such notice
is given in connection with the purchase of all of the Mortgage Loans and each
REO Property remaining in the Trust Fund by the Servicers, each Servicer shall
deliver to the Trustee for deposit in the Distribution Account not later than
the last Business Day of the month next preceding the month of the final
distribution on the Certificates an amount in immediately available funds
equal to the above-described purchase price for the Mortgage Loans purchased
by such Servicer. The Trustee shall remit to the related Servicer from such
funds deposited in the Distribution Account (i) any amounts which the related
Servicer would be permitted to withdraw and retain from the Collection Account
pursuant to Section 3.11 and (ii) any other amounts otherwise payable by the
Trustee to such Servicer from amounts on deposit in the Distribution Account
pursuant to the terms of this Agreement, in each case prior to making any
final distributions pursuant to Section 10.01(d) below. Upon certification to
the
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Trustee by a Servicing Officer of the making of such final deposit, the
Trustee shall promptly release or cause to be released to the related Servicer
the related Mortgage Files for the remaining Mortgage Loans, and the Trustee
shall execute all assignments, endorsements and other instruments necessary to
effectuate such transfer.
(d) Upon presentation of the Certificates by the Certificateholders
on the final Distribution Date, the Trustee shall distribute to each
Certificateholder so presenting and surrendering its Certificates the amount
otherwise distributable on such Distribution Date in accordance with Section
4.01 in respect of the Certificates so presented and surrendered. Any funds
not distributed to any Holder or Holders of Certificates being retired on such
Distribution Date because of the failure of such Holder or Holders to tender
their Certificates shall, on such date, be set aside and held in trust by the
Trustee and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to
this Section 9.01 shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a
second notice to the remaining non-tendering Certificateholders to surrender
their Certificates for cancellation in order to receive the final distribution
with respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall, directly or through an agent, mail a final notice to remaining related
non-tendering Certificateholders concerning surrender of their Certificates.
The costs and expenses of maintaining the funds in trust and of contacting
such Certificateholders shall be paid out of the assets remaining in the trust
funds. If within one year after the final notice any such Certificates shall
not have been surrendered for cancellation, the Trustee shall pay to the
Depositor all such amounts, and all rights of non-tendering Certificateholders
in or to such amounts shall thereupon cease. No interest shall accrue or be
payable to any Certificateholder on any amount held in trust by the Trustee as
a result of such Certificateholder's failure to surrender its Certificate(s)
for final payment thereof in accordance with this Section 9.01.
Immediately following the deposit of funds in trust hereunder in
respect of the Certificates, the Trust Fund shall terminate.
SECTION 9.02. Additional Termination Requirements.
(a) In the event that the Servicers purchase all the Mortgage Loans
and each REO Property or the final payment on or other liquidation of the last
Mortgage Loan or REO Property remaining in the Trust Fund pursuant to Section
9.01, the Trust Fund shall be terminated in accordance with the following
additional requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to REMIC I's, REMIC II's,
REMIC III's, REMIC IV's and REMIC V's final Tax Return pursuant to
Treasury regulation Section 1.860F-1 and shall satisfy all
requirements of a qualified liquidation under Section 860F of the
Code and any regulations thereunder, as evidenced by an Opinion of
Counsel obtained at the expense of the Servicers;
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(ii) During such 90-day liquidation period, and at or prior to
the time of making of the final payment on the Certificates, the
Trustee shall sell all of the assets of the Trust Fund to the
Servicers for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Residual Certificates
all cash on hand in the Trust Fund (other than cash retained to meet
claims), and the Trust Fund shall terminate at that time.
(b) At the expense of the Servicers, the Trustee shall prepare or
cause to be prepared the documentation required in connection with the
adoption of a plan of liquidation of each REMIC executed hereunder pursuant to
this Section 9.02.
(c) By their acceptance of Certificates, the Holders thereof hereby
agree to authorize the Trustee to specify the 90-day liquidation period for
each REMIC executed hereunder, which authorization shall be binding upon all
successor Certificateholders.
ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee shall elect to treat each REMIC created hereunder as
a REMIC under the Code and, if necessary, under applicable state law. Each
such election will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. For
the purposes of the REMIC election in respect of REMIC I, the REMIC I Regular
Interests shall be designated as the Regular Interests in REMIC I and the
Class R-I Certificates shall be designated as the Residual Interests in the
Trust Fund. The REMIC II Regular Interests shall be designated as the Regular
Interests in REMIC II and the Class R-II Certificates shall be designated as
the Residual Interests in REMIC II. The REMIC III Regular Interests shall be
designated as the Regular Interests in REMIC III and the Class R-III
Certificates shall be designated as the Residual Interests in REMIC III. The
REMIC IV Regular Interests shall be designated as the Regular Interests in
REMIC IV and the Class R-IV Certificates shall be designated as the Residual
Interests in REMIC IV. The Certificates (other than the Residual Certificates)
shall be designated as the Regular Interests in REMIC V and the Class R-V
Certificates shall be designated as the Residual Interests in REMIC V. The
Trustee shall not permit the creation of any "interests" in any REMIC created
hereunder (within the meaning of Section 860G of the Code) other than the
REMIC I Regular Interests, the REMIC II Regular Interests, REMIC III Regular
Interest and REMIC IV Regular Interest and the interests represented by the
Certificates.
(b) 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.
(c) The Trustee shall pay out of funds on deposit in the
Distribution Account, any and all expenses relating to any tax audit of the
Trust Fund (including, but not limited to, any
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professional fees or any administrative or judicial proceedings with respect
to any REMIC created hereunder that involve the Internal Revenue Service or
state tax authorities) unless such expenses, professional fees or any
administrative or judicial proceedings are incurred by reason of the Trustee's
willful misfeasance, bad faith or negligence. The Trustee, as agent for all of
REMIC I's, REMIC II's, REMIC III's, REMIC IV's and REMIC V's tax matters
persons, shall (i) act on behalf of the Trust Fund in relation to any tax
matter or controversy involving any REMIC created hereunder and (ii) represent
the Trust Fund in any administrative or judicial proceeding relating to an
examination or audit by any governmental taxing authority with respect thereto
and will be entitled to reimbursement from the Trust Fund for any expenses
incurred by the Trustee in connection therewith unless such administrative or
judicial proceeding relating to an examination or audit by any governmental
taxing authority is incurred by reason of the Trustee's willful misfeasance,
bad faith or negligence. The holder of the largest Percentage Interest of each
Class of Residual Certificates shall be designated, in the manner provided
under Treasury regulations section 1.860F-4(d) and Treasury regulations
section 301.6231(a)(7)-1, as the tax matters person of the related REMIC
created hereunder. By their acceptance thereof, the holder of the largest
Percentage Interest of the Residual Certificates hereby agrees to irrevocably
appoint the Trustee or an Affiliate as its agent to perform all of the duties
of the tax matters person for the Trust Fund.
(d) The Trustee shall prepare, sign and file all of the Tax Returns
in respect of each REMIC created hereunder. The expenses of preparing and
filing such returns shall be borne by the Trustee without any right of
reimbursement therefor. Each Servicer shall provide on a timely basis to the
Trustee or its designee such information with respect to the assets of the
Trust Fund as is in its possession and reasonably required by the Trustee to
enable it to perform its obligations under this Article.
(e) The Trustee shall perform on behalf of each REMIC created
hereunder all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or any state or
local taxing authority. Among its other duties, as required by the Code, the
REMIC Provisions or other such compliance guidance, the Trustee shall provide
(i) to any Transferor of a Residual Certificate such information as is
necessary for the application of any tax relating to the transfer of a
Residual Certificate to any Person who is not a Permitted Transferee, (ii) to
the Certificateholders such information or reports as are required by the Code
or the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address
and telephone number of the person who will serve as the representative of
each REMIC created hereunder. Each Servicer shall provide on a timely basis to
the Trustee such information with respect to the assets of the Trust Fund,
including, without limitation, the Mortgage Loans, as is in its possession and
reasonably required by the Trustee to enable it to perform its obligations
under this subsection. In addition, the Depositor shall provide or cause to be
provided to the Trustee, within ten (10) days after the Closing Date, all
information or data that the Trustee reasonably determines to be relevant for
tax purposes as to the valuations and issue prices of the Certificates,
including, without limitation, the price, yield, prepayment assumption and
projected cash flow of the Certificates.
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(f) The Trustee shall take such action and shall cause each REMIC
created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and each
Servicer shall assist the Trustee, to the extent reasonably requested by the
Trustee to do specific actions in order to assist in the maintenance of such
status). The Trustee shall not take any action, cause the Trust Fund to take
any action or fail to take (or fail to cause to be taken) any action that,
under the REMIC Provisions, if taken or not taken, as the case may be, could
(i) endanger the status of any REMIC created hereunder as a REMIC or (ii)
result in the imposition of a tax upon the Trust Fund (including but not
limited to the tax on prohibited transactions as defined in Section 860F(a)(2)
of the Code and the tax on contributions to a REMIC set forth in Section
860G(d) of the Code) (either such event, an "Adverse REMIC Event") unless the
Trustee has received an Opinion of Counsel, addressed to the Trustee (at the
expense of the party seeking to take such action but in no event at the
expense of the Trustee) to the effect that the contemplated action will not,
with respect to any REMIC created hereunder, endanger such status or result in
the imposition of such a tax, nor shall any Servicer take or fail to take any
action (whether or not authorized hereunder) as to which the Trustee has
advised it in writing that it has received an Opinion of Counsel to the effect
that an Adverse REMIC Event could occur with respect to such action; provided
that each Servicer may conclusively rely on such Opinion of Counsel and shall
incur no liability for its action or failure to act in accordance with such
Opinion of Counsel. In addition, prior to taking any action with respect to
any REMIC created hereunder or the respective assets of each, or causing any
REMIC created hereunder to take any action, which is not contemplated under
the terms of this Agreement, each Servicer will consult with the Trustee or
its designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to any REMIC created hereunder, and
each Servicer shall not take any such action or cause any REMIC created
hereunder to take such action as to which the Trustee has advised it in
writing that an Adverse REMIC Event could occur; provided that each Servicer
may conclusively rely on such writing and shall incur no liability for its
action or failure to act in accordance with such writing. The Trustee may
consult with counsel to make such written advice, and the cost of same shall
be borne by the party seeking to take the action not permitted by this
Agreement, but in no event shall such cost be an expense of the Trustee. At
all times as may be required by the Code, the Trustee will ensure that
substantially all of the assets of each REMIC created hereunder will consist
of "qualified mortgages" as defined in Section 860G(a)(3) of the Code and
"permitted investments" as defined in Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2)
of the Code, on the "net income from foreclosure property" of such REMIC as
defined in Section 860G(c) of the Code, on any contributions to any such REMIC
after the Startup Day therefor pursuant to Section 860G(d) of the Code, or any
other tax is imposed by the Code or any applicable provisions of state or
local tax laws, such tax shall be charged (i) to the Trustee pursuant to
Section 10.03 hereof, if such tax arises out of or results from a breach by
the Trustee of any of its obligations under this Article X, (ii) to the
applicable Servicer pursuant to Section 10.03 hereof, if such tax arises out
of or results from a breach by such Servicer of any of its obligations under
Article III or this Article X, or otherwise (iii) against amounts on deposit
in the Distribution Account and shall be paid by withdrawal therefrom.
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(h) On or before April 15th of each calendar year, commencing April
15, 2003, the Trustee shall deliver to each Servicer, each Rating Agency and
the Counterparty a Certificate from a Responsible Officer of the Trustee
stating the Trustee's compliance with this Article X.
(i) The Trustee shall, for federal income tax purposes, maintain
books and records with respect to each REMIC created hereunder on a calendar
year and on an accrual basis.
(j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to any REMIC created hereunder other than in
connection with any Qualified Substitute Mortgage Loan delivered in accordance
with Section 2.03 unless it shall have received an Opinion of Counsel to the
effect that the inclusion of such assets in the Trust Fund will not cause the
related REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding or subject such REMIC to any tax under the REMIC Provisions or
other applicable provisions of federal, state and local law or ordinances.
(k) Neither the Trustee nor any Servicer shall enter into any
arrangement by which any REMIC created hereunder will receive a fee or other
compensation for services nor permit any such REMIC to receive any income from
assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code. As discussed above, for federal income tax purposes any payments to the
Counterparty under the Yield Maintenance Agreement will be treated as a
payment to the Strip Amount, as the case may be, and a payment from the holder
of said certificate to the Counterparty.
(l) The Trustee shall treat the Net WAC Fund as an outside reserve
fund within the meaning of Treasury Regulation 1.860G-2(h) that is owned by
the Class X Certificateholders and that is not an asset of the REMIC. The
Trustee shall treat the rights of the Class A1, Class M1, Class M2, and Class
B Certificateholders to receive payments from the Net WAC Fund as rights in an
interest rate cap contract written by the Class X Certificateholder in favor
of the other Certificateholders. Thus, each Certificate other than the Class
R, Class A-IO, Class B-IO, Strip Amount and Class P Certificates shall be
treated as representing ownership of not only REMIC V Regular Interests, but
also ownership of an interest in an interest rate cap contract. For purposes
of determining the issue price of the REMIC V Regular Interests, the Trustee
shall assume that the interest rate cap contract has a value of $10,000.
(m) The Trustee shall apply for an Employee Identification Number
from the IRS via a Form SS-4 or any other applicable method for all tax
entities and will also file a Form 8811.
SECTION 10.02. Prohibited Transactions and Activities.
None of the Depositor, any Servicer or the Trustee shall sell,
dispose of or substitute for any of the Mortgage Loans (except in connection
with (i) the foreclosure of a Mortgage Loan, including but not limited to, the
acquisition or sale of a Mortgaged Property acquired by deed in lieu of
foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the termination of
the Trust Fund pursuant to Article IX of this Agreement, (iv) a substitution
pursuant to Article
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II of this Agreement or (v) a purchase of Mortgage Loans pursuant to Article
II or III of this Agreement), nor acquire any assets for any REMIC created
hereunder (other than REO Property acquired in respect of a defaulted Mortgage
Loan), nor sell or dispose of any investments in the Collection Account or the
Distribution Account for gain, nor accept any contributions to any REMIC
created hereunder after the Closing Date (other than a Qualified Substitute
Mortgage Loan delivered in accordance with Section 2.03), unless it has
received an Opinion of Counsel, addressed to the Trustee (at the expense of
the party seeking to cause such sale, disposition, substitution, acquisition
or contribution but in no event at the expense of the Trustee) that such sale,
disposition, substitution, acquisition or contribution will not (a) affect
adversely the status of any of any REMIC Regular Interest created hereunder as
a REMIC or (b) cause any REMIC Regular Interest created hereunder to be
subject to a tax on "prohibited transactions" or "contributions" pursuant to
the REMIC Provisions.
SECTION 10.03. Servicers and Trustee Indemnification.
(a) The Trustee agrees to indemnify, severally and not jointly, the
Trust Fund, the Depositor and each Servicer for any taxes and costs including,
without limitation, any reasonable attorneys fees imposed on or incurred by
the Trust Fund, the Depositor or each Servicer, as a result of a breach of its
respective covenants set forth in this Article X.
(b) Each Servicer agrees to indemnify severally and not jointly the
Trust Fund, the Depositor, the other Servicer and the Trustee for any taxes
and costs including, without limitation, any reasonable attorneys' fees
imposed on or incurred by the Trust Fund, the Depositor, the other Servicer or
the Trustee, as a result of a breach of the related Servicer's covenants set
forth in Article III or this Article X.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
This Agreement may be amended from time to time by the Depositor,
the Servicers and the Trustee without the consent of any of the
Certificateholders, (i) to cure any ambiguity or defect, (ii) to correct,
modify or supplement any provisions herein (including to give effect to the
expectations of Certificateholders), or (iii) to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be inconsistent with the provisions of this Agreement provided that such
action shall not, as evidenced by either (i) an Opinion of Counsel delivered
to the Trustee, adversely affect in any material respect the interests of any
Certificateholder or (ii) delivery to the Trustee of a letter from each Rating
Agency confirming the then-current ratings of the Offered Certificates. No
amendment shall be deemed to adversely affect in any material respect the
interests of any Certificateholder who shall have consented thereto, and no
Opinion of Counsel shall be required to address the effect of any such
amendment on any such consenting Certificateholder.
This Agreement may also be amended from time to time by the
Depositor, the Servicers and the Trustee with the consent of the Holders of
Certificates entitled to at least 66%
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of the Voting Rights for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of,
or delay the timing of, payments received on Mortgage Loans which are required
to be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of
the Holders of any Class of Certificates in a manner, other than as described
in (i), without the consent of the Holders of Certificates of such Class
evidencing at least 66% of the Voting Rights allocated to such Class, or (iii)
modify the consents required by the immediately preceding clauses (i) and (ii)
without the consent of the Holders of all Certificates then outstanding.
Notwithstanding any other provision of this Agreement, for purposes of the
giving or withholding of consents pursuant to this Section 11.01, Certificates
registered in the name of the Depositor or any Servicer or any Affiliate
thereof shall be entitled to Voting Rights with respect to matters affecting
such Certificates.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall be entitled to receive an Opinion of Counsel to the effect that
such amendment will not result in the imposition of any tax on any REMIC
created hereunder pursuant to the REMIC Provisions or cause any REMIC to fail
to qualify as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
The cost of any Opinion of Counsel to be delivered pursuant to this
Section 11.01 shall be borne by the Person seeking the related amendment, but
in no event shall such Opinion of Counsel be an expense of the Trustee.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
SECTION 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicers at the expense of the Certificateholders, but only upon direction of
the Trustee accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number
133
of counterparts, each of which counterparts shall be deemed to be an original,
and such counterparts shall constitute but one and the same instrument.
SECTION 11.03. 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 representatives or heirs to claim an accounting or
to take any action or proceeding in any court for a partition or winding up of
the Trust Fund, nor 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
expressly provided for 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 any
of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless (i) such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as hereinbefore provided, and (ii) the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder
with every other Certificateholder and the Trustee, that no one or more
Holders of Certificates shall have any right in any manner whatsoever by
virtue of any provision of this Agreement to affect, disturb or prejudice the
rights of the Holders of any other of such Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner herein provided and for
the equal, ratable and common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 11.04. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
134
SECTION 11.05. Notices.
All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or facsimile transmission or delivered in any other manner
specified herein, to (a) in the case of the Depositor, 00 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxx (telecopy number (000) 000-0000,
or such other address or telecopy number as may hereafter be furnished to the
Servicers and the Trustee in writing by the Depositor, (b) in the case of
Fairbanks Capital Corp., 0000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000,
Attention: Xxxxxxx X. Xxxxxx (telecopy number (000) 000-0000), or such other
address or telecopy number as may hereafter be furnished to the Trustee, the
other Servicer and the Depositor in writing by Fairbanks Capital Corp., (c) in
the case of the Trustee, 000 Xxxx Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000,
Attention: Structured Finance Ref: ABSC 2002-HE1, or such other address or
telecopy number as may hereafter be furnished to the Servicers and the
Depositor in writing by the Trustee, (d) in the case of New Century Mortgage
Corporation, 00000 Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention:
President (telecopy number: (000) 000-0000), or such other address or telecopy
number as may hereafter be furnished to the Trustee, the Servicers and the
Depositor in writing by New Century Mortgage Corporation, (e) in the case of
WMC Mortgage Corp., 0000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxxx, XX 00000, Attention:
Xxxxx Xxxxxxxx (telecopy number: (000) 000-0000) and Xxxxxx Xxxxxxxxx
(telecopy number: (000) 000-0000) or such other address or telecopy number as
may hereafter be furnished to the Trustee, the Servicers and the Depositor in
writing by WMC Mortgage Corp., and (f) in the case of Long Beach Mortgage
Company, 0000 Xxxx xxx Xxxxxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000,
Attention: General Counsel (telecopy number: (000) 000-0000) or such other
address or telecopy number as may hereafter be furnished to the Trustee, the
other Servicer and the Depositor in writing by Long Beach Mortgage Company.
Any notice required or permitted to be given to a Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given when mailed, whether or not the Certificateholder receives such notice.
A copy of any notice required to be telecopied hereunder also shall be mailed
to the appropriate party in the manner set forth above.
SECTION 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.07. Notice to Rating Agencies and the Counterparty.
The Trustee shall use its best efforts promptly to provide notice to
the Rating Agencies and the Counterparty with respect to each of the following
of which it has actual knowledge:
135
Any amendment to this Agreement;
The occurrence of a Servicer Event of Default that has not
been cured or waived;
The resignation or termination of any Servicer or the Trustee;
The repurchase or substitution of Mortgage Loans pursuant to
or as contemplated by Section 2.03;
The final payment to the Holders of any Class of Certificates;
Any change in the location of the Collection Account or the
Distribution Account;
The Trustee, were it to succeed as a Servicer, is unable to
make advances regarding Delinquent Mortgage Loans; and
The filing of any claim under any Servicer's blanket bond and
errors and omissions insurance policy required by Section
3.14 or the cancellation or material modification of
coverage under any such instrument.
In addition, the Trustee shall make available to each Rating Agency
and the Counterparty copies of each report to Certificateholders described in
Section 4.02 and each Servicer, as required pursuant to Section 3.20 and
Section 3.21, shall make available to each Rating Agency copies of the
following:
(1) Each annual statement as to compliance described in
Section 3.20; and
(2) Each annual independent public accountants' servicing
report described in Section 3.21.
Any such notice pursuant to this Section 11.07 shall be in writing
and shall be deemed to have been duly given if personally delivered at or
mailed by first class mail, postage prepaid, or by facsimile transmission or
express delivery service to Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Fitch, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, XX
00000, Attention: Asset Backed Securities Corporation Home Equity Loan Trust
2002-HE1, and to Standard & Poor's Ratings Services, a division of the
XxXxxx-Xxxx Companies at 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000,
Attention: Structured Finance Surveillance Group, Credit Suisse First Boston
International, One Xxxxx Xxxxxx, Xxxxxx X00 0XX, Xxxxxxx, Attention: Head of
Credit Risk Management or such other addresses as the Rating Agencies or the
Counterparty may designate in writing to the parties hereto.
SECTION 11.08. Article and Section References.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
136
SECTION 11.09. Third Party Rights.
The Counterparty shall be a third-party beneficiary of this
Agreement.
SECTION 11.10. Grant of Security Interest.
It is the express intent of the parties hereto that the conveyance
of the Mortgage Loans by the Depositor to the Trustee be, and be construed as,
a sale of the Mortgage Loans by the Depositor and not a pledge of the Mortgage
Loans by the Depositor to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the aforementioned intent of the
parties, the Mortgage Loans are held to be property of the Depositor, then,
(a) it is the express intent of the parties that such conveyance be deemed a
pledge of the Mortgage Loans by the Depositor to the Trustee to secure a debt
or other obligation of the Depositor and (b)(1) this Agreement shall also be
deemed to be a security agreement within the meaning of Articles 8 and 9 of
the Uniform Commercial Code as in effect from time to time in the State of New
York; (2) the conveyance provided for in Section 2.01 hereof shall be deemed
to be a grant by the Depositor to the Trustee of a security interest in all of
the Depositor's right, title and interest in and to the Mortgage Loans and all
amounts payable to the holders of the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts, other than investment earnings, from time to
time held or invested in the Collection Account and the Distribution Account,
whether in the form of cash, instruments, securities or other property; (3)
the obligations secured by such security agreement shall be deemed to be all
of the Depositor's obligations under this Agreement, including the obligation
to provide to the Certificateholders the benefits of this Agreement relating
to the Mortgage Loans and the Trust Fund; and (4) notifications to persons
holding such property, and acknowledgments, receipts or confirmations from
persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Trustee for the purpose of perfecting
such security interest under applicable law. Accordingly, the Depositor hereby
grants to the Trustee a security interest in the Mortgage Loans and all other
property described in clause (2) of the preceding sentence, for the purpose of
securing to the Trustee the performance by the Depositor of the obligations
described in clause (3) of the preceding sentence. Notwithstanding the
foregoing, the parties hereto intend the conveyance pursuant to Section 2.01
to be a true, absolute and unconditional sale of the Mortgage Loans and assets
constituting the Trust Fund by the Depositor to the Trustee.
SECTION 11.11. Protection of Assets.
(a) Except for transactions and activities entered into in
connection with the securitization that is the subject of this Agreement, the
Trust is not authorized and has no power to:
(i) borrow money or issue debt;
(ii) merge with another entity, reorganize, liquidate or sell
assets; or
(iii) engage in any business or activities.
137
Each party to this Agreement agrees that it will not file an
involuntary bankruptcy petition or initiate any other form of insolvency
proceeding against the Trust Fund until after the Certificates have been paid.
138
IN WITNESS WHEREOF, the Depositor, the Servicers and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized, in each case as of the day and year first above
written.
ASSET BACKED SECURITIES CORPORATION,
as Depositor
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
FAIRBANKS CAPITAL CORP.,
as a Servicer
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
LONG BEACH MORTGAGE COMPANY,
as a Servicer
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: First Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ X. Xxxxxxxxxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxxxxxxxxx
Title: Vice President
000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of January 2002, before me, a notary public in and
for said State, personally appeared Xxxx Xxxxxxx, known to me to be a Vice
President of Asset Backed Securities Corporation, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxxxx Xxxxx Xxxxxxx
----------------------------------
Notary Public
[Notarial Seal]
140
STATE OF UTAH )
) ss.:
COUNTY OF SALT LAKE )
On the 28th day of January 2002, before me, a notary public
in and for said State, personally appeared Xxxxxxx X. Xxxxx, known to me to be
an Executive Vice President of Fairbanks Capital Corp., one of the
corporations that executed the within instrument, and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
/s/ Xxxxxxx X. Xxxxxxx
----------------------------
Notary Public
[Notarial Seal]
000
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of January 2002, before me, a notary public in and
for said State, personally appeared Xxxxxxx X. Xxxxxxxx, known to me to be a
First Vice President of Long Beach Mortgage Company, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxxxxx Xxxxx Xxxxxxx
-----------------------------
Notary Public
[Notarial Seal]
000
XXXXX XX XXXXXXXXX )
) ss.:
COUNTY OF XXXXXX )
On the 25th day of January 2002, before me, a notary public in and
for said State, personally appeared Xxxxxx Xxxxxxxxxxxxxx, known to me to be a
Vice President of U.S Bank National Association, one of the entities that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
entity executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xxxxx X. Xxxxxxx
----------------------
Notary Public
[Notarial Seal]
143
[A1][A2]
EXHIBIT A-1
FORM OF CLASS [A1][A2] CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 2002-HE1, Class A_ Aggregate Certificate Principal Balance
of the Class A_ Certificates as of the
Issue Date:
Pass-Through Rate: Variable $_____________
Date of Pooling and Servicing Denomination: $____________
Agreement: January 1, 2002.
Servicers:
First Distribution Date:
Fairbanks Capital Corp. and Long Beach
Mortgage Company
February 15, 2002
Trustee: U.S. Bank N.A.
No. ____
Issue Date: January 30, 2002
CUSIP: ____________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY
A-1-1
BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ASSET
BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY OF
THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR
THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY
ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES.
This certifies that ____________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class [A-1][A-2] Certificates
as of the Issue Date) in that certain beneficial ownership interest evidenced
by all the Class [A-1][A-2] Certificates created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Asset
Backed Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and 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 issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class [A-1][A-2]
Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of
A-1-2
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest payable
with respect to this Certificate on any Distribution Date shall equal a rate
per annum equal to the lesser of (i) the One-Month LIBOR plus _____%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less
than 10% of the aggregate principal balance of the Mortgage Loans as of the
related cut-off date, or One-Month LIBOR plus _____% per annum, in the case of
any Distribution Date thereafter, and (ii) the Available Funds Cap for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the
A-1-3
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee, and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee, or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-1-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: January __, 2001
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class [A-1][A-2] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:_________________________________
Authorized Signatory
A-1-5
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
_______________
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right ________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
___________________ ___________________________________
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
A-1-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____ _________________________________________
for the account of ____________________, account number _________________,
or, if mailed by check, to _______________________________________________.
Applicable statements should be mailed to __________________________________
This information is provided by _______________, the assignee named above, or
____________________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS [M1] [M2] CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A1 AND CLASS A2
CERTIFICATES [AND THE CLASS M1 CERTIFICATES] TO THE EXTENT DESCRIBED
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Series 2002-HE1, Class [M1] [M2] Aggregate Certificate Principal Balance
of the Class [M1] [M2] Certificates
as of the Issue Date:
Pass-Through Rate: Variable $____________
Date of Pooling and Servicing
Agreement: January 1, 2002. Denomination: $___________
First Distribution Date: Servicers:
February 15, 2002 Fairbanks Capital Corp. and Long Beach
Mortgage Company
No. ____ Trustee: U.S. Bank N.A.
A-2-1
Issue Date: January 30, 2002
CUSIP: ______________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING
A-2-2
CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the [M1] [M2] Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the [M1] [M2] Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and 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 issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class [M1] [M2]
Certificates on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of
A-2-3
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest payable
with respect to this Certificate on any Distribution Date shall equal a rate
per annum equal to the lesser of (i) the One-Month LIBOR plus _____%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less
than 10% of the aggregate principal balance of the Mortgage Loans as of the
related cut-off date, or One-Month LIBOR plus _____%, in the case of any
Distribution Date thereafter, and (ii) the Available Funds Cap for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the
A-2-4
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested
by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-2-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: January __, 2001
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class [M1] [M2] Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-2-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
_______________
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right ________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
__________________
Dated:
___________________________________________
Signature by or on behalf of assignor
___________________________________________
Signature Guaranteed
A-2-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____ _______________________________ for the account of
_______________________________, account number ___________________,
or, if mailed by check, to ______________________ Applicable statements should
be mailed to ________________________
This information is provided by ________________, the assignee named above, or
__________________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS B CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
CLASS M1 CERTIFICATES AND THE CLASS M2 CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Series 2002-HE1, Class B Aggregate Certificate Principal Balance
of the Class B Certificates as of the Issue
Pass-Through Rate: Variable Date: $__________
Date of Pooling and Servicing
Agreement: January 1, 2002. Denomination: $___________
Servicers:
First Distribution Date:
Fairbanks Capital Corp. and Long Beach
Mortgage Company
February 15, 2002
Trustee: U.S. Bank N.A.
No. __
Issue Date: January 30, 2002
A-3-1
CUSIP: _____________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that __________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class B Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class B Certificates created pursuant to a Pooling and Servicing Agreement,
dated as specified above (the "Agreement"), among Asset Backed Securities
Corporation (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement), the Servicer, and 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 issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in
A-3-2
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date, or otherwise by check mailed by first class mail to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee
of the pendency of such distribution and only upon presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest payable
with respect to this Certificate on any Distribution Date shall equal a rate
per annum equal to the lesser of (i) the One-Month LIBOR plus ____%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less
than 10% of the aggregate principal balance of the Mortgage Loans as of the
related cut-off date, or One-Month LIBOR plus _____%, in the case of any
Distribution Date thereafter, and (ii) the Available Funds Cap for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in
A-3-3
authorized denominations evidencing the same aggregate Percentage Interest
will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any person using Plan Assets to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor,
the Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: January __, 2001
A-3-4
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-3-5
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
ASSIGNMENT
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
_______________
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right ________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address: ______________.
Dated:
___________________________________________
Signature by or on behalf of assignor
___________________________________________
Signature Guaranteed
A-3-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____ ________________________
for the account of _________________________, account number _______________,
or, if mailed by check, to _____________________.
Applicable statements should be mailed to ____________________
This information is provided by _________________, the assignee named above,
or ____________________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS X CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
CLASS M CERTIFICATES AND THE CLASS B CERTIFICATES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS 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 REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
A-4-1
Series 2002-HE1, Class X Aggregate Certificate Principal Balance of the
Class X Certificates as of the Issue Date:
Pass-Through Rate:
Denomination: $______________
Date of Pooling and Servicing Servicers:
Agreement: January 1, 2002.
First Distribution Date: Fairbanks Capital Corp. and Long Beach
Mortgage Company
February 15, 2002 Trustee: U.S. Bank N.A.
No. ___ Issue Date: January 30, 2002
CUSIP: _______________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class X Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class X Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and the
Trustee, a summary of certain of the pertinent provisions
A-4-2
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 issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class X Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of
the Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
A-4-3
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement
as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of
the Holder of the Certificate desiring to effect the transfer and/or such
Holder's prospective transferee upon which such Opinion of Counsel is based.
Neither the Depositor, the Certificate Registrar or the Trustee is obligated
to register or qualify the Class of Certificates specified on the face hereof
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor, the Certificate Registrar 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 this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall
be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Certificate Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
A-4-4
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement.
A-4-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: January __, 2002
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class X Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-4-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
_______________
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right ________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
Dated:
___________________________________________
Signature by or on behalf of assignor
___________________________________________
Signature Guaranteed
A-4-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ______________________
for the account of _________________, account number _______________, or, if
mailed by check, to _______________________
Applicable statements should be mailed to
This information is provided by _________________, the assignee named above, or
__________________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS 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 REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
Series 2002-HE1, Class P Aggregate Certificate Principal
Balance of the Class P Certificates
as of the Issue Date: $100.00
Date of Pooling and Servicing Agreement:
January 1, 2002.
Denomination: $_________
First Distribution Date:
Servicers:
February 15, 2002 Fairbanks Capital Corp. and Long Beach
Mortgage Company
No. ___ Trustee: U.S. Bank N.A.
Issue Date: January 30, 2001
A-5-1
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION
OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that _____________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Certificate Principal Balance of the Class P Certificates as of the
Issue Date) in that certain beneficial ownership interest evidenced by all the
Class P Certificates created pursuant to a Pooling and Servicing Agreement,
dated as specified above (the "Agreement"), among Asset Backed Securities
Corporation (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement), the Servicer, and 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 issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class P Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person
A-5-2
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Trustee for that purpose as provided
in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"),
A-5-3
and an effective registration or qualification under applicable state
securities laws, or is made in a transaction that does not require such
registration or qualification. In the event that such a transfer of this
Certificate is to be made without registration or qualification, the Trustee
and the Certificate Registrar shall require receipt of (i) if such transfer is
purportedly being made in reliance upon Rule 144A under the 1933 Act, written
certifications from the Holder of the Certificate desiring to effect the
transfer, and from such Holder's prospective transferee, substantially in the
forms attached to the Agreement as Exhibit F-1, and (ii) in all other cases,
an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration or qualification (which Opinion of Counsel shall not
be an expense of the Trust Fund or of the Depositor, the Trustee or the
Servicer in their respective capacities as such), together with copies of the
written certification(s) of the Holder of the Certificate desiring to effect
the transfer and/or such Holder's prospective transferee upon which such
Opinion of Counsel is based. None of the Depositor, the Certificate Registrar
or the Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any
Holder desiring to effect a transfer of this Certificate shall be required to
indemnify the Trustee, the Depositor, the Certificate Registrar 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 this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall
be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Certificate Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance
A-5-4
of the Mortgage Loans and any REO properties owned by the Trust at the time of
purchase being less than 10% of the sum of the aggregate Stated Principal
Balance of the Mortgage Loans at the Initial Cut-off Date plus the amount on
deposit in the Pre-Funding Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement .
A-5-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: January __, 2002
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-5-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
_______________
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right ________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
Dated:
___________________________________________
Signature by or on behalf of assignor
___________________________________________
Signature Guaranteed
A-5-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________
for the account of ___________________, account number ____________________,
or, if mailed by check, to ______________________________________
Applicable statements should be mailed to ____________________________________.
This information is provided by _______________________________________, the
assignee named above, or ________________________________________, as its
agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS A-IO CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE.
A-6-1
Series 2001-HE3, Class A-IO Servicers:
Fairbanks Capital Corp. and Long
Pass-Through Rate: _____% Beach Mortgage Company
Date of Pooling and Servicing Agreement: Trustee: U.S. Bank N.A.
January 1, 2002.
Issue Date: January 30, 2002
First Distribution Date:
February 15, 2002
No. __
Aggregate Notional Amount of the
Class A-IO Certificates
as of the Issue Date:
$___________
DISTRIBUTIONS IN REDUCTION OF THE NOTIONAL AMOUNT OF THIS CERTIFICATE
MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE AGGREGATE
NOTIONAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
ASSET BACKED SECURITIES CORPORATION, THE SERVICER, THE TRUSTEE OR ANY
OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________ is the registered owner of a Percentage
Interest (obtained by dividing the denomination of this Certificate by the
aggregate Notional Amount of the Class A-IO Certificates as of the Issue Date)
in that certain beneficial ownership interest evidenced by all the Class A-IO
Certificates created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Asset Backed Securities Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer, and the Trustee, a summary of certain of
the pertinent provisions
A-6-2
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 issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-IO Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Notional Amount of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
A-6-3
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement
as Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel
satisfactory to it that such transfer may be made without such registration or
qualification (which Opinion of Counsel shall not be an expense of the Trust
Fund or of the Depositor, the Trustee or the Servicer in their respective
capacities as such), together with copies of the written certification(s) of
the Holder of the Certificate desiring to effect the transfer and/or such
Holder's prospective transferee upon which such Opinion of Counsel is based.
Neither the Depositor, the Certificate Registrar or the Trustee is obligated
to register or qualify the Class of Certificates specified on the face hereof
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required to indemnify the
Trustee, the Depositor, the Certificate Registrar 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 this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall
be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Certificate Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
A-6-4
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee ,the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant
to the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the
Trust Fund of all the Mortgage Loans and all property acquired in respect of
such Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will
effect early retirement of the Certificates; however, such right to purchase
is subject to the aggregate Stated Principal Balance of the Mortgage Loans and
any REO properties owned by the Trust at the time of purchase being less than
10% of the sum of the aggregate Stated Principal Balance of the Mortgage Loans
at the Initial Cut-off Date plus the amount on deposit in the Pre-Funding
Account on the Closing Date.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement.
A-6-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: January __, 2002
U.S BANK NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-IO Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:__________________________________
Authorized Signatory
A-6-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
_______________
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right ________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in
the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
Dated:
___________________________________________
Signature by or on behalf of assignor
___________________________________________
Signature Guaranteed
A-6-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________
for the account of ______________________, account number __________________,
or, if mailed by check, to __________________________.
Applicable statements should be mailed to ____________________________________.
This information is provided by ______________________________,
the assignee named above, or ___________________________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC"), AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THIS 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 REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE TRUSTEE THAT (A)
SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY POSSESSION THEREOF, ANY
STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) THAT IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION
A-7-1
511 OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF
THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3)
SHALL HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (4) AN
AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER IS TO
IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES
CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH
REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND
SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE
DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE
PROVISIONS OF SECTION 5.02(d) OF THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM
ACQUIRING BENEFICIAL OWNERSHIP OF THIS CERTIFICATE.
Series 2002-HE1, Class R Aggregate Percentage Interest
of the Class R Certificates as
of the Issue Date: 100.00%
Date of Pooling and Servicing Agreement:
January 1, 2002. Percentage Interest of this
Class R Certificate: 100.00%
First Distribution Date: February 15, 2002
Servicers:
No. __ Fairbanks Capital Corp. and
Long Beach Mortgage Company
Trustee: U.S. Bank N.A.
Issue Date: January 30, 2002
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
A-7-2
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN ASSET BACKED SECURITIES CORPORATION, THE
SERVICER, THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ______________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class R Certificates created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Asset Backed
Securities Corporation (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Servicer, and 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 issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class R Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified
on the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the
aggregate Certificate Principal Balance of the Class of Certificates specified
on the face hereof.
A-7-3
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. As provided in the Agreement, withdrawals
from the Collection Account and the Distribution Account may be made from time
to time for purposes other than distributions to Certificateholders, such
purposes including reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the
Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies appointed by the Trustee as provided in the Agreement,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if
such transfer is purportedly being made in reliance upon Rule 144A under the
1933 Act, written certifications from the Holder of the Certificate desiring
to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit F-1, and (ii)
in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee or the Servicer in their respective capacities as such), together with
copies of the written certification(s) of the Holder of the Certificate
desiring to effect the transfer and/or such Holder's prospective transferee
upon which such Opinion of Counsel is based. Neither the Depositor nor the
Trustee is obligated to
A-7-4
register or qualify the Class of Certificates specified on the face hereof
under the 1933 Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of such
Certificates without registration or qualification. Any Holder desiring to
effect a transfer of this Certificate shall be required 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 this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall
be made except in accordance with Section 5.02(c) of the Agreement.
Prior to registration of any transfer, sale or other disposition of this
Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R Certificates have been designated as a
residual interest in a REMIC, (B) it will include in its income a pro rata
share of the net income of the Trust Fund and that such income may be an
"excess inclusion," as defined in the Code, that, with certain exceptions,
cannot be offset by other losses or benefits from any tax exemption, and (C)
it expects to have the financial means to satisfy all of its tax obligations
including those relating to holding the Class R Certificates. Notwithstanding
the registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified Organization,
such registration shall be deemed to be of no legal force or effect whatsoever
and such Person shall not be deemed to be a Certificateholder for any purpose,
including, but not limited to, the receipt of distributions in respect of this
Certificate.
The Holder of this Certificate, by its acceptance hereof, shall be deemed
to have consented to the provisions of Section 5.02 of the Agreement and to
any amendment of the Agreement deemed necessary by counsel of the Depositor to
ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust Fund to
cease to qualify as a REMIC or cause the imposition of a tax upon the REMIC.
No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Servicer, the Trustee and the Certificate Registrar
and any agent of the Depositor, the Servicer, the Trustee or the Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Depositor, the Servicer,
the Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the
A-7-5
Trustee and required to be paid to them pursuant to the Agreement following
the earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund, and
(ii) the purchase by the party designated in the Agreement at a price
determined as provided in the Agreement from the Trust Fund of all the
Mortgage Loans and all property acquired in respect of such Mortgage Loans.
The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all the Mortgage Loans and all
property acquired in respect of any Mortgage Loan at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans and any REO
properties owned by the Trust at the time of purchase being less than 10% of
the sum of the aggregate Stated Principal Balance of the Mortgage Loans at the
Initial Cut-off Date plus the amount on deposit in the Pre-Funding Account on
the Closing Date.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-7-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: January __, 2002
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:________________________________
Authorized Signatory
A-7-7
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right ____________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address: _______________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
A-7-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________
for the account of ________________________, account number __________________,
or, if mailed by check, to _____________________________
Applicable statements should be mailed to _________________________________
This information is provided by _______________________________________, the
assignee named above, or ________________________________________, as its
agent.
X-0-0
XXXXXXX X-0
-----------
FORM OF CLASS B-IO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986 (THE "CODE").
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE. THIS CERTIFICATE IS SUBORDINATE TO
THE CLASS A CERTIFICATES, THE CLASS A-IO CERTIFICATES, THE CLASS M1
CERTIFICATES AND THE CLASS M2 CERTIFICATES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS 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 REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE.
A-8-1
Series 2002-HE1, Class B-IO Servicers:
Fairbanks Capital Corp. and Long
Pass-Through Rate: _____% Beach Mortgage Company
Date of Pooling and Servicing Agreement: Trustee: U.S. Bank N.A.
January 1, 2002.
Issue Date: January 30, 2001
First Distribution Date:
February 15, 2002
No. __
Aggregate Notional Amount of the Class B-IO Certificates
as of the Issue Date:
$___________
DISTRIBUTIONS IN REDUCTION OF THE NOTIONAL AMOUNT OF THIS CERTIFICATE MAY
BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE AGGREGATE NOTIONAL
AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
ASSET BACKED PASS THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family fixed-rate
and adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed
and sold by
ASSET BACKED SECURITIES CORPORATION
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN ASSET BACKED SECURITIES CORPORATION, THE SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY
ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Notional Amount of the Class B-IO Certificates as of the Issue
Date) in that certain beneficial ownership interest evidenced by all the Class
B-IO Certificates created pursuant to a Pooling and Servicing Agreement, dated
as specified above (the "Agreement"), among Asset Backed Securities Corporation
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Servicer, and the Trustee, a summary of certain of
the pertinent provisions
A-8-2
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 issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to the Holders of Class B-IO Certificates on such
Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing
at least five Business Days prior to the Record Date immediately prior to such
Distribution Date, or otherwise by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a
Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Notional Amount of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee and the rights of the Certificateholders
under the Agreement at any time by the Depositor, the Servicer, and the Trustee
with the consent of the Holders of Certificates entitled to at least 66% of the
Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
A-8-3
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No transfer of this Certificate shall be made unless the transfer is
made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of
the Certificate desiring to effect the transfer, and from such Holder's
prospective transferee, substantially in the forms attached to the Agreement as
Exhibit F-1, and (ii) in all other cases, an Opinion of Counsel satisfactory to
it that such transfer may be made without such registration or qualification
(which Opinion of Counsel shall not be an expense of the Trust Fund or of the
Depositor, the Trustee or the Servicer in their respective capacities as such),
together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. Neither the Depositor,
the Certificate Registrar or the Trustee is obligated to register or qualify
the Class of Certificates specified on the face hereof under the 1933 Act or
any other securities law or to take any action not otherwise required under the
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Certificate
Registrar 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 this Certificate to a Plan subject to ERISA or Section
4975 of the Code, any Person acting, directly or indirectly, on behalf of any
such Plan or any Person using "Plan Assets" to acquire this Certificate shall
be made except in accordance with Section 5.02(c) of the Agreement.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
A-8-4
The Depositor, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Servicer, the Trustee ,the Certificate Registrar nor any such agent shall be
affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all the Mortgage Loans and all property acquired in respect of such
Mortgage Loans. The Agreement permits, but does not require, the party
designated in the Agreement to purchase from the Trust Fund all the Mortgage
Loans and all property acquired in respect of any Mortgage Loan at a price
determined as provided in the Agreement. The exercise of such right will effect
early retirement of the Certificates; however, such right to purchase is
subject to the aggregate Stated Principal Balance of the Mortgage Loans and any
REO properties owned by the Trust at the time of purchase being less than 10%
of the sum of the aggregate Stated Principal Balance of the Mortgage Loans at
the Initial Cut-off Date plus the amount on deposit in the Pre-Funding Account
on the Closing Date.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement.
A-8-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: January __, 2002
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class B-IO Certificates referred to in the
within-mentioned Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar
By:_________________________________
Authorized Signatory
A-8-6
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
-----------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right ___________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass
Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address: _______________________.
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
A-8-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________
for the account of _______________________________, account number
________________________________, or, if mailed by check, to
__________________________.
Applicable statements should be mailed to ___________________________________.
This information is provided by ______________________________, the assignee
named above, or ________________________________________, as its agent.
A-8-8
EXHIBIT B
---------
[RESERVED]
B-1
EXHIBIT C-1
-----------
FORM OF TRUSTEE'S INITIAL CERTIFICATION
[Date]
-------------------------------------------------------------------------------
Asset Backed Securities Corporation Fairbanks Capital Corp.
Eleven Madison Avenue 0000 Xxxxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000
-------------------------------------------------------------------------------
Long Beach Mortgage Company
0000 Xxxx xxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
-------------------------------------------------------------------------------
Re: Pooling and Servicing Agreement, dated as of January 1, 2002,
among Asset Backed Securities Corporation, Fairbanks Capital
Corp., Long Beach Mortgage Company and U.S. Bank National
Association, Asset Backed Securities Corporation, Asset Backed
Pass-Through Certificates Series 2002-HE1
--------------------------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.02 of the Pooling and Servicing Agreement the
undersigned as Trustee hereby acknowledges receipt of each Mortgage File and
certifies that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Initial Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the exception report annexed hereto as not being
covered by this certification), (i) all documents constituting part of such
Mortgage File (other than such documents described in Section 2.01(a)(v) of the
Pooling and Servicing Agreement) required to be delivered to it pursuant to the
Pooling and Servicing Agreement are in its possession, (ii) such documents have
been reviewed by it and are not mutilated, torn or defaced unless initialed by
the related borrower and relate to such Initial Mortgage Loan and (iii) based
on its examination and only as to the foregoing, the information set forth in
the Mortgage Loan Schedule that corresponds to items (i) through (iii), (ix),
(x), (xiii), (xv) and (xvii) through (xx) of the definition of "Mortgage Loan
Schedule" of the Pooling and Servicing Agreement accurately reflects
information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
due authorization, recordability or genuineness of any of the documents
contained in the Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan.
C-1-1
U.S. BANK NATIONAL ASSOCIATION
By:__________________________________
Name:
Title:
C-1-2
EXHIBIT C-2
-----------
FORM OF TRUSTEE'S FINAL CERTIFICATION
[Date]
-------------------------------------------------------------------------------
Asset Backed Securities Corporation Fairbanks Capital Corp.
Eleven Madison Avenue 0000 Xxxxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000
-------------------------------------------------------------------------------
Long Beach Mortgage Company
0000 Xxxx xxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
-------------------------------------------------------------------------------
Re: Pooling and Servicing Agreement, dated as of January 1, 2002,
among Asset Backed Securities Corporation, Fairbanks Capital
Corp., Long Beach Mortgage Company and U.S. Bank National
Association, Asset Backed Securities Corporation, Asset Backed
Pass-Through Certificates Series 2002-HE1
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attachment hereto), it or a
Custodian on its behalf has received:
(b) the related electronic Mortgage Loan Schedule, if available;
(c) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of U.S. Bank National Association,
as Trustee under the applicable agreement, without recourse," with
all prior and intervening endorsements showing a complete chain of
endorsement from the originator to the Person so endorsing to the
Trustee or a copy of such original Mortgage Note with an accompanying
lost note affidavit executed by the Seller;
(d) the original Mortgage with evidence of recording thereon,
and a copy, certified by the appropriate recording office, of the
recorded power of attorney, if the Mortgage was executed pursuant to
a power of attorney, with evidence of recording thereon;
(e) an original Assignment of the Mortgage in blank;
C-2-1
(f) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the originator
to the Person assigning the Mortgage to the Trustee or as
contemplated by the preceding clause (4);
(g) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(h) the original lender's title insurance policy, if available,
together with all endorsements or riders which were issued with or
subsequent to the issuance of such policy, insuring the priority of
the Mortgage as a first lien on the Mortgaged Property represented
therein as a fee interest vested in the Mortgagor, or in the event
such original title policy is unavailable, a written commitment or
uniform binder or preliminary report of title issued by the title
insurance or escrow company, if available.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
U.S. BANK NATIONAL ASSOCIATION
By:_____________________________
Name:
Title:
C-2-2
EXHIBIT D
---------
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
[ON FILE AT THE OFFICES OF SIDLEY XXXXXX XXXXX & XXXX LLP]
D-1
EXHIBIT E-1
-----------
REQUEST FOR RELEASE
(for Trustee/Custodian)
Loan Information
----------------
Name of Mortgagor: ____________________________________
Servicer
Loan No.: ____________________________________
Trustee/Custodian
-----------------
Name: ____________________________________
Address: ____________________________________
____________________________________
Trustee/Custodian
Mortgage File No.: ____________________________________
Depositor
---------
Name: Asset Backed Securities Corporation
Address: ____________________________________
____________________________________
Certificates: Asset Backed Securities Corporation
Asset Backed Pass-Through
Certificates, Series 2002-HE1.
E-1-1
The undersigned Servicer hereby acknowledges that it has received from
_______________________, as Trustee for the Holders of Asset Backed Securities
Corporation Asset Backed Pass-Through Certificates, Series 2002-HE1, the
documents referred to below (the "Documents") with respect to the Mortgage
Loans serviced by it. All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement, dated as of January 1, 2002, among the Trustee, the
Depositor and the Servicers (the "Agreement").
(a) Promissory Note dated _______________, 20__, in the original principal
sum of $__________, made by _____________________, payable to, or
endorsed to the order of, the Trustee.
(b) Mortgage recorded on _________________________ as instrument no.
____________________ in the County Recorder's Office of the County of
_________________, State of __________________ in book/reel/docket
_________________ of official records at page/image _____________.
(c) Deed of Trust recorded on ___________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of ____________________ in book/reel/docket
_________________ of official records at page/image ______________.
(d) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________________ as instrument no. _________ in the County Recorder's
Office of the County of _______________, State of
_______________________ in book/reel/docket ____________ of official
records at page/image ____________.
(e) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
(f) _____________________________________________
(g) _____________________________________________
(h) _____________________________________________
(i) _____________________________________________
The undersigned Servicer hereby acknowledges and agrees as follows:
(1) The Servicer shall hold and retain possession of the Documents in
trust for the benefit of the Trustee, solely for the purposes provided in
the Agreement.
(2) The Servicer shall not cause or permit the Documents to become
subject to, or encumbered by, any claim, liens, security interest,
charges, writs of attachment or other impositions nor shall the Servicer
assert or seek to assert any claims or rights of setoff to or against the
Documents or any proceeds thereof.
E-1-2
(3) The Servicer shall return each and every Document previously
requested from the Mortgage File to the Trustee when the need therefor no
longer exists, unless the Mortgage Loan relating to the Documents has been
liquidated and the proceeds thereof have been remitted to the Collection
Account and except as expressly provided in the Agreement.
(4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Servicer shall at
all times be earmarked for the account of the Trustee, and the Servicer
shall keep the Documents and any proceeds separate and distinct from all
other property in the Servicer's possession, custody or control.
Dated:
[Fairbanks Capital Corp.][Long Beach Mortgage
Company]
By:_________________________________
Name:
Title:
E-1-3
EXHIBIT E-2
-----------
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICERS' CERTIFICATE AND TRUST RECEIPT
ASSET BACKED PASS-THROUGH CERTIFICATES
SERIES 2002-HE1
____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE SERVICER, HOLDING THE OFFICE SET FORTH BENEATH
HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER:_____________________ BORROWER'S
NAME:__________________
COUNTY:_______________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO
SECTION 3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
__________________________________ DATED:__________________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
E-2-1
EXHIBIT F-1
-----------
FORM OF TRANSFEROR REPRESENTATION LETTER
[Date]
U.S. Bank National Association
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Re: Asset Backed Securities Corporation,
Asset Backed Pass-Through Certificates, Series 2002-HE1,
Class ___, representing a ___% Class ___ Percentage Interest
--------------------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ________________ (the "Transferor") to
________________ (the "Transferee") of the captioned Asset Backed Pass-Through
Certificates (the "Certificates"), the Transferor hereby certifies as follows:
Neither the Transferor nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited 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) has otherwise
approached or negotiated with respect to any Certificate, any interest in any
Certificate or any other similar security with any person in any manner, (d)
has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
January 1, 2002, among Asset Backed Securities Corporation as Depositor,
Fairbanks Capital Corp. as a Servicer, Long Beach Mortgage Company, as a
Servicer and U.S. Bank National Association, as Trustee (the "Pooling and
Servicing Agreement"), pursuant to which the Certificates were issued.
Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.
Very truly yours,
F-1-1
[Transferor]
By:_________________________________
Name:
Title:
F-1-2
FORM OF TRANSFEREE REPRESENTATION LETTER
[Date]
U.S. Bank National Association
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Re: Asset Backed Securities Corporation,
Asset Backed Pass-Through Certificates, Series 2002-HE1,
Class ___, representing a ___% Class ___ Percentage Interest
----------------------------------------------------------------
Ladies and Gentlemen:
In connection with the purchase from ______________________ (the
"Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as
follows:
1. The Transferee is a "qualified institutional buyer" as that term
is defined in Rule 144A ("Rule 144A") under the Securities Act of 1933
(the "1933 Act") and has completed either of the forms of certification to
that effect attached hereto as Annex 1 or Annex 2. The Transferee is aware
that the sale to it is being made in reliance on Rule 144A. The Transferee
is acquiring the Certificates for its own account or for the account of a
qualified institutional buyer, and understands that such Certificate may
be resold, pledged or transferred only (i) to a person reasonably believed
to be a qualified institutional buyer that purchases for its own account
or for the account of a qualified institutional buyer to whom notice is
given that the resale, pledge or transfer is being made in reliance on
Rule 144A, or (ii) pursuant to another exemption from registration under
the 1933 Act.
2. The Transferee has been furnished with all information regarding
(a) the Certificates and distributions thereon, (b) the nature,
performance and servicing of the Mortgage Loans, (c) the Pooling and
Servicing Agreement referred to below, and (d) any credit enhancement
mechanism associated with the Certificates, that it has requested.
F-1-3
All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing
Agreement, dated as of January 1, 2002, among Asset Backed Securities
Corporation, as Depositor, Fairbanks Capital Corp., as a Servicer, Long
Beach Mortgage Company, as a Servicer and U.S. Bank National Association,
as Trustee, pursuant to which the Certificates were issued.
[TRANSFEREE]
By:________________________________
Name:
Title:
F-1-4
ANNEX 1 TO EXHIBIT F-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
---------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and U.S. Bank National Association, as Trustee, with respect to
the Asset Backed Pass-Through Certificates (the "Certificates") described in
the Transferee Certificate to which this certification relates and to which
this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").
2. In connection with purchases by the Transferee, the Transferee is
a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933 ("Rule 144A") because (i) the Transferee owned
and/or invested on a discretionary basis $______________________ in securities
(except for the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in
the category marked below.
___ Corporation, etc. The Transferee is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
___ Bank. The Transferee (a) is a national bank or banking institution
organized under the laws of any State, territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision
over any such institutions or is a foreign savings and loan
association or equivalent institution and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached hereto.
___ Broker-dealer. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Transferee 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
F-1-5
insurance commissioner or a similar official or agency of a State,
territory or the District of Columbia.
___ State or Local Plan. The Transferee 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 Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act
of 1974.
___ Investment Advisor. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee 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 Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the
Transferee is not itself a reporting company under the Securities Exchange Act
of 1934.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor 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 Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Certificates
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", the Transferee
agrees that, in connection with any purchase of securities sold to the
Transferee for the account of a third party (including any separate account) in
reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.
7. The Transferee 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 Transferee's purchase of the Certificates will
constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties
updated annual financial statements promptly after they become available.
Dated:
___________________________________________
F-1-6
Print Name of Transferee
By:________________________________________
Name:
Title:
F-1-7
ANNEX 2 TO EXHIBIT F-1
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and U.S. Bank National Association, as Trustee, with respect to
the Asset Backed Pass-Through Certificates (the "Certificates") described in
the Transferee Certificate to which this certification relates and to which
this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").
2. In connection with purchases by the Transferee, the Transferee is
a "qualified institutional buyer" as defined in Rule 144A because (i) the
Transferee is an investment company registered under the Investment Company Act
of 1940, and (ii) as marked below, the Transferee alone, or the Transferee'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
Transferee's most recent fiscal year. For purposes of determining the amount of
securities owned by the Transferee or the Transferee's Family of Investment
Companies, the cost of such securities was used.
____ The Transferee owned $___________________ in securities (other
than the excluded securities referred to below) as of the end of
the Transferee's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Transferee 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
Transferee'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 Transferee or are part of
the Transferee'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 Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will continue
to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
F-1-8
6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
Dated:
___________________________________________
Print Name of Transferee
By:________________________________________
Name:
Title:
IF AN ADVISER:
___________________________________________
Print Name of Transferee
F-1-9
FORM OF TRANSFEREE REPRESENTATION LETTER
The undersigned hereby certifies on behalf of the purchaser named
below (the "Purchaser") as follows:
1. I am an executive officer of the Purchaser.
2. The Purchaser is a "qualified institutional buyer", as defined in
Rule 144A, ("Rule 144A") under the Securities Act of 1933, as amended.
3. As of the date specified below (which is not earlier than the last
day of the Purchaser's most recent fiscal year), the amount of
"securities", computed for purposes of Rule 144A, owned and invested on a
discretionary basis by the Purchaser was in excess of $100,000,000.
Name of Purchaser
By: (Signature)
Name of Signatory
Title
Date of this certificate
Date of information provided in paragraph 3
F-1-10
EXHIBIT F-2
-----------
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
____________________________________, being duly sworn, deposes,
represents and warrants as follows:
1. I am a ______________________ of ____________________________ (the
"Owner") a corporation duly organized and existing under the laws of
______________, the record owner of Asset Backed Securities Corporation, Home
Equity Loan Trust 2002-HE1 Asset Backed Pass-Through Certificates, Series
2002-HE1, Class R (the "Class R Certificates"), on behalf of whom I make this
affidavit and agreement. Capitalized terms used but not defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement
pursuant to which the Class R Certificates were issued.
2. The Owner (i) is and will be a "Permitted Transferee" as of
____________________, 20___ and (ii) is acquiring the Class R Certificates for
its own account or for the account of another Owner from which it has received
an affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
possession of the United States. For this purpose, a "disqualified
organization" means the United States, any state or political subdivision
thereof, any agency or instrumentality of any of the foregoing (other than an
instrumentality all of the activities of which are subject to tax and, except
for the Federal Home Loan Mortgage Corporation, a majority of whose board of
directors is not selected by any such governmental entity) or any foreign
government, international organization or any agency or instrumentality of such
foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives)
that is generally exempt from federal income tax unless such organization is
subject to the tax on unrelated business taxable income.
3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after March 31, 1988; (ii) that such tax would be on the
transferor or, if such transfer is through an agent (which person includes a
broker, nominee or middleman) for a non-Permitted Transferee, on the agent;
(iii) that the person otherwise liable for the tax shall be relieved of
liability for the tax if the transferee furnishes to such person an affidavit
that the transferee is a Permitted Transferee and, at the time of transfer,
such person does not have actual knowledge that the affidavit is false; and
(iv) that each of the Class R Certificates may be a "noneconomic residual
interest" within the meaning of proposed Treasury regulations promulgated under
the Code and that the transferor of a "noneconomic residual interest" will
remain liable for any taxes due with respect to the income on such residual
interest, unless no significant purpose of the transfer is to impede the
assessment or collection of tax.
F-2-1
In accordance with Revenue Procedure 2001-12, I.R.B. 2001-2 (December
8, 2000), the Transferee represents and warrants that one of the following
applies:
(i) the consideration paid to the Transferee for accepting the Class
R Certificates is greater than the present value of the anticipated
net federal income taxes and tax benefits ("Tax Liability Present
Value") associated with owning such Certificates, with such present
value computed using a discount rate equal to the "applicable federal
rate" prescribed by Section 1274 of the Internal Revenue Code as of
the date hereof (with all applicable computations done in accordance
with Rev. Proc. 2001-12) or, to the extent it is not, if the
Transferee has asserted that it regularly borrows, in the ordinary
course of its trade or business, substantial funds from unrelated
third parties at a lower interest rate than such applicable federal
rate and the consideration paid to the Transferee is greater than the
Tax Liability Present Value using such lower interest rate as the
discount rate, the transactions with the unrelated third party
lenders, the interest rate or rates, the date or dates of such
transactions, and the maturity dates or, in the case of adjustable
rate debt instruments, the relevant adjustment dates or periods, with
respect to such borrowings, are accurately stated in Exhibit A to
this letter; or
(ii) the Transferee (A) is an "eligible corporation" as defined in
Section 860L(a)(2) of the Internal Revenue Code, as to which the
income of Class R Certificates will only be subject to taxation in
the United States, (B) has, and has had in each of its two preceding
fiscal years, gross assets for financial reporting purposes
(excluding any obligation of a person related to the transferee
within the meaning of Section 860L of the Internal Revenue Code) in
excess of $100 million and net assets of $10 million, and (C) hereby
agrees only to transfer the Certificate to another corporation
meeting the criteria set forth in this letter.
4. The Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificates if, at any time during the taxable year of the
pass-through entity, a non-Permitted Transferee is the record holder of an
interest in such entity. (For this purpose, a "pass-through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)
5. The Owner is aware that the Trustee will not register the transfer
of any Class R Certificate unless the transferee, or the transferee's agent,
delivers to the Trustee, among other things, an affidavit in substantially the
same form as this affidavit. The Owner expressly agrees that it will not
consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.
6. The Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to constitute a
reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is a Permitted Transferee.
7. The Owner's taxpayer identification number is ___________________.
8. The Owner has reviewed the restrictions set forth on the face of
the Class R Certificates and the provisions of Section 5.02(d) of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (in
particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize
the Trustee to deliver payments to a person other than the Owner and negotiate
a mandatory sale by the Trustee in the event that the Owner holds such
F-2-2
Certificate in violation of Section 5.02(d)); and that the Owner expressly
agrees to be bound by and to comply with such restrictions and provisions.
9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of any tax.
10. The Owner anticipates that it will, so long as it holds the Class
R Certificates, have sufficient assets to pay any taxes owed by the holder of
such Class R Certificates, and hereby represents to and for the benefit of the
person from whom it acquired the Class R Certificates that the Owner intends to
pay taxes associated with holding such Class R Certificates as they become due,
fully understanding that it may incur tax liabilities in excess of any cash
flows generated by the Class R Certificates.
11. The Owner has no present knowledge that it may become insolvent
or subject to a bankruptcy proceeding for so long as it holds the Class R
Certificates.
12. The Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.
13. The Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or entity that will
not have sufficient assets to pay any taxes owed by the holder of such Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.
14. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, obtain from its transferee the representations
required by Section 5.02(d) of the Pooling and Servicing Agreement under which
the Class R Certificate were issued and will not consummate any such transfer
if it knows, or knows facts that should lead it to believe, that any such
representations are false.
15. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, deliver to the Trustee an affidavit, which represents
and warrants that it is not transferring the Class R Certificates to impede the
assessment or collection of any tax and that it has no actual knowledge that
the proposed transferee: (i) has insufficient assets to pay any taxes owed by
such transferee as holder of the Class R Certificates; (ii) may become
insolvent or subject to a bankruptcy proceeding for so long as the Class R
Certificates remains outstanding; and (iii) is not a "Permitted Transferee".
16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
or trust whose income from sources without the United States may be included 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.
17. The Owner of the Class R Certificate, hereby agrees that in the
event that the Trust Fund created by the Pooling and Servicing Agreement is
terminated pursuant to Section 9.01 thereof, the undersigned shall assign and
transfer to the Holders of the Class X Certificates any amounts in excess of
par received in connection with such termination. Accordingly, in the
F-2-3
event of such termination, the Trustee is hereby authorized to withhold any
such amounts in excess of par and to pay such amounts directly to the Holders
of the Class X Certificates. This agreement shall bind and be enforceable
against any successor, transferee or assigned of the undersigned in the Class R
Certificate. In connection with any transfer of the Class R Certificate, the
Owner shall obtain an agreement substantially similar to this clause from any
subsequent owner.
18. The Owner 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 other retirement arrangement, including individual retirement
accounts and annuities, Xxxxx plans and bank collective investment funds and
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that is subject to Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 (the "Code") (any of the foregoing, a
"Plan"), and is not acquiring the Class R Certificates with "plan assets" of a
Plan within the meaning of the Department of Labor ("DOL") regulation, 29
C.F.R. ss. 2510.3-101.
F-2-4
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its [Vice]
President, attested by its [Assistant] Secretary, this ____ day of __________,
20__.
[OWNER]
By:____________________________________
Name:
Title: [Vice] President
ATTEST:
By:_________________________________
Name:
Title: [Assistant] Secretary
Personally appeared before me the above-named , known or proved to me to
be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of __________, 20__.
_____________________________________
Notary Public
County of _____________________
State of __________________
My Commission expires:
F-2-5
FORM OF TRANSFEROR AFFIDAVIT
STATE OF NEW YORK )
: ss. :
COUNTY OF NEW YORK )
______________________________________, being duly sworn, deposes,
represents and warrants as follows:
1. I am a ____________________ of _____________________________ (the
"Owner"), a corporation duly organized and existing under the laws of
______________, on behalf of whom I make this affidavit.
2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.
3. The Owner has no actual knowledge that the Person that is the
proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.
4. The Owner understands that the Purchaser has delivered to the
Trustee a transfer affidavit and agreement in the form attached to the Pooling
and Servicing Agreement as Exhibit F-2. The Owner does not know or believe that
any representation contained therein is false.
5. At the time of transfer, the Owner has conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Owner has determined that the Purchaser has historically
paid its debts as they became due and has found no significant evidence to
indicate that the Purchaser will not continue to pay its debts as they become
due in the future. The Owner understands that the transfer of a Residual
Certificate may not be respected for United States income tax purposes (and the
Owner may continue to be liable for United States income taxes associated
therewith) unless the Owner has conducted such an investigation.
6. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
F-2-6
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, pursuant to the authority of its Board of Directors, by its [Vice]
President, attested by its [Assistant] Secretary, this ____ day of ___________,
20__.
[OWNER]
By:_____________________________________
Name:
Title: [Vice] President
ATTEST:
By:___________________________________
Name:
Title: [Assistant] Secretary
Personally appeared before me the above-named , known or proved to me to
be the same person who executed the foregoing instrument and to be a [Vice]
President of the Owner, and acknowledged to me that [he/she] executed the same
as [his/her] free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of __________, 20__.
_______________________________________
Notary Public
County of _______________________
State of __________________
My Commission expires:
F-2-7
EXHIBIT G
---------
FORM OF CERTIFICATION WITH RESPECT TO ERISA AND THE CODE
_____________, 20__.
-------------------------------------------------------------------------------
Asset Backed Securities Corporation Fairbanks Capital Corp.
Eleven Madison Avenue 0000 Xxxxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000
-------------------------------------------------------------------------------
U.S. Bank National Association Long Beach Mortgage Company
000 Xxxx Xxxxx Xxxxxx 0000 Xxxx and Xxxxxxx Xxxx
Xx. Xxxx, Xxxxxxxxx 00000 Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
-------------------------------------------------------------------------------
Re: Asset Backed Securities Corporation
Asset Backed Pass Through Certificates,
Series 2002-HE1, Class [M1] [M2] [B]
------------------------------------
Dear Sirs:
__________________________________ (the "Transferee") intends to acquire
from _____________________ (the "Transferor") $____________ Initial Certificate
Principal Balance of Asset Backed Securities Corporation, Long Beach Asset
Backed Pass-Through Certificates, Series 2002-HE1, Class [M1], [M2], [B], (the
"Certificates"), issued pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of January 1, 2002 among Asset
Backed Securities Corporation, as depositor (the "Depositor"), Fairbanks
Capital Corp., as a servicer ("Fairbanks"), Long Beach Mortgage Company, as a
servicer ("Long Beach" and, together with Fairbanks, the "Servicers"), and U.S.
Bank National Association, as trustee (the "Trustee"). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned thereto in
the Pooling and Servicing Agreement. The Transferee hereby certifies,
represents and warrants to, and covenants with the Depositor, the Trustee, and
the Servicers that the following statements in either (1) or (2) or (3) are
accurate:
_____ (1) The Certificates (i) are not being acquired by, and will not be
transferred to, any employee benefit plan within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or other retirement arrangement, including individual
retirement accounts and annuities, Xxxxx plans and bank collective
investment funds and insurance company general or separate accounts in
which such plans, accounts or arrangements are invested, that is subject
to Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986 (the "Code") (any of the foregoing, a "Plan"), (ii) are not being
acquired with "plan assets" of a Plan within the meaning of the Department
of Labor ("DOL") regulation, 29 C.F.R. ss. 2510.3-101, and (iii) will not
be transferred to any entity that is deemed to be investing plan assets
within the meaning of the DOL regulation at 29 C.F.R. ss. 2510.3-101; or
G-1
_____ (2) The Certificates are being acquired with the understanding that
this acquisition is conditioned upon such Certificates being rated at
least "BBB-" at that time; or
G-2
_____ (3) The source of funds used to purchase such Certificates is an
"insurance company general account" (as such term is defined in PTCE
95-60), and the conditions set forth in Sections I and III of PTCE 95-60
have been satisfied.
Very truly yours,
_______________________________________
By:___________________________
Name:
Title:
G-3
EXHIBIT H
FORM OF SUBSEQUENT TRANSFER AGREEMENT
THIS SUBSEQUENT TRANSFER AGREEMENT, dated as of [_____], 2002 (this
"Subsequent Transfer Agreement"), among ASSET BACKED SECURITIES CORPORATION, a
Delaware corporation, as depositor (the "Depositor"), CREDIT SUISSE FIRST
BOSTON MORTGAGE CAPITAL LLC, a Delaware corporation, as seller (the "Seller"),
FAIRBANKS CAPITAL CORP., a Utah corporation, as servicer (the "Servicer") and
U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (the
"Trustee");
WHEREAS, the parties hereto are also among the parties to the Pooling and
Servicing Agreement dated as of January 1, 2002 specified above (the "Pooling
and Servicing Agreement") among the Depositor, Fairbanks Capital Corp., as a
servicer ("Fairbanks"), Long Beach Mortgage Company, as a servicer ("Long
Beach") and the Trustee in relation to the ABSC Series 2002-HE1, Asset Backed
Pass-Through Certificates, Series 2002-HE1;
WHEREAS, Sections 2.01(c) of the Pooling and Servicing Agreement provides
for the parties hereto to enter into this Subsequent Transfer Agreement in
accordance with the terms and conditions of the Pooling and Servicing
Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged the parties hereto agree as follows:
(a) The "Subsequent Transfer Date" and "Subsequent Cut-off Date"
with respect to this Subsequent Transfer Agreement shall be
[__________], 2002.
(b) The "Aggregate Subsequent Transfer Amount" with respect to this
Subsequent Transfer Agreement shall be $[___________], provided,
however, that such amount shall not exceed the amount on deposit in
the Pre-Funding Account.
(c) The Subsequent Mortgage Loans conveyed on the Subsequent
Transfer Date shall satisfy the pool characteristics for the Trust
Fund identified in Section 2.01(c) of the Pooling and Servicing
Agreement.
(d) In case any provision of this Subsequent Transfer Agreement
shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions or obligations shall
not in any way be affected or impaired thereby.
(e) In the event of any conflict between the provisions of this
Subsequent Transfer Agreement and the Pooling and Servicing
Agreement, the provisions of the Pooling and Servicing Agreement
shall prevail. Capitalized terms used herein
H-1
and not otherwise defined have the meanings in the Pooling and
Servicing Agreement.
(f) The Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all right
title and interest in the Subsequent Mortgage Loans identified in
Schedule A, including all interest and principal due on or with
respect to such Subsequent Mortgage Loans on or after the Subsequent
Cut-off Date and all interest and principal payments on such
Subsequent Mortgage Loans received prior to the Subsequent Cut-off
Date in respect of installments of interest and principal due
thereafter, but not including principal and interest due on such
Subsequent Mortgage Loans prior to the Subsequent Cut-off Date, any
insurance policies in respect of such Subsequent Mortgage Loans and
all proceeds of any of the foregoing.
(vi) The Servicer hereby agrees to service the Subsequent Mortgage Loans
in accordance with the terms and conditions set forth in the Pooling
and Servicing Agreement.
(g) This Subsequent Transfer Agreement shall be governed by, and
shall be construed and enforced in accordance with the laws of the
State of New York.
(h) This Subsequent Transfer Agreement may be executed in one or
more counterparts each of which so executed and delivered shall de
deemed an original, but all such counterparts together shall
constitute but one and the same instrument.
H-2
IN WITNESS WHEREOF, the parties to this Subsequent Transfer Agreement have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
ASSET BACKED SECURITIES CORPORATION,
as Depositor
By: _______________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON MORTGAGE
CAPITAL LLC,
as Seller
By: _______________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Trustee
By: _______________________________________
Name:
Title:
FAIRBANKS CAPITAL CORP.,
as Servicer
By: _______________________________________
Name:
Title:
H-3
EXHIBIT I
LETTER AGREEMENT
January 28, 2002
U.S. Bank, National Association, as Trustee
Corporate Trust Services
U.S. Bank Trust Center
EP-MN-T2CT
000 Xxxx 0xx Xxxxxx
Xx. Xxxx, XX 00000
Ladies and Gentlemen:
Reference is made to a Pooling and Servicing Agreement (the "Agreement"),
dated as of January 1, 2002, among Asset Backed Securities Corporation, as
Depositor, Fairbanks Capital Corporation, as Servicer, Long Beach Mortgage
Company ("Long Beach"), as Servicer, and U.S. Bank National Association, as
Trustee (the "Trustee"). Capitalized terms used but not defined herein shall
have the respective meanings assigned thereto in the Agreement. All references
to Long Beach herein are references to Long Beach in its capacity as the
Originator of the Long Beach Serviced Loans under the Agreement, and not as the
Servicer thereof.
With respect to the Long Beach Serviced Loans, Long Beach hereby makes the
representations and warranties contained in Schedule A hereto as of December
22, 1998 to and for the benefit of the Trustee. In addition, Long Beach hereby
represents and warrants to and for the benefit of the Trustee as of the
December 22, 1998 that (i) no Long Beach Serviced Loan was subject to the Home
Ownership and Equity Protection Act of 1994 or any comparable state law, (ii)
no proceeds from any Long Beach Serviced Loan were used to finance
single-premium credit insurance, and (iii) no Long Beach Serviced Loan under
the terms of this Agreement will impose a prepayment premium for a term in
excess of five years. In the event of a breach of one of these representations
and warranties, Long Beach hereby agrees that it shall abide by the repurchase
and substitution provisions set forth in Section 2.03 of the Agreement as if
fully set forth at length herein.
If notified by the Trustee or Credit Suisse First Boston Mortgage Capital
LLC ("CSFBMC") that any document in the Mortgage File relating to a Long Beach
Serviced Loan is missing or defective, in any material respect and such defect
existed, or such document was missing, on or prior to December 22, 1998, Long
Beach shall deliver such missing document or cure such defect as required by
Section 2.03 of the Agreement. If Long Beach does not deliver such missing
document or cure such defect in all material respects during such period, Long
Beach shall repurchase such Long Beach Serviced Loan from the Trust Fund at the
Purchase Price. In connection with any such purchase of a Long Beach Serviced
Loan, Long Beach shall follow the procedure set forth in Section 2.03 of the
Agreement. If such defect existed, or such document was missing, after December
22, 1998, CSFBMC shall have the obligations pursuant to this paragraph to cure
or purchase such Long Beach Serviced Loan.
I-1
CSFBMC hereby represents and warrants to and for the benefit of the
Trustee as of the date hereof, that nothing has occurred since December 22,
1998 to cause any of the representations and warranties on Schedule A to this
letter (other than representation and warranty (iv) set forth in such Schedule
A) and the additional representations and warranties made by Long Beach set
forth in the second paragraph above to be untrue as of the date hereof with
respect to the Long Beach Serviced Loans. CSFBMC hereby agrees that, in the
event that there is a breach of the representation in the preceding sentence,
CSFBMC shall abide by the repurchase and substitution provisions set forth in
Section 2.03 of the Agreement as if fully set forth at length herein.
I-2
Please acknowledge your acceptance and agreement to the foregoing by
signing and returning the enclosed copy of this letter agreement to us.
Very truly yours,
LONG BEACH MORTGAGE COMPANY
By: _______________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON MORTGAGE
CAPITAL LLC
By: _______________________________________
Name:
Title:
Agreed to and accepted:
U.S. BANK NATIONAL ASSOCIATION
By: ________________________________
Name:
Title:
I-3
Schedule A
----------
Representations and Warranties
Capitalized terms used in this letter but not defined in this Schedule A
or in this letter shall have the meanings ascribed thereto in the Agreement.
The following representations and warranties are only applicable to the Long
Beach Serviced Loans.
1. The information set forth on the Mortgage Loan Schedule with respect to
each Long Beach Serviced Loan is true and correct in all material
respects;
2. Each related Mortgage is a valid and enforceable first lien on the related
Mortgaged Property, including all improvements thereon, subject only to
(a) the lien of nondelinquent current real property taxes and assessments,
(b) covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such
Mortgage, such exceptions appearing of record being acceptable to mortgage
lending institutions generally or specifically reflected in the appraisal
made in connection with the origination of the related Long Beach Serviced
Loan, and (c) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by such Mortgage;
3. Immediately prior to the assignment of the Long Beach Serviced Loans to
CSFBMC pursuant to a purchase agreement, dated as of September 1, 1998,
between the CSFBMC and Long Beach, Long Beach had good title to, and was
the sole legal and beneficial owner of, each Long Beach Serviced Loan free
and clear of any pledge, lien, encumbrance or security interest and has
full right and authority, subject to no interest or participation of, or
agreement with, any other party to sell and assign the same;
4. To the best of Long Beach's knowledge, there is no delinquent tax or
assessment lien against any related Mortgaged Property;
5. There is no valid offset, defense or counterclaim to any related Mortgage
Note or Mortgage, including the obligation of the Mortgagor to pay the
unpaid principal of or interest on such Mortgage Note, nor will the
operation of any of the terms of the Mortgage Note and the Mortgage, or
the exercise of any right thereunder, render the Mortgage unenforceable,
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury and no such right
of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
6. To the best of Long Beach's knowledge, there are no mechanics' liens or
claims for work, labor or material affecting any related Mortgaged
Property which are or may be a lien prior to, or equal with, the lien of
the related Mortgage, except those which are insured against by the title
insurance policy referred to in (x) below;
7. To the best of Long Beach's knowledge, each Mortgaged Property is free of
material damage and is in average repair;
8. Each Long Beach Serviced Loan at origination complied in all material
respect with applicable local, state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and consummation of the
transactions contemplated hereby will not involve the violation of any
such laws;
9. Neither Long Beach nor any prior holder of any related Mortgage has
modified such Mortgage in any material respect (except that a Long Beach
Serviced Loan may have been modified by a written instrument which has
been recorded, if necessary, to protect the interests of the Trustee and
which has been delivered to the Trustee); satisfied, cancelled or
subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or
satisfaction with respect thereto;
I-4
10. A lender's policy of title insurance together with a condominium
endorsement and extended coverage endorsement, if applicable, and an
adjustable rate mortgage endorsement in an amount at least equal to the
principal balance of each Long Beach Serviced Loan as of December 1, 1998,
or a commitment (binder) to issue the same was effective on the date of
the origination of each Long Beach Serviced Loan, each such policy is
valid and remains in full force and effect, the transfer of the related
Long Beach Serviced Loan to CSFBMC has not affected the validity or
enforceability of such policy and each such policy was issued by a title
insurer qualified to do business in the jurisdiction where the Mortgaged
Property is located and insures Long Beach and successor owners of
indebtedness secured by the insured Mortgage, as to the first priority
lien of the Mortgage; to the best of Long Beach's knowledge, no claims
have been made under such mortgage title insurance policy and no prior
holder of the related Mortgage, including Long Beach, has done, by act or
omission, anything which would impair the coverage of such mortgage title
insurance policy;
11. Each Long Beach Serviced Loan was originated by Long Beach or by a savings
and loan association, savings bank, commercial bank, credit union,
insurance company or similar institution which is supervised and examined
by a federal or state authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and
211 of the National Housing Act and, if originated on behalf of Long Beach
by a Person other than Long Beach, is subject to the same standards and
procedures used by Long Beach in originating mortgage loans directly;
12. With respect to each Long Beach Serviced Loan on each Adjustment Date, if
any, the Mortgage Rate will be adjusted to equal LIBOR plus the margin,
rounded to the nearest 0.125%, subject to the periodic rate cap, the
Maximum Mortgage Rate and the Minimum Mortgage Rate. The related Mortgage
Note is payable on the first day of each month in self-amortizing monthly
installments of principal and interest, with interest payable in arrears,
and requires a Monthly Payment which is sufficient to fully amortize the
outstanding principal balance of the Long Beach Serviced Loan over its
remaining term and to pay interest at the applicable Mortgage Rate. No
Long Beach Serviced Loan is subject to negative amortization. All rate
adjustments have been performed in accordance with the terms of the
related Mortgage Note or subsequent modifications, if any;
13. To the best of Long Beach's knowledge, all of the improvements which were
included for the purpose of determining the appraised value of the related
Mortgaged Property lie wholly within the boundaries and building
restrictions lines of such property, and no improvements on adjoining
properties encroach upon the Mortgaged Property;
14. All inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of the related Mortgaged Property
and, with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied
under applicable law;
15. All parties which have had any interest in the related Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with
any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located;
16. The Mortgage Note and the related Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms and with applicable laws. All parties to the
Mortgage Note and the Mortgage had legal capacity to execute the Mortgage
Note and the Mortgage and each Note and Mortgage have been duly and
properly executed by such parties;
17. With the exception of the Hold-back Loans (as defined below), the proceeds
of each Long Beach Serviced Loan have been fully disbursed, there is no
requirement for further advances thereunder and any and all requirements
as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, closing or recording the Long
Beach Serviced Loans were paid. A "Hold-back Loan" means a Long Beach
Serviced Loan with respect to which a portion of the loan proceeds are
held back from the Mortgagor until required repairs or improvements on the
Mortgaged Property are completed;
I-5
18. The related Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial foreclosure.
There is no homestead or other exemption available to the Mortgagor which
would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
19. 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 Trustee to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
20. Reserved;
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 Long Beach have been capitalized under the
Mortgage or the related Mortgage Note;
22. The origination, underwriting and collection practices used by Long Beach
with respect to each Long Beach Serviced Loan have been in all respects
legal, proper, prudent and customary in the mortgage servicing business;
23. There is no pledged account or other security other than real estate
securing the Mortgagor's obligations;
24. No Long Beach Serviced Loan has a shared appreciation feature, or other
contingent interest feature;
25. No Long Beach Serviced Loan provides for primary mortgage insurance;
26. The improvements upon each Mortgaged Property are covered by a valid and
existing hazard insurance policy with a generally acceptable carrier that
provides for fire extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located representing
coverage not less than the lesser of the outstanding principal balance of
the related Long Beach Serviced Loan or the minimum amount required to
compensate for damage or loss on a replacement cost basis. All individual
insurance policies and flood policies referred to in clause (xxvii) below
contain a standard mortgagee clause naming Long Beach or the original
mortgagee, and its successors in interest, as mortgagee, and Long Beach
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;
27. If the related 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 outstanding principal balance of the Long Beach Serviced 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;
28. There is no default, breach, violation or event of acceleration existing
under the Mortgage or the related Mortgage Note; and Long Beach has not
waived any default, breach, violation or event of acceleration;
29. Each related Mortgaged Property is improved by a one- to four-family
residential dwelling, including condominium units and dwelling units in
planned unit developments, which, to the best of Long Beach's knowledge,
does not include cooperatives or mobile homes and does not constitute
other than real property under state law; and the Mortgaged Property is
either a fee simple estate or a long-term residential lease;
I-6
30. If the Long Beach Serviced Loan is secured by a long term residential
lease, (1) the lessor under the lease holds a fee simple interest in the
land; (2) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's consent
and the acquisition by the holder of the Mortgage of the rights of the
lessee upon foreclosure or assignment in lieu of foreclosure or provide
the holder of the Mortgage with substantially similar protections; (3) the
terms of such lease do not (a) allow the termination thereof upon the
lessee's default without the holder of the Mortgage being entitled to
receive written notice of, and opportunity to cure, such default, (b)
allow the termination of the lease in the event of damage or destruction
as long as the Mortgage is in existence, (c) prohibit the holder of the
Mortgage from being insured (or receiving proceeds of insurance) under the
hazard insurance policy or policies relating to the Mortgaged Property or
(d) permit any increase in rent other than pre established increases set
forth in the lease; (4) the original term of such lease is not less than
15 years; (5) the term of such lease does not terminate earlier than five
years after the maturity date of the Mortgage Note; and (6) the Mortgaged
Property is located in a jurisdiction in which the use of leasehold
estates in transferring ownership in residential properties is a widely
accepted practice;
31. Reserved;
32. There is no obligation on the part of Long Beach or any other party under
the terms of the related Mortgage or related Mortgage Note to make
payments in addition to those made by the Mortgagor;
33. Any future advances made prior to December 1, 1998, have been consolidated
with the outstanding principal amount secured by the Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the Mortgage Loan Schedule. The
consolidated principal amount does not exceed the original principal
amount of the Long Beach Serviced Loan;
34. Each Long Beach Serviced Loan was underwritten in accordance with Long
Beach's underwriting guidelines as described in the prospectus supplement
of Asset Backed Securities Corporation dated as of January 25, 2002,
relating to the Asset Backed Securities Corporation Home Equity Loan
Trust 2002-HE1;
35. The Mortgage File contains an appraisal which was performed by an
appraiser who satisfied, and which was conducted in accordance with, all
of the applicable requirements of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended;
36. None of the Long Beach Serviced Loans is a graduated payment Mortgage
Loan, nor is any Long Beach Serviced Loan subject to a temporary buydown
or similar arrangement;
37. With respect to each Long Beach Serviced Loan, no loan junior in lien
priority to such Long Beach Serviced Loan and secured by the related
Mortgaged Property was originated by Long Beach at the time of origination
of such Long Beach Serviced Loan;
38. Reserved;
39. The Mortgage contains an enforceable provision for the acceleration of the
payment of the unpaid principal balance of the Long Beach Serviced Loan in
the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder;
40. Long Beach has not advanced funds, or induced, solicited or knowingly
received any advance of funds by a party other than the mortgagor,
directly or indirectly, for the payment of any amount required under the
Long Beach Serviced Loan;
41. There is no proceeding pending, or to the best of Long Beach's knowledge
threatened, for the total or partial condemnation of the related Mortgaged
Property or the taking by eminent domain of any Mortgaged Property
securing a Long Beach Serviced Loan;
I-7
42. None of the Long Beach Serviced Loans are classified as "high cost" loans
under Section 32 of the Home Ownership and Equity Protection Act of 1994;
43. With respect to any Long Beach Serviced Loan which is a Long Beach
Serviced Loan originated in the State of Texas, any and all applicable
requirements of Section 50, Article XVI of the Texas Constitution which
were in effect at the time of the originationof such Long Beach Serviced
Loan have been complied with. Specifically, without limiting the
generality of the foregoing,
1. all fees paid by the owner of the Mortgaged Property or such owner's
spouse, to any person, that were necessary to originate, evaluate,
maintain, record, insure or service the Long Beach Serviced Loan are
reflected in the closing statement for such Long Beach Serviced Loan;
2. the Long Beach Serviced Loan was closed only at the office of the
originating lender, an attorney at law, or a title company;
3. the originating lender has not been found by a federal regulatory
agency to have engaged in the practice of refusing to make loans
because the applicants for the loans reside or the Mortgaged Property
proposed to secure the loans is located in a certain area;
4. the owner of the Mortgaged Property was not required to apply the
proceeds of the Long Beach Serviced Loan to repay another debt except
debt secured by the Mortgaged Property or debt to a lender other than
the originating lender;
5. the owner of the Mortgaged Property did not sign any documents or
instruments relating to the Long Beach Serviced Loan in which blanks
were left to be filled in; and
6. if discussions between the originating lender and the borrower were
conducted primarily in a language other than English, the originating
lender provided to the owner of the Mortgaged Property, prior to
closing, a copy of the notice required by Section 50(g), Article XVI
of the Texas Constitution translated into the written language in
which the discussions were conducted;
44. The Loan-to-Value Ratio for each Long Beach Serviced Loan was no greater
than 90%, at the time of origination; and
45. The first date on which each Mortgagor was required to make a payment on
the related Long Beach Serviced Loan is no later than January 1, 1999.
I-8
EXHIBIT J
PERFORMANCE STANDARDS
Subject to the ramp-up time set forth in paragraph F below, the
following servicing performance standards (the "Performance Standards") shall
be applicable to the Servicer:
a. Outbound Calling and Collection Calls. As further described
below, in respect of Mortgage Loans for which foreclosure
actions have not been commenced, and for which Servicer has no
notice of litigation or pre-litigation claims, Servicer shall
make telephone calls to Mortgagors according to the following
schedule:
1. Welcome Calls. At least three attempts during the first
thirty (30) days following the Cut-Off Date.
2. Collection Calls, first 18 days of month. At least one
attempt every other Business Day at a 25% Right Party
Contact Rate.
3. Collection Calls, after the 18th day of the month. At least
two attempts every other Business Day at 25% Right Party
Contact Rate.
A further explanation of the Servicer's Calling Program is as
follows:
Welcome Calls. Welcome calls will be made regardless of the
Mortgagor's Delinquency status. If a borrower is Delinquent in the
first month following the Cut-Off Date, the calling programs
described below for collection calls will also be followed.
Collection Calls -- First 18 Days of the Month. These calls are made
for all Mortgage Loans that are past due between the first and 18th
day of the month, except for loans that are screened out from such
calls for reasons including, but not limited to: loans in
bankruptcies, loans where the early indicator scoring model indicates
the historical payment date is prior to the 18th of the month and
loans for which borrowers have requested in writing that the Servicer
not contact them.
Collection Calls -- after the 18th Day of the Month but Not Yet in
Foreclosure. These calls are made for all Mortgage Loans that are
Delinquent after the 18th day of the month, except for loans that are
screened out from such calls for reasons including, but not limited
to: bankruptcies, loans in foreclosure loans for which Mortgagors
have requested in writing that the Servicer not contact them; and
loans where the early indicator scoring model indicates the
historical payment date is the 18th of the month.
b. Written Correspondence. The Service will prepare and deliver the
following written correspondence.
1. Early Late Notices. The Servicer will mail a late notice to
all Mortgagors once they are 5 days past their due date,
except for the following loans that are screened out for
such written correspondence for reasons including, but not
limited to, bankruptcies, interim payments in the first 30
days after transfer and loans for which the historical
average payment date is before the 15th day of delinquency;
and loans which have been analyzed by EI scoring.
2. Twenty Day Collection Letter. The Servicer will mail a
20-day delinquency letter on the 20th day of delinquency.
J-1
3. Demands. When applicable, Servicer will send a demand
letter and intent to foreclose via certified mail on the
33rd day of delinquency.
c. Foreclosure Time Lines.
1. For Mortgage Loans in foreclosure, the Servicer will meet
or improve upon the foreclosure timeline measured in the
aggregate on a rolling three month weighted average basis,
by loan count across all states. The Servicer will use the
more stringent of the Xxxxxx Xxx or Xxxxxxx Mac foreclosure
time lines as may be amended from time to time, in each
state, based on the standard with the shortest time lines.
Servicer will not be penalized with a reduction in fees for
unavoidable delays including bankruptcy filing, missing
assignments and necessary collateral documents, contested
actions, service of process delays, sheriff sale scheduling
delays, court delays in entering judgment or scheduling
hearing, and other circumstances agreed to by Owner,
provided that Servicer has documented its system
accordingly.
d. Pre-foreclosure Resolution Rate
1. A "Pre-foreclosure Resolution" will be obtained for at
least 55% of the Mortgage Loans (by number of Mortgage
Loans) for which Foreclosure actions have commenced (a
"Defaulted Mortgage Loan"), measured on a rolling
three-month average basis. The Pre-foreclosure Resolution
percentage described in the preceding sentence shall be
calculated as of the number of Pre-foreclosure Resolutions
divided by the sum of the number of Pre-foreclosure
Resolutions plus the number of Mortgage Loans converting to
REO Property during the previous three months. REO Property
shall not include Mortgage Property taken back by the
Servicer pursuant to a deed-in-lieu of foreclosure.
2. A "Pre-foreclosure Resolution" shall mean any of the
following:
Full reinstatement means any Defaulted Mortgage Loan for
which the Mortgagor brings the Mortgage Loan back to a
contractually current status either through a lump sum
payment or otherwise consistent with the terms of the
related Servicing Agreement.
Full payoff means any Defaulted Mortgage Loan which is paid
in full and such payment in full is received by the
Servicer in full satisfaction of the indebtedness owed
under the applicable Mortgage Note.
Short Liquidation means a Defaulted Mortgage Loan for which
a final payment in an amount less than the indebtedness
owed under the applicable Mortgage Note is made consistent
with the terms of the related Servicing Agreement and such
payment is received by the Servicer in full satisfaction of
such indebtedness, including as the result of any short
sale, short refinance, or Mortgage Note sale.
Deed-in-Lieu of Foreclosure means a Defaulted Mortgage Loan
for which title to the Mortgaged Property is taken back by
the Servicer through deed-in-lieu of foreclosure and the
resulting REO Property is liquidated consistent with the
terms of the related Servicing Agreement.
Modification (subject to REMIC restrictions) means a
Defaulted Mortgage Loan which is modified in a manner
consistent with the related Servicing Agreement.
J-2
Performing Forbearance Plan means a Defaulted Mortgage Loan
for which a Mortgagor has entered into a forbearance plan
for the repayment of the indebtedness owed under the
applicable Mortgage Note.
Take-out at Foreclosure Sale means the Mortgaged Property
related to a Defaulted Mortgage Loan that is purchased at a
foreclosure sale by a party other than the Servicer (or by
Servicer on behalf of the owner of the loan) in a manner
consistent with the related Servicing Agreement.
e. REO Sales
1. With respect to those REO Properties being managed by the
Servicer, the Servicer will sell at least 15% of the
sellable REO Properties (by number of Mortgage Loans) on a
monthly basis and obtain "average net proceeds" of at least
88% of the low market value reflected in the indication of
value, in each case measured on a rolling 3 month average
basis.
2. "Average net proceeds" means proceeds from sale after
brokerage costs and closing costs.
3. The Servicer will not be subject to a performance standard
with respect to REO Sales for REO Properties managed by an
REO Manager (other than the Servicer) selected by the
Owner.
f Ramp-up Time
The Servicer shall endeavor to meet the Performance Standards
contained herein as soon as possible after the Cut-Off Date, but shall not be
considered to be in default under the Servicing Agreement unless it fails a
performance standard starting during the applicable period reflected in the
table below. For those performance standards measured on an average or weighted
average three-month rolling basis, the Servicer shall not be considered in
default under the Servicing Agreement unless it fails such performance standard
after completion of the applicable three-month period.
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RAMP-UP PERIODS
-------------------------------------------------------------------------------
Performance Standard Applies First 90 Applies After
Days 90 Days
-------------------------------------------------------------------------------
Welcome Call Attempts Yes N/A
-------------------------------------------------------------------------------
1 - 18 Day Call Attempts Yes Yes
-------------------------------------------------------------------------------
1 - 18 Day Right Party Hits No Yes
-------------------------------------------------------------------------------
18+ Day Call Attempts Yes Yes
-------------------------------------------------------------------------------
18+ Day Right Party Hits No Yes
-------------------------------------------------------------------------------
Written Correspondence (All) Yes Yes
-------------------------------------------------------------------------------
Pre-foreclosure Resolution Yes Yes
-------------------------------------------------------------------------------
Foreclosure Timeline Yes Yes
-------------------------------------------------------------------------------
REO Liquidation Rate Yes Yes
-------------------------------------------------------------------------------
REO Proceeds Yes Yes
-------------------------------------------------------------------------------
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Schedule 1
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MORTGAGE LOAN SCHEDULE
FILED BY PAPER
[ON FILE WITH THE TRUSTEE]
[Part A - New Century Mortgage Corporation]
[Part B - Long Beach Mortgage Company]
[Part C - WMC Mortgage Corp.]
Schedule 2
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PREPAYMENT CHARGE SCHEDULE
TO BE PROVIDED UPON REQUEST
