EXECUTION
_____________________________________________________________________
GE CAPITAL MORTGAGE SERVICES, INC.,
Seller and Servicer
and
STATE STREET BANK AND TRUST COMPANY
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1995
REMIC Multi-Class Pass-Through Certificates,
Series 1995-7
_____________________________________________________________________
Section Page
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.01. Definitions.............................................. 1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
2.01. Conveyance of Mortgage Loans............................. 40
2.02. Acceptance by Trustee.................................... 43
2.03. Representations and Warranties of the Company;
Mortgage Loan Repurchase................................. 45
2.04. Execution of Certificates................................ 51
2.05. Designations under the REMIC Provisions.................. 51
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
3.01. Company to Act as Servicer............................... 52
3.02. Collection of Certain Mortgage Loan Payments;
Mortgage Loan Payment Record; Certificate Account........ 58
3.03. Collection of Taxes, Assessments and Other Items......... 61
3.04. Permitted Debits to the Mortgage Loan Payment Record..... 61
3.05. Maintenance of the Primary Insurance Policies............ 63
3.06. Maintenance of Hazard Insurance.......................... 63
3.07. Assumption and Modification Agreements................... 64
3.08. Realization Upon Defaulted Mortgage Loans................ 65
3.09. Trustee to Cooperate; Release of Mortgage Files.......... 69
3.10. Servicing Compensation; Payment of Certain
Expenses by the Company.................................. 70
3.11. Reports to the Trustee; Certificate Account
Statements............................................... 71
3.12. Annual Statement as to Compliance........................ 71
3.13. Annual Independent Public Accountants'
Servicing Report......................................... 71
3.14. Access to Certain Documentation and Information
Regarding the Mortgage Loans............................. 72
3.15. Maintenance of Certain Servicing Policies................ 72
3.16. Optional Purchase of Defaulted Mortgage Loans............ 72
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ARTICLE IV
PAYMENTS AND STATEMENTS
4.01. Distributions............................................ 72
4.02. Method of Distribution................................... 78
4.03. Allocation of Losses..................................... 79
4.04. Monthly Advances; Purchases of Defaulted
Mortgage Loans........................................... 82
4.05. Statements to Certificateholders......................... 83
4.06. Servicer's Certificate................................... 85
4.07. Reports of Foreclosures and Abandonments of
Mortgaged Property....................................... 86
4.08. Reduction of Servicing Fees by Compensating
Interest Payments........................................ 86
ARTICLE V
THE CERTIFICATES
5.01. The Certificates......................................... 86
5.02. Registration of Transfer and Exchange of
Certificates............................................. 88
5.03. Mutilated, Destroyed, Lost or Stolen Certificates........ 95
5.04. Persons Deemed Owners.................................... 96
5.05. Access to List of Certificateholders' Names
and Addresses............................................ 96
5.06. Representation of Certain Certificateholders............. 96
5.07. Determination of COFI.................................... 97
5.08. Determination of LIBOR................................... 98
ARTICLE VI
THE COMPANY
6.01. Liability of the Company................................. 99
6.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Company.......................... 99
6.03. Assignment...............................................100
6.04. Limitation on Liability of the Company and Others........100
6.05. The Company Not to Resign................................101
ARTICLE VII
DEFAULT
7.01. Events of Default........................................101
7.02. Trustee to Act; Appointment of Successor.................103
7.03. Notification to Certificateholders.......................104
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ARTICLE VIII
THE TRUSTEE
8.01. Duties of Trustee........................................104
8.02. Certain Matters Affecting the Trustee....................106
8.03. Trustee Not Liable for Certificates or
Mortgage Loans...........................................107
8.04. Trustee May Own Certificates.............................108
8.05. The Company to Pay Trustee's Fees and Expenses...........108
8.06. Eligibility Requirements for Trustee.....................108
8.07. Resignation or Removal of Trustee........................109
8.08. Successor Trustee........................................110
8.09. Merger or Consolidation of Trustee.......................110
8.10. Appointment of Co-Trustee or Separate Trustee............111
8.11. Compliance with REMIC Provisions; Tax Returns............112
ARTICLE IX
TERMINATION
9.01. Termination upon Repurchase by the Company or
Liquidation of All Mortgage Loans........................113
9.02. Additional Termination Requirements......................114
ARTICLE X
MISCELLANEOUS PROVISIONS
10.01. Amendment...............................................115
10.02. Recordation of Agreement................................116
10.03. Limitation on Rights of Certificateholders..............117
10.04. Governing Law...........................................118
10.05. Notices.................................................118
10.06. Notices to the Rating Agencies..........................118
10.07. Severability of Provisions..............................119
10.08. Certificates Nonassessable and Fully Paid...............119
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Exhibits
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EXHIBIT A Forms of Certificates
EXHIBIT B Principal Balance Schedules
EXHIBIT C Mortgage Loans
EXHIBIT D Form of Servicer's Certificate
EXHIBIT E Form of Transfer Certificate as to
ERISA Matters for Definitive
ERISA-Restricted Certificates
EXHIBIT F Form of Residual Certificate
Transferee Affidavit
EXHIBIT G Form of Residual Certificate
Transferor Letter
EXHIBIT H Additional Servicer Compensation
EXHIBIT I Form of Investment Letter for
Definitive Restricted Certificates
EXHIBIT J Form of Distribution Date Statement
EXHIBIT K Form of Special Servicing and
Collateral Fund Agreement
EXHIBIT L Form of Lost Note Affidavit and
Agreement
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THIS POOLING AND SERVICING AGREEMENT, dated as of
September 1, 1995, between GE CAPITAL MORTGAGE SERVICES, INC., a
corporation organized and existing under the laws of the State of
New Jersey, and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts banking corporation, as Trustee.
W I T N E S S E T H T H A T :
In consideration of the mutual agreements herein
contained, GE Capital Mortgage Services, Inc. and State Street
Bank and Trust Company agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this
Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Accretion Directed Certificate: Any of the Class A1,
Class A2, Class A3, Class A4 and Class R Certificates.
Accretion Termination Date: As to the Class A5
Certificates, the earlier to occur of (i) the Distribution
Date on which distributions of principal of the
Certificates are first being made pursuant to Section
4.01(c) and (ii) the Distribution Date on which the Class
Certificate Principal Balance of the Class A4 Certificates
has been reduced to zero.
Accrual Amount: As to any Class of Accrual
Certificates and each Distribution Date through the related
Accretion Termination Date, the sum of (x) any amount of
Accrued Certificate Interest allocable to such Class
pursuant to Section 4.01(a)(i) on such Distribution Date
and (y) any amount of Unpaid Class Interest Shortfall
allocable to such Class pursuant to Section 4.01(a)(ii) on
such Distribution Date. As to any Class of Accrual
Certificates and each Distribution Date after the related
Accretion Termination Date, zero.
Accrual Certificate: Any Class A5 Certificate.
Accrued Certificate Interest: As to any Distribution
Date and any Class of Certificates (other than any Class of
Principal Only Certificates), interest accrued during the
related Interest Accrual Period at the applicable
Certificate Interest Rate on the Class Certificate
Principal Balance (or, in the case of any Class of Notional
Certificates other than the Class S Certificates, on the
aggregate Notional Principal Balance) thereof immediately
prior (or, in the case of the Class S Certificates, on the
aggregate Notional Principal Balance thereof with respect)
to such Distribution Date, calculated on the basis of a
360-day year consisting of twelve 30-day months. Accrued
Certificate Interest on each Class of Certificates (other
than any Class of Principal Only Certificates) shall be
reduced by such Class's share of the amount of any Net
Interest Shortfall and Interest Losses for such
Distribution Date. Any Net Interest Shortfall and Interest
Losses shall be allocated among the Classes of Certificates
(other than any Class of Principal Only Certificates) in
proportion to the respective amounts of Accrued Certificate
Interest that would have resulted absent such shortfall and
losses.
Agreement: This Pooling and Servicing Agreement and
all amendments hereof and supplements hereto.
Allocable Share: (a) As to any Distribution Date and
amounts distributable pursuant to clauses (i) and (iii) of
the Junior Optimal Principal Amount, and as to each Class
of Junior Certificates, the fraction, expressed as a
percentage, the numerator of which is the Class Certificate
Principal Balance of such Class and the denominator of
which is the aggregate Class Certificate Principal Balances
of the Junior Certificates.
(b) As to any Distribution Date and amounts
distributable pursuant to clauses (ii), (iv) and (v) of the
Junior Optimal Principal Amount, and as to the Class M
Certificates and each Class of Class B1, Class B2, Class
B3, Class B4 and Class B5 Certificates for which the
related Prepayment Distribution Trigger has been satisfied
on such Distribution Date, the fraction, expressed as a
percentage, the numerator of which is the Class Certificate
Principal Balance of such Class and the denominator of
which is the aggregate Class Certificate Principal Balances
of all such Classes. As to any Distribution Date and each
Class of Class B Certificates for which the related
Prepayment Distribution Trigger has not been satisfied on
such Distribution Date, 0%.
Amortization Payment: As to any REO Mortgage Loan and
any month, the payment of principal and accrued interest
due in such month in accordance with the terms of the
related Mortgage Note as contemplated by Section 3.08(b).
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Amount Held for Future Distribution: As to each
Distribution Date, the total of all amounts credited to the
Mortgage Loan Payment Record as of the preceding
Determination Date on account of (i) Principal Prepayments,
Insurance Proceeds and Liquidation Proceeds received
subsequent to the preceding Prepayment Period applicable to
such receipts, and (ii) monthly payments of principal and
interest due subsequent to the preceding Due Date.
Anniversary Determination Date: The Determination Date
occurring in October of each year that the Certificates are
outstanding, commencing in October 1995.
Assumed Monthly Payment Reduction: As of any
Anniversary Determination Date and as to any Non-Primary
Residence Loan remaining in the Mortgage Pool whose
original principal balance was 80% or greater of the
Original Value thereof, the excess of (i) the Monthly
Payment thereof calculated on the assumption that the
Mortgage Rate thereon was equal to the weighted average (by
principal balance) of the Net Mortgage Rates of all
Outstanding Mortgage Loans (the "Weighted Average Rate") as
of such Anniversary Determination Date over (ii) the
Monthly Payment thereof calculated on the assumption that
the Net Mortgage Rate thereon was equal to the Weighted
Average Rate less 1.25% per annum.
Available Funds: As to each Distribution Date, an
amount equal to the sum of (i) all amounts credited to the
Mortgage Loan Payment Record pursuant to Section 3.02 as of
the preceding Determination Date, (ii) any Monthly Advance
and any Compensating Interest Payment for such Distribution
Date, (iii) the Purchase Price of any Defective Mortgage
Loans, Defaulted Mortgage Loans, and Modified Mortgage
Loans deposited in the Certificate Account on the Business
Day preceding such Distribution Date (including any amounts
deposited in the Certificate Account in connection with any
substitution of a Mortgage Loan as specified in Section
2.03(b)), and (iv) the purchase price of any defaulted
Mortgage Loan purchased under an agreement entered into
pursuant to Section 3.08(e) as of the end of the preceding
Prepayment Period, less the sum of (x) the Amount Held for
Future Distribution, and (y) amounts permitted to be
debited from the Mortgage Loan Payment Record pursuant to
clauses (i) through (vii) of Section 3.04.
Bankruptcy Coverage Termination Date: The Distribution
Date upon which the Bankruptcy Loss Amount has been reduced
to zero or a negative number (or the Cross-Over Date, if
earlier).
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Bankruptcy Loss Amount: As of any Determination Date
prior to the first Anniversary Determination Date, the
Bankruptcy Loss Amount shall equal $173,726, as reduced by
the aggregate amount of Deficient Valuations and Debt
Service Reductions since the Cut-off Date. As of any
Determination Date after the first Anniversary
Determination Date, other than an Anniversary Determination
Date, the Bankruptcy Loss Amount shall equal the Bankruptcy
Loss Amount on the immediately preceding Anniversary
Determination Date as reduced by the aggregate amount of
Deficient Valuations and Debt Service Reductions since such
preceding Anniversary Determination Date. As of any
Anniversary Determination Date, the Bankruptcy Loss Amount
shall equal the lesser of (x) the Bankruptcy Loss Amount as
of the preceding Determination Date as reduced by any
Deficient Valuations and Debt Service Reductions for the
preceding Distribution Date, and (y) the greater of (i) the
Fitch Formula Amount for such Anniversary Determination
Date and (ii) the S&P Formula Amount for such Anniversary
Determination Date.
The Bankruptcy Loss Amount may be further reduced by
the Company (including accelerating the manner in which
such coverage is reduced) provided that prior to any such
reduction, the Company shall obtain written confirmation
from each Rating Agency that such reduction shall not
adversely affect the then-current rating assigned to the
related Classes of Certificates by such Rating Agency and
shall provide a copy of such written confirmation to the
Trustee.
BIF: The Bank Insurance Fund of the FDIC, or its
successor in interest.
Book-Entry Certificate: Any Certificate registered in
the name of the Depository or its nominee, ownership of
which is reflected on the books of the Depository or on the
books of a person maintaining an account with such
Depository (directly or as an indirect participant in
accordance with the rules of such Depository). As of the
Closing Date, each Class of Certificates, other than the
Class B3, Class B4, Class B5, Class R and Class S
Certificates, constitutes a Class of Book-Entry
Certificates.
Book-Entry Nominee: As defined in Section 5.02(b).
Business Day: Any day other than a Saturday or a
Sunday, or a day on which banking institutions in New York
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City or Boston, Massachusetts are authorized or obligated
by law or executive order to be closed.
Buydown Funds: Funds contributed by the Mortgagor or
another source in order to reduce the interest payments
required from the Mortgagor for a specified period in
specified amounts.
Buydown Mortgage Loan: Any Mortgage Loan as to which
the Mortgagor pays less than the full monthly payment
specified in the Mortgage Note during the Buydown Period
and the difference between the amount paid by the Mortgagor
and the amount specified in the Mortgage Note is paid from
the related Buydown Funds.
Buydown Period: The period during which Buydown Funds
are required to be applied to the related Buydown Mortgage
Loan.
Certificate: Any one of the certificates signed and
countersigned by the Trustee in substantially the forms
attached hereto as Exhibit A.
Certificate Account: The trust account or accounts
created and maintained with the Trustee pursuant to Section
3.02 and which must be an Eligible Account.
Certificate Interest Rate: With respect to any Class
of Certificates other than the Class S Certificates, the
fixed per annum rate specified in Section 5.01(b). With
respect to the Class S Certificates and any Distribution
Date, the Strip Rate for such Distribution Date.
Certificate Owner: With respect to any Book-Entry
Certificate, the person who is the beneficial owner thereof.
Certificate Principal Balance: As to any Certificate
other than a Notional Certificate, and as of any
Distribution Date, the Initial Certificate Principal
Balance of such Certificate (plus, in the case of any
Accrual Certificate, its Percentage Interest of any related
Accrual Amount for each previous Distribution Date) less
the sum of (i) all amounts distributed with respect to such
Certificate in reduction of the Certificate Principal
Balance thereof on previous Distribution Dates pursuant to
Section 4.01, (ii) any Realized Losses allocated to such
Certificate on previous Distribution Dates pursuant to
Section 4.03(b) and (c), and (iii) in the case of a
Subordinate Certificate, such Certificate's Percentage
Interest of the Subordinate Certificate Writedown Amount
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allocated to such Certificate on previous Distribution Dates.
The Notional Certificates are issued without Certificate Principal
Balances.
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, solely for the purposes of giving any consent
pursuant to this Agreement, a Certificate of any Class to
the extent that the Company or any affiliate is the
Certificate Owner or Holder thereof (except to the extent
the Company or any affiliate thereof shall be the
Certificate Owner or Holder of all Certificates of such
Class), shall be deemed not to be outstanding and the
Percentage Interest (or Voting Rights) evidenced thereby
shall not be taken into account in determining whether the
requisite amount of Percentage Interests (or Voting Rights)
necessary to effect any such consent has been obtained;
provided, however, that in determining whether the Trustee
shall be protected in relying on such consent only the
Certificates that the Trustee knows to be so held shall be
so disregarded.
Class: All Certificates bearing the same class
designation.
Class B Certificate: Any Class B1, Class B2, Class B3,
Class B4 or Class B5 Certificate.
Class Certificate Principal Balance: As to any Class
of Certificates, other than any Class of Notional
Certificates, and any date of determination, the aggregate
of the Certificate Principal Balances of all Certificates
of such Class. The Class Certificate Principal Balance of
each such Class of Certificates as of the Closing Date is
specified in Section 5.01(b).
Class Interest Shortfall: As to any Distribution Date
and any Class of Certificates (other than any Class of
Principal Only Certificates), any amount by which the
amount distributed to Holders of such Class of Certificates
(or added to the Class Certificate Principal Balance of any
Class of Accrual Certificates) on such Distribution Date is
less than the Accrued Certificate Interest thereon for such
Distribution Date.
Class PO Deferred Amount: As to any Distribution Date
on or prior to the Cross-Over Date, the aggregate of the
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applicable PO Percentage of the principal portion of each
Realized Loss, other than any Excess Loss, to be allocated
to the Class PO Certificates on such Distribution Date or
previously allocated to the Class PO Certificates and not
yet paid to the Holders of the Class PO Certificates
pursuant to Section 4.01(a)(iv).
Closing Date: September 28, 1995.
Code: The Internal Revenue Code of 1986, as it may be
amended from time to time, any successor statutes thereto,
and applicable U.S. Department of the Treasury temporary or
final regulations promulgated thereunder.
COFI: The monthly weighted average cost of funds for
savings institutions the home offices of which are located
in Arizona, California, or Nevada that are member
institutions of the Eleventh Federal Home Loan Bank
District, as computed from statistics tabulated and
published by the Federal Home Loan Bank of San Francisco in
its monthly Information Bulletin.
COFI Certificates: None.
COFI Determination Date: As to each Interest Accrual
Period for any COFI Certificates, the last Business Day of
the calendar month preceding the commencement of such
Interest Accrual Period.
Company: GE Capital Mortgage Services, Inc., a
corporation organized and existing under the laws of the
State of New Jersey, or its successor in interest or, if
any successor servicer is appointed as herein provided,
then such successor servicer.
Compensating Interest Payment: With respect to any
Distribution Date, an amount equal to the aggregate of the
Interest Shortfalls described in clauses (a) and (b) of the
definition thereof with respect to such Distribution Date;
provided, however, that such amount shall not exceed the
lesser of (i) an amount equal to the product of (x) the
Pool Scheduled Principal Balance with respect to such
Distribution Date and (y) one-twelfth of 0.125%, and (ii)
the aggregate of the Servicing Fees that the Company would
be entitled to retain on such Distribution Date (less any
portion thereof paid as servicing compensation to any
Primary Servicer) without giving effect to any Compensating
Interest Payment.
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Component: Any of the components of a Class of
Component Certificates having the designations and initial
Component Principal Balances as follows:
Initial Component
Designation Principal Balance
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Class A2A $24,178,000
Class A2B 10,822,000
Component Certificates: Any Class A2 Certificate.
Component Principal Balance: As of any Distribution
Date, and with respect to any Component, other than any
Notional Component, the initial Component Principal Balance
thereof (as set forth, as applicable, in the definition of
Component) less the sum of (x) all amounts distributed in
reduction thereof on previous Distribution Dates pursuant
to Section 4.01 and (y) the amount of all Realized Losses
allocated thereto pursuant to Section 4.03(d).
Confirmatory Mortgage Note: With respect to any
Mortgage Loan, a note or other evidence of indebtedness
executed by the Mortgagor confirming its obligation under
the note or other evidence of indebtedness previously
executed by the Mortgagor upon the origination of the
related Mortgage Loan.
Corporate Trust Office: The principal office of the
Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of
the execution of this instrument is located at 000 Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Corporate
Trust Department.
Cross-Over Date: The first Distribution Date on which
the aggregate Class Certificate Principal Balance of the
Junior Certificates has been reduced to zero (giving effect
to all distributions on such Distribution Date).
Cut-off Date: September 1, 1995.
Debt Service Reduction: As to any Mortgage Loan and
any Determination Date, the excess of (a) the then current
Monthly Payment for such Mortgage Loan over (b) the amount
of the monthly payment of principal and interest required
to be paid by the Mortgagor as established by a court of
competent jurisdiction as a result of a proceeding
initiated by or against the related Mortgagor under the
Bankruptcy Code, as amended from time to time (11 U.S.C.).
8
Defaulted Mortgage Loan: With respect to any
Determination Date, a Mortgage Loan as to which the related
Mortgagor has failed to make unexcused payment in full of a
total of three or more consecutive installments of
principal and interest, and as to which such delinquent
installments have not been paid, as of the close of
business on the last Business Day of the month next
preceding the month of such Determination Date.
Defective Mortgage Loan: Any Mortgage Loan which is
required to be purchased by the Company (or which the
Company may replace with a substitute Mortgage Loan)
pursuant to Section 2.02 or 2.03(a).
Deficient Valuation: As to any Mortgage Loan and any
Determination Date, the excess of (a) the then outstanding
indebtedness under such Mortgage Loan over (b) the
valuation by a court of competent jurisdiction of the
related Mortgaged Property as a result of a proceeding
initiated by or against the related Mortgagor under the
Bankruptcy Code, as amended from time to time (11 U.S.C.),
pursuant to which such Mortgagor retained such Mortgaged
Property.
Definitive Certificate: Any Certificate, other than a
Book-Entry Certificate, issued in definitive, fully
registered form.
Depository: The initial Depository shall be The
Depository Trust Company, the nominee of which is CEDE &
Co. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York, as amended, or
any successor provisions thereto.
Depository Participant: A broker, dealer, bank or
other financial institution or other Person for which, from
time to time, the Depository effects book-entry transfers
and pledges of securities deposited with such Depository.
Designated Loan Closing Documents: With respect to any
Designated Loan, a Lost Note Affidavit substantially in the
form of Exhibit L, and an assignment of the related
Mortgage to the Trustee in recordable form (except for the
omission therein of recording information concerning such
Mortgage).
Designated Loans: None.
Determination Date: With respect to any Distribution
Date, the fifth Business Day prior thereto.
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Discount Mortgage Loan: Any Mortgage Loan with a Net
Mortgage Rate less than 7.50% per annum.
Disqualified Organization: Any of the following: (i)
the United States, any State or political subdivision
thereof, or any agency or instrumentality of any of the
foregoing (including but not limited to state pension
organizations); (ii) a foreign government, International
Organization or any agency or instrumentality of either of
the foregoing; (iii) an organization (except certain
farmers' cooperatives described in Code section 521) which
is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by section 511 of the Code on
unrelated business taxable income); and (iv) a rural
electric and telephone cooperative described in Code
section 1381(a)(2)(C). The terms "United States," "State"
and "International Organization" shall have the meanings
set forth in Code section 7701 or successor provisions. A
corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision
thereof for these purposes if all of its activities are
subject to tax and a majority of its board of directors is
not selected by such governmental unit.
Distribution Date: The 25th day of each calendar month
after the month of initial issuance of the Certificates,
or, if such 25th day is not a Business Day, the next
succeeding Business Day.
Distribution Date Statement: The statement referred to
in Section 4.05(a).
Document File: As defined in Section 2.01.
Due Date: The first day of the month of the related
Distribution Date.
Eligible Account: An account that is either (i)
maintained with a depository institution the debt
obligations of which have been rated by each Rating Agency
in one of its two highest long-term rating categories and
has been assigned by S&P its highest short-term rating,
(ii) an account or accounts the deposits in which are fully
insured by either the BIF or the SAIF, (iii) an account or
accounts, in a depository institution in which such
accounts are insured by the BIF or the SAIF (to the limits
established by the FDIC), the uninsured deposits in which
accounts are either invested in Permitted Investments or
are otherwise secured to the extent required by the Rating
Agencies such that, as evidenced by an Opinion of Counsel
10
delivered to the Trustee, the Certificateholders have a
claim with respect to the funds in such account or a
perfected first security interest against any collateral
(which shall be limited to Permitted Investments) securing
such funds that is superior to claims of any other
depositors or creditors of the depository institution with
which such account is maintained, (iv) a trust account
maintained with the corporate trust department of a federal
or state chartered depository institution or of a trust
company with trust powers and acting in its fiduciary
capacity for the benefit of the Trustee hereunder or (v)
such account as will not cause either Rating Agency to
downgrade or withdraw its then-current rating assigned to
the Certificates, as evidenced in writing by the Rating
Agencies.
ERISA: The Employee Retirement Income Security Act of
1974, as amended.
ERISA-Restricted Certificate: Any Class M, Class B or
Class S Certificate.
Event of Default: An event described in Section 7.01.
Excess Bankruptcy Loss: Any Deficient Valuation or
Debt Service Reduction, or portion thereof, (i) occurring
after the Bankruptcy Coverage Termination Date or (ii) if
on such date, in excess of the then-applicable Bankruptcy
Loss Amount.
Excess Fraud Loss: Any Fraud Loss, or portion thereof,
(i) occurring after the Fraud Coverage Termination Date or
(ii) if on such date, in excess of the then-applicable
Fraud Loss Amount.
Excess Special Hazard Loss: Any Special Hazard Loss,
or portion thereof, (i) occurring after the Special Hazard
Termination Date or (ii) if on such date, in excess of the
then-applicable Special Hazard Loss Amount.
FDIC: The Federal Deposit Insurance Corporation, or
its successor in interest.
FHLMC: The Federal Home Loan Mortgage Corporation or
its successor in interest.
Financial Intermediary: A broker, dealer, bank or
other financial institution or other Person that clears
through or maintains a custodial relationship with a
Depository Participant.
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Fitch: Fitch Investors Service, L.P. and its
successors.
Fitch Formula Amount: As to each Anniversary
Determination Date, the greater of (i) $50,000 and (ii) the
product of (x) the greatest Assumed Monthly Payment
Reduction for any Non-Primary Residence Loan whose original
principal balance was 80% or greater of the Original Value
thereof, (y) the weighted average remaining term to
maturity (expressed in months) of all the Non-Primary
Residence Loans remaining in the Mortgage Pool as of such
Anniversary Determination Date, and (z) the sum of (A) one
plus (B) the number of all remaining Non-Primary Residence
Loans divided by the total number of Outstanding Mortgage
Loans as of such Anniversary Determination Date.
FNMA: The Federal National Mortgage Association or its
successor in interest.
Fraud Coverage Termination Date: The Distribution Date
upon which the related Fraud Loss Amount has been reduced
to zero or a negative number (or the Cross-Over Date, if
earlier).
Fraud Loss: Any Realized Loss attributable to fraud in
the origination of the related Mortgage Loan.
Fraud Loss Amount: As of any Distribution Date after
the Cut-off Date, (x) prior to the first anniversary of the
Cut-off Date, an amount equal to $[ ] minus the aggregate
amount of Fraud Losses that would have been allocated to
the Junior Certificates in accordance with Section 4.03 in
the absence of the Loss Allocation Limitation since the
Cut-off Date, and (y) from the first through the fifth
anniversary of the Cut-off Date, an amount equal to (1) the
lesser of (a) the Fraud Loss Amount as of the most recent
anniversary of the Cut-off Date and (b) 1.00% of the
aggregate outstanding principal balance of all of the
Mortgage Loans as of the most recent anniversary of the
Cut-off Date minus (2) the Fraud Losses that would have
been allocated to the Junior Certificates in accordance
with Section 4.03 in the absence of the Loss Allocation
Limitation since the most recent anniversary of the Cut-off
Date. After the fifth anniversary of the Cut-off Date the
Fraud Loss Amount shall be zero.
Initial Certificate Principal Balance: With respect to
any Certificate, other than a Notional Certificate, the
Certificate Principal Balance of such Certificate or any
predecessor Certificate on the Closing Date.
12
Initial LIBOR Rate: None.
Insurance Proceeds: Proceeds paid pursuant to the
Primary Insurance Policies, if any, and amounts paid by any
insurer pursuant to any other insurance policy covering a
Mortgage Loan.
Insured Expenses: Expenses covered by the Primary
Insurance Policies, if any, or any other insurance policy or
policies applicable to the Mortgage Loans.
Interest Accrual Period: With respect to any
Distribution Date and any Class of Certificates (other than
any Class of Principal Only Certificates) or Component, the
one-month period ending on the last day of the month
preceding the month in which such Distribution Date occurs.
Interest Losses: The interest portion of (i) on or
prior to the Cross-Over Date, any Excess Special Hazard
Losses, Excess Fraud Losses and Excess Bankruptcy Losses
and (ii) after the Cross-Over Date, any Realized Losses and
Debt Service Reductions.
Interest Shortfall: With respect to any Distribution
Date and each Mortgage Loan that during the related
Prepayment Period was the subject of a Voluntary Principal
Prepayment, or constitutes a Relief Act Mortgage Loan, an
amount determined as follows:
(a) partial principal prepayments: one month's
interest at the applicable Net Mortgage Rate on the
amount of such prepayment;
(b) principal prepayments in full (including the
Purchase Price of any Modified Mortgage Loan purchased
pursuant to Section 3.01(c)) received on or after the
sixteenth day of the month preceding the month of such
Distribution Date (or, in the case of the first
Distribution Date, on or after the Cut-off Date) but
on or before the last day of the month preceding the
month of such Distribution Date: the difference
between (i) one month's interest at the applicable Net
Mortgage Rate on the Scheduled Principal Balance of
such Mortgage Loan immediately prior to such
prepayment and (ii) the amount of interest for the
calendar month of such prepayment (adjusted to the
applicable Net Mortgage Rate) received at the time of
such prepayment;
(c) principal prepayments in full (including the
Purchase Price of any Modified Mortgage Loan purchased
13
pursuant to Section 3.01(c)) received by the Company
(or of which the Company receives notice, in the case
of a Mortgage Loan serviced by a Primary Servicer) on
or after the first day but on or before the fifteenth
day of the month of such Distribution Date: none; and
(d) Relief Act Mortgage Loans: As to any Relief
Act Mortgage Loan, the excess of (i) 30 days' interest
(or, in the case of a Principal Prepayment in full,
interest to the date of prepayment) on the Scheduled
Principal Balance thereof (or, in the case of a
Principal Prepayment in part, on the amount so
prepaid) at the related Net Mortgage Rate over (ii) 30
days' interest (or, in the case of a Principal
Prepayment in full, interest to the date of
prepayment) on such Scheduled Principal Balance (or,
in the case of a Principal Prepayment in part, on the
amount so prepaid) at the Net Mortgage Rate required
to be paid by the Mortgagor as limited by application
of the Relief Act.
Junior Certificate: Any Class M or Class B
Certificate.
Junior Optimal Principal Amount: As to any
Distribution Date, an amount equal to the sum of the
following (but in no event greater than the aggregate
Certificate Principal Balances of the Junior Certificates
immediately prior to such Distribution Date):
(i) the Junior Percentage of the applicable Non-PO
Percentage of the principal portion of each
Monthly Payment due on the related Due Date on
each Outstanding Mortgage Loan as of such Due Date
as specified in the amortization schedule at the
time applicable thereto (after adjustment for
previous Principal Prepayments and Debt Service
Reductions subsequent to the Bankruptcy Coverage
Termination Date but before any adjustment to such
amortization schedule by reason of any bankruptcy
(other than as aforesaid) or similar proceeding or
any moratorium or similar waiver or grace period);
(ii) the Junior Prepayment Percentage of the applicable
Non-PO Percentage of all Voluntary Principal
Prepayments in part received during the related
Prepayment Period, and 100% of any Group I Senior
Optimal Principal Amount and Group II Senior
Optimal Principal Amount not distributed to the
Group I Senior Certificates and Group II Senior
Certificates, respectively, on such Distribution
14
Date, together with the Junior Prepayment
Percentage of the applicable Non-PO Percentage of
the Scheduled Principal Balance of each Mortgage
Loan which was the subject of a Voluntary
Principal Prepayment in full during the related
Prepayment Period;
(iii) the excess, if any, of (x) the sum of (A) the
applicable Non-PO Percentage of all Net
Liquidation Proceeds allocable to principal
received during the related Prepayment Period
(other than in respect of Mortgage Loans described
in clause (B)) and (B) the applicable Non-PO
Percentage of the principal balance of each
Mortgage Loan that was purchased by an insurer
from the Trustee during the related Prepayment
Period pursuant to the related Primary Insurance
Policy, over (y) the sum of the amounts
distributable pursuant to clause (iii) of each of
the definitions of Group I Senior Optimal
Principal Amount and the Group II Senior Optimal
Principal Amount on such Distribution Date;
(iv) the Junior Prepayment Percentage of the
applicable Non-PO Percentage of the Scheduled
Principal Balance of each Mortgage Loan which was
purchased on such Distribution Date pursuant to
Section 2.02, 2.03(a) or 3.16; and
(v) the Junior Prepayment Percentage of the
applicable Non-PO Percentage of the Substitution
Amount for any Mortgage Loan substituted during
the month of such Distribution Date.
For purposes of clause (ii) above, a Voluntary Principal
Prepayment in full with respect to a Mortgage Loan serviced
by a Primary Servicer shall be deemed to have been received
when the Company, as servicer, receives notice thereof.
After the Class Certificate Principal Balances of the
Junior Certificates have been reduced to zero, the Junior
Optimal Principal Amount shall be zero.
Junior Percentage: As to any Distribution Date, the
excess of 100% over the Senior Percentage for such
Distribution Date.
Junior Prepayment Percentage: As to any Distribution
Date, the excess of 100% over the Senior Prepayment
Percentage for such Distribution Date, except that (i) after
15
the aggregate Certificate Principal Balances of the Senior
Certificates other than the Class PO Certificates have been
reduced to zero, the Junior Prepayment Percentage shall be
100%, and (ii) after the Cross-Over Date, the Junior
Prepayment Percentage shall be zero.
Latest Maturity Date: September 25, 2027.
LIBOR: London interbank offered rate quotations for
one-month Eurodollar deposits, as such quotations may
appear on the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as
may replace the LIBO page on the Reuters Monitor Money
Rates Service for the purpose of displaying London
interbank offered quotations of major banks), as determined
pursuant to Section 5.08.
LIBOR Certificates: None.
LIBOR Determination Date: The second London Business
Day immediately preceding the commencement of each Interest
Accrual Period for any LIBOR Certificates.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan
as to which the Company has determined that all amounts
which it expects to recover from or on account of such
Mortgage Loan have been recovered, including any Mortgage
Loan with respect to which the Company determines not to
foreclose upon the related Mortgaged Property based on its
belief that such Mortgaged Property may be contaminated
with or affected by hazardous or toxic wastes, materials or
substances.
Liquidation Expenses: Expenses which are incurred by
the Company in connection with the liquidation of any
defaulted Mortgage Loan and not recovered by the Company
under any Primary Insurance Policy for reasons other than
the Company's failure to comply with Section 3.05, such
expenses including, without limitation, legal fees and
expenses, and, regardless of when incurred, any
unreimbursed amount expended by the Company pursuant to
Section 3.03 or Section 3.06 respecting the related
Mortgage Loan and any related and unreimbursed Property
Protection Expenses.
Liquidation Proceeds: Cash (other than Insurance
Proceeds) received in connection with the liquidation of
any defaulted Mortgage Loan whether through judicial
foreclosure or otherwise.
16
London Business Day: Any day on which banks are open
for dealing in foreign currency and exchange in London,
England and New York City.
Loss Allocation Limitation: As defined in Section
4.03(b).
Modified Mortgage Loan: Any Mortgage Loan which the
Company has modified pursuant to Section 3.01(c).
Monthly Advance: With respect to any Distribution
Date, the aggregate of the advances required to be made by
the Company pursuant to Section 4.04(a) (or by the Trustee
pursuant to Section 4.04(b)) on such Distribution Date, the
amount of any such Monthly Advance being equal to (a) the
aggregate of payments of principal and interest (adjusted
to the related Net Mortgage Rate) on the Mortgage Loans
that were due on the related Due Date, without regard to
any arrangements entered into by the Company with the
related Mortgagors pursuant to Section 3.02(a)(ii), and
delinquent as of the close of business on the Business Day
next preceding the related Determination Date, less (b) the
amount of any such payments which the Company or the
Trustee, as applicable, in its reasonable judgment believes
will not be ultimately recoverable by it either out of late
payments by the Mortgagor, Liquidation Proceeds, Insurance
Proceeds or otherwise. With respect to any Mortgage Loan,
the portion of any such advance or advances made with
respect thereto.
Monthly Payment: The scheduled monthly payment on a
Mortgage Loan for any month allocable to principal or
interest on such Mortgage Loan.
Mortgage: The mortgage or deed of trust creating a
first lien on a fee simple interest in real 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 such
documents pursuant to this Agreement.
Mortgage Loan Payment Record: The record maintained by
the Company pursuant to Section 3.02(b).
Mortgage Loan Schedule: As of any date of
determination, the schedule of Mortgage Loans included in
the Trust Fund. The initial schedule of Mortgage Loans as
of the Cut-off Date is attached hereto as Exhibit C.
17
Mortgage Loans: As of any date of determination, each
of the mortgage loans identified on the Mortgage Loan
Schedule (as amended pursuant to Section 2.03(b)) delivered
and assigned to the Trustee pursuant to Section 2.01 or
2.03(b), and not theretofore released from the Trust Fund
by the Trustee.
Mortgage Note: With respect to any Mortgage Loan, the
note or other evidence of indebtedness (which may consist
of a Confirmatory Mortgage Note) evidencing the
indebtedness of a Mortgagor under such Mortgage Loan.
Mortgage Pool: The aggregate of the Mortgage Loans
identified in the Mortgage Loan Schedule.
Mortgage Rate: The per annum rate of interest borne by
a Mortgage Loan as set forth in the related Mortgage Note.
Mortgaged Property: The property securing the Mortgage
Note.
Mortgagor: With respect to any Mortgage Loan, each
obligor on the related Mortgage Note.
Net Interest Shortfall: With respect to any
Distribution Date, the excess, if any, of the aggregate
Interest Shortfalls for such Distribution Date over any
Compensating Interest Payment for such date.
Net Liquidation Proceeds: As to any Liquidated
Mortgage Loan, the sum of (i) any Liquidation Proceeds
therefor less the related Liquidation Expenses, and (ii)
any Insurance Proceeds therefor, other than any such
Insurance Proceeds applied to the restoration of the
related Mortgaged Property.
Net Mortgage Rate: With respect to any Mortgage Loan,
the related Mortgage Rate less the applicable Servicing Fee
Rate.
Non-Book-Entry Certificate: Any Certificate other than
a Book-Entry Certificate.
Non-Credit Loss: Any Fraud Loss, Special Hazard Loss
or Deficient Valuation.
Non-Discount Mortgage Loan: Any Mortgage Loan with a
Net Mortgage Rate greater than or equal to 7.50% per annum.
18
Non-permitted Foreign Holder: As defined in Section
5.02(b).
Non-PO Percentage: As to any Discount Mortgage Loan, a
fraction (expressed as a percentage), the numerator of
which is the Net Mortgage Rate of such Discount Mortgage
Loan and the denominator of which is 7.50%. As to any
Non-Discount Mortgage Loan, 100%.
Non-Primary Residence Loan: Any Mortgage Loan secured
by a Mortgaged Property that is (on the basis of
representations made by the Mortgagors at origination) a
second home or investor-owned property.
Nonrecoverable Advance: All or any portion of any
Monthly Advance or Monthly Advances previously made by the
Company (or the Trustee) which, in the reasonable judgment
of the Company (or, as applicable, the Trustee) will not be
ultimately recoverable from related Liquidation Proceeds,
Insurance Proceeds or otherwise. The determination by the
Company that it has made a Nonrecoverable Advance or that
any advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by an Officer's Certificate of
the Company delivered to the Trustee and detailing the
reasons for such determination.
Non-U.S. Person: As defined in Section 4.02(c).
Notional Certificate: Any Class S Certificate.
Notional Component: None.
Notional Component Balance: None.
Notional Principal Balance: As to any Distribution
Date and the Class S Certificates, the aggregate Scheduled
Principal Balance of the Outstanding Non-Discount Mortgage
Loans as of the Due Date in the month preceding such
Distribution Date. As to any Distribution Date and any
Class S Certificate, such Certificate's Percentage Interest
of the aggregate Notional Principal Balance of the Class S
Certificates for such Distribution Date.
Officer's Certificate: A certificate signed by the
President, a Senior Vice President or a Vice President of
the Company and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, who
may be counsel for the Company; provided, however, that any
Opinion of Counsel with respect to the interpretation or
19
application of the REMIC Provisions or the status of an
account as an Eligible Account shall be the opinion of
independent counsel satisfactory to the Trustee.
Original Value: The value of the property underlying a
Mortgage Loan based, in the case of the purchase of the
underlying Mortgaged Property, on the lower of an appraisal
satisfactory to the Company or the sales price of such
property or, in the case of a refinancing, on an appraisal
satisfactory to the Company.
Outstanding Mortgage Loan: With respect to any Due
Date, a Mortgage Loan which, prior to such Due Date, was
not the subject of a Principal Prepayment in full, did not
become a Liquidated Mortgage Loan and was not purchased
pursuant to Section 2.02, 2.03(a), 3.01(c) or 3.16 or
replaced pursuant to Section 2.03(b).
Outstanding Non-Discount Mortgage Loan: Any
Outstanding Mortgage Loan that is a Non-Discount Mortgage
Loan.
PAC Balance: As to any Distribution Date and any Class
of PAC Certificates and any PAC Component, the balance
designated as such for such Distribution Date and such
Class or Component as set forth in the Principal Balance
Schedules.
PAC Certificates: None.
PAC Component: None.
Pay-out Rate: With respect to any Class of
Certificates (other than any Class of Principal Only
Certificates) and any Distribution Date, the rate at which
interest is distributed on such Class on such Distribution
Date and which is equal to a fraction (expressed as an
annualized percentage) the numerator of which is the
Accrued Certificate Interest for such Class and
Distribution Date, and the denominator of which is the
Class Certificate Principal Balance (or, in the case of the
Notional Certificates, the Notional Principal Balance) of
such Class immediately prior to such Distribution Date.
Percentage Interest: With respect to any Certificate,
the percentage interest in the undivided beneficial
ownership interest in the Trust Fund evidenced by
Certificates of the same Class as such Certificate. With
respect to any Certificate, the Percentage Interest
evidenced thereby shall equal the Initial Certificate
20
Principal Balance (or, in the case of a Notional
Certificate, the initial Notional Principal Balance)
thereof divided by the aggregate Initial Certificate
Principal Balance (or, in the case of a Notional
Certificate, the aggregate initial Notional Principal
Balance) of all Certificates of the same Class.
Permitted Investments: One or more of the following;
provided, however, that no such Permitted Investment may
mature later than the Business Day preceding the
Distribution Date after such investment except as otherwise
provided in Section 3.02(e) hereof, provided, further, that
such investments qualify as "cash flow investments" as
defined in section 860G(a)(6) of the Code:
(i) obligations of, or guaranteed as to timely
receipt of principal and interest by, the United
States or any agency or instrumentality thereof when
such obligations are backed by the full faith and
credit of the United States;
(ii) repurchase agreements on obligations
specified in clause (i) provided that the unsecured
obligations of the party agreeing to repurchase such
obligations are at the time rated by each Rating
Agency in the highest long-term rating category;
(iii) federal funds, certificates of deposit, time
deposits and banker's acceptances, of any U.S.
depository institution or trust company incorporated
under the laws of the United States or any state
provided that the debt obligations of such depository
institution or trust company at the date of
acquisition thereof have been rated by each Rating
Agency in the highest long-term rating category;
(iv) commercial paper of any corporation
incorporated under the laws of the United States or
any state thereof which on the date of acquisition has
the highest short term rating of each Rating Agency;
and
(v) other obligations or securities that are
acceptable to each Rating Agency as a Permitted
Investment hereunder and will not, as evidenced in
writing, result in a reduction or withdrawal in the
then current rating of the Certificates.
Notwithstanding the foregoing, Permitted Investments shall
not include "stripped securities" and investments which
21
contractually may return less than the purchase price
therefor.
Person: Any legal person, including any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Plan: Any Person which is an employee benefit plan
subject to ERISA or a plan subject to section 4975 of the
Code.
PO Percentage: As to any Discount Mortgage Loan, a
fraction (expressed as a percentage), the numerator of
which is the excess of 7.50% over the Net Mortgage Rate of
such Discount Mortgage Loan and the denominator of which is
7.50%. As to any Non-Discount Mortgage Loan, 0%.
PO Principal Distribution Amount: As to any
Distribution Date, an amount equal to the sum of the
applicable PO Percentage of:
(i) the principal portion of each Monthly Payment due
on the related Due Date on each Outstanding
Mortgage Loan as of such Due Date as specified in
the amortization schedule at the time applicable
thereto (after adjustments for previous Principal
Prepayments and Debt Service Reductions subsequent
to the Bankruptcy Coverage Termination Date but
before any adjustment to such amortization
schedule by reason of any bankruptcy (except as
aforesaid) or similar proceeding or any moratorium
or similar waiver or grace period);
(ii) all Voluntary Principal Prepayments in part
received during the related Prepayment Period,
together with the Scheduled Principal Balance (as
reduced by any Deficient Valuation occurring on or
prior to the Bankruptcy Coverage Termination Date)
of each Mortgage Loan which was the subject of a
Voluntary Principal Prepayment in full during the
related Prepayment Period;
(iii) the sum of (A) all Net Liquidation Proceeds
allocable to principal received in respect of
each Mortgage Loan that became a Liquidated
Mortgage Loan during the related Prepayment
Period (other than Mortgage Loans described in
clause (B)) and (B) the principal balance of each
Mortgage Loan purchased by an insurer from the
22
Trustee pursuant to the related Primary Insurance Policy,
in each case during the related Prepayment Period;
(iv) the Scheduled Principal Balance (as reduced by
any Deficient Valuation occurring on or prior to
the Bankruptcy Coverage Termination Date) of each
Mortgage Loan which was purchased on such
Distribution Date pursuant to Section 2.02,
2.03(a) or 3.16; and
(v) the Substitution Amount for any Mortgage Loan
substituted during the month of such Distribution
Date; for purposes of this clause (v), the
definition of "Substitution Amount" shall be
modified to reduce the Scheduled Principal Balance
of the Mortgage Loan that is substituted for by
any Deficient Valuation occurring on or prior to
the Bankruptcy Coverage Termination Date.
For purposes of clause (ii) above, a Voluntary Principal
Prepayment in full with respect to a Mortgage Loan serviced
by a Primary Servicer shall be deemed to have been received
when the Company, as servicer, receives notice thereof.
Pool Scheduled Principal Balance: With respect to any
Distribution Date, the aggregate Scheduled Principal
Balance of all the Mortgage Loans that were Outstanding
Mortgage Loans on the Due Date in the month next preceding
the month of such Distribution Date (or, in the case of the
first Distribution Date, the Cut-off Date; or, if so
specified, such other date).
Prepayment Assumption: The assumed fixed schedule of
prepayments on a pool of new mortgage loans with such
schedule given as a monthly sequence of prepayment rates,
expressed as annualized percent values. These values start
at 0.2% per year in the first month, increase by 0.2% per
year in each succeeding month until month 30, ending at
6.0% per year. At such time, the rate remains constant at
6.0% per year for the balance of the remaining term.
Multiples of the Prepayment Assumption are calculated from
this prepayment rate series.
Prepayment Assumption Multiple: 275% of the Prepayment
Assumption.
Prepayment Distribution Trigger: As of any
Distribution Date and as to each Class of Class B
Certificates, the related Prepayment Distribution Trigger is
satisfied if (x) the fraction, expressed as a percentage,
23
the numerator of which is the aggregate Class Certificate
Principal Balances of such Class and each Class subordinate
thereto, if any, on such Distribution Date, and the
denominator of which is the Pool Scheduled Principal
Balance for such Distribution Date, equals or exceeds (y)
such percentage calculated as of the Closing Date.
Prepayment Interest Excess: As to any Voluntary
Principal Prepayment in full received from the first day
through the fifteenth day of any calendar month (other than
the calendar month in which the Cut-off Date occurs), all
amounts paid in respect of interest on such Principal
Prepayment. For purposes of determining the amount of
Prepayment Interest Excess for any month, a Voluntary
Principal Prepayment in full with respect to a Mortgage
Loan serviced by a Primary Servicer shall be deemed to have
been received when the Company, as servicer, receives
notice thereof. All Prepayment Interest Excess shall be
retained by the Company, as servicer, as additional
servicing compensation.
Prepayment Period: With respect to any Distribution
Date and any Voluntary Principal Prepayment in part or
other Principal Prepayment other than a Voluntary Principal
Prepayment in full, the calendar month preceding the month
of such Distribution Date; with respect to any Distribution
Date and any Voluntary Principal Prepayment in full, the
period beginning on the sixteenth day of the calendar month
preceding the month of such Distribution Date (or, in the
case of the first Distribution Date, beginning on the
Cutoff Date) and ending on the fifteenth day of the month
in which such Distribution Date occurs.
Primary Insurance Policy: The certificate of private
mortgage insurance relating to a particular Mortgage Loan.
Each such policy covers defaults by the Mortgagor, which
coverage shall equal the portion of the unpaid principal
balance of the related Mortgage Loan that exceeds 75% of
the Original Value of the underlying Mortgaged Property.
Primary Servicer: Any servicer with which the Company
has entered into a servicing agreement, as described in
Section 3.01(f).
Principal Balance Schedules: Any principal balance
schedules attached hereto, if applicable, as Exhibit B,
setting forth the PAC Balances of any PAC Certificates and
PAC Components, the TAC Balances of any TAC Certificates
and TAC Components, and the Scheduled Balances of any
Scheduled Certificates and Scheduled Components.
24
Principal Only Certificate: Any Class PO Certificate.
Principal Prepayment: Any payment or other recovery of
principal on a Mortgage Loan (including, for this purpose,
any refinancing permitted by Section 3.01, any Purchase
Price of a Modified Mortgage Loan purchased pursuant to
Section 3.01(c) and any REO Proceeds treated as such
pursuant to Section 3.08(b)) which is received in advance
of its scheduled Due Date and is not accompanied by an
amount of interest representing scheduled interest for any
month subsequent to the month of prepayment.
Private Placement Memorandum: The private placement
memorandum relating to the Restricted Junior Certificates
dated September 21, 1995.
Prohibited Transaction Exemption: U.S. Department of
Labor Prohibited Transaction Exemption 90-30, 55 Fed. Reg.
21461, May 24, 1990.
Property Protection Expenses: With respect to any
Mortgage Loan, expenses paid or incurred by or for the
account of the Company in accordance with the related
Mortgage for (a) real estate property taxes and property
repair, replacement, protection and preservation expenses
and (b) similar expenses reasonably paid or incurred to
preserve or protect the value of such Mortgage to the
extent the Company is not reimbursed therefor pursuant to
the Primary Insurance Policy, if any, or any other
insurance policy with respect thereto.
Purchase Price: With respect to any Mortgage Loan
required or permitted to be purchased hereunder from the
Trust Fund, an amount equal to 100% of the unpaid principal
balance thereof plus interest thereon at the applicable
Mortgage Rate from the date to which interest was last paid
to the first day of the month in which such purchase price
is to be distributed; provided, however, that if the
Company is the servicer hereunder, such purchase price
shall be net of unreimbursed Monthly Advances with respect
to such Mortgage Loan, and the interest component of the
Purchase Price may be computed on the basis of the Net
Mortgage Rate for such Mortgage Loan; and provided,
further, that if such Mortgage Loan is a Modified Mortgage
Loan, the interest component of the Purchase Price shall be
computed (i) on the basis of the applicable Mortgage Rate
before giving effect to the related modification and (ii)
from the date to which interest was last paid to the date
on which such Modified Mortgage Loan is assigned to the
Company pursuant to Section 3.01(c).
25
QIB: A "qualified institutional buyer" as defined in
Rule 144A under the Securities Act of 1933, as amended.
Rating Agency: Any statistical credit rating agency,
or its successor, that rated any of the Certificates at the
request of the Company at the time of the initial issuance
of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such
statistical credit rating agency, or other comparable
Person, designated by the Company, notice of which
designation shall be given to the Trustee. References
herein to the two highest long-term rating categories of a
Rating Agency shall mean such ratings without any
modifiers. As of the date of the initial issuance of the
Certificates, the Rating Agencies are Fitch and S&P; except
that for purposes of the Class B2, Class B3 and Class B4
Certificates, Fitch shall be the sole Rating Agency.
Realized Loss: Any (i) Deficient Valuation or (ii) as
to any Liquidated Mortgage Loan, (x) the unpaid principal
balance of such Liquidated Mortgage Loan plus accrued and
unpaid interest thereon at the Net Mortgage Rate through
the last day of the month of such liquidation less (y) the
related Liquidation Proceeds and Insurance Proceeds (as
reduced by the related Liquidation Expenses).
Record Date: The last Business Day of the month
immediately preceding the month of the related Distribution
Date.
Reference Banks: As defined in Section 5.08.
Relief Act: The Soldiers' and Sailors' Civil Relief
Act of 1940, as amended.
Relief Act Mortgage Loan: Any Mortgage Loan as to
which the Monthly Payment thereof has been reduced due to
the application of the Relief Act.
REMIC: A "real estate mortgage investment conduit"
within the meaning of section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax
law relating to real estate mortgage investment conduits,
which appear at sections 860A through 860G of Part IV of
Subchapter M of Chapter 1 of the Code, and related
provisions, and U.S. Department of the Treasury temporary
or final regulations promulgated thereunder, as the
foregoing may be in effect from time to time, as well as
provisions of applicable state laws.
26
REO Mortgage Loan: Any Mortgage Loan which is not a
Liquidated Mortgage Loan and as to which the related
Mortgaged Property is held as part of the Trust Fund.
REO Proceeds: Proceeds, net of any related expenses of
the Company, received in respect of any REO Mortgage Loan
(including, without limitation, proceeds from the rental of
the related Mortgaged Property).
Reserve Interest Rate: As defined in Section 5.08.
Residual Certificate: Any Class R Certificate.
Responsible Officer: When used with respect to the
Trustee, any officer or assistant officer assigned to and
working in the Corporate Trust Department of the Trustee
and, also, with respect to a particular matter, any other
officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular
subject.
Restricted Certificate: Any Restricted Junior
Certificate or Class S Certificate.
Restricted Junior Certificate: Any Class B3, Class B4
or Class B5 Certificate.
S&P: Standard & Poor's Rating Services, a division of
The XxXxxx-Xxxx Companies, Inc., and its successors.
S&P Formula Amount: As to each Anniversary
Determination Date, the greater of (i) $100,000 and (ii)
the product of (x) 0.06% and (y) the Scheduled Principal
Balance of each Mortgage Loan remaining in the Mortgage
Pool whose original principal balance was 75% or greater of
the Original Value thereof.
SAIF: The Savings Association Insurance Fund of the
FDIC, or its successor in interest.
Scheduled Balance: As to any Distribution Date and any
Class of Scheduled Certificates and any Scheduled
Component, the balance designated as such for such
Distribution Date and such Class or Component as set forth
in the Principal Balance Schedules.
Scheduled Certificates: None.
Scheduled Component: None.
27
Scheduled Principal Balance: As to any Mortgage Loan
and Distribution Date, the principal balance of such
Mortgage Loan as of the Due Date in the month next
preceding the month of such Distribution Date (or, if so
specified, such other date) as specified in the
amortization schedule at the time relating to such Mortgage
Loan (before any adjustment to such amortization schedule
by reason of any bankruptcy or similar proceeding or any
moratorium or similar waiver or grace period) after giving
effect to any previous Principal Prepayments, Deficient
Valuations incurred subsequent to the Bankruptcy Coverage
Termination Date, adjustments due to the application of the
Relief Act and the payment of principal due on such Due
Date, irrespective of any delinquency in payment by the
related Mortgagor. As to any Mortgage Loan and the Cut-off
Date, the "unpaid balance" thereof specified in the initial
Mortgage Loan Schedule.
Senior Certificate: Any Class A1, Class A2, Class A3,
Class A4, Class A5, Class A6, Class L, Class MA, Class PO
or Class R Certificate.
Senior Certificate Principal Balance: As of any
Distribution Date, an amount equal to the sum of the
Certificate Principal Balances of the Senior Certificates
(other than the Class PO Certificates).
Senior Percentage: As to any Distribution Date, the
lesser of (i) 100% and (ii) the percentage (carried to six
places rounded up) obtained by dividing the Senior
Certificate Principal Balance immediately prior to such
Distribution Date by an amount equal to the sum of the
Certificate Principal Balances of all the Certificates
other than the Class PO Certificates immediately prior to
such Distribution Date.
Senior Prepayment Percentage: For any Distribution
Date occurring prior to the fifth anniversary of the first
Distribution Date, 100%.
For any Distribution Date occurring on or after the
fifth anniversary of the first Distribution Date, an amount
as follows:
(i) for any Distribution Date subsequent to September
2000 to and including the Distribution Date in
September 2001, the Senior Percentage for such
Distribution Date plus 70% of the Junior
Percentage for such Distribution Date;
28
(ii) for any Distribution Date subsequent to September
2001 to and including the Distribution Date in
September 2002, the Senior Percentage for such
Distribution Date plus 60% of the Junior
Percentage for such Distribution Date;
(iii) for any Distribution Date subsequent to September
2002 to and including the Distribution Date in
September 2003, the Senior Percentage for such
Distribution Date plus 40% of the Junior
Percentage for such Distribution Date;
(iv) for any Distribution Date subsequent to September
2003 to and including the Distribution Date in
September 2004, the Senior Percentage for such
Distribution Date plus 20% of the Junior
Percentage for such Distribution Date; and
(v) for any Distribution Date thereafter, the Senior
Percentage for such Distribution Date.
Notwithstanding the foregoing, if on any Distribution Date
the Senior Percentage exceeds the Senior Percentage as of
the Cut-off Date, the Senior Prepayment Percentage for such
Distribution Date will equal 100%.
In addition, notwithstanding the foregoing, no reduction of
the Senior Prepayment Percentage shall occur on any
Distribution Date unless at least one of the following two
tests is satisfied:
Test I: If, as of the last day of the month
preceding such Distribution Date, (i) the aggregate
Scheduled Principal Balance of Mortgage Loans
delinquent 60 days or more (including for this purpose
any Mortgage Loans in foreclosure and Mortgage Loans
with respect to which the related Mortgaged Property
has been acquired by the Trust Fund) averaged over the
last six months, as a percentage of the aggregate
Scheduled Principal Balance of Mortgage Loans averaged
over the last six months, does not exceed 2%, and (ii)
cumulative Realized Losses with respect to the
Mortgage Loans do not exceed (a) 30% of the aggregate
Class Certificate Principal Balances of the Junior
Certificates as of the Cut-off Date (the "Original
Subordinate Principal Balance") if such Distribution
Date occurs between and including October 2000 and
September 2001, (b) 35% of the Original Subordinate
Principal Balance if such Distribution Date occurs
between and including October 2001 and September 2002,
(c) 40% of the Original Subordinate Principal Balance
29
if such Distribution Date occurs between and including
October 2002 and September 2003, (d) 45% of the
Original Subordinate Principal Balance if such
Distribution Date occurs between and including October
2003 and September 2004, and (e) 50% of the Original
Subordinate Principal Balance if such Distribution
Date occurs during or after October 2004; or
Test II: If, as of the last day of the month
preceding such Distribution Date, (i) the aggregate
Scheduled Principal Balance of Mortgage Loans
delinquent 60 days or more (including for this purpose
any Mortgage Loans in foreclosure and Mortgage Loans
with respect to which the related Mortgaged Property
has been acquired by the Trust Fund) averaged over the
last three months, as a percentage of the aggregate
Scheduled Principal Balance of Mortgage Loans averaged
over the last three months, does not exceed 4%, and
(ii) cumulative Realized Losses with respect to the
Mortgage Loans do not exceed (a) 10% of the Original
Subordinate Principal Balance if such Distribution
Date occurs between and including October 2000 and
September 2001, (b) 15% of the Original Subordinate
Principal Balance if such Distribution Date occurs
between and including October 2001 and September 2002,
(c) 20% of the Original Subordinate Principal Balance
if such Distribution Date occurs between and including
October 2002 and September 2003, (d) 25% of the
Original Subordinate Principal Balance if such
Distribution Date occurs between and including October
2003 and September 2004, and (e) 30% of the Original
Subordinate Principal Balance if such Distribution
Date occurs during or after October 2004.
Servicer's Certificate: A certificate, completed by
and executed on behalf of the Company in accordance with
Section 4.06, substantially in the form of Exhibit D hereto
or in such other form as the Company and the Trustee shall
agree.
Servicing Fee: As to any Mortgage Loan and
Distribution Date, an amount equal to the product of (i)
the Scheduled Principal Balance of such Mortgage Loan as of
the Due Date in the preceding calendar month and (ii) the
Servicing Fee Rate for such Mortgage Loan.
Servicing Fee Rate: As to any Mortgage Loan, the per
annum rate identified as such for such Mortgage Loan and set
forth in the Mortgage Loan Schedule.
30
Servicing Officer: Any officer of the Company involved
in, or responsible for, the administration and servicing of
the Mortgage Loans whose name appears on a list of
servicing officers attached to an Officer's Certificate
furnished to the Trustee by the Company, as such list may
from time to time be amended.
Single Certificate: A Certificate with an Initial
Certificate Principal Balance, or initial Notional
Principal Balance, of $1,000, or, in the case of a Class of
Certificates issued with an initial Class Certificate
Principal Balance or initial Notional Principal Balance of
less than $1,000, such lesser amount.
Special Hazard Loss: (i) A Realized Loss suffered by a
Mortgaged Property on account of direct physical loss,
exclusive of (a) any loss covered by a hazard policy or a
flood insurance policy required to be maintained in respect
of such Mortgaged Property under Section 3.06 and (b) any
loss caused by or resulting from:
(1) normal wear and tear;
(2) conversion or other dishonest act on the part of
the Trustee, the Company or any of their agents or
employees; or
(3) errors in design, faulty workmanship or faulty
materials, unless the collapse of the property or
a part thereof ensues;
or (ii) any Realized Loss suffered by the Trust Fund
arising from or related to the presence or suspected
presence of hazardous wastes or hazardous substances on a
Mortgaged Property unless such loss to a Mortgaged Property
is covered by a hazard policy or a flood insurance policy
required to be maintained in respect of such Mortgaged
Property under Section 3.06.
Special Hazard Loss Amount: As of any Distribution
Date, an amount equal to $4,188,733 minus the sum of (i)
the aggregate amount of Special Hazard Losses that would
have been allocated to the Junior Certificates in
accordance with Section 4.03 in the absence of the Loss
Allocation Limitation and (ii) the Adjustment Amount (as
defined below) as most recently calculated. On each
anniversary of the Cut-off Date, the "Adjustment Amount"
shall be equal to the amount, if any, by which the amount
calculated in accordance with the preceding sentence
(without giving effect to the deduction of the Adjustment
Amount for such anniversary) exceeds the lesser of (x) the
greater of (A) the product of the Special Hazard Percentage for
31
such anniversary multiplied by the outstanding principal balance
of all the Mortgage Loans on the Distribution Date immediately
preceding such anniversary and (B) twice the outstanding
principal balance of the Mortgage Loan which has the
largest outstanding principal balance on the Distribution
Date immediately preceding such anniversary, and (y) an
amount calculated by the Company and approved by each
Rating Agency, which amount shall not be less than
$500,000.
Special Hazard Percentage: As of each anniversary of
the Cut-off Date, the greater of (i) 1.00% and (ii) the
largest percentage obtained by dividing (x) the aggregate
outstanding principal balance (as of the immediately
preceding Distribution Date) of the Mortgage Loans secured
by Mortgaged Properties located in a single, five-digit zip
code area in the State of California by (y) the outstanding
principal balance of all the Mortgage Loans as of the
immediately preceding Distribution Date.
Special Hazard Termination Date: The Distribution Date
upon which the Special Hazard Loss Amount has been reduced
to zero or a negative number (or the Cross-Over Date, if
earlier).
Startup Day: As defined in Section 2.05(b).
Strip Rate: With respect to the Class S Certificates
and any Distribution Date, a variable rate per annum equal
to the excess of (x) the weighted average (by Scheduled
Principal Balance) carried to six decimal places, rounded
down, of the Net Mortgage Rates of the Outstanding
Non-Discount Mortgage Loans as of the Due Date in the
preceding calendar month (or the Cut-off Date, in the case
of the first Distribution Date) over (y) 7.50%; provided,
however, that such calculation shall not include any
Mortgage Loan that was the subject of a Voluntary Principal
Prepayment in full received by the Company (or of which the
Company received notice, in the case of a Mortgage Loan
serviced by a Primary Servicer) on or after the first day
but on or before the 15th day of such preceding calendar
month.
Subordinate Certificates: As to any date of
determination, first, the Class B5 Certificates until the
Class Certificate Principal Balance thereof has been
reduced to zero; second, the Class B4 Certificates until
the Class Certificate Principal Balance thereof has been
reduced to zero; third, the Class B3 Certificates until the
Class Certificate Principal Balance thereof has been
reduced to zero; fourth, the Class B2 Certificates until
the Class Certificate Principal Balance thereof has been
32
reduced to zero; fifth, the Class B1 Certificates until the Class
Certificate Principal Balance thereof has been reduced to
zero; and sixth, the Class M Certificates until the Class
Certificate Principal Balance thereof has been reduced to
zero.
Subordinate Certificate Writedown Amount: As to any
Distribution Date, first, any amount distributed to the
Class PO Certificates on such Distribution Date pursuant to
Section 4.01(a)(iv) and second, after giving effect to the
application of clause first above, the amount by which (i)
the sum of the Class Certificate Principal Balances of all
the Certificates (after giving effect to the distribution
of principal and the application of Realized Losses in
reduction of the Certificate Principal Balances of the
related Certificates on such Distribution Date) exceeds
(ii) the Pool Scheduled Principal Balance on the first day
of the month of such Distribution Date less any Deficient
Valuations occurring on or prior to the Bankruptcy Coverage
Termination Date.
Substitution Amount: With respect to any Mortgage Loan
substituted pursuant to Section 2.03(b), the excess of (x)
the Scheduled Principal Balance of the Mortgage Loan that
is substituted for, over (y) the Scheduled Principal
Balance of the related substitute Mortgage Loan, each
balance being determined as of the date of substitution.
TAC Balance: As to any Distribution Date and any Class
of TAC Certificates and any TAC Component, the balance
designated as such for such Distribution Date and such
Class or Component as set forth in the Principal Balance
Schedules.
TAC Certificates: None.
TAC Component: None.
Trigger Event: Any one or more of the following: (i)
if the Company is not a wholly-owned direct or indirect
subsidiary of General Electric Company or if General
Electric Capital Corporation shall not own (directly or
indirectly) at least two-thirds of the voting shares of the
capital stock of the Company, (ii) if the long-term senior
unsecured rating of General Electric Capital Corporation is
downgraded or withdrawn by Fitch or S&P below their two
highest rating categories, (iii) if General Electric
Capital Corporation is no longer obligated pursuant to the
terms of the support agreement, dated as of October 1,
1990, between General Electric Capital Corporation and the
Company, to maintain the Company's net worth or liquidity
33
(as such terms are defined therein) at the levels specified
therein, or if such support agreement, including any amendment
thereto, has been breached, terminated or otherwise held to be
unenforceable and (iv) if such support agreement, including
any amendment thereto, is amended or modified.
Trust Fund: The corpus of the trust created by this
Agreement evidenced by the Certificates and consisting of:
(i) the Mortgage Loans;
(ii) all payments on or collections in respect of
such Mortgage Loans, except as otherwise described in
the first paragraph of Section 2.01;
(iii) the obligation of the Company to deposit in
the Certificate Account the amounts required by
Sections 3.02(d), 3.02(e) and 4.04(a), and the
obligation of the Trustee to deposit in the
Certificate Account any amount required pursuant to
Section 4.04(b);
(iv) the obligation of the Company to purchase or
replace any Defective Mortgage Loan pursuant to Section
2.02 or 2.03;
(v) the obligation of the Company to purchase any
Modified Mortgage Loan pursuant to Section 3.01(c);
(vi) all property acquired by foreclosure or deed
in lieu of foreclosure with respect to any REO Mortgage
Loan;
(vii) the proceeds of the Primary Insurance
Policies, if any, and the hazard insurance policies
required by Section 3.06, in each case, in respect of
the Mortgage Loans;
(viii) the Certificate Account established pursuant
to Section 3.02(d);
(ix) the Eligible Account or Accounts, if any,
established pursuant to Section 3.02(e) and;
(x) any collateral funds established to secure
the obligations of the holders of the Class B4 and
Class B5 Certificates, respectively, under any
agreements entered into between such holder and the
Company pursuant to Section 3.08(e).
34
Trustee: The institution executing this Agreement as
Trustee, or its successor in interest, or if any successor
trustee is appointed as herein provided, then such
successor trustee so appointed.
Uninsured Cause: Any cause of damage to property
subject to a Mortgage such that the complete restoration of
the property is not fully reimbursable by the hazard
insurance policies required to be maintained pursuant to
Section 3.06.
Unpaid Class Interest Shortfall: As to any
Distribution Date and any Class of Certificates (other than
any Class of Principal Only Certificates), the amount, if
any, by which the aggregate of the Class Interest
Shortfalls for such Class for prior Distribution Dates is
in excess of the aggregate amounts distributed on prior
Distribution Dates to Holders of such Class of Certificates
(or added to the Class Certificate Principal Balance of any
Class of Accrual Certificates) pursuant to Section
4.01(a)(ii), in the case of the Senior Certificates (other
than any Class of Principal Only Certificates) and the
Class S Certificates, Section 4.01(a)(vi), in the case of
the Class M Certificates, Section 4.01(a)(ix), in the case
of the Class B1 Certificates, Section 4.01(a)(xii), in the
case of the Class B2 Certificates, Section 4.01(a)(xv), in
the case of the Class B3 Certificates, Section
4.01(a)(xviii), in the case of the Class B4 Certificates,
and Section 4.01(a)(xxi), in the case of the Class B5
Certificates.
Voluntary Principal Prepayment: With respect to any
Distribution Date, any prepayment of principal received from
the related Mortgagor on a Mortgage Loan (including the
Purchase Price of any Modified Mortgage Loan purchased
pursuant to Section 3.01(c)).
Voting Rights: The portion of the voting rights of all
the Certificates that is allocated to any Certificate for
purposes of the voting provisions of Section 10.01. At all
times during the term of this Agreement, 98% of all Voting
Rights shall be allocated to the Certificates other than
the Class S Certificates and 2% of all Voting Rights shall
be allocated to the Class S Certificates. Voting Rights
allocated to the Class S Certificates shall be allocated
among the Certificates of such Class in proportion to their
Notional Principal Balances. Voting Rights allocated to the
other Classes of Certificates shall be allocated among such
Classes (and among the Certificates within each such Class)
in proportion to their Class Certificate Principal Balances
(or Certificate Principal Balances), as the case may be.
35
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans. The
Company, concurrently with the execution and delivery of this
Agreement, does hereby transfer, assign, set-over and otherwise
convey to the Trustee without recourse (except as provided
herein) all the right, title and interest of the Company in and
to the Mortgage Loans, including all interest and principal
received by the Company on or with respect to the Mortgage Loans
(other than payments of principal and interest due and payable on
the Mortgage Loans on or before, and all Principal Prepayments
received before, the Cut-off Date).
In connection with such transfer and assignment, the
Company does hereby deliver to the Trustee the following
documents or instruments with respect to each Mortgage Loan
(other than any Designated Loan) so transferred and assigned:
(i) The Mortgage Note, endorsed without recourse in
blank by the Company, including all intervening
endorsements showing a complete chain of endorsement from
the originator to the Company; provided, however, that if
such Mortgage Note is a Confirmatory Mortgage Note, such
Confirmatory Mortgage Note may be payable directly to the
Company or may show a complete chain of endorsement from
the named payee to the Company;
(ii) Any assumption and modification agreement; and
(iii) An assignment in recordable form (which may be
included in a blanket assignment or assignments) of the
Mortgage to the Trustee.
With respect to each Designated Loan, the Company does hereby
deliver to the Trustee the Designated Loan Closing Documents.
In instances where a completed assignment of the
Mortgage in recordable form cannot be delivered by the Company to
the Trustee prior to or concurrently with the execution and
delivery of this Agreement, due to a delay in connection with
recording of the Mortgage, the Company may, in lieu of delivering
the completed assignment in recordable form, deliver to the
Trustee the assignment in such form, otherwise complete except
for recording information.
With respect to each Designated Loan, within 45 days
of the Closing Date the Company shall deliver to the Trustee
either (a) the documents referred to in clauses (i) and (ii) of
36
the second preceding paragraph, provided that if the Company cannot
locate such documents in the form initially executed by the
Mortgagor and the obligor under any assumption and modification
agreement, then it shall use reasonable efforts to obtain, and
may deliver, new documents executed by such parties evidencing
their obligations under the initial documents or (b) an Opinion
of Counsel satisfactory to the Trustee from counsel admitted to
practice in the jurisdiction in which the related Mortgaged
Property is located to the effect that the absence of the
original Mortgage Note or assumption and modification agreement,
as the case may be, will not preclude the Company as servicer
from initiating or prosecuting to completion any foreclosure
proceeding with respect to such Mortgaged Property. If such
documents are not so delivered within 45 days of the Closing
Date, the Company will use its best reasonable efforts (and the
Trustee will have no obligation to inquire as to such efforts) to
substitute another Mortgage Loan for such Designated Loan on the
next succeeding Distribution Date pursuant to Section 2.03(b). If
the Company is unable to effect such substitution, it shall
repurchase such Designated Loan on such Distribution Date
pursuant to Section 2.03(a).
In connection with each Mortgage Loan transferred and
assigned to the Trustee, the Company shall deliver to the Trustee
the following documents or instruments as promptly as
practicable, but in any event within 30 days, after receipt by
the Company of all such documents and instruments for all of the
outstanding Mortgage Loans:
(i) the Mortgage with evidence of recording indicated
thereon;
(ii) a copy of the title insurance policy; and
(iii) with respect to any Mortgage that has been
assigned to the Company, the related recorded intervening
assignment or assignments of Mortgage, showing a complete
chain of assignment from the originator to the Company.
Pending such delivery, the Company shall retain in its files (a)
copies of the documents described in clauses (i) and (iii) of the
preceding sentence, without evidence of recording thereon, and
(b) title insurance binders with respect to the Mortgage Loans.
The Company shall also retain in its files evidence of any
primary mortgage insurance relating to the Mortgage Loans during
the period when the related insurance is in force. Pending
delivery of the documents referred to in the second preceding
sentence, such evidence of primary mortgage insurance shall
include a copy of the relevant Primary Insurance Policy. (The
copies of the Mortgage, intervening assignments of Mortgage, if
any, title insurance binder and the Primary Insurance Policy, if
37
any, described in the second and third preceding sentences are
collectively referred to herein as the "Document File" with
respect to each Mortgage Loan.) The Company shall advise the
Trustee in writing if such delivery to the Trustee shall not have
occurred on or before the first anniversary of the Closing Date.
The Company shall promptly furnish to the Trustee the documents
included in the Document Files (other than any such documents
previously delivered to the Trustee as originals or copies)
either (a) upon the written request of the Trustee or (b) when
the Company or the Trustee obtains actual notice or knowledge of
a Trigger Event. The Trustee shall have no obligation to request
delivery of the Document Files unless a Responsible Officer of
the Trustee has actual notice or knowledge of the occurrence of a
Trigger Event.
In the case of Mortgage Loans which have been prepaid
in full after the Cut-off Date and prior to the date of execution
and delivery of this Agreement, the Company, in lieu of
delivering the above documents to the Trustee, herewith delivers
to the Trustee a certification of a Servicing Officer of the
nature set forth in Section 3.09.
The Company shall not be required to record the
assignments of the Mortgages to the Trustee unless the Company or
the Trustee obtains actual notice or knowledge of the occurrence
of any Trigger Event; provided, however, that such recording
shall not be required if the Company delivers to the Trustee a
letter from each Rating Agency to the effect that the failure to
take such action will not cause such Rating Agency to reduce or
withdraw its then current ratings of the Certificates. The party
obtaining actual notice or knowledge of any of such events shall
give the other party prompt written notice thereof. For purposes
of the foregoing (as well as for purposes of determining whether
the Company shall be required to deliver the Document Files to
the Trustee following the occurrence of a Trigger Event), the
Company shall be deemed to have knowledge of any such downgrading
referred to in the definition of Trigger Event if, in the
exercise of reasonable diligence, the Company has or should have
had knowledge thereof. As promptly as practicable subsequent to
the Company's delivery or receipt of such written notice, as the
case may be, the Company shall insert the recording information
in the assignments of the Mortgages to the Trustee and shall
cause the same to be recorded, at the Company's expense, in the
appropriate public office for real property records, except that
the Company need not cause to be so completed and recorded any
assignment which relates to a Mortgage Loan secured by property
in a jurisdiction under the laws of which, on the basis of an
Opinion of Counsel reasonably satisfactory to the Trustee and
satisfactory to each Rating Agency (as evidenced in writing),
recordation of such assignment is not necessary to protect the
Trustee against discharge of such Mortgage Loan by the Company or
38
any valid assertion that any Person other than the Trustee has
title to or any rights in such Mortgage Loan. In the event that
the Company fails or refuses to record the assignment of
Mortgages in the circumstances provided above, the Trustee shall
record or cause to be recorded such assignment at the expense of
the Company. In connection with the recording of any such
assignment, the Company shall furnish such documents as may be
reasonably necessary to accomplish such recording.
Notwithstanding the foregoing, at any time the Company may
record, or cause to be recorded, the assignments of Mortgages at
the expense of the Company.
Section 2.02. Acceptance by Trustee. Subject to the
examination hereinafter provided, the Trustee acknowledges
receipt of the Mortgage Notes, the assignments of the Mortgages
to the Trustee, the assumption and modification agreements, if
any, and the Designated Loan Closing Documents, if any, delivered
pursuant to Section 2.01, and declares that the Trustee holds and
will hold such documents and each other document delivered to it
pursuant to Section 2.01 in trust, upon the trusts herein set
forth, for the use and benefit of all present and future
Certificateholders. The Trustee agrees, for the benefit of
Certificateholders, to review each Mortgage File within 45 days
after (i) the execution and delivery of this Agreement, in the
case of the Mortgage Notes, the assignments of the Mortgages to
the Trustee, the assumption and modification agreements, if any,
and the Designated Loan Closing Documents, if any, (ii) delivery
after the Closing Date of (x) the Mortgage Notes and the
assumption and modification agreements, if any, or (y) an Opinion
of Counsel described in the fourth paragraph of Section 2.01, as
applicable, with respect to each Designated Loan, and (iii)
delivery of the recorded Mortgages, title insurance policies and
recorded intervening assignments of Mortgage, if any, to
ascertain that all required documents set forth in Section 2.01
have been executed, received and recorded, if applicable, and
that such documents relate to the Mortgage Loans identified in
Exhibit C hereto. In performing such examination, the Trustee may
conclusively assume the due execution and genuineness of any such
document and the genuineness of any signature thereon. It is
understood that the scope of the Trustee's examination of the
Mortgage Files is limited solely to confirming, after receipt of
the documents listed in Section 2.01, that such documents have
been executed, received and recorded, if applicable, and relate
to the Mortgage Loans identified in Exhibit C to this Agreement.
If in the course of such review the Trustee finds (1) that any
document required to be delivered as aforesaid has not been
delivered, or (2) any such document has been mutilated, defaced
or physically altered without the borrower's authorization or
approval, or (3) based upon its examination of such documents,
the information with respect to any Mortgage Loan set forth on
Exhibit C is not accurate, the Trustee shall promptly so notify
39
the Company in writing, which shall have a period of 60 days
after receipt of such notice to correct or cure any such defect.
The Company hereby covenants and agrees that, if any such
material defect cannot be corrected or cured, the Company will on
a Distribution Date which is not later than the first
Distribution Date which is more than ten days after the end of
such 60-day period repurchase the related Mortgage Loan from the
Trustee at the Purchase Price therefor or replace such Mortgage
Loan pursuant to Section 2.03(b); provided, however, that if the
defect (or breach pursuant to Section 2.03(a)) is one that, had
it been discovered before the Startup Day, would have prevented
the Mortgage Loan from being a "qualified mortgage" within the
meaning of the REMIC Provisions, such defect or breach shall be
cured, or the related Mortgage Loan shall be repurchased or
replaced, on a Distribution Date which falls within 90 days of
the date of discovery of such defect or breach. The Purchase
Price for the repurchased Mortgage Loan, or any amount required
in respect of a substitution pursuant to Section 2.03(b), shall
be deposited by the Company in the Certificate Account pursuant
to Section 3.02(d) on the Business Day prior to the applicable
Distribution Date and, upon receipt by the Trustee of written
notification of such deposit signed by a Servicing Officer, the
Trustee shall release to the Company the related Mortgage File
and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as shall be necessary
to vest in the Company any Mortgage Loan released pursuant
hereto. It is understood and agreed that the obligation of the
Company to repurchase or replace any Mortgage Loan as to which a
material defect in a constituent document exists shall constitute
the sole remedy respecting such defect available to
Certificateholders or the Trustee on behalf of
Certificateholders.
Upon receipt by the Trustee of the Mortgage Note with
respect to a Designated Loan that is not defective in accordance
with the fifth sentence of the preceding paragraph, the related
Lost Note Affidavit delivered pursuant to Section 2.01 shall be
void and the Trustee shall return it to the Company.
Section 2.03. Representations and Warranties of the
Company; Mortgage Loan Repurchase. (a) The Company hereby
represents and warrants to the Trustee that:
(i) The information set forth in Exhibit C hereto was
true and correct in all material respects at the date or
dates respecting which such information is furnished;
(ii) As of the date of the initial issuance of the
Certificates, each Mortgage is a valid and enforceable
first lien on the property securing the related Mortgage
Note subject only to (a) the lien of current real property
40
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 in the area wherein
the property subject to the Mortgage is located or
specifically reflected in the appraisal obtained in
connection with the origination of the related Mortgage
Loan obtained by the Company 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;
(iii) Immediately prior to the transfer and assignment
herein contemplated, the Company had good title to, and was
the sole owner of, each Mortgage Loan and all action had
been taken to obtain good record title to each related
Mortgage. Each Mortgage Loan has been transferred free and
clear of any liens, claims and encumbrances;
(iv) As of the date of the initial issuance of the
Certificates, no payment of principal of or interest on or
in respect of any Mortgage Loan is 30 or more days past due
and none of the Mortgage Loans have been past due 30 or
more days more than once during the preceding 12 months;
(v) As of the date of the initial issuance of the
Certificates, there is no mechanics' lien or claim for
work, labor or material affecting the premises subject to
any Mortgage which is or may be a lien prior to, or equal
or coordinate with, the lien of such Mortgage except those
which are insured against by the title insurance policy
referred to in (x) below;
(vi) As of the date of the initial issuance of the
Certificates, there is no delinquent tax or assessment lien
against the property subject to any Mortgage;
(vii) As of the date of the initial issuance of the
Certificates, there is no valid offset, defense or
counterclaim to any Mortgage Note or Mortgage, including
the obligation of the Mortgagor to pay the unpaid principal
and interest on such Mortgage Note;
(viii) As of the date of the initial issuance of the
Certificates, the physical property subject to any Mortgage
is free of material damage and is in good repair;
(ix) Each Mortgage Loan at the time it was made
complied in all material respects with applicable state and
41
federal laws, including, without limitation, usury, equal
credit opportunity and disclosure laws;
(x) A lender's title insurance policy or binder, or
other assurance of title insurance customary in the
relevant jurisdiction therefor, in either case, in a form
acceptable to FNMA or FHLMC, was issued on the date of the
origination of each Mortgage Loan and each such policy or
binder is valid and remains in full force and effect;
(xi) The original principal amount of each Mortgage
Note was not more than 95% of the Original Value; as of the
Cut-off Date, no more than 37.75% of the Mortgage Loans by
Scheduled Principal Balance had original principal amounts
of more than 80% of the Original Value and each Mortgage
Note having an original principal amount in excess of 80%
of the Original Value is covered by a Primary Insurance
Policy so long as its then outstanding principal amount
exceeds 80% of the greater of (a) the Original Value and
(b) the then current value of the related Mortgaged
Property as evidenced by an appraisal thereof satisfactory
to the Company. Each Primary Insurance Policy is issued by
a private mortgage insurer acceptable to FNMA or FHLMC;
(xii) Each 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,
over an original term of not more than thirty years. The
Mortgage Rate of each Mortgage Note of the related Mortgage
Loan was not less than 6.5% per annum and not greater than
9.75% per annum. The Mortgage Rate of each Mortgage Note is
fixed for the life of the related Mortgage Loan;
(xiii) The improvements on the Mortgaged Properties are
insured against loss under a hazard insurance policy with
extended coverage and conforming to the requirements of
Section 3.06 hereof. As of the date of initial issuance of
the Certificates, all such insurance policies are in full
force and effect;
(xiv) As of the Cut-off Date, no more than 12% of the
Mortgage Loans by Scheduled Principal Balance had a
Scheduled Principal Balance of more than $400,000;
(xv) As of the Cut-off Date, no more than 1.25% of the
Mortgage Loans by Scheduled Principal Balance are secured
by Mortgaged Properties located in any one postal zip code
area;
(xvi) As of the Cut-off Date, at least 97% of the
Mortgage Loans by Scheduled Principal Balance are secured by
42
Mortgaged Properties determined by the Company to be the
primary residence of the Mortgagor. The basis for such
determination is the making of a representation by the
Mortgagor at origination that he or she intends to occupy
the underlying property;
(xvii) As of the Cut-off Date, at least 94% of the
Mortgage Loans by Scheduled Principal Balance are secured
by one-family detached residences;
(xviii) As of the Cut-off Date, no more than 3% of the
Mortgage Loans by Scheduled Principal Balance are secured
by condominiums and, as of the Cut-off Date, no more than
1% of the Mortgage Loans by Scheduled Principal Balance are
secured by two- to four-family residential properties. As
to each condominium or related Mortgage Loan, (a) the
related condominium is in a project that is on the FNMA or
FHLMC approved list, (b) the related condominium is in a
project that, upon submission of appropriate application,
could be so approved by either FNMA or FHLMC, (c) the
related Mortgage Loan meets the requirements for purchase
by FNMA or FHLMC, (d) the related Mortgage Loan is of the
type that could be approved for purchase by FNMA or FHLMC
but for the principal balance of the related Mortgage Loan
or the pre-sale requirements or (e) the related Mortgage
Loan has been approved by a nationally recognized mortgage
pool insurance company for coverage under a mortgage pool
insurance policy issued by such insurer. As of the Cut-off
Date, no more than 0.25% of the Mortgage Loans by Scheduled
Principal Balance are secured by condominiums located in
any one postal zip code area;
(xix) No Mortgage Loan is secured by a leasehold
interest in the related Mortgaged Property, and each
Mortgagor holds fee title to the related Mortgaged
Property;
(xx) As of the Cut-off Date, no more than 2.75% of the
Mortgage Loans by Scheduled Principal Balance constituted
Buydown Mortgage Loans. The maximum Buydown Period for any
Buydown Mortgage Loan is three years, and the maximum
difference between the stated Mortgage Rate of any Buydown
Mortgage Loan and the rate paid by the related Mortgagor is
three percentage points. Each Buydown Mortgage Loan has
been fully funded;
(xxi) The original principal balances of the Mortgage
Loans range from $42,500 to $1,200,000;
(xxii) As of the Cut-off Date, no more than 2.5% of the
Mortgage Loans by Scheduled Principal Balance are secured
by second homes, no more than 0.75% of the Mortgage Loans
43
by Scheduled Principal Balance are secured by investor-owned
properties, and, as of the Cut-off Date, 1% of the Mortgage
Loans by Scheduled Principal Balance are secured by
condominiums that constitute second homes;
(xxiii) All appraisals are on forms acceptable to either
FNMA or FHLMC, including information regarding three
comparable properties;
(xxiv) No selection procedures, other than those
necessary to comply with the representations and warranties
set forth herein or the description of the Mortgage Loans
made in any disclosure document delivered to prospective
investors in the Certificates, have been utilized in
selecting the Mortgage Loans from the Company's portfolio
which would be adverse to the interests of the
Certificateholders;
(xxv) To the best of the Company's knowledge, at
origination no improvement located on or being part of a
Mortgaged Property was in violation of any applicable
zoning and subdivision laws and ordinances;
(xxvi) None of the Mortgage Loans is a temporary
construction loan. With respect to any Mortgaged Property
which constitutes new construction, the related
construction has been completed substantially in accordance
with the specifications therefor and any incomplete aspect
of such construction shall not be material or interfere
with the habitability or legal occupancy of the Mortgaged
Property. Mortgage Loan amounts sufficient to effect any
such completion are in escrow for release upon or in
connection with such completion or a performance bond or
completion bond is in place to provide funds for this
purpose and such completion shall be accomplished within
120 days after weather conditions permit the commencement
thereof;
(xxvii) As of the Closing Date, each Mortgage Loan is a
"qualified mortgage" as defined in Section 860G(a)(3) of the
Code; and
(xxviii) As of the Closing Date, the Company possesses the
Document File with respect to each Mortgage Loan, and the
related Mortgages and intervening assignment or assignments
of Mortgages, if any, have been delivered to a title
insurance company for recording.
It is understood and agreed that the representations
and warranties set forth in this Section 2.03(a) shall survive
delivery of the respective Mortgage Files to the Trustee. Upon
discovery by either the Company or the Trustee of a breach of any
44
of the foregoing representations and warranties which materially
and adversely affects the interests of the Certificateholders in
the related Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other. Subject to the
following sentence, within 60 days of its discovery or its
receipt of notice of breach, or, with the prior written consent
of a Responsible Officer of the Trustee, such longer period
specified in such consent, the Company shall cure such breach in
all material respects or shall repurchase such Mortgage Loan from
the Trustee or replace such Mortgage Loan pursuant to Section
2.03(b). Any such repurchase by the Company shall be accomplished
in the manner set forth in Section 2.02, subject to the proviso
of the third-to-last sentence thereof, and at the Purchase Price.
It is understood and agreed that the obligation of the Company to
repurchase or replace any Mortgage Loan as to which a breach
occurred and is continuing shall constitute the sole remedy
respecting such breach available to Certificateholders or the
Trustee on behalf of Certificateholders and such obligation of
the Company to repurchase or replace any such Mortgage Loan shall
not be assumed by any Person which may succeed the Company as
servicer hereunder, but shall continue as an obligation of the
Company. Notwithstanding the preceding sentence, if a breach of
the representation and warranty of the Company contained in
Section 2.03(a)(ix) occurs as a result of a violation of the
federal Truth in Lending Act, 15 U.S.C. ss. 1601 et seq., as
amended ("TILA"), and the Trustee or Trust Fund is named as a
defendant in a TILA suit in respect of such violation and
liability in respect thereof is imposed upon the Trustee or the
Trust Fund as assignees of the related Mortgage Loan pursuant to
Section 1641 of TILA, the Company shall indemnify the Trustee and
the Trust Fund from, and hold them harmless against, any and all
losses, liabilities, damages, claims or expenses (including
reasonable attorneys' fees) to which the Trustee and the Trust
Fund, or either of them, become subject pursuant to TILA, insofar
as such losses, damages, claims or expenses (including reasonable
attorneys' fees) result from such violation. The Company's
obligations under the preceding sentence shall not impair or
derogate from the Company's obligations to the Trustee under
Section 8.05.
(b) If the Company is required to repurchase any
Mortgage Loan pursuant to Section 2.02 or 2.03(a), the Company
may, at its option, within the applicable time period specified
in such respective Sections, remove such Defective Mortgage Loan
from the terms of this Agreement and substitute one or more other
mortgage loans for such Defective Mortgage Loan, in lieu of
repurchasing such Defective Mortgage Loan, provided that no such
substitution shall occur more than two years after the Closing
Date. Any substitute Mortgage Loan shall (a) have a Scheduled
Principal Balance (together with that of any other Mortgage Loan
45
substituted for the same Defective Mortgage Loan) as of the first
Distribution Date following the month of substitution not in
excess of the Scheduled Principal Balance of the Defective
Mortgage Loan as of such date (the amount of any difference, plus
one month's interest thereon at the respective Net Mortgage Rate,
to be deposited by the Company in the Certificate Account
pursuant to Section 2.02), (b) have a Mortgage Rate not less
than, and not more than one percentage point greater than, the
Mortgage Rate of the Defective Mortgage Loan, (c) have the same
Net Mortgage Rate as the Defective Mortgage Loan, (d) have a
remaining term to stated maturity not later than, and not more
than one year less than, the remaining term to stated maturity of
the Defective Mortgage Loan, (e) be, in the reasonable
determination of the Company, of the same type, quality and
character as the Defective Mortgage Loan as if the defect or
breach had not occurred, (f) have a ratio of its current
principal amount to its Original Value not greater than that of
the removed Mortgage Loan and (g) be, in the reasonable
determination of the Company, in compliance with the
representations and warranties contained in Section 2.03(a) as of
the date of substitution.
The Company shall amend the Mortgage Loan Schedule to
reflect the withdrawal of any Defective Mortgage Loan and the
substitution of a substitute Mortgage Loan therefor. Upon such
amendment the Company shall be deemed to have made as to such
substitute Mortgage Loan the representations and warranties set
forth in Section 2.03(a) as of the date of such substitution,
which shall be continuing as long as any Certificate shall be
outstanding or this Agreement has not been terminated, and the
remedies for breach of any such representation or warranty shall
be as set forth in Section 2.03(a). Upon such amendment, the
Trustee shall review the Mortgage File delivered to it relating
to the substitute Mortgage Loan, within the time and in the
manner and with the remedies specified in Section 2.02, except
that for purposes of this Section 2.03(b) (other than the
two-year period specified in the first sentence of the preceding
paragraph of this Section 2.03(b)), such time shall be measured
from the date of the applicable substitution.
Section 2.04. Execution of Certificates. The Trustee
has caused to be executed, countersigned and delivered to or upon
the order of the Company, in exchange for the Mortgage Loans, the
Certificates in authorized denominations evidencing the entire
ownership of the Trust Fund.
46
Section 2.05. Designations under the REMIC Provisions.
(a) The Company hereby designates the Classes of
Certificates identified in Section 5.01(b), other than the Class
R Certificate, as "regular interests," and the Class R
Certificate as the single class of "residual interests," in the
REMIC established hereunder for purposes of the REMIC Provisions.
(b) The Closing Date will be the "Startup Day" for the
REMIC established hereunder for purposes of the REMIC Provisions.
(c) The "tax matters person" with respect to the REMIC
established hereunder for purposes of the REMIC Provisions shall
be (i) the Company, if the Company is the owner of a Class R
Certificate, or (ii) in any other case, the beneficial owner of
the Class R Certificate having the largest Percentage Interest of
such Class; provided, however, that such largest beneficial owner
and, to the extent relevant, each other holder of a Class R
Certificate, by its acceptance thereof irrevocably appoints the
Company as its agent and attorney-in-fact to act as "tax matters
person" with respect to the REMIC established hereunder for
purposes of the REMIC Provisions.
(d) The "latest possible maturity date" of the regular
interests in the REMIC established hereunder is the Latest
Maturity Date for purposes of section 860G(a)(1) of the Code.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Company to Act as Servicer. (a) It is
intended that the REMIC formed hereunder shall constitute, and
that the affairs of the REMIC shall be conducted so as to qualify
the Trust Fund (other than any collateral fund established under
the agreement referred to in Section 3.08(e)) as, a "real estate
mortgage investment conduit" as defined in and in accordance with
the REMIC Provisions. In furtherance of such intention, the
Company covenants and agrees that it shall act as agent (and the
Company is hereby appointed to act as agent) on behalf of the
Trust Fund and the Holders of the Residual Certificates and that
in such capacity it shall:
(i) prepare and file, or cause to be prepared and
filed, in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066) and
prepare and file or cause to be prepared and filed with the
Internal Revenue Service and applicable state or local tax
47
authorities income tax or information returns for each
taxable year with respect to the REMIC established
hereunder, using the calendar year as the taxable year and
the accrual method of accounting, containing such
information and at the times and in the manner as may be
required by the Code or state or local tax laws,
regulations, or rules, and shall furnish or cause to be
furnished to Certificateholders the schedules, statements
or information at such times and in such manner as may be
required thereby;
(ii) within thirty days of the Closing Date, shall
furnish or cause to be furnished to the Internal Revenue
Service, on Form 8811 or as otherwise may be required by
the Code, the name, title, address, and telephone number of
the person that the holders of the Certificates may contact
for tax information relating thereto (and the Company shall
act as the representative of the REMIC established
hereunder for this purpose), together with such additional
information as may be required by such Form, and shall
update such information at the time or times in the manner
required by the Code;
(iii) make or cause to be made an election, on behalf of
the REMIC established hereunder, to be treated as a REMIC,
and make the appropriate designations, if applicable, in
accordance with Section 2.05 hereof on the federal tax
return of the Trust Fund for its first taxable year (and,
if necessary, under applicable state law);
(iv) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal
Revenue Service and, if necessary, state tax authorities,
all information returns or reports, or furnish or cause to
be furnished by telephone, mail, publication or other
appropriate method such information, as and when required
to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation
of any original issue discount using the Prepayment
Assumption Multiple;
(v) provide information necessary for the computation
of tax imposed on the transfer of a Residual Certificate to
a Disqualified Organization, or an agent (including a
broker, nominee or other middleman) of a Disqualified
Organization, or a pass-through entity in which a
Disqualified Organization is the record holder of an
interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for
such tax);
48
(vi) use its best reasonable efforts to conduct the
affairs of the REMIC established hereunder at all times
that any Certificates are outstanding so as to maintain the
status thereof as a REMIC under the REMIC Provisions;
(vii) not knowingly or intentionally take any action or
omit to take any action that would cause the termination of
the REMIC status of the REMIC or that would subject the
Trust Fund to tax, except for taxes for which the Company
is required to indemnify the REMIC pursuant to Section
3.01(c);
(viii) exercise reasonable care not to allow the creation
of any "interests" in the REMIC within the meaning of
section 860D(a)(2) of the Code other than the interests
represented by the Classes of Certificates identified in
Section 5.01(b);
(ix) exercise reasonable care not to allow the
occurrence of any "prohibited transactions" within the
meaning of section 860F of the Code, unless (1) the Company
shall have provided an Opinion of Counsel to the Trustee
that such occurrence would not (a) result in a taxable
gain, (b) otherwise subject the Trust Fund to tax, or (c)
cause the REMIC established hereunder to fail to qualify as
a REMIC or (2) such "prohibited transactions" arise from
the modification, holding or purchase of a Modified
Mortgage Loan pursuant to Section 3.01(c);
(x) exercise reasonable care not to allow the Trust
Fund to receive income from the performance of services or
from assets not permitted under the REMIC Provisions to be
held by a REMIC, except such as may arise from the
modification, holding or purchase of a Modified Mortgage
Loan pursuant to Section 3.01(c);
(xi) pay the amount of any federal or state tax,
including prohibited transaction taxes, taxes on certain
contributions to the REMIC after the Startup Day, and taxes
on net income from foreclosure property, imposed on the
Trust Fund when and as the same shall be due and payable
(but such obligation shall not prevent the Company or any
other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Company
from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings);
(xii) ensure that federal, state or local income tax or
information returns shall be signed by the Trustee or such
other person as may be required to sign such returns by the
Code or state or local laws, regulations or rules; and
49
(xiii) maintain such records relating to the REMIC
established hereunder, including but not limited to the
income, expenses, individual Mortgage Loans (including
Mortgaged Property), other assets and liabilities thereof,
and the fair market value and adjusted basis of the
property of each determined at such intervals as may be
required by the Code, as may be necessary to prepare the
foregoing returns, schedules, statements or information.
The Company shall be entitled to be reimbursed
pursuant to Section 3.04 for any federal income taxes paid by it
pursuant to clause (xi) of the preceding sentence, except to the
extent that such taxes are imposed as a result of the bad faith,
misfeasance or negligence of the Company in the performance of
its obligations hereunder. The Company shall not be entitled to
be reimbursed for any taxes paid pursuant to the indemnification
provisions of Section 3.01(c) (except as provided therein). With
respect to any reimbursement of prohibited transaction taxes, the
Company shall inform the Trustee of the circumstances under which
such taxes were incurred.
(b) The Company shall service and administer the
Mortgage Loans and shall have full power and authority, acting
alone or through one or more Primary Servicers, to do 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, the Company shall continue, and is
hereby authorized and empowered by the Trustee, to execute and
deliver, or file, as appropriate, on behalf of itself, the
Certificateholders and the Trustee or any of them, any and all
continuation statements, termination statements, instruments of
satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the properties subject to
the Mortgages. Without limitation of the foregoing, if the
Company in its individual capacity agrees to refinance any
Mortgage Loan upon the request of the related Mortgagor, the
Company, as servicer hereunder, may execute an instrument of
assignment in customary form to the Company in its individual
capacity. In connection with any such refinancing, the Trustee
shall, upon certification of a Servicing Officer to the effect
that an amount equal to the principal balance of the related
Mortgage Loan together with accrued and unpaid interest thereon
at the applicable Net Mortgage Rate to the date of such
certification has been credited to the Mortgage Loan Payment
Record, release the related Mortgage File to the Company
whereupon the Company may cancel the related Mortgage Note. Upon
request by the Company after the execution and delivery of this
Agreement, the Trustee shall furnish the Company with any powers
of attorney and other documents necessary or appropriate to
50
enable the Company to carry out its servicing and administrative duties
hereunder. The Company shall maintain servicing standards
equivalent to those required for approval by FNMA or FHLMC. The
Company shall not agree to any modification of the material terms
of any Mortgage Loan except as provided in Section 3.01(c), the
second sentence of Section 3.02(a) and in Section 3.07. The
Company shall not release any portion of any Mortgaged Property
from the lien of the related Mortgage unless the related Mortgage
Loan would be a "qualified mortgage" within the meaning of the
REMIC Provisions following such release.
(c) The Company may agree to a modification of any
Mortgage Loan (the "Relevant Mortgage Loan") upon the request of
the related Mortgagor, provided that (i) the modification is in
lieu of a refinancing and the Mortgage Rate on the Relevant
Mortgage Loan, as modified, is approximately a prevailing market
rate for newly-originated mortgage loans having similar terms,
(ii) the aggregate of the adjusted bases of all Modified Mortgage
Loans (including the Relevant Mortgage Loan) plus the aggregate
adjusted bases of any assets that are not qualified mortgages or
Permitted Investments under Code Section 860GA that are assets of
the REMIC established hereunder at all times on any day is less
than one percent of the aggregate of the adjusted bases of all
assets of the REMIC (including such Modified Mortgage Loans) on
such day, and (iii) the Company purchases the Relevant Mortgage
Loan from the Trust Fund as described below. Effective
immediately after such modification, and, in any event, on the
same Business Day on which the modification occurs, all right,
title and interest of the Trustee in and to the Modified Mortgage
Loan shall automatically be deemed transferred and assigned to
the Company and all benefits and burdens of ownership thereof,
including without limitation the right to accrued interest
thereon from and including the date of modification and the risk
of default thereon, shall pass to the Company. To confirm such
transfer and assignment, the Company, as servicer hereunder, as
soon as practicable shall execute an instrument of assignment of
the Modified Mortgage Loan without recourse in customary form to
the Company in its individual capacity. The Company shall
promptly deliver to the Trustee a certification of a Servicing
Officer to the effect that (i) an amount equal to the Purchase
Price of such Modified Mortgage Loan has been credited to the
Mortgage Loan Payment Record on the date of the transfer and
assignment of such Modified Mortgage Loan to the Company and (ii)
all requirements of the first paragraph of this subsection (c)
have been satisfied with respect to such Modified Mortgage Loan.
The Company shall deposit the Purchase Price for any
Modified Mortgage Loan in the Certificate Account pursuant to
Section 3.02(d) on the Business Day prior to the Distribution
Date on which such funds are considered Available Funds,
51
provided, however, that if the Company is required to deposit
funds in one or more Eligible Accounts on a daily basis pursuant
to Section 3.02(e), the Purchase Price for any Modified Mortgage
Loan shall be deposited therein within one Business Day after the
purchase of such Modified Mortgage Loan. Upon receipt by the
Trustee of written notification of any such deposit signed by a
Servicing Officer, the Trustee shall release to the Company the
related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without
recourse, as shall be necessary more fully to vest in the Company
any Modified Mortgage Loan previously transferred and assigned
pursuant hereto.
The Company covenants and agrees to indemnify the
Trust Fund against any and all liability for any "prohibited
transaction" taxes and any related interest, additions and
penalties imposed on the REMIC established hereunder as a result
of any modification of a Mortgage Loan effected pursuant to this
subsection (c), any holding of a Modified Mortgage Loan by the
REMIC or any purchase of a Modified Mortgage Loan by the Company
(but such obligation shall not prevent the Company or any other
appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Company from withholding
payment of such tax, if permitted by law, pending the outcome of
such proceedings). The Company shall have no right of
reimbursement for any amount paid pursuant to the foregoing
indemnification, except to the extent that the amount of any tax,
interest and penalties, together with interest thereon, is
refunded to the Trust Fund or the Company.
(d) The relationship of the Company (and of any
successor to the Company as servicer under this Agreement) to the
Trustee under this Agreement is intended by the parties to be
that of an independent contractor and not that of a joint
venturer, partner or agent.
(e) All costs incurred by the Company in effecting the
timely payment of taxes and assessments on the properties subject
to the Mortgage Loans shall not, for the purpose of calculating
monthly distributions to Certificateholders, be added to the
amount owing under the related Mortgage Loans, notwithstanding
that the terms of such Mortgage Loans so permit, and such costs
shall be recoverable by the Company to the extent permitted by
Section 3.04. The Company shall collect such amounts from the
Mortgagor and shall credit the Mortgage Loan Payment Record
accordingly.
(f) If the Company enters into a servicing agreement
with any servicer (a "Primary Servicer") pursuant to which such
Primary Servicer shall directly service certain Mortgage Loans
52
and the Company shall perform master servicing with respect
thereto, the Company shall not be released from its obligations
to the Trustee and Certificateholders with respect to the
servicing and administration of the Mortgage Loans in accordance
with the provisions of Article III hereof and such obligations
shall not be diminished by virtue of any such servicing agreement
or arrangement and the Company shall be obligated to the same
extent and under the same terms and conditions as if the Company
alone were servicing and administering the Mortgage Loans. Any
amounts received by a Primary Servicer in respect of a Mortgage
Loan shall be deemed to have been received by the Company whether
or not actually received by it. Any servicing agreement that may
be entered into and any transactions or services relating to the
Mortgage Loans involving a Primary Servicer in its capacity as
such shall be deemed to be between the Company and the Primary
Servicer alone, and the Trustee and the Certificateholders shall
have no claims, obligations, duties or liabilities with respect
thereto. Notwithstanding the foregoing, in the event the Company
has been removed as the servicer hereunder pursuant to Section
6.04 or Section 7.01, the Trustee or any successor servicer
appointed pursuant to Section 7.02 shall succeed to all of the
Company's rights and interests (but not to any obligations or
liabilities of the Company arising prior to the date of
succession) under any servicing agreement with any Primary
Servicer in respect of the Mortgage Loans, subject to the
limitation on the Trustee's responsibilities under Section 7.02.
(g) In no event shall any collateral fund established under
the agreement referred to in Section 3.08(e) constitute an asset
of any REMIC established hereunder.
Section 3.02. Collection of Certain Mortgage Loan
Payments; Mortgage Loan Payment Record; Certificate Account. (a)
The Company shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with
this Agreement, follow such collection procedures as it follows
with respect to mortgage loans comparable to the Mortgage Loans
in its servicing portfolio. Consistent with the foregoing, the
Company may in its discretion (i) waive any late payment charge
or any assumption fees or other fees which may be collected in
the ordinary course of servicing such Mortgage Loan and (ii) if a
default on the Mortgage Loan has occurred or is reasonably
foreseeable, arrange with a Mortgagor a schedule for the payment
of principal and interest due and unpaid for a period of not more
than 125 days after the applicable Due Date. Any arrangement of
the sort described in clause (ii) above shall not affect the
amount or timing of the Company's obligation to make Monthly
Advances with respect to any Mortgage Loan which Monthly Advances
53
shall be made pursuant to the original amortization schedule
applicable to such Mortgage Loan.
(b) The Company shall establish and maintain a
Mortgage Loan Payment Record in which the following payments on
and collections in respect of each Mortgage Loan shall as
promptly as practicable be credited by the Company for the
account of the Holders of the Certificates:
(i) All payments on account of principal, including
Principal Prepayments (other than (A) payments of principal
due and payable on the Mortgage Loans on or before, and all
Principal Prepayments received before, the Cut-off Date,
(B) in the case of a substitute Mortgage Loan, payments of
principal due and payable on such Mortgage Loan on or
before the Determination Date in the month of substitution,
and all Principal Prepayments received before the first day
of the month of substitution, and (C) in the case of a
replaced Mortgage Loan, payments of principal due and
payable on such Mortgage Loan after the Determination Date
in the month of substitution, and all Principal Prepayments
received in the month of substitution);
(ii) All payments (other than (A) those due and payable
on or before the Cut-off Date, (B) in the case of a
substitute Mortgage Loan, those due and payable on such
Mortgage Loan on or before the Determination Date in the
month of substitution, and (C) in the case of a replaced
Mortgage Loan, those due and payable on such Mortgage Loan
after the Determination Date in the month of substitution)
on account of interest at the applicable Net Mortgage Rate
on the Mortgage Loan received from the related Mortgagor,
including any Buydown Funds applied with respect to
interest at the applicable Net Mortgage Rate on any Buydown
Mortgage Loan;
(iii) All Liquidation Proceeds received by the Company
with respect to such Mortgage Loan and the Purchase Price
for any Mortgage Loan purchased by the Company pursuant to
Sections 2.02, 2.03, 3.01(c) and 3.16 (including any
amounts received in respect of a substitution of a Mortgage
Loan);
(iv) All Insurance Proceeds (including, for this
purpose, any amounts required to be credited by the Company
pursuant to the last sentence of Section 3.06) received by
the Company for the benefit of the Trust Fund, other than
proceeds to be applied to the restoration or repair of the
property subject to the related Mortgage or released, or to
be released, to the related Mortgagor in accordance with
the normal servicing procedures of the Company; and
54
(v) All REO Proceeds.
The foregoing requirements respecting credits to the Mortgage
Loan Payment Record are exclusive, it being understood that,
without limiting the generality of the foregoing, the Company
need not enter in the Mortgage Loan Payment Record collections,
Liquidation Proceeds or Insurance Proceeds in respect of Mortgage
Loans which have been previously released from the terms of this
Agreement, amounts representing fees or late charge penalties
payable by Mortgagors, or amounts received by the Company for the
account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items.
(c) Subject to subsection (e) below, until the
Business Day prior to each Distribution Date on which amounts are
required to be deposited in the Certificate Account pursuant to
subsection (d) of this Section 3.02, the Company may retain and
commingle such amounts with its own funds and shall be entitled
to retain for its own account any gain or investment income
thereon, and any such investment income shall not be subject to
any claim of the Trustee or Certificateholders. To the extent
that the Company realizes any net loss on any such investments,
the Company shall deposit in the Certificate Account an amount
equal to such net loss at the time the Company is required to
deposit amounts in the Certificate Account pursuant to subsection
(d) of this section 3.02. Any such deposit shall not increase the
Company's obligation under said subsection (d).
(d) The Trustee shall establish and maintain with the
Trustee in its corporate trust department a single separate trust
account designated in the name of the Trustee for the benefit of
the Holders of the Certificates issued hereunder (the
"Certificate Account") into which the Company shall deposit, not
later than 11:00 a.m. New York time on the Business Day prior to
each Distribution Date, an amount in next day funds equal to the
Available Funds for such Distribution Date. If the Trustee does
not receive such deposit by 2:00 p.m. on such Business Day, it
shall give the Company written notice thereof.
(e) If the Company or a Responsible Officer of the
Trustee obtains actual notice of or knowledge of the occurrence
of either (x) any Trigger Event or (y) the downgrade by S&P of
General Electric Capital Corporation's short-term senior
unsecured debt rating below A-1+, then, notwithstanding
subsection (c) above, the Company shall promptly establish, and
thereafter maintain, one or more Eligible Accounts in the name of
the Trustee and bearing a designation indicating that amounts
therein are held for the benefit of the Trustee and the
Certificateholders, into which the Company and any Primary
Servicer shall deposit on a daily basis within one Business Day
55
after receipt, all amounts otherwise required to be credited to
the Mortgage Loan Payment Record pursuant to Section 3.02(b);
provided, however, that such action shall not be required if the
Company delivers to the Trustee a letter from each Rating Agency
to the effect that the failure to take such action will not cause
such Rating Agency to withdraw or reduce its then current ratings
of the Certificates. All amounts so deposited shall be held in
trust for the benefit of Certificateholders. Amounts so deposited
may be invested at the written instruction of the Company in
Permitted Investments in the name of the Trustee maturing no
later than the Business Day preceding the Distribution Date
following the date of such investment; provided, however, that
any such Permitted Investment which is an obligation of State
Street Bank and Trust Company, in its individual capacity and not
in its capacity as Trustee, may mature on such Distribution Date;
and, provided further, that no such Permitted Investment shall be
sold before the maturity thereof if the sale thereof would result
in the realization of gain prior to maturity unless the Company
has obtained an Opinion of Counsel that such sale or disposition
will not cause the Trust Fund to be subject to the tax on
prohibited transactions under section 860F of the Code, or
otherwise subject the Trust Fund to tax or cause the REMIC
established hereunder to fail to qualify as a REMIC. The Trustee
shall maintain physical possession of all Permitted Investments,
other than Permitted Investments maintained in book-entry form.
The Company, as servicer, shall be entitled to retain for its own
account any gain or other income from Permitted Investments, and
neither the Trustee nor Cer-tificateholders shall have any right
or claim with respect to such income. The Company shall deposit
an amount equal to any loss realized on any Permitted Investment
as soon as any such loss is realized. If the provisions in this
subsection (e) become operable, references in this Agreement to
the Mortgage Loan Payment Record and credits and debits to such
Record shall be deemed to refer to Eligible Accounts and deposits
to and withdrawals from such Eligible Accounts. Any action which
may be necessary to establish the terms of an account pursuant to
this Section 3.02(e) may be taken by an amendment or supplement
to this Agreement or pursuant to a written order of the Company,
which amendment, supplement or order shall not require the
consent of Certificateholders, provided that the Company has
delivered to the Trustee a letter from each Rating Agency to the
effect that such amendment, supplement or order will not cause
such Rating Agency to withdraw or reduce its then current ratings
of the Certificates.
Section 3.03. Collection of Taxes, Assessments and
Other Items. The Company shall establish and maintain with one
or more depository institutions one or more accounts into which
it shall deposit all collections of taxes, assessments, private
56
mortgage or hazard insurance premiums or comparable items for the
account of the Mortgagors. As servicer, the Company shall effect
the timely payment of all such items for the account of
Mortgagors. Withdrawals from such account or accounts may be made
only to effect payment of taxes, assessments, private mortgage or
standard hazard insurance premiums or comparable items, to
reimburse the Company out of related collections for any payments
made regarding taxes and assessments or for any payments made
pursuant to Section 3.05 regarding premiums on Primary Insurance
Policies and Section 3.06 regarding premiums on standard hazard
insurance policies, to refund to any Mortgagors any sums
determined to be overages, or to pay interest owed to Mortgagors
to the extent required by law.
Section 3.04. Permitted Debits to the Mortgage Loan
Payment Record. The Company (or any successor servicer pursuant
to Section 7.02) may, from time to time, make debits to the
Mortgage Loan Payment Record for the following purposes:
(i) To reimburse the Company or the applicable Primary
Servicer for Liquidation Expenses theretofore incurred in
respect of any Mortgage Loan in an amount not to exceed the
amount of the related Liquidation Proceeds credited to the
Mortgage Loan Payment Record pursuant to Section
3.02(b)(iii); provided that the Company or the applicable
Primary Servicer shall not be entitled to reimbursement for
Liquidation Expenses incurred after the initiation of
foreclosure proceedings in respect of any Defaulted
Mortgage Loan that is repurchased pursuant to Section 3.16;
(ii) To reimburse the Company or the applicable Primary
Servicer for Insured Expenses and amounts expended by it
pursuant to Section 3.08 in good faith in connection with
the restoration of property damaged by an Uninsured Cause,
in an amount not to exceed the amount of the related
Insurance Proceeds and Liquidation Proceeds (net of any
debits pursuant to clause (i) above) and amounts
representing proceeds of other insurance policies covering
the property subject to the related Mortgage credited to
the Mortgage Loan Payment Record pursuant to Section
3.02(b) (iii) and (iv);
(iii) To reimburse the Company to the extent permitted
by Sections 3.01(a) and 6.04;
(iv) To pay to the Company amounts received in respect
of any Defective Mortgage Loan, Defaulted Mortgage Loan, or
Modified Mortgage Loan purchased by the Company to the
extent that the distribution of any such amounts on the
Distribution Date upon which the proceeds of such purchase
57
are distributed would make the total amount distributed in
respect of any such Mortgage Loan on such Distribution Date
greater than the Purchase Price therefor, net of any
unreimbursed Monthly Advances made by the Company;
(v) To reimburse the Company (or the Trustee, as
applicable) for Monthly Advances theretofore made in
respect of any Mortgage Loan to the extent of late
payments, REO Proceeds, Insurance Proceeds and Liquidation
Proceeds in
respect of such Mortgage Loan;
(vi) To reimburse the Company from any Mortgagor
payment of interest or other recovery with respect to a
particular Mortgage Loan, to the extent not previously
retained by the Company, for unpaid Servicing Fees with
respect to such Mortgage Loan, subject to Section 3.08(d);
(vii) To reimburse the Company (or the Trustee, as
applicable) for any Nonrecoverable Advance (which right of
reimbursement of the Trustee pursuant to this clause shall
be prior to such right of the Company); and
(viii) To make deposits into the Certificate Account
pursuant to Section 3.02(d).
The Company shall keep and maintain separate
accounting records, on a Mortgage Loan by Mortgage Loan basis,
for the purpose of accounting for debits to the Mortgage Loan
Payment Record pursuant to clauses (i), (ii), (iv), (v) and (vi)
of this Section 3.04; provided, however, that it is understood
and agreed that the record of such accounting need not be
retained by the Company for a period longer than the five most
recent fiscal years.
Section 3.05. Maintenance of the Primary Insurance
Policies. (a) The Company shall not take any action which would
result in non-coverage under any applicable Primary Insurance
Policy of any loss which, but for the actions of the Company,
would have been covered thereunder. To the extent coverage is
available, the Company shall keep or cause to be kept in full
force and effect each such Primary Insurance Policy until the
principal balance of the related Mortgage Note is 80% or less of
the greater of (i) the related Original Value and (ii) the then
current value of the property underlying the related Mortgage
Note as evidenced by an appraisal thereof satisfactory to the
Company. The Company shall not cancel or refuse to renew any such
Primary Insurance Policy applicable to a Mortgage Loan that is in
effect at the Closing Date and is required to be kept in force
hereunder unless the replacement Primary Insurance Policy for
such canceled or non-renewed policy is maintained with an
58
insurer whose claims-paying ability is acceptable to each Rating
Agency for mortgage pass-through certificates having ratings
equal to or better than the ratings then assigned to the
Certificates by such Rating Agency. The Company agrees to effect
the timely payment of the premium on each Primary Insurance
Policy, and such costs not otherwise recoverable shall be
recoverable by the Company from related Insurance Proceeds and
Liquidation Proceeds pursuant to Section 3.04.
(b) In connection with its activities as administrator
and servicer of the Mortgage Loans, the Company agrees to
present, on behalf of itself, the Trustee and the related
Certificateholders, claims to the insurer under each Primary
Insurance Policy and, in this regard, to take such reasonable
action as shall be necessary to permit recovery under any Primary
Insurance Policy respecting a related defaulted Mortgage Loan. To
the extent provided in Section 3.02(b), any amounts collected by
the Company under any Primary Insurance Policy in respect of the
Mortgage Loans (including, without limitation, a Mortgage Loan
purchased by a related insurer) shall be credited to the Mortgage
Loan Payment Record.
Section 3.06. Maintenance of Hazard Insurance. The
Company shall cause to be maintained for each Mortgage Loan
hazard insurance with a standard mortgagee clause and with
extended coverage in an amount which is at least equal to the
maximum insurable value of the improvements securing such
Mortgage Loan from time to time or the principal balance owing on
such Mortgage Loan from time to time, whichever is less. The
Company shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance
with extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value from time to time
of the improvements which are a part of such property or (ii) the
unpaid principal balance of such Mortgage Loan at the time of
such foreclosure or deed in lieu of foreclosure plus accrued
interest and the good-faith estimate of the Company of related
Liquidation Expenses to be incurred in connection therewith. To
the extent provided in Section 3.02(b)(iv), amounts collected by
the Company under any such policies in respect of the Mortgage
Loans shall be credited to the Mortgage Loan Payment Record. Such
costs shall be recoverable by the Company pursuant to Sections
3.03 and 3.04. In cases in which property securing any Mortgage
Loan is located in a federally designated flood area, the hazard
insurance to be maintained for such Mortgage Loan shall include
flood insurance. All such flood insurance shall be in such
amounts as are required under applicable guidelines of FNMA. The
Company shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and
shall be under no obligation itself to maintain any such
59
additional insurance on property acquired in respect of a
Mortgage Loan, 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 Company shall obtain and
maintain a blanket policy insuring against hazard losses on all
of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first sentence of
this Section 3.06, it being understood and agreed that such
policy may contain a deductible clause, in which case the Company
shall, in the event that there shall not have been maintained on
the related Mortgaged Property a policy complying with the first
sentence of this Section 3.06, and there shall have been a loss
which would have been covered by such policy, credit to the
Mortgage Loan Payment Record the amount not otherwise payable
under the blanket policy because of such deductible clause.
Section 3.07. Assumption and Modification Agreements.
(a) In any case in which property subject to a Mortgage has been
or is about to be conveyed by the Mortgagor, the Company shall
exercise its right to accelerate the maturity of such Mortgage
Loan under any "due-on-sale" clause applicable thereto, unless in
the reasonable discretion of the Company, such exercise would
adversely affect or jeopardize coverage under the related Primary
Insurance Policy, if any; provided, however, that if the Company
is prevented, as provided in Section 3.07(b), from enforcing any
such clause, the Company is authorized to make or enter into an
assumption and modification agreement from or with the Person to
whom such property has been or is about to be conveyed, pursuant
to which such Person becomes liable under the Mortgage Note and
the Mortgagor remains liable thereon. In connection with any such
assumption and modification agreement, the Company shall apply
its then current underwriting standards to such Person. The
Company shall not make or enter into any such assumption and
modification agreement, however, unless (to the extent
practicable in the circumstances) it shall have received
confirmation of the continued effectiveness of any applicable
Primary Insurance Policy and hazard insurance policy. The Company
shall notify the Trustee that any assumption and modification
agreement has been completed by forwarding to the Trustee the
original copy thereof, which copy shall be added by the Trustee
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. In
connection with any such agreement, the Mortgage Rate, mortgage
term and any other material term of such Mortgage Loan shall not
be changed. Any fee collected by the Company for entering into
any such agreement will be retained by the Company as additional
servicing compensation.
60
(b) Notwithstanding Section 3.07(a) or any other
provision of this Agreement, the Company shall not be deemed to
be in default, breach or any other violation of its obligations
hereunder by reason of any assumption of a Mortgage Loan, or
transfer of the property subject to a Mortgage without the
assumption thereof, by operation of law or any assumption or
transfer which the Company reasonably believes it may be
restricted by law from preventing, for any reason whatsoever.
Section 3.08. Realization Upon Defaulted Mortgage
Loans. (a) The Company shall foreclose upon or otherwise
comparably convert the ownership of properties securing such of
the Mortgage Loans as come into and continue in default and as to
which no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02. In connection with
such foreclosure or other conversion the Company shall,
consistent with Section 3.05, follow such practices and
procedures as it shall deem necessary or advisable and as shall
be normal and usual in its general mortgage servicing activities.
The foregoing is subject to the proviso that the Company shall
not be required to expend its own funds in connection with any
foreclosure or towards the restoration of any property unless it
shall determine (i) that such restoration or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to
Certificateholders after reimbursement to itself for such
expenses and (ii) that such expenses will be recoverable to it
either through Liquidation Proceeds or Insurance Proceeds.
Notwithstanding the foregoing, the Company shall not be entitled
to recover legal expenses incurred in connection with foreclosure
proceedings where the Mortgage Loan is reinstated and such
foreclosure proceedings are terminated prior to completion, other
than sums received from the Mortgagor for such expenses.
Notwithstanding anything to the contrary contained
herein, the Company shall be under no obligation to foreclose
upon or otherwise convert the ownership of any Mortgaged Property
which it believes may be contaminated with or affected by
hazardous or toxic wastes, materials or substances. The Company
may, but shall not be obligated to, make such determination on
the basis of a Phase I environmental assessment with respect to
the related Mortgaged Property. Neither the Trustee nor the
Company shall be liable to the Trust Fund or the
Certificateholders if, based on the Company's belief that such
contamination or effect exists, the Company does not foreclose
upon or otherwise convert the ownership of a Mortgaged Property.
In addition, neither the Trustee nor the Company shall be liable
to the Trust Fund or the Certificateholders if, based on the
Company's belief that no such contamination or effect exists, the
Company forecloses upon a Mortgaged Property and the Trustee or
its nominee on behalf of the Trust Fund takes title to such
61
Mortgaged Property, and thereafter such Mortgaged Property is
determined to be so contaminated or affected.
(b) In the event that title to any Mortgaged Property
is acquired in foreclosure or by deed in lieu of foreclosure, the
deed or certificate of sale shall be issued to the Trustee, or to
its nominee on behalf of the Trust Fund. Notwithstanding any such
acquisition of title and cancellation of the related Mortgage
Loan, such Mortgage Loan shall (except for purposes of Section
9.01) be considered to be an Outstanding Mortgage Loan until such
time as the Mortgaged Property shall be sold and such Mortgage
Loan becomes a Liquidated Mortgage Loan. Consistent with the
foregoing, for purposes of all calculations hereunder so long as
such Mortgage Loan shall be considered to be an Outstanding
Mortgage Loan, it shall be assumed that the related Mortgage Note
and its amortization schedule in effect on and after such
acquisition of title (after giving effect to any previous
Principal Prepayments and Deficient Valuations incurred
subsequent to the related Bankruptcy Coverage Termination Date
and before any adjustment thereto by reason of any bankruptcy
(other than as aforesaid) or any similar proceeding or any
moratorium or similar waiver or grace period) remain in effect
(notwithstanding that the indebtedness evidenced by such Mortgage
Note shall have been discharged), subject to adjustment to
reflect the application of REO Proceeds received in any month.
REO Proceeds received in any month shall be applied to the
payment of the installments of principal due and interest accrued
on the related REO Mortgage Loan in accordance with the terms of
such Mortgage Note. REO Proceeds received in any month in excess
of the Amortization Payment for such month due on an REO Mortgage
Loan shall be treated as a Principal Prepayment received in
respect of such Mortgage Loan.
(c) In the event that the Trust Fund acquires any
Mortgaged Property as aforesaid or otherwise in connection with a
default or imminent default on a Mortgage Loan, the Company shall
dispose of such Mortgaged Property prior to two years after its
acquisition by the Trust Fund unless (a) the Trustee shall have
been supplied with an Opinion of Counsel to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent
to such two-year period (and specifying the period beyond such
two-year period for which the Mortgaged Property may be held)
will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in section 860F of the
Code, or cause the REMIC established hereunder to fail to qualify
as a REMIC at any time that any Certificates are outstanding, in
which case the Trust Fund may continue to hold such Mortgaged
Property (subject to any conditions contained in such Opinion of
Counsel), or (b) the Trustee (at the Company's expense) or the
Company shall have applied for, prior to the expiration of such
62
two-year period, an extension of such two-year period in the
manner contemplated by section 856(e)(3) of the Code, in which
case the two-year period shall be extended by the applicable
period. Notwithstanding any other provision of this Agreement, no
Mortgaged Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the Trust Fund or sold in
such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify at any time as "foreclosure
property" within the meaning of section 860G(a)(8) of the Code,
(ii) subject the Trust Fund to the imposition of any federal or
state income taxes on "net income from foreclosure property" with
respect to such Mortgaged Property within the meaning of section
860G(c) of the Code, or (iii) cause the sale of such Mortgaged
Property to result in the receipt by the Trust Fund of any income
from non-permitted assets as described in section 860F(a)(2)(B)
of the Code, unless the Company has agreed to indemnify and hold
harmless the Trust Fund with respect to the imposition of any
such taxes.
(d) Any collection of Insurance Proceeds or
Liquidation Proceeds will be applied in the following order of
priority: first, to reimburse the Company for any related
unreimbursed Liquidation Expenses and to reimburse the Company or
the Trustee, as applicable, for any related unreimbursed Monthly
Advances; second, to accrued and unpaid interest on the Mortgage
Loan at the Mortgage Rate from the date to which interest was
last paid or advanced to the Due Date prior to the Distribution
Date on which such amounts are to be distributed; and third, as a
recovery of principal of the Mortgage Loan. If the amount 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 between the Servicing Fee and interest
at the Net Mortgage Rate in proportion to the amount of such
accrued interest which would have been allocated to each such
category in the absence of any shortfall.
(e) Notwithstanding anything to the contrary contained
herein, the Company shall have the right to enter into an
agreement substantially in the form of Exhibit K hereto with the
Person that first acquires the Class B5 Certificates from the
initial purchaser thereof on the Closing Date (provided that such
form may be revised to delete the option on the part of such
Person to purchase a defaulted Mortgage Loan as set forth in
Section 2.02(f) thereof). Prior to entering into any such
agreement with any Person, the Company shall obtain a
certification from such Person to the effect that (i) such Person
is not an "affiliate" (within the meaning of the Prohibited
Transaction Exemption) of the Trustee and (ii) such Person will
not purchase any Certificates if such purchase would cause such
63
Person to hold more than a ten percent interest in the Mortgage
Pool. It is understood that the right of the Company to be
reimbursed for Monthly Advances and Nonrecoverable Advances under
this Agreement shall not be affected in any way by the provisions
of any such agreement. The Trustee hereby agrees to perform such
obligations as may be expressly required of it pursuant to the
provisions of such agreement and to promptly notify each party to
such agreement if a Responsible Officer of the Trustee (with
direct responsibility for administration of this Agreement)
becomes aware of any discussions, plans or events that might lead
to the Trustee's becoming an "affiliate" (within the meaning of
the Prohibited Transaction Exemption) of any Person with which
the Company has entered into such agreement, provided that the
contents of any such notification shall be kept confidential by
the parties to such agreement. The Company agrees to promptly
notify the Trustee upon entering into any such agreement. In
addition, the Company shall provide the Trustee with such
information as may be necessary for the Trustee to perform its
obligations thereunder, including written instructions, clearly
identifying the source, amount and application of funds to be
deposited or withdrawn from the Collateral Fund (as defined in
such agreement). The Trustee shall provide the Company with such
information concerning credits and debits to the Collateral Fund
on account of income, gains and losses realized from Collateral
Fund Permitted Investments (as defined in such agreement), and
costs associated with the purchase and sale thereof, as the
Company may request in order to prepare the instructions
described in the preceding sentence.
In addition, subject to the provisions of the
preceding paragraph, the Company shall have the right to enter
into an agreement substantially in the form of Exhibit K hereto
with the Person that first acquires the Class B4 Certificates
from the initial purchaser thereof on the Closing Date, provided
that (i) such Person has also acquired the Class B5 Certificates,
(ii) such Person shall have no rights under such agreement until
the date on which the Class Certificate Principal Balance of the
Class B5 Certificates has been reduced to zero, and (iii) any
rights of such Person under such Agreement shall terminate in the
event that such Person transfers, directly or indirectly, the
Class B4 Certificates to any other Person.
Section 3.09. Trustee to Cooperate; Release of
Mortgage Files. Upon the payment in full of any Mortgage Loan,
the Company will immediately notify the Trustee by a
certification (which certification shall include a statement to
the effect that all amounts received in connection with such
payment which are required to be credited to the Mortgage Loan
Payment Record pursuant to Section 3.02 have been so credited) of
64
a Servicing Officer and shall request delivery to it of the
Mortgage File. If a Buydown Mortgage Loan is the subject of a
Principal Prepayment in full during the related Buydown Period,
the related Buydown Funds will be applied or returned to the
Person entitled thereto in accordance with the terms of such
Buydown Mortgage Loan. Upon receipt of such certification and
request in form satisfactory to the Trustee, the Trustee shall
promptly, but in any event within five Business Days, release the
related Mortgage File to the Company; provided, that the Trustee
shall not be responsible for any delay in the release of a
Mortgage File resulting from acts beyond its control, including
without limitation, acts of God, strikes, lockouts, riots, acts
of war or terrorism, epidemics, nationalization, governmental
regulations imposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other
disasters. Upon any such payment in full, the Company is
authorized to execute, pursuant to the authorization contained in
Section 3.01, an instrument of satisfaction regarding such
Mortgage, which instrument of satisfaction shall be recorded by
the Company if required by applicable law and be delivered to the
Person entitled thereto, it being understood and agreed that no
expenses incurred in connection with such instrument of
satisfaction shall be reimbursed from amounts at the time
credited to the Mortgage Loan Payment Record. From time to time
and as appropriate for the servicing or foreclosure of any
Mortgage Loan (including, without limitation, collection under
any Primary Insurance Policy), the Trustee shall, upon request of
the Company and delivery to the Trustee of a receipt signed by a
Servicing Officer, release the related Mortgage File to the
Company and shall execute such documents as shall be necessary to
the prosecution of any such proceedings. Such receipt shall
obligate the Company to return the Mortgage File to the Trustee
when the need therefor by the Company no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of
a certificate of a Servicing Officer similar to that hereinabove
specified, the receipt shall be released by the Trustee to the
Company.
Section 3.10. Servicing Compensation; Payment of
Certain Expenses by the Company. (a) As compensation for its
activities and obligations hereunder, the Company shall be
entitled to withhold and pay to itself out of each payment
received by it on account of interest on each Mortgage Loan
(including the portion of any Buydown Funds applied to the
related Buydown Mortgage Loan for the applicable period) an
amount equal to the Servicing Fee. The aggregate of the Servicing
Fees payable to the Company on any Distribution Date shall be
reduced by the amount of any Compensating Interest Payment for
such Distribution Date. Additional servicing compensation in the
65
form of Prepayment Interest Excess, assumption fees, modification fees,
late payment charges, interest income or gain with respect to amounts
deposited in the Certificate Account and invested by the Company or
otherwise shall be retained by the Company, subject to Section 3.10(b),
if applicable. The Company shall be required to pay all expenses
incurred by it in connection with its activities hereunder
(including payment of Trustee fees and all other fees and
expenses not expressly stated hereunder to be for the account of
the Certificateholders) and shall not be entitled to
reimbursement therefor except as provided in Sections 3.01, 3.03,
3.04 and 3.08.
(b) The Company may, as a condition to granting any
request by a Mortgagor for any consent, modification, waiver or
amendment or any other matter or thing, the granting of which is
in the Company's discretion pursuant to the terms of the
instruments evidencing or securing the related Mortgage Loan and
is permitted by other sections of this Agreement, require (to the
extent permitted by applicable law) that such Mortgagor pay to it
a reasonable or customary fee in accordance with the schedule set
forth as Exhibit H (which may be amended from time to time by
provision of a revised schedule of such fees to the Trustee,
whereupon such revised schedule shall be deemed to be Exhibit H
hereunder) for the additional services performed in connection
with such request, together with any related costs and expenses
incurred by it. Such fees shall be additional servicing
compensation to the Company.
Section 3.11. Reports to the Trustee; Certificate
Account Statements. Not later than 15 days after each
Distribution Date, the Company shall forward to the Trustee a
statement, certified by a Servicing Officer, setting forth the
status of the Mortgage Loan Payment Record as of the close of
business on such Distribution Date and showing, for the period
covered by such statement, the aggregate of credits to the
Mortgage Loan Payment Record for each category of credit
specified in Section 3.02 and each category of debit specified in
Section 3.04.
Section 3.12. Annual Statement as to Compliance. The
Company will deliver to the Trustee, on or before March 31 of
each year, beginning with March 31, 1996, an Officer's
Certificate stating that (a) a review of the activities of the
Company during the preceding calendar year and of its performance
under this Agreement has been made under such Officer's
supervision and (b) to the best of such Officer's knowledge,
based on such review, the Company has fulfilled all its material
obligations under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such
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obligation, specifying each such default known to such Officer and
the nature and status thereof.
Section 3.13. Annual Independent Public Accountants'
Servicing Report. On or before March 31 of each year, beginning
with March 31, 1996, the Company at its expense shall cause a
firm of independent public accountants (who may also render other
services to the Company) to furnish a report to the Trustee to
the effect that such firm has examined certain documents and
records relating to the servicing of mortgage loans under pooling
and servicing agreements (including this Agreement) substantially
similar to this Agreement (which agreements shall be described in
a schedule to such statement), and that such examination, which
has been conducted substantially in compliance with the audit
guide for audits of non-supervised mortgagees approved by the
Department of Housing and Urban Development for use by
independent public accountants (to the extent that the procedures
in such audit guide are applicable to the servicing obligations
set forth in such agreements), has disclosed no items of
noncompliance with the provisions of this Agreement which, in the
opinion of such firm, are material, except for such items of
noncompliance as shall be set forth in such report. For purposes
of such report, such firm may conclusively presume that any
pooling and servicing agreement which governs certificates
offered under a common registration statement under the
Securities Act of 1933 with the Certificates is similar to this
Agreement, unless such other pooling and servicing agreement
expressly states otherwise. In rendering such report, such firm
may rely, as to matters relating to direct servicing of Mortgage
Loans by any Primary Servicer, upon comparable reports of
independent public accountants with respect to such Primary
Servicer.
Section 3.14. Access to Certain Documentation and
Information Regarding the Mortgage Loans. To the extent permitted
by applicable law, the Company shall provide to the Trustee,
Certificateholders which are regulated insurance entities and the
applicable insurance regulatory agencies thereof,
Certificateholders which are federally insured savings and loan
associations, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners thereof access to the
documentation regarding the Mortgage Loans required by applicable
regulations of the Office of Thrift Supervision or of such
insurance regulatory agencies, as the case may be, such access
being afforded without charge but only upon reasonable request
and during normal business hours at the offices of the Company.
Nothing in this Section 3.14 shall derogate from the obligation
of the Company to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors and the
failure of the Company to provide access as provided in this
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Section 3.14 as a result of such obligation shall not constitute
a breach of this Section 3.14.
Section 3.15. Maintenance of Certain Servicing
Policies. The Company shall during the term of its service as
servicer maintain in force (i) a policy or policies of insurance
covering errors and omissions in the performance of its
obligations as servicer hereunder and (ii) a fidelity bond in
respect of its officers, employees or agents. Each such policy or
policies and bond shall, together, comply with the requirements
from time to time of FNMA for persons performing servicing for
mortgage loans purchased by such association.
Section 3.16. Optional Purchase of Defaulted Mortgage
Loans. The Company shall have the right, but not the obligation,
to purchase any Defaulted Mortgage Loan for a price equal to the
Purchase Price therefor. Any such purchase shall be accomplished
as provided in Section 4.04(a) hereof.
ARTICLE IV
PAYMENTS AND STATEMENTS
Section 4.01. Distributions. (a) On each Distribution
Date, the Trustee shall withdraw the Available Funds from the
Certificate Account and shall make distributions to Holders of
the Certificates as of the preceding Record Date in the following
order of priority, to the extent of the remaining Available
Funds:
(i) to each Class of Senior Certificates (other than
any Class of Principal Only Certificates) and the Class S
Certificates, the Accrued Certificate Interest thereon for
such Distribution Date; provided, however, that the Accrued
Certificate Interest on the Class A5 Certificates for such
Distribution Date shall be applied in the manner provided
in Section 4.01(e); and provided further, that any
shortfall in available amounts shall be allocated among
such Classes in proportion to the amount of Accrued
Certificate Interest otherwise distributable thereon or, in
the case of the Accrual Certificates, added to the Class
Certificate Principal Balance thereof;
(ii) to each Class of Senior Certificates (other than
any Class of Principal Only Certificates) and the Class S
Certificates, any related Unpaid Class Interest Shortfall
for such Distribution Date; provided, however, that any
Unpaid Class Interest Shortfall for the Class A5
Certificates for such Distribution Date shall be applied in
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the manner provided in Section 4.01(e); and provided
further, that any shortfall in available amounts shall be
allocated among such Classes in proportion to the Unpaid
Class Interest Shortfall for each such Class on such
Distribution Date;
(iii) to the Classes of Senior Certificates, in
reduction of the Class Certificate Principal Balances
thereof, concurrently as follows:
(A) to the Class PO Certificates, the PO
Principal Distribution Amount on such Distribution
Date, until the Class Certificate Principal Balance of
such Class has been reduced to zero;
(B) concurrently, (I) to the Group II Senior
Certificates, the Group II Senior Optimal Principal
Amount on such Distribution Date, in proportion to the
Class Certificate Principal Balances of such Classes,
until the Class Certificate Principal Balances thereof
have each been reduced to zero, and (II) to the Group
I Senior Certificates, the Group I Senior Optimal
Principal Amount on such Distribution Date, in the
following order or priority;
first, to the Class R Certificates, until the
Class Certificate Principal Balance thereof has
been reduced to zero;
second, concurrently, to the Class A1 and
Class A2 Certificates (in the latter case, in
respect of the Class A2A Component), in
proportion to the Class Certificate Principal
Balance of the Class A1 Certificates and the
Component Principal Balance of the Class A2A
Component, until the Class Certificate Principal
Balance of such Class and the Component Principal
Balance of such Component have each been reduced
to zero;
third, concurrently, to the Class A2 and
Class A3 Certificates (in the former case, in
respect of the Class A2B Component), in
proportion to the Component Principal Balance of
the Class A2B Component and the Class Certificate
Principal Balance of the Class A3 Certificates,
until the Component Principal Balance of such
Component and the Class Certificate Principal
Balance of such Class have each been reduced to
zero;
69
fourth, to the Class A4 Certificates, until
the Class Certificate Principal Balance thereof
has been reduced to zero;
fifth, to the Class A5 Certificates, until
the Class Certificate Principal Balance thereof
has been reduced to zero; and
sixth, to the Class A6 Certificates, until
the Class Certificate Principal Balance thereof
has been reduced to zero;
(iv) to the Class PO Certificates, any Class PO
Deferred Amount for such Distribution Date, up to an amount
not to exceed the Junior Optimal Principal Amount for such
Distribution Date, until the Class Certificate Principal
Balance of such Class has been reduced to zero; provided,
that any such amounts distributed to the Class PO
Certificates pursuant to this clause (iv) shall not reduce
the Class Certificate Principal Balance thereof;
(v) to the Class M Certificates, the Accrued
Certificate Interest thereon for such Distribution Date;
(vi) to the Class M Certificates, any Unpaid Class
Interest Shortfall therefor on such Distribution Date;
(vii) to the Class M Certificates, in reduction of the
Class Certificate Principal Balance thereof, such Class's
Allocable Share of the Junior Optimal Principal Amount on
such Distribution Date;
(viii) to the Class B1 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date;
(ix) to the Class B1 Certificates, any Unpaid Class
Interest Shortfall therefor on such Distribution Date;
(x) to the Class B1 Certificates, in reduction of the
Class Certificate Principal Balance thereof, such Class's
Allocable Share of the Junior Optimal Principal Amount on
such Distribution Date;
(xi) to the Class B2 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date;
(xii) to the Class B2 Certificates, any Unpaid Class
Interest Shortfall therefor on such Distribution Date;
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(xiii) to the Class B2 Certificates, in reduction of the
Class Certificate Principal Balance thereof, such Class's
Allocable Share of the Junior Optimal Principal Amount on
such Distribution Date;
(xiv) to the Class B3 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date;
(xv) to the Class B3 Certificates, any Unpaid Class
Interest Shortfall therefor on such Distribution Date;
(xvi) to the Class B3 Certificates, in reduction of the
Class Certificate Principal Balance thereof, such Class's
Allocable Share of the Junior Optimal Principal Amount on
such Distribution Date;
(xvii) to the Class B4 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date;
(xviii) to the Class B4 Certificates, any Unpaid Class
Interest Shortfall therefor on such Distribution Date;
(xix) to the Class B4 Certificates, in reduction of the
Class Certificate Principal Balance thereof, such Class's
Allocable Share of the Junior Optimal Principal Amount on
such Distribution Date;
(xx) to the Class B5 Certificates, the Accrued
Certificate Interest thereon for such Distribution Date;
(xxi) to the Class B5 Certificates, any Unpaid Class
Interest Shortfall therefor on such Distribution Date; and
(xxii) to the Class B5 Certificates, in reduction of the
Class Certificate Principal Balance thereof, such Class's
Allocable Share of the Junior Optimal Principal Amount on
such Distribution Date.
Notwithstanding the foregoing, amounts otherwise distributable
pursuant to clauses (vii), (x), (xiii), (xvi), (xix) and (xxii)
on any Distribution Date shall be reduced, in inverse order of
priority, by any amount distributed pursuant to clause (iv) on
such date, such that such amount distributed pursuant to clause
(iv) on such date shall be applied first to reduce the amount
distributable pursuant to clause (xxii), and then, to the extent
of any excess, applied second, to reduce the amount distributable
pursuant to clause (xix), third, to reduce the amount
distributable pursuant to clause (xvi), fourth, to reduce the
amount distributable pursuant to clause (xiii), fifth, to reduce
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the amount distributable pursuant to clause (x) and sixth, to
reduce the amount distributable pursuant to clause (vii).
If, on any Distribution Date, after distributions have been made
pursuant to clauses (i) and (ii) above, the remaining Available
Funds are insufficient to make the full amount of distributions
required to be made pursuant to clause (iii) above, (1) the
amount distributable to the Class PO Certificates pursuant to
clause (iii)(A) shall be equal to the product of (x) the
remaining Available Funds and (y) the fraction, expressed as a
percentage, the numerator of which is the PO Principal
Distribution Amount for such Distribution Date and the
denominator of which is the sum of (x) such PO Principal
Distribution Amount and (y) the sum of the Group I Senior Optimal
Principal Amount and the Group II Senior Optimal Principal Amount
for such Distribution Date, and (2) the amount distributable to
the Senior Certificates pursuant to clause (iii)(B) shall be
equal to the product of (x) the remaining Available Funds and (y)
the fraction, expressed as a percentage, the numerator of which
is the sum of the Group I Senior Optimal Principal Amount and the
Group II Senior Optimal Principal Amount for such Distribution
Date and the denominator of which is the sum of such Senior
Optimal Principal Amount and the PO Principal Distribution Amount
for such Distribution Date.
(b) On each Distribution Date, the Trustee shall
distribute to the holder of the Class R Certificate any remaining
Available Funds for such Distribution Date after application of
all amounts described in clause (a) of this Section 4.01. Any
distributions pursuant to this clause (b) shall not reduce the
Class Certificate Principal Balance of the Class R Certificate.
(c) If on any Distribution Date the Class Certificate
Principal Balances of the Junior Certificates have each been
reduced to zero, the amount distributable to the Senior
Certificates other than the Class PO Certificates pursuant to
Section 4.01(a)(iii)(B) for such Distribution Date and each
succeeding Distribution Date shall be allocated among such
Classes of Senior Certificates, pro rata, on the basis of their
respective Class Certificate Principal Balances immediately prior
to such Distribution Date, regardless of the priorities and
amounts set forth in Section 4.01(a)(iii)(B).
(d) If on any Distribution Date (i) the Class
Certificate Principal Balance of the Class M Certificates or any
Class of Class B Certificates for which the related Prepayment
Distribution Trigger was satisfied on such Distribution Date is
reduced to zero and (ii) amounts distributable pursuant to
clauses (ii), (iv) and (v) of the Junior Optimal Principal Amount
remain undistributed on such Distribution Date after all amounts
72
otherwise distributable on such date pursuant to clauses (v)
through (xxii) of Section 4.01(a) have been distributed, such
amounts shall be distributed on such Distribution Date to the
remaining Classes of Junior Certificates in order of priority,
such that no such distribution shall be made to any Class of
Junior Certificates while a prior such Class is outstanding.
(e) On each Distribution Date through the Accretion
Termination Date, before distributions have been made pursuant to
clause (a)(iii) of this Section 4.01, amounts allocable to the
Class A5 Certificates pursuant to clauses (a)(i) and (a)(ii) of
this Section 4.01 (less any amounts distributed as interest on
the Class A5 Certificates on the Accretion Termination Date)
shall not be distributable to such Class pursuant to such clauses
but shall instead be (i) added to the Class Certificate Principal
Balance of the Class A5 Certificates to the extent of the Accrual
Amount for such Distribution Date, and (ii) distributed in the
following order of priority:
first, to the Accretion Directed Certificates, in
the manner, to the extent and in accordance with the
priorities set forth in clauses first through fourth
of Section 4.01(a)(iii)(B)(II), such distributions
being made, in each case, in reduction of the
Certificate Principal Balances of such Classes; and
second, to the Class A5 Certificates, as Accrued
Certificate Interest thereon.
On each Distribution Date occurring after the Accretion
Termination Date, amounts allocable to the Class A5 Certificates
pursuant to clauses (a)(i) and (a)(ii) of this Section 4.01 shall
be distributable on such Distribution Date pursuant to such
clauses to Holders of the Class A5 Certificates as Accrued
Certificate Interest.
(f) Notwithstanding Section 4.01(e), if on any
Distribution Date the amount distributable to the Accrual
Certificates pursuant to Section 4.01(a)(iii) is sufficient to
reduce the Class Certificate Principal Balance thereof to zero on
such Distribution Date, and additional funds are available (after
giving effect to all distributions required pursuant to Section
4.01(a)) to distribute an amount equal to the Accrual Amount for
such Class on such Distribution Date to such Accrual
Certificates, such amount shall be distributed to such Accrual
Certificates on such Distribution Date as the final distribution
thereon.
Section 4.02. Method of Distribution. (a) All
distributions with respect to each Class of Certificates on each
73
Distribution Date shall be made pro rata among the outstanding
Certificates of such Class, based on the Percentage Interest in
such Class represented by each Certificate. Payments to the
Certificateholders on each Distribution Date will be made by the
Trustee to the Certificateholders of record on the related Record
Date (other than as provided in Section 9.01 respecting the final
distribution) by check or money order mailed to a
Certificateholder at the address appearing in the Certificate
Register, or upon written request by such Certificateholder to
the Trustee made not later than the applicable Record Date, by
wire transfer to a U.S. depository institution acceptable to the
Trustee, or by such other means of payment as such
Certificateholder and the Trustee shall agree.
(b) Each distribution with respect to a Book-Entry
Certificate shall be paid to the Depository, which shall credit
the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to
each Financial Intermediary for which it acts as agent. Each
Financial Intermediary shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to
be made by the Depository and the Depository Participants in
accordance with the provisions of the applicable Certificates.
Neither the Trustee nor the Company shall have any responsibility
therefor except as otherwise provided by applicable law.
(c) The Trustee shall withhold or cause to be withheld
such amounts as it reasonably determines are required by the Code
(giving full effect to any exemptions from withholding and
related certifications required to be furnished by
Certificateholders or Certificate Owners and any reductions to
withholding by virtue of any bilateral tax treaties and any
applicable certification required to be furnished by
Certificateholders or Certificate Owners with respect thereto)
from distributions to be made to Non-U.S. Persons. If the Trustee
reasonably determines that a more accurate determination of the
amount required to be withheld for a distribution can be made
within a reasonable period after the scheduled date for such
distribution, it may hold such distribution in trust for a holder
of a Residual Certificate until such determination can be made.
For the purposes of this paragraph, a "Non-U.S. Person" is an
individual, corporation, partnership or other person other than 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 that is subject to U.S. federal income tax
regardless of the source of its income.
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Section 4.03. Allocation of Losses. (a) On or prior to
each Determination Date, the Company shall determine the amount
of any Realized Loss in respect of each Mortgage Loan that
occurred during the immediately preceding calendar month.
(b) With respect to any Distribution Date, the
principal portion of each Realized Loss (other than any Excess
Special Hazard Loss, Excess Fraud Loss and Excess Bankruptcy
Loss) shall be allocated as follows:
(i) the applicable PO Percentage of any such Realized
Loss shall be allocated to the Class PO Certificates until
the Class Certificate Principal Balance thereof has been
reduced to zero; and
(ii) the applicable Non-PO Percentage of any such
Realized Loss shall be allocated in the following order of
priority:
first, to the Class B5 Certificates until the
Class Certificate Principal Balance thereof has been
reduced to zero;
second, to the Class B4 Certificates until the
Class Certificate Principal Balance thereof has been
reduced to zero;
third, to the Class B3 Certificates until the
Class Certificate Principal Balance thereof has been
reduced to zero;
fourth, to the Class B2 Certificates until the
Class Certificate Principal Balance thereof has been
reduced to zero;
fifth, to the Class B1 Certificates until the
Class Certificate Principal Balance thereof has been
reduced to zero;
sixth, to the Class M Certificates until the Class
Certificate Principal Balance thereof has been reduced
to zero; and
seventh, to the Classes of Senior Certificates
other than the Class PO Certificates, pro rata, in
accordance with their Class Certificate Principal
Balances; provided, that any such loss allocated to
any Class of Accrual Certificates shall be allocated
on the basis of the lesser of (x) the Class
Certificate Principal Balance thereof immediately
75
prior to the applicable Distribution Date and (y) the Class
Certificate Principal Balance thereof on the Closing
Date (as reduced by any Realized Losses previously
allocated thereto); and provided, further, that all
such losses, other than Non-Credit Losses, that would
otherwise be allocable to the Class A4 and Class A6
Certificates shall be allocable, first, to the Class
MA Certificates until the Class Certificate Principal
Balance thereof has been reduced to zero, and second,
to the Class A4 and Class A6 Certificates,
respectively. If on any Distribution Date the amount
of such losses allocated to the Class A4 and Class A6
Certificates exceeds the Class Certificate Principal
Balance of the Class MA Certificates, such losses
shall be allocated to the Class MA Certificates to the
extent of the remaining Class Certificate Principal
Balance thereof, in proportion to the Class
Certificate Principal Balances of the Class A4 and
Class A6 Certificates.
(c) With respect to any Distribution Date, the
principal portion of any Excess Special Hazard Loss, Excess Fraud
Loss and Excess Bankruptcy Loss (other than those attributable to
Debt Service Reductions) shall be allocated as follows: (1) the
PO Percentage of any such loss shall be allocated to the Class PO
Certificates, and (2) the Non-PO Percentage of any such loss
shall be allocated to each Class of Certificates other than the
Class PO Certificates, pro rata, based on the respective Class
Certificate Principal Balances thereof; provided, that any such
loss allocated to any Class of Accrual Certificates shall be
allocated on the basis of the lesser of (x) the Class Certificate
Principal Balance thereof immediately prior to the applicable
Distribution Date and (y) the Class Certificate Principal Balance
thereof on the Closing Date (as reduced by any Realized Losses
previously allocated thereto).
(d) Any Realized Losses allocated to a Class of
Certificates pursuant to Section 4.03(b) or (c) shall be
allocated among the Certificates of such Class in proportion to
their respective Certificate Principal Balances. In addition, any
Realized Losses allocated to any Class of Component Certificates
on a Distribution Date shall be allocated in reduction of the
Component Principal Balances of the related Components (other
than any Notional Component) in proportion to their respective
Component Principal Balances immediately prior to such
Distribution Date. Any allocation of Realized Losses pursuant to
this paragraph (d) shall be accomplished by reducing the
Certificate Principal Balance (or, in the case of any Component,
the Component Principal Balance) of the related Certificates
76
(or Components) on the related Distribution Date in accordance
with Section 4.03(e).
(e) Realized Losses allocated in accordance with this
Section 4.03 shall be allocated on the Distribution Date in the
month following the month in which such loss was incurred and, in
the case of the principal portion thereof, after giving effect to
distributions made on such Distribution Date, except that the
aggregate amount of Realized Losses to be allocated to the Class
PO Certificates on such Distribution Date will be taken into
account in determining distributions in respect of any Class PO
Deferred Amount for such date.
(f) On each Distribution Date, the Company shall
determine the Subordinate Certificate Writedown Amount, if any.
Any such Subordinate Certificate Writedown Amount shall effect a
corresponding reduction in the Certificate Principal Balance of
the Subordinate Certificates, which reduction shall occur on such
Distribution Date after giving effect to distributions made on
such Distribution Date.
(g) Notwithstanding the foregoing, no such allocation
of any Realized Loss shall be made on a Distribution Date to a
Class of Certificates to the extent that such allocation would
result in the reduction of the aggregate Certificate Principal
Balances of all the Certificates as of such Distribution Date,
after giving effect to all distributions and prior allocations of
Realized Losses on such date, to an amount less than the
aggregate Scheduled Principal Balance of the Mortgage Loans as of
the first day of the month of such Distribution Date, less any
Deficient Valuations occurring on or prior to the Bankruptcy
Coverage Termination Date (such limitation, the "Loss Allocation
Limitation").
Section 4.04. Monthly Advances; Purchases of Defaulted
Mortgage Loans. (a) The Company shall be required to make Monthly
Advances in the manner and to the extent provided herein. Prior
to the close of business on each Determination Date, the Company
shall determine (i) the amount of the Monthly Advance which it is
required to make on the related Distribution Date and (ii)
whether it has elected to purchase any Defaulted Mortgage Loan or
Loans on such Distribution Date. If the Company so elects to
purchase any Defaulted Mortgage Loans (or is required to purchase
any Mortgage Loan pursuant to Section 2.02 or 2.03(a) or purchase
any Modified Mortgage Loan pursuant to Section 3.01(c)), no
Monthly Advance shall be required with respect thereto for the
month in which such purchase occurs (or, in the case of a
purchase of a Modified Mortgage Loan, in the month in which the
Purchase Price thereof is required to be deposited in the
Certificate Account). The Company shall include information
77
as to each of such determinations in the Servicer's Certificate
furnished by it to the Trustee in accordance with Section 4.06
and shall be obligated to deposit in the Certificate Account
pursuant to Section 3.02(d) on or before 11:00 a.m. New York time
on the Business Day next preceding the following Distribution
Date the respective amounts applicable to such determinations
appearing in such Servicer's Certificate. Upon receipt by the
Trustee of written notification signed by a Servicing Officer of
any such deposit relating to the purchase by the Company of such
a Mortgage Loan, the Trustee shall release to the Company the
related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without
recourse, as shall be necessary to vest in the Company any
Mortgage Loan released pursuant hereto.
(b) In the event that the Company deposits or expects
to deposit less than the Available Funds required to be deposited
by it pursuant to Section 3.02(d), the Company shall so notify
the Trustee no later than 9:00 a.m. on the Business Day preceding
the related Distribution Date, and the amount so deposited, if
any, shall be deemed to have been deposited first pursuant to
clause (i) of the definition of Available Funds, second pursuant
to clause (iii) of the definition of Available Funds, and third
pursuant to clause (ii) of the definition of Available Funds.
Such notice shall specify each Mortgage Loan delinquent as of the
preceding Determination Date. In such event, the Trustee shall
make any Monthly Advance required to be made hereunder, in the
manner and to the extent required; provided, the Trustee shall
not be so obligated if prohibited by applicable law.
(c) In the event that the Company is succeeded
hereunder as servicer, the obligation to make Monthly Advances in
the manner and to the extent required by Section 4.04(a) shall be
assumed by the successor servicer (subject to Section 7.02).
Section 4.05. Statements to Certificateholders. (a)
Each month, at least two Business Days prior to each Distribution
Date, the Company shall deliver to the Trustee for mailing to
each Certificateholder, and the Trustee shall mail to each
Certificateholder on such Distribution Date, a statement (each, a
"Distribution Date Statement") substantially in the form of
Exhibit J hereto, setting forth:
(i) The amount of such distribution to the
Certificateholders of each Class (and in respect of any
Component), other than any Notional Certificates (and any
Notional Component), allocable to principal, separately
identifying the aggregate amount of any Principal
Prepay-ments included therein (including, for this purpose,
the Scheduled Principal Balances of all Defaulted Mortgage
78
Loans and Defective Mortgage Loans purchased pursuant to Section
2.02, 2.03(b) or 3.16, respectively, and any amounts
deposited pursuant to Section 2.03(b) in connection with
the substitution of any Mortgage Loans pursuant to Section
2.02 or 2.03(a), the proceeds of which purchases or
substitutions are being distributed on such Distribution
Date);
(ii) The amount of such distribution to the
Certificateholders of each Class (other than any Class of
Principal Only Certificates) allocable to interest,
including any Accrual Amount added to the Class Certificate
Principal Balance of any Class of Accrual Certificates;
(iii) The amount of servicing compensation paid to the
Company during the month preceding the month of
distribution in respect of the Mortgage Loans and such
other customary information as the Company deems necessary
or desirable to enable Certificateholders to prepare their
tax returns;
(iv) The Pool Scheduled Principal Balance and the
aggregate number of the Mortgage Loans on the preceding Due
Date after giving effect to all distributions allocable to
principal made on such Distribution Date;
(v) The Class Certificate Principal Balance (or
Notional Principal Balance) of each Class and the
Certificate Principal Balance (or Notional Principal
Balance) of a Single Certificate of each Class after giving
effect to (i) all distributions allocable to principal (or
reductions in the Notional Principal Balance, in the case
of the Notional Certificates, or the addition of any
Accrual Amount, in the case of any Class of Accrual
Certificates) made on such Distribution Date and (ii) the
allocation of any Realized Losses and any Subordinate
Certificate Writedown Amount for such Distribution Date;
(vi) The Pay-out Rate applicable to each Class of
Certificates;
(vii) The book value and unpaid principal balance of any
real estate acquired on behalf of Certificateholders
through foreclosure, or grant of a deed in lieu of
foreclosure or otherwise, of any REO Mortgage Loan, and the
number of the related Mortgage Loans;
(viii) The aggregate Scheduled Principal Balances and
number of Mortgage Loans which, as of the close of business
on the last day of the month preceding the related
Distribution Date, were (a) delinquent as to a total of (x)
79
30-59 days, (y) 60-89 days and (z) 90 days or more, and (b)
in foreclosure;
(ix) The Scheduled Principal Balance of any Mortgage
Loan replaced pursuant to Section 2.03(b), and of any
Modified Mortgage Loan purchased pursuant to Section
3.01(c);
(x) The Certificate Interest Rates of any LIBOR
Certificates, any COFI Certificates and the Class S
Certificates applicable to the Interest Accrual Period
relating to such Distribution Date and such Class;
(xi) The Senior Percentage, Group I Senior Percentage,
Group II Senior Percentage and Junior Percentage for such
Distribution Date; and
(xii) The Senior Prepayment Percentage, Group I Senior
Prepayment Percentage, Group II Senior Prepayment
Percentage and Junior Prepayment Percentage for such
Distribution Date.
In the case of information furnished pursuant to
clauses (i) through (iii) above, the amounts shall be expressed
as a dollar amount per Single Certificate.
In connection with any proposed transfer of a
Certificate that is purported to be made in reliance on Rule 144A
under the Securities Act, the Company shall be responsible for
furnishing such information as may be required thereunder to a
proposed transferee. In furtherance of the Company's obligations
hereunder, the Company hereby instructs the Trustee, at the
Company's expense and on its behalf, and the Trustee agrees, to
promptly make available to the proposed transferee, upon request
of the holder, (i) all statements furnished to Certificateholders
pursuant to this Section 4.05(a) on previous Distribution Dates,
(ii) all certificates furnished to the Trustee pursuant to
Section 4.06 in prior months, (iii) Officer's Certificates
furnished to the Trustee pursuant to Section 3.12 for the two
years preceding such request, (iv) reports of independent
accountants furnished to the Trustee pursuant to Section 3.13 for
the two years preceding such request, (v) a copy of the Private
Placement Memorandum relating to such Certificate, together with
any amendments or supplements thereto issued by the Company
(which copy shall be furnished to the Trustee by the Company),
and (vi) the Company's Current Report on Form 8-K, dated the
Closing Date, relating to the Mortgage Loans; provided, however,
that the Trustee shall in no event be required to make available
such statements or certificates pursuant to clauses (i) and (ii)
above relating to Distribution Dates occurring more than
twenty-four months preceding the month in which such request was
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received; provided, further, however, that notwithstanding the
Trustee's agreement as aforesaid to provide such materials to a
proposed transferee, the Trustee does not assume, and shall not
thereby be deemed to have assumed, any responsibility for
compliance by the Company with Rule 144A (subject to the
Trustee's agreement set forth in the second sentence of this
paragraph) and shall be entitled to include a notice with such
statements or certificates to the effect that such materials have
not been prepared or assembled by the Trustee and that the
Trustee assumes no responsibility for the adequacy, sufficiency
or contents thereof. In connection with any such proposed
transfer, the Company shall make available to the proposed
holder, at the request of the related transferor, such additional
information, if any, as may be required to be delivered pursuant
to Rule 144A(d)(4).
(b) On or prior to January 20th of each year,
commencing in 1996, the Company shall furnish to the Trustee for
mailing to each Person who at any time during the calendar year
was a Certificateholder a statement containing information
required to be provided pursuant to the Code.
Section 4.06. Servicer's Certificate. Each month, not
later than the second Business Day next preceding each
Distribution Date, the Company shall deliver to the Trustee a
completed Servicer's Certificate.
Section 4.07. Reports of Foreclosures and Abandonments
of Mortgaged Property. The Trustee shall, in each year beginning
after 1995, make the reports of foreclosures and abandonments of
any Mortgaged Property as required by section 6050J of the Code.
In order to facilitate this reporting process, the Company, on or
before January 15th of each year, shall provide to the Trustee
reports relating to each instance occurring during the previous
calendar year in which the Company (i) on behalf of the Trustee
acquires an interest in a Mortgaged Property through foreclosure
or other comparable conversion in full or partial satisfaction of
a Mortgage Loan, or (ii) knows or has reason to know that a
Mortgaged Property has been abandoned. Reports from the Company
shall be in form and substance sufficient to meet the reporting
requirements imposed by section 6050J of the Code.
Section 4.08. Reduction of Servicing Fees by
Compensating Interest Payments. The aggregate amount of the
Servicing Fees subject to retention by the Company as servicer in
respect of any Distribution Date shall be reduced by the amount
of any Compensating Interest Payment for such Distribution Date.
ARTICLE V
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THE CERTIFICATES
Section 5.01. The Certificates. (a) The Certificates
shall be substantially in the forms set forth in Exhibit A
hereto, as applicable, and shall, on original issue, be executed
by the Trustee, not in its individual capacity but solely as
Trustee, and countersigned and delivered by the Trustee to or
upon the order of the Company as provided in Article II.
(b) The Certificates shall be issued in an aggregate
Initial Certificate Principal Balance of $400,052,341.79. Such
aggregate original principal balance shall be divided among the
Classes having the designations, Class Certificate Principal
Balances, Certificate Interest Rates and minimum denominations as
follows:
Initial
Class
Certificate Certificate
Principal Interest Minimum
Designation Balance Rate Denominations
----------- ----------- ------ -------------
Class A1 $172,580,000.00 7.50% $ 25,000
Class A2 35,000,000.00 7.50 25,000
Class A3 53,633,000.00 7.50 25,000
Class A4 50,504,000.00 7.50 25,000
Class A5 8,105,000.00 7.50 25,000
Class A6 19,991,191.00 7.50 25,000
Class L 30,000,000.00 7.50 25,000
Class MA 5,000,000.00 7.50 25,000
Class PO 1,235,909.00 0.00 40,000
Class M 8,001,046.00 7.50 100,000
Class B1 5,000,654.00 7.50 100,000
Class B2 5,000,654.00 7.50 100,000
Class B3 3,000,392.00 7.50 250,000
Class B4 1,000,130.00 7.50 250,000
Class B5 2,000,265.79 7.50 250,000
Class S (1) (1) 12,500,000
Class R 100.00 7.50% 100
(1) The Class S Certificates are issued with an initial
Notional Principal Balance of $359,695,297.34 and shall
bear interest at the Strip Rate.
(c) The Certificates shall be issuable in registered
form only. The Book-Entry Certificates will be evidenced by one
or more certificates, beneficial ownership of which will be held
in the minimum dollar denominations in Certificate Principal
Balance or Notional Principal Balance, as applicable, specified
in Section 5.01(b), and, except in the case of the Residual
Certificates, integral multiples of $1,000 in excess thereof. The
Non-Book-Entry Certificates shall each be issued in the
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minimum dollar denominations in Certificate Principal Balance or
Notional Principal Balance, as applicable, specified in Section
5.01(b), and integral multiples of $1,000 (or $1,000,000 in the
case of the Class S Certificates) in excess thereof (and, if
necessary, in the amount of the remaining Class Certificate
Principal Balance or Notional Principal Balance, as applicable,
of each Class, in the case of one Certificate of such Class). The
Residual Certificate shall be issued as a single certificate
evidencing the entire Class Certificate Principal Balance of such
Class and having a Percentage Interest of 100%. If necessary, one
Certificate of each Class of Book-Entry Certificates and the
Class S Certificates may evidence an additional amount equal to
the remainder of the Class Certificate Principal Balance (or
Notional Principal Balance) of such Class.
(d) The Certificates shall be executed by manual or
facsimile signature on behalf of the Trustee by an authorized
officer under its seal, which may be in facsimile form and be
imprinted or otherwise reproduced thereon. Certificates bearing
the manual or facsimile signatures of individuals who were, at
the time when such signatures were affixed, authorized to sign on
behalf of the Trustee shall bind the Trustee, notwithstanding
that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless such
Certificate shall have been manually countersigned by the Trustee
substantially in the forms set forth in Exhibit A hereto, and
such countersignature upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been
duly executed and delivered hereunder. All Certificates issued on
the Closing Date shall be dated the Closing Date; all
Certificates issued thereafter shall be dated the date of their
countersignature.
(e) The Strip Rate for each Interest Accrual Period
shall be determined by the Company and included in the Servicer's
Certificate for the related Distribution Date.
Section 5.02. Registration of Transfer and Exchange of
Certificates. (a) The Trustee shall cause to be kept at an office
or agency in the city in which the Corporate Trust Office of the
Trustee is located or in the City of New York, New York a
Certificate Register 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 shall initially
serve as Certificate Registrar for the purpose of registering
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Certificates and transfers and exchanges of Certificates as
herein provided.
Subject to Sections 5.02(b) and 5.02(c), upon
surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Trustee shall execute, authenticate
and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class in
authorized denominations of a like Percentage Interest.
At the option of a Certificateholder, Certificates may
be exchanged for other Certificates of authorized denominations
of a like Class and Percentage Interest, upon surrender of the
Certificates to be exchanged at any such office or agency.
Whenever any Certificates are so surrendered for exchange the
Trustee shall execute, countersign and deliver the Certificates
which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration
of 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.
All Certificates surrendered for registration of
transfer and exchange shall be canceled and subsequently
destroyed by the Trustee and a certificate of destruction shall
be delivered by the Trustee to the Company.
(b) No legal or beneficial interest in all or any
portion of the Residual Certificates may be transferred directly
or indirectly to (i) a Disqualified Organization or an agent of a
Disqualified Organization (including a broker, nominee, or
middleman), (ii) an entity that holds REMIC residual securities
as nominee to facilitate the clearance and settlement of such
securities through electronic book-entry changes in accounts of
participating organizations (a "Book-Entry Nominee"), or (iii) an
individual, corporation, partnership or other person unless such
transferee (A) is not a Non-U.S. Person or (B) is a Non-U.S.
Person that holds a Residual Certificate in connection with the
conduct of a trade or business within the United States and has
furnished the transferor and the Trustee with an effective
Internal Revenue Service Form 4224 or (C) is a Non-U.S. Person
that has delivered to both the transferor and the Trustee an
opinion of a nationally recognized tax counsel to the effect that
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the transfer of a Residual Certificate to it is in accordance
with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of a Residual Certificate will
not be disregarded for federal income tax purposes (any such
person who is not covered by clause (A), (B) or (C) above being
referred to herein as a "Non-permitted Foreign Holder"), and any
such purported transfer shall be void and have no effect. The
Trustee shall not execute, and shall not authenticate and
deliver, a Residual Certificate in connection with any transfer
thereof unless the transferor shall have provided to the Trustee
an affidavit, substantially in the form attached as Exhibit F
hereto, signed by the transferee, to the effect that the
transferee is not such a Disqualified Organization, an agent
(including a broker, nominee, or middleman) for any entity as to
which the transferee has not received a substantially similar
affidavit, a Book-Entry Nominee or a Non-permitted Foreign
Holder, which affidavit shall contain the consent of the
transferee to any such amendments of this Agreement as may be
required to further effectuate the foregoing restrictions on
transfer of the Residual Certificates to Disqualified
Organizations, Book-Entry Nominees or Non-permitted Foreign
Holders, and an agreement by the Transferee that it will not
transfer a Residual Certificate without providing to the Trustee
an affidavit substantially in the form attached as Exhibit F
hereto and a letter substantially in the form attached as Exhibit
G hereto. Such affidavit shall also contain the statement of the
transferee that (i) it does not have the intention to impede the
assessment or collection of any federal, state or local taxes
legally required to be paid with respect to the Residual
Certificates and (ii) it understands that it may incur tax
liabilities in excess of cash flows generated by a Residual
Certificate and that it intends to pay taxes associated with
holding a Residual Certificate as they become due.
The affidavit described in the preceding paragraph, if
not executed in connection with the initial issuance of the
Residual Certificates, shall be accompanied by a written
statement in the form attached as Exhibit G hereto, signed by the
transferor, to the effect that as of the time of the transfer,
the transferor has (i) no actual knowledge that the transferee is
a Disqualified Organization, Book-Entry Nominee or Non-permitted
Foreign Holder, (ii) no reason to believe that the transferee has
the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with
respect to a Residual Certificate, and (iii) conducted a
reasonable investigation and found that the transferee had
historically paid its debts as they came due and found no
significant evidence to indicate that the transferee will not
continue to pay its debts as they become due. The Residual
Certificates shall bear a legend referring to the foregoing
85
restrictions contained in this paragraph and the preceding paragraph.
Upon notice to the Company that any legal or
beneficial interest in any portion of the Residual Certificates
has been transferred, directly or indirectly, to a Disqualified
Organization or agent thereof (including a broker, nominee, or
middleman) in contravention of the foregoing restrictions, (i)
such transferee shall be deemed to hold the Residual Certificate
in constructive trust for the last transferor who was not a
Disqualified Organization or agent thereof, and such transferor
shall be restored as the owner of such Residual Certificate as
completely as if such transfer had never occurred, provided that
the Company may, but is not required to, recover any
distributions made to such transferee with respect to the
Residual Certificate and return such recovery to the transferor,
and (ii) the Company agrees to furnish to the Internal Revenue
Service and to any transferor of the Residual Certificate or such
agent (within 60 days of the request therefor by the transferor
or agent) such information necessary to the application of
section 860E(e) of the Code as may be required by the Code,
including but not limited to the present value of the total
anticipated excess inclusions with respect to the Residual
Certificate (or portion thereof) for periods after such transfer.
At the election of the Company, the cost to the Company of
computing and furnishing such information may be charged to the
transferor or such agent referred to above; however, the Company
shall in no event be excused from furnishing such information.
The restrictions on transfers of the Residual
Certificates set forth in the preceding three paragraphs shall
cease to apply to transfers (and the applicable portions of the
legend to the Residual Certificates may be deleted) after
delivery to the Trustee of an Opinion of Counsel to the effect
that the elimination of such restrictions will not cause the
REMIC established hereunder to fail to qualify as a REMIC at any
time that the Certificates are outstanding.
No transfer of a Restricted Certificate shall be made
unless such transfer is exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Act"), and any
applicable state securities laws, or is made in accordance with
such Act and laws. As a condition to any transfer of a (i) Class
S Certificate or (ii) Restricted Junior Certificate in the form
of a Definitive Certificate to any person other than a QIB (as
certified by the proposed transferee in the form of assignment
attached to the related Certificate), either (x) the Trustee
shall require the transferee to execute an investment letter in
the form substantially as set forth in Exhibit I hereto or in
such other form as may be acceptable to the Trustee, certifying
86
as to the facts surrounding such transfer, or (y) in lieu of such
investment letter, the Trustee may accept a written Opinion of
Counsel (in form and substance acceptable to the Trustee) that
such proposed transfer may be made pursuant to an exemption from
the Act. As an additional condition to any transfer of a
Restricted Junior Certificate in the form of a Definitive
Certificate, either (i) the transferor and the transferee shall
complete the form of assignment attached to the Certificate
proposed to be transferred, or (ii) the Trustee shall have
received the above-referenced opinion of counsel. The holder of
any Restricted Certificate desiring to effect the transfer
thereof to a person other than a QIB shall, and hereby agrees to,
comply with any applicable conditions set forth in the preceding
two sentences and indemnify the Trustee and the Company against
any liability that may result if the transfer thereof is not so
exempt or is not made in accordance with such federal and state
laws. Such agreement to so indemnify the Trustee and the Company
shall survive the termination of this Agreement. Notwithstanding
the foregoing, no Opinion of Counsel or investment letter shall
be required upon the original issuance of (i) the Restricted
Junior Certificates to the Initial Purchaser (as defined in the
related Private Placement Memorandum) and (ii) the Class S
Certificates to the Company or upon any subsequent transfer of a
Class S Certificate by the Company to an affiliate (as defined in
Rule 405 under the Act) of the Company (an "Affiliate") or by an
Affiliate to another Affiliate, in a transaction exempt from the
registration requirements of the Act. The Trustee shall require
any such subsequent transferee to deliver a letter, executed by
itself and/or the transferor, certifying as to the transferor's
and transferee's status as the Company or an Affiliate, as the
case may be, and as to the fact that such transfer was made in a
transaction exempt from the registration requirements of the Act.
Any opinion or letter required pursuant to this paragraph shall
not be at the expense of the Trust Fund or the Trustee.
(c) (i) No transfer of an ERISA-Restricted Certificate
in the form of a Definitive Certificate shall be made to any
Person unless the Trustee has received (A) a certificate
(substantially in the form of Exhibit E or such other form as is
acceptable to the Company and the Trustee) from such transferee
to the effect that such transferee (i) is not a Plan or a Person
that is using the assets of a Plan to acquire such
ERISA-Restricted Certificate or (ii) is an insurance company
investing assets of its general account and the exemptions
provided by Section III(a) of Department of Labor Prohibited
Transaction Class Exemption 95-60, 60 Fed. Reg. 35925 (July 12,
1995) (the "Exemptions") apply to the transferee's acquisition
and holding of any ERISA-Restricted Certificate or (B) an opinion
of counsel satisfactory to the Trustee and the Company to the
effect that the purchase and holding of such a Certificate will
87
not constitute or result in the assets of the Trust Fund being deemed
to be "plan assets" subject to the prohibited transactions
provisions of ERISA or Section 4975 of the Code and will not
subject the Trustee or the Company to any obligation in addition
to those undertaken in the Agreement; provided, however, that the
Trustee will not require such certificate or opinion in the event
that, as a result of a change of law or otherwise, counsel
satisfactory to the Trustee has rendered an opinion to the effect
that the purchase and holding of an ERISA-Restricted Certificate
by a Plan or a Person that is purchasing or holding such a
Certificate with the assets of a Plan will not constitute or
result in a prohibited transaction under ERISA or Section 4975 of
the Code. The preparation and delivery of the certificate and
opinions referred to above shall not be an expense of the Trust
Fund, the Trustee or the Company. Notwithstanding the foregoing,
no opinion or certificate shall be required for the initial
issuance of the ERISA-Restricted Certificates.
(ii) No transfer of a Residual Certificate shall be
made to any Person unless the Trustee has received a
certification (substantially in the form of paragraph 4 of
Exhibit F) from such transferee to the effect that, among other
things, such transferee is not a Plan or a Person that is using
the assets of a Plan to acquire any such Certificate. The
preparation and delivery of such certificate shall not be an
expense of the Trust Fund, the Trustee or the Company.
(d) Subject to Section 8.01(i) hereof, the Trustee may
conclusively rely upon any certificate, affidavit or opinion
delivered pursuant to Section 5.02(b) or (c). Any certificate or
affidavit required to be delivered by a transferee under this
Section 5.02 may be executed and delivered in the name of such
transferee by its attorney-in-fact duly authorized in writing in
form and substance satisfactory to the Trustee.
(e) Except as to any additional Certificate of any
Class of Book-Entry Certificates held in physical certificated
form pursuant to Section 5.02(g) or any Restricted Junior
Certificate of any Class of Book-Entry Certificates that is
transferred to an entity other than a QIB, the Book-Entry
Certificates shall, subject to Section 5.02(f), at all times
remain registered in the name of the Depository or its nominee
and at all times: (i) registration thereof may not be transferred
by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate
Owners and with respect to ownership and transfers of such
Certificates; (iii) ownership and transfers of registration of
the Certificates issued in book-entry form on the books of the
Depository shall be governed by applicable rules established by
the Depository and the rights of Certificate Owners with respect
88
to Book-Entry Certificates shall be governed by applicable law
and agreements between such Certificate Owners and the
Depository, Depository Participants, and indirect participating
firms; (iv) the Depository may collect its usual and customary
fees, charges and expenses from its Depository Participants; (v)
the Trustee shall deal with the Depository, Depository
Participants and indirect participating firms as authorized
representatives of the Certificate Owners of the Certificates
issued in book-entry form for all purposes including the making
of payments due on the Book-Entry Certificates and exercising the
rights of Holders under this Agreement, and requests and
directions for and votes of such representatives shall not be
deemed to be inconsistent if they are made with respect to
different Certificate Owners; (vi) the Trustee may rely and shall
be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and
furnished by the Depository Participants with respect to indirect
participating firms and persons shown on the books of such
indirect participating firms as direct or indirect Certificate
Owners; (vii) Certificate Owners shall not be entitled to
certificates for the Book-Entry Certificates and (viii) the
Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders
and give notice to the Depository of such record date.
All transfers by Certificate Owners of 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 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. Except as
provided herein, the Trustee shall have no duty to monitor or
restrict the transfer of Certificates or interests therein, and
shall have no liability for any transfer, including any transfer
made through the book-entry facilities of the Depository or
between or among Depository Participants or Certificate Owners,
made in violation of applicable restrictions set forth herein,
except in the event of the failure of the Trustee to perform its
duties and fulfill its obligations under this Agreement.
(f) If (x)(i) the Company or the Depository advises
the Trustee in writing that the Depository is no longer willing,
qualified or able to properly discharge its responsibilities as
Depository, and (ii) the Trustee or the Company is unable to
locate a qualified successor, (y) the Company at its option
advises the Trustee in writing that it elects to terminate the
book-entry system through the Depository or (z) after the
occurrence of an Event of Default, Certificate Owners
representing not less than 51% of the aggregate Voting Rights
89
allocated to the Book-Entry Certificates together advise the
Trustee and the Depository through the Depository Participants 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 such
Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee
shall issue the Definitive Certificates. Neither the Company nor
the Trustee shall be liable for any delay in 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.
(g) On or prior to the Closing Date, there shall be
delivered to the Depository one certificate for each Class of
Book-Entry Certificates registered in the name of the
Depository's nominee, Cede & Co. The face amount of each such
Certificate shall represent 100% of the initial Class Certificate
Principal Balance thereof, except for such amount that does not
constitute an acceptable denomination to the Depository. An
additional Certificate of each Class of Book-Entry Certificates
may be issued evidencing such remainder and, if so issued, will
be held in physical certificated form by the Holders thereof.
Each Certificate issued in book-entry form shall bear the
following legend:
"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
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."
Section 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to
the Certificate Registrar, or the Certificate Registrar receives
evidence to its satisfaction of the destruction, loss or theft of
90
any Certificate and (b) there is delivered to the Company, the
Certificate Registrar and the Trustee such security or indemnity
as may be required by them to save each of them harmless, then,
in the absence of notice to the Certificate Registrar or the
Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, countersign and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor, Class and
Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Trustee may require the
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) connected therewith. Any
duplicate Certificate issued pursuant to this Section 5.03 shall
constitute complete and indefeasible evidence of ownership in the
Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners. Prior to due
presentation of a Certificate for registration of transfer, the
Company, the Trustee, the Certificate Registrar and any agent of
the Company, the Trustee or the Certificate Registrar 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 neither the Company, the Trustee, the Certificate
Registrar nor any agent of the Company, the Trustee or the
Certificate Registrar shall be affected by any notice to the
contrary.
Section 5.05. Access to List of Certificateholders'
Names and Addresses. The Certificate Registrar will furnish or
cause to be furnished to the Company, within 15 days after
receipt by the Certificate Registrar of request therefor from the
Company in writing, a list, in such form as the Company may
reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date for payment
of distributions to Certificateholders. If three or more
Certificateholders (hereinafter referred to as "applicants")
apply in writing to the Trustee, and such application states that
the applicants desire to communicate with other
Certificateholders with respect to their rights under this
Agreement or under the Certificates and is accompanied by a copy
of the communication which such applicants propose to transmit,
then the Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during
normal business hours to the most recent list of
Certificateholders held by the Trustee. If such list is as of a
date more than 90 days prior to the date of receipt of such
91
applicants' request, the Trustee shall promptly request from the
Certificate Registrar a current list as provided above, and shall
afford such applicants access to such list promptly upon receipt.
Every Certificateholder, by receiving and holding a Certificate,
agrees with the Certificate Registrar and the Trustee that
neither the Certificate Registrar nor the Trustee shall be held
accountable by reason of the disclosure of any such information
as to the names and addresses of the Certificateholders
hereunder, regardless of the source from which such information
was derived.
Section 5.06. Representation of Certain
Certificateholders. The fiduciary of any Plan which becomes a
Holder of a Certificate, by virtue of its acceptance of such
Certificate, will be deemed to have represented and warranted to
the Trustee and the Company that such Plan is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D
promulgated by the Securities and Exchange Commission under the
Securities Act of 1933.
Section 5.07. Determination of COFI. (a) If the
outstanding Certificates include any COFI Certificates, then on
each COFI Determination Date the Trustee shall determine the
value of COFI on the basis of the most recently available
Information Bulletin referred to in the definition of "COFI". The
establishment of COFI by the Trustee and the Trustee's subsequent
calculation of the rates of interest applicable to the COFI
Certificates for each Interest Accrual Period shall (in the
absence of manifest error) be final and binding. During each
Interest Accrual Period the Certificate Interest Rate for the
COFI Certificates for the current and immediately preceding
Interest Accrual Period shall be made available by the Trustee to
Certificate Owners and Certificateholders at the following
telephone number: (000) 000-0000.
(b) The failure by the Federal Home Loan Bank of San
Francisco to publish COFI for a period of 65 calendar days will
constitute an "Alternative Rate Event" for purposes hereof. Upon
the occurrence of an Alternative Rate Event, the Company will
calculate the Certificate Interest Rates for the COFI
Certificates for the subsequent Interest Accrual Periods by
using, in place of COFI, (i) the replacement index, if any,
published or designated by the Federal Home Loan Bank of San
Francisco or (ii) if no replacement index is so published or
designated, an alternative index to be selected by the Company
that has performed, or that the Company expects to perform, in a
manner substantially similar to COFI. At the time an alternative
index is first selected by the Company, the Company shall
determine the average number of basis points, if any, by which
the alternative index differed from COFI for such period as the
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Company, in its sole discretion, reasonably determines to reflect
fairly the long-term difference between COFI and the alternative
index, and shall adjust the alternative index by such average.
The Company shall select a particular index as an alternative
only if it receives an Opinion of Counsel to the effect that the
selection of such index will not cause any REMIC established
hereunder to fail to qualify as a REMIC for federal income tax
purposes. In the absence of manifest error, the selection of any
alternative index as provided by this Section 5.07(b) shall be
final and binding for each subsequent Interest Accrual Period.
Upon the occurrence of an Alternative Rate Event, the Trustee
shall have no responsibility for the determination of any
alternative index or the calculation of the Certificate Interest
Rates for the COFI Certificates.
(c) If at any time after the occurrence of an
Alternative Rate Event the Federal Home Loan Bank of San
Francisco resumes publication of COFI, the Certificate Interest
Rates for the COFI Certificates for each Interest Accrual Period
commencing thereafter will be calculated by reference to COFI.
Section 5.08. Determination of LIBOR. (a) If the
outstanding Certificates include any LIBOR Certificates, then on
each LIBOR Determination Date the Trustee shall determine LIBOR
on the basis of the offered LIBOR quotations of the Reference
Banks as of 11:00 a.m. London time on such LIBOR Determination
Date as follows:
(i) If on any LIBOR Determination Date two or more of
the Reference Banks provide such offered quotations, LIBOR
for the next Interest Accrual Period will be the arithmetic
mean of such offered quotations (rounding such arithmetic
mean upwards if necessary to the nearest whole multiple of
1/16%);
(ii) If on any LIBOR Determination Date only one or
none of the Reference Banks provides such offered
quotations, LIBOR for the next Interest Accrual Period will
be whichever is the higher of (x) LIBOR as determined on
the previous LIBOR Determination Date or (y) the Reserve
Interest Rate. The "Reserve Interest Rate" will be the rate
per annum which the Trustee determines to be either (A) the
arithmetic mean (rounding such arithmetic mean upwards if
necessary to the nearest whole multiple of 1/16%) of the
one-month Eurodollar lending rates that New York City banks
selected by the Trustee are quoting, on the relevant LIBOR
Determination Date, to the principal London offices of
leading banks in the London interbank market or (B) in the
event that the Trustee can determine no such arithmetic
mean, the lowest one-month Eurodollar lending rate that the
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New York City banks selected by the Trustee are quoting on
such LIBOR Determination Date to leading European banks;
and
(iii) If on any LIBOR Determination Date the Trustee is
required but is unable to determine the Reserve Interest
Rate in the manner provided in paragraph (ii) above, LIBOR
for the next Interest Accrual Period will be LIBOR as
determined on the previous LIBOR Determination Date, or, in
the case of the first LIBOR Determination Date, the Initial
LIBOR Rate.
(b) The establishment of LIBOR by the Trustee and the
Trustee's subsequent calculation of the Certificate Interest
Rates applicable to the LIBOR Certificates for the relevant
Interest Accrual Period, in the absence of manifest error, will
be final and binding. In all cases, the Trustee may conclusively
rely on quotations of LIBOR for the Reference Banks as such
quotations appear on the display designated "LIBO" on the Reuters
Monitor Money Rates Service.
(c) Within five Business Days of the Trustee's
calculation of the Certificate Interest Rates of the LIBOR
Certificates, the Trustee shall furnish to the Company by
telecopy (or by such other means as the Trustee and the Company
may agree from time to time) such Certificate Interest Rates.
(d) The Trustee shall provide to Certificateholders
who inquire of it by telephone the Certificate Interest Rates of
the LIBOR Certificates for the current and immediately preceding
Interest Accrual Period.
(e) As used herein, "Reference Banks" shall mean no
more than four leading banks engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i)
with an established place of business in London, England, (ii)
whose quotations appear on the "Reuters Screen LIBO Page" (as
described in the definition of LIBOR hereof) on the applicable
LIBOR Determination Date and (iii) which have been designated as
such by the Trustee and are able and willing to provide such
quotations to the Trustee on each LIBOR Determination Date. The
Reference Banks initially shall be: Barclay's plc, Bank of Tokyo,
National Westminster Bank and Trust Company and Bankers Trust
Company. If any of the initial Reference Banks should be removed
from the Reuters Screen LIBO Page or in any other way fail to
meet the qualifications of a Reference Bank, the Trustee, after
consultation with the Company, shall use its best efforts to
designate alternate Reference Banks.
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ARTICLE VI
THE COMPANY
Section 6.01. Liability of the Company. The Company
shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the
Company herein.
Section 6.02. Merger or Consolidation of, or
Assumption of the Obligations of, the Company. Any corporation
into which the Company may be merged or consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Company shall be a party, or any
corporation succeeding to the business of the Company, or any
corporation, more than 50% of the voting stock of which is,
directly or indirectly, owned by General Electric Company, or any
limited partnership, the sole general partner of which is either
the Company or a corporation, more than 50% of the voting stock
of which is owned, directly or indirectly, by General Electric
Company, which executes an agreement of assumption to perform
every obligation of the Company hereunder, shall be the successor
of the Company 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.
Section 6.03. Assignment. The Company may assign its
rights and delegate its duties and obligations as servicer under
this Agreement; provided, that (i) the purchaser or transferee
accepting such assignment or delegation is qualified to service
mortgage loans for FNMA or FHLMC, is reasonably satisfactory to
the Trustee and executes and delivers to the Trustee an
agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such purchaser or
transferee of the due and punctual performance and observance of
each covenant and condition to be performed or observed by the
Company as servicer hereunder from and after the date of such
agreement and (ii) each Rating Agency's rating of any Classes of
Certificates in effect immediately prior to such assignment or
delegation would not be qualified, downgraded or withdrawn as a
result thereof. In the case of any such assignment or delegation,
the Company will be released from its obligations as servicer
hereunder except for liabilities and obligations as servicer
incurred prior to such assignment or delegation.
Section 6.04. Limitation on Liability of the Company
and Others. Neither the Company nor any of the directors or
officers or employees or agents of the Company 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 by
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the Company pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not
protect the Company or any such person against any liability
which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of
duties of the Company or by reason of reckless disregard of
obligations and duties of the Company hereunder. The Company and
any director or officer or employee or agent of the Company may
rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any
matters arising hereunder. The Company and any director or
officer or employee or agent of the Company shall be indemnified
by the Trust Fund and held harmless 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 related to any specific Mortgage Loan or
Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and
any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of
duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. The Company shall be under no
obligation to appear in, prosecute or defend any legal action
which is not incidental to its duties to service the Mortgage
Loans in accordance with this Agreement and which in its opinion
may involve it in any expense or liability; provided, however,
that the Company may in its sole discretion undertake any such
action which it may deem necessary or desirable in respect of
this Agreement, and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such
event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and
liabilities of the Trust Fund and the Company shall be entitled
to be reimbursed therefor from amounts credited to the Mortgage
Loan Payment Record as provided by Section 3.04.
Section 6.05. The Company Not to Resign. Subject to
the provisions of Sections 6.02 and 6.03, the Company shall not
resign from the obligations and duties hereby imposed on it
except upon determination that the performance of its duties
hereunder is no longer permissible under applicable law. Any such
determination permitting the resignation of the Company shall be
evidenced by an Opinion of Counsel to such effect delivered to
the Trustee. No such resignation shall become effective until the
Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Company in accordance
with Section 7.02.
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ARTICLE VII
DEFAULT
Section 7.01. Events of Default. If any one of the
following events ("Events of Default") shall occur and be
continuing:
(i) Any failure by the Company to make any payment to
the Trustee of funds pursuant to Section 3.02(d) out of
which distributions to Certificateholders of any Class are
required to be made under the terms of the Certificates and
this Agreement which failure continues unremedied for a
period of three Business Days after the date upon which
written notice of such failure shall have been given to the
Company by the Trustee or to the Company and the Trustee by
Holders of Certificates of each Class affected thereby
evidencing, as to each such Class, Percentage Interests
aggregating not less than 25%; or
(ii) Failure on the part of the Company duly to observe
or perform in any material respect any other covenants or
agreements of the Company set forth in the Certificates or
in this Agreement, which covenants and agreements (A)
materially affect the rights of Certificateholders and (B)
continue unremedied for a period of 60 days after the date
on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Company by the
Trustee, or to the Company and the Trustee by the Holders
of Certificates of each Class affected thereby evidencing,
as to each such Class, Percentage Interests aggregating not
less than 25%; or
(iii) The entry of a decree or order by a court or
agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar
proceedings of or relating to the Company, or for the
winding up or liquidation of the Company's affairs, and the
continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(iv) The consent by the Company to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Company or of
or relating to substantially all of its property; or the
Company shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take
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advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its
obligations;
then, and in each and every such case, so long as an Event of
Default shall not have been remedied by the Company, either the
Trustee, or the Holders of Certificates of each Class affected
thereby evidencing, as to each such Class, Percentage Interests
aggregating not less than 51%, by notice then given in writing to
the Company (and to the Trustee if given by the
Certificateholders) may terminate all of the rights and
obligations of the Company as servicer under this Agreement. On
or after the receipt by the Company of such written notice, all
authority and power of the Company under this Agreement, whether
with respect to the Certificates or the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee pursuant to
and under this Section 7.01; and, without limitation, the Trustee
is hereby authorized and empowered to execute and deliver, on
behalf of the Company, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all
other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the
transfer and endorsement of the Mortgage Loans and related
documents, or otherwise, including, without limitation, the
recordation of the assignments of the Mortgage Loans to it. The
Company agrees to cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the Company
hereunder, including, without limitation, the transfer to the
Trustee for the administration by it of all cash amounts that
shall at the time be held by the Company and that have been or
should have been credited by it to the Mortgage Loan Payment
Record, or that have been deposited by the Company in the
Certificate Account or are thereafter received by the Company
with respect to the Mortgage Loans. In addition to any other
amounts which are then, or, notwithstanding the termination of
its activities as servicer, may become, payable to the Company
under this Agreement, the Company shall be entitled to receive
out of any delinquent payment on account of interest on a
Mortgage Loan, due during the period prior to the notice pursuant
to this Section 7.01 which terminates the obligation and rights
of the Company hereunder and received after such notice, that
portion of such payment which it would have been entitled to
retain pursuant to Section 3.04(vi) if such notice had not been
given.
Section 7.02. Trustee to Act; Appointment of
Successor. (a) On and after the time the Company receives a
notice of termination pursuant to Section 7.01, the Trustee shall
be the successor in all respects to the Company in its capacity
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as servicer under this Agreement and the transactions set forth
or provided for herein and shall succeed to all the rights of and
be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Company in its capacity as
servicer by the terms and provisions hereof; provided, however,
that the responsibilities and duties of the Company pursuant to
Sections 2.02 and 2.03(a) and, if the Trustee is prohibited by
law or regulation from making Monthly Advances, the
responsibility to make Monthly Advances pursuant to Section 4.04,
shall not be the responsibilities, duties or obligations of the
Trustee; and provided further, that any failure of the Trustee to
perform such duties and responsibilities that is caused by the
Company's failure to cooperate with the Trustee as required by
Section 7.01 shall not be considered a default by the Trustee
hereunder. As compensation therefor, the Trustee shall, except as
provided in Section 7.01, be entitled to such compensation as the
Company would have been entitled to hereunder if no such notice
of termination had been given. Notwithstanding the above, the
Trustee may, if it shall be unwilling so to act, or shall, if it
is legally unable so to act, appoint, or petition a court of
competent jurisdiction to appoint, any established housing and
home finance institution approved to service mortgage loans for
either FNMA or FHLMC, having a net worth of not less than
$10,000,000, as the successor to the Company hereunder in the
assumption of all or any part of the responsibilities, duties or
liabilities of the Company hereunder. Pending appointment of a
successor to the Company pursuant to this Article VII, unless the
Trustee is prohibited by law from so acting, the Trustee shall
act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree;
provided, however, that no such compensation shall be in excess
of that permitted the Company hereunder. The Trustee and such
successor shall take such action, consistent with this Agreement,
as shall be necessary to effectuate any such succession.
(b) Any successor, including the Trustee, to the
Company as servicer pursuant to this Article VII shall during the
term of its service as servicer maintain in force (i) a policy or
policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder, and (ii) a
fidelity bond in respect of its officers, employees and agents to
the same extent as the Company is so required pursuant to Section
3.15.
Section 7.03. Notification to Certificateholders.
Upon any termination or appointment of a successor to the Company
pursuant to this Article VII, the Trustee shall give prompt
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written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register.
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee. The Trustee, prior to
the occurrence of an Event of Default and after the curing of all
Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in
this Agreement. If an Event of Default has occurred (which has
not been cured), 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
his or her own affairs.
The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Trustee which are specifically
required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they conform
to the requirements of this Agreement.
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 an Event of Default,
and after the curing of all such Events of Default which
may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee and, in the
absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming 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 of the Trustee, unless it shall be proved that the
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Trustee was negligent in performing its duties in accordance
with the terms of this Agreement;
(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 of each Class affected
thereby evidencing, as to each such Class, Percentage
Interests aggregating not less than 25%, 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; and
(iv) The Trustee shall not be charged with knowledge of
(A) any failure by the Company to comply with the
obligations of the Company referred to in clauses (i) and
(ii) of Section 7.01, (B) the rating downgrade referred to
in the definition of "Trigger Event" or (C) any failure by
the Company to comply with the obligations of the Company
to record the assignments of Mortgages referred to in
Section 2.01 unless a Responsible Officer of the Trustee at
the Corporate Trust Office obtains actual knowledge of such
failures, occurrence or downgrade or the Trustee receives
written notice of such failures, occurrence or downgrade
from the Company or the Holders of Certificates of each
Class affected thereby evidencing, as to each such Class,
Percentage Interests aggregating not less than 25%.
Subject to any obligation of the Trustee to make
Monthly Advances as provided herein, the Trustee shall not be
required to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if
there is reasonable ground for believing that the repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it, and none of the provisions
contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Company under this
Agreement, except during such time, if any, as the Trustee shall
be the successor to, and be vested with the rights, duties,
powers and privileges of, the Company in accordance with the
terms of this Agreement.
Section 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(i) The Trustee may conclusively rely and shall be
protected in acting or refraining from acting upon any
resolution, Officer's Certificate, certificate of auditors
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or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance
with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders,
pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or
thereby; nothing contained herein shall, however, relieve
the Trustee of the obligations, upon the occurrence of an
Event of Default (which has not been cured), 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 his or her 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 an Event of Default and
after the curing of all 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 documents, unless requested in writing so to
do by Holders of Certificates of each Class affected
thereby evidencing, as to each such Class, Percentage
Interests aggregating not less than 25%; provided, however,
that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity
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against such cost, expense or liability as a condition to such
proceeding. The reasonable expense of every such investigation
shall be paid by the Company or, if paid by the Trustee, shall be
reimbursed by the Company upon demand. Nothing in this
clause (v) shall derogate from the obligation of the
Company to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors; and
(vi) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys or a
custodian.
Section 8.03. Trustee Not Liable for Certificates or
Mortgage Loans. The recitals contained herein and in the
Certificates (other than the signature and countersignature of
the Trustee on the Certificates) shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as
to the validity or sufficiency of this Agreement or of the
Certificates (other than the signature and countersignature of
the Trustee on the Certificates) or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the
use or application by the Company of any of the Certificates or
of the proceeds of such Certificates, or for the use or
application of any funds paid to the Company in respect of the
Mortgage Loans or deposited in or withdrawn from the Certificate
Account by the Company.
Section 8.04. Trustee May Own Certificates. The
Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would
have if it were not Trustee.
Section 8.05. The Company to Pay Trustee's Fees and
Expenses. The Company covenants and agrees to pay to the Trustee
from time to time, and the Trustee shall be entitled to,
reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution
of the trusts hereby created and in the exercise and performance
of any of the powers and duties hereunder of the Trustee, and the
Company will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances (including
any Monthly Advances of the Trustee not previously reimbursed
thereto pursuant to Section 3.04) incurred or made by the Trustee
in accordance with any of the provisions of this Agreement
(including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as
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may arise from its negligence or bad faith or which is the
responsibility of Certificateholders hereunder. In addition, the
Company covenants and agrees to indemnify the Trustee from, and
hold it harmless against, any and all losses, liabilities,
damages, claims or expenses other than those resulting from the
negligence or bad faith of the Trustee. From time to time, the
Trustee may request that the Company debit the Mortgage Loan
Payment Record pursuant to Section 3.04 to reimburse the Trustee
for any Monthly Advances and Nonrecoverable Advances.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation having
its principal office either in the State of New York or in the
same state as that in which the initial Trustee under this
Agreement has its principal office and organized and doing
business under the laws of such 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 publishes reports of
condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 8.06, the combined capital
and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent
report of condition so published. The Trustee shall not be an
affiliate of the Company. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this
Section 8.06, the Trustee shall resign immediately in the manner
and with the effect specified in Section 8.07.
Section 8.07. Resignation or Removal of Trustee. The
Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Company.
Upon receiving such notice of resignation, the Company shall
promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor Trustee. If no
successor Trustee shall have been so appointed and having
accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a
successor Trustee.
If the conditions in any of the following clauses (i),
(ii) or (iii) shall occur at any time, the Company may remove the
Trustee: (i) 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 Company; (ii) the Trustee
shall be legally unable to act, or shall be adjudged a
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bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation;
or (iii) the replacement of the Trustee with a successor Trustee
will enable the Company to avoid (and should, based on the
information included in the notice referred to below, result in
the avoidance of) a downgrading of the ratings assigned to the
Certificates by the Rating Agencies (whether or not other actions
could avoid such downgrading) and no Event of Default, as
provided by Section 7.01 hereof, shall have occurred or be
continuing; provided, however, that no action shall be taken
pursuant to this clause (iii) unless reasonable notice shall have
been provided to the Trustee, which notice shall set forth the
basis for any rating downgrade as contemplated by the Rating
Agencies and shall also indicate the manner in which such
proposed action is intended to avoid such downgrade. If it
removes the Trustee under the authority of the immediately
preceding sentence, the Company shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the Trustee so removed
and one copy to the successor trustee.
Any resignation or removal of the Trustee and
appointment of a successor Trustee pursuant to any of the
provisions of this Section 8.07 shall not become effective until
acceptance of appointment by the successor Trustee as provided in
Section 8.08.
Section 8.08. Successor Trustee. Any successor Trustee
appointed as provided in Section 8.07 shall execute, acknowledge
and deliver to the Company and to its predecessor Trustee an
instrument accepting such appointment hereunder, and thereupon
the resignation or removal of the predecessor Trustee shall
become effective and such successor Trustee, without any further
act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Trustee.
The predecessor Trustee shall deliver to the successor Trustee
all Mortgage Files and related documents and statements held by
it hereunder; and the Company and the predecessor Trustee shall
execute and deliver such instruments and do such other things as
may reasonably be required for 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 8.08 unless at the time of such
acceptance such successor Trustee shall be eligible under the
provisions of Section 8.06.
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Upon acceptance of appointment by a successor Trustee
as provided in this Section 8.08, the Company shall mail notice
of the succession of such Trustee hereunder to all holders of
Certificates at their addresses as shown in the Certificate
Register. If the Company fails to mail such notice within 10 days
after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the
expense of the Company.
Section 8.09. Merger or Consolidation of Trustee. Any
corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to the corporate
trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided that such corporation shall be
eligible under the provisions of Section 8.06, 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 of this Agreement,
at any time, for the purpose of meeting any legal requirements of
any jurisdiction in which any part of the Trust Fund or property
securing any Mortgage Note may at the time be located, the
Company 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, of all or any part of the
Trust Fund, or separate trustee or separate trustees of any part
of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such
title to the Trust Fund, or any part thereof, and, subject to the
other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Company and the Trustee may
consider necessary or desirable. If the Company shall not have
joined in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Default shall have
occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 8.06 and no notice to
Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the
following provisions and conditions:
106
(i) 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 (it being
understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to
the Company hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the
holding of title to the Trust Fund or any portion thereof
in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely
at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally
liable by reason of any act or omission of any other trustee
hereunder; and
(iii) The Company and the Trustee acting jointly may at
any time accept the resignation of or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to
each of them. Every instrument appointing any separate trustee or
co-trustee shall refer to this Agreement and the conditions of
this Article VIII. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the
estates or property specified in its instrument of appointment,
either jointly with the Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating
to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the Company.
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.
107
Section 8.11. Compliance with REMIC Provisions; Tax
Returns. The Trustee shall at all times act in such a manner in
the performance of its duties hereunder as shall be necessary to
prevent the Trust Fund from failing to qualify as a REMIC and to
prevent the imposition of a tax on the Trust Fund or REMIC
established hereunder. The Trustee, upon request, will furnish
the Company with all such information within its possession as
may be reasonably required in connection with the preparation of
all tax returns of the Trust Fund and any Reserve Fund, and
shall, upon request, execute such returns.
ARTICLE IX
TERMINATION
Section 9.01. Termination upon Repurchase by the
Company or Liquidation of All Mortgage Loans. Subject to Section
9.02, the respective obligations and responsibilities of the
Company and the Trustee created hereby (other than the obligation
of the Trustee to make certain payments to Certificateholders
after the final Distribution Date and the obligation of the
Trustee to send certain notices as hereinafter set forth) shall
terminate upon the last action required to be taken by the
Trustee on the final Distribution Date pursuant to this Article
IX following the earlier of (a) the repurchase by the Company of
all Mortgage Loans and all REO Mortgage Loans remaining in the
Trust Fund at a price equal to the sum of (x) 100% of the unpaid
principal balance of each Mortgage Loan (other than any REO
Mortgage Loans described in the following clause) plus accrued
and unpaid interest thereon at the applicable Net Mortgage Rate
(less any amounts constituting previously unreimbursed Monthly
Advances) and (y) the appraised value of any REO Mortgage Loan
(less the good faith estimate of the Company of Liquidation
Expenses to be incurred in connection with its disposal thereof),
such appraisal to be conducted by an appraiser mutually agreed
upon by the Company and the Trustee, and (b) the later of the
final payment or other liquidation (or any Monthly Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust
Fund or the disposition of all property acquired upon foreclosure
or by deed in lieu of foreclosure of any Mortgage Loan; provided,
however, that in no event shall the Trust Fund 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 of America to the Court of St.
James's, living on the date of this Agreement. The right of the
Company to repurchase all Mortgage Loans pursuant to clause (a)
above shall be conditioned upon the aggregate of the Scheduled
Principal Balance of the Outstanding Mortgage Loans, at the time
of any such repurchase, aggregating less than 10 percent of the
108
aggregate of the Scheduled Principal Balance of the Mortgage
Loans as of the Cut-off Date.
Notice of any termination, specifying the Distribution
Date upon which the Certificateholders may surrender their
Certificates to the Trustee for payment of the final distribution
and cancellation, shall be given promptly by the Trustee by
letter to Certificateholders mailed not earlier than the 15th day
and not later than the 25th day of the month next preceding the
month of such final distribution specifying (A) the Distribution
Date upon which final payment of the Certificates will be made
upon presentation and surrender of the Certificates at the office
of the Trustee therein designated, (B) the amount of any such
final payment and (C) 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 therein specified. 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 exercise by the Company of its right of
repurchase, the Company shall deposit in the Certificate Account
not later than 11:00 a.m. on the Business Day prior to the final
Distribution Date in next-day funds an amount equal to the price
described above. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to
Certificateholders an amount equal to the price calculated as
above provided, any such repurchase being in lieu of the
distribution otherwise required to be made on the Distribution
Date upon which the repurchase is effected. Upon certification to
the Trustee by a Servicing Officer following such final deposit,
the Trustee shall promptly release to the Company the Mortgage
Files for the repurchased Mortgage Loans.
On the final Distribution Date, the Trustee shall
distribute amounts on deposit in the Certificate Account in
accordance with the applicable priorities provided by Section
4.01. Distributions on each Certificate shall be made on the
final Distribution Date in the manner specified in Section 4.02
but only upon presentation and surrender of the Certificates.
In the event that all of the Certificateholders shall
not surrender their Certificates for cancellation within six
months after the date specified in the above-mentioned written
notice, the Trustee shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the
Certificates shall not have been surrendered for cancellation,
the Trustee may take appropriate steps, or may appoint an agent
to take appropriate steps, to contact the remaining
109
Certificateholders concerning surrender of their Certificates,
and the cost thereof shall be paid out of the funds and other
assets which remain subject hereto.
Section 9.02. Additional Termination Requirements. (a)
In the event the Company exercises its purchase option as
provided in Section 9.01, the Trust Fund and the REMIC
established hereunder shall be terminated in accordance with the
following additional requirements, unless the Trustee has been
supplied with an Opinion of Counsel to the effect that the
failure to comply with the requirements of this Section 9.02 will
not (i) result in the imposition of taxes on "prohibited
transactions" of such REMIC as defined in section 860F of the
Code, or (ii) cause the Trust Fund to fail to qualify as a REMIC
at any time that any Certificates are outstanding:
(i) Within 90 days prior to the final Distribution
Date set forth in the notice given by the Trustee under
Section 9.01, the Company shall prepare and the Trustee
shall execute and adopt a plan of complete liquidation for
such REMIC within the meaning of section 860F(a)(4)(A)(i)
of the Code, which shall be evidenced by such notice; and
(ii) Within 90 days after the time of adoption of such
a plan of complete liquidation, the Trustee shall sell all
of the assets of the Trust Fund to the Company for cash in
accordance with Section 9.01.
(b) By their acceptance of the Residual Certificates,
the Holders thereof hereby authorize the Trustee to adopt such a
plan of complete liquidation which authorization shall be binding
on all successor Holders of the Residual Certificates.
(c) On the final federal income tax return for the
REMIC, the Trustee will attach a statement specifying the date of
the adoption of the plan of liquidation.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment. This Agreement may be
amended from time to time by the Company and the Trustee, without
the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or
therein which may be defective or inconsistent with any other
provisions herein, or to add any other provisions with respect to
matters or questions arising under this Agreement, which shall
not be materially inconsistent with the provisions of this
110
Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Trustee and the Company may at any time
and from time to time amend this Agreement to modify, eliminate
or add to any of its provisions to such extent as shall be
necessary or appropriate to maintain the qualification of the
Trust Fund as a REMIC under the Code or to avoid or minimize the
risk of the imposition of any tax on the Trust Fund pursuant to
the Code that would be a claim against the Trust Fund at any time
prior to the final redemption of the Certificates, provided that
the Trustee has obtained an opinion of independent counsel (which
opinion also shall be addressed to the Company) to the effect
that such action is necessary or appropriate to maintain such
qualification or to avoid or minimize the risk of the imposition
of such a tax.
This Agreement may also be amended from time to time
by the Company and the Trustee with the consent of Holders of
Certificates evidencing (i) not less than 66% of the Voting
Rights of all the Certificates or (ii) Percentage Interests
aggregating not less than 66% of each Class affected by such
amendment, 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 (a) reduce in any manner the amount of, or delay
the timing of, collections of payments on the Mortgage Loans or
distributions which are required to be made on any Certificate
without the consent of the Holder of such Certificate, (b)
adversely affect in any material respects the interests of the
Holders of any Class of Certificates in any manner other than as
described in (a), without the consent of the Holders of
Certificates evidencing Percentage Interests aggregating not less
than 66% of such Class, or (c) reduce the aforesaid percentages
of Certificates of any Class required to consent to any such
amendment, without the consent of the Holders of all Certificates
of such Class then outstanding.
Notwithstanding any contrary provision of this
Agreement, the Trustee shall not consent to any amendment to this
Agreement unless it shall have first received an Opinion of
Counsel to the effect that such amendment will not subject the
Trust Fund to tax or cause the Trust Fund to fail to qualify as a
REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any such amendment or
consent the Trustee shall furnish written notification of the
substance of such amendment to each Certificateholder.
111
It shall not be necessary for the consent of
Certificateholders under this Section 10.01 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 requirements as the Trustee
may prescribe.
Section 10.02. Recordation of Agreement. 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 Company and at its expense on
direction by the Trustee, 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
Certificateholders.
For the purpose of facilitating the recordation of
this Agreement as herein provided and for other purposes, this
Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an
original, and such counterparts shall constitute but one and the
same instrument.
Section 10.03. 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 commence any 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 provided in Section 10.01) or in any manner otherwise
control the operation and management of the Trust Fund, or the
obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to
time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
112
No Certificateholder shall have any right by virtue or
by availing itself of any provisions of this Agreement to
institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of
default and of the continuance thereof, as hereinbefore provided,
and unless also the Holders of Certificates of each Class
affected thereby evidencing, as to each such Class, Percentage
Interests aggregating not less than 25% 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 60 days after
its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly
covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of the Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder, or
to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the
provisions of this Section 10.03, each and every
Certificateholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
Section 10.04. 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.
Section 10.05. Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed
to have been duly given if personally delivered at or mailed by
certified mail, return receipt requested, (a) in the case of the
Company, to GE Capital Mortgage Services, Inc., 0 Xxxxxxxxx
Xxxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000, Attention: General
Counsel, (b) in the case of the Trustee, to State Street Bank and
Trust Company, Corporate Trust Department, 000 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, (c) in the case of Fitch, to Fitch
Investors Service, L.P., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Structured Finance Surveillance, and (d)
in the case of S&P, to Standard & Poor's, 00 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mortgage Surveillance
Group, or, as to each such Person, at such other address as
113
shall be designated by such Person in a written notice
to each other named Person. Any notice required or permitted to
be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder
receives such notice.
Section 10.06. Notices to the Rating Agencies. The
Company shall deliver written notice of the following events to
each Rating Agency promptly following the occurrence thereof:
material amendment to this Agreement; any Event of Default; any
Trigger Event; change in or termination of the Trustee; removal
of the Company or any successor servicer as servicer; repurchase
or replacement of any Defective Mortgage Loan pursuant to Section
2.03; and final payment to Certificateholders. In addition, the
Company shall deliver copies of the following documents to each
Rating Agency at the time such documents are required to be
delivered pursuant to this Agreement: monthly statements to
Certificateholders pursuant to Section 4.05, annual report of
independent accountants pursuant to Section 3.13 and annual
servicer compliance report pursuant to Section 3.12.
Notwithstanding the foregoing, the failure to deliver such
notices or copies shall not constitute an Event of Default under
this Agreement.
Section 10.07. 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
to the extent permitted by law such covenants, agreements,
provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the
rights of the Holders thereof.
Section 10.08. Certificates Nonassessable and Fully
Paid. It is the intention of the Trustee that Certificateholders
shall not be personally liable for obligations of the Trust Fund,
that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of
the Trust Fund or for any reason whatsoever, and that
Certificates upon execution, countersignature and delivery
thereof by the Trustee are and shall be deemed fully paid.
* * *
IN WITNESS WHEREOF, the Company and the Trustee have
caused this Agreement to be duly executed by their respective
officers and their respective seals, duly attested, to be
hereunto affixed, all as of the day and year first above written.
GE CAPITAL MORTGAGE SERVICES, INC.
By:_______________________________
Name:
Title:
[SEAL]
Attest:
By:_____________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY,
as Trustee
By:_______________________________
Name:
Title:
[SEAL]
Attest:
By:_____________________
Name:
Title:
State of New Jersey )
) ss.:
County of Camden )
On the 28th day of September, 1995 before me, a notary
public in and for the State of New Jersey, personally appeared
_______________________, known to me who, being by me duly sworn,
did depose and say that he/she resides at ___________________
__________________________________________; that he/she is a(n)
_________________________ of GE Capital Mortgage Services, Inc.,
a corporation formed under the laws of the State of New Jersey,
one of the parties that executed the foregoing instrument; that
he/she knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed
by order of the Board of Directors of said corporation; and that
he/she signed his/her name thereto by like order.
___________________________
Notary Public
[Notarial Seal]
The Commonwealth of Massachusetts )
) ss.:
County of Suffolk )
On the 28th day of September, 1995 before me, a notary
public in and for the Commonwealth of Massachusetts, personally
appeared ____________________, known to me who, being by me duly
sworn, did depose and say that he/she resides at _______________
_________________________________; that he/she is a(n) _________
_________________________ of State Street Bank and Trust Company,
one of the parties that executed the foregoing instrument; that
he/she knows the seal of said Bank; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said Bank; and that he/she
signed his/her name thereto by order of the Board of Directors of
said Bank.
_________________________
Notary Public
[Notarial Seal]
EXHIBIT A
FORMS OF CERTIFICATES
[Previously Filed]
EXHIBIT B
PRINCIPAL BALANCE SCHEDULES
[Not applicable]
EXHIBIT C
MORTGAGE LOANS
[Each Mortgage Loan shall be identified by loan
number, address of the Mortgaged Property and name of the
Mortgagor. The following details shall be set forth as to each
Mortgage Loan: (i) the principal balance at the time of its
origination, (ii) the Scheduled Principal Balance as of the
Cut-off Date, (iii) the interest rate borne by the Mortgage Note,
(iv) the scheduled monthly level payment of principal and
interest, (v) the loan-to-value ratio, (vi) the maturity date of
the Mortgage Note and (vii) the Servicing Fee Rate for such
Mortgage Loan.]
[Previously Filed]
EXHIBIT D
FORM OF SERVICER'S CERTIFICATE
----------------, ------
(month) (year)
GE CAPITAL MORTGAGE SERVICES, INC.
REMIC Multi-Class Pass-Through Certificates,
Series 1995-7
Pursuant to the Pooling and Servicing Agreement dated
as of September 1, 1995 (the "Agreement") between GE Capital
Mortgage Services, Inc. (the "Company"), and State Street Bank
and Trust Company (the "Trustee"), governing the Certificates
referred to above, the Company hereby certifies to the Trustee:
With respect to the Agreement and as of the
Determination Date for this month:
A. Mortgage Loan Information:
(1) Aggregate Scheduled Monthly
Payments:
(a) Principal $________
(b) Interest $________
(c) Total $________
(2) Aggregate Monthly Payments
received and Monthly Advances
made this Month:
(a) Principal $________
(b) Interest $________
(c) Total $________
(3) Aggregate Principal Prepayments
in part received and applied
in the applicable Prepayment
Period:
(a) Principal $________
(b) Interest $________
(c) Total $________
(4) Aggregate Principal Prepayments
in full received in
the applicable Prepayment
Period:
(a) Principal $________
(b) Interest $________
(c) Total $________
(5) Aggregate Insurance Proceeds
(including purchases of
Mortgage Loans by primary
mortgage insurers) for
prior month:
(a) Principal $________
(b) Interest $________
(c) Total $________
(6) Aggregate Liquidation
Proceeds for prior month:
(a) Principal $________
(b) Interest $________
(c) Total $________
(7) Aggregate Purchase Prices for
Defaulted and Modified
Mortgage Loans:
(a) Principal $________
(b) Interest $________
(c) Total $________
(8) Aggregate Purchase Prices
(and substitution adjustments)
for Defective Mortgage Loans:
(a) Principal $________
(b) Interest $________
(c) Total $________
(9) Pool Scheduled Principal
Balance: $________
(10) Available Funds: $________
(11) Realized Losses for
prior month: $________
2
(12) Aggregate Realized
Losses and Debt
Service Reductions:
(a) Deficient Valuations $________
(b) Special Hazard
Losses $________
(c) Fraud Losses $________
(d) Excess Bankruptcy
Losses $________
(e) Excess Special
Hazard Losses $________
(f) Excess Fraud
Losses $________
(g) Debt Service
Reductions $________
(13) Compensating Interest Payment: $________
(14) Accrued Certificate Interest,
Unpaid Class Interest Shortfalls
and Pay-out Rate:
Class A1 $__________ $__________ ____%
Class A2 $__________ $__________ ____%
Class A3 $__________ $__________ ____%
Class A4 $__________ $__________ ____%
Class A5 $__________ $__________ ____%
Class A6 $__________ $__________ ____%
Class L $__________ $__________ ____%
Class MA $__________ $__________ ____%
Class M $__________ $__________ ____%
Class B1 $__________ $__________ ____%
Class B2 $__________ $__________ ____%
Class B3 $__________ $__________ ____%
Class B4 $__________ $__________ ____%
Class B5 $__________ $__________ ____%
Class S $__________ $__________ ____%
Class R $__________ $__________ ____%
3
(15) Principal distribu-
table:
Class A1 $__________
Class A2 $__________
Class A3 $__________
Class A4 $__________
Class A5 $__________
Class A6 $__________
Class L $__________
Class MA $__________
Class PO $__________
Class M $__________
Class B1 $__________
Class B2 $__________
Class B3 $__________
Class B4 $__________
Class B5 $__________
Class R $__________
(16) Accrual Amount ______________
(17) Additional distributions to
the Class R Certificate
pursuant to Section 4.01(b): $_____________
(18) Certificate Interest Rate of:
Class S Certificates _____________%
B. Other Amounts:
1. Senior Percentage for such
Distribution Date: _____________%
2. Group I Senior Percentage for
such Distribution Date _____________%
3. Group II Senior Percentage for
such Distribution Date _____________%
4. Senior Prepayment Percentage
for such Distribution Date: _____________%
4
5. Group I Senior Prepayment
Percentage for such
Distribution Date _____________%
6. Group II Senior Prepayment
Percentage for such
Distribution Date _____________%
7. Junior Percentage
for such Distribution Date: _____________%
8. Junior Prepayment Percentage
for such Distribution Date: _____________%
9. Subordinate Certificate
Writedown Amount for
such Distribution Date: $_____________
10. Prepayment Distribution
Triggers satisfied: Yes No
Class B1 ____ ____
Class B2 ____ ____
Class B3 ____ ____
Class B4 ____ ____
Class B5 ____ ____
Capitalized terms used in this Certificate shall have the
same meanings as in the Agreement.
GE CAPITAL MORTGAGE SERVICES, INC.
By:_______________________________
Name:
Title:
5
EXHIBIT E
FORM OF TRANSFER CERTIFICATE AS TO ERISA MATTERS FOR
DEFINITIVE ERISA-RESTRICTED CERTIFICATES
State Street Bank and Trust Company
Corporate Trust Department
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
[NAME OF OFFICER] ______________________ hereby certifies
that:
1. That he [she] is [title of officer] _________________ of
[name of Investor] _______________________________________ (the
"Investor"), a ________________________ [description of type of
entity] duly organized and existing under the laws of the [State
of ____________] [United States], on behalf of which he [she]
makes this affidavit.
2. The Investor (i) is not, and on ________________ [insert
date of transfer of Certificate to Investor] will not be, and on
such date will not be investing the funds of, an employee benefit
plan subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or a plan subject to Section 4975 of
the Code or (ii) is an insurance company investing assets of its
general account and the exemptions provided by Section III(a) of
Department of Labor Prohibited Transaction Class Exemption 95-60,
60 Fed. Reg. 35925 (July 12, 1995) (the "Exemptions") apply to
the Investor's acquisition and holding or any ERISA-Restricted
Certificate.
3. The Investor hereby acknowledges that under the terms of
the Pooling and Servicing Agreement (the "Agreement") between
State Street Bank and Trust Company, as Trustee and GE Capital
Mortgage Services, Inc., dated as of September 1, 1995, no
transfer of any ERISA-Restricted Certificate shall be permitted
to be made to any person unless the Trustee has received (i) a
certificate from such transferee to the effect that (x) such
transferee is not an employee benefit plan subject to ERISA or a
plan subject to Section 4975 of the Code (a "Plan") and is not
using the assets of any such employee benefit or other plan to
acquire any such Certificate or (y) such transferee is an
insurance company investing assets of its general account and the
Exemptions apply to such transferee's acquisition and holding of
any such Certificate or (ii) an opinion of counsel satisfactory
to the Trustee to the effect that the purchase and holding of any
such Certificate will not constitute or result in the assets of
the Trust Fund created by the Agreement being deemed to be "plan
assets" and subject to the prohibited transaction provisions of
ERISA or Section 4975 of the Code and will not subject the
Trustee or the Company to any obligation in addition to those
undertaken in the Agreement (provided, however, that the Trustee
will not require such certificate or opinion in the event that,
as a result of change of law or otherwise, counsel satisfactory
to the Trustee has rendered an opinion to the effect that the
purchase and holding of any such Certificate by a Plan or a
Person that is purchasing or holding any such Certificate with
the assets of a Plan will not constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code).
[4. The ERISA-Restricted Certificates shall be registered
in the name of ______________________________________________ as
nominee for the Investor.]
IN WITNESS WHEREOF, the Investor has caused this instrument
to be executed on its behalf, pursuant to authority of its Board
of Directors, by its [title of officer] __________________ and
its corporate seal to be hereunder attached, attested by its
[Assistant] Secretary, this ____ day of _________, 199_.
______________________________
[name of Investor]
By:___________________________
Name:
Title:
The undersigned hereby
acknowledges that it is holding
and will hold the ERISA-Restricted
Certificates at the exclusive
direction of and as nominee of
the Investor named above.
[name of nominee]
By:____________________________
Name:
Title:
2
EXHIBIT F
FORM OF RESIDUAL CERTIFICATE TRANSFEREE AFFIDAVIT
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], _________________ being first duly
sworn, deposes and says:
1. That he [she] is [title of officer] ___________
_____________ of [name of Purchaser] ________________________
_________________ (the "Purchaser"), a _______________________
[description of type of entity] duly organized and existing under
the laws of the [State of __________] [United States], on behalf
of which he [she] makes this affidavit.
2. That the Purchaser's Taxpayer Identification
Number is [ ].
3. That the Purchaser is not a "disqualified
organization" within the meaning of Section 860E(e)(5) of the
Internal Revenue Code of 1986, as amended (the "Code") and will
not be a "disqualified organization" as of [date of transfer],
and that the Purchaser is not acquiring a Residual Certificate
(as defined below) for the account of, or as agent (including a
broker, nominee, or other middleman) for, any person or entity
from which it has not received an affidavit substantially in the
form of this affidavit. For these purposes, a "disqualified
organization" means the United States, any state or political
subdivision thereof, any foreign government, any international
organization, any agency or instrumentality of any of the
foregoing (other than an instrumentality if all of its activities
are subject to tax and a majority of its board of directors is
not selected by such governmental entity), any cooperative
organization furnishing electric energy or providing telephone
service to persons in rural areas as described in Code Section
1381(a)(2)(C), or any organization (other than a farmers'
cooperative described in Code Section 521) that is exempt from
federal income tax unless such organization is subject to the tax
on unrelated business income imposed by Code Section 511. As used
herein, "Residual Certificate" means any Certificate designated
as a "Class R Certificate" of GE Capital Mortgage Services,
Inc.'s REMIC Multi-Class Pass-Through Certificates, Series
1995-7.
4. That the Purchaser is not, and on __________
[insert date of transfer of Residual Certificate to Purchaser]
will not be, and is not and on such date will not be investing
the assets of, an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or
a plan subject to Code Section 4975 or a person or entity that is
using the assets of any employee benefit plan or other plan to
acquire a Residual Certificate.
5. That the Purchaser hereby acknowledges that under
the terms of the Pooling and Servicing Agreement (the
"Agreement") between State Street Bank and Trust Company, as
Trustee, and GE Capital Mortgage Services, Inc. dated as of
September 1, 1995, no transfer of the Residual Certificates shall
be permitted to be made to any person unless the Trustee has
received a certificate from such transferee to the effect that
such transferee is not an employee benefit plan subject to ERISA
or a plan subject to Section 4975 of the Code and is not using
the assets of any employee benefit plan or other plan to acquire
Residual Certificates.
6. That the Purchaser does not hold REMIC residual
securities as nominee to facilitate the clearance and settlement
of such securities through electronic book-entry changes in
accounts of participating organizations (such entity, a
"Book-Entry Nominee").
7. That the Purchaser does not have the intention to
impede the assessment or collection of any federal, state or
local taxes legally required to be paid with respect to such
Residual Certificate.
8. That the Purchaser will not transfer a Residual
Certificate to any person or entity (i) as to which the Purchaser
has actual knowledge that the requirements set forth in paragraph
3, paragraph 6 or paragraph 10 hereof are not satisfied or that
the Purchaser has reason to believe does not satisfy the
requirements set forth in paragraph 7 hereof, and (ii) without
obtaining from the prospective Purchaser an affidavit
substantially in this form and providing to the Trustee a written
statement substantially in the form of Exhibit G to the
Agreement.
9. That the Purchaser understands that, as the holder
of a Residual Certificate, the Purchaser may incur tax
liabilities in excess of any cash flows generated by the interest
and that it intends to pay taxes associated with holding such
Residual Certificate as they become due.
2
10. That the Purchaser (i) is not a Non-U.S. Person or
(ii) is a Non-U.S. Person that holds a Residual Certificate in
connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Trustee
with an effective Internal Revenue Service Form 4224 or successor
form at the time and in the manner required by the Code or (iii)
is a Non-U.S. Person that has delivered to both the transferor
and the Trustee an opinion of a nationally recognized tax counsel
to the effect that the transfer of such Residual Certificate to
it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of a
Residual Certificate will not be disregarded for federal income
tax purposes. "Non-U.S. Person" means an individual, corporation,
partnership or other person other than 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 that is
subject to U.S. federal income tax regardless of the source of
its income.
11. That the Purchaser agrees to such amendments of
the Pooling and Servicing Agreement as may be required to further
effectuate the restrictions on transfer of any Residual
Certificate to such a "disqualified organization," an agent
thereof, a Book-Entry Nominee, or a person that does not satisfy
the requirements of paragraph 7 and paragraph 10 hereof.
12. That the Purchaser consents to the designation of
the Company as its agent to act as "tax matters person" of the
Trust Fund pursuant to the Pooling and Servicing Agreement.
3
IN WITNESS WHEREOF, the Purchaser has caused this
instrument to be executed on its behalf, pursuant to authority of
its Board of Directors, by its [title of officer] this _____ day
of __________, 19__.
____________________________________
[name of Purchaser]
By:______________________________
Name:
Title:
Personally appeared before me the above-named [name of
officer] ________________, known or proved to me to be the same
person who executed the foregoing instrument and to be the [title
of officer] _________________ of the Purchaser, 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 Purchaser.
Subscribed and sworn before me this _____ day of
__________, 19__.
NOTARY PUBLIC
______________________________
COUNTY OF_____________________
STATE OF______________________
My commission expires the _____ day of __________, 19__.
4
EXHIBIT G
LETTER FROM TRANSFEROR OF RESIDUAL CERTIFICATE
-------------------
Date
State Street Bank and Trust Company
Corporate Trust Department
000 Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: GE Capital Mortgage Services, Inc.
REMIC Multi-Class Pass-Through
Certificates, Series 1995-7
Ladies and Gentlemen:
_______________________ (the "Transferor") has
reviewed the attached affidavit of _____________________________
(the "Transferee"), and has no actual knowledge that such
affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has
no reason to believe that the Transferee has the intention to
impede the assessment or collection of any federal, state or
local taxes legally required to be paid with respect to a
Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found
that the Transferee had historically paid its debts as they came
due and found no significant evidence to indicate that the
Transferee will not continue to pay its debts as they become due.
Very truly yours,
-------------------------------
Name:
Title:
EXHIBIT H
ADDITIONAL SERVICER COMPENSATION
QUALIFIED ADMINISTRATIVE EXPENSES
(Conventional, Non-Conforming Loans)
Assumption Fees $550 - $800
Late Charges Per Loan Documents
Appraisal/Inspection Fees Reasonable and Customary
Charges
Partial Release Fees $300
Easements $150
Insufficient Funds Charges $15
Document Requests
(copies of loan file documents,
additional pay-off quotations,
amortization schedules, payment
histories) $0
Modification Fees Reasonable and Customary
Charges
EXHIBIT I
FORM OF INVESTMENT LETTER FOR
DEFINITIVE RESTRICTED CERTIFICATES
------------------
Date
State Street Bank and Trust Company
Corporate Trust Department
000 Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: GE Capital Mortgage Services, Inc.
REMIC Multi-Class Pass Through
Certificates, Series 1995-7
---------------------------
Ladies and Gentlemen:
1. The undersigned, a [title of officer] _______________ of
[name of Investor] _________________________________________ (the
"Investor"), a ____________________________ [description of type
of entity] duly organized and existing under the laws of the
[State of __________________] [United States], hereby certifies
as follows:
2. The Investor hereby acknowledges that under the terms of
the Pooling and Servicing Agreement between State Street Bank and
Trust Company, as Trustee, and GE Capital Mortgage Services, Inc.
(the "Company"), dated as of September 1, 1995 (the "Agreement"),
no transfer of a Restricted Certificate may be made unless such
transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and
any applicable state securities laws, or is made in accordance
with the Securities Act and such laws.
3. The Investor understands that (a) the Restricted
Certificates have not been and will not be registered or
qualified under the Securities Act, or the securities laws of any
state, (b) neither the Company nor the Trustee is required, and
neither intends, to so register or qualify the Restricted
Certificates, (c) the Restricted Certificates cannot be resold
unless (i) they are registered and qualified under the Securities
Act and the applicable state securities laws or (ii) such sale is
exempt from the requirements of the Securities Act, (d) the
Agreement contains restrictions regarding the transfer of the
Restricted Certificates and (e) the Restricted Certificates will
bear a legend to the foregoing effect.
4. The Investor is acquiring the Restricted Certificates
for its own account for investment only and not with a view to or
for sale or other transfer in connection with any distribution of
the Restricted Certificates in any manner that would violate the
Securities Act or any applicable state securities laws.
5. The investor (a) is a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters, and in particular in such matters
related to securities similar to the Restricted Certificates,
such that it is capable of evaluating the merits and risks of
investment in the Restricted Certificates, (b) is able to bear
the economic risks of such an investment and (c) is an
"accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) promulgated pursuant to the Securities Act.
6. The Investor will not authorize nor has it authorized
any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Restricted Certificate, any interest in any
Restricted Certificate or any other similar security to any
person in any manner, (b) solicit any offer to buy or to accept a
pledge, disposition or other transfer of any Restricted
Certificate, any interest in any Restricted Certificate or any
other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Restricted
Certificate, any interest in any Restricted Certificate or any
other similar security with any person in any manner, (d) make
any general solicitation by means of general advertising or in
any other manner, or (e) take any other action that would
constitute a distribution of any Restricted Certificate under the
Securities Act, that would render the disposition of any
Restricted Certificate a violation of Section 5 of the Securities
Act or any state securities law, or that could require
registration or qualification pursuant thereto. Neither the
Investor nor anyone acting on its behalf has offered the
Restricted Certificates for sale or made any general solicitation
by means of general advertising or in any other manner with
respect to the Restricted Certificates. The Investor will not
sell or otherwise transfer any of the Restricted Certificates,
except in compliance with the provisions of the Agreement.
7. If (i) an Investor in a Class S Certificate sells or
otherwise transfers any Class S Certificate, or (ii) an Investor
in a Restricted Junior Certificate sells or otherwise transfers
2
any such Certificate to a transferee other than a "qualified
institutional buyer" under Rule 144A of the Securities Act, such
Investor will obtain (a) from any subsequent purchaser the same
certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this paragraph or
(b) an opinion of counsel in form and substance satisfactory to
the Trustee pursuant to the Agreement.
8. The Investor hereby indemnifies the Trustee and the
Company against any liability that may result if the Investor's
transfer of a Restricted Certificate (or any portion thereof) is
not exempt from the registration requirements of the Securities
Act and any applicable state securities laws or is not made in
accordance with such federal and state laws. Such indemnification
of the Trustee and the Company shall survive the termination of
the Agreement.
[9. The Restricted Certificates shall be registered in the
name of _____________________________ as nominee for the
Investor.]
IN WITNESS WHEREOF, the Investor has caused this
instrument to be executed on its behalf, pursuant to authority of
its Board of Directors, by its [title of officer] _____________
this _____ day of __________, 19__.
_________________________________
[name of Investor]
By:______________________________
Name:
Title:
The undersigned hereby
acknowledges that it is holding
and will hold the Restricted
Certificates at the exclusive
direction of and as nominee
of the Investor named above.
_____________________________
[name of nominee]
By:__________________________
Name:
Title:
3
EXHIBIT J
FORM OF DISTRIBUTION DATE STATEMENT
----------------, -----
(month) (year)
GE CAPITAL MORTGAGE SERVICES, INC.
REMIC Multi-Class Pass-Through Certificates,
Series 1995-7
Pursuant to the Pooling and Servicing Agreement dated
as of September 1, 1995 (the "Agreement") between GE Capital
Mortgage Services, Inc. (the "Company"), and State Street Bank
and Trust Company (the "Trustee"), governing the Certificates
referred to above, the Company hereby certifies to the Trustee:
With respect to the Agreement and as of the
Determination Date for this month:
The amounts below (other than for Class R) are for a
Single Certificate of $1,000:
(1) Amount of distribution
allocable to principal:
Class A1 $__________
Class A2 $__________
Class A3 $__________
Class A4 $__________
Class A5 $__________
Class A6 $__________
Class L $__________
Class MA $__________
Class PO $__________
Class M $__________
Class B1 $__________
Class B2 $__________
Class B3 $__________
Class B4 $__________
Class B5 $__________
Class R $__________
(2) Aggregate principal prepayments
included in distribution:
Class A1 $__________
Class A2 $__________
Class A3 $__________
Class A4 $__________
Class A5 $__________
Class A6 $__________
Class L $__________
Class MA $__________
Class PO $__________
Class M $__________
Class B1 $__________
Class B2 $__________
Class B3 $__________
Class B4 $__________
Class B5 $__________
Class R $__________
(3) Amount of distribution
allocable to interest;
Pay-out Rate:
Class A1 $__________ ____%
Class A2 $__________ ____%
Class A3 $__________ ____%
Class A4 $__________ ____%
Class A5 $__________ ____%
Class A6 $__________ ____%
Class L $__________ ____%
Class MA $__________ ____%
Class M $__________ ____%
Class B1 $__________ ____%
Class B2 $__________ ____%
Class B3 $__________ ____%
Class B4 $__________ ____%
Class B5 $__________ ____%
Class R $__________ ____%
Class S $__________ ____%
(4) Servicing Compensation: $__________
2
The amounts below are for the aggregate of all
Certificates:
(5) Pool Scheduled Principal
Balance; number of
Mortgage Loans: $__________ __________
(6) Class Certificate Principal
Balance (or Notional Principal
Balance) of each Class;
Certificate Principal Balance
(or Notional Principal Balance)
of Single Certificate of each
Class:
Single
Certificate
Class Class Balance Balance
Class A1 $__________ $__________
Class A2 $__________ $__________
Class A3 $__________ $__________
Class A4 $__________ $__________
Class A5 $__________ $__________
Class A6 $__________ $__________
Class L $__________ $__________
Class MA $__________ $__________
Class PO $__________ $__________
Class M $__________ $__________
Class B1 $__________ $__________
Class B2 $__________ $__________
Class B3 $__________ $__________
Class B4 $__________ $__________
Class B5 $__________ $__________
Class R $__________ $__________
Class S $__________ $__________
(7) Book value of real
estate acquired on
behalf of Certificate-
holders; number of
related Mortgage Loans:
$---------- ----------
3
(8) Aggregate Scheduled Principal
Balance and number of
delinquent Mortgage Loans:
30-59 days delinquent $__________ __________
60-89 days delinquent $__________ __________
90 or more days delinquent $__________ __________
In foreclosure $__________ __________
(9) Aggregate Scheduled
Principal Balance and
number of replaced
Mortgage Loans: $__________ __________
(10) Aggregate Scheduled
Principal Balance and
number of modified
Mortgage Loans: $__________ __________
(11) Certificate Interest Rate of:
Class S Certificates __________%
(12) Senior Percentage for such
Distribution Date: __________%
(13) Group I Senior Percentage for such
Distribution Date: __________%
(14) Group II Senior Percentage for such
Distribution Date: __________%
(15) Senior Prepayment Percentage
for such Distribution Date: __________%
(16) Group I Senior Prepayment Percentage
for such Distribution Date: __________%
(17) Group II Senior Prepayment Percentage
for such Distribution Date: __________%
(18) Junior Percentage
for such Distribution Date: __________%
(19) Junior Prepayment Percentage
for such Distribution Date: __________%
4
Capitalized terms used in this Statement shall have the
same meanings as in the Agreement.
GE CAPITAL MORTGAGE SERVICES, INC.
By:_______________________________
Name:
Title:
5
EXHIBIT K
SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the
"Agreement") is made and entered into as of ____________________,
1995, between GE Capital Mortgage Services, Inc. (the "Company")
and _____________________________ (the "Purchaser").
PRELIMINARY STATEMENT
___________________________ or an affiliate thereof is the
holder of the entire interest in REMIC Multi-Class Pass-Through
Certificates, Series 1995-7, Class B_ (the "Class B_
Certificates"). The Class B_ Certificates were issued pursuant to
a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of September 1, 1995 between the Company (in
its capacity as servicer thereunder, the "Servicer") and State
Street Bank and Trust Company as Trustee.
____________________________ or an affiliate thereof
intends to resell all of the Class B_ Certificates directly to
the Purchaser on or promptly after the date hereof.
In connection with such sale, the parties hereto have
agreed that the Company, as Servicer, will engage in certain
special servicing procedures relating to foreclosures for the
benefit of the Purchaser, and that the Purchaser will deposit
funds in a collateral fund to cover any losses attributable to
such procedures as well as all advances and costs in connection
therewith, as set forth herein.
[The parties hereto have further agreed that the Purchaser
will have no rights, and the Company will have no obligations
under this Agreement until the Class Certificate Principal
Balance of the REMIC Multi-Class Pass-Through Certificates,
Series 1995-7, Class B5 (the "Class B5 Certificates") has been
reduced to zero, and any Special Servicing and Collateral Fund
Agreement in respect of such Class between the Company and the
Purchaser has been terminated.]
In consideration of the mutual agreements herein contained,
the receipt and sufficiency of which are hereby acknowledged, the
Company and the Purchaser agree that the following provisions
shall become effective and shall be binding on and enforceable by
the Company and the Purchaser upon the acquisition by the
Purchaser of the Class B_ Certificates.
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms. Whenever used in this
Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Business Day: Any day other than (i) a Saturday or a Sunday
of (ii) a day on which banking institutions in New York City or
Boston, Massachusetts are required or authorized by law or
executive order to be closed.
Collateral Fund: The fund established and maintained
pursuant to Section 3.01 hereof.
Collateral Fund Permitted Investments: Either (i)
obligations of, or obligations fully guaranteed as to principal
and interest by, the United States, or any agency or
instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States, (ii) repurchase
agreements on obligations specified in clause (i) provided that
the unsecured obligations of the party agreeing to repurchase
such obligations are at the time rated by each Rating Agency in
the highest long-term rating category, (iii) federal funds,
certificates of deposit, time deposits and banker's acceptances
of any U.S. depository institution or trust company incorporated
under the laws of the United States or any state provided that
the debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated by
each Rating Agency in the highest long-term rating category, (iv)
commercial paper of any corporation incorporated under the laws
of the United States or any state thereof which on the date of
acquisition has the highest short term rating of each Rating
Agency, and (v) other obligations or securities that are
acceptable to each Rating Agency as a Collateral Fund Permitted
Investment hereunder and will not, as evidenced in writing,
result in a reduction or withdrawal in the then current rating of
the Certificates and, for each of the preceding clauses, the
maturity thereof shall be not later than the earlier to occur of
(A) 30 days from the date of the related investment and (B) the
Business Day preceding the next succeeding Distribution Date.
Commencement of Foreclosure: The first official action
required under local law in order to commence foreclosure
proceedings or to schedule a trustee's sale under a deed of
trust, including (i) in the case of a mortgage, any filing or
2
service of process necessary to commence an action to foreclose,
or (ii) in the case of a deed of trust, the posting, publishing,
filing or delivery of a notice of sale, but not including in
either case (x) any notice of default, notice of intent to
foreclose or sell or any other action prerequisite to the actions
specified in (i) or (ii) above and, upon the consent of the
Purchaser which will be deemed given unless expressly withheld
within two Business Days of notification, (y) the acceptance of a
deed-in-lieu of foreclosure (whether in connection with a sale of
the related property or otherwise) or (z) initiation and
completion of a short pay-off.
Current Appraisal: With respect to any Mortgage Loan as to
which the Purchaser has made an Election to Delay Foreclosure, an
appraisal of the related Mortgaged Property obtained by the
Purchaser as nearly contemporaneously as practicable to the time
of the Purchaser's election, prepared based on the Company's
customary requirements for such appraisals.
Election to Delay Foreclosure: Any election by the
Purchaser to delay the Commencement of Foreclosure, made in
accordance with Section 2.02(b).
Election to Foreclose: Any election by the Purchaser to
proceed with the Commencement of Foreclosure, made in accordance
with Section 2.03(a).
Required Collateral Fund Balance: As of any date of
determination, an amount equal to the aggregate of all amounts
previously required to be deposited in the Collateral Fund
pursuant to Section 2.02(d) (after adjustments for all
withdrawals and deposits prior to such date pursuant to Section
2.02(e)) and Section 2.03(b) (after adjustment for all
withdrawals and deposits prior to such date pursuant to Section
2.03(c)) and Section 3.02, reduced by all withdrawals therefrom
prior to such date pursuant to Section 2.02(g) and Section
2.03(d).
Section 1.02. Definitions Incorporated by Reference. All
capitalized terms not otherwise defined in this Agreement shall
have the meanings assigned in the Pooling and Servicing
Agreement.
3
ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01. Reports and Notices.
(a) In connection with the performance of its duties under
the Pooling and Servicing Agreement relating to the realization
upon defaulted Mortgage Loans, the Company as Servicer shall
provide to the Purchaser the following notices and reports:
(i) Within five Business Days after each Distribution
Date (or included in or with the monthly statements to
Certificateholders pursuant to the Pooling and Servicing
Agreement), the Company, as Servicer, shall provide to the
Purchaser a report, using the same methodology and
calculations in its standard servicing reports, indicating
for the Trust Fund the number of Mortgage Loans that are
(A) thirty days, (B) sixty days, (C) ninety days or more
delinquent or (D) in foreclosure, and indicating for each
such Mortgage Loan the loan number and outstanding
principal balance.
(ii) Prior to the Commencement of Foreclosure in
connection with any Mortgage Loan, the Company shall
provide the Purchaser with a notice (sent by facsimile
transmission) of such proposed and imminent foreclosure,
stating the loan number and the aggregate amount owing
under the Mortgage Loan. Such notice may be provided to the
Purchaser in the form of a copy of a referral letter from
the Company to an attorney requesting the institution of
foreclosure or a copy of a request to foreclose received by
the Company from the related primary servicer which has
been approved by the Company.
(b) If requested by the Purchaser, the Company shall make
its servicing personnel available (during their normal business
hours) to respond to reasonable inquiries, in writing by
facsimile transmission, by the Purchaser in connection with any
Mortgage Loan identified in a report under subsection (a)(i) or
(a)(ii) which has been given to the Purchaser, provided, that (1)
the Company shall only be required to provide information that is
readily accessible to its servicing personnel and is
non-confidential and (2) the Company shall respond within five
Business Days orally or in writing by facsimile transmission.
(c) In addition to the foregoing, the Company shall provide
to the Purchaser such information as the Purchaser may reasonably
4
request concerning each Mortgage Loan that is at least sixty days
delinquent and each Mortgage Loan which has become real estate
owned, through the final liquidation thereof, provided, that the
Company shall only be required to provide information that is
readily accessible to its servicing personnel and is
non-confidential.
Section 2.02. Purchaser's Election to Delay Foreclosure
Proceedings.
(a) The Purchaser shall be deemed to direct the Company
that in the event that the Company does not receive written
notice of the Purchaser's election pursuant to subsection (b)
below within 24 hours (exclusive of any intervening non-Business
Days) of transmission of the notice provided by the Company under
Section 2.01(a)(ii) subject to extension as set forth in Section
2.02(b), the Company may proceed with the Commencement of
Foreclosure in respect of such Mortgage Loan in accordance with
its normal foreclosure policies without further notice to the
Purchaser. Any foreclosure that has been initiated may be
discontinued (i) without notice to the Purchaser if the Mortgage
Loan has been brought current or if a refinancing or prepayment
occurs with respect to the Mortgage Loan (including by means of a
short payoff approved by the Company) or (ii) with notice to the
Purchaser if the Company has reached the terms of a forbearance
agreement with the borrower. In such latter case the Company may
complete such forbearance agreement unless instructed otherwise
by the Purchaser within two Business Days of notification.
(b) In connection with any Mortgage Loan with respect to
which a notice under Section 2.01(a)(ii) has been given to the
Purchaser, the Purchaser may elect to instruct the Company to
delay the Commencement of Foreclosure until such time as the
Purchaser determines that the Company may proceed with the
Commencement of Foreclosure. Such election must be evidenced by
written notice received within 24 hours (exclusive of any
intervening non-Business Days) of transmission of the notice
provided by the Company under Section 2.01(a)(ii). The Purchaser
shall send a copy of such notice of election to each Rating
Agency as soon as practicable thereafter. Such 24-hour period
shall be extended for no longer than an additional four Business
Days after the receipt of the information if the Purchaser
requests additional information related to such foreclosure
within such 24-hour period; provided, however, that the Purchaser
will have at least one Business Day to make such election
following its receipt of any requested additional information.
Any such additional information shall (i) not be confidential in
nature and (ii) be obtainable by the Company from existing
5
reports, certificates or statements or otherwise be readily
accessible to its servicing personnel. The Purchaser agrees that
it has no right to deal with the mortgagor. However, if the
Company's normal foreclosure policies include acceptance of a
deed-in-lieu of foreclosure or short payoff, the Purchaser will
be notified and given two Business Days to respond.
(c) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the
Purchaser shall obtain a Current Appraisal as soon as
practicable, and shall provide the Company with a copy of such
Current Appraisal.
(d) Within two Business Days of making any Election to
Delay Foreclosure, the Purchaser shall remit by wire transfer to
the Trustee, for deposit in the Collateral Fund, an amount, as
calculated by the Company, equal to the sum of (i) 125% of the
greater of the Scheduled Principal Balance of the Mortgage Loan
and the value shown in the Current Appraisal referred to in
subsection (c) above (or, if such Current Appraisal has not yet
been obtained, the Company's estimate thereof, in which case the
required deposit under this subsection shall be adjusted upon
obtaining such Current Appraisal), and (ii) three months'
interest on the Mortgage Loan at the applicable Mortgage Rate. If
any Election to Delay Foreclosure extends for a period in excess
of three months (such excess period being referred to herein as
the "Excess Period"), the Purchaser shall remit by wire transfer
in advance to the Trustee for deposit in the Collateral Fund the
amount of each additional month's interest, as calculated by the
Company, equal to interest on the Mortgage Loan as the applicable
Mortgage Rate for the Excess Period. The terms of this Agreement
will no longer apply to the servicing of any Mortgage Loan upon
the failure of the Purchaser to deposit the above amounts
relating to the Mortgage Loan within two Business Days of (i) the
Election to Delay Foreclosure or (ii) the beginning of the
related Excess Period, as the case may be.
(e) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Company
or the Trustee may withdraw from the Collateral Fund from time to
time amounts necessary to reimburse the Company for all related
Monthly Advances and Liquidation Expenses thereafter made by the
Company as Servicer in accordance with the Pooling and Servicing
Agreement. To the extent that the amount of any such Liquidation
Expense is determined by the Company based on estimated costs,
and the actual costs are subsequently determined to be higher,
the Company or the Trustee may withdraw the additional amount
from the Collateral Fund to reimburse the Company. In the event
6
that the Mortgage Loan is brought current by the mortgagor, the
amounts so withdrawn from the Collateral Fund shall be
redeposited therein as and to the extent that reimbursement
therefor from amounts paid by the mortgagor is not prohibited
pursuant to the Pooling and Servicing Agreement as of the date
hereof. Except as provided in the preceding sentence, amounts
withdrawn from the Collateral Fund to cover Monthly Advances and
Liquidation Expenses shall not be redeposited therein or
otherwise reimbursed to the Purchaser. If and when any such
Mortgage Loan is brought current by the mortgagor, all amounts
remaining in the Collateral Fund in respect of such Mortgage Loan
(after adjustment for all previous withdrawals and deposits
pursuant to this subsection and after reimbursement to the
Servicer for all related Monthly Advances) shall be released to
the Purchaser.
(f) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Company
shall continue to service the Mortgage Loan in accordance with
its customary procedures (other than the delay in Commencement of
Foreclosure as provided herein). If and when, following such
election, the Purchaser shall notify the Company that it believes
that it is appropriate to do so, the Company shall proceed with
the Commencement of Foreclosure; provided that, in any event, if
the Mortgage Loan is not brought current by the mortgagor by the
time the loan becomes 6 months delinquent, the Purchaser's
election shall no longer be effective, unless the Purchaser shall
have purchased the related Mortgage Loan promptly following (and
in any event not later than the third Business Day after) the end
of such 6-month period in the manner provided in the following
two sentences, and the Company shall be entitled to proceed with
the Commencement of Foreclosure. Any purchase of such Mortgage
Loan by the Purchaser pursuant to the preceding sentence shall be
at a purchase price equal to the unpaid principal balance of the
Mortgage Loan plus accrued interest at the Mortgage Rate from the
date last paid by the mortgagor. Such purchase price shall be
deposited by the Purchaser into the Collateral Fund in
immediately available funds on the Business Day which is the date
of purchase and the Purchaser shall instruct the Trustee (with
notice to the Company) to withdraw such amount therefrom on such
Business Day and remit the same to the Trust Fund for application
as Liquidation Proceeds pursuant to the Pooling and Servicing
Agreement. Following such withdrawal, all amounts remaining in
the Collateral Fund in respect of such Mortgage Loan (after
adjustment for all previous withdrawals and deposits pursuant to
this Agreement and after reimbursement to the Servicer for all
related Monthly Advances) shall be released to the Purchaser.
7
(g) Upon the occurrence of a liquidation with respect to
any Mortgage Loan as to which the Purchaser made an Election to
Delay Foreclosure and as to which the Company proceeded with the
Commencement of Foreclosure in accordance with subsection (f)
above, the Company shall calculate the amount, if any, by which
the value shown on the Current Appraisal obtained under
subsection (c) exceeds the actual sales price obtained for the
related Mortgaged Property (net of Liquidation Expenses and
unreimbursed Monthly Advances related to the extended foreclosure
period), and the Company or the Trustee shall withdraw the amount
of such excess from the Collateral Fund and shall remit the same
to the Trust Fund for application as additional Liquidation
Proceeds pursuant to the Pooling and Servicing Agreement. After
making such withdrawal, all amounts remaining in the Collateral
Fund in respect of such Mortgage Loan (after adjustment for all
withdrawals and deposits pursuant to subsection (e) and after
reimbursement to the Servicer for all related Monthly Advances)
shall be released to the Purchaser.
Section 2.03. Purchaser's Election to Commence Foreclosure
Proceedings.
(a) In connection with any Mortgage Loan identified in a
report under Section 2.01(a)(i)(B), the Purchaser may elect to
instruct the Company to proceed with the Commencement of
Foreclosure as soon as practicable. Such election must be
evidenced by written notice received by the Company by 5:00 p.m.,
New York City time, on the third Business Day following the
delivery of such report under Section 2.01(a)(i).
(b) Within two Business Days of making any Election to
Foreclose, the Purchaser shall remit to the Trustee, for deposit
in the Collateral Fund, an amount, as calculated by the Company,
equal to 125% of the current Scheduled Principal Balance of the
Mortgage Loan and three months' interest on the Mortgage Loan at
the applicable Mortgage Rate. If and when any such Mortgage Loan
is brought current by the mortgagor, all amounts in the
Collateral Fund in respect of such Mortgage Loan (after
adjustment for all withdrawals and deposits pursuant to
subsection (c) below) shall be released to the Purchaser. The
terms of this Agreement will no longer apply to the servicing of
any Mortgage Loan upon the failure of the Purchaser to deposit
the above amounts relating to the Mortgage Loan within two
Business Days of the Election to Foreclose.
(c) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Foreclose, the Company shall
continue to service the Mortgage Loan in accordance with its
8
customary procedures. In connection therewith, the Company shall
have the same rights to make withdrawals for Monthly Advances and
Liquidation Expenses from the Collateral Fund as are provided
under Section 2.02(e), and the Company shall make reimbursements
thereto to the limited extent provided under such subsection. The
Company shall not be required to proceed with the Commencement of
Foreclosure if (i) the same is stayed as a result of the
mortgagor's bankruptcy or is otherwise barred by applicable law,
or to the extent that all legal conditions precedent thereto have
not yet been complied with, or (ii) the Company believes there is
a breach of representations or warranties by the Company, which
may result in a repurchase or substitution of such Mortgage Loan,
or (iii) the Company has or expects to have the right under the
Pooling and Servicing Agreement to purchase the defaulted
Mortgage Loan and intends to exercise such right or (iv) the
Company reasonably believes the Mortgaged Property may be
contaminated with or affected by hazardous wastes or hazardous
substances (and the Company supplies the Purchaser with
information supporting such belief) or (v) the same is prohibited
by or is otherwise inconsistent with the provisions of the
Pooling and Servicing Agreement. Any foreclosure that has been
initiated may be discontinued (i) without notice to the Purchaser
if the Mortgage Loan has been brought current or if a refinancing
or prepayment occurs with respect to the Mortgage Loan (including
by means of a short payoff approved by the Purchaser) or (ii)
with notice to the Purchaser if the Company has reached the terms
of a forbearance agreement unless instructed otherwise by the
Purchaser within two Business Days of notification.
(d) Upon the occurrence of a liquidation with respect to
any Mortgage Loan as to which the Purchaser made an Election to
Foreclose and as to which the Company proceeded with the
Commencement of Foreclosure in accordance with subsection (c)
above, the Company shall calculate the amount, if any, by which
the Scheduled Principal Balance of the Mortgage Loan at the time
of liquidation (plus all unreimbursed Monthly Advances and
Liquidation Expenses in connection therewith other than those
previously paid from the Collateral Fund) exceeds the actual
sales price obtained for the related Mortgaged Property, and the
Company or the Trustee shall withdraw the amount of such excess
from the Collateral Fund and shall remit the same to the Trust
Fund for application as additional Liquidation Proceeds pursuant
to the Pooling and Servicing Agreement. After making such
withdrawal, all amounts remaining in the Collateral Fund (after
adjustment for all withdrawals and deposits pursuant to
subsection (c) above and after reimbursement to the Servicer for
9
all related Monthly Advances) in respect of such Mortgage Loan
shall be released to the Purchaser.
Section 2.04. Termination.
(a) With respect to all Mortgage Loans included in the
Trust Fund, the Purchaser's right to make any Election to Delay
Foreclosure or any Election to Foreclose and the Company's
obligations under Section 2.01 shall terminate on the earliest to
occur of the following: (i) at such time as the Class Certificate
Principal Balance of the Class B_ Certificates has been reduced
to zero, (ii) if the greater of (x) 43% (or such lower or higher
percentage that represents the Company's actual loss experience
with respect to the Mortgage Loans in the related pool) of the
aggregate principal balance of all Mortgage Loans that are in
foreclosure or are more than 90 days delinquent on a contractual
basis and the aggregate book value of REO properties or (y) the
aggregate amount that the Company estimates through its normal
servicing practices will be required to be withdrawn from the
Collateral Fund with respect to Mortgage Loans as to which the
Purchaser has made an Election to Delay Foreclosure or an
Election to Foreclose exceeds (z) the then-current Class
Certificate Principal Balance of the Class B_ Certificates, or
(iii) upon any transfer by the Purchaser of any interest (other
than the minority interest therein, but only if the transferee
provides written acknowledgment to the Company of the Purchaser's
right hereunder and that such transferee will have no rights
hereunder) in the Class B_ Certificates [or in the Class B5
Certificates] (whether or not such transfer is registered under
the Pooling and Servicing Agreement), including any such transfer
in connection with a termination of the Trust Fund. Unless
earlier terminated as set forth herein, this Agreement and the
respective rights, obligations and responsibilities of the
Purchaser and the Company hereunder shall terminate immediately
upon (x) the later to occur of (i) the final liquidation of the
last Mortgage Loan as to which the Purchaser made any Election to
Delay Foreclosure or any Election to Foreclose and the withdrawal
of all remaining amounts in the Collateral Fund as provided
herein and (ii) ten (10) Business Days' notice or (y) the
occurrence of any event that results in the Purchaser becoming an
"affiliate" of the Trustee within the meaning of the Prohibited
Transaction Exemption (as defined in the Pooling and Servicing
Agreement).
(b) The Purchaser's rights pursuant to Section 2.02 or 2.03
of this Agreement shall terminate with respect to a Mortgage Loan
as to which the Purchaser has exercised its rights under Section
2.02 or 2.03 hereof, upon Purchaser's failure to deposit any
10
amounts required pursuant to Section 2.02(d) or 2.03(b) after one
Business Day's notice of such failure.
Section 2.05. Notification. The Purchaser shall promptly
notify the Trustee and the Company if such Purchaser becomes
aware of any discussions, plans or events that might lead to such
Person's becoming an "affiliate" (within the meaning of the
Prohibited Transaction Exemption) of the Trustee, provided that
the contents of any such notification shall be kept confidential
by the parties to this Agreement.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. Collateral Fund. Upon payment by the
Purchaser of the initial amount required to be deposited in the
Collateral Fund pursuant to Article II, the Company shall request
the Trustee to establish and maintain with the Trustee a
segregated account entitled "REMIC Multi-Class Pass-Through
Certificates 1995-7 Collateral Fund, for the benefit of GE
Capital Mortgage Services, Inc. and State Street Bank and Trust
Company on behalf of Certificateholders, as secured parties" (the
"Collateral Fund"). Amounts held in the Collateral Fund shall
continue to be the property of the Purchaser, subject to the
first priority security interest granted hereunder for the
benefit of such secured parties, until withdrawn from the
Collateral Fund pursuant to the Section 2.02 or 2.03 hereof.
Upon the termination of this Agreement and the liquidation
of all Mortgage Loans as to which the Purchaser has made any
Election to Delay Foreclosure or any Election to Foreclose
pursuant to Section 2.04 hereof, the Company shall distribute to
the Purchaser all amounts remaining in the Collateral Fund
together with any investment earnings thereon (after giving
effect to all withdrawals therefrom permitted under this
Agreement).
The Purchaser shall not take or direct the Company or the
Trustee to take any action contrary to any provision of the
Pooling and Servicing Agreement. In no event shall the Purchaser
(i) take or cause the Trustee or the Company to take any action
that could cause any REMIC established under the Pooling and
Servicing Agreement to fail to qualify as a REMIC or cause the
imposition on any such REMIC of any "prohibited transaction" or
"prohibited contribution" taxes or (ii) cause the Trustee or the
Company to fail to take any action necessary to maintain the
status of any such REMIC as a REMIC.
11
Section 3.02. Collateral Fund Permitted Investments. The
Company shall, at the written direction of the Purchaser, direct
the Trustee to invest the funds in the Collateral Fund in the
name of the Trustee in Collateral Fund Permitted Investments.
Such direction shall not be changed more frequently then
quarterly. In the absence of any direction, the Company shall
direct the Trustee select such investments in accordance with the
definition of Collateral Fund Permitted Investments in its
discretion.
All income and gain realized from any investment as well as
any interest earned on deposits in the Collateral Fund (net of
any losses on such investments) and any payments of principal
made in respect of any Collateral Fund Permitted Investment shall
be deposited in the Collateral Fund upon receipt. All costs and
realized losses associated with the purchase and sale of
Collateral Fund Permitted Investments shall be borne by the
Purchaser and the amount of net realized losses shall be promptly
deposited by the Purchaser in the Collateral Fund. The Company
shall periodically (but not more frequently than monthly) direct
the Trustee to distribute to the Purchaser upon request an amount
of cash, to the extent cash is available therefor in the
Collateral Fund, equal to the amount by which the balance of the
Collateral Fund, after giving effect to all other distributions
to be made from the Collateral Fund on such date, exceeds the
Required Collateral Fund Balance. Any amounts so distributed
shall be released from the lien and security interest of this
Agreement.
Section 3.03. Grant of Security Interest. In order to
secure the obligations of the Purchaser hereunder to the Company
and the Trustee for the benefit of Certificateholders (other than
its obligations under Section 4.10), the Purchaser hereby grants
to the Company and to the Trustee for the benefit of the
Certificateholders a security interest in and lien on all of the
Purchaser's right, title and interest, whether now owned or
hereafter acquired, in and to: (1) the Collateral Fund, (2) all
amounts deposited in the Collateral Fund and Collateral Fund
Permitted Investments in which such amounts are invested (and the
distributions and proceeds of such investments) and (3) all cash
and non-cash proceeds of any of the foregoing, including proceeds
of the voluntary or involuntary conversion thereof (all of the
foregoing collectively, the "Collateral").
The Purchaser acknowledges the lien on and security
interest in the Collateral for the benefit of the Company and the
Trustee on behalf of the Certificateholders. The Purchaser shall
take all actions requested by the Company or the Trustee as may
12
be reasonably necessary to perfect the security interest created
under this Agreement in the Collateral and cause it to be prior
to all other security interests and liens, including the
execution and delivery to the Company or at its direction the
Trustee for filing of appropriate financing statements in
accordance with applicable law.
Section 3.04. Collateral Shortfalls. In the event that
amounts on deposit in the Collateral Fund at any time are
insufficient to cover any withdrawals therefrom that the Company
or the Trustee is then entitled to make hereunder, the Purchaser
shall be obligated to pay such amounts to the Company or the
Trustee immediately upon demand. Such obligation shall constitute
a general corporate obligation of the Purchaser. The failure to
pay such amounts within two Business Days of such demand (except
for amounts to cover interest on a Mortgage Loan pursuant to
Sections 2.02(d) and 2.03(b)), shall cause an immediate
termination of the Purchaser's right to make any Election to
Delay Foreclosure or Election to Foreclose and the Company's
obligations under this Agreement with respect to all Mortgage
Loans to which such insufficiencies relate, without the necessity
of any further notice or demand on the part of the Company.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Amendment. This Agreement may be amended from
time to time by the Company and the Purchaser by written
agreement signed by the Company and the Purchaser provided that
no such amendment shall have a material adverse effect on the
holders of other Classes of Certificates.
Section 4.02. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such
counterparts shall constitute but one and the same instrument.
Section 4.03. 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.
Section 4.04. Notices. All demands, notices and direction
hereunder shall be in writing or by telecopy and shall be deemed
effective upon receipt to:
13
(a) in the case of the Company,
GE Capital Mortgage Services, Inc.
Three Executive Campus
Cherry Hill, New Jersey 08002
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or such other address as may hereafter be furnished in writing by
the Company, or
(b) in the case of the Purchaser,
________________________________
________________________________
________________________________
Attention:______________________
Telephone:______________________
Facsimile:______________________
or such other address as may hereafter be furnished in writing by
the Purchaser, or
(c) in the case of the Trustee,
State Street Bank and Trust Company
Corporate Trust Department
Two International Place, Fifth Floor
Boston, Massachusetts 02110
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Section 4.05. Severability of Provisions. If any one or
more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever, including
regulatory, 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.
Section 4.06. Successor and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of
the parties hereto and the respective successors and assigns of
the parties hereto; provided, however, that the rights under this
14
Agreement cannot be assigned by the Purchaser without the consent
of the Company.
Section 4.07. Article and Section Headings. The article
and section headings herein are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
Section 4.08. Third Party Beneficiaries. The Trustee on
behalf of Certificateholders is the intended third party
beneficiary of this Agreement.
Section 4.09. Confidentiality. The Purchaser agrees that
all information supplied by or on behalf of the Company pursuant
to Sections 2.01 or 2.02, including individual account
information, is the property of the Company and the Purchaser
agrees to use such information solely for the purposes set forth
in this Agreement and to hold such information confidential and
not to disclose such information.
Section 4.10. Indemnification. The Purchaser agrees to
indemnify and hold harmless the Company against any and all
losses, claims, damages or liabilities to which it may be
subject, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon
actions taken by the Company in accordance with the provisions of
this Agreement and which actions conflict or are alleged to
conflict with the Company's obligations under the Pooling and
Servicing Agreement. The Purchaser hereby agrees to reimburse the
Company on demand for the reasonable legal or other expenses
incurred by it in connection with investigating or defending any
such loss, claim, damage, liability or action.
[Section 4.11. Delayed Effectiveness. The Purchaser agrees
that, notwithstanding any other provision of this Agreement, the
Purchaser shall have no rights hereunder, and the Company shall
have no obligations hereunder, until the Class Certificate
Principal Balance of the Class B5 Certificates has been reduced
to zero and any Special Servicing and Collateral Fund Agreement
between the Company and the Purchaser relating to such Class B5
Certificates has been terminated.]
15
IN WITNESS WHEREOF, the Company and the Purchaser have
caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year
first above written.
GE CAPITAL MORTGAGE SERVICES, INC.
By:_______________________________
Name:
Title:
[PURCHASER]
By:_______________________________
Name:
Title:
Acknowledged and agreed to:
STATE STREET BANK AND TRUST COMPANY
By:_______________________________
Name:
Title:
16
EXHIBIT L
FORM OF LOST NOTE AFFIDAVIT AND AGREEMENT
State of New Jersey )
) ss.
County of Camden )
GE Capital Mortgage Services, Inc. (the "Company") by
its undersigned authorized representative, being duly sworn,
hereby certifies as follows:
1. Pursuant to a Pooling and Servicing Agreement dated
as of September 1, 1995 (the "Agreement"), between the Company,
as seller, and State Street Bank and Trust Company, as trustee
(together with its successors, the "Trustee"), relating to the
Company's REMIC Multi-Class Pass-Through Certificates, Series
1995-7, the Company has assigned all of its right, title and
interest in the mortgage loan(s) described below (the "Designated
Loan(s)") to the Trustee.
(a) Loan Number:
Maker:
Original Principal Amount:
Maturity Date:
[(b) Loan Number:
Maker:
Original Principal Amount:
Maturity Date:]
2. The Company has provided to the Trustee certain
representations and warranties in Section 2.03 of the Agreement
as to the ownership, assignment and enforceability of the
Designated Loan(s) and the related promissory notes or other
instruments evidencing the Designated Loan(s).
3. [The Designated Loan] [Each of the Designated
Loans] is evidenced by a promissory note, executed by its
[respective] maker as indicated above (the "Mortgage Notes(s)").
4. The Company is the current holder of the
indebtedness evidenced by the Mortgage Note(s), the indebtedness
evidenced by the Mortgage Note(s) has not been pledged or
otherwise hypothecated, and the Company has not granted to any
person (other than the Trustee pursuant to the Agreement) any
interest in the indebtedness evidenced by the Mortgage Note(s).
5. After diligent search, the Company has been unable
to locate the Mortgage Note(s) and believes [it] [them] to be
lost. [A true and correct photocopy] [[True and correct
photocopies] of the Mortgage Note(s) [is] [are] attached hereto
as Exhibit A.]
6. If at any time the Company locates [any of] the
Mortgage Note(s), it shall endorse such Mortgage Note(s) for
transfer to the Trustee, without recourse, and shall promptly
deliver the Mortgage Note(s), as endorsed, to the Trustee.
7. In the event that the unavailability of any
Mortgage Note to the Trustee results in a breach of any
representations or warranties of the Company set forth in the
Agreement, the Trustee shall have the rights and remedies (if
any) set forth in the Agreement, subject to the provisions
thereof. In addition, the Company covenants and agrees to
indemnify the Trustee and the Trust Fund from and hold them
harmless against any and all losses, liabilities, damages, claims
or expenses (other than those resulting from negligence or bad
faith from the Trustee) arising from the Company's failure to
have delivered any Mortgage Note to the Trustee, including
without limitation any thereof arising from any action to enforce
the indebtedness evidenced by such Mortgage Note or any claim by
any third party who is the holder of such indebtedness by virtue
of possession of such Mortgage Note.
2
This affidavit is given in connection with the
Company's execution of the Agreement. The Trustee's rights and
remedies set forth herein and in the Agreement shall constitute
the sole and exclusive remedies of the Trustee or its successors
and assigns arising out of or relating to the absence or loss of
the Mortgage Note(s) or the Company's failure to deliver the
same.
GE CAPITAL MORTGAGE SERVICES, INC.
By:________________________________
Name:
Title:
Sworn to before me this
____ day of September, 1995
______________________________
Notary Public
3
