Exhibit 4.2
BEAR XXXXXXX ASSET BACKED SECURITIES I LLC,
Depositor
[_______________________],
Seller and Company
[_______________________],
Master Servicer and Securities Administrator
and
[_______________________],
Trustee
____________________
POOLING AND SERVICING AGREEMENT
Dated as of ____ 1, 200__
________________________________________
BEAR XXXXXXX ASSET BACKED SECURITIES TRUST 200__-___
ASSET-BACKED CERTIFICATES, SERIES 200__-___
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.01 Defined Terms...................................................................................3
Section 1.02 Allocation of Certain Interest Shortfalls......................................................27
ARTICLE II CONVEYANCE OF TRUST FUND REPRESENTATIONS AND
WARRANTIES
Section 2.01 Conveyance of Trust Fund.......................................................................28
Section 2.02 Acceptance of the Mortgage Loans...............................................................30
Section 2.03 Representations, Warranties and Covenants of the Company and the Seller........................32
Section 2.04 Representations and Warranties of the Depositor................................................41
Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases................42
Section 2.06 Countersignature and Delivery of Certificates..................................................43
ARTICLE III ADMINISTRATION AND SERVICING OF COMPANY MORTGAGE
LOANS BY COMPANY
Section 3.01 The Company....................................................................................44
Section 3.02 Due-on-Sale Clauses; Assumption Agreements.....................................................45
Section 3.03 Subservicers...................................................................................46
Section 3.04 Documents, Records and Funds in Possession of Company to Be Held for Trustee...................47
Section 3.05 Maintenance of Hazard Insurance................................................................47
Section 3.06 Presentment of Claims and Collection of Proceeds...............................................48
Section 3.07 Maintenance of the Primary Mortgage Insurance Policies.........................................48
Section 3.08 Fidelity Bond, Errors and Omissions Insurance..................................................49
Section 3.09 Realization upon Defaulted Mortgage Loans; Determination of Excess Liquidation Proceeds and
Realized Losses; Repurchases of Certain Mortgage Loans.........................................49
Section 3.10 Servicing Compensation.........................................................................52
Section 3.11 REO Property...................................................................................52
Section 3.12 Liquidation Reports............................................................................53
Section 3.13 Annual Certificate as to Compliance............................................................53
Section 3.14 Annual Independent Certified Public Accountants' Servicing Report..............................53
Section 3.15 Books and Records..............................................................................54
ARTICLE IV ADMINISTRATION AND MASTER SERVICING OF MORTGAGE
LOANS BY MASTER SERVICER
Section 4.01 Master Servicer................................................................................55
i
Section 4.02 REMIC-Related Covenants........................................................................56
Section 4.03 Monitoring of Company and Servicer.............................................................56
Section 4.04 Fidelity Bond..................................................................................57
Section 4.05 Power to Act; Procedures.......................................................................57
Section 4.06 Due-on-Sale Clauses; Assumption Agreements.....................................................58
Section 4.07 Release of Mortgage Files......................................................................58
Section 4.08 Documents, Records and Funds in Possession of Master Servicer, Company and Servicer to Be Held
for Trustee....................................................................................59
Section 4.09 Standard Hazard Insurance and Flood Insurance Policies.........................................60
Section 4.10 Presentment of Claims and Collection of Proceeds...............................................61
Section 4.11 Maintenance of the Primary Mortgage Insurance Policies.........................................61
Section 4.12 Trustee to Retain Possession of Certain Insurance Policies and Documents.......................62
Section 4.13 Realization upon Defaulted Mortgage Loans......................................................62
Section 4.14 Compensation for the Master Servicer...........................................................62
Section 4.15 REO Property...................................................................................62
Section 4.16 Annual Officer's Certificate as to Compliance..................................................63
Section 4.17 Annual Independent Accountant's Servicing Report...............................................64
Section 4.18 Reports Filed with Securities and Exchange Commission..........................................64
[Section 4.19 Company........................................................................................65
Section 4.20 UCC............................................................................................65
Section 4.21 Optional Purchase of Certain Mortgage Loans....................................................65
ARTICLE V ACCOUNTS
Section 5.01 Collection of Mortgage Loan Payments; Protected Account........................................67
Section 5.02 Permitted Withdrawals From the Protected Account...............................................68
Section 5.02A Reports to Master Servicer.....................................................................70
Section 5.03 Collection of Taxes; Assessments and Similar Items; Escrow Accounts............................71
Section 5.04 Servicer Protected Accounts....................................................................71
Section 5.05 Master Servicer Collection Account.............................................................72
Section 5.06 Permitted Withdrawals and Transfers from the Master Servicer Collection Account................73
Section 5.07 Distribution Account...........................................................................74
Section 5.08 Permitted Withdrawals and Transfers from the Distribution Account..............................75
ARTICLE VI DISTRIBUTIONS AND ADVANCES
Section 6.01 Advances.......................................................................................77
Section 6.02 Compensating Interest Payments.................................................................78
Section 6.03 [Reserved.]....................................................................................78
Section 6.04 Distributions..................................................................................78
Section 6.04A Allocation of Realized Losses..................................................................80
Section 6.05 Monthly Statements to Certificateholders.......................................................81
Section 6.06 REMIC Designation..............................................................................83
ii
ARTICLE VII THE CERTIFICATES
Section 7.01 The Certificates...............................................................................85
Section 7.02 Certificate Register; Registration of Transfer and Exchange of Certificates....................85
Section 7.03 Mutilated, Destroyed, Lost or Stolen Certificates..............................................89
Section 7.04 Persons Deemed Owners..........................................................................89
Section 7.05 Access to List of Certificateholders' Names and Addresses......................................90
Section 7.06 Book-Entry Certificates........................................................................90
Section 7.07 Notices to Depository..........................................................................91
Section 7.08 Definitive Certificates........................................................................91
Section 7.09 Maintenance of Office or Agency................................................................92
ARTICLE VIII THE COMPANY AND THE MASTER SERVICER
Section 8.01 Liabilities of the Depositor, the Company and the Master Servicer..............................93
Section 8.02 Merger or Consolidation of the Depositor, the Company or the Master Servicer...................93
Section 8.03 Indemnification of the Trustee, the Master Servicer and the Securities Administrator...........93
Section 8.04 Limitations on Liability of the Depositor, the Company, the Master Servicer and Others.........94
Section 8.05 Master Servicer and Company Not to Resign......................................................95
Section 8.06 Successor Master Servicer......................................................................96
Section 8.07 Sale and Assignment of Master Servicing........................................................96
ARTICLE IX DEFAULT; TERMINATION OF MASTER SERVICER;
TERMINATION OF COMPANY
Section 9.01 Events of Default..............................................................................98
Section 9.02 Trustee to Act; Appointment of Successor.......................................................99
Section 9.03 Notification to Certificateholders............................................................101
Section 9.04 Waiver of Defaults............................................................................101
Section 9.05 Company Default...............................................................................101
Section 9.06 Waiver of Company Defaults....................................................................103
ARTICLE X CONCERNING THE TRUSTEE AND THE SECURITIES
ADMINISTRATOR
Section 10.01 Duties of Trustee and Securities Administrator................................................104
Section 10.02 Certain Matters Affecting the Trustee and the Securities Administrator........................106
Section 10.03 Trustee and Securities Administrator Not Liable for Certificates or Mortgage Loans............107
Section 10.04 Trustee and Securities Administrator May Own Certificates.....................................108
Section 10.05 Trustee's and Securities Administrator's Fees and Expenses....................................108
Section 10.06 Eligibility Requirements for Trustee and Securities Administrator.............................109
Section 10.07 Insurance.....................................................................................109
Section 10.08 Resignation and Removal of Trustee and Securities Administrator...............................109
Section 10.09 Successor Trustee or Securities Administrator.................................................110
iii
Section 10.10 Merger or Consolidation of Trustee or Securities Administrator................................111
Section 10.11 Appointment of Co-Trustee or Separate Trustee.................................................111
Section 10.12 Tax Matters...................................................................................112
ARTICLE XI TERMINATION
Section 11.01 Termination upon Liquidation or Repurchase of all Mortgage Loans..............................116
Section 11.02 Final Distribution on the Certificates........................................................116
Section 11.03 Additional Termination Requirements...........................................................118
ARTICLE XII MISCELLANEOUS PROVISIONS
Section 12.01 Amendment.....................................................................................119
Section 12.02 Recordation of Agreement; Counterparts........................................................120
Section 12.03 Governing Law.................................................................................120
Section 12.04 Intention of Parties..........................................................................121
Section 12.05 Notices.......................................................................................121
Section 12.06 Severability of Provisions....................................................................122
Section 12.07 Assignment....................................................................................122
Section 12.08 Limitation on Rights of Certificateholders....................................................122
Section 12.09 Inspection and Audit Rights...................................................................123
Section 12.10 Certificates Nonassessable and Fully Paid.....................................................123
iv
Exhibits
Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class M-[1][2] Certificates
Exhibit A-3 Form of Class B-1 Certificates
Exhibit A-4 Form of Class R Certificate
Exhibit B Mortgage Loan Schedule
Exhibit C-1 Form of Initial Certification of Trustee
Exhibit C-2 Form of Interim Certification of Trustee
Exhibit C-3 Form of Final Certification of Trustee
Exhibit D Form of Transfer Affidavit
Exhibit E Form of Transferor Certificate
Exhibit F Form of Investment Letter (Non-Rule 144A)
Exhibit G Form of Rule 144A Investment Letter
Exhibit H Form of Request for Release
Exhibit I DTC Letter of Representations
Exhibit J Schedule of Mortgage Loans with Lost Notes
Exhibit K Form of Custodial Agreement
Exhibit L Form of Company Certification
v
POOLING AND SERVICING AGREEMENT, dated as of _____ 1, 200__, among BEAR
XXXXXXX ASSET BACKED SECURITIES I LLC, a Delaware limited liability company, as
depositor (the "Depositor"), _________________________________________, a
_______________________, as seller (in such capacity, the "Seller") and as
company (in such capacity, the "Company"),
______________________________________________________, a
_____________________________, as master servicer (in such capacity, the "Master
Servicer") and as securities administrator (in such capacity, the "Securities
Administrator") and ________________________________________, a
___________________________________, not in its individual capacity, but solely
as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed to the
Trustee in return for the Certificates.
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as the "REMIC Trust." The Class R Certificate will
represent the sole class of "residual interests" in the REMIC Trust for purposes
of the REMIC Provisions (as defined herein) under federal income tax law.
The following table irrevocably sets forth the Class designation,
Pass-Through Rate and Initial Certificate Principal Balance for each Class of
Certificates that represents one or more of the "regular interests" in the REMIC
Trust created hereunder:
Initial Certificate Assumed Final
Class Designation Principal Balance Pass-Through Rate Maturity Date(1)
----------------- ----------------- ----------------- -------------
[Class A-1] $ Class A-1 Pass-Through Rate
[Class M-1] $ Class M-1 Pass Through Rate
[Class M-2] $ Class M-2 Pass-Through Rate
[Class B-1] $ Class B-1 Pass Through Rate
-------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the
maturity date for the Mortgage Loan with the latest maturity date has
been designated as the "latest possible maturity date" for each Class
of Certificates that represents one or more of the "regular
interests" in the REMIC Trust.
The Trust Fund shall be named, and may be referred to as, the "Bear Xxxxxxx
Asset Backed Securities Trust 200__-___." The Certificates issued hereunder may
be referred to as "Asset-Backed Certificates Series 200__-___" (including for
purposes of any endorsement or assignment of a Mortgage Note or Mortgage).
In consideration of the mutual agreements herein contained, the Depositor,
the Master Servicer, the Securities Administrator, the Seller, the Company and
the Trustee agree as follows:
2
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
In addition to those terms defined in Section 1.02, whenever used in this
Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
Accepted Master Servicing Practices: With respect to any Mortgage Loan, as
applicable, either (a) those customary mortgage servicing practices of prudent
mortgage servicing institutions that master service mortgage loans of the same
type and quality as such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is located, to the extent applicable to the Trustee or the
Master Servicer (except in its capacity as successor to the Company or the
related Servicer), or (b) as provided in Section 3.01 hereof or as provided in
the related Servicing Agreement, but, in each case, in no event below the
standard set forth in clause (a).
Accepted Servicing Practices: With respect to each Company Mortgage Loan,
those mortgage servicing practices (including collection procedures) that are in
accordance with all applicable statutes, regulations and prudent mortgage
banking practices for similar mortgage loans.
Account: The Distribution Account, the Master Servicer Collection Account,
the Net WAC Reserve Fund and any Protected Account.
Accrual Period: With respect to the Certificates (other than the Class
[M-2], Class [B-1] and Class R Certificates) and any Distribution Date, the
calendar month immediately preceding such Distribution Date. With respect to the
Class [M-2] Certificates and Class [B-1] Certificates and any Distribution Date,
the period from and including the 25th day of the calendar month preceding the
calendar month in which the Distribution Date occurs (or with respect to the
first Accrual Period, the Closing Date) to and including the 24th day of the
calendar month in which such Distribution Date occurs. All calculations of
interest on the Certificates (other than the Class [M-2], Class [B-1] and Class
R Certificates) will be made on the basis of a 360-day year consisting of twelve
30-day months. All calculations of interest on the Class [M-2] Certificates and
Class [B-1] Certificates will be made on the basis of the actual number of days
elapsed in the related Accrual Period.
Advance: An advance of delinquent payments of principal or interest in
respect of a Mortgage Loan required to be made by the Company as provided in
Section 6.01(a) hereof, by the related Servicer in accordance with the related
Servicing Agreement or by the Master Servicer as provided in Section 6.01(b)
hereof.
Agreement: This Pooling and Servicing Agreement and any and all amendments
or supplements hereto made in accordance with the terms herein.
3
Amount Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the Company's or the related Servicer's Protected
Account at the close of business on the immediately preceding Determination Date
on account of (i) all Scheduled Payments or portions thereof received in respect
of the Mortgage Loans due after the related Due Period and (ii) Principal
Prepayments, Liquidation Proceeds and Insurance Proceeds received in respect of
such Mortgage Loans after the last day of the related Prepayment Period.
Applied Realized Loss Amount: With respect to any Distribution Date and a
Class of Subordinated Certificates the sum of the Realized Losses with respect
to the Mortgage Loans which are to be applied in reduction of the Certificate
Principal Balance of that Class of Certificates pursuant to this Agreement,
which shall, on any such Distribution Date equal with respect to the Class
[B-1], Class [M-2] and Class [M-1] Certificates, so long as their respective
Certificate Principal Balances have not been reduced to zero, the amount, if
any, by which, (i) the aggregate Certificate Principal Balance of all of the
Certificates (after all distributions of principal on such Distribution Date and
the allocation of Realized Losses on such Distribution Date) exceeds (ii) the
aggregate Stated Principal Balance of all of the Mortgage Loans as of the last
day of the related Due Period.
Appraised Value: With respect to any Mortgage Loan originated in connection
with a refinancing, the appraised value of the Mortgaged Property based upon the
appraisal made at the time of such refinancing or, with respect to any other
Mortgage Loan, the lesser of (x) the appraised value of the Mortgaged Property
based upon the appraisal made by a fee appraiser at the time of the origination
of the related Mortgage Loan, and (y) the sales price of the Mortgaged Property
at the time of such origination.
Assignment Agreement: Collectively, the _______________ Assignment
Agreement, the _______________ Assignment Agreement and the _______________
Assignment Agreement.
Available Funds: The sum of Interest Funds and Principal Funds with respect
to the Mortgage Loans.
Bankruptcy Code: Title 11 of the United States Code.
Basic Principal Distribution Amount: Shall mean, with respect to any
Distribution Date, the lesser of (a) the excess of (i) the Available Funds for
such Distribution Date over (ii) the aggregate Monthly Interest Distributable
Amount for the Certificates (other than the Class R Certificate) for such
Distribution Date and (b) the excess of (i) the Principal Remittance Amount for
such Distribution Date over (ii) the Overcollateralization Release Amount, if
any, for such Distribution Date.
Book-Entry Certificates: Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a person maintaining
an account with the Depository (directly, as a "Depository Participant", or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 7.06). As of the Closing Date, each Class
of Regular Certificates constitutes a Class of Book-Entry Certificates.
4
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day
on which banking institutions in The City of New York, New York,
_______________, or the city in which the Corporate Trust Office of the Trustee
or the principal office of the Company or the Master Servicer is located are
authorized or obligated by law or executive order to be closed.
Certificate: Any one of the certificates of any Class executed and
authenticated by the Trustee in substantially the forms attached hereto as
Exhibits A-1 through A-7.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate (other than the Class
R Certificate) and as of any Distribution Date, the Initial Certificate
Principal Balance of such Certificate less the sum of (i) all amounts
distributed with respect to such Certificate in reduction of the Certificate
Principal Balance thereof on previous Distribution Dates pursuant to Section
6.04, and (ii) in the case of any Subordinated Certificate, any Applied Realized
Loss Amounts allocated to such Certificate on previous Distribution Dates.
Certificate Register: The register maintained pursuant to Section 7.02
hereof.
Certificateholder or Holder: The person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository, in the case of any Book-Entry Certificates).
Class: All Certificates bearing the same Class designation as set forth in
Section 7.01 hereof.
Class A-1 Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A-1 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class A-1 Certificates as set forth herein and evidencing a Regular Interest
in the REMIC Trust.
Class A-1 Pass-Through Rate: Shall mean (i) on any Distribution Date which
occurs on or prior to the Optional Termination Date, _____% per annum and (ii)
for each Distribution Date thereafter, _____% per annum[, in each case subject
to a cap equal to the Net WAC Rate Cap for such Distribution Date].
Class B-1 Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A-3 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class B-1 Certificates as set forth herein and evidencing a Regular Interest
in the REMIC Trust.
Class B-1 Pass-Through Rate: Shall mean (i) on any Distribution Date which
occurs on or prior to the Optional Termination Date, the related LIBOR Rate and
(ii) for each Distribution Date thereafter, the related LIBOR Rate plus _____%
per annum, [in each case subject to a cap equal to the Net WAC Rate Cap for such
Distribution Date].
5
Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class M-1 Certificates as set forth herein and evidencing a Regular Interest
in the REMIC Trust.
Class M-1 Pass-Through Rate: Shall mean (i) on any Distribution Date which
occurs on or prior to the Optional Termination Date, _____% per annum and (ii)
for each Distribution Date thereafter, _____% per annum[, in each case subject
to a cap equal to the Net WAC Rate Cap for such Distribution Date].
Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A-2 hereto,
representing the right to the Percentage Interest of distributions provided for
the Class M-2 Certificates as set forth herein and evidencing a Regular Interest
in the REMIC Trust.
Class M-2 Pass-Through Rate: Shall mean (i) on any Distribution Date which
occurs on or prior to the Optional Termination Date, the related LIBOR Rate and
(ii) for each Distribution Date thereafter, the related LIBOR Rate plus _____%
per annum[, in each case subject to a cap equal to the Net WAC Rate Cap for such
Distribution Date].
Class R Certificate: The Certificate designated the "Class R Certificate"
on the face thereof, in substantially the form set forth in Exhibit A-4 hereto,
evidencing the sole class of "residual interests" (within the meaning of Section
860G(a)(2) in the REMIC Trust.
Closing Date: _____ __, 200__.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Compensating Interest: An amount, not to exceed the Servicing Fee, to be
deposited in the Master Servicer Collection Account by the Company or the
related Servicer to the payment of a Prepayment Interest Shortfall on a Mortgage
Loan subject to this Agreement; provided that in the event the Company or the
related Servicer fails to make such payment, the Master Servicer shall be
obligated to do so pursuant to Section 6.02(c) hereof.
Corporate Trust Office: The designated office of the Trustee where at any
particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
Agreement is located at ______________________________, or at such other address
as the Trustee may designate from time to time.
Cross-Over Date: The first Distribution Date on which the aggregate
Certificate Principal Balance of the Subordinated Certificates has been reduced
to zero (giving effect to all distributions on such Distribution Date).
Custodial Agreement: An agreement dated as of the Closing Date among the
Depositor, the Seller, the Trustee and the Custodian in substantially the form
of Exhibit K hereto.
6
Custodian: ________________________________________________, or any
successor custodian appointed pursuant to the provisions hereof and the
Custodial Agreement.
Cut-off Date: The close of business on _____ 1, 200__.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-off Date after
application of all Principal Prepayments received prior to the Cut-off Date and
scheduled payments of principal due on or before the Cut-off Date, whether or
not received, but without giving effect to any installments of principal
received in respect of Due Dates after the Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction by a
court of competent jurisdiction in a proceeding under the Bankruptcy Code in the
Scheduled Payment for such Mortgage Loan that became final and non-appealable,
except such a reduction resulting from a Deficient Valuation or any other
reduction that results in a permanent forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under such Mortgage Loan, or any reduction in
the amount of principal to be paid in connection with any Scheduled Payment that
results in a permanent forgiveness of principal, which valuation or reduction
results from an order of such court that is final and non-appealable in a
proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 7.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon is
not made pursuant to the terms of such Mortgage Loan by the close of business on
the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on the
face thereof as the "Initial Principal Balance of this Certificate".
Depositor: Bear Xxxxxxx Asset Backed Securities I LLC, a Delaware limited
liability company, or its successor in interest.
Depository: The initial Depository shall be The Depository Trust Company
("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(a)(5) of the
Uniform Commercial Code of the State of New York.
7
Depository Agreement: With respect to the Class of Book-Entry Certificates,
the agreement among the Depositor, the Trustee and the initial Depository, dated
as of the Closing Date, substantially in the form of Exhibit I.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the _____th day
of the month of such Distribution Date or, if such _____th day is not a Business
Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 5.07 in the name of the Trustee for the
benefit of the Certificateholders and designated "[Name of Trustee], in trust
for registered holders of Bear Xxxxxxx Asset Backed Securities Trust 200__-___,
Asset-Backed Certificates, Series 200__-___". Funds in the Distribution Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date, on or
before 3:00 p.m. Eastern time on the Business Day immediately preceding such
Distribution Date.
Distribution Date: The _____th day of each calendar month after the initial
issuance of the Certificates, or if such _____th day is not a Business Day, the
next succeeding Business Day, commencing in _____ 200__.
Due Date: As to any Mortgage Loan, the date in each month on which the
related Scheduled Payment is due, as set forth in the related Mortgage Note.
Due Period: With respect to any Distribution Date, the period from the
second day of the calendar month preceding the calendar month in which such
Distribution Date occurs through close of business on the first day of the
calendar month in which such Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company, the
long-term unsecured debt obligations and short-term unsecured debt obligations
of which (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the debt obligations of such
holding company, so long as Xxxxx'x is not a Rating Agency) are rated by each
Rating Agency in one of its two highest long-term and its highest short-term
rating categories respectively, at the time any amounts are held on deposit
therein, or (ii) an account or accounts in a depository institution or trust
company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
8
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the corporate trust department of a federal or state chartered depository
institution or trust company having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity or (iv) any other account
acceptable to the Rating Agencies. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with
the Trustee.
Company Mortgage Loans: Shall mean those Mortgage Loans serviced by the
Company pursuant to the terms of this Agreement.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA Restricted Certificate: The Class R Certificate.
Event of Default: As defined in Section 9.01 hereof.
Exemption: Prohibited Transaction Exemption 90-30, as amended from time to
time.
Excess Liquidation Proceeds: To the extent not required by law to be paid
to the related Mortgagor, the excess, if any, of any Liquidation Proceeds with
respect to a Mortgage Loan over the Stated Principal Balance of such Mortgage
Loan and accrued and unpaid interest at the related Mortgage Rate through the
last day of the month in which the Mortgage Loan has been liquidated.
Extra Principal Distribution Amount: With respect to any Distribution Date
(a) on or prior to the earlier of (1) the [10]% Clean-Up Call Date and (2) the
Distribution Date in _____ 20_____, the lesser of (x) the Net Monthly Excess
Cashflow for such Distribution Date and (y) the Overcollateralization Increase
Amount for such Distribution Date; and (b) thereafter, the Net Monthly Excess
Cashflow for such Distribution Date.
Xxxxxx Xxx: Xxxxxx Xxx (formerly, Federal National Mortgage Association),
or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
Final Recovery Determination: With respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property purchased by the
Seller or the [Master Servicer] pursuant to or as contemplated by Section
2.03(c) or Section 11.01), a determination made by the Company pursuant to this
Agreement or the applicable Servicer pursuant to the related Servicing Agreement
that all Insurance Proceeds, Liquidation Proceeds and other payments or
recoveries which the Company or such Servicer, in its reasonable good faith
judgment, expects to be finally recoverable in respect thereof have been so
recovered. The Master Servicer shall maintain records, based solely on
information provided by each Servicer, of each Final Recovery Determination made
thereby.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement Act of
1989.
9
Freddie Mac: Freddie Mac (formerly The Federal Home Loan Mortgage
Corporation), or any successor thereto.
Indemnified Persons: The Trustee, the Master Servicer, the Company, the
Trust Fund and the Securities Administrator and their officers, directors,
agents and employees and, with respect to the Trustee, any separate co-trustee
and its officers, directors, agents and employees.
Initial Certificate Principal Balance: With respect to any Certificate, the
Certificate Principal Balance of such Certificate or any predecessor Certificate
on the Closing Date.
Insurance Policy: With respect to any Mortgage Loan included in the Trust
Fund, any insurance policy or LPMI Policy, including all riders and endorsements
thereto in effect with respect to such Mortgage Loan, including any replacement
policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans pursuant
to any Insurance Policy or any other insurance policy covering a Mortgage Loan,
to the extent such proceeds are payable to the mortgagee under the Mortgage, the
Company, the related Servicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with the procedures that the Company or the related
Servicer would follow in servicing mortgage loans held for its own account, in
each case other than any amount included in such Insurance Proceeds in respect
of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Determination Date: Shall mean the second LIBOR Business Day
preceding the commencement of each Accrual Period.
Interest Funds: For any Distribution Date, (i) the sum, without
duplication, of (a) all scheduled interest during the related Due Period with
respect to the related Mortgage Loans less the Servicing Fee, the Master
Servicing Fee and the LPMI Fee, if any, (b) all Advances relating to interest
with respect to the related Mortgage Loans made on or prior to the related
Distribution Account Deposit Date, (c) all Compensating Interest with respect to
the related Mortgage Loans and required to be remitted by the Company or the
Master Servicer pursuant to this Agreement or the related Servicer pursuant to
the related Servicing Agreement with respect to such Distribution Date, (d)
Liquidation Proceeds with respect to the related Mortgage Loans collected during
the related Prepayment Period (to the extent such Liquidation Proceeds relate to
interest), (e) all amounts relating to interest with respect to each Mortgage
Loan repurchased by the Seller pursuant to Sections 2.02 and 2.03 and by Company
pursuant to Section 4.21 and (f) all amounts in respect of interest paid by the
Master Servicer pursuant to Section 11.01, in each case to the extent remitted
by the Company or the related Servicer, as applicable, to the Distribution
Account pursuant to this Agreement or the related Servicing Agreement minus (ii)
all amounts relating to interest required to be reimbursed pursuant to Sections
5.02, 5.04, 5.06 and 5.08 or as otherwise set forth in this Agreement.
Interest Shortfall: With respect to any Distribution Date, means the
aggregate shortfall, if any, in collections of interest (adjusted to the related
Net Mortgage Rates) on Mortgage Loans
10
resulting from (a) Principal Prepayments in full received during the related
Prepayment Period, (b) the partial Principal Prepayments received during the
related Prepayment Period to the extent applied prior to the Due Date in the
month of the Distribution Date and (c) interest payments on certain of the
Mortgage Loans being limited pursuant to the provisions of the Relief Act or
similar state laws.
Last Scheduled Distribution Date: _____ __, 20___.
Latest Possible Maturity Date: The Distribution Date following the final
scheduled maturity date of the Mortgage Loan in the Trust Fund having the latest
scheduled maturity date as of the Cut-off Date.
LIBOR Business Day: Shall mean a day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
LIBOR Rate: Shall mean (i) with respect to the Class [M-2] Certificates,
[One-Month] LIBOR plus _____% per annum and (ii) with respect to the Class [B-1]
Certificates, [One-Month] LIBOR plus _____% per annum.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Company or the related Servicer has made a Final
Recovery Determination with respect thereto.
Liquidation Proceeds: Amounts, other than Insurance Proceeds, received in
connection with the partial or complete liquidation of a Mortgage Loan, whether
through trustee's sale, foreclosure sale or otherwise, or in connection with any
condemnation or partial release of a Mortgaged Property and any other proceeds
received with respect to an REO Property, less the sum of related unreimbursed
Advances, Servicing Fees, Master Servicing Fees and Servicing Advances and all
expenses of liquidation, including property protection expenses and foreclosure
and sale costs, including court and reasonable attorneys' fees.
Loan-to-Value Ratio: The fraction, expressed as a percentage, the numerator
of which is the original principal balance of the related Mortgage Loan and the
denominator of which is the Appraised Value of the related Mortgaged Property.
Loss Allocation Limitation: The meaning specified in Section 6.04A(c)
hereof.
LPMI Fee: Shall mean the fee payable to the insurer for each Mortgage Loan
subject to an LPMI Policy as set forth in such LPMI Policy.
LPMI Policy: A policy of mortgage guaranty insurance issued by an insurer
meeting the requirements of Xxxxxx Xxx and Freddie Mac in which the Company or
the related Servicer of the related Mortgage Loan is responsible for the payment
of the LPMI Fee thereunder from collections on the related Mortgage Loan.
11
Master Servicer: ________________________________________________, in its
capacity as master servicer, and its successors and assigns.
Master Servicer Certification: A written certification covering servicing
of the Mortgage Loans by the Company and all Servicers and signed by an officer
of the Master Servicer that complies with (i) the Xxxxxxxx-Xxxxx Act of 2002, as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the Xxxxxxxx-Xxxxx Act of 2002 is amended, (b) the Statement referred to in
clause (ii) is modified or superceded by any subsequent statement, rule or
regulation of the Securities and Exchange Commission or any statement of a
division thereof, or (c) any future releases, rules and regulations are
published by the Securities and Exchange Commission from time to time pursuant
to the Xxxxxxxx-Xxxxx Act of 2002, which in any such case affects the form or
substance of the required certification and results in the required
certification being, in the reasonable judgment of the Master Servicer,
materially more onerous than the form of the required certification as of the
Closing Date, the Master Servicer Certification shall be as agreed to by the
Master Servicer, the Depositor and the Seller following a negotiation in good
faith to determine how to comply with any such new requirements.
Master Servicer Collection Account: The trust accounts or accounts created
and maintained pursuant to Section 5.05 hereof, which shall be entitled "[Name
of Servicer], as Trustee f/b/o holders of Bear Xxxxxxx Asset Backed Securities
Trust 200__-___, Asset Backed Certificates, Series 200__-___, Master Servicer
Collection Account".
Master Servicing Fee: As to each Mortgage Loan and any Distribution Date,
an amount equal to 1/12th of the Master Servicing Fee Rate multiplied by the
Stated Principal Balance of such Mortgage Loan as of the last day of the related
Due Period or, in the event of any payment of interest that accompanies a
Principal Prepayment in full during the related Due Period made by the Mortgagor
immediately prior to such prepayment, interest at the Master Servicing Fee Rate
on the Stated Principal Balance of such Mortgage Loan for the period covered by
such payment of interest.
Master Servicing Fee Rate: ___% per annum.
MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.
MERS(R) System: The system of recording transfers of Mortgages
electronically maintained by MERS.
MIN: The Mortgage Identification Number for Mortgage Loans registered with
MERS on the MERS(R) System.
MOM Loan: With respect to any Mortgage Loan, MERS acting as the mortgagee
of such Mortgage Loan, solely as nominee for the originator of such Mortgage
Loan and its successors and assigns, at the origination thereof.
12
Monthly Interest Distributable Amount: With respect to the Certificates
(other than the Class R Certificate) for any Distribution Date, means an amount
equal to the interest accrued during the related Accrual Period at the
applicable Pass-Through Rate on the Certificate Principal Balance of such
Certificate immediately prior to such Distribution Date less such Certificate's
share of any Unpaid Interest Shortfall and the interest portion of any Realized
Losses on the Mortgage Loans allocated to such Certificate pursuant to Section
1.02. Accrued Certificate Interest is calculated on the basis of a 360-day year
consisting of twelve 30-day months. No Accrued Certificate Interest will be
payable with respect to any Class of Certificates after the Distribution Date on
which the outstanding Certificate Principal Balance of such Certificate has been
reduced to zero.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 6.05.
Moody's: Xxxxx'x Investors Service, Inc.
Mortgage: The mortgage, deed of trust or other instrument creating a first
lien on or first priority ownership interest in an estate in fee simple in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loans: Such of the Mortgage Loans transferred and assigned to the
Trustee pursuant to the provisions hereof, as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason including, without limitation, a breach of the representation
contained in Section 2.03(b)(v) hereof, shall continue to be a Mortgage Loan
hereunder until the Purchase Price with respect thereto has been paid to the
Trust Fund.
Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase Agreement
dated as of ____ __, 200__, between the Seller, as seller and the Depositor, as
purchaser.
Mortgage Loan Purchase Price: The price, calculated as set forth in Section
11.01, to be paid in connection with the repurchase of the Mortgage Loans
pursuant to Section 11.01.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to time
amended by the Company or the Master Servicer to reflect the deletion of Deleted
Mortgage Loans and the addition of Replacement Mortgage Loans pursuant to the
provisions of this Agreement) transferred to the Trustee as part of the Trust
Fund and from time to time subject to this Agreement, the initial Mortgage Loan
Schedule being attached hereto as Exhibit B, setting forth the following
information with respect to each Mortgage Loan:
(i) the loan number;
13
(ii) the Mortgage Rate in effect as of the Cut-off Date;
(iii) the Servicer (or the Company, if it services the Mortgage
Loan),the Servicing Fee Rate and the Master Servicing Fee Rate;
(iv) the Net Mortgage Rate in effect as of the Cut-off Date;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the original term;
(ix) the remaining term;
(x) the property type; and
(xi) the MIN with respect to each Mortgage Loan.
Such schedule shall also set forth the aggregate Cut-off Date Principal Balance
for all of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of indebtedness
of a Mortgagor under a Mortgage Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligors on a Mortgage Note.
Net Interest Shortfalls: Shall mean Interest Shortfalls net of payments by
the Company, the Servicer or the Master Servicer in respect of Compensating
Interest.
Net Monthly Excess Cashflow: With respect to any Distribution Date, the sum
of (a) any Overcollateralization Release Amount and (b) the excess of (x) the
Available Funds for such Distribution Date over (y) the sum for such
Distribution Date of (A) the aggregate amount of the Monthly Interest
Distributable Amount for the Offered Certificates and (B) the Principal
Remittance Amount.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum
rate equal to the related Mortgage Rate less the sum of (i) the Servicing Fee
Rate, (ii) the Master Servicing Fee Rate and (iii) the rate at which the LPMI
Fee is calculated, if any.
Net WAC Rate Cap: With respect to each Class of Offered Certificates and
each Distribution Date shall mean the weighted average of the Net Mortgage Rates
of the Mortgage
14
Loans, weighted based on their Stated Principal Balances as of the first day of
the calendar month preceding the month in which the Distribution Date occurs.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Company or the Master Servicer pursuant to this
Agreement or the related Servicer pursuant to the related Servicing Agreement,
that, in the good faith judgment of the Company, the Master Servicer or the
related Servicer, will not or, in the case of a proposed advance, would not, be
ultimately recoverable by it from the related Mortgagor, related Liquidation
Proceeds, Insurance Proceeds or otherwise.
Offered Certificates: The Class [A-1], Class [M-1], Class [M-2] and Class
[B-1] Certificates.
Officer's Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor or the
Master Servicer (or any other officer customarily performing functions similar
to those performed by any of the above designated officers and also to whom,
with respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with a particular subject) or (ii), if
provided for in this Agreement, signed by a Servicing Officer, as the case may
be, and delivered to the Depositor, the Seller, the Securities Administrator,
the Master Servicer and/or the Trustee, as the case may be, as required by this
Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate determined by
the Securities Administrator on the related Interest Determination Date on the
basis of the rate for U.S. dollar deposits for one month that appears on
Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such Interest
Determination Date; provided that the parties hereto acknowledge that One-Month
LIBOR for the first Accrual Period shall equal _____% per annum. If such rate
does not appear on such page (or such other page as may replace that page on
that service, or if such service is no longer offered, such other service for
displaying One-Month LIBOR or comparable rates as may be reasonably selected by
the Securities Administrator), One-Month LIBOR for the applicable Accrual Period
will be the Reference Bank Rate. If no such quotations can be obtained by the
Securities Administrator and no Reference Bank Rate is available, One-Month
LIBOR will be One-Month LIBOR applicable to the preceding Accrual Period. The
establishment of One-Month LIBOR on each Interest Determination Date by the
Securities Administrator and the Securities Administrator's calculation of the
rate of interest applicable to the Class [M-2] Certificates and Class [B-1]
Certificates for the related Accrual Period shall, in the absence of manifest
error, be final and binding.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Seller, the Depositor, the Company or the Master Servicer, reasonably
acceptable to each addressee of such opinion; provided that with respect to
Section 2.05, 8.05, 8.07 or 12.01, or the interpretation or application of the
REMIC Provisions, such counsel must (i) in fact be independent of the Seller,
Depositor, the Company and the Master Servicer, (ii) not have any direct
financial interest
15
in the Seller, Depositor, the Company or the Master Servicer or in any affiliate
of either, and (iii) not be connected with the Seller, Depositor, the Company or
the Master Servicer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Optional Termination: The termination of the Trust Fund created hereunder
as a result of the purchase of all of the Mortgage Loans and any REO Property
pursuant to the last sentence of Section 11.01 hereof.
Optional Termination Date: The first Distribution Date on which the Trust
Fund may be terminated at the option of the [Master Servicer] as described under
Section 11.01.
Original Value: The value of the property underlying a Mortgage Loan based,
in the case of the purchase of the underlying Mortgaged Property, on the lower
of an appraisal or the sales price of such property or, in the case of a
refinancing, on an appraisal.
Originator: With respect to each Mortgage Loan, shall mean the originator
set forth in the Mortgage Loan Schedule for such Mortgage Loan.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(a) Certificates theretofore canceled by the Trustee or delivered to
the Trustee for cancellation; and
(b) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee pursuant to this
Agreement.
Outstanding Mortgage Loan: As of any date of determination, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Prepayment Period.
Overcollateralized Amount: With respect to any Distribution Date, is the
excess, if any, of (a) the aggregate Stated Principal Balances of the Mortgage
Loans as of the last day of the related Due Period over (b) the Certificate
Principal Balances of the Offered Certificates on such Distribution Date (after
taking into account the payment of principal other than any Extra Principal
Distribution Amount on such Certificates).
Overcollateralization Increase Amount: As of any Distribution Date after
the Distribution Date in ______ 200__ the excess, if any, of (a) the
Overcollateralization Target Amount over (b) the Overcollateralized Amount on
such Distribution Date (after taking into account payments to the Offered
Certificates of the Basic Principal Distribution Amount on such Distribution
Date).
16
Overcollateralization Release Amount: With respect to any Distribution
Date, the lesser of (x) the Principal Remittance Amount for such Distribution
Date and (y) the excess, if any, of (i) the Overcollateralized Amount for such
Distribution Date (assuming that 100% of the Principal Remittance Amount is
applied as a principal payment on such Distribution Date) over (ii) the
Overcollateralization Target Amount for such Distribution Date.
Overcollateralization Target Amount: With respect to any Distribution Date,
$________.
Ownership Interest: As to any Certificate, any ownership interest in such
Certificate including any interest in such Certificate as the Holder thereof and
any other interest therein, whether direct or indirect, legal or beneficial.
Pass-Through Rate: With respect to each Class of Certificates, the
applicable Pass-Through Rate for each such Class as set forth in the Preliminary
Statement.
Percentage Interest: With respect to any Certificate of a specified Class,
the Percentage Interest set forth on the face thereof or the percentage obtained
by dividing the Denomination of such Certificate by the aggregate of the
Denominations of all Certificates of the such Class.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the United
States;
(ii) general obligations of or obligations guaranteed by any state of
the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency, or such lower rating as will
not result in the downgrading or withdrawal of the ratings then assigned to
the Certificates by each Rating Agency;
(iii) [Reserved];
(iv) commercial or finance company paper which is then receiving the
highest commercial or finance company paper rating of each Rating Agency,
or such lower rating as will not result in the downgrading or withdrawal of
the ratings then assigned to the Certificates by each Rating Agency;
(v) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof
and subject to supervision and examination by federal and/or state banking
authorities (including the Trustee in its commercial banking capacity),
provided that the commercial paper and/or long term unsecured debt
obligations of such depository institution or trust company are then rated
one of the two highest long-term and the highest short-term ratings of each
such Rating Agency for such securities, or such lower ratings as will not
result in the downgrading or withdrawal of the rating then assigned to the
Certificates by any Rating Agency;
17
(vi) demand or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that such
deposits are fully insured by the FDIC;
(vii) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation containing, at the time of the issuance of
such agreements, such terms and conditions as will not result in the
downgrading or withdrawal of the rating then assigned to the Certificates
by any such Rating Agency;
(viii) repurchase obligations with respect to any security described
in clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal) described in
clause (v) above;
(ix) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of [115]% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof
which, at the time of such investment, have one of the two highest long
term ratings of each Rating Agency (except if the Rating Agency is Xxxxx'x,
such rating shall be the highest commercial paper rating of Xxxxx'x for any
such securities), or such lower rating as will not result in the
downgrading or withdrawal of the rating then assigned to the Certificates
by any Rating Agency, as evidenced by a signed writing delivered by each
Rating Agency;
(x) interests in any money market fund (including any such fund
managed or advised by the Trustee or Master Servicer or any affiliate
thereof) which at the date of acquisition of the interests in such fund and
throughout the time such interests are held in such fund has the highest
applicable long term rating by each Rating Agency or such lower rating as
will not result in the downgrading or withdrawal of the ratings then
assigned to the Certificates by each Rating Agency;
(xi) short term investment funds sponsored by any trust company or
banking association incorporated under the laws of the United States or any
state thereof (including any such fund managed or advised by the Trustee or
any affiliate thereof) which on the date of acquisition has been rated by
each Rating Agency in their respective highest applicable rating category
or such lower rating as will not result in the downgrading or withdrawal of
the ratings then assigned to the Certificates by each Rating Agency; and
(xii) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable to each
Rating Agency as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any Rating Agency, as
evidenced by a signed writing delivered by each Rating Agency;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount; provided further that no such
instrument shall be a Permitted Investment (A) if such instrument evidences
18
principal and interest payments derived from obligations underlying such
instrument and the interest payments with respect to such instrument provide a
yield to maturity of greater than 120% of the yield to maturity at par of such
underlying obligations, or (B) if it may be redeemed at a price below the
purchase price (the foregoing clause (B) not to apply to investments in units of
money market funds pursuant to clause (vii) above); provided further that no
amount beneficially owned by the REMIC Trust may be invested in investments
(other than money market funds) treated as equity interests for federal income
tax purposes, unless the Master Servicer shall receive an Opinion of Counsel, at
the expense of the Master Servicer, to the effect that such investment will not
adversely affect the status of the REMIC Trust as a REMIC under the Code or
result in imposition of a tax on the REMIC Trust. Permitted Investments that are
subject to prepayment or call may not be purchased at a price in excess of par.
Permitted Transferee: Any person other than (i) the United States, any
State or political subdivision thereof, any possession of the United States or
any agency or instrumentality of any of the foregoing, (ii) a foreign
government, International Organization or any agency or instrumentality of
either of the foregoing, (iii) an organization (except certain farmers'
cooperatives described in section 521 of the Code) that is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by section 511 of
the Code on unrelated business taxable income) on any excess inclusions (as
defined in section 860E(c)(1) of the Code) with respect to the Class R
Certificate, (iv) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership (other than a partnership that has any
direct or indirect foreign partners) or other entity (treated as a corporation
or a partnership for federal income tax purposes), created or organized in or
under the laws of the United States, any state thereof or the District of
Columbia, an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial decisions
of the trustor and (vi) any other Person so designated by the Trustee based upon
an Opinion of Counsel addressed to the Trustee (which shall not be an expense of
the Trustee) that states that the Transfer of an Ownership Interest in the Class
R Certificate to such Person may cause the REMIC Trust created hereunder to fail
to qualify as a REMIC at any time that any Certificates are Outstanding. The
terms "United States," "State" and "International Organization" shall have the
meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of Freddie Mac, a majority
of its board of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
association, joint- stock company, limited liability company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
Prepayment Assumption: The applicable rate of prepayment, as described in
the Prospectus Supplement relating to each Class of Offered Certificates.
19
Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject of a partial Principal Prepayment, a
Principal Prepayment in full, or that became a Liquidated Loan during the
related Prepayment Period, (other than a Principal Prepayment in full resulting
from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03, 4.21 or
11.01 hereof), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan immediately prior to such prepayment (or liquidation) or in the case of a
partial Principal Prepayment on the amount of such prepayment (or liquidation
proceeds) exceeds (ii) the amount of interest paid or collected in connection
with such Principal Prepayment or such liquidation proceeds less the sum of (a)
the related Servicing Fee and (b) the LPMI Fee, if any.
Prepayment Period: As to any Distribution Date and (i) each Company
Mortgage Loan, the calendar month immediately preceding the month in which such
Distribution Date occurs and (ii) any other Mortgage Loan, the period set forth
in the related Servicing Agreement.
Primary Mortgage Insurance Policy: Any primary mortgage guaranty insurance
policy issued in connection with a Mortgage Loan which provides compensation to
a Mortgage Note holder in the event of default by the obligor under such
Mortgage Note or the related security instrument, if any or any replacement
policy therefor through the related Accrual Period for such Class relating to a
Distribution Date.
Principal Distribution Amount: With respect to each Distribution Date, is
equal to the sum of the Basic Principal Distribution Amount for such
Distribution Date, plus any Extra Principal Distribution Amount for such
Distribution Date.
Principal Funds: With respect to any Distribution Date, (i) the sum,
without duplication, of (a) all scheduled principal collected during the related
Due Period, (b) all Advances relating to principal made on or prior to the
Distribution Account Deposit Date, (c) Principal Prepayments exclusive of
prepayment charges or penalties collected during the related Prepayment Period,
(d) the Stated Principal Balance of each Mortgage Loan that was repurchased by
the Seller pursuant to Sections 2.02 or 2.03 or by the Compay pursuant to
Section 4.21, (e) the aggregate of all Substitution Adjustment Amounts for the
related Determination Date in connection with the substitution of Mortgage Loans
pursuant to Section 2.03(c), (e) all Liquidation Proceeds collected during the
related Prepayment Period (to the extent such Liquidation Proceeds relate to
principal) and remitted by the Company or the related Servicer to the
Distribution Account pursuant to this Agreement or the related Servicing
Agreement and (f) amounts in respect of principal paid by the [Master Servicer]
pursuant to Section 11.01 minus (ii) all amounts required to be reimbursed
pursuant to Sections 5.02, 5.04, 5.06 and 5.08 or as otherwise set forth in this
Agreement.
Principal Remittance Amount: With respect to each Distribution Date, the
sum of the amounts listed in clauses (a) through (e) of the definition of
Principal Funds.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 4.21 and 11.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any
20
date or dates in any month or months subsequent to the month of prepayment.
Partial Principal Prepayments shall be applied by the Company or the related
Servicer, as appropriate, in accordance with the terms of the related Mortgage
Note.
Private Certificate: The Class R Certificate.
Prospectus Supplement: The Prospectus Supplement dated ___________ __, 20__
relating to the public offering of the Offered Certificates.
Protected Account: Each account established and maintained by the Company
with respect to receipts on the Mortgage Loans and REO Property in accordance
with Section 5.01 hereof or by the related Servicer in accordance with the
related Servicing Agreement.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller pursuant to Section 2.02 or 2.03 hereof, an amount
equal to the sum of (i) 100% of the outstanding principal balance of the
Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon
at the applicable Mortgage Rate through the first day of the month in which the
Purchase Price is to be distributed to Certificateholders, reduced by any
portion of the Servicing Fee, Master Servicing Fee, Servicing Advances and
Advances payable to the purchaser of the Mortgage Loan plus and (iii) any costs
and damages (if any) incurred by the Trust in connection with any violation of
such Mortgage Loan of any predatory or abusive lending laws.
Rating Agency: Each of [Xxxxx'x] and [S&P]. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to each Mortgage Loan as to which a Final
Recovery Determination has been made, an amount (not less than zero) equal to
(i) the unpaid principal balance of such Mortgage Loan as of the commencement of
the calendar month in which the Final Recovery Determination was made, plus (ii)
accrued interest from the Due Date as to which interest was last paid by the
Mortgagor through the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest was
then accruing on such Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, minus (v) the proceeds, if
any, received in respect of such Mortgage Loan during the calendar month in
which such Final Recovery Determination was made, net of amounts that are
payable therefrom to the Company pursuant to this Agreement or the applicable
Servicer pursuant to the related Servicing Agreement.
With respect to any REO Property as to which a Final Recovery Determination
has been made, an amount (not less than zero) equal to (i) the unpaid principal
balance of the related Mortgage Loan as of the date of acquisition of such REO
Property on behalf of the REMIC Trust, plus (ii) accrued interest from the Due
Date as to which interest was last paid by the
21
Mortgagor in respect of the related Mortgage Loan through the end of the
calendar month immediately preceding the calendar month in which such REO
Property was acquired, calculated in the case of each calendar month during such
period (A) at an annual rate equal to the annual rate at which interest was then
accruing on the related Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of the related Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, plus (iii) REO
Imputed Interest for such REO Property for each calendar month commencing with
the calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, minus (iv)
the aggregate of all unreimbursed Advances and Servicing Advances.
With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation.
With respect to each Mortgage Loan which has become the subject of a Debt
Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a
court of competent jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly Payment.
Record Date: With respect to the Certificates (other than the Class [M-2]
Certificates and Class [B-1] Certificates) and any Distribution Date, the close
of business on the last Business Day of the month preceding the month in which
such Distribution Date occurs. With respect to any Distribution Date and the
Class [M-2] Certificates and Class [B-1] Certificates, so long as the Class
[M-2] Certificates and Class [B-1] Certificates are Book-Entry Certificates, the
Business Day preceding such Distribution Date, and otherwise, the close of
business on the last Business Day of the month preceding the month in which such
Distribution Date occurs.
Reference Banks: Shall mean leading banks selected by the Securities
Administrator and engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) which have been designated as such by the Securities Administrator
and (iii) which are not controlling, controlled by, or under common control
with, the Depositor, the Seller or the Master Servicer.
Reference Bank Rate: With respect to any Accrual Period shall mean the
arithmetic mean, rounded upwards, if necessary, to the nearest whole multiple of
[0.03125%], of the offered rates for United States dollar deposits for one month
that are quoted by the Reference Banks as of 11:00 a.m., New York City time, on
the related Interest Determination Date to prime banks in the London interbank
market for a period of one month in an amount approximately equal to the
aggregate Certificate Principal Balance of the Class [M-2] Certificates and
Class [B-1] Certificates for such Accrual Period, provided that at least two
such Reference Banks provide such rate. If fewer than two offered rates appear,
the Reference Bank Rate will be the arithmetic mean, rounded upwards, if
necessary, to the nearest whole multiple of [0.03125]%, of the rates quoted by
one or more major banks in New York City, selected by the Securities
Administrator, as of 11:00 a.m., New York City time, on such date for loans in
United States dollars to leading
22
European banks for a period of one month in amounts approximately equal to the
aggregate Certificate Principal Balance of the Class [M-2] Certificates and
Class [B-1] Certificates for such Accrual Period.
Regular Certificate: Any Certificate other than the Class R Certificate.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as amended
or any similar state law.
REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC Trust: The segregated pool of assets described in Section 6.06(a).
REMIC Certificates: The REMIC Regular Certificates and the Class R
Certificate.
REMIC Opinion: Shall mean an Opinion of Counsel to the effect that the
proposed action will not have an adverse affect on the REMIC Trust.
REMIC Provisions: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at sections 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and proposed,
temporary and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time as
well as provisions of applicable state laws.
REMIC Regular Certificate: A Class A-1, Class M-[1], Class M-[2] or Class
[B-1] Certificate.
Remittance Date: Shall mean (i) with respect to the Company, the Business
Day immediately preceding the Distribution Account Deposit Date and (ii) with
respect to the related Servicer, the date specified in the related Servicing
Agreement.
Remittance Report: As defined in Section 6.04(d).
REO Imputed Interest: As to any REO Property, for any calendar month during
which such REO Property was at any time part of the REMIC Trust, one month's
interest at the applicable Net Mortgage Rate on the Stated Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan, if appropriate) as of the close of business on the
Distribution Date in such calendar month.
REO Property: A Mortgaged Property acquired by the Company or the related
Servicer through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan or Mortgage Loans in the
aggregate substituted by the Seller for a Deleted Mortgage Loan, which must, on
the date of such substitution, as confirmed in a Request for Release, (i) have a
Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than [90]% of, the Stated Principal Balance of the Deleted Mortgage Loan;
(ii) have a fixed Mortgage Rate not less than or more than 1% per annum higher
than the Mortgage Rate of the Deleted Mortgage
23
Loan; (iii) have the same or higher credit quality characteristics than that of
the Deleted Mortgage Loan; (iv) have a Loan-to-Value Ratio no higher than that
of the Deleted Mortgage Loan; (v) have a remaining term to maturity no greater
than (and not more than one year less than) that of the Deleted Mortgage Loan;
(vi) not permit conversion of the Mortgage Rate from a fixed rate to a variable
rate; (vii) have the same lien priority as the Deleted Mortgage Loan; (viii)
constitute the same occupancy type as the Deleted Mortgage Loan or be owner
occupied; and (ix) comply with each representation and warranty set forth in
Section 2.03 hereof.
Repurchase Price: With respect to each Mortgage Loan, a price equal to (i)
the outstanding principal balance of such Mortgage Loan, plus (ii) interest on
such outstanding principal balance at the Mortgage Rate (net of the Servicing
Fee Rate) from the last date through which interest has been paid to the end of
the month of repurchase, less (iii) amounts advanced by the Company or the
related Servicer in respect of such repurchased Mortgage Loan which are being
held in the Master Servicer Collection Account for remittance to the Trustee
plus (iv) any costs and damages (if any) incurred by the Trust in connection
with any violation of such Mortgage Loan of any predatory or abusive lending
laws.
Request for Release: The Request for Release to be submitted by the Seller,
the Company, the related Servicer or the Master Servicer to the Custodian
substantially in the form of Exhibit H. Each Request for Release furnished to
the Custodian by the Seller, the Company, the related Servicer or the Master
Servicer shall be in duplicate and shall be executed by an officer of such
Person or a Servicing Officer (or, if furnished electronically to the Custodian,
shall be deemed to have been sent and executed by an officer of such Person or a
Servicing Officer) of the Company or the related Servicer, as applicable.
Required Insurance Policy: With respect to any Mortgage Loan, any insurance
policy that is required to be maintained from time to time under this Agreement
or the related Servicing Agreement.
Responsible Officer: With respect to the Trustee, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, or any Trust
Officer with specific responsibility for the transactions contemplated hereby,
any other officer customarily performing functions similar to those performed by
any of the above designated officers or other officers of the Trustee specified
by the Trustee, as to whom, with respect to a particular matter, such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
S&P: Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on
any Due Date allocable to principal and/or interest on such Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
Securities Administrator: ________________________________________________,
in its capacity as securities administrator hereunder, and its successors and
assigns.
24
Seller: ________________________, a ____________________, and its
successors and assigns, in its capacity as seller of the Mortgage Loans to the
Depositor.
Senior Certificates: The Class [A-1] Certificates.
Servicer: Either ___________________ or _____________.
Servicing Advances: All customary, reasonable and necessary "out of pocket"
costs and expenses (including reasonable legal fees) incurred in the performance
by the Company or the related Servicer of its servicing obligations hereunder or
under the related Servicing Agreement, including, but not limited to, the cost
of (i) the preservation, restoration and protection of a Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures, and
including any expenses incurred in relation to any such proceedings that result
from the Mortgage Loan being registered in the MERS(R) System, (iii) the
management and liquidation of any REO Property (including, without limitation,
realtor's commissions) and (iv) compliance with any obligations under Section
3.07 hereof to cause insurance to be maintained.
Servicing Agreement: Shall mean ______________________.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to 1/12th of the Servicing Fee Rate multiplied by the Stated
Principal Balance of such Mortgage Loan as of the last day of the related Due
Period or, in the event of any payment of interest that accompanies a Principal
Prepayment in full during the related Due Period made by the Mortgagor
immediately prior to such prepayment, interest at the Servicing Fee Rate on the
Stated Principal Balance of such Mortgage Loan for the period covered by such
payment of interest.
Servicing Fee Rate: ___% per annum.
Servicing Modification: With respect to any Mortgage Loan that is in
default or, in the reasonable judgment of the Company or the related Servicer,
as to which default is reasonably foreseeable, any modification which is
effected by the Company or the related Servicer in accordance with the terms of
this Agreement or the related Servicing Agreement which results in any change in
the outstanding Stated Principal Balance, any change in the Mortgage Rate or any
extension of the term of such Mortgage Loan.
Servicing Officer: Any officer of the Company or the related Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans (i) in the case of the Company, whose name and facsimile
signature appear on a list of servicing officers furnished to the Trustee by the
Company on the Closing Date pursuant to this Agreement, as such list may from
time to time be amended and (ii) in the case of the related Servicer, as to
which evidence reasonably acceptable to the Trustee, as applicable, of due
authorization, by such party has been furnished from time to time to the
Trustee.
Startup Day: The Startup Day for the REMIC Trust formed hereunder shall be
the Closing Date.
25
Stated Principal Balance: With respect to any Mortgage Loan or related REO
Property and any Distribution Date, the Cut-off Date Principal Balance thereof
minus the sum of (i) the principal portion of the Scheduled Payments due with
respect to such Mortgage Loan during each Due Period ending prior to such
Distribution Date (and irrespective of any delinquency in their payment), (ii)
all Principal Prepayments with respect to such Mortgage Loan received prior to
or during the related Prepayment Period, and all Liquidation Proceeds to the
extent applied by the Company or the related Servicer as recoveries of principal
in accordance with Section 3.09 or the related Servicing Agreement with respect
to such Mortgage Loan, that were received by the Company or the Servicer as of
the close of business on the last day of the Prepayment Period related to such
Distribution Date and (iii) any Realized Losses on such Mortgage Loan incurred
during the related Prepayment Period. The Stated Principal Balance of a
Liquidated Loan equals zero.
Subordinated Certificates: The Class [M-1], Class [M-2] and Class [B-1]
Certificates.
Subservicer Assignment Agreement: The Assignment, Assumption and
Recognition Agreement, dated as of _____ ___, 200___, by and among the Seller,
Subservicer and the Trustee evidencing the assignment of the Subservicer
Servicing Agreement to the Trust.
Subservicer Loans: Those Mortgage Loans subject to this Agreement which
were purchased by the Seller from Subservicer pursuant to the Subservicer
Servicing Agreement.
Subservicer Servicing Agreement: The Servicing Agreement, dated as of _____
1, 200__, by and between the Seller and Subservicer.
Subservicing Agreement: Any agreement entered into between the Company and
a subservicer with respect to the subservicing of any Mortgage Loan hereunder by
such subservicer.
Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03(c).
Successor Master Servicer: The meaning ascribed to such term pursuant to
Section 9.01.
Tax Matters Person: The person designated as "tax matters person" in the
manner provided under Treasury regulation ss. 1.860F-4(d) and temporary Treasury
regulation ss. 301.6231(a)(7)-1T. The holder of the Class R Certificate shall be
the Tax Matters Person for the REMIC Trust. The Securities Administrator, or any
successor thereto or assignee thereof shall serve as tax administrator hereunder
and as agent for the related Tax Matters Person.
[10%] Clean-up Call Date: Shall mean the first Distribution Date in or
after __________ 200__ upon which the Stated Principal Balance of the Mortgage
Loans as of the end of the related Due Period is less than or equal to [10%] of
the aggregate Cut-off Date Principal Balance of the Mortgage Loans.
Transfer Affidavit: As defined in Section 7.02(c).
26
Transfer: Any direct or indirect transfer or sale of any Ownership Interest
in a Certificate.
Trust Fund: The corpus of the trust created hereunder consisting of (i) the
Mortgage Loans and all interest accruing and principal due with respect thereto
after the Cut-off Date to the extent not applied in computing the Cut-off Date
Principal Balance thereof; (ii) the Distribution Account, the Master Servicer
Collection Account maintained by the Master Servicer and the Protected Accounts
maintained by the Company and the Servicers and all amounts deposited therein
pursuant to the applicable provisions of this Agreement and the Servicing
Agreements; (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the mortgagee's
rights under the Insurance Policies with respect to the Mortgage Loans; (v) the
Servicing Agreement and the Assignment Agreements; (vi) the rights under the
Mortgage Loan Purchase Agreement, and (vii) all proceeds of the foregoing,
including proceeds of conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.
Trustee: ____________________, a ____________________________, not in its
individual capacity, but solely in its capacity as trustee for the benefit of
the Certificateholders under this Agreement, and any successor thereto, and any
corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.
Unpaid Interest Shortfalls: Shall mean Interest Shortfalls net of payments
by the Company, the related Servicer or the Master Servicer in respect of
Compensating Interest.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions
hereunder. All of the Voting Rights shall be allocated to the Certificates other
than the Class R Certificate, with the allocation among the Certificates other
than the Class R Certificate to be in proportion to the Certificate Principal
Balance of each such Class relative to the Certificate Principal Balance of all
other such Classes. Voting Rights will be allocated among the Certificates of
each such Class in accordance with their respective Percentage Interests.
Section 1.01 Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class [A-1], Class [M-1], Class [M-2] and the Class
[B-1] Certificates for any Distribution Date, (1) the aggregate amount of any
Unpaid Interest Shortfalls in respect of the Mortgage Loans for any Distribution
Date shall be allocated among the Certificates in proportion to the amount of
the Monthly Interest Distributable Amount that would have been allocated to such
Certificates in the absence of such Unpaid Interest Shortfalls and (2) the
interest portion of Realized Losses for the Mortgage Loans will be allocated
first to the Class [B-1] Certificates, second to the Class [M-2] Certificates,
and third to the Class [M-1] Certificates, and following the Cross-Over Date to
the Class [A-1] Certificates.
27
ARTICLE II
CONVEYANCE OF TRUST FUND
REPRESENTATIONS AND WARRANTIES
Section 2.01 Conveyance of Trust Fund.
The Seller hereby sells, transfers, assigns, sets over and otherwise
conveys to the Depositor, without recourse, all the right, title and interest of
the Seller in and to the assets in the Trust Fund.
The Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor and has agreed to take the
actions specified herein.
The Depositor, concurrently with the execution and delivery hereof, hereby
sells, transfers, assigns, sets over and otherwise conveys to the Trustee for
the use and benefit of the Certificateholders, without recourse, all the right,
title and interest of the Depositor in and to the Trust Fund.
In connection with such sale, the Depositor has delivered to, and deposited
with, the Trustee or the Custodian, as its agent, the following documents or
instruments with respect to each Mortgage Loan so assigned: (i) the original
Mortgage Note, including any riders thereto, endorsed without recourse to the
order of "[Name of Trustee], as Trustee for certificateholders of Bear Xxxxxxx
Asset Backed Securities Trust 200__-___, Asset Backed Certificates, Series
200__-___," and showing to the extent available to the Seller an unbroken chain
of endorsements from the original payee thereof to the Person endorsing it to
the Trustee, (ii) the original Mortgage and, if the related Mortgage Loan is a
MOM Loan, noting the presence of the MIN and language indicating that such
Mortgage Loan is a MOM Loan, which shall have been recorded (or if the original
is not available, a copy), with evidence of such recording indicated thereon (or
if clause (x) in the proviso below applies, shall be in recordable form), (iii)
unless the Mortgage Loan is a MOM Loan, the assignment (either an original or a
copy, which may be in the form of a blanket assignment if permitted in the
jurisdiction in which the Mortgaged Property is located) to the Trustee of the
Mortgage with respect to each Mortgage Loan in the name of "[Name of Trustee],
as Trustee for certificateholders of Bear Xxxxxxx Asset Backed Securities Trust
200__-___, Asset Backed Certificates, Series 200__-___," which shall have been
recorded (or if clause (x) in the proviso below applies, shall be in recordable
form) (iv) an original or a copy of all intervening assignments of the Mortgage,
if any, to the extent available to the Seller, with evidence of recording
thereon, (v) the original policy of title insurance or mortgagee's certificate
of title insurance or commitment or binder for title insurance, if available, or
a copy thereof, or, in the event that such original title insurance policy is
unavailable, a photocopy thereof, or in lieu thereof, a current lien search on
the related Mortgaged Property and (vi) originals or copies of all available
assumption, modification or substitution agreements, if any; provided, however,
that in lieu of the foregoing, the Seller may deliver the following documents,
under the circumstances set forth below: (x) if any Mortgage, assignment thereof
to the Trustee or intervening assignments thereof have been delivered or are
being delivered to recording offices for recording and have not been returned in
time to permit their delivery as specified above, the Depositor may
28
deliver a true copy thereof with a certification by the Seller or the title
company issuing the commitment for title insurance, on the face of such copy,
substantially as follows: "Certified to be a true and correct copy of the
original, which has been transmitted for recording"; and (y) in lieu of the
Mortgage Notes relating to the Mortgage Loans identified in the list set forth
in Exhibit J, the Depositor may deliver a lost note affidavit and indemnity and
a copy of the original note, if available; and provided, further, however, that
in the case of Mortgage Loans which have been prepaid in full after the Cut-Off
Date and prior to the Closing Date, the Depositor, in lieu of delivering the
above documents, may deliver to the Trustee and its Custodian a certification of
a Servicing Officer to such effect and in such case shall deposit all amounts
paid in respect of such Mortgage Loans, in the Master Servicer Collection
Account or in the Distribution Account on the Closing Date. In the case of the
documents referred to in clause (x) above, the Depositor shall deliver such
documents to the Trustee or its Custodian promptly after they are received. The
Seller shall cause, at its expense, the Mortgage and intervening assignments, if
any, and to the extent required in accordance with the foregoing, the assignment
of the Mortgage to the Trustee to be submitted for recording promptly after the
Closing Date; provided that the Seller need not cause to be recorded any
assignment (a) in any jurisdiction under the laws of which, as evidenced by an
Opinion of Counsel addressed to the Trustee delivered by the Seller to the
Trustee and the Rating Agencies, the recordation of such assignment is not
necessary to protect the Trustee's interest in the related Mortgage Loan or (b)
if MERS is identified on the Mortgage or on a properly recorded assignment of
the Mortgage as mortgagee of record solely as nominee for Seller and its
successors and assigns. In the event that the Seller, the Depositor or the
Master Servicer gives written notice to the Trustee that a court has
recharacterized the sale of the Mortgage Loans as a financing, the Seller shall
submit or cause to be submitted for recording as specified above or, should the
Seller fail to perform such obligations, the Master Servicer shall cause each
such previously unrecorded assignment to be submitted for recording as specified
above at the expense of the Trust. In the event a Mortgage File is released to
the Company or the Servicer as a result of such Person having completed a
Request for Release, the Custodian shall, if not so completed, complete the
assignment of the related Mortgage in the manner specified in clause (iii)
above.
In connection with the assignment of any Mortgage Loan registered on the
MERS(R) System, the Seller further agrees that it will cause, at the Seller's
own expense, within 30 days after the Closing Date, the MERS(R) System to
indicate that such Mortgage Loans have been assigned by the Seller to the
Depositor and by the Depositor to the Trustee in accordance with this Agreement
for the benefit of the Certificateholders by including (or deleting, in the case
of Mortgage Loans which are repurchased in accordance with this Agreement) in
such computer files (a) the code in the field which identifies the specific
Trustee and (b) the code in the field "Pool Field" which identifies the series
of the Certificates issued in connection with such Mortgage Loans. The Seller
further agrees that it will not, and will not permit the Company, the Servicer
or the Master Servicer to, and the Master Servicer agrees that it will not,
alter the codes referenced in this paragraph with respect to any Mortgage Loan
during the term of this Agreement unless and until such Mortgage Loan is
repurchased in accordance with the terms of this Agreement or the Mortgage Loan
Purchase Agreement.
29
Section 2.02 Acceptance of the Mortgage Loans.
(a) Based on the Initial Certification received by it from the
Custodian, the Trustee acknowledges receipt of, subject to the further review
and exceptions reported by the Custodian pursuant to the procedures described
below, the documents (or certified copies thereof) delivered to the Trustee or
the Custodian on its behalf pursuant to Section 2.01 and declares that it holds
and will continue to hold directly or through a custodian those documents and
any amendments, replacements or supplements thereto and all other assets of the
Trust Fund delivered to it in trust for the use and benefit of all present and
future Holders of the Certificates. On the Closing Date, the Trustee or the
Custodian on its behalf will deliver an Initial Certification in the form
annexed hereto as Exhibit C-1 confirming whether or not it has received the
Mortgage File for each Mortgage Loan, but without review of such Mortgage File,
except to the extent necessary to confirm whether such Mortgage File contains
the original Mortgage Note or a lost note affidavit and indemnity in lieu
thereof. No later than [90] days after the Closing Date, the Trustee or the
Custodian on its behalf shall, for the benefit of the Certificateholders, review
each Mortgage File delivered to it and execute and deliver to the Seller and, if
reviewed by the Custodian, the Trustee, an Interim Certification substantially
in the form annexed hereto as Exhibit C-2. In conducting such review, the
Trustee or the Custodian on its behalf will ascertain whether all required
documents have been executed and received and whether those documents relate,
determined on the basis of the Mortgagor name, original principal balance and
loan number, to the Mortgage Loans identified in Exhibit B to this Agreement, as
supplemented (provided, however, that with respect to those documents described
in subclauses (iv) and (vi) of Section 2.01, such obligations shall extend only
to documents actually delivered pursuant to such subclauses). In performing any
such review, the Trustee and the Custodian may conclusively rely on the
purported due execution and genuineness of any such document and on the
purported genuineness of any signature thereon. If the Trustee or the Custodian
on its behalf finds any document constituting part of the Mortgage File not to
have been executed or received, or to be unrelated to the Mortgage Loans
identified in Exhibit B or to appear to be defective on its face, the Trustee or
the Custodian on its behalf shall include such information in the exception
report attached to Exhibit C-2. The Seller shall correct or cure any such defect
or, if prior to the end of the second anniversary of the Closing Date, the
Seller may substitute for the related Mortgage Loan a Replacement Mortgage Loan,
which substitution shall be accomplished in the manner and subject to the
conditions set forth in Section 2.03 or shall deliver to the Trustee an Opinion
of Counsel addressed to the Trustee to the effect that such defect does not
materially or adversely affect the interests of the Certificateholders in such
Mortgage Loan within [60] days from the date of notice from the Trustee of the
defect and if the Seller fails to correct or cure the defect or deliver such
opinion within such period, the Seller will, subject to Section 2.03, within 90
days from the notification of the Trustee purchase such Mortgage Loan at the
Purchase Price; provided, however, that if such defect relates solely to the
inability of the Seller to deliver the Mortgage, assignment thereof to the
Trustee, or intervening assignments thereof with evidence of recording thereon
because such documents have been submitted for recording and have not been
returned by the applicable jurisdiction, the Seller shall not be required to
purchase such Mortgage Loan if the Seller delivers such documents promptly upon
receipt, but in no event later than [360] days after the Closing Date.
(b) No later than [180] days after the Closing Date, the Trustee or
the Custodian on its behalf will review, for the benefit of the
Certificateholders, the Mortgage Files
30
and will execute and deliver or cause to be executed and delivered to the Seller
and, if reviewed by the Custodian, the Trustee, a Final Certification
substantially in the form annexed hereto as Exhibit C-3. In conducting such
review, the Trustee or the Custodian on its behalf will ascertain whether each
document required to be recorded has been returned from the recording office
with evidence of recording thereon and the Trustee or the Custodian on its
behalf has received either an original or a copy thereof, as required in Section
2.01 (provided, however, that with respect to those documents described in
subclauses (iv) and (vi) of Section 2.01, such obligations shall extend only to
documents actually delivered pursuant to such subclauses). If the Trustee or the
Custodian on its behalf finds any document with respect to a Mortgage Loan has
not been received, or to be unrelated, determined on the basis of the Mortgagor
name, original principal balance and loan number, to the Mortgage Loans
identified in Exhibit B or to appear defective on its face, the Trustee or the
Custodian on its behalf shall note such defect in the exception report attached
to the Final Certification and shall promptly notify the Seller. The Seller
shall correct or cure any such defect or, if prior to the end of the second
anniversary of the Closing Date, the Seller may substitute for the related
Mortgage Loan a Replacement Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03 or shall deliver to the Trustee an Opinion of Counsel addressed to the
Trustee to the effect that such defect does not materially or adversely affect
the interests of Certificateholders in such Mortgage Loan within [60] days from
the date of notice from the Trustee of the defect and if the Seller is unable
within such period to correct or cure such defect, or to substitute the related
Mortgage Loan with a Replacement Mortgage Loan or to deliver such opinion, the
Seller shall, subject to Section 2.03, within [90] days from the notification of
the Trustee, purchase such Mortgage Loan at the Purchase Price; provided,
however, that if such defect relates solely to the inability of the Seller to
deliver the Mortgage, assignment thereof to the Trustee or intervening
assignments thereof with evidence of recording thereon, because such documents
have not been returned by the applicable jurisdiction, the Seller shall not be
required to purchase such Mortgage Loan, if the Seller delivers such documents
promptly upon receipt, but in no event later than [360] days after the Closing
Date.
(c) In the event that a Mortgage Loan is purchased by the Seller in
accordance with subsections 2.02(a) or (b) above or Section 2.03, the Seller
shall remit the applicable Purchase Price to the Master Servicer for deposit in
the Master Servicer Collection Account and shall provide written notice to the
Trustee detailing the components of the Purchase Price, signed by a Servicing
Officer. Upon deposit of the Purchase Price in the Master Servicer Collection
Account and upon receipt of a Request for Release with respect to such Mortgage
Loan, the Trustee or the Custodian will release to the Seller the related
Mortgage File and the Trustee shall execute and deliver all instruments of
transfer or assignment, without recourse, representation or warranty furnished
to it by the Seller, as are necessary to vest in the Seller title to and rights
under the Mortgage Loan. Such purchase shall be deemed to have occurred on the
date on which the deposit into the Master Servicer Collection Account was made.
The Trustee shall promptly notify the Rating Agencies of such repurchase. The
obligation of the Seller to cure, repurchase or substitute for any Mortgage Loan
as to which a defect in a constituent document exists shall be the sole remedies
respecting such defect available to the Certificateholders or to the Trustee on
their behalf.
(d) The Seller shall deliver to the Trustee, and Trustee agrees to
accept the Mortgage Note and other documents constituting the Mortgage File with
respect to any
31
Replacement Mortgage Loan, which the Trustee or the Custodian will review as
provided in subsections 2.02(a) and 2.02(b), provided, that the Closing Date
referred to therein shall instead be the date of delivery of the Mortgage File
with respect to each Replacement Mortgage Loan.
Section 2.03 Representations, Warranties and Covenants of the Company and
the Seller.
(a) The Company hereby represents and warrants to the Master Servicer,
the Depositor, the Securities Administrator and the Trustee as follows, as of
the Closing Date:
(i) It is duly organized and is validly existing and in good standing
under the laws of _______________________ and is duly authorized and
qualified to transact any and all business contemplated by this Agreement
to be conducted by it in any state in which a Mortgaged Property is located
or is otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing business
laws of any such state, to the extent necessary to ensure its ability to
enforce each Mortgage Loan, to service the Mortgage Loans in accordance
with the terms of this Agreement and to perform any of its other
obligations under this Agreement in accordance with the terms hereof.
(ii) It has the full corporate power and authority to service each
Mortgage Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on its part the execution,
delivery and performance of this Agreement; and this Agreement, assuming
the due authorization, execution and delivery hereof by the other parties
hereto, constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, except that (a) the enforceability
hereof may be limited by bankruptcy, insolvency, moratorium, receivership
and other similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by it, the
servicing of the Company Mortgage Loans by it under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof are
in its ordinary course of business and will not (A) result in a material
breach of any term or provision of its charter or by-laws or (B) materially
conflict with, result in a material breach, violation or acceleration of,
or result in a material default under, the terms of any other material
agreement or instrument to which it is a party or by which it may be bound,
or (C) constitute a material violation of any statute, order or regulation
applicable to it of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it; and it is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair its
ability to perform or meet any of its obligations under this Agreement.
32
(iv) It is an approved servicer of conventional mortgage loans for
Xxxxxx Xxx or Freddie Mac and is a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to sections 203 and 211 of the
National Housing Act.
(v) No litigation is pending or, to the best of its knowledge,
threatened, against it that would materially and adversely affect the
execution, delivery or enforceability of this Agreement or its ability to
service the Company Mortgage Loans or to perform any of its other
obligations under this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for its execution, delivery and
performance of, or compliance with, this Agreement or the consummation of
the transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, it has obtained the same.
(b) The Seller hereby represents and warrants to the Depositor, the
Securities Administrator, the Master Servicer and the Trustee as follows, as of
the Closing Date:
(i) The Seller is duly organized as a ____________________ and is
validly existing and in good standing under the laws of
_____________________ and is duly authorized and qualified to transact any
and all business contemplated by this Agreement to be conducted by the
Seller in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such qualification
and, in any event, is in compliance with the doing business laws of any
such state, to the extent necessary to ensure its ability to enforce each
Mortgage Loan, to sell the Mortgage Loans in accordance with the terms of
this Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) The Seller has the full corporate power and authority to sell
each Mortgage Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary corporate action on the part of the Seller the
execution, delivery and performance of this Agreement; and this Agreement,
assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes a legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms, except
that (a) the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(iii) The execution and delivery of this Agreement by the Seller, the
sale of the Mortgage Loans by the Seller under this Agreement, the
consummation of any other of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof are
in the ordinary course of business of the Seller and will not (A) result in
a material breach of any term or provision of the charter or by-laws of the
Seller or (B) materially conflict with, result in a material breach,
violation or acceleration of, or
33
result in a material default under, the terms of any other material
agreement or instrument to which the Seller is a party or by which it may
be bound, or (C) constitute a material violation of any statute, order or
regulation applicable to the Seller of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Seller; and the Seller is not in breach or violation of any material
indenture or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which breach or
violation may materially impair the Seller's ability to perform or meet any
of its obligations under this Agreement.
(iv) The Seller is an approved seller of conventional mortgage loans
for Xxxxxx Xxx or Freddie Mac and is a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to sections 203 and 211 of the
National Housing Act.
(v) No litigation is pending or, to the best of the Seller's
knowledge, threatened, against the Seller that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Seller to sell the Mortgage Loans or to
perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the consummation of the transactions contemplated hereby, or
if any such consent, approval, authorization or order is required, the
Seller has obtained the same.
(vii) With respect to each Mortgage Loan as of the Cut-off Date (unless
otherwise expressly provided):
(A) The information set forth in the Mortgage Loan Schedule on the
Closing Date is complete, true and correct.
(B) All payments required to be made prior to the Cut-off Date with
respect to each Mortgage Loan have been made and no Mortgage Loan is delinquent
____ or more days; and the Seller has not advanced funds, or induced, solicited
or knowingly received any advance of funds from a party other than the owner of
the Mortgaged Property subject to the Mortgage, directly or indirectly, for the
payment of any amount required under any Mortgage Loan.
(C) Except with respect to taxes, insurance and other amounts
previously advanced by a prior servicer with respect to any Mortgage Loan, to
the best of Seller's knowledge, there are no delinquent taxes, water charges,
sewer rents, assessments, insurance premiums, leasehold payments, including
assessments payable in future installments, or other outstanding charges
affecting the related Mortgaged Property.
(D) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments which in the case of the Mortgage Loans are in the Mortgage File and
have been or will be recorded, if necessary to protect the interests of the
Trustee, and which have been or will be delivered to the
34
Trustee, all in accordance with this Agreement. The substance of any such
waiver, alteration or modification has been approved by the title insurer, to
the extent required by the related policy. No Mortgagor has been released, in
whole or in part, except in connection with an assumption agreement approved by
the title insurer, to the extent required by the policy, and which assumption
agreement in the case of the Mortgage Loans is part of the Mortgage File.
(E) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto.
(F) All buildings upon, or comprising part of, the Mortgaged Property
are insured by an insurer acceptable to Xxxxxx Xxx and Freddie Mac against loss
by fire, hazards of extended coverage and such other hazards as are customary in
the area where the Mortgaged Property is located, and such insurer is licensed
to do business in the state where the Mortgaged Property is located. All such
insurance policies contain a standard mortgagee clause naming the originator,
its successors and assigns as mortgagee and Xxxxxx has received no notice that
all premiums thereon have not been paid. If upon origination of the Mortgage
Loan, the Mortgaged Property was, or was subsequently deemed to be, in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available),
which require under applicable law that a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
(or any successor thereto) be obtained, such flood insurance policy is in effect
which policy is with a generally acceptable carrier in an amount representing
coverage not less than the least of (A) the Stated Principal Balance of the
related Mortgage Loan, (B) the minimum amount required to compensate for damage
or loss on a replacement cost basis, or (C) the maximum amount of insurance that
is available under the Flood Disaster Protection Act of 1973. The Mortgage
obligates the Mortgagor thereunder to maintain all such insurance at Xxxxxxxxx's
cost and expense and, on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to maintain such insurance at Xxxxxxxxx's cost and expense and
to obtain reimbursement therefor from the Mortgagor.
(G) Any and all requirements of any federal, state or local law
including, usury, truth in lending, real estate settlement procedures including,
the Real Estate Settlement Procedures Act of 1974, as amended, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with in all material respects.
(H) The Mortgage has not been satisfied, canceled, subordinated, or
rescinded, in whole or in part, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such release, cancellation, subordination or
rescission.
(I) The Mortgage is a valid, existing and enforceable [first] [junior]
lien on the Mortgaged Property, including all improvements on the Mortgaged
Property, if any, subject
35
only to (1) the lien of current real property taxes and assessments not yet due
and payable, (2) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of recording
being acceptable to mortgage lending institutions generally and specifically
referred to in the lender's title insurance policy delivered to the originator
of the Mortgage Loan and which do not adversely affect the Appraised Value of
the Mortgaged Property, (3) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage [and if a junior lien, the related
Senior Liens]. The Seller has full right to sell and assign the Mortgage to the
Depositor.
(J) The Mortgage Note and the related Mortgage are genuine and each is
the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency or reorganization or general principles of equity.
(K) All parties to the Mortgage Note and the Mortgage had the legal
capacity to enter into the Mortgage Loan transaction and to execute and deliver
the Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have
been duly and properly executed by such parties.
(L) The proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage.
(M) Immediately prior to the conveyance of the Mortgage Loans by the
Seller to the Depositor hereunder, the Seller was the sole owner and holder of
the Mortgage Loan; the related Originator or the Seller or the Servicer was the
custodian of the related escrow account, if applicable; the Mortgage Loan had
neither been assigned nor pledged, and the Seller had good and marketable title
thereto, and had full right to transfer and sell the Mortgage Loan and the
related servicing rights to the Depositor free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest subject to the related
Servicing Agreement, if applicable, and had full right and authority subject to
no interest or participation of, or agreement with, any other party, to sell and
assign the Mortgage Loan and the related servicing rights to the Depositor
pursuant to the terms of this Agreement.
(N) All parties which have had any interest in the Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (2) organized under the laws of such state,
qualified to do business in such state, a federal savings and loan association
or national bank having principal offices in such state or not deemed to be
doing business in such state under applicable law.
36
(O) The Mortgage Loan is covered by an ALTA lender's title insurance
policy or equivalent form acceptable to the Department of Housing and Urban
Development, or any successor thereto, and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject to the
exceptions contained in clause (I) above) the Seller (as assignee), its
successors and assigns as to the [first] priority lien of the Mortgage in the
original principal amount of the Mortgage Loan and against any loss by reason of
the invalidity or unenforceability of the lien resulting from the provisions of
the Mortgage Note and/or Mortgage providing for adjustment in the Mortgage Rate
and monthly payment. Additionally, such lender's title insurance policy
affirmatively insures ingress and egress, and against encroachments by or upon
the Mortgaged Property or any interest therein. With respect to each Mortgage
Loan, the Seller (as assignee) is the sole insured of such lender's title
insurance policy, and such lender's title insurance policy is in full force and
effect. No claims have been made under such lender's title insurance policy, and
no prior holder of the related Mortgage, including the Seller in the case of a
Mortgage Loan, has done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy. Except as provided in clause
(B), immediately prior to the Cut-off Date, there was no default, breach,
violation or event of acceleration existing under the Mortgage or the Mortgage
Note and there was no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration, and the Seller has not waived any default,
breach, violation or event of acceleration.
(P) There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to such lien) affecting the related Mortgaged Property which are
or may be liens prior to or equal with, the lien of the related Mortgage.
(Q) All improvements which were considered in any appraisal which was
used in determining the Appraised Value of the related Mortgaged Property lay
wholly within the boundaries and building restriction lines of the Mortgaged
Property, and no improvements on adjoining properties encroach upon the
Mortgaged Property.
(R) [Reserved]
(S) The origination, servicing and collection practices with respect
to each Mortgage Note and Mortgage including, the establishment, maintenance and
servicing of the escrow accounts and escrow payments, if any, since origination,
have been conducted in all respects in accordance with the terms of Mortgage
Note and in compliance with all applicable laws and regulations and, unless
otherwise required by law or Xxxxxx Xxx/Xxxxxxx Mac standard, in accordance with
the proper, prudent and customary practices in the mortgage origination and
servicing business. With respect to the escrow accounts and escrow payments, if
any, and any Company Mortgage Loan all such payments are in the possession or
under the control of the Seller and there exists no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
made. Any interest required to be paid pursuant to state and local law has been
properly paid and credited.
(T) The Mortgaged Property is free of material damage and waste and
there is no proceeding pending for the total or partial condemnation thereof.
37
(U) The Mortgage contains customary and enforceable provisions to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
intended to be provided thereby, including, (1) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (2) otherwise by judicial
foreclosure. There is no other exemption available to the Mortgagor which would
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage. The Mortgagor has not notified the Seller
and the Seller has no knowledge of any relief requested or allowed to the
Mortgagor under the Relief Act.
(V) The Mortgage Note is not and has not been secured by any
collateral except the lien of the applicable Mortgage.
(W) [Reserved]
(X) In the event the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor.
(Y) No Mortgage Loan contains a permanent or temporary "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan.
(Z) The Mortgagor has received all disclosure materials required by
applicable law with respect to the making of the Mortgage Loan.
(AA) No Mortgage Loan was made in connection with the construction or
rehabilitation of a Mortgaged Property.
(BB) To the best of Seller's knowledge, the Mortgaged Property is
lawfully occupied under applicable law and all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities.
(CC) The assignment of Mortgage with respect to a Mortgage Loan is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located.
(DD) [Reserved].
(EE) [Reserved].
(FF) The Mortgaged Property consists of a single parcel of real
property with or without a detached single family residence erected thereon, or
an individual condominium unit, or a 2-4 family dwelling, or an individual unit
in a planned unit development as defined by Xxxxxx Xxx or a manufactured
dwelling which conforms with Xxxxxx Xxx and Freddie Mac
38
requirements regarding such dwellings, or a townhouse, each structure of which
is permanently affixed to the Mortgaged Property, and is legally classified as
real estate.
(GG) [Reserved]
(HH) [Reserved]
(II) Each Mortgage Loan at the time of origination was underwritten in
general in accordance with guidelines not inconsistent with the guidelines set
forth in the Prospectus Supplement and generally accepted prime credit
underwriting guidelines.
(JJ) No error, omission, misrepresentation, fraud or similar
occurrence with respect to a Mortgage Loan has taken place on the part of the
Seller or the related Originator.
(KK) [None of the Mortgage Loans is (i) a loan subject to 12 CFR Part
226.31, 12 CFR Part 226.32 or 12 CFR Part 226.34 of Regulation Z, the regulation
implementing the Truth-in-Lending Act, which implements the Home Ownership and
Equity Protection Act of 1994, as amended or (ii) classified and /or defined as
a "high cost", "covered", or "predatory" loan under any other state, federal or
local law or regulation or ordinance, including, but not limited to, the States
of Georgia or North Carolina, or the City of New York.]
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(b)(vii) that materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the party discovering such breach shall give prompt written notice thereof to
the other parties. Any breach of a representation or warranty contained in
clause (KK) above, shall be automatically deemed to affect materially and
adversely the interests of the Certificateholders. The Seller hereby covenants
with respect to the representations and warranties set forth in Section
2.03(b)(vii), that within 90 days of the discovery of a breach of any
representation or warranty set forth therein that materially and adversely
affects the interests of the Certificateholders in any Mortgage Loan, it shall
cure such breach in all material respects and, if such breach is not so cured,
(i) if such 90-day period expires prior to the second anniversary of the Closing
Date, remove such Mortgage Loan (a "Deleted Mortgage Loan") from the Trust Fund
and substitute in its place a Replacement Mortgage Loan, in the manner and
subject to the conditions set forth in this Section; or (ii) repurchase the
affected Mortgage Loan or Mortgage Loans from the Trustee at the Purchase Price
in the manner set forth below; provided that any such substitution pursuant to
(i) above or repurchase pursuant to (ii) above shall not be effected prior to
the delivery to the Trustee of an Opinion of Counsel if required by Section 2.05
hereof and any such substitution pursuant to (i) above shall not be effected
prior to the additional delivery to the Trustee of a Request for Release. The
Seller shall promptly reimburse the Master Servicer and the Trustee for any
expenses reasonably incurred by the Master Servicer or the Trustee in respect of
enforcing the remedies for such breach. To enable the Securities Administrator
to amend the Mortgage Loan Schedule, the Seller shall, unless it cures such
breach in a timely fashion pursuant to this Section 2.03, promptly notify the
Securities Administrator whether it intends either to repurchase, or to
substitute for, the Mortgage Loan affected by such breach. With respect to the
representations and warranties in Section 2.03(b)(vii) that are made to the best
of the Seller's knowledge, if it is discovered by any of the Depositor, the
Master Servicer, the Seller, the Securities Administrator
39
or the Trustee that the substance of such representation and warranty is
inaccurate and such inaccuracy materially and adversely affects the value of the
related Mortgage Loan, notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation or warranty, the Seller shall
nevertheless be required to cure, substitute for or repurchase the affected
Mortgage Loan in accordance with the foregoing.
With respect to any Replacement Mortgage Loan or Loans, the Seller shall
deliver to the Trustee for the benefit of the Certificateholders such documents
and agreements as are required by Section 2.01. No substitution will be made in
any calendar month after the Determination Date for such month. Scheduled
Payments due with respect to Replacement Mortgage Loans in the Due Period
related to the Distribution Date on which such proceeds are to be distributed
shall not be part of the Trust Fund and will be retained by the Seller. For the
month of substitution, distributions to Certificateholders will include the
Scheduled Payment due on any Deleted Mortgage Loan for the related Due Period
and thereafter the Seller shall be entitled to retain all amounts received in
respect of such Deleted Mortgage Loan. The Securities Administrator shall amend
the Mortgage Loan Schedule for the benefit of the Certificateholders to reflect
the removal of such Deleted Mortgage Loan and the substitution of the
Replacement Mortgage Loan or Loans and the Securities Administrator shall
deliver the amended Mortgage Loan Schedule to the Trustee and the Custodian.
Upon such substitution, the Replacement Mortgage Loan or Loans shall be subject
to the terms of this Agreement in all respects, and the Seller shall be deemed
to have made with respect to such Replacement Mortgage Loan or Loans, as of the
date of substitution, the representations and warranties set forth in Section
2.03(b)(vii) with respect to such Mortgage Loan. Upon any such substitution and
the deposit into the Master Servicer Collection Account of the amount required
to be deposited therein in connection with such substitution as described in the
following paragraph and receipt by the Trustee of a Request for Release for such
Mortgage Loan, the Trustee or the Custodian shall release to the Seller the
Mortgage File relating to such Deleted Mortgage Loan and held for the benefit of
the Certificateholders and the Trustee shall execute and deliver at the Seller's
direction such instruments of transfer or assignment as have been prepared by
the Seller, in each case without recourse, representation or warranty as shall
be necessary to vest in the Seller, or its respective designee, title to the
Trustee's interest in any Deleted Mortgage Loan substituted for pursuant to this
Section 2.03.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for a Deleted Mortgage Loan, the Master Servicer will determine
the amount (if any) by which the aggregate principal balance of all the
Replacement Mortgage Loans as of the date of substitution is less than the
Stated Principal Balance (after application of the principal portion of the
Scheduled Payment due in the month of substitution) of such Deleted Mortgage
Loan. An amount equal to the aggregate of such deficiencies, described in the
preceding sentence for any Distribution Date (such amount, the "Substitution
Adjustment Amount") shall be deposited into the Master Servicer Collection
Account, by the Seller delivering such Replacement Mortgage Loan on the
Determination Date for the Distribution Date relating to the Prepayment Period
during which the related Mortgage Loan became required to be purchased or
replaced hereunder.
In the event that the Seller shall have repurchased a Mortgage Loan, the
Purchase Price therefor shall be deposited into the Master Servicer Collection
Account maintained by the Master Servicer, on the Determination Date for the
Distribution Date in the month following the month
40
during which the Seller became obligated to repurchase or replace such Mortgage
Loan and upon such deposit of the Purchase Price, the delivery of an Opinion of
Counsel if required by Section 2.05 and the receipt of a Request for Release,
the Trustee or the Custodian shall release the related Mortgage File held for
the benefit of the Certificateholders to the Seller, and the Trustee shall
execute and deliver at such Person's direction the related instruments of
transfer or assignment prepared by the Seller, in each case without recourse,
representation or warranty as shall be necessary to transfer title from the
Trustee for the benefit of the Certificateholders and transfer the Trustee's
interest to the Seller to any Mortgage Loan purchased pursuant to this Section
2.03. It is understood and agreed that the obligation under this Agreement of
the Seller to cure, repurchase or replace any Mortgage Loan as to which a breach
has occurred and is continuing shall constitute the sole remedies against the
Seller respecting such breach available to Certificateholders, the Depositor or
the Trustee.
(d) The representations and warranties set forth in Section 2.03
hereof shall survive delivery of the respective Mortgage Loans and Mortgage
Files to the Trustee or the Custodian for the benefit of the Certificateholders.
Section 2.04 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Master Servicer, the
Securities Administrator and the Trustee as follows, as of the date hereof and
as of the Closing Date:
(i) The Depositor is duly organized and is validly existing as a
limited liability company in good standing under the laws of the State of
Delaware and has full power and authority (corporate and other) necessary
to own or hold its properties and to conduct its business as now conducted
by it and to enter into and perform its obligations under this Agreement.
(ii) The Depositor has the full power and authority to execute,
deliver and perform, and to enter into and consummate the transactions
contemplated by, this Agreement and has duly authorized, by all necessary
corporate action on its part, the execution, delivery and performance of
this Agreement; and this Agreement, assuming the due authorization,
execution and delivery hereof by the other parties hereto, constitutes a
legal, valid and binding obligation of the Depositor, enforceable against
the Depositor in accordance with its terms, subject, as to enforceability,
to (i) bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and (ii) general principles of
equity, regardless of whether enforcement is sought in a proceeding in
equity or at law.
(iii) The execution and delivery of this Agreement by the Depositor,
the consummation of the transactions contemplated by this Agreement, and
the fulfillment of or compliance with the terms hereof are in the ordinary
course of business of the Depositor and will not (A) result in a material
breach of any term or provision of the charter or by-laws of the Depositor
or (B) materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which the Depositor is a party or
by which it may be bound or (C) constitute a material violation of any
statute, order or regulation
41
applicable to the Depositor of any court, regulatory body, administrative
agency or governmental body having jurisdiction over the Depositor; and the
Depositor is not in breach or violation of any material indenture or other
material agreement or instrument, or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation may
materially impair the Depositor's ability to perform or meet any of its
obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the Depositor's
knowledge, threatened, against the Depositor that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Depositor to perform its obligations under
this Agreement in accordance with the terms hereof.
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement or the consummation of the transactions contemplated hereby, or
if any such consent, approval, authorization or order is required, the
Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee as of the
Closing Date, following the transfer of the Mortgage Loans to it by the Seller,
the Depositor had good title to the Mortgage Loans and the related Mortgage
Notes were subject to no offsets, claims, defenses or counterclaims.
It is understood and agreed that the representations and warranties set
forth in the immediately preceding paragraph shall survive delivery of the
Mortgage Files to the Trustee or the Custodian for the benefit of the
Certificateholders. Upon discovery by the Depositor or the Trustee of a breach
of such representations and warranties, the party discovering such breach shall
give prompt written notice to the others and to each Rating Agency.
Section 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases.
(a) Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan that is not in default or as to which default is
not imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03
shall be made unless the Seller delivers to the Trustee an Opinion of Counsel,
addressed to the Trustee, to the effect that such repurchase or substitution
would not (i) result in the imposition of the tax on "prohibited transactions"
of the REMIC Trust contributions after the Closing Date, as defined in sections
860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the REMIC Trust
to fail to qualify as a REMIC at any time that any Certificates are outstanding.
Any Mortgage Loan as to which repurchase or substitution was delayed pursuant to
this paragraph shall be repurchased or the substitution therefor shall occur
(subject to compliance with Sections 2.02 or 2.03) upon the earlier of (a) the
occurrence of a default or imminent default with respect to such Mortgage Loan
and (b) receipt by the Trustee of an Opinion of Counsel addressed to the Trustee
to the effect that such repurchase or substitution, as applicable, will not
result in the events described in clause (i) or clause (ii) of the preceding
sentence.
42
(b) Upon discovery by the Depositor, the Seller or the Master Servicer
that any Mortgage Loan does not constitute a "qualified mortgage" within the
meaning of section 860G(a)(3) of the Code, the party discovering such fact shall
promptly (and in any event within 5 Business Days of discovery) give written
notice thereof to the other parties and the Trustee. In connection therewith,
the Trustee shall require the Seller, at the Seller's option, to either (i)
substitute, if the conditions in Section 2.03(c) with respect to substitutions
are satisfied, a Replacement Mortgage Loan for the affected Mortgage Loan, or
(ii) repurchase the affected Mortgage Loan within 90 days of such discovery in
the same manner as it would a Mortgage Loan for a breach of representation or
warranty contained in Section 2.03. The Trustee shall reconvey to the Seller the
Mortgage Loan to be released pursuant hereto (and the Custodian shall deliver
the related Mortgage File) in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 2.03.
Section 2.06 Countersignature and Delivery of Certificates.
The Trustee acknowledges the sale, transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed,
countersigned and delivered, to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing the entire ownership of the
Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights
referred to above for the benefit of all present and future Holders of the
Certificates and to perform the duties set forth in this Agreement in accordance
with its terms.
43
ARTICLE III
ADMINISTRATION AND SERVICING OF COMPANY MORTGAGE LOANS BY COMPANY
Section 3.01 The Company.
The Company shall service and administer the Company Mortgage Loans in
accordance with customary and usual standards of practice of prudent mortgage
loan servicers in the respective states in which the related Mortgaged
Properties are located. In connection with such servicing and administration,
the Company shall have full power and authority, acting alone and/or through
subservicers as provided in Section 3.03, to do or cause to be done any and all
things that it may deem necessary or desirable in connection with such servicing
and administration, including but not limited to, the power and authority,
subject to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any related Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided herein), (iii) to collect any Insurance Proceeds and
other Liquidation Proceeds, and (iv) subject to Section 3.09, to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Company Mortgage Loan; provided that the Company shall take no
action that is inconsistent with or prejudices the interests of the Trust Fund
or the Certificateholders in any Company Mortgage Loan or the rights and
interests of the Depositor and the Trustee under this Agreement.
Without limiting the generality of the foregoing, the Company, in its own
name or in the name of the Trust, the Depositor or the Trustee, is hereby
authorized and empowered by the Trust, the Depositor and the Trustee, when the
Company believes it appropriate in its reasonable judgment, to execute and
deliver, on behalf of the Trustee, the Depositor, the Certificateholders or any
of them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge and all other comparable instruments, with respect
to the Company Mortgage Loans, and with respect to the related Mortgaged
Properties held for the benefit of the Certificateholders. The Company shall
prepare and deliver to the Depositor and/or the Trustee such documents requiring
execution and delivery by any or all of them as are necessary or appropriate to
enable the Company to service and administer the Company Mortgage Loans. Upon
receipt of such documents, the Depositor and/or the Trustee shall execute such
documents and deliver them to the Company.
In accordance with the standards of the first paragraph of this Section
3.01, the Company shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties relating to the Company Mortgage Loans, which advances shall be
reimbursable in the first instance from related collections from the Mortgagors
pursuant to Section 5.03, and further as provided in Section 5.02. All costs
incurred by the Company, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties relating to the Company Mortgage Loans
and related insurance premiums shall not, for the purpose of calculating monthly
distributions to the
44
Certificateholders, be added to the Stated Principal Balance under the related
Company Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit.
Section 3.02 Due-on-Sale Clauses; Assumption Agreements.
(a) Except as otherwise provided in this Section 3.02, when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Company shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Company is not required to exercise such
rights with respect to an Company Mortgage Loan if the Person to whom the
related Mortgaged Property has been conveyed or is proposed to be conveyed
satisfies the terms and conditions contained in the Mortgage Note and Mortgage
related thereto and the consent of the mortgagee under such Mortgage Note or
Mortgage is not otherwise so required under such Mortgage Note or Mortgage as a
condition to such transfer. In the event that the Company is prohibited by law
from enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Company is authorized, subject to Section 3.02(b), to
take or enter into an assumption and modification agreement from or with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Company
enters such agreement) by the applicable Required Insurance Policies. The
Company, subject to Section 3.02(b), is also authorized with the prior approval
of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Company shall not be deemed to be in default under this Section
3.02(a) by reason of any transfer or assumption that the Company reasonably
believes it is restricted by law from preventing.
(b) Subject to the Company's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.02(a), in any case in which a Mortgaged
Property has been conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption agreement or modification agreement or supplement to
the Mortgage Note or Mortgage that requires the signature of the Trustee, or if
an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the related Company Mortgage Loan, the Company shall
prepare and deliver or cause to be prepared and delivered to the Trustee for
signature and shall direct, in writing, the Trustee to execute the assumption
agreement with the Person to whom the Mortgaged Property is to be conveyed and
such modification agreement or supplement to the Mortgage Note or Mortgage or
other instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In connection with any such assumption, no material term of the Mortgage Note
(including, but not limited to, the Mortgage Rate, the amount of the Scheduled
Payment and any other term affecting the amount or timing of payment on the
Mortgage Loan) may be changed. In addition, the substitute
45
Mortgagor and the Mortgaged Property must be acceptable to the Company in
accordance with its servicing standards as then in effect. The Company shall
notify the Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Trustee the original of such substitution or
assumption agreement, which in the case of the original shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. Any fee collected by the Company for entering into
an assumption or substitution of liability agreement will be retained by the
Company as additional servicing compensation.
Section 3.03 Subservicers.
The Company shall perform all of its servicing responsibilities hereunder
or may cause a subservicer to perform any such servicing responsibilities on its
behalf, but the use by the Company of a subservicer shall not release the
Company from any of its obligations hereunder and the Company shall remain
responsible hereunder for all acts and omissions of each subservicer as fully as
if such acts and omissions were those of the Company. The Company shall pay all
fees of each subservicer from its own funds, and a subservicer's fee shall not
exceed the Servicing Fee payable to the Company hereunder.
At the cost and expense of the Company, without any right of reimbursement
from its Protected Account, the Company shall be entitled to terminate the
rights and responsibilities of a subservicer and arrange for any servicing
responsibilities to be performed by a successor subservicer; provided, however,
that nothing contained herein shall be deemed to prevent or prohibit the
Company, at the Company's option, from electing to service the related Company
Mortgage Loans itself. In the event that the Company's responsibilities and
duties under this Agreement are terminated pursuant to Section 9.03, the Company
shall at its own cost and expense terminate the rights and responsibilities of
each subservicer effective as of the date of termination of the Company. The
Company shall pay all fees, expenses or penalties necessary in order to
terminate the rights and responsibilities of each subservicer from the Company's
own funds without reimbursement from the Trust Fund.
Notwithstanding the foregoing, the Company shall not be relieved of its
obligations hereunder and shall be obligated to the same extent and under the
same terms and conditions as if it alone were servicing and administering the
Company Mortgage Loans. The Company shall be entitled to enter into an agreement
with a subservicer for indemnification of the Company by the subservicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
Any subservicing agreement and any other transactions or services relating
to the Company Mortgage Loans involving a subservicer shall be deemed to be
between such subservicer and the Company alone, and neither the Master Servicer
nor the Trustee shall have any obligations, duties or liabilities with respect
to such subservicer including any obligation, duty or liability of either the
Master Servicer or the Trustee to pay such subservicer's fees and expenses. For
purposes of remittances to the Master Servicer pursuant to this Agreement, the
Company shall be deemed to have received a payment on an Company Mortgage Loan
when a subservicer has received such payment.
46
Section 3.04 Documents, Records and Funds in Possession of Company to Be
Held for Trustee.
Notwithstanding any other provisions of this Agreement, the Company shall
transmit to the Trustee as required by this Agreement all documents and
instruments in respect of an Company Mortgage Loan coming into the possession of
the Company from time to time and shall account fully to the Trustee for any
funds received by the Company or that otherwise are collected by the Company as
Liquidation Proceeds or Insurance Proceeds in respect of any such Mortgage Loan.
All Mortgage Files and funds collected or held by, or under the control of, the
Company in respect of any Company Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds, including but not
limited to, any funds on deposit in the Protected Account maintained by the
Company, shall be held by the Company for and on behalf of the Trustee and shall
be and remain the sole and exclusive property of the Trustee, subject to the
applicable provisions of this Agreement. The Company also agrees that it shall
not create, incur or subject any Mortgage File or any funds that are deposited
in the Protected Account maintained by the Company or the Master Servicer
Collection Account or in any Escrow Account, or any funds that otherwise are or
may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, an Company Mortgage Loan, except, however, that the
Company shall be entitled to set off against and deduct from any such funds any
amounts that are properly due and payable to the Company under this Agreement.
Section 3.05 Maintenance of Hazard Insurance.
The Company shall cause to be maintained, for each Company Mortgage Loan,
hazard insurance on buildings upon, or comprising part of, the Mortgaged
Property against loss by fire, hazards of extended coverage and such other
hazards as are customary in the area where the related Mortgaged Property is
located with an insurer which is licensed to do business in the state where the
related Mortgaged Property is located. Each such policy of standard hazard
insurance shall contain, or have an accompanying endorsement that contains, a
standard mortgagee clause. The Company shall also cause flood insurance to be
maintained on property acquired upon foreclosure or deed in lieu of foreclosure
of any Company Mortgage Loan, to the extent described below. Pursuant to Section
5.01, any amounts collected by the Company under any such policies (other than
the amounts to be applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with the Company's normal servicing procedures) shall be deposited in
the Protected Account maintained by the Company. Any cost incurred by the
Company in maintaining any such insurance shall not, for the purpose of
calculating monthly distributions to the Certificateholders or remittances to
the Trustee for their benefit, be added to the principal balance of the Mortgage
Loan, notwithstanding that the terms of the Company Mortgage Loan so permit.
Such costs shall be recoverable by the Company out of late payments by the
related Mortgagor or out of Liquidation Proceeds to the extent permitted by
Section 5.02. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
47
additional insurance. If the Mortgaged Property is located at the time of
origination of the Company Mortgage Loan in a federally designated special flood
hazard area and such area is participating in the national flood insurance
program, the Company shall cause flood insurance to be maintained with respect
to such Mortgage Loan. Such flood insurance shall be in an amount equal to the
least of (i) the Stated Principal Balance of the related Mortgage Loan, (ii)
minimum amount required to compensate for damage or loss on a replacement cost
basis or (iii) the maximum amount of such insurance available for the related
Mortgaged Property under the Flood Disaster Protection Act of 1973, as amended.
In the event that the 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 3.05, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the 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 3.05, and there shall have
been a loss that would have been covered by such policy, deposit in the
Protected Account maintained by the Company the amount not otherwise payable
under the blanket policy because of such deductible clause. Such deposit shall
be from the Company's own funds without reimbursement therefor. In connection
with its activities as administrator and servicer of the Company Mortgage Loans,
the Company agrees to present, on behalf of itself, the Depositor and the
Trustee for the benefit of the Certificateholders, claims under any such blanket
policy.
Section 3.06 Presentment of Claims and Collection of Proceeds.
The Company shall prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured's claim) as shall be necessary to realize recovery under such Insurance
Policies. Any proceeds disbursed to the Company in respect of such Insurance
Policies shall be promptly deposited in the Protected Account maintained by the
Company upon receipt, except that any amounts realized that are to be applied to
the repair or restoration of the related Mortgaged Property as a condition
precedent to the presentation of claims on the related Mortgage Loan to the
insurer under any applicable Insurance Policy need not be so deposited (or
remitted).
Section 3.07 Maintenance of the Primary Mortgage Insurance Policies.
(a) The Company shall not take any action that would result in
noncoverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of the Company would have been covered thereunder.
The Company shall use its best efforts to keep in force and effect (to the
extent that the Mortgage Loan requires the Mortgagor to maintain such
insurance), Primary Mortgage Insurance applicable to each Company Mortgage Loan.
The Company shall not cancel or refuse to renew any such Primary Mortgage
Insurance Policy that is in effect at the date of the initial issuance of the
Mortgage Note and is required to be kept in force hereunder.
48
(b) The Company agrees to present on behalf of the Trustee and the
Certificateholders, claims to the insurer under any Primary Mortgage Insurance
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Primary Mortgage Insurance Policies
respecting defaulted Mortgage Loans. Pursuant to Section 5.01, any amounts
collected by the Company under any Primary Mortgage Insurance Policies shall be
deposited in the Protected Account maintained by the Company, subject to
withdrawal pursuant to Section 5.02 hereof.
Section 3.08 Fidelity Bond, Errors and Omissions Insurance.
The Company shall maintain, at its own expense, a blanket fidelity bond and
an errors and omissions insurance policy, with broad coverage with responsible
companies on all officers, employees or other persons acting in any capacity
with regard to the Company Mortgage Loans and who handle funds, money, documents
and papers relating to the Company Mortgage Loans. The fidelity bond and errors
and omissions insurance shall be in the form of the Mortgage Banker's Blanket
Bond and shall protect and insure the Company against losses, including forgery,
theft, embezzlement, fraud, errors and omissions and negligent acts of such
persons. Such fidelity bond shall also protect and insure the Company against
losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of an
Company Mortgage Loan which is not in accordance with Accepted Servicing
Practices. No provision of this Section 3.08 requiring the fidelity bond and
errors and omissions insurance shall diminish or relieve the Company from its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by Accepted Servicing Practices. The Company
shall deliver to the Master Servicer a certificate from the surety and the
insurer as to the existence of the fidelity bond and errors and omissions
insurance policy and shall obtain a statement from the surety and the insurer
that such fidelity bond or insurance policy shall in no event be terminated or
materially modified without thirty days prior written notice to the Master
Servicer and the Trustee. The Company shall notify the Master Servicer and the
Trustee within five business days of receipt of notice that such fidelity bond
or insurance policy will be, or has been, materially modified or terminated. The
Trustee for the benefit of the Certificateholders must be named as loss payees
on the fidelity bond and as additional insured on the errors and omissions
policy.
Section 3.09 Realization upon Defaulted Mortgage Loans; Determination of
Excess Liquidation Proceeds and Realized Losses; Repurchases of Certain Mortgage
Loans.
(a) The Company shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Company Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. In
connection with such foreclosure or other conversion, the Company shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided that
the 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 and/or foreclosure will increase the
49
proceeds of liquidation of the Company Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Insurance Proceeds or Liquidation Proceeds (respecting which it shall
have priority for purposes of withdrawals from the Protected Account maintained
by the Company pursuant to Section 5.02). If the Company reasonably believes
that Liquidation Proceeds with respect to any such Mortgage Loan would not be
increased as a result of such foreclosure or other action, such Mortgage Loan
will be charged-off and will become a Liquidated Loan. The Company will give
notice of any such charge-off to the Trustee and the Securities Administrator.
The Company shall be responsible for all other costs and expenses incurred by it
in any such proceedings; provided that such costs and expenses shall be
Servicing Advances and that it shall be entitled to reimbursement thereof from
the proceeds of liquidation of the related Mortgaged Property, as contemplated
in Section 5.02. If the Company has knowledge that a Mortgaged Property that the
Company is contemplating acquiring in foreclosure or by deed- in-lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Company, the Company will, prior to
acquiring the Mortgaged Property, consider such risks and only take action in
accordance with its established environmental review procedures.
With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee for the benefit of the Certificateholders (or
the Trustee's nominee on behalf of the Certificateholders). The Trustee's name
shall be placed on the title to such REO Property solely as the Trustee
hereunder and not in its individual capacity. The Company shall ensure that the
title to such REO Property references this Agreement and the Trustee's capacity
hereunder. Pursuant to its efforts to sell such REO Property, the Company shall
either itself or through an agent selected by the Company protect and conserve
such REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Company deems to be in the best interest of
the Company and the Certificateholders for the period prior to the sale of such
REO Property. The Company shall prepare for and deliver to the Trustee and the
Securities Administrator a statement with respect to each REO Property that has
been rented showing the aggregate rental income received and all expenses
incurred in connection with the management and maintenance of such REO Property
at such times as is necessary to enable the Trustee to comply with the reporting
requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Protected Account maintained by
the Company no later than the close of business on each Determination Date. The
Company shall perform the tax reporting and withholding related to foreclosures,
abandonments and cancellation of indebtedness income as specified by Sections
1445, 6050J and 6050P of the Code by preparing and filing such tax and
information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on an
Company Mortgage Loan, the Company shall dispose of such Mortgaged Property
prior to three years after its acquisition by the Trust Fund or, at the expense
of the Trust Fund, request more than 60 days prior to the day on which such
three-year period would otherwise expire, an extension of the three-year grace
period unless the Trustee shall have been supplied with an Opinion of Counsel
addressed to the Trustee (such opinion not to be an expense of the Trustee) to
the effect that the holding by the Trust Fund of such Mortgaged Property
subsequent to such three-year period will not result in the imposition
50
of taxes on "prohibited transactions" of the REMIC Trust as defined in section
860F of the Code or cause the REMIC Trust to fail to qualify as a REMIC at any
time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such Mortgaged Property (subject to any conditions contained in
such Opinion of Counsel). Notwithstanding any other provision of this Agreement,
no Mortgaged Property acquired by the Trust Fund shall be rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the Trust Fund in such a manner or pursuant to any terms that would
(i) cause such Mortgaged Property to fail to qualify as "foreclosure property"
within the meaning of section 860G(a)(8) of the Code or (ii) subject the REMIC
Trust to the imposition of any federal, state or local income taxes on the
income earned from such Mortgaged Property under section 860G(c) of the Code or
otherwise, unless the Company has agreed to indemnify and hold harmless the
Trust Fund with respect to the imposition of any such taxes.
The decision of the Company to foreclose on a defaulted Company Mortgage
Loan shall be subject to a determination by the Company that the proceeds of
such foreclosure would exceed the costs and expenses of bringing such a
proceeding. The income earned from the management of any Mortgaged Properties
acquired through foreclosure or other judicial proceeding, net of reimbursement
to the Company for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted Company Mortgage
Loans (with interest accruing as though such Mortgage Loans were still current)
and all such income shall be deemed, for all purposes in the Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into the Protected Account maintained by the Company. To the
extent the income received during a Prepayment Period is in excess of the amount
attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Company Mortgage Loan, such excess shall be
considered to be a partial Principal Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net of
any payment to the Company as provided above, shall be deposited in the
Protected Account maintained by the Company on the next succeeding Determination
Date following receipt thereof for distribution on the related Distribution
Date, except that any Excess Liquidation Proceeds shall be retained by the
Company as additional servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery resulting from
a partial collection of Liquidation Proceeds or any income from an REO Property,
will be applied in the following order of priority: first, to reimburse the
Company for any related unreimbursed Servicing Advances and Servicing Fees,
pursuant to Section 5.02 or this Section 3.09; second, to reimburse the Company
for any unreimbursed Advances, pursuant to Section 5.02 or this Section 3.09;
third, to accrued and unpaid interest (to the extent no Advance has been made
for such amount) on the Company Mortgage Loan or related REO Property, at the
Net Mortgage Rate to the first day of the month in which such amounts are
required to be distributed; and fourth, as a recovery of principal of the
Mortgage Loan.
51
(b) On each Determination Date, the Company shall determine the
respective aggregate amounts of Excess Liquidation Proceeds and Realized Losses,
if any, for the related Prepayment Period.
(c) The Company has no intent to foreclose on any Company Mortgage
Loan based on the delinquency characteristics as of the Closing Date; provided,
that the foregoing does not prevent the Company from initiating foreclosure
proceedings on any date hereafter if the facts and circumstances of such
Mortgage Loans including delinquency characteristics in the Company's discretion
so warrant such action.
Section 3.10 Servicing Compensation.
As compensation for its activities hereunder, the Company shall be entitled
to retain or withdraw from its Protected Account out of each payment of interest
on a Company Mortgage Loan included in the Trust Fund an amount equal to the
Servicing Fee.
Additional servicing compensation in the form of any Excess Liquidation
Proceeds, assumption fees, late payment charges, all income and gain net of any
losses realized from Permitted Investments with respect to funds in or credited
to the Protected Account maintained by the Company shall be retained by the
Company to the extent not required to be deposited in the Protected Account
maintained by the Company pursuant to Section 5.02. The Company shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance, as
required by Section 3.05 and maintenance of the other forms of insurance
coverage required by Section 3.07) and shall not be entitled to reimbursement
therefor except as specifically provided in Section 5.02.
Section 3.11 REO Property.
(a) In the event the Trust Fund acquires ownership of any REO Property
in respect of any related Company Mortgage Loan, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Company shall sell any REO Property as expeditiously as
possible and in accordance with the provisions of this Agreement. Pursuant to
its efforts to sell such REO Property, the Company shall protect and conserve
such REO Property in the manner and to the extent required herein, in accordance
with the REMIC Provisions.
(b) The Company shall deposit all funds collected and received in
connection with the operation of any REO Property into the Protected Account
maintained by the Company.
(c) The Company, upon the final disposition of any REO Property, shall
be entitled to reimbursement for any related unreimbursed Advances, unreimbursed
Servicing Advances or Servicing Fees from Liquidation Proceeds received in
connection with the final disposition of such REO Property; provided, that any
such unreimbursed Advances or Servicing Fees as well as any unpaid Servicing
Fees may be reimbursed or paid, as the case may be, prior to final disposition,
out of any net rental income or other net amounts derived from such REO
Property.
52
Section 3.12 Liquidation Reports.
Upon the foreclosure of any Mortgaged Property relating to an Company
Mortgage Loan or the acquisition thereof by the Trust Fund pursuant to a
deed-in-lieu of foreclosure, the Company shall submit a liquidation report to
the Master Servicer containing such information as shall be mutually acceptable
to the Company and the Master Servicer with respect to such Mortgaged Property.
Section 3.13 Annual Certificate as to Compliance.
(a) The Company will deliver to the Master Servicer not later than
March 1, 200__ and not later than March 1 of each year thereafter, a certificate
of a Servicing Officer stating, as to each signatory thereof, that (i) a review
of the activities of the Company during the preceding calendar year and of
performance under this Agreement has been made under such officers' supervision,
and (ii) to the best of such officers' knowledge, based on such review, the
Company has fulfilled all of its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officers and the nature
and status thereof except for such defaults as such officer in its good faith
judgment believe to be immaterial.
(b) (i) The Company will deliver to the Master Servicer, on or before
March 1 of each year beginning March 1, 200__ (or, if any such day is not a
Business Day, the immediately preceding Business Day), or on any alternative
date specified by the Master Servicer upon thirty (30) days written request, a
certification containing the information set forth in Exhibit L. Such
certification shall be signed by the senior officer in charge of servicing of
the Company. In addition, the Company shall provide such other information with
respect to the Company Mortgage Loans and the servicing and administration
thereof within the control of the Company which shall be required to enable the
Master Servicer to comply with the reporting requirements of the Securities and
Exchange Act of 1934, as amended.
(ii) The Company shall indemnify and hold harmless the Master Servicer
and its officers, directors, agents and affiliates from and against any losses,
damages, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Company or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.13(b) or the Company's negligence, bad faith or
willful misconduct in connection therewith. If the indemnification provided for
herein is unavailable or insufficient to hold harmless the Master Servicer, then
the Company agrees that it shall contribute to the amount paid or payable by the
Master Servicer as a result of the losses, claims, damages or liabilities of the
Master Servicer in such proportion as is appropriate to reflect the relative
fault of the Master Servicer on the one hand and the Company on the other in
connection with a breach of the Company's obligations under this Section
3.13(b).
Section 3.14 Annual Independent Certified Public Accountants' Servicing
Report.
Not later than March 1, 200__ and not later than March 1 of each year
thereafter, the Company at its expense shall cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Master
53
Servicer to the effect that, with respect to the preceding calendar year such
firm has examined certain documents and records relating to the Company's
servicing of mortgage loans of the same type as the Company Mortgage Loans
pursuant to servicing agreements substantially similar to this Agreement, which
agreements may include this Agreement, and that, on the basis of such an
examination, conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers, such firm is of the opinion that the
Company's servicing has been conducted in compliance with the agreements
examined pursuant to this Section 3.14, except for (i) such exceptions as such
firm shall believe to be immaterial,(ii) such other exceptions as shall be set
forth in such statement and (iii) such exceptions that the Uniform Single
Attestation Program for Mortgage Bankers requires it to report.
Section 3.15 Books and Records.
The Company shall be responsible for maintaining, and shall maintain, a
complete set of books and records for the Company Mortgage Loans which shall be
appropriately identified in the Company's computer system to clearly reflect the
ownership of the Company Mortgage Loans by the Trust. In particular, the Company
shall maintain in its possession, available for inspection by the Master
Servicer and the Trustee and shall deliver to Master Servicer and the Trustee
upon demand, evidence of compliance with all federal, state and local laws,
rules and regulations. To the extent that original documents are not required
for purposes of realization of Liquidation Proceeds or Insurance Proceeds,
documents maintained by the Company may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including, but not limited to, optical imagery techniques so long as the Company
complies with the requirements of Accepted Servicing Practices.
The Company shall maintain with respect to each Company Mortgage Loan and
shall make available for inspection by the Master Servicer and the Trustee the
related servicing file during the time such Company Mortgage Loan is subject to
this Agreement and thereafter in accordance with applicable law.
54
ARTICLE IV
ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS BY MASTER SERVICER
Section 4.01 Master Servicer. The Master Servicer shall supervise, monitor
and oversee the obligation of the Company and the related Servicer to service
and administer their respective Mortgage Loans in accordance with the terms of
this Agreement and the related Servicing Agreement and shall have full power and
authority to do any and all things which it may deem necessary or desirable in
connection with such master servicing and administration. In performing its
obligations hereunder, the Master Servicer shall act in a manner consistent with
Accepted Master Servicing Practices. Furthermore, the Master Servicer shall
oversee and consult with the Company and the related Servicer as necessary from
time-to-time to carry out the Master Servicer's obligations hereunder, shall
receive, review and evaluate all reports, information and other data provided to
the Master Servicer by the Company and the related Servicer and shall cause the
Company and related Servicer to perform and observe the covenants, obligations
and conditions to be performed or observed by such Person under this Agreement
and the related Servicing Agreement. The Master Servicer shall independently and
separately monitor the Company and the related Servicer's servicing activities
with respect to each related Mortgage Loan, reconcile the results of such
monitoring with such information provided in the previous sentence on a monthly
basis and coordinate corrective adjustments to the Company's, the related
Servicer's and Master Servicer's records, and based on such reconciled and
corrected information, prepare the statements specified in Section 6.05 and any
other information and statements required hereunder. The Master Servicer shall
reconcile the results of its Mortgage Loan monitoring with the actual
remittances of the Company and the Servicer to the Protected Accounts pursuant
to this Agreement and the related Servicing Agreement.
The Trustee shall furnish the Company, the Servicers and the Master
Servicer with any powers of attorney and other documents in form as provided to
it necessary or appropriate to enable the Company, the Servicer and the Master
Servicer to service and administer the related Mortgage Loans and REO Property.
The Trustee and the Securities Administrator shall provide access to the
records and documentation in possession of the Trustee or the Securities
Administrator regarding the related Mortgage Loans and REO Property and the
servicing thereof to the Certificateholders, the FDIC, and the supervisory
agents and examiners of the FDIC, such access being afforded only upon
reasonable prior written request and during normal business hours at the office
of the Trustee or the Securities Administrator; provided, however, that, unless
otherwise required by law, neither the Trustee nor the Securities Administrator
shall be required to provide access to such records and documentation if the
provision thereof would violate the legal right to privacy of any Mortgagor. The
Trustee and the Securities Administrator shall allow representatives of the
above entities to photocopy any of the records and documentation and shall
provide equipment for that purpose at a charge that covers the Trustee's or the
Securities Administrator's actual costs.
55
The Trustee shall execute and deliver to the Company or the related
Servicer and the Master Servicer any court pleadings, requests for trustee's
sale or other documents necessary or desirable to (i) the foreclosure or
trustee's sale with respect to a Mortgaged Property; (ii) any legal action
brought to obtain judgment against any Mortgagor on the Mortgage Note or
Security Instrument; (iii) obtain a deficiency judgment against the Mortgagor;
or (iv) enforce any other rights or remedies provided by the Mortgage Note or
Security Instrument or otherwise available at law or equity.
Section 4.02 REMIC-Related Covenants. For as long as the REMIC Trust shall
exist, the Trustee and the Securities Administrator shall act in accordance
herewith to assure continuing treatment of such REMIC as a REMIC, and the
Trustee and the Securities Administrator shall comply with any directions of the
Seller, the Company, the Servicers or the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any investment of
deposits in an Account unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee has received a REMIC
Opinion addressed to the Trustee prepared at the expense of the Trust Fund; and
(b) other than with respect to a substitution pursuant to the Mortgage Loan
Purchase Agreement or Section 2.04 of this Agreement, as applicable, accept any
contribution to the REMIC Trust after the Startup Day without receipt of a REMIC
Opinion.
Section 4.03 Monitoring of Company and Servicer. (a) The Master Servicer
shall be responsible for reporting to the Trustee and the Seller the compliance
by the Company and the related Servicer with its duties under this Agreement and
the related Servicing Agreement. In the review of the Company's and the related
Servicer's activities, the Master Servicer may rely upon an Officer's
Certificate of the Company and the related Servicer with regard to such Person's
compliance with the terms of this Agreement or the related Servicing Agreement.
In the event that the Master Servicer, in its judgment, determines that the
Company or the related Servicer should be terminated in accordance with this
Agreement or the related Servicing Agreement, or that a notice should be sent
pursuant to this Agreement or the related Servicing Agreement with respect to
the occurrence of an event that, unless cured, would constitute grounds for such
termination, the Master Servicer shall notify the Seller and the Trustee thereof
and the Master Servicer shall issue such notice or take such other action as it
deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Company under this
Agreement and the related Servicer under the related Servicing Agreement, and
shall, in the event that the Company or the related Servicer fails to perform
its obligations in accordance with this Agreement or the related Servicing
Agreement, subject to the preceding paragraph, terminate the rights and
obligations of such Person thereunder and act as servicer of the related
Mortgage Loans or to cause the Trustee to enter in to a new Servicing Agreement
with a successor Servicer selected by the Master Servicer; provided, however, it
is understood and acknowledged by the parties hereto that there will be a period
of transition (not to exceed 90 days) before the actual servicing functions can
be fully transferred to such successor Servicer. Such enforcement, including,
without limitation, the legal prosecution of claims, termination of the related
Servicing Agreement and the pursuit of other appropriate remedies, shall be in
such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Master Servicer shall pay
56
the costs of such enforcement at its own expense, subject to its right of
reimbursement pursuant to the provisions of this Agreement or the related
Servicing Agreement, provided that the Master Servicer shall not be required to
prosecute or defend any legal action except to the extent that the Master
Servicer shall have received reasonable indemnity for its costs and expenses in
pursuing such action.
(c) To the extent that the costs and expenses of the Master Servicer
related to any termination of the Company or the related Servicer, appointment
of a successor Servicer or the transfer and assumption of servicing by the
Master Servicer with respect to this Agreement or the related Servicing
Agreement (including, without limitation, (i) all legal costs and expenses and
all due diligence costs and expenses associated with an evaluation of the
potential termination of the Company or the related Servicer as a result of an
event of default by such Person and (ii) all costs and expenses associated with
the complete transfer of servicing, including all servicing files and all
servicing data and the completion, correction or manipulation of such servicing
data as may be required by the successor servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
service to service the Mortgage Loans in accordance with this Agreement or the
related Servicing Agreement) are not fully and timely reimbursed by the Company
or the terminated Servicer, the Master Servicer shall be entitled to
reimbursement of such costs and expenses from the Master Servicer Collection
Account.
(d) The Master Servicer shall require the Company and the related
Servicer to comply with the remittance requirements and other obligations set
forth in this Agreement or the related Servicing Agreement, as applicable.
(e) If the Master Servicer acts as a servicer, it will not assume
liability for the representations and warranties of the Company or the related
Servicer, if any, that it replaces.
Section 4.04 Fidelity Bond. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Xxxxxxxx's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations hereunder.
The errors and omissions insurance policy and the fidelity bond shall be in such
form and amount generally acceptable for entities serving as master servicers or
trustees.
Section 4.05 Power to Act; Procedures. The Master Servicer shall master
service the Mortgage Loans and shall have full power and authority, subject to
the REMIC Provisions and the provisions of Article XI hereof, to do any and all
things that it may deem necessary or desirable in connection with the master
servicing and administration of the Mortgage Loans, including but not limited to
the power and authority (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan, in each case, in accordance with the provisions of
this Agreement and the related Servicing Agreement, as applicable; provided,
however, that the Master Servicer shall not (and, consistent with its
responsibilities under
57
Section 4.03, shall not permit the Company or the related Servicer to) knowingly
or intentionally take any action, or fail to take (or fail to cause to be taken)
any action reasonably within its control and the scope of duties more
specifically set forth herein, that, under the REMIC Provisions, if taken or not
taken, as the case may be, would cause the REMIC Trust to fail to qualify as a
REMIC or result in the imposition of a tax upon the Trust Fund (including but
not limited to the tax on prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code) unless the Master Servicer has received an Opinion
of Counsel (but not at the expense of the Master Servicer) to the effect that
the contemplated action will not would cause the REMIC Trust to fail to qualify
as a REMIC or result in the imposition of a tax upon the REMIC Trust. The
Trustee shall furnish the Master Servicer, upon written request from a Servicing
Officer, with any powers of attorney empowering the Master Servicer, the Company
or the related Servicer to execute and deliver instruments of satisfaction or
cancellation, or of partial or full release or discharge, and to foreclose upon
or otherwise liquidate Mortgaged Property, and to appeal, prosecute or defend in
any court action relating to the Mortgage Loans or the Mortgaged Property, in
accordance with the related Servicing Agreement and this Agreement, and the
Trustee shall execute and deliver such other documents, as the Master Servicer
may request, to enable the Master Servicer to master service and administer the
Mortgage Loans and carry out its duties hereunder, in each case in accordance
with Accepted Master Servicing Practices (and the Trustee shall have no
liability for misuse of any such powers of attorney by the Master Servicer, the
Company or the related Servicer). If the Master Servicer or the Trustee has been
advised that it is likely that the laws of the state in which action is to be
taken prohibit such action if taken in the name of the Trustee or that the
Trustee would be adversely affected under the "doing business" or tax laws of
such state if such action is taken in its name, the Master Servicer shall join
with the Trustee in the appointment of a co-trustee pursuant to Section 10.11
hereof. In the performance of its duties hereunder, the Master Servicer shall be
an independent contractor and shall not, except in those instances where it is
taking action in the name of the Trustee, be deemed to be the agent of the
Trustee.
Section 4.06 Due-on-Sale Clauses; Assumption Agreements. To the extent
provided in this Agreement or the related Servicing Agreement, to the extent
Mortgage Loans contain enforceable due-on-sale clauses, the Master Servicer
shall cause the Company and the related Servicer to enforce such clauses in
accordance with this Agreement or the related Servicing Agreement. If applicable
law prohibits the enforcement of a due-on-sale clause or such clause is
otherwise not enforced in accordance with this Agreement or the related
Servicing Agreement, and, as a consequence, a Mortgage Loan is assumed, the
original Mortgagor may be released from liability in accordance with this
Agreement or the related Servicing Agreement.
Section 4.07 Release of Mortgage Files. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by the Company or the
related Servicer of a notification that payment in full has been escrowed in a
manner customary for such purposes for payment to Certificateholders on the next
Distribution Date, the Company or the related Servicer will, if required under
the related Servicing Agreement (or if the Company or the related Servicer does
not, the Master Servicer may), promptly furnish to the Custodian, on behalf of
the Trustee, two copies of a certification substantially in the form of Exhibit
H hereto signed by a Servicing Officer or in a mutually agreeable electronic
format which will, in lieu of a signature on its face, originate from a
Servicing Officer (which certification shall include a statement to the effect
that
58
all amounts received in connection with such payment that are required to be
deposited in the Protected Account maintained by the Company or the Servicer
pursuant to Article V or by the related Servicer pursuant to the related
Servicing Agreement have been or will be so deposited) and shall request that
the Custodian, on behalf of the Trustee, deliver to the Company or the related
Servicer the related Mortgage File. Upon receipt of such certification and
request, the Custodian, on behalf of the Trustee, shall promptly release the
related Mortgage File to the Company or the related Servicer and the Trustee and
Custodian shall have no further responsibility with regard to such Mortgage
File. Upon any such payment in full, the Company or the related Servicer is
authorized, to give, as agent for the Trustee, as the mortgagee under the
Mortgage that secured the Mortgage Loan, an instrument of satisfaction (or
assignment of mortgage without recourse, representation or warranty) regarding
the Mortgaged Property subject to the Mortgage, which instrument of satisfaction
or assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of such payment, it being understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to the
Protected Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan and in accordance with this Agreement or the
related Servicing Agreement, the Trustee shall execute such documents as shall
be prepared and furnished to the Trustee by the Company, the related Servicer or
the Master Servicer (in form reasonably acceptable to the Trustee) and as are
necessary to the prosecution of any such proceedings. The Custodian, on behalf
of the Trustee, shall, upon the request of the Company, the related Servicer or
the Master Servicer, and delivery to the Custodian, on behalf of the Trustee, of
two copies of a request for release signed by a Servicing Officer substantially
in the form of Exhibit H (or in a mutually agreeable electronic format which
will, in lieu of a signature on its face, originate from a Servicing Officer),
release the related Mortgage File held in its possession or control to the
Company, the related Servicer or the Master Servicer, as applicable. Such trust
receipt shall obligate the Company, the related Servicer or the Master Servicer
to return the Mortgage File to the Custodian on behalf of the Trustee, when the
need therefor by such Person 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 Mortgage File shall be released by
the Custodian, on behalf of the Trustee, to the Company, the related Servicer or
the Master Servicer.
Section 4.08 Documents, Records and Funds in Possession of Master Servicer,
Company and Servicer to Be Held for Trustee.
(a) The Master Servicer shall transmit and the Company or the related
Servicer (to the extent required by this Agreement or the related Servicing
Agreement) shall transmit to the Trustee or Custodian such documents and
instruments coming into the possession of such Person from time to time as are
required by the terms hereof, or in the case of the related Servicer, the
related Servicing Agreement, to be delivered to the Trustee or Custodian. Any
funds received by the Master Servicer, the Company or by the related Servicer in
respect of any Mortgage Loan or which otherwise are collected by the Master
Servicer, the Company or by the related Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan shall be held for the benefit
of the Trustee and the Certificateholders subject to the Master Servicer's right
to retain or withdraw from the Master Servicer Collection Account the Master
59
Servicing Fee and other amounts provided in this Agreement, and to the right of
the Company and the related Servicer to retain its Servicing Fee and other
amounts as provided in this Agreement or the related Servicing Agreement. The
Master Servicer shall, and (to the extent provided in this Agreement or the
related Servicing Agreement) shall cause the Company and the related Servicer
to, provide access to information and documentation regarding the Mortgage Loans
to the Trustee, its agents and accountants at any time upon reasonable request
and during normal business hours, and to Certificateholders that are savings and
loan associations, banks or insurance companies, the OTS, the FDIC and the
supervisory agents and examiners of such Office and Corporation or examiners of
any other federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift Supervision or other
regulatory authority, such access to be afforded without charge but only upon
reasonable request in writing and during normal business hours at the offices of
the Master Servicer designated by it. In fulfilling such a request the Master
Servicer shall not be responsible for determining the sufficiency of such
information.
(b) All Mortgage Files and funds collected or held by, or under the
control of, the Master Servicer, in respect of any Mortgage Loans, whether from
the collection of principal and interest payments or from Liquidation Proceeds
or Insurance Proceeds, shall be held by the Master Servicer for and on behalf of
the Trustee and the Certificateholders and shall be and remain the sole and
exclusive property of the Trustee; provided, however, that the Master Servicer,
the Company and the related Servicer shall be entitled to setoff against, and
deduct from, any such funds any amounts that are properly due and payable to the
Master Servicer or such Servicer under this Agreement or the related Servicing
Agreement.
Section 4.09 Standard Hazard Insurance and Flood Insurance Policies.
(a) For each Mortgage Loan, the Master Servicer shall enforce any
obligation of the Company and the related Servicer under this Agreement or the
related Servicing Agreement to maintain or cause to be maintained standard fire
and casualty insurance and, where applicable, flood insurance, all in accordance
with the provisions of this Agreement or the related Servicing Agreement. It is
understood and agreed that such insurance shall be with insurers meeting the
eligibility requirements set forth in this Agreement and the related Servicing
Agreement and that no earthquake or other additional insurance is to be required
of any Mortgagor or to be maintained on property acquired in respect of a
defaulted 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.
(b) Pursuant to Sections 5.01, 5.03 and 5.04 any amounts collected by
the Company, the Servicers or the Master Servicer, or by the Company or the
Servicers, under any insurance policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or
released to the Mortgagor in accordance with this Agreement or the Servicing
Agreements) shall be deposited by the Company in its Protected Account or by the
related Servicer or the Master Servicer into the Master Servicer Collection
Account, subject to withdrawal pursuant to Sections 5.02, 5.03, 5.04 and 5.06,
as applicable. Any cost incurred by the Master Servicer, the Company or the
related Servicer in maintaining any such insurance if the Mortgagor defaults in
its obligation to do so shall be added to the amount owing under the Mortgage
Loan where the terms of the Mortgage Loan so permit; provided, however, that the
60
addition of any such cost shall not be taken into account for purposes of
calculating the distributions to be made to Certificateholders and shall be
recoverable by the Master Servicer, the Company or the related Servicer pursuant
to Sections 5.02, 5.03, 5.04 and 5.06, as applicable.
Section 4.10 Presentment of Claims and Collection of Proceeds. The Master
Servicer shall (to the extent provided in this Agreement and the related
Servicing Agreement) cause the Company or the Servicer to, prepare and present
on behalf of the Trustee and the Certificateholders all claims under the
Insurance Policies and take such actions (including the negotiation, settlement,
compromise or enforcement of the insured's claim) as shall be necessary to
realize recovery under such policies. Any proceeds disbursed to the Master
Servicer (or disbursed to the Company or the related Servicer and remitted to
the Master Servicer) in respect of such policies, bonds or contracts shall be
promptly deposited in the Master Servicer Collection Account upon receipt,
except that any amounts realized that are to be applied to the repair or
restoration of the related Mortgaged Property as a condition precedent to the
presentation of claims on the related Mortgage Loan to the insurer under any
applicable Insurance Policy need not be so deposited (or remitted).
Section 4.11 Maintenance of the Primary Mortgage Insurance Policies.
(a) The Master Servicer shall not take, or permit the Company or the
related Servicer (to the extent such action is prohibited under this Agreement
or the related Servicing Agreement) to take, any action that would result in
noncoverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of the Master Servicer, the Company or the related
Servicer, would have been covered thereunder. The Master Servicer shall use its
best reasonable efforts to cause the Company and the related Servicer (to the
extent required under this Agreement and the related Servicing Agreement) to
keep in force and effect (to the extent that the Mortgage Loan requires the
Mortgagor to maintain such insurance), primary mortgage insurance applicable to
each Mortgage Loan (including any LPMI Policy) in accordance with the provisions
of this Agreement and the related Servicing Agreement, as applicable. The Master
Servicer shall not, and shall not permit the Company or the related Servicer (to
the extent required under this Agreement or the related Servicing Agreement) to,
cancel or refuse to renew any such Primary Mortgage Insurance Policy that is in
effect at the date of the initial issuance of the Mortgage Note and is required
to be kept in force hereunder except in accordance with the provisions of this
Agreement and the related Servicing Agreement, as applicable.
(b) The Master Servicer agrees to cause the Company and the related
Servicer (to the extent required under this Agreement and the related Servicing
Agreement) to present, on behalf of the Trustee and the Certificateholders,
claims to the insurer under any Primary Mortgage Insurance Policies and, in this
regard, to take such reasonable action as shall be necessary to permit recovery
under any Primary Mortgage Insurance Policies respecting defaulted Mortgage
Loans. Pursuant to Sections 5.01, 5.03 and 5.04, any amounts collected by the
Company or the related Servicer under any Primary Mortgage Insurance Policies
shall be deposited by the Company in its Protected Account or by the related
Servicer in the Master Servicer Collection Account, subject to withdrawal
pursuant to Section 5.03 or 5.04, as applicable.
61
Section 4.12 Trustee to Retain Possession of Certain Insurance Policies and
Documents.
The Trustee (or the Custodian, as directed by the Trustee), shall retain
possession and custody of the originals (to the extent available) of any Primary
Mortgage Insurance Policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates have been distributed in full and the Master Servicer otherwise
has fulfilled its obligations under this Agreement, the Trustee (or its
Custodian, if any, as directed by the Trustee) shall also retain possession and
custody of each Mortgage File in accordance with and subject to the terms and
conditions of this Agreement. The Master Servicer shall promptly deliver or
cause to be delivered to the Trustee (or the Custodian, as directed by the
Trustee), upon the execution or receipt thereof the originals of any Primary
Mortgage Insurance Policies, any certificates of renewal, and such other
documents or instruments that constitute portions of the Mortgage File that come
into the possession of the Master Servicer from time to time.
Section 4.13 Realization upon Defaulted Mortgage Loans. The Master Servicer
shall cause the Company and the related Servicer (to the extent required under
this Agreement and the related Servicing Agreement) to foreclose upon, repossess
or otherwise comparably convert the ownership of Mortgaged 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,
all in accordance with this Agreement or the related Servicing Agreement.
Section 4.14 Compensation for the Master Servicer.
The Master Servicer shall be entitled to the Master Servicing Fee on each
Distribution Date as compensation for the performance of its obligations
hereunder. In addition, pursuant to Article V all income and gain realized from
any investment of funds in the Distribution Account and the Master Servicer
Collection Account shall be for the benefit of the Master Servicer as additional
compensation. The Master Servicer will be entitled to retain, as additional
compensation, any interest remitted by the related Servicer in connection with a
Principal Prepayment in full or otherwise in excess of amounts required to be
remitted to the Master Servicer Collection Account. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder and shall not be entitled to reimbursement therefor except as provided
in this Agreement.
Section 4.15 REO Property.
(a) In the event the Trust Fund acquires ownership of any REO Property
in respect of any related Mortgage Loan, the deed or certificate of sale shall
be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall, to the extent provided in this
Agreement or the related Servicing Agreement, cause the Company or the related
Servicer to sell, any REO Property as expeditiously as possible and in
accordance with the provisions of this Agreement and the related Servicing
Agreement, as applicable. Pursuant to its efforts to sell such REO Property, the
Master Servicer shall cause the Company or the related Servicer to protect and
conserve, such REO Property in the manner and to the extent required by this
Agreement or the related Servicing Agreement, in accordance with the REMIC
Provisions and in a manner that does not result in a tax on "net income from
foreclosure
62
property" or cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code.
(b) The Master Servicer shall, to the extent required by this
Agreement or the related Servicing Agreement, cause the Company or the related
Servicer to deposit all funds collected and received in connection with the
operation of any REO Property in the Protected Account.
(c) The Master Servicer and the Company or the related Servicer, upon
the final disposition of any REO Property, shall be entitled to reimbursement
for any related unreimbursed Advances and other unreimbursed advances as well as
any unpaid Servicing Fees from Liquidation Proceeds received in connection with
the final disposition of such REO Property; provided, that any such unreimbursed
Monthly Advances as well as any unpaid Servicing Fees may be reimbursed or paid,
as the case may be, prior to final disposition, out of any net rental income or
other net amounts derived from such REO Property.
(d) To the extent provided in this Agreement or the related Servicing
Agreement, the Liquidation Proceeds from the final disposition of the REO
Property, net of any payment to the Master Servicer and the Company or the
related Servicer as provided above shall be deposited in the Protected Account
on or prior to the Determination Date in the month following receipt thereof and
be remitted by wire transfer in immediately available funds to the Master
Servicer for deposit into the related Master Servicer Collection Account on the
next succeeding Remittance Date.
Section 4.16 Annual Officer's Certificate as to Compliance.
(a) The Master Servicer shall deliver to the Securities Administrator,
the Trustee and the Rating Agencies on or before March 1 of each year,
commencing on March 1, 200__, an Officer's Certificate, certifying that with
respect to the period ending December 31 of the prior year: (i) such Servicing
Officer has reviewed the activities of such Master Servicer during the preceding
calendar year or portion thereof and its performance under this Agreement, (ii)
to the best of such Servicing Officer's knowledge, based on such review, such
Master Servicer has performed and fulfilled its duties, responsibilities and
obligations under this Agreement in all material respects throughout such year,
or, if there has been a default in the fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to such
Servicing Officer and the nature and status thereof, (iii) nothing has come to
the attention of such Servicing Officer to lead such Servicing Officer to
believe that the Company or any Servicer has failed to perform any of its
duties, responsibilities and obligations under this Agreement or the related
Servicing Agreement in all material respects throughout such year, or, if there
has been a material default in the performance or fulfillment of any such
duties, responsibilities or obligations, specifying each such default known to
such Servicing Officer and the nature and status thereof.
(b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide
63
the Trustee with such statement or (ii) the Trustee shall be unaware of the
Master Servicer's failure to provide such statement).
Section 4.17 Annual Independent Accountant's Servicing Report. If the
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Securities Administrator, the Trustee, the Rating
Agencies and the Seller on or before March 1 of each year, commencing on March
1, 200__ to the effect that, with respect to the most recently ended fiscal
year, such firm has examined certain records and documents relating to the
Master Servicer's performance of its servicing obligations under this Agreement
and pooling and servicing and trust agreements in material respects similar to
this Agreement and to each other and that, on the basis of such examination
conducted substantially in compliance with the audit program for mortgages
serviced for Freddie Mac or the Uniform Single Attestation Program for Mortgage
Bankers, such firm is of the opinion that the Master Servicer's activities have
been conducted in compliance with this Agreement, or that such examination has
disclosed no material items of noncompliance except for (i) such exceptions as
such firm believes to be immaterial, (ii) such other exceptions as are set forth
in such statement and (iii) such exceptions that the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages Serviced by
Freddie Mac requires it to report. Copies of such statements shall be provided
to any Certificateholder upon request by the Master Servicer, or by the Trustee
at the expense of the Master Servicer if the Master Servicer shall fail to
provide such copies (unless (i) the Master Servicer shall have failed to provide
the Trustee with such statement or (ii) the Trustee shall be unaware of the
Master Servicer's failure to provide such statement). If such report discloses
exceptions that are material, the Master Servicer shall advise the Trustee
whether such exceptions have been or are susceptible of cure, and will take
prompt action to do so.
Section 4.18 Reports Filed with Securities and Exchange Commission. Within
15 days after each Distribution Date, the Securities Administrator shall, in
accordance with industry standards, file with the Commission via the Electronic
Data Gathering and Retrieval System ("XXXXX"), a Form 8-K with a copy of the
statement to the Trustee who shall make available a copy of the monthly
statement to the Certificateholders for such Distribution Date as an exhibit
thereto. Prior to January 30 in each year, the Securities Administrator shall,
in accordance with industry standards and only if instructed by the Depositor,
file a Form 15 Suspension Notice with respect to the Trust Fund, if applicable.
Prior to (i) March 15, 200__ and (ii) unless and until a Form 15 Suspension
Notice shall have been filed, prior to March 15 of each year thereafter, the
Master Servicer shall provide the Securities Administrator with a Master
Servicer Certification, together with a copy of the annual independent
accountant's servicing report and annual statement of compliance of the Company
to be delivered pursuant to this Agreement and each Servicer, in each case,
required to be delivered pursuant to the related Servicing Agreement, and, if
applicable, the annual independent accountant's servicing report and annual
statement of compliance to be delivered by the Master Servicer pursuant to
Sections 4.16 and 4.17. Prior to (i) March 31, 2004 and (ii) unless and until a
Form 15 Suspension Notice shall have been filed, March 31 of each year
thereafter, the Securities Administrator shall file a Form 10-K, in substance
conforming to industry standards, with respect to the Trust. Such Form 10-K
shall include the Master Servicer Certification and other documentation provided
by the Master Servicer pursuant to the second preceding sentence. The Depositor
hereby grants to the
64
Securities Administrator a limited power of attorney to execute and file each
such document on behalf of the Depositor. Such power of attorney shall continue
until either the earlier of (i) receipt by the Securities Administrator from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Securities Administrator, from time to time upon request, such further
information, reports and financial statements within its control related to this
Agreement, the Mortgage Loans as the Securities Administrator reasonably deems
appropriate to prepare and file all necessary reports with the Commission. The
Securities Administrator shall have no responsibility to file any items other
than those specified in this Section 4.18; provided, however, the Securities
Administrator will cooperate with the Depositor in connection with any
additional filings with respect to the Trust Fund as the Depositor deems
necessary under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Copies of all reports filed by the Securities Administrator under the
Exchange Act shall be sent to: the Depositor c/o Bear, Xxxxxxx & Co. Inc., Attn:
Managing Director-Analysis and Control, One Metrotech Center North, Brooklyn,
New York 11202-3859. Fees and expenses incurred by the Securities Administrator
in connection with this Section 4.18 shall not be reimbursable from the Trust
Fund.
[Section 4.19 Company. On the Closing Date, the Company will receive from
the Seller a payment of $_____].
Section 4.20 UCC. The Trustee agrees to file continuation statements for
any Uniform Commercial Code financing statements which the Seller has informed
the Trustee were filed on the Closing Date in connection with the Trust. The
Seller shall file any financing statements or amendments thereto required by any
change in the Uniform Commercial Code.
Section 4.21 Optional Purchase of Certain Mortgage Loans.
With respect to any Mortgage Loans which as of the first day of a Calendar
Quarter is delinquent in payment by 90 days or more or is an REO Property, the
Company shall have the right to purchase any Mortgage Loan from the Trust which
becomes 90 days or more delinquent or becomes an REO Property at a price equal
to the Repurchase Price; provided, however, (i) that such Mortgage Loan is still
90 days or more delinquent or is an REO Property as of the date of such purchase
and (ii) this purchase option, if not theretofore exercised, shall terminate on
the date prior to the last day of the related Calendar Quarter. This purchase
option, if not exercised, shall not be thereafter reinstated unless the
delinquency is cured and the Mortgage Loan thereafter again becomes 90 days or
more delinquent or becomes an REO Property, in which case the option shall again
become exercisable as of the first day of the related Calendar Quarter.
In addition, the Company shall, at its option, purchase any Mortgage Loan
from the Trust if the first Due Date for such Mortgage Loan is subsequent to the
Cut-off Date and the initial Monthly Payment is not made within thirty (30) days
of such Due Date. Such purchase shall be made at a price equal to the Repurchase
Price.
If at any time the Company remits to the Master Servicer a payment for
deposit in the Master Servicer Collection Account covering the amount of the
Repurchase Price for such a Mortgage Loan, and the Company provides to the
Trustee a certification signed by a Servicing Officer stating that the amount of
such payment has been deposited in the Master Servicer
65
Collection Account, then the Trustee shall execute the assignment of such
Mortgage Loan prepared and delivered to the Trustee, at the request of the
Company, without recourse, representation or warranty, to the Company which
shall succeed to all the Trustee's right, title and interest in and to such
Mortgage Loan, and all security and documents relative thereto. Such assignment
shall be an assignment outright and not for security. The Company will thereupon
own such Mortgage, and all such security and documents, free of any further
obligation to the Trustee or the Certificateholders with respect thereto.
66
ARTICLE V
ACCOUNTS
Section 5.01 Collection of Mortgage Loan Payments; Protected Account.
(a) The Company shall make reasonable efforts in accordance with
customary and usual standards of practice of prudent mortgage lenders in the
respective states in which the Mortgaged Properties are located to collect all
payments called for under the terms and provisions of the Mortgage Loans to the
extent such procedures shall be consistent with this Agreement and the terms and
provisions of any related Required Insurance Policy. Consistent with the
foregoing, the Company may in its discretion (i) waive any late payment charge
and (ii) extend the due dates for payments due on a Mortgage Note for a period
not greater than 125 days. In the event of any such arrangement, the Company
shall make Advances on the related Mortgage Loan during the scheduled period in
accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements, and shall be entitled to
reimbursement therefor in accordance with Section 6.01. The Company shall not be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note or otherwise or against any
public or governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law. In addition, if (x) a Mortgage Loan is in default or default is
imminent or (y) the Company delivers to the Trustee a certification addressed to
the Trustee, based on the advice of counsel or certified public accountants, in
either case, that have a national reputation with respect to taxation of REMICs,
that a modification of such Mortgage Loan will not result in the imposition of
taxes on or disqualify the REMIC Trust, the Company may, (A) amend the related
Mortgage Note to reduce the Mortgage Rate applicable thereto, provided that such
reduced Mortgage Rate shall in no event be lower than ___% with respect to any
Mortgage Loan and (B) amend any Mortgage Note to extend to the maturity thereof.
(b) The Company shall establish and maintain a Protected Account
(which shall at all times be an Eligible Account) with a depository institution
in the name of the Company for the benefit of the Trustee on behalf of the
Certificateholders and designated "[Name of Trustee], in trust for registered
holders of Bear Xxxxxxx Asset Backed Securities Trust 200__-___, Asset-Backed
Certificates Series 200__-___". The Company shall deposit or cause to be
deposited into the Protected Account on a daily basis within one Business Day of
receipt, except as otherwise specifically provided herein, the following
payments and collections remitted by subservicers or received by it in respect
of the Company Mortgage Loans subsequent to the Cut-off Date (other than in
respect of principal and interest due on the Company Mortgage Loans on or before
the Cut-off Date) and the following amounts required to be deposited hereunder:
(i) all payments on account of principal, including Principal
Prepayments, on the Company Mortgage Loans;
67
(ii) all payments on account of interest on the Company Mortgage Loans
net of the related Servicing Fee permitted under Section 3.10 and LPMI
Fees, if any;
(iii) all Liquidation Proceeds and Insurance Proceeds, other than
proceeds to be applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Company's
normal servicing procedures;
(iv) any amount required to be deposited by the Company pursuant to
Section 5.01(c) in connection with any losses on Permitted Investments;
(v) any amounts required to be deposited by the Company pursuant to
Section 3.05; and
(vi) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Company into the Protected
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges or assumption fees, if collected, need not be remitted by the Company.
In the event that the Company shall remit any amount not required to be remitted
and not otherwise subject to withdrawal pursuant to Section 5.02, it may at any
time withdraw or direct the institution maintaining the Protected Account, to
withdraw such amount from the Protected Account, any provision herein to the
contrary notwithstanding. Such withdrawal or direction may be accomplished by
delivering written notice thereof to the institution maintaining the Protected
Account, that describes the amounts deposited in error in the Protected Account.
The Company shall maintain adequate records with respect to all withdrawals made
pursuant to this Section. All funds deposited in the Protected Account shall be
held in trust for the Certificateholders until withdrawn in accordance with
Section 5.02.
(c) The institution that maintains the Protected Account shall invest
the funds in the Protected Account, in the manner directed by the Company, in
Permitted Investments which shall mature not later than the Remittance Date and
shall not be sold or disposed of prior to its maturity. All such Permitted
Investments shall be made in the name of the Trustee, for the benefit of the
Certificateholders. All income and gain net of any losses realized from any such
investment shall be for the benefit of the Company as servicing compensation and
shall be remitted to it monthly as provided herein. The amount of any losses
incurred in the Protected Account in respect of any such investments shall be
deposited, by the Company into the Protected Account, out of the Company's own
funds.
(d) The Company shall give at least 30 days advance notice to the
Trustee, the Seller, the Master Servicer, each Rating Agency and the Depositor
of any proposed change of location of the Protected Account prior to any change
thereof.
Section 5.02 Permitted Withdrawals From the Protected Account.
(a) The Company may from time to time make withdrawals from the
Protected Account for the following purposes:
68
(i) to pay itself (to the extent not previously paid to or withheld by
the Company), as servicing compensation in accordance with Section 3.10,
that portion of any payment of interest that equals the Servicing Fee for
the period with respect to which such interest payment was made, and, as
additional servicing compensation, those other amounts set forth in Section
3.10;
(ii) to reimburse the Company for Advances made by it with respect to
the Mortgage Loans, provided, however, that the Company's right of
reimbursement pursuant to this subclause (ii) shall be limited to amounts
received on particular Mortgage Loan(s) (including, for this purpose,
Liquidation Proceeds and Insurance Proceeds) that represent late recoveries
of payments of principal and/or interest on such particular Mortgage
Loan(s) in respect of which any such Advance was made;
(iii) to reimburse the Company for any previously made portion of a
Servicing Advance or an Advance made by the Company that, in the good faith
judgment of the Company, will not be ultimately recoverable by it from the
related Mortgagor, any related Liquidation Proceeds, Insurance Proceeds or
otherwise (a "Nonrecoverable Advance"), to the extent not reimbursed
pursuant to clause (ii) or clause (v);
(iv) to reimburse the Company from Insurance Proceeds for Insured
Expenses covered by the related Insurance Policy;
(v) to pay the Company any unpaid Servicing Fees and to reimburse it
for any unreimbursed Servicing Advances, provided, however, that the
Company's right to reimbursement for Servicing Advances pursuant to this
subclause (v) with respect to any Mortgage Loan shall be limited to amounts
received on particular Mortgage Loan(s) (including, for this purpose,
Liquidation Proceeds, Insurance Proceeds and purchase and repurchase
proceeds) that represent late recoveries of the payments for which such
Servicing Advances were made;
(vi) to pay to the Seller, the Depositor or itself, as applicable,
with respect to each Mortgage Loan or property acquired in respect thereof
that has been purchased pursuant to Section 2.02, 2.03 or 4.21 of this
Agreement, all amounts received thereon and not taken into account in
determining the related Stated Principal Balance of such repurchased
Mortgage Loan;
(vii) to pay any expenses recoverable by the Company pursuant to
Section 8.04 of this Agreement;
(viii) to withdraw pursuant to Section 5.01 any amount deposited in
the Protected Account and not required to be deposited therein; and
(ix) to clear and terminate the Protected Account upon termination of
this Agreement pursuant to Section 11.01 hereof.
In addition, no later than 1:00 p.m. Eastern time on the Remittance Date,
the Company shall withdraw from the Protected Account and remit to the Master
Servicer the amount required to be withdrawn therefrom pursuant to Section 5.04
hereof. In addition, on or before the
69
Remittance Date, the Company shall remit to the Master Servicer for deposit in
the Master Servicer Collection Account any Advances or any payments of
Compensating Interest required to be made by the Company with respect to the
Company Mortgage Loans.
The Company shall keep and maintain separate accounting, on a Mortgage Loan
by Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Protected Account pursuant to subclauses (i), (ii), (iv), (v) and (vi) above.
Prior to making any withdrawal from the Protected Account pursuant to subclause
(iii), the Company shall deliver to the Trustee an Officer's Certificate of a
Servicing Officer indicating the amount of any previous Advance or Servicing
Advance determined by the Company to be a Nonrecoverable Advance and identifying
the related Mortgage Loan(s), and their respective portions of such
Nonrecoverable Advance.
Section 5.02A Reports to Master Servicer.
On or before the tenth calendar day of each month, the Company shall
furnish to the Master Servicer electronically in a format acceptable to the
Master Servicer loan accounting reports in the investor's assigned loan number
order to document the payment activity on each Company Mortgage Loan on an
individual mortgage loan basis. With respect to each month, such loan accounting
reports shall contain the following:
(i) With respect to each Scheduled Payment (on both an actual and
scheduled basis with respect to mortgage loan balances and on an actual
basis with respect to paid-through dates), the amount of such remittance
allocable to principal (including a separate breakdown of any Principal
Prepayment, including the amount of any Prepayment Interest Shortfall);
(ii) with respect to each Monthly Payment, the amount of such
remittance allocable to scheduled interest;
(iii) the amount of servicing compensation received by the Company
during the prior calendar month;
(iv) the aggregate scheduled principal balance of the Company Mortgage
Loans;
(v) the aggregate amount of Advances made by the Company pursuant to
Section 6.01;
(vi) the aggregate of any expenses reimbursed to the Company during
the prior calendar month pursuant to Section 5.02; and
(vii) the number and aggregate outstanding principal balances of
Company Mortgage Loans (a) delinquent (1) 30 to 59 days, (2) 60 to 89 days,
(3) 90 days or more; (b) as to which foreclosure has commenced; and (c) as
to which REO Property has been acquired.
70
Section 5.03 Collection of Taxes; Assessments and Similar Items; Escrow
Accounts.
With respect to each Company Mortgage Loan, to the extent required by the
related Mortgage Note, the Company shall establish and maintain one or more
accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors (or advances by the Company) for the payment of
taxes, assessments, hazard insurance premiums or comparable items for the
account of the Mortgagors. Nothing herein shall require the Company to compel a
Mortgagor to establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be made
only to effect timely payment of taxes, assessments, hazard insurance premiums,
condominium or PUD association dues, or comparable items, to reimburse the
Company out of related collections for any payments made with respect to each
Company Mortgage Loan pursuant to Section 3.01 (with respect to taxes and
assessments and insurance premiums) and Section 3.05 (with respect to hazard
insurance), to refund to any Mortgagors for any Company Mortgage Loans any sums
as may be determined to be overages, to pay interest, if required by law or the
terms of the related Mortgage or Mortgage Note, to such Mortgagors on balances
in the Escrow Account or to clear and terminate the Escrow Account at the
termination of this Agreement in accordance with Section 11.01 thereof. The
Escrow Account shall not be a part of the Trust Fund.
Section 5.04 Servicer Protected Accounts. (a) The Master Servicer shall
enforce the obligation of the Company and the Servicers to establish and
maintain a Protected Account in accordance with this Agreement and the Servicing
Agreements, with records to be kept with respect thereto on a Mortgage Loan by
Mortgage Loan basis, into which accounts shall be deposited within one Business
Day (or as of such other time specified in the Servicing Agreements) of receipt
all collections of principal and interest on any Mortgage Loan and with respect
to any REO Property received by the Company or the related Servicer, including
Principal Prepayments, Insurance Proceeds, Liquidation Proceeds, and advances
made from the Company's or such Servicer's own funds (less servicing
compensation as permitted by this Agreement or the related Servicing Agreement)
and all other amounts to be deposited in the Protected Accounts. Each of the
Company and the Servicers are hereby authorized to make withdrawals from and
deposits to the related Protected Account for purposes required or permitted by
this Agreement. To the extent provided in this Agreement or any Servicing
Agreement, the Protected Account shall be held in a Designated Depository
Institution and segregated on the books of such institution in the name of the
Trustee for the benefit of Certificateholders.
(b) To the extent provided in this Agreement or any Servicing
Agreement, amounts on deposit in a Protected Account may be invested in
Permitted Investments in the name of the Trustee for the benefit of
Certificateholders and, except as provided in the preceding paragraph, not
commingled with any other funds, such Permitted Investments to mature, or to be
subject to redemption or withdrawal, no later than the date on which such funds
are required to be withdrawn for deposit in the Master Servicer Collection
Account, and shall be held until required for such deposit. The income earned
from Permitted Investments made pursuant to this Section 5.04 shall be paid to
the Company or the related Servicer under this Agreement or the related
Servicing Agreement, and the risk of loss of moneys required to be distributed
to the Certificateholders resulting from such investments shall be borne by and
be the risk of the
71
Company or the related Servicer, as the case may be. The Company or the related
Servicer (to the extent provided in this Agreement or the related Servicing
Agreement) shall deposit the amount of any such loss in the Protected Account
within two Business Days of receipt of notification of such loss but not later
than the second Business Day prior to the Distribution Date on which the moneys
so invested are required to be distributed to the Certificateholders.
(c) To the extent provided in this Agreement or the related Servicing
Agreement and subject to this Article V, on or before each Remittance Date, the
Company or the related Servicer shall withdraw or shall cause to be withdrawn
from its Protected Account and shall immediately deposit or cause to be
deposited in the Master Servicer Collection Account amounts representing the
following collections and payments (other than with respect to principal of or
interest on the Mortgage Loans due on or before the Cut-off Date):
(i) Scheduled Payments on the Mortgage Loans received or any related
portion thereof advanced by the Company or the related Servicer pursuant to
the related Servicing Agreement which were due on or before the related Due
Date, net of the amount thereof comprising the Servicing Fees;
(ii) Full Principal Prepayments and any Liquidation Proceeds received
by the Company or the related Servicer with respect to such Mortgage Loans
in the related Prepayment Period, with interest to the date of prepayment
or liquidation, net of the amount thereof comprising the Servicing Fees and
LPMI Fees, if any;
(iii) Partial Principal Prepayments received by the Company or the
related Servicer for such Mortgage Loans in the related Prepayment Period;
and
(iv) Any amount to be used as an Advance.
(d) Withdrawals may be made from a Protected Account by the Company as
described in Section 5.02 hereof and by the Master Servicer or the related
Servicer only to make remittances as provided in Section 5.04(c), 5.05 and 5.06;
to reimburse the Master Servicer or the Servicer for Advances which have been
recovered by subsequent collection from the related Mortgagor; to remove amounts
deposited in error; to remove fees, charges or other such amounts deposited on a
temporary basis; or to clear and terminate the account at the termination of
this Agreement in accordance with Section 11.01. As provided in Sections 5.04(c)
and 5.05(b) certain amounts otherwise due to the related Servicer may be
retained by the related Servicer and need not be deposited in the Master
Servicer Collection Account.
Section 5.05 Master Servicer Collection Account. (a) The Master Servicer
shall establish and maintain in the name of the Trustee, for the benefit of the
Certificateholders, the Master Servicer Collection Account which shall be an
Eligible Account. The Master Servicer will deposit in the Master Servicer
Collection Account as identified by the Master Servicer and as received by the
Master Servicer, the following amounts:
(i) Any amounts withdrawn from a Protected Account;
(ii) Any Advance and any Compensating Interest Payments;
72
(iii) Any Insurance Proceeds or Liquidation Proceeds received by or on
behalf of the Master Servicer or which were not deposited in a Protected
Account;
(iv) The Repurchase Price with respect to any Mortgage Loans purchased
by the Seller or Section 2.02 or 2.03, any amounts which are to be treated
pursuant to Section 2.04 of this Agreement as the payment of such a
Repurchase Price, the Repurchase Price with respect to any Mortgage Loans
purchased by the Company pursuant to Section 4.21, and all proceeds of any
Mortgage Loans or property acquired with respect thereto repurchased by the
Seller or its designee pursuant to Section 11.01;
(v) Any amounts required to be deposited with respect to losses on
investments of deposits in an Account; and
(vi) Any other amounts received by or on behalf of the Master Servicer
or the Trustee and required to be deposited in the Master Servicer
Collection Account pursuant to this Agreement.
(b) All amounts deposited to the Master Servicer Collection Account
shall be held by the Master Servicer in the name of the Trustee in trust for the
benefit of the Certificateholders in accordance with the terms and provisions of
this Agreement. The requirements for crediting the Master Servicer Collection
Account or the Distribution Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in the
nature of late payment charges or assumption, tax service, statement account or
payoff, substitution, satisfaction, release and other like fees and charges,
need not be credited by the Master Servicer or the related Servicer to the
Distribution Account or the Master Servicer Collection Account, as applicable.
In the event that the Master Servicer shall deposit or cause to be deposited to
the Distribution Account any amount not required to be credited thereto, the
Trustee, upon receipt of a written request therefor signed by a Servicing
Officer of the Master Servicer, shall promptly transfer such amount to the
Master Servicer, any provision herein to the contrary notwithstanding.
(c) The amount at any time credited to the Master Servicer Collection
Account may be invested, in the name of the Trustee, or its nominee, for the
benefit of the Certificateholders, in Permitted Investments or be held in cash
as directed by Master Servicer. All Permitted Investments shall mature or be
subject to redemption or withdrawal on or before, and shall be held until, the
next succeeding Distribution Account Deposit Date. Any and all investment
earnings from the Master Servicer Collection Account shall be paid to the Master
Servicer. The risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the Master Servicer. The Master Servicer shall deposit the amount of any
such loss in the Master Servicer Collection Account within two Business Days of
receipt of notification of such loss but not later than the second Business Day
prior to the Distribution Date on which the moneys so invested are required to
be distributed to the Certificateholders.
Section 5.06 Permitted Withdrawals and Transfers from the Master Servicer
Collection Account. (a) The Master Servicer will, from time to time on demand of
the Master Servicer or the Securities Administrator, make or cause to be made
such withdrawals or transfers from the
73
Master Servicer Collection Account as the Master Servicer has designated for
such transfer or withdrawal pursuant to this Agreement and the related Servicing
Agreement. The Master Servicer may clear and terminate the Master Servicer
Collection Account pursuant to Section 11.01 and remove amounts from time to
time deposited in error.
(b) On an ongoing basis, the Master Servicer shall withdraw from the
Master Servicer Collection Account to pay itself as provided in Section 4.14 and
to pay any expenses recoverable by the Trustee, the Master Servicer, the
Custodian or the Securities Administrator pursuant to Sections 4.03, 8.03, 8.04
and 10.05.
(c) In addition, on or before each Distribution Account Deposit Date,
the Master Servicer shall deposit in the Distribution Account (or remit to the
Trustee for deposit therein) any Advances required to be made by the Master
Servicer with respect to the Mortgage Loans.
(d) No later than 3:00 p.m. New York time on each Distribution Account
Deposit Date, the Master Servicer will transfer all available funds on deposit
in the Master Servicer Collection Account with respect to the related
Distribution Date to the Trustee for deposit in the Distribution Account.
Section 5.07 Distribution Account.
(a) The Trustee shall establish and maintain in the name of the
Trustee, for the benefit of the Certificateholders, the Distribution Account as
a segregated trust account or accounts.
(b) All amounts deposited to the Distribution Account shall be held by
the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.
(c) The Distribution Account shall constitute an Eligible Account of
the Trust Fund segregated on the books of the Trustee and held by the Trustee
and the Distribution Account and the funds deposited therein shall not be
subject to, and shall be protected from, all claims, liens, and encumbrances of
any creditors or depositors of the Trustee (whether made directly, or indirectly
through a liquidator or receiver of the Trustee). The amount at any time
credited to the Distribution Account may be, as directed by the Master Servicer,
held either uninvested in a trust or deposit account of the Trustee with no
liability for interest or other compensation thereof, except as otherwise agreed
in writing with the Master Servicer, or invested in the name of the Trustee, in
such Permitted Investments which mature not later than the Business Day next
preceding the succeeding Distribution Date, except if such Permitted Investment
is an obligation of or is managed by the institution that maintains such fund or
account, then such Permitted Investment shall mature not later than such
Distribution Date. Permitted Investments in respect of the Distribution Account
shall not be sold or disposed of prior to their maturity. All investment
earnings on amounts on deposit in the Distribution Account or benefit from funds
uninvested therein from time to time shall be for the account of the Master
Servicer. The Master Servicer shall be permitted to receive distribution of any
and all investment earnings from the Distribution Account on each Distribution
Date. If there is any loss
74
on a Permitted Investment or demand deposit, the Master Servicer shall deposit
the amount of the loss in the Distribution Account. With respect to the
Distribution Account and the funds deposited therein, the Trustee shall take
such action as may be necessary to ensure that the Certificateholders shall be
entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e),
and applicable regulations pursuant thereto, if applicable, or any applicable
comparable state statute applicable to state chartered banking corporations.
Section 5.08 Permitted Withdrawals and Transfers from the Distribution
Account.
(a) The Trustee will, from time to time on demand of the Master
Servicer or the Securities Administrator, make or cause to be made such
withdrawals or transfers from the Distribution Account as the Master Servicer
has designated for such transfer or withdrawal pursuant to this Agreement or any
Servicing Agreement or as the Securities Administrator has instructed hereunder
for the following purposes (limited in the case of amounts due the Master
Servicer to those not withdrawn from the Master Servicer Collection Account in
accordance with the terms of this Agreement; provided that the Trustee shall not
be responsible for such determination and may rely on the Master Servicer's or
the Securities Administrator's instructions under this Section 5.08):
(i) to reimburse the Master Servicer, the Company or the related
Servicer for any Advance or Servicing Advance of its own funds, the right
of the Master Servicer, the Company or the related Servicer to
reimbursement pursuant to this subclause (i) being limited to amounts
received on a particular Mortgage Loan (including, for this purpose, the
Repurchase Price therefor, Insurance Proceeds and Liquidation Proceeds)
which represent late payments or recoveries of the principal of or interest
on such Mortgage Loan respecting which such Advance or Servicing Advance
was made;
(ii) to reimburse the Master Servicer, the Company or the related
Servicer from Insurance Proceeds or Liquidation Proceeds relating to a
particular Mortgage Loan for amounts expended by the Master Servicer, the
Company or the related Servicer in good faith in connection with the
restoration of the related Mortgaged Property which was damaged by an
uninsured cause or in connection with the liquidation of such Mortgage
Loan;
(iii) to reimburse the Master Servicer, the Company or the related
Servicer from Insurance Proceeds relating to a particular Mortgage Loan for
insured expenses incurred with respect to such Mortgage Loan and to
reimburse the Master Servicer, the Company or the related Servicer from
Liquidation Proceeds from a particular Mortgage Loan for Liquidation
Expenses incurred with respect to such Mortgage Loan; provided that the
Master Servicer shall not be entitled to reimbursement for Liquidation
Expenses with respect to a Mortgage Loan to the extent that (i) any amounts
with respect to such Mortgage Loan were paid as Excess Liquidation Proceeds
pursuant to clause (x) of this Subsection (a) to the Master Servicer; and
(ii) such Liquidation Expenses were not included in the computation of such
Excess Liquidation Proceeds;
(iv) [reserved];
75
(v) [reserved];
(vi) to reimburse the Master Servicer, the Company or a Servicer for
advances of funds pursuant to this Agreement or the related Servicing
Agreement, and the right to reimbursement pursuant to this subclause being
limited to amounts received on the related Mortgage Loan (including, for
this purpose, the Repurchase Price therefor, Insurance Proceeds and
Liquidation Proceeds) which represent late recoveries of the payments for
which such advances were made;
(vii) to reimburse the Master Servicer, the Company or a Servicer for
any Advance or advance, after a Realized Loss has been allocated with
respect to the related Mortgage Loan if the Advance or advance has not been
reimbursed pursuant to clauses (i) and (vi);
(viii) to pay the Master Servicer as set forth in Section 4.14;
(ix) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections 4.03,
8.04(c) and (d) and 12.02 or otherwise reimbursable to it pursuant to this
Agreement;
(x) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds to the extent not retained by
the Company or the related Servicer;
(xi) to reimburse or pay the Company or the related Servicer any such
amounts as are due thereto under this Agreement or the related Servicing
Agreement and have not been retained by or paid to the Company or the
related Servicer, to the extent provided herein and in the related
Servicing Agreement;
(xii) to reimburse the Trustee, the Custodian or the Securities
Administrator for expenses, costs and liabilities incurred by or
reimbursable to it pursuant to this Agreement (to the extent not reimbursed
from the Master Servicer Collection Account in accordance with Section
5.06);
(xiii) to remove amounts deposited in error; and
(xiv) to clear and terminate the Distribution Account pursuant to
Section 11.01.
(b) The Master Servicer shall keep and maintain separate accounting,
on a Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Distribution Account pursuant to subclauses (i) through
(vi), inclusive, and (viii) or with respect to any such amounts which would have
been covered by such subclauses had the amounts not been retained by the Master
Servicer without being deposited in the Distribution Account under Section 5.06.
(c) On each Distribution Date, the Trustee shall distribute the
Available Funds to the extent of funds on deposit in the Distribution Account to
the holders of the Certificates in accordance with the Remittance Report upon
which the Trustee may conclusively rely.
76
ARTICLE VI
DISTRIBUTIONS AND ADVANCES
Section 6.01 Advances.
(a) The Company shall make an Advance with respect to any Company
Mortgage Loan and deposit such Advance in the Master Servicer Collection Account
no later than 1:00 p.m. Eastern time on the Remittance Date in immediately
available funds. The Master Servicer shall cause the related Servicer to remit
any such Advance required pursuant to the terms of the related Servicing
Agreement. The Company or the related Servicer, as applicable, shall be
obligated to make any such Advance only to the extent that such advance would
not be a Nonrecoverable Advance. If the Company or the related Servicer shall
have determined that it has made a Nonrecoverable Advance or that a proposed
Advance or a lesser portion of such Advance would constitute a Nonrecoverable
Advance, the Company or the related Servicer, as the case may be, shall deliver
(i) to the Trustee for the benefit of the Certificateholders funds constituting
the remaining portion of such Advance, if applicable, and (ii) to the Depositor,
the Master Servicer, each Rating Agency and the Trustee an Officer's Certificate
setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its own funds, the
Company may (i) cause to be made an appropriate entry in its records relating to
the Protected Account that any Amounts Held for Future Distribution has been
used by the Company in discharge of its obligation to make any such Advance and
(ii) transfer such funds from the Protected Account to the Distribution Account.
Any funds so applied and transferred shall be replaced by the Company by deposit
in the Distribution Account, no later than the close of business on the
Remittance Date immediately preceding the Distribution Date on which such funds
are required to be distributed pursuant to this Agreement.
The Company shall be entitled to be reimbursed from the Protected Account
for all Advances of its own funds made pursuant to this Section as provided in
Section 5.02. The obligation to make Advances with respect to any Mortgage Loan
shall continue until such Mortgage Loan is paid in full or the related Mortgaged
Property or related REO Property has been liquidated or until the purchase or
repurchase thereof (or substitution therefor) from the Trust Fund pursuant to
any applicable provision of this Agreement, except as otherwise provided in this
Section 6.01.
(b) If the Scheduled Payment on a Mortgage Loan that was due on a
related Due Date and is delinquent other than as a result of application of the
Relief Act and for which the Company or the related Servicer was required to
make an Advance pursuant to this Agreement or the related Servicing Agreement
exceeds the amount deposited in the Master Servicer Collection Account which
will be used for an Advance with respect to such Mortgage Loan, the Master
Servicer will deposit in the Master Servicer Collection Account not later than
the Distribution Account Deposit Date immediately preceding the related
Distribution Date an amount equal to such deficiency, net of the Master
Servicing Fee and Servicing Fee for such Mortgage Loan except to the extent the
Master Servicer determines any such Advance to be
77
nonrecoverable from Liquidation Proceeds, Insurance Proceeds or future payments
on the Mortgage Loan for which such Advance was made. Subject to the foregoing,
the Master Servicer shall continue to make such Advances through the date that
the Company or the related Servicer is required to do so under this Agreement or
the related Servicing Agreement, as applicable. If applicable, on the
Distribution Account Deposit Date, the Master Servicer shall present an
Officer's Certificate to the Trustee (i) stating that the Master Servicer elects
not to make an Advance in a stated amount and (ii) detailing the reason it deems
the advance to be nonrecoverable.
Subject to and in accordance with the provisions of Article IX hereof, in
the event the Master Servicer fails to make such Advance, then the Trustee, as
Successor Master Servicer, shall be obligated to make such Advance, subject to
the provisions of this Section 6.01.
Section 6.02 Compensating Interest Payments.
(a) In the event that there is a Prepayment Interest Shortfall arising
from a voluntary Principal Prepayment in part or in full by the Mortgagor with
respect to any Company Mortgage Loan, the Company shall, to the extent of the
Servicing Fee for such Distribution Date, deposit into the Master Servicer
Collection Account, as a reduction of the Servicing Fee for such Distribution
Date, no later than the close of business on the Remittance Date immediately
preceding such Distribution Date, an amount equal to the Prepayment Interest
Shortfall; and in case of such deposit, the Company shall not be entitled to any
recovery or reimbursement from the Depositor, the Trustee, the Seller, the
Securities Administrator, the Trust Fund or the Certificateholders.
(b) The Master Servicer shall cause each Servicer under the related
Servicing Agreement to remit any required Compensating Interest Payments to the
Master Servicer Collection Account on the Remittance Date.
(c) The Master Servicer shall be required to remit the amount of any
such Prepayment Interest Shortfalls, to the extent of the Master Servicing Fee
for such Distribution Date, in the event the Company or the related Servicer is
required to make such payment but fails to do so.
Section 6.03 [Reserved.]
Section 6.04 Distributions.
(a) On each Distribution Date, the Available Funds for such
Distribution Date shall be withdrawn by the Trustee to the extent of funds on
deposit in the Distribution Account and distributed as directed in accordance
with the Remittance Report for such Distribution Date, in the following order of
priority:
first, to pay accrued and unpaid interest on the Offered Certificates
as follows:
1. To the holders of the Class [A-1] Certificates, the Monthly
Interest Distributable Amount for such Class for such Distribution Date;
78
2. To the holders of the Class [M-1] Certificates, the Monthly
Interest Distributable Amount for such Class for such Distribution Date;
3. To the holders of the Class [M-2] Certificates, the Monthly
Interest Distributable Amount for such Class for such Distribution Date;
and
4. To the holders of the Class [B-1] Certificates, the Monthly
Interest Distributable Amount for such Class for such Distribution Date.
second, (a) on each Distribution Date other than the Distribution Date
in _____, 200__, the Principal Distribution Amount for such Distribution Date
shall be paid to the holders of the Offered Certificates, allocated on a pro
rata basis, based on the Certificate Principal Balance of each such Class, until
the Certificate Principal Balance of each such Class has been reduced to zero;
and (b) on the Distribution Date in _____, 200__, the Principal Distribution
Amount for such Distribution Date shall be paid (i) first, to the holders of the
Class P Certificates, until the Certificate Principal Balance thereof has been
reduced to zero and (ii) second, to the holders of the Offered Certificates,
allocated on a pro rata basis, based on the Certificate Principal Balance of
each such Class, until the Certificate Principal Balance of each such Class has
been reduced to zero.
third, after the payment of interest and principal to the Certificates
as described in clauses first and second above, any Net Monthly Excess Cashflow
for such Distribution Date will be distributed as follows:
1. After the Distribution Date in _____, 200__, to the holders of the
Offered Certificates, in an amount equal to any Extra Principal
Distribution Amount, payable to such holders as part of the Principal
Distribution Amount pursuant to clause second above;
2. To the holders of the Class [A-1] Certificates, then to the holders
of the Class [M-1] Certificates, then to the holders of the Class [M-2]
Certificates, and then to the holders of the Class [B-1] Certificates, any
Unpaid Interest Shortfall for such Classes of Certificates on such
Distribution Date, to the extent not previously reimbursed;
3. To the holders of the Class [M-1] Certificates, in an amount equal
to the Applied Realized Loss Amount for the Class [M-1] Certificates;
4. To the holders of the Class [M-2] Certificates, in an amount equal
to the Applied Realized Loss Amount for the Class [M-2] Certificates;
5. To the holders of the Class [B-1] Certificates, in an amount equal
to the Applied Realized Loss Amount for the Class [B-1] Certificates; and
6. To the holders of the Class R Certificate, any amount of Net
Monthly Excess Cashflow remaining after distributions pursuant to items 1
through 5 of this clause third.
(b) [Reserved.]
79
(c) Subject to Section 11.02 hereof respecting the final distribution,
on each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if (i) such Holder has so
notified the Trustee at least 5 Business Days prior to the related Record Date
and (ii) such Holder shall hold Regular Certificates with aggregate principal
denominations of not less than $1,000,000 or evidencing a Percentage Interest
aggregating 10% or more with respect to such Class or, if not, by check mailed
by first class mail to such Certificateholder at the address of such holder
appearing in the Certificate Register. Notwithstanding the foregoing, but
subject to Section 11.02 hereof respecting the final distribution, distributions
with respect to Certificates registered in the name of a Depository shall be
made to such Depository in immediately available funds.
(d) On or before 5:00 p.m. Eastern time on the fifth Business Day
immediately preceding each Distribution Date, the Master Servicer shall deliver
a report to the Securities Administrator in the form of a computer readable
magnetic tape (or by such other means as the Master Servicer and the Securities
Administrator may agree from time to time) containing such data and information,
as agreed to by the Master Servicer and the Securities Administrator such as to
permit the Securities Administrator to prepare the Monthly Statement to
Certificateholders and to direct the Trustee in writing to make the required
distributions for the related Distribution Date (the "Remittance Report"). The
Securities Administrator shall deliver a Remittance Report to the Trustee on or
before 5:00 p.m. Eastern time on the Business Day immediately preceding each
Distribution Date.
Section 6.04A Allocation of Realized Losses.
(a) On or prior to each Determination Date, the Master Servicer shall
determine the amount of any Realized Loss in respect of each Mortgage Loan that
occurred during the immediately preceding calendar month.
(b) The interest portion of Realized Losses shall be allocated to the
Certificates as described in Section 1.02 hereof.
(c) The principal portion of all Realized Losses on the Mortgage Loans
allocated to any REMIC Regular Interest pursuant to Section 6.04(A)(d) shall be
allocated on each Distribution Date as follows: first, to Net Monthly Excess
Cashflow; second, to the Class B-1 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; third, to the Class M-2 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero; and
fourth, to the Class M-1 Certificates, until the Certificate Principal Balance
thereof has been reduced to zero. All such Realized Losses to be allocated to
the Certificate Principal Balances of all Classes on any Distribution Date shall
be so allocated after the actual distributions to be made on such date as
provided above. All references above to the Certificate Principal Balance of any
Class of Certificates shall be to the Certificate Principal Balance of such
Class immediately prior to the relevant Distribution Date, before reduction
thereof by any Realized Losses, in each case to be allocated to such Class of
Certificates, on such Distribution Date.
80
Any allocation of the principal portion of Realized Losses to a Subordinate
Certificate on any Distribution Date shall be made by reducing the Certificate
Principal Balance thereof by the amount so allocated. No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A-1 Certificates.
All such Realized Losses and all other losses allocated to a Class of
Certificates hereunder will be allocated among the, Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.
Section 6.05 Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Securities
Administrator shall prepare and make available to each Holder of Certificates,
the Trustee, the Master Servicer and the Depositor a statement setting forth for
the Certificates:
(i) the amount of the related distribution to Holders of each Class
allocable to principal, separately identifying (A) the aggregate amount of
any Principal Prepayments included therein, (B) the aggregate of all
scheduled payments of principal included therein and (C) Extra Principal
Distribution Amount (if any);
(ii) the amount of such distribution to Holders of each Class
allocable to interest;
(iii) the Certificate Principal Balance of each Class after giving
effect (i) to all distributions allocable to principal on such Distribution
Date and (ii) the allocation of any Applied Realized Loss Amounts for such
Distribution Date;
(iv) the aggregate of the Stated Principal Balances of all of the
Mortgage Loans for the following Distribution Date;
(v) the amount of the Master Servicing Fees paid to or retained by the
Master Servicer and the Servicing Fees paid to or retained by the Company
or the related Servicer for the related Due Period;
(vi) the Pass-Through Rate for each Class of Certificates with respect
to the current Accrual Period, and, if applicable, whether such
Pass-Through Rate was limited by the Net WAC Rate Cap];
(vii) the amount of Advances included in the distribution on such
Distribution Date;
(viii) the cumulative amount of Applied Realized Loss Amounts to date
and, in addition, if the Certificate Principal Balances of the Subordinate
Certificates have all been reduced to zero, the cumulative amount of any
Realized Losses that have not been allocated to any Certificates;
(ix) the number and aggregate principal amounts of Mortgage Loans (A)
Delinquent (exclusive of Mortgage Loans in foreclosure and bankruptcy) (1)
31 to 60
81
days, (2) 61 to 90 days and (3) 91 or more days, (B) in foreclosure and
delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more days and
(C) in bankruptcy and delinquent (1) 31 to 60 days, (2) 61 to 90 days and
(3) 91 or more days, in each case as of the close of business on the last
day of the calendar month preceding such Distribution Date;
(x) with respect to any Mortgage Loan that was liquidated during the
preceding calendar month, the loan number and Stated Principal Balance of,
and Realized Loss on, such Mortgage Loan as of the end of the related
Prepayment Period;
(xi) the total number and principal balance of any real estate owned
or REO Properties as of the end of the related Prepayment Period;
(xii) the three month rolling average of the percent equivalent of a
fraction, the numerator of which is the aggregate Stated Principal
Balance of the Mortgage Loans that are 60 days or more delinquent or are
in bankruptcy or foreclosure or are REO Properties, and the denominator
of which is the aggregate Stated Principal Balance of all of the Mortgage
Loans as of the last day of the calendar month preceding such
Distribution Date; and
(xiii) the Realized Losses during the related Prepayment Period and
the cumulative Realized Losses through the end of the preceding month.
The Securities Administrator may make the foregoing Monthly Statement (and,
at its option, any additional files containing the same information in an
alternative format) available each month to Certificateholders via the
Securities Administrator's internet website. The Securities Administrator's
internet website shall initially be located at "www.[___].com". Assistance in
using the website can be obtained by calling the Securities Administrator's
customer service desk at (___) ___-____. Parties that are unable to use the
above distribution options are entitled to have a paper copy mailed to them via
first class mail by calling the customer service desk and indicating such. The
Securities Administrator may change the way Monthly Statements are distributed
in order to make such distributions more convenient or more accessible to the
above parties.
To the extent timely received from the Securities Administrator, the
Trustee will also make the related Monthly Statements available to
Certificateholders via the Trustee's internet website. The Trustee's internet
website will initially be located at "xxx.xxxxxxxx.xxx/xxxxxx". Assistance in
using the Trustee's internet website can be obtained by calling the Trustee's
customer service desk at (___) ___-____.
(b) The Securities Administrator's responsibility for making the above
information available to the Certificateholders is limited to the availability,
timeliness and accuracy of the information derived from the Master Servicer, the
Company and the Servicers. The Securities Administrator will make available a
copy of each statement provided pursuant to this Section 6.05 to each Rating
Agency.
(c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished upon request to each Person who at
any time during the
82
calendar year was a Certificateholder, based on information provided by the
Securities Administrator containing the information set forth in clauses (a)(i)
and (a)(ii) of this Section 6.05 aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder. Such
obligation of the Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Trustee or
the Securities Administrator pursuant to any requirements of the Code as from
time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Securities
Administrator shall furnish to the Holders of the Residual Certificates the
applicable Form 1066 and each applicable Form 1066Q and shall respond promptly
to written requests made not more frequently than quarterly by any Holder of a
Residual Certificate with respect to the following matters:
(i) The original projected principal and interest cash flows on the
Closing Date on each Class of regular and residual interests created
hereunder and on the Mortgage Loans, based on the Prepayment Assumption;
(ii) The projected remaining principal and interest cash flows as of
the end of any calendar quarter with respect to each Class of regular and
residual interests created hereunder and the Mortgage Loans, based on the
Prepayment Assumption;
(iii) The applicable Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and interest cash
flows described above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each Class of regular or residual
interests created hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of a REMIC with respect
to such regular interests or bad debt deductions claimed with respect to
the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of a REMIC;
and
(vii) Any taxes (including penalties and interest) imposed on the
REMIC, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or local
income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above shall
be provided by the Depositor pursuant to Section 10.12.
Section 6.06 REMIC Designation.
(a) The Trustee shall elect that the Trust Fund shall be treated as a
REMIC under Section 860D of the Code. Any inconsistencies or ambiguities in this
Agreement or in the
83
administration of this Agreement shall be resolved in a manner that preserves
the validity of such REMIC election. The assets of the REMIC Trust shall include
the Mortgage Loans and all interest owing in respect of and principal due
thereon, the Distribution Account, the Master Servicer Collection Account, the
Reserve Account, the Protected Accounts maintained by the Company and the
Servicers, any REO Property, any proceeds of the foregoing and any other assets
subject to this Agreement.
84
ARTICLE VII
THE CERTIFICATES
Section 7.01 The Certificates.
The Certificates shall be substantially in the forms attached hereto as
Exhibits A-1 through A-7. The Certificates shall be issuable in registered form,
in the minimum dollar denominations, integral dollar multiples in excess thereof
(except that one Certificate of each Class may be issued in a different amount
which must be in excess of the applicable minimum dollar denomination) and
aggregate dollar denominations as set forth in the following table:
Minimum Integral Multiple in Original Certificate
Class Denomination Excess of Minimum Principal Balance Pass-Through Rate
--------- ------------ -------------------- -------------------- -----------------
[A-1] $25,000 $1,000 $ Class A-1 Pass-Through Rate
[M-1] $25,000 $1,000 $ Class M-1 Pass-Through Rate
[M-2] $25,000 $1,000 $ Class M-2 Pass-Through Rate
[B-1] $25,000 $1,000 $ Class B-1 Pass-Through Rate
[R] 100% N/A N/A N/A
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such authentication and delivery. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate the countersignature
of the Trustee by manual signature, and such countersignature upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly countersigned and delivered hereunder. All
Certificates shall be dated the date of their countersignature. On the Closing
Date, the Trustee shall authenticate the Certificates to be issued at the
written direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee on a
continuous basis, an adequate inventory of Certificates to facilitate transfers.
Section 7.02 Certificate Register; Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 7.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
Transfer of any Certificate, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of like aggregate Percentage Interest.
85
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute, authenticate, and
deliver the Certificates that the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of Transfer or exchange shall be accompanied by a written instrument of Transfer
in form satisfactory to the Trustee duly executed by the holder thereof or his
attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or exchange shall
be canceled and subsequently destroyed by the Trustee in accordance with the
Trustee's customary procedures.
(b) No Transfer of a Private Certificate shall be made unless such
Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall each certify
to the Trustee and the Securities Administrator in writing the facts surrounding
the Transfer in substantially the forms set forth in Exhibit E (the "Transferor
Certificate") and (x) deliver a letter in substantially the form of either
Exhibit F (the "Investment Letter") or Exhibit G (the "Rule 144A Letter") or (y)
there shall be delivered to the Trustee and the Securities Administrator an
Opinion of Counsel addressed to the Trustee and the Securities Administrator
that such Transfer may be made pursuant to an exemption from the Securities Act,
which Opinion of Counsel shall not be an expense of the Depositor, the Seller,
the Master Servicer, the Securities Administrator or the Trustee. The Depositor
shall provide to any Holder of a Private Certificate and any prospective
transferee designated by any such Holder, information regarding the related
Certificates and the Mortgage Loans and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4)
for Transfer of any such Certificate without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A. The
Trustee, the Securities Administrator and the Master Servicer shall cooperate
with the Depositor in providing the Rule 144A information referenced in the
preceding sentence, including providing to the Depositor such information
regarding the Certificates, the Mortgage Loans and other matters regarding the
Trust Fund as the Depositor shall reasonably request to meet its obligation
under the preceding sentence. Each Holder of a Private Certificate desiring to
effect such Transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Seller, the Securities Administrator and the Master Servicer
against any liability that may result if the Transfer is not so exempt or is not
made in accordance with such federal and state laws.
No Transfer of an ERISA Restricted Certificate shall be made unless either
(i) the Trustee, the Master Servicer and the Securities Administrator shall have
received a
86
representation from the transferee of such Certificate acceptable to and in form
and substance satisfactory to the Trustee, the Master Servicer and the
Securities Administrator, to the effect that such transferee is not an employee
benefit plan subject to Section 406 of ERISA and/or a plan subject to Section
4975 of the Code, or a Person acting on behalf of any such plan or using the
assets of any such plan, or (ii) in the case of any such ERISA Restricted
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or a plan subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, the Trustee shall have received
an Opinion of Counsel for the benefit of the Trustee, the Master Servicer and
the Securities Administrator and on which they may rely, satisfactory to the
Trustee, to the effect that the purchase or holding of such ERISA Restricted
Certificate will not result in any prohibited transactions under ERISA or
Section 4975 of the Code and will not subject the Trustee, the Master Servicer,
the Depositor or the Securities Administrator to any obligation in addition to
those expressly undertaken in this Agreement, which Opinion of Counsel shall not
be an expense of the Trustee, the Master Servicer, the Depositor or the
Securities Administrator. Notwithstanding anything else to the contrary herein,
any purported transfer of an ERISA Restricted Certificate to or on behalf of an
employee benefit plan subject to Section 406 of ERISA and/or a plan subject to
Section 4975 of the Code without the delivery of the Opinion of Counsel as
described above shall be void and of no effect; provided that the restriction
set forth in this sentence shall not be applicable if there has been delivered
to the Trustee an Opinion of Counsel meeting the requirements of clause (ii) of
the first sentence of this paragraph. None of the Trustee, the Securities
Administrator or the Master Servicer shall be under any liability to any Person
for any registration of transfer of any ERISA Restricted Certificate that is in
fact not permitted by this Section 7.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement. The Trustee and the
Securities Administrator shall each be entitled, but not obligated, to recover
from any Holder of any ERISA Restricted Certificate that was in fact an employee
benefit plan subject to Section 406 of ERISA or a plan subject to Section 4975
of the Code or a Person acting on behalf of any such plan at the time it became
a Holder or, at such subsequent time as it became such a plan or Person acting
on behalf of such a plan, all payments made on such ERISA Restricted Certificate
at and after either such time. Any such payments so recovered by the Trustee or
the Securities Administrator shall be paid and delivered by the Trustee or the
Securities Administrator to the last preceding Holder of such Certificate that
is not such a plan or Person acting on behalf of a plan.
Each beneficial owner of a Class M-1, Class M-2 or Class B-1 Certificate or
any interest therein shall be deemed to have represented, by virtue of its
acquisition or holding of that certificate or interest therein, that either (i)
it is not a Plan or investing with "Plan Assets", (ii) it has acquired and is
holding such certificate in reliance on the Exemption, and that it understands
that there are certain conditions to the availability of the Exemption,
including that the certificate must be rated, at the time of purchase, not lower
than "BBB-" (or its equivalent) by S&P, Fitch or Xxxxx'x Investors Service,
Inc., and the certificate is so rated or (iii) (1) it is an insurance company,
(2) the source of funds used to acquire or hold the certificate or interest
therein is an "insurance company general account," as such term is defined in
Prohibited Transaction Class Exemption ("PTCE") 95-60, and (3) the conditions in
Sections I and III of PTCE 95-60 have been satisfied.
87
(c) Each Person who has or who acquires any Ownership Interest in the
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in the Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in the
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in the Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of the Class R Certificate unless, in
addition to the certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit D.
(iii) Each Person holding or acquiring any Ownership Interest in the
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from any
other Person to whom such Person attempts to Transfer its Ownership
Interest in the Class R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or agent
in connection with any Transfer of the Class R Certificate and (C) not to
Transfer its Ownership Interest in the Class R Certificate or to cause the
Transfer of an Ownership Interest in the Class R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest in
the Class R Certificate in violation of the provisions of this Section
7.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
the Class R Certificate in violation of the provisions of this Section
6.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of the Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of the Class R
Certificate that is in fact not permitted by Section 7.02(b) and this
Section 7.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under
the provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit. The Trustee shall be
entitled but not obligated to recover from any Holder of the Class R
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on the Class R Certificate at and
after either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Permitted
Transferee of such Certificate.
(v) The Master Servicer shall make available within 60 days of written
request from the Trustee, all information necessary to compute any tax
imposed under Section 860E(e) of the Code as a result of a Transfer of an
Ownership Interest in the Class R Certificate to any Holder who is not a
Permitted Transferee.
88
The restrictions on Transfers of the Class R Certificate set forth in this
Section 7.02(c) shall cease to apply (and the applicable portions of the legend
on the Class R Certificate may be deleted) with respect to Transfers occurring
after delivery to the Trustee of an Opinion of Counsel addressed to the Trustee,
which Opinion of Counsel shall not be an expense of the Trustee, the Securities
Administrator, the Seller or the Master Servicer to the effect that the
elimination of such restrictions will not cause the REMIC Trust to fail to
qualify as a REMIC at any time that the Certificates are outstanding or result
in the imposition of any tax on the Trust Fund, a Certificateholder or another
Person. Each Person holding or acquiring any ownership Interest in the Class R
Certificate hereby consents to any amendment of this Agreement that, based on an
Opinion of Counsel addressed to the Trustee and furnished to the Trustee, is
reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, the Class R Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of the Class R Certificate that is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 7.02 shall not be an expense of the Trust
Fund, the Trustee, the Depositor, the Seller, the Securities Administrator or
the Master Servicer.
Section 7.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Securities Administrator and the Trustee such security or indemnity as may
be required by them to save each of them harmless, then, in the absence of
notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute, authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Class, tenor and Percentage Interest. In connection with the
issuance of any new Certificate under this Section 7.03, the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith. Any replacement
Certificate issued pursuant to this Section 7.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time. All Certificates surrendered to the Trustee under the terms of this
Section 7.03 shall be canceled and destroyed by the Trustee in accordance with
its standard procedures without liability on its part.
Section 7.04 Persons Deemed Owners.
The Securities Administrator, the Trustee and any agent of the Securities
Administrator or the Trustee may treat the person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Securities Administrator, the Trustee nor any agent
of the Securities Administrator or the Trustee shall be affected by any notice
to the contrary.
89
Section 7.05 Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in writing
from the Trustee, (b) state that such Certificateholders desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates, and (c) provide a copy of the communication that such
Certificateholders propose to transmit or if the Depositor or the Master
Servicer shall request such information in writing from the Trustee, then the
Trustee shall, within ten Business Days after the receipt of such request,
provide the Depositor, the Master Servicer or such Certificateholders at such
recipients' expense the most recent list of the Certificateholders of the Trust
Fund held by the Trustee, if any. The Depositor and every Certificateholder, by
receiving and holding a Certificate, agree that the Trustee shall not be held
accountable by reason of the disclosure of any such information as to the list
of the Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 7.06 Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book- Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. Such Certificates shall initially be registered on the Certificate
Register in the name of the Depository or its nominee, and no Certificate Owner
of such Certificates will receive a definitive certificate representing such
Certificate Owner's interest in such Certificates, except as provided in Section
7.08. Unless and until definitive, fully registered Certificates ("Definitive
Certificates") have been issued to the Certificate Owners of such Certificates
pursuant to Section 7.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Securities Administrator and the Trustee may
deal with the Depository and the Depository Participants for all purposes
(including the making of distributions) as the authorized representative of the
respective Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be transferred
by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 7.08, the Depository will make
book-entry transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;
(e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
90
(g) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.
Section 7.07 Notices to Depository.
Whenever any notice or other communication is required to be given to
Certificateholders of a Class with respect to which Book-Entry Certificates have
been issued, unless and until Definitive Certificates shall have been issued to
the related Certificate Owners, the Trustee shall give all such notices and
communications to the Depository.
Section 7.08 Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depositor or the Depository advises the Trustee that the
Depository is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Depositor is unable to locate a qualified successor, (b)
the Depositor, at its sole option, advises the Trustee that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Trustee and the Depository in writing through the Depository Participants that
the continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, then the Trustee shall notify
all Certificate Owners of such Certificates, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to applicable Certificate Owners requesting the same. The Depositor shall
provide the Trustee with an adequate inventory of certificates to facilitate the
issuance and transfer of Definitive Certificates. Upon surrender to the Trustee
of any such Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall countersign
and deliver such Definitive Certificates. Neither the Depositor nor the Trustee
shall be liable for any delay in delivery of such instructions and each may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of such Definitive Certificates, all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of such Definitive Certificates as Certificateholders hereunder.
91
Section 7.09 Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies at
__________________________________________________________ where Certificates
may be surrendered for registration of transfer or exchange. The Trustee will
give prompt written notice to the Certificateholders of any change in such
location of any such office or agency.
92
ARTICLE VIII
THE COMPANY AND THE MASTER SERVICER
Section 8.01 Liabilities of the Depositor, the Company and the Master
Servicer. Each of the Depositor, the Company and the Master Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by it herein.
Section 8.02 Merger or Consolidation of the Depositor, the Company or the
Master Servicer.
(a) Each of the Depositor, the Company and the Master Servicer will
keep in full force and effect its existence, rights and franchises as a
corporation under the laws of the state of its incorporation, and will obtain
and preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Certificates or any of the
Mortgage Loans and to perform its duties under this Agreement.
(b) Any Person into which the Depositor, the Company or the Master
Servicer may be merged or consolidated, or any corporation resulting from any
merger or consolidation to which the Depositor, the Company or the Master
Servicer shall be a party, or any Person succeeding to the business of the
Depositor, the Company or the Master Servicer, shall be the successor of the
Depositor, the Company or the Master Servicer hereunder, without the execution
or filing of any paper or further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 8.03 Indemnification of the Trustee, the Master Servicer and the
Securities Administrator.
(a) The Master Servicer agrees to indemnify the Indemnified Persons
for, and to hold them harmless against, any loss, liability or expense
(including reasonable legal fees and disbursements of counsel) incurred on their
part that may be sustained in connection with, arising out of, or relating to,
any claim or legal action (including any pending or threatened claim or legal
action) relating to this Agreement, including the powers of attorney delivered
pursuant to Sections 4.01 and 4.05 hereof, the Assignment Agreements, the
Custodial Agreement or the Certificates (i) related to the Master Servicer's
failure to perform its duties in compliance with this Agreement (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) or (ii) incurred by reason of the Master Servicer's willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder, provided, in each case, that with respect to any such claim or legal
action (or pending or threatened claim or legal action), the Trustee shall have
given the Master Servicer and the Seller written notice thereof promptly after
the Trustee shall have with respect to such claim or legal action knowledge
thereof; provided, however that the failure to give such notice shall not
relieve the Master Servicer of its indemnification obligations hereunder. This
indemnity shall survive the resignation or removal
93
of the Trustee, Master Servicer or the Securities Administrator and the
termination of this Agreement.
(b) The Company agrees to indemnify the Indemnified Persons and to
hold them harmless from and against any and all claims, losses, damages,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Indemnified Persons may sustain in any
way related to the failure of the Company to perform in any way its duties and
service the Company Mortgage Loans in strict compliance with the terms of this
Agreement and for breach of any representation or warranty of the Company
contained herein. The Company shall immediately notify the Master Servicer and
the Trustee if a claim is made by a third party with respect to this Agreement
or the Company Mortgage Loans, assume (with the consent of the Master Servicer
and the Trustee and with counsel reasonably satisfactory to the Master Servicer
and the Trustee) the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or any
Indemnified Person in respect of such claim but failure to so notify the Company
shall not limit its obligations hereunder. The Company agrees that it will not
enter into any settlement of any such claim without the consent of the
Indemnified Persons unless such settlement includes an unconditional release of
such Indemnified Persons from all liability that is the subject matter of such
claim. The provisions of this Section 8.03(b) shall survive termination of this
Agreement.
(c) The Seller will indemnify any Indemnified Person for any loss,
liability or expense of any Indemnified Person not otherwise paid or covered
pursuant to Subsections (a) or (b) above.
Section 8.04 Limitations on Liability of the Depositor, the Company, the
Master Servicer and Others. Subject to the obligation of the Depositor, the
Company and the Master Servicer to indemnify the Indemnified Persons pursuant to
Section 8.03:
(a) Neither the Depositor, the Company, the Master Servicer nor any of
the directors, officers, employees or agents of the Depositor, the Company and
the Master Servicer shall be under any liability to the Indemnified Persons, the
Trust Fund or the Certificateholders for taking any action or for refraining
from taking any action in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Depositor, the Company, the Master Servicer or any such Person against any
breach of warranties or representations made herein or any liability which would
otherwise be imposed by reason of such Person's willful misfeasance, bad faith
or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.
(b) The Depositor, the Company, the Master Servicer and any director,
officer, employee or agent of the Depositor, the Company and the Master Servicer
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder.
(c) The Depositor, the Company, the Master Servicer, the Trustee, the
Custodian and any director, officer, employee or agent of the Depositor, the
Company, the Master Servicer, the Trustee or the Custodian shall be indemnified
by the Trust and held
94
harmless thereby against any loss, liability or expense (including reasonable
legal fees and disbursements of counsel) incurred on their part that may be
sustained in connection with, arising out of, or related to, any claim or legal
action (including any pending or threatened claim or legal action) relating to
this Agreement, the Assignment Agreements, the Custodial Agreement, the
Certificates or the Servicing Agreements (except with respect to the Master
Servicer only, to the extent that the Master Servicer is indemnified by the
Company under this Agreement or by the related Servicer under the related
Servicing Agreement), other than (i) any such loss, liability or expense related
to the Company's or the Master Servicer's failure to perform its respective
duties in compliance with this Agreement (except as any such loss, liability or
expense shall be otherwise reimbursable pursuant to this Agreement), or to the
Custodian's failure to perform its duties under the Custodial Agreement, or (ii)
any such loss, liability or expense incurred by reason of the Company's, the
Master Servicer's or the Custodian's willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or under the Custodial
Agreement, as applicable, or by reason of reckless disregard of obligations and
duties hereunder or under the Custodial Agreement, as applicable.
(d) Neither the Depositor, the Company nor the Master Servicer shall
be under any obligation to appear in, prosecute or defend any legal action that
is not incidental to its duties under this Agreement and that in its opinion may
involve it in any expense or liability; provided, however, the Master Servicer
may in its discretion, with the consent of the Trustee (which consent shall not
be unreasonably withheld), undertake any such action which it may deem necessary
or desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, 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
Master Servicer shall be entitled to be reimbursed therefor out of the Master
Servicer Collection Account as provided by Section 5.05. Nothing in this
Subsection 8.04(d) shall affect the Master Servicer's obligation to supervise,
or to take such actions as are necessary to ensure, the servicing and
administration of the Mortgage Loans pursuant to Subsection 4.01(a).
(e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required to investigate or make recommendations
concerning potential liabilities which the Trust might incur as a result of such
course of action by reason of the condition of the Mortgaged Properties but
shall give notice to the Trustee if it has notice of such potential liabilities.
(f) The Master Servicer shall not be liable for any acts or omissions
of the Company or the Servicers, except as otherwise expressly provided herein.
Section 8.05 Master Servicer and Company Not to Resign. (a) Except as
provided in Section 8.07, the Master Servicer shall not resign from the
obligations and duties hereby imposed on it except (i) with the prior written
consent of the Trustee (which consent shall not be unreasonably withheld) or
(ii) upon a determination that any such duties hereunder are no longer
permissible under applicable law and such impermissibility cannot be cured. Any
such determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect, addressed to and delivered
to, the Trustee. No such resignation by the
95
Master Servicer shall become effective until the Company or the Trustee or a
successor to the Master Servicer reasonably satisfactory to the Trustee shall
have assumed the responsibilities and obligations of the Master Servicer in
accordance with Section 9.02 hereof. The Trustee shall notify the Rating
Agencies of the resignation of the Master Servicer.
(b) The Company shall not resign from the obligations and duties
hereby imposed on it except (i) upon the assignment of its servicing duties with
respect to all or a portion of the Company Mortgage Loans to an institution that
is a Xxxxxx Xxx and Freddie Mac approved seller/servicer in good standing that
has a net worth of not less than $10,000,000 and with the prior written consent
of the Master Servicer (which consent shall not be unreasonably withheld) or
(ii) upon the determination that its duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Company. Any
determination permitting the resignation of the Company shall be evidenced by an
Opinion of Counsel to such effect addressed to and delivered, to the Master
Servicer and the Trustee which Opinion of Counsel shall be in form and substance
acceptable to the Master Servicer and the Trustee. No appointment of a successor
to the Company shall be effective hereunder unless (a) the Rating Agencies have
confirmed in writing that such appointment will not result in a downgrade,
qualification or withdrawal of the then current ratings assigned to the
Certificates, (b) such successor shall have represented that it is meets the
eligibility criteria set forth in clause (i) above and (c) such successor has
agreed to assume the obligations of the Company hereunder to the extent of the
Company Mortgage Loans to be serviced by such successor. The Company shall
provide a copy of the written confirmation of the Rating Agencies and the
agreement executed by such successor to the Master Servicer and the Trustee. No
such resignation shall become effective until a Qualified Successor or the
Master Servicer shall have assumed the Company's responsibilities and
obligations hereunder. The Company shall notify the Master Servicer, the Trustee
and the Rating Agencies of the resignation of the Company or the assignment of
all or a portion of its servicing duties hereunder in accordance with this
Section 8.05.
Section 8.06 Successor Master Servicer. In connection with the appointment
of any successor Master Servicer or the assumption of the duties of the Master
Servicer, the Company or the Trustee may make such arrangements for the
compensation of such successor master servicer out of payments on the Mortgage
Loans as the Company or the Trustee and such successor master servicer shall
agree. If the successor master servicer does not agree that such market value is
a fair price, such successor master servicer shall obtain two quotations of
market value from third parties actively engaged in the servicing of
single-family mortgage loans. In no event shall the compensation of any
successor master servicer exceed that permitted the Master Servicer without the
consent of all of the Certificateholders.
Section 8.07 Sale and Assignment of Master Servicing. The Master Servicer
may sell and assign its rights and delegate its duties and obligations in its
entirety as Master Servicer under this Agreement and the Company may terminate
the Master Servicer without cause and select a new Master Servicer; provided,
however, that: (i) the purchaser or transferee accepting such assignment and
delegation (a) shall be a Person which shall be qualified to service mortgage
loans for Xxxxxx Xxx or Freddie Mac; (b) shall have a net worth of not less than
$10,000,000 (unless otherwise approved by each Rating Agency pursuant to clause
(ii) below); (c) shall be reasonably satisfactory to the Trustee (as evidenced
in a writing signed by the Trustee); and (d) shall execute and deliver to the
Trustee an agreement, in form and substance
96
reasonably satisfactory to the Trustee, which contains an assumption by such
Person of the due and punctual performance and observance of each covenant and
condition to be performed or observed by it as master servicer under this
Agreement, any custodial agreement from and after the effective date of such
agreement; (ii) each Rating Agency shall be given prior written notice of the
identity of the proposed successor to the Master Servicer and each Rating
Agency's rating of the Certificates in effect immediately prior to such
assignment, sale and delegation will not be downgraded, qualified or withdrawn
as a result of such assignment, sale and delegation, as evidenced by a letter to
such effect delivered to the Master Servicer and the Trustee; (iii) the Master
Servicer assigning and selling the master servicing shall deliver to the Trustee
an Officer's Certificate and an Opinion of Counsel addressed to the Trustee,
each stating that all conditions precedent to such action under this Agreement
have been completed and such action is permitted by and complies with the terms
of this Agreement; and (iv) in the event the Master Servicer is terminated
without cause by the Company, the Company shall pay, from its own funds and
without any right of reimbursement, the terminated Master Servicer a termination
fee equal to ___% of the aggregate Stated Principal Balance of the Mortgage
Loans at the time the master servicing of the Mortgage Loans is transferred to
the successor Master Servicer. No such assignment or delegation shall affect any
liability of the Master Servicer arising prior to the effective date thereof.
97
ARTICLE IX
DEFAULT; TERMINATION OF MASTER SERVICER;
TERMINATION OF COMPANY
Section 9.01 Events of Default.
"Event of Default," wherever used herein, means any one of the following
events:
(i) any failure by the Master Servicer to remit to the Trustee any
amounts received or collected by the Master Servicer in respect of the
Mortgage Loans and required to be remitted by it hereunder or any Advance
required to be made by it pursuant to this Agreement, which failure shall
continue unremedied for [one Business Day] after the date on which written
notice of such failure shall have been given to the Master Servicer by the
Trustee or the Depositor, or to the Trustee and the Master Servicer by the
Holders of Certificates evidencing not less than [25]% of the Voting Rights
evidenced by the Certificates; or
(ii) any failure by the Master Servicer to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Master Servicer contained in this Agreement or any breach of a
representation or warranty by the Master Servicer, which failure or breach
shall continue unremedied for a period of [60] days after the date on which
written notice of such failure shall have been given to Master Servicer by
the Trustee or the Depositor, or to the Trustee and the Master Servicer by
the Holders of Certificates evidencing not less than [25]% of the Voting
Rights evidenced by the Certificates; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force undischarged
or unstayed for a period of 60 consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to the
Master Servicer or all or substantially all of the property of the Master
Servicer; or
(v) the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of, or commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
98
(vi) the Master Servicer assigns or delegates its duties or rights
under this Agreement in contravention of the provisions permitting such
assignment or delegation under Sections 8.05 or 8.07.
If an Event of Default shall occur, then, and in each and every such case,
so long as such Event of Default shall not have been remedied, the Trustee may,
and at the direction of the Holders of Certificates evidencing not less than 25%
of the Voting Rights evidenced by the Certificates, the Trustee shall, by notice
in writing to the Master Servicer (with a copy to each Rating Agency), terminate
all of the rights and obligations of the Master Servicer (and the Securities
Administrator if the Master Servicer and the Securities Administrator are the
same entity) under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, other than its rights as a Certificateholder hereunder. On or
after the receipt by the Master Servicer of such written notice, all authority
and power of the Master Servicer (and, if applicable, the Securities
Administrator) hereunder, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee, or any successor
appointed pursuant to Section 9.02 (a "Successor Master Servicer" and, if
applicable, "Successor Securities Administrator"). Such Successor Master
Servicer shall thereupon if such Successor Master Servicer is a successor to the
Master Servicer, make any Advance required by Article VI, subject, in the case
of the Trustee, to Section 9.02. The Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the terminated Master Servicer and, if
applicable, the terminated Securities Administrator, as attorney- in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of any Mortgage Loans and related documents, or otherwise. Unless
expressly provided in such written notice, no such termination shall affect any
obligation of the Master Servicer to pay amounts owed pursuant to Article VIII
or Article X. The Master Servicer and, if applicable, the Securities
Administrator agrees to cooperate with the Trustee in effecting the termination
of the Master Servicer's and, if applicable, the Securities Administrator's
responsibilities and rights hereunder, including, without limitation, the
transfer to the applicable Successor Master Servicer of all cash amounts which
shall at the time be credited to the Master Servicer Collection Account
maintained pursuant to Section 5.05, or thereafter be received with respect to
the applicable Mortgage Loans. The Trustee shall promptly notify the Rating
Agencies of the occurrence of an Event of Default known to the Trustee.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a Scheduled Payment on a Mortgage Loan that was due prior to the
notice terminating the Master Servicer's rights and obligations as Master
Servicer hereunder and received after such notice, that portion thereof to which
the Master Servicer would have been entitled pursuant to Sections 5.05 and to
receive any other amounts payable to the Master Servicer hereunder the
entitlement to which arose prior to the termination of its activities hereunder.
Section 9.02 Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of termination
pursuant to Section 9.01 hereof the Trustee shall automatically become the
successor to the Master Servicer with respect to the transactions set forth or
provided for herein and after a transition period (not
99
to exceed 90 days), shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions hereof; provided, however that, pursuant to Article VI hereof, the
Trustee in its capacity as successor Master Servicer shall be responsible for
making any Advances required to be made by the Master Servicer immediately upon
the termination of the Master Servicer and any such Advance shall be made on the
Distribution Date on which such Advance was required to be made by the
predecessor Master Servicer. Effective on the date of such notice of
termination, as compensation therefor, the Trustee shall be entitled to all
compensation, reimbursement of expenses and indemnifications that the Master
Servicer would have been entitled to if it had continued to act hereunder,
provided, however, that the Trustee shall not be (i) liable for any acts or
omissions of the Master Servicer, (ii) obligated to make Advances if it is
prohibited from doing so under applicable law, (iii) responsible for expenses of
the Master Servicer pursuant to Section 2.03 or (iv) obligated to deposit losses
on any Permitted Investment directed by the Master Servicer. Notwithstanding the
foregoing, the Trustee may, if it shall be unwilling to so act, or shall, if it
is prohibited by applicable law from making Advances pursuant to Article VI or
if it is otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current rating of the
Certificates by each Rating Agency as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. Any Successor Master Servicer
shall (i) be an institution that is a Xxxxxx Xxx and Freddie Mac approved
seller/servicer in good standing, that has a net worth of at least $15,000,000
and (ii) be willing to act as successor servicer of any Mortgage Loans under
this Agreement or the related Servicing Agreement with respect to which the
Company or the original Servicer has been terminated as servicer, and shall have
executed and delivered to the Depositor and the Trustee an agreement accepting
such delegation and assignment, that contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Master Servicer (other than any liabilities of the Master Servicer hereof
incurred prior to termination of the Master Servicer under Section 9.01 or as
otherwise set forth herein), with like effect as if originally named as a party
to this Agreement, provided that each Rating Agency shall have acknowledged in
writing that its rating of the Certificates in effect immediately prior to such
assignment and delegation will not be qualified or reduced as a result of such
assignment and delegation. If the Trustee assumes the duties and
responsibilities of the Master Servicer in accordance with this Section 9.02,
the Trustee shall not resign as Master Servicer until a Successor Master
Servicer has been appointed and has accepted such appointment. Pending
appointment of a successor to the Master Servicer hereunder, the Trustee, unless
the Trustee is prohibited by law from so acting, shall, subject to Section 4.04
hereof, act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans or otherwise as
it and such successor shall agree; provided that no such compensation unless
agreed to by the Certificateholders shall be in excess of that permitted the
Master Servicer hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. Neither the Trustee nor any other Successor Master Servicer
shall be deemed to be in default hereunder by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof or any
failure to perform, or any delay in performing, any duties or responsibilities
hereunder, in either case caused by the failure of the Master Servicer and the
Securities Administrator to
100
deliver or provide, or any delay in delivering or providing, any cash,
information, documents or records to it.
The costs and expenses of the Trustee in connection with the termination of
the Master Servicer, appointment of a Successor Master Servicer and, if
applicable, any transfer of servicing, including, without limitation, all costs
and expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee or the Successor Master Servicer to service the
related Mortgage Loans properly and effectively, to the extent not paid by the
terminated Master Servicer, shall be payable to the Trustee pursuant to Section
10.05. Any successor to the Master Servicer as successor servicer under any
Subservicing Agreement shall give notice to the applicable Mortgagors of such
change of servicer and shall, during the term of its service as successor
servicer maintain in force the policy or policies that the Master Servicer is
required to maintain pursuant to Section 4.04.
Section 9.03 Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder actually known to a Responsible Officer of the
Trustee, unless such Event of Default shall have been cured or waived.
Section 9.04 Waiver of Defaults.
The Trustee shall transmit by mail to all Certificateholders, within 60
days after the occurrence of any Event of Default actually known to a
Responsible Officer of the Trustee, unless such Event of Default shall have been
cured, notice of each such Event of Default hereunder known to the Trustee. The
Holders of Certificates evidencing not less than 51% of the Voting Rights may,
on behalf of all Certificateholders, waive any default by the Master Servicer in
the performance of its obligations hereunder and the consequences thereof,
except a default in the making of or the causing to be made of any required
distribution on the Certificates. Upon any such waiver of a past default, such
default shall be deemed to cease to exist, and any Event of Default arising
therefrom shall be deemed to have been timely remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
The Trustee shall give notice of any such waiver to the Rating Agencies.
Section 9.05 Company Default.
In case one or more of the following events of default by the Company
(each, a "Company Default") shall occur and be continuing, that is to say:
101
(i) any failure by the Company to remit to the Master Servicer any
payment required to be made under the terms of this Agreement on any
Remittance Date; or
(ii) failure on the part of the Company duly to observe or perform in
any material respect any other of the covenants or agreements on the part
of the Company set forth in this Agreement, the breach of which has a
material adverse effect and which continue unremedied for a period of sixty
days (except that such number of days shall be fifteen in the case of a
failure to pay any premium for any insurance policy required to be
maintained under this Agreement and such failure shall be deemed to have a
material adverse effect) 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 Master Servicer; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Company and
such decree or order shall have remained in force undischarged or unstayed
for a period of sixty days; or
(iv) the Company shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating
to the Company or of or relating to all or substantially all of its
property; or
(v) the Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) the Company attempts to assign its right to servicing
compensation hereunder or the Company attempts to sell or otherwise dispose
of all or substantially all of its property or assets or to assign this
Agreement or the servicing responsibilities hereunder or to delegate its
duties hereunder or any portion thereof except as otherwise permitted
herein; or
(vii) the Company ceases to be qualified to transact business in any
jurisdiction where it is currently so qualified, but only to the extent
such non-qualification materially and adversely affects the Company's
ability to perform its obligations hereunder;
then, and in each and every such case, so long as a Company Default shall not
have been remedied, the Master Servicer, by notice in writing to the Company
may, in addition to whatever rights the Master Servicer and the Trustee on
behalf of the Certificateholders may have under Section 8.03 and at law or
equity to damages, including injunctive relief and specific performance,
terminate all the rights and obligations of the Company under this Agreement and
in and to the Company Mortgage Loans and the proceeds thereof without
compensating the Company for the same. On or after the receipt by the Company of
such written notice, all authority and power of Company under this Agreement,
whether with respect to the Company
102
Mortgage Loans or otherwise, shall pass to and be vested in the Master Servicer.
Upon written request from the Master Servicer, the Company shall prepare,
execute and deliver, any and all documents and other instruments, place in the
Master Servicer's possession all Mortgage Files relating to the Company Mortgage
Loans, and do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the Company Mortgage Loans and related
documents, or otherwise, at the Company's sole expense. The Company agrees to
cooperate with the Master Servicer in effecting the termination of the Company's
responsibilities and rights hereunder, including, without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Company to its Protected Account or Escrow
Account or thereafter received with respect to the Company Mortgage Loans or any
related REO Property.
Section 9.06 Waiver of Company Defaults.
The Master Servicer, with the consent of the Trustee, may waive only by
written notice any default by the Company in the performance of its obligations
hereunder and its consequences. Upon any such waiver of a past default, such
default shall cease to exist, and any Company Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon except to the extent expressly so waived in writing.
103
ARTICLE X
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 10.01 Duties of Trustee and Securities Administrator.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing or waiver of all Events of Default which may have occurred, and
the Securities Administrator each undertake to perform such duties and only such
duties as are specifically set forth in this Agreement as duties of the Trustee
and the Securities Administrator, respectively. If an Event of Default has
occurred and has not been cured or waived, the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and the same degree of
care and skill in their exercise, as a prudent person would exercise under the
circumstances in the conduct of such Person's own affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee or the Securities Administrator pursuant
to any provision of this Agreement, the Trustee or the Securities Administrator,
respectively, shall examine them to determine whether they are, on their face,
in the form required by this Agreement; provided, however, that neither the
Trustee nor the Securities Administrator shall be responsible for the accuracy
or content of any resolution, certificate, statement, opinion, report, document,
order or other instrument furnished by the Master Servicer; provided, further,
that neither the Trustee nor the Securities Administrator shall be responsible
for the accuracy or verification of any calculation provided to it pursuant to
this Agreement.
(c) On each Distribution Date, the Trustee shall make monthly
distributions and the final distribution to the Certificateholders from funds in
the Distribution Account as provided in Sections 6.04 and 11.01 herein based
solely on the applicable Remittance Report.
(d) No provision of this Agreement shall be construed to relieve the
Trustee or the Securities Administrator from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have occurred with
respect to the Trustee and at all times with respect to the Securities
Administrator, the duties and obligations of the Trustee and the Securities
Administrator shall be determined solely by the express provisions of this
Agreement, neither the Trustee nor the Securities Administrator shall be
liable except for the performance of their respective duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee or the Securities Administrator and, in the absence of bad faith on
the part of the Trustee or the Securities Administrator, respectively, the
Trustee or the Securities Administrator, respectively, may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed
104
therein, upon any certificates or opinions furnished to the Trustee or the
Securities Administrator, respectively, and conforming to the requirements
of this Agreement;
(ii) Neither the Trustee nor the Securities Administrator shall be
liable in its individual capacity for an error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee or an
officer or officers of the Securities Administrator, respectively, unless
it shall be proved that the Trustee or the Securities Administrator,
respectively, was negligent in ascertaining the pertinent facts;
(iii) Neither the Trustee nor the Securities Administrator shall be
liable with respect to any action taken, suffered or omitted to be taken by
it in good faith in accordance with the directions of the Holders of
Certificates evidencing not less than 25% of the aggregate Voting Rights of
the Certificates, if such action or non-action relates to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee or the Securities Administrator, respectively, or exercising any
trust or other power conferred upon the Trustee or the Securities
Administrator, respectively, under this Agreement;
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default or Event of Default unless a
Responsible Officer of the Trustee shall have actual knowledge thereof. In
the absence of such notice, the Trustee may conclusively assume there is no
such default or Event of Default;
(v) The Trustee shall not in any way be liable by reason of any
insufficiency in any Account held by or in the name of Trustee unless it is
determined by a court of competent jurisdiction in a non-appealable
judgment that the Trustee's gross negligence or willful misconduct was the
primary cause of such insufficiency (except to the extent that the Trustee
is obligor and has defaulted thereon);
(vi) Anything in this Agreement to the contrary notwithstanding, in no
event shall the Trustee or the Securities Administrator be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Trustee or the
Securities Administrator, respectively, has been advised of the likelihood
of such loss or damage and regardless of the form of action; and
(vii) None of the Securities Administrator, the Master Servicer, the
Seller, the Depositor or the Trustee shall be responsible for the acts or
omissions of the other, it being understood that this Agreement shall not
be construed to render them partners, joint venturers or agents of one
another.
Neither the Trustee nor the Securities Administrator shall be required to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there is reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it, and none of the provisions contained in this Agreement shall in
any event require the Trustee or the Securities Administrator to perform, or be
responsible for the manner of
105
performance of, any of the obligations of the Master Servicer or the Company
hereunder or any Servicer under the related Servicing Agreement.
(e) All funds received by the Trustee and required to be deposited in
the Distribution Account pursuant to this Agreement will be promptly so
deposited by the Trustee.
Section 10.02 Certain Matters Affecting the Trustee and the Securities
Administrator.
(a) Except as otherwise provided in Section 10.01:
(i) The Trustee and the Securities Administrator may rely and shall be
protected in acting or refraining from acting in reliance on any resolution
or certificate of the Seller, the Company, the Master Servicer or the
related Servicer, any certificates of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(ii) The Trustee and the Securities Administrator may consult with
counsel and any advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection with respect to any action
taken or suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(iii) Neither the Trustee nor the Securities Administrator shall be
under any obligation to exercise any of the trusts or powers vested in it
by this Agreement, other than its obligation to give notices pursuant to
this Agreement, or to institute, conduct or defend any litigation hereunder
or in relation hereto at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to the Trustee or the Securities
Administrator, as applicable, reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby.
Nothing contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge (which has not been
cured or waived), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise, as a prudent person would exercise under the circumstances in the
conduct of his own affairs;
(iv) Prior to the occurrence of an Event of Default hereunder and
after the curing or waiver of all Events of Default which may have occurred
with respect to the Trustee and at all times with respect to the Securities
Administrator, neither the Trustee nor the Securities Administrator shall
be liable in its individual capacity for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement;
(v) Neither the Trustee nor the Securities Administrator shall be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by Holders of Certificates evidencing not
less than 25% of the aggregate Voting Rights of the Certificates and
106
provided that the payment within a reasonable time to the Trustee or the
Securities Administrator, as applicable, of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee or the Securities Administrator, as
applicable, reasonably assured to the Trustee or the Securities
Administrator, as applicable, by the security afforded to it by the terms
of this Agreement. The Trustee or the Securities Administrator may require
reasonable indemnity against such expense or liability as a condition to
taking any such action. The reasonable expense of every such examination
shall be paid by the Certificateholders requesting the investigation;
(vi) The Trustee and the Securities Administrator may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or through Affiliates, agents or attorneys; provided, however,
that the Trustee may not appoint any paying agent other than the Securities
Administrator to perform any paying agent functions under this Agreement
without the express written consent of the Master Servicer, which consent
will not be unreasonably withheld. Neither the Trustee nor the Securities
Administrator shall be liable or responsible for the misconduct or
negligence of any of the Trustee's or the Securities Administrator's agents
or attorneys or paying agent appointed hereunder by the Trustee or the
Securities Administrator with due care and, when required, with the consent
of the Master Servicer;
(vii) Should the Trustee or the Securities Administrator deem the
nature of any action required on its part to be unclear, the Trustee or the
Securities Administrator, respectively, may require prior to such action
that it be provided by the Depositor with reasonable further instructions;
the right of the Trustee or the Securities Administrator to perform any
discretionary act enumerated in this Agreement shall not be construed as a
duty, and neither the Trustee nor the Securities Administrator shall be
accountable for other than its negligence or willful misconduct in the
performance of any such act;
(viii) Neither the Trustee nor the Securities Administrator shall be
required to give any bond or surety with respect to the execution of the
trust created hereby or the powers granted hereunder, except as provided in
Subsection 10.07; and
(ix) Neither the Trustee nor the Securities Administrator shall have
any duty to conduct any affirmative investigation as to the occurrence of
any condition requiring the repurchase of any Mortgage Loan by any Person
pursuant to this Agreement, or the eligibility of any Mortgage Loan for
purposes of this Agreement.
Section 10.03 Trustee and Securities Administrator Not Liable for
Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Trustee on the Certificates) shall be
taken as the statements of the Depositor, and neither the Trustee nor the
Securities Administrator shall have any responsibility for their correctness.
Neither the Trustee nor the Securities Administrator makes any representation as
to the validity or sufficiency of the Certificates (other than the signature and
countersignature of the Trustee on the Certificates) or of any Mortgage Loan
except as expressly
107
provided in Sections 2.02 and 2.06 hereof; provided, however, that the foregoing
shall not relieve the Trustee of the obligation to review the Mortgage Files
pursuant to Sections 2.02 and 2.05 of this Agreement. The Trustee's signature
and countersignature (or countersignature of its agent) on the Certificates
shall be solely in its capacity as Trustee and shall not constitute the
Certificates an obligation of the Trustee in any other capacity. Neither the
Trustee or the Securities Administrator shall be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor with respect to the Mortgage Loans. Subject to the provisions of
Section 2.06, neither the Trustee nor the Securities Administrator shall be
responsible for the legality or validity of this Agreement or any document or
instrument relating to this Agreement, the validity of the execution of this
Agreement or of any supplement hereto or instrument of further assurance, or the
validity, priority, perfection or sufficiency of the security for the
Certificates issued hereunder or intended to be issued hereunder. Neither the
Trustee nor the Securities Administrator shall at any time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. Neither the Trustee nor the Securities Administrator shall have any
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement.
Section 10.04 Trustee and Securities Administrator May Own Certificates.
Each of the Trustee and the Securities Administrator in its individual
capacity or in any capacity other than as Trustee or Securities Administrator
hereunder may become the owner or pledgee of any Certificates with the same
rights it would have if it were not the Trustee or the Securities Administrator,
as applicable, and may otherwise deal with the parties hereto.
Section 10.05 Trustee's and Securities Administrator's Fees and Expenses.
The fees and expenses of the Trustee and the Securities Administrator shall
be paid in accordance with a side letter agreement with the Master Servicer and
at the expense of the Master Servicer. In addition, the Trustee and the
Securities Administrator will be entitled to recover from the Master Servicer
Collection Account pursuant to Section 5.06 all reasonable out-of-pocket
expenses, disbursements and advances and the expenses of the Trustee and the
Securities Administrator, respectively, in connection with any Event of Default,
any breach of this Agreement or any claim or legal action (including any pending
or threatened claim or legal action) incurred or made by the Trustee or the
Securities Administrator, respectively, in the administration of the trusts
hereunder (including the reasonable compensation, expenses and disbursements of
its counsel) except any such expense, disbursement or advance as may arise from
its negligence or intentional misconduct or which is the responsibility of the
Certificateholders or the Trust Fund hereunder. If funds in the Master Servicer
Collection Account are insufficient therefor, the Trustee and the Securities
Administrator shall recover such expenses from the Depositor. Such compensation
and reimbursement obligation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust.
108
Section 10.06 Eligibility Requirements for Trustee and Securities
Administrator.
The Trustee and any successor Trustee and the Securities Administrator and
any successor Securities Administrator shall during the entire duration of this
Agreement be a state bank or trust company or a national banking association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus and undivided profits of at least $40,000,000 or,
in the case of a successor Trustee, $50,000,000, subject to supervision or
examination by federal or state authority and, in the case of the Trustee, rated
"BBB" or higher by Fitch with respect to their long-term rating and rated "BBB"
or higher by Standard & Poor's and "Baa2" or higher by Xxxxx'x with respect to
any outstanding long-term unsecured unsubordinated debt, and, in the case of a
successor Trustee or successor Securities Administrator other than pursuant to
Section 10.10, rated in one of the two highest long-term debt categories of, or
otherwise acceptable to, each of the Rating Agencies. The Trustee shall not be
an Affiliate of the Master Servicer. If the Trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 10.06 the combined capital and surplus of such corporation shall be
deemed to be its total equity capital (combined capital and surplus) as set
forth in its most recent report of condition so published. In case at any time
the Trustee or the Securities Administrator, as applicable, shall cease to be
eligible in accordance with the provisions of this Section 10.06, the Trustee or
the Securities Administrator shall resign immediately in the manner and with the
effect specified in Section 10.08.
Section 10.07 Insurance.
The Trustee and the Securities Administrator, at their own expense, shall
at all times maintain and keep in full force and effect: (i) fidelity insurance,
(ii) theft of documents insurance and (iii) forgery insurance (which may be
collectively satisfied by a "Financial Institution Bond" and/or a "Bankers'
Blanket Bond"). All such insurance shall be in amounts, with standard coverage
and subject to deductibles, as are customary for insurance typically maintained
by banks or their affiliates which act as custodians for investor-owned mortgage
pools. A certificate of an officer of the Trustee or the Securities
Administrator as to the Trustee's or the Securities Administrator's,
respectively, compliance with this Section 10.07 shall be furnished to any
Certificateholder upon reasonable written request.
Section 10.08 Resignation and Removal of Trustee and Securities
Administrator.
The Trustee and the Securities Administrator may at any time resign
(including, in the case of the Securities Administrator, in connection with the
resignation or termination of the Master Servicer) and be discharged from the
Trust hereby created by giving written notice thereof to the Depositor, the
Seller, the Securities Administrator (or the Trustee, if the Securities
Administrator resigns) and the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor trustee or successor securities administrator, as
applicable, by written instrument, in triplicate, one copy of which instrument
shall be delivered to each of the resigning trustee or securities administrator,
as applicable, and the successor trustee or securities administrator, as
applicable. If no successor trustee or successor securities administrator shall
have been so appointed and have accepted
109
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee or Securities Administrator may petition any court of
competent jurisdiction for the appointment of a successor trustee or securities
administrator.
If at any time (i) the Trustee or the Securities Administrator shall cease
to be eligible in accordance with the provisions of Section 10.06 hereof and
shall fail to resign after written request thereto by the Depositor, (ii) the
Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or the Securities
Administrator or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, or (iii)(A) a tax is imposed with respect to the
Trust Fund by any state in which the Trustee or the Securities Administrator or
the Trust Fund is located, (B) the imposition of such tax would be avoided by
the appointment of a different trustee or securities administrator and (C) the
Trustee or the Securities Administrator, as applicable fails to indemnify the
Trust Fund against such tax, then the Depositor or the Master Servicer may
remove the Trustee or the Securities Administrator, as applicable, and appoint a
successor trustee or successor securities administrator, as applicable, by
written instrument, in multiple copies, a copy of which instrument shall be
delivered to the Trustee, the Securities Administrator, each Master Servicer and
the successor trustee or successor securities administrator, as applicable.
The Holders evidencing at least 51% of the Voting Rights of each Class of
Certificates may at any time remove the Trustee or Securities Administrator and
appoint a successor trustee or securities administrator by written instrument or
instruments, in multiple copies, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered by the successor trustee or successor securities administrator to
each of the Master Servicer, the Trustee or Securities Administrator so removed
and the successor trustee or securities administrator so appointed. Notice of
any removal of the Trustee or Securities Administrator shall be given to each
Rating Agency by the Trustee or successor trustee.
Any resignation or removal of the Trustee or Securities Administrator and
appointment of a successor trustee or securities administrator pursuant to any
of the provisions of this Section 10.08 shall become effective upon acceptance
of appointment by the successor trustee or securities administrator as provided
in Section 10.09 hereof.
Section 10.09 Successor Trustee or Securities Administrator.
Any successor trustee or securities administrator appointed as provided in
Section 10.08 hereof shall execute, acknowledge and deliver to the Depositor and
to its predecessor trustee or predecessor securities administrator, as
applicable, and the Master Servicer an instrument accepting such appointment
hereunder and thereupon the resignation or removal of the predecessor trustee or
securities administrator shall become effective and such successor trustee or
securities administrator, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee or
securities administrator herein.
110
No successor trustee or securities administrator shall accept appointment
as provided in this Section 10.09 unless at the time of such acceptance such
successor trustee or securities administrator shall be eligible under the
provisions of Section 10.07 hereof and its appointment shall not adversely
affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee or securities
administrator as provided in this Section 10.09, the successor trustee or
securities administrator shall mail notice of the succession of such trustee or
securities administrator hereunder to all Holders of Certificates. If the
successor trustee or securities administrator fails to mail such notice within
ten days after acceptance of appointment, the Depositor shall cause such notice
to be mailed at the expense of the Trust Fund.
Section 10.10 Merger or Consolidation of Trustee or Securities
Administrator.
Any corporation, state bank or national banking association into which the
Trustee or the Securities Administrator may be merged or converted or with which
it may be consolidated or any corporation, state bank or national banking
association resulting from any merger, conversion or consolidation to which the
Trustee or the Securities Administrator shall be a party, or any corporation,
state bank or national banking association succeeding to substantially all of
the corporate trust business of the Trustee or of the business of the Securities
Administrator, shall be the successor of the Trustee or the Securities
Administrator hereunder, provided that such corporation shall be eligible under
the provisions of Section 10.06 hereof without the execution or filing of any
paper or further act on the part of any of the parties hereto, anything herein
to the contrary notwithstanding.
Section 10.11 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Master Servicer and the Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 10.11, such powers, duties, obligations, rights and trusts as the Master
Servicer and the Trustee may consider necessary or desirable. If the Master
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in the case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 10.06 and
no notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 10.09.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
111
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee, except for the obligation of the Trustee under this
Agreement to advance funds on behalf of the Master Servicer, shall be
conferred or imposed upon and exercised or performed by the Trustee and
such separate trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act separately without
the Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be performed
(whether a Trustee hereunder or as a Successor Master Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Fund or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article X. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Master Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the Trustee
its agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co- trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 10.12 Tax Matters.
It is intended that the Trust Fund shall constitute, and that the affairs
of the Trust Fund shall be conducted so that it qualifies as, a "real estate
mortgage investment conduit" as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Securities Administrator
covenants and agrees that it shall act as agent for so long as it is also Master
Servicer (and the Securities Administrator is hereby appointed to act as agent)
on behalf of the Trust Fund. The Trustee and/or the Securities Administrator, as
agent on behalf of the Trust Fund, shall do or refrain from doing, as
applicable, the following: (a) the Securities Administrator shall prepare and
file, or cause to be prepared and filed, in a timely manner, U.S.
112
Real Estate Mortgage Investment Conduit Income Tax Returns (Form 1066 or any
successor form adopted by the Internal Revenue Service) and prepare and file or
cause to be prepared and filed with the Internal Revenue Service and applicable
state or local tax authorities income tax or information returns for each
taxable year with respect to the REMIC Trust containing such information and at
the times and in the manner as may be required by the Code or state or local tax
laws, regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) the Securities Administrator shall
apply for an employer identification number with the Internal Revenue Service
via a Form SS-4 or other comparable method for the REMIC Trust that is or
becomes a taxable entity, and within thirty days of the Closing Date, furnish or
cause to be furnished to the Internal Revenue Service, on Forms 8811 or as
otherwise may be required by the Code, the name, title, address, and telephone
number of the person that the holders of the Certificates may contact for tax
information relating thereto, together with such additional information as may
be required by such Form, and update such information at the time or times in
the manner required by the Code for the Trust Fund; (c) the Trustee shall make
or cause to be made elections, on behalf of the REMIC Trust formed hereunder to
be treated as a REMIC on the federal tax return of the REMIC Trust for its first
taxable year (and, if necessary, under applicable state law); (d) the Securities
Administrator shall prepare and forward, or cause to be prepared and forwarded,
to the Certificateholders and to the Internal Revenue Service and, if necessary,
state tax authorities, all information returns and reports as and when required
to be provided to them in accordance with the REMIC Provisions, including
without limitation, the calculation of any original issue discount using the
Prepayment Assumption; (e) the Securities Administrator shall provide
information necessary for the computation of tax imposed on the transfer of the
Class R Certificate to a Person that is not a Permitted Transferee, or an agent
(including a broker, nominee or other middleman) of a Person that is not a
Permitted Transferee, or a pass-through entity in which a Person that is not a
Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable
for such tax); (f) each of the Securities Administrator and the Trustee shall,
to the extent under its control, conduct the affairs of the Trust Fund at all
times that any Certificates are outstanding so as to maintain the status of the
REMIC Trust as a REMIC under the REMIC Provisions; (g) neither the Trustee nor
the Securities Administrator shall knowingly or intentionally take any action or
omit to take any action that would cause the termination of the REMIC status of
the REMIC Trust; (h) the Trustee shall pay, from the sources specified in the
penultimate paragraph of this Section 10.12, as directed by the Securities
Administrator in its Remittance Report, the amount of any federal, state and
local taxes, including prohibited transaction taxes as described below, imposed
on the REMIC Trust formed hereunder prior to the termination of the Trust Fund
when and as the same shall be due and payable (but such obligation shall not
prevent the Trustee, the Securities Administrator at the written request of the
Trustee, or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Securities Administrator from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings); (i) the Trustee shall sign or cause to be signed federal,
state or local income tax or information returns or any other document prepared
by the Securities Administrator pursuant to this Section 10.12 requiring a
signature thereon by the Trustee; (j) the Securities Administrator shall
maintain records relating to the REMIC Trust including but not limited to the
income, expenses, assets and liabilities of the REMIC Trust and adjusted basis
of the Trust Fund property determined at such intervals as may
113
be required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information; (k) the Securities Administrator shall,
for federal income tax purposes, maintain books and records with respect to the
REMIC Trust on a calendar year and on an accrual basis; (l) neither the Trustee
nor the Master Servicer shall enter into any arrangement not otherwise provided
for in this Agreement by which the REMIC Trust will receive a fee or other
compensation for services nor permit the REMIC Trust to receive any income from
assets other than "qualified mortgages" as defined in Section 860G(a)(3) of the
Code or "permitted investments" as defined in Section 860G(a)(5) of the Code;
and (m) as and when necessary and appropriate, the Trustee, or at the written
request of the Trustee, the Securities Administrator, shall represent the Trust
Fund in any administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative adjustment
as to any taxable year of any REMIC formed hereunder, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of the Trust Fund, and otherwise act on
behalf of each REMIC formed hereunder in relation to any tax matter involving
the REMIC Trust.
In order to enable each of the Trustee and the Securities Administrator to
perform its duties as set forth herein, the Depositor shall provide, or cause to
be provided, to the Trustee or the Securities Administrator within 10 days after
the Closing Date all information or data that the Trustee or the Securities
Administrator requests in writing and determines to be relevant for tax purposes
to the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, Prepayment Assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Depositor shall provide
to the Trustee or the Securities Administrator promptly upon written request
therefor, any such additional information or data that the Trustee or the
Securities Administrator may, from time to time, request in order to enable the
Trustee or the Securities Administrator to perform its duties as set forth
herein. The Depositor hereby indemnifies each of Trustee and the Securities
Administrator for any losses, liabilities, damages, claims or expenses of the
Trustee or the Securities Administrator arising from any errors or
miscalculations of the Trustee or the Securities Administrator, as applicable,
that result from any failure of the Depositor to provide, or to cause to be
provided, accurate information or data to the Trustee or the Securities
Administrator, as applicable, on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of the
REMIC Trust as defined in Section 860F(a)(2) of the Code, on the "net income
from foreclosure property" of the Trust Fund as defined in Section 860G(c) of
the Code, on any contribution to any of the REMIC Trust after the startup day
pursuant to Section 860G(d) of the Code, or any other tax is imposed, including,
without limitation, any federal, state or local tax or minimum tax imposed upon
any of the REMIC Trust created hereunder, and is not paid as otherwise provided
for herein, such tax shall be paid by (i) the Trustee or the Securities
Administrator, if any such other tax arises out of or results from a breach by
the Trustee or the Securities Administrator, respectively, of any of its
obligations under this Agreement, (ii) any party hereto (other than the Trustee
or the Securities Administrator) to the extent any such other tax arises out of
or results from a breach by such other party of any of its obligations under
this Agreement or (iii) in all other cases, or in the event that any liable
party hereto fails to honor its obligations under the preceding clauses (i) or
(ii), any such tax will be paid first with amounts otherwise to be distributed
to the Class R-1 Certificateholders, and second with amounts otherwise to be
distributed to all other
114
Certificateholders in the following order of priority: first, to the Class B-1
Certificates, second, to the Class M-2 Certificates, third, to the Class M-1
Certificates and fourth to the Class A-1 Certificates. Notwithstanding anything
to the contrary contained herein, to the extent that such tax is payable by the
Holder of any Certificates, the Trustee is hereby authorized to retain on any
Distribution Date, from the Holder of the Class R Certificates (and, if
necessary, second, from the Holders of the other Certificates in the priority
specified in the preceding sentence), funds otherwise distributable to such
Holders in an amount sufficient to pay such tax. Following written notification
to the Securities Administrator by the Trustee of any amount payable out of
distributions to the Certificateholders pursuant to the preceding two sentences,
the Securities Administrator shall include in its Remittance Report instructions
as to distributions to such parties taking into account the priorities described
in the second preceding sentence. The Securities Administrator, on written
request by the Trustee, agrees to promptly notify in writing the party liable
for any such tax of the amount thereof and the due date for the payment thereof.
The Trustee and the Securities Administrator each agree that, in the event
it should obtain any information necessary for the other party to perform its
obligations pursuant to this Section 10.12, it will promptly notify and provide
such information to such other party. Notwithstanding anything in this Agreement
to the contrary, the Trustee agrees that, in the event that the Trustee obtains
actual knowledge that the Securities Administrator has breached any of its
obligations pursuant to this Section 10.12, the Trustee shall perform such
obligations on its behalf to the extent that the Trustee possesses all documents
necessary to so perform and receives reasonable compensation therefor, provided,
however, that the Trustee shall not be liable for any losses resulting from any
such breach.
115
ARTICLE XI
TERMINATION
Section 11.01 Termination upon Liquidation or Repurchase of all Mortgage
Loans.
Subject to Section 11.03, the obligations and responsibilities of the
Depositor, the Master Servicer, the Securities Administrator, the Seller and the
Trustee created hereby with respect to the Trust Fund shall terminate upon the
earlier of (a) the purchase by [Master Servicer] of all of the Mortgage Loans
(and REO Properties) remaining in the Trust Fund at a price (the "Mortgage Loan
Purchase Price") equal to the sum of (i) 100% of the Stated Principal Balance of
each Mortgage Loan (other than in respect of REO Property), (ii) accrued
interest thereon at the applicable Mortgage Rate to, but not including, the
first day of the month of such purchase, (iii) the appraised value of any REO
Property in the Trust Fund (up to the Stated Principal Balance of the related
Mortgage Loan), such appraisal to be conducted by an appraiser mutually agreed
upon by the Master Servicer and the Trustee and (iv) unreimbursed out-of pocket
costs of the Company, the Servicers or the Master Servicer, including
unreimbursed servicing advances and the principal portion of any unreimbursed
Advances, made on the Mortgage Loans prior to the exercise of such repurchase
right and (v) any unreimbursed costs and expenses of the Trustee and the
Securities Administrator payable pursuant to Section 10.05 and (b) the later of
(i) the maturity or other liquidation (or any Advance with respect thereto) of
the last Mortgage Loan remaining in the Trust Fund and the disposition of all
REO Property and (ii) the distribution to Certificateholders of all amounts
required to be distributed to them pursuant to this Agreement, as applicable. In
no event shall the trusts created hereby continue beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to the Court of St.
Xxxxx, living on the date hereof and (ii) the Latest Possible Maturity Date.
The right to repurchase all Mortgage Loans and REO Properties pursuant to
clause (a) in the preceding paragraph shall be exercisable on or after the
earlier of (i) the [10%] Clean-Up Call Date and (ii) the Distribution Date in
_________, 20__.
Section 11.02 Final Distribution on the Certificates.
If on any Determination Date, (i) the Master Servicer determines that there
are no Outstanding Mortgage Loans and no other funds or assets in the Trust Fund
other than the funds in the Master Servicer Collection Account, the Master
Servicer shall direct the Securities Administrator to send a final distribution
notice promptly to each Certificateholder or (ii) the Securities Administrator
determines that a Class of Certificates shall be retired after a final
distribution on such Class, the Securities Administrator shall notify the
Certificateholders within five (5) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the related Certificates at the office
of the Trustee specified in the final distribution notice to Certificateholders.
If [Master Servicer] elects to terminate the Trust Fund pursuant to Section
11.01, at least 20 days prior to the date notice is to
116
be mailed to the Certificateholders, the [Master Servicer] shall notify the
Depositor, the Securities Administrator, the Trustee of the date the [Master
Servicer] intends to terminate the Trust Fund. The Master Servicer shall remit
the Mortgage Loan Purchase Price to the Trustee on the Business Day prior to
the Distribution Date for such Optional Termination by the [Master Servicer].
Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the
Securities Administrator by letter to Certificateholders mailed not earlier than
the 10th day and no later than the 15th day of the month immediately preceding
the month of such final distribution. Any such notice shall specify (a) the
Distribution Date upon which final distribution on the Certificates will be made
upon presentation and surrender of Certificates at the office therein
designated, (b) the amount of such final distribution, (c) the location of the
office or agency at which such presentation and surrender must be made and (d)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office therein specified. The Securities Administrator will
give such notice to each Rating Agency at the time such notice is given to
Certificateholders.
In the event such notice is given, the Master Servicer shall cause all
funds in the Master Servicer Collection Account to be remitted to the Trustee
for deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit with respect to the Trust
Fund and the receipt by the Trustee of a Request for Release therefor, the
Trustee or the Custodian shall promptly release to the Master Servicer, as
applicable the Mortgage Files for the Mortgage Loans and the Trustee shall
execute and deliver any documents prepared and delivered to it which are
necessary to transfer any REO Property.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class in accordance with
the Remittance Report the amounts allocable to such Certificates held in the
Distribution Account in the order and priority set forth in Section 6.04 hereof
on the final Distribution Date and in proportion to their respective Percentage
Interests.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Securities Administrator shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Securities
Administrator may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets that remain a part of the Trust Fund. If within one year
after the second notice all Certificates shall not have been surrendered for
cancellation, the Class R Certificateholder shall be entitled to all unclaimed
funds and other assets of the Trust Fund that remain subject hereto.
117
Section 11.03 Additional Termination Requirements.
(a) Upon exercise by [Majority Class B-1 Certificateholder] of its
purchase option as provided in Section 11.01, the Trust Fund shall be terminated
in accordance with the following additional requirements, unless each of the
Trustee and the Securities Administrator have been supplied with an Opinion of
Counsel addressed to the Trustee, at the expense of [Master Servicer], to the
effect that the failure of the Trust Fund to comply with the requirements of
this Section 11.03 will not (i) result in the imposition of taxes on "prohibited
transactions" of the REMIC Trust, or (ii) cause the REMIC Trust to fail to
qualify as a REMIC at any time that any Certificates are outstanding:
(1) The [Master Servicer] shall establish a 90-day liquidation period
and notify the Trustee and Securities Administrator thereof, and the Securities
Administrator shall in turn specify the first day of such period in a statement
attached to the tax return for the REMIC Trust pursuant to Treasury Regulation
Section 1.860F-1. [Master Servicer] shall satisfy all the requirements of a
qualified liquidation under Section 860F of the Code and any regulations
thereunder, as evidenced by an Opinion of Counsel addressed to the Trustee
obtained at the expense of [Master Servicer];
(2) During such 90-day liquidation period, and at or prior to the time
of making the final payment on the Certificates, the Securities Administrator as
agent of the Trustee shall sell all of the assets of the REMIC Trust for cash;
and
(3) At the time of the making of the final payment on the
Certificates, the Securities Administrator as agent for the Trustee shall
distribute or credit, or cause to be distributed or credited, to the Holder of
the Class R Certificate all cash on hand (other than cash retained to meet
claims), and the REMIC Trust shall terminate at that time.
(b) By their acceptance of the Certificates, the Holders thereof
hereby authorize the adoption of a 90-day liquidation period for the REMIC
Trust, which authorization shall be binding upon all successor
Certificateholders.
(c) The Securities Administrator as agent for the REMIC Trust hereby
agrees to adopt and sign such a plan of complete liquidation upon the written
request of the [Master Servicer] and the receipt of the Opinion of Counsel
referred to in Section 11.03(a)(1) and to take such other action in connection
therewith as may be reasonably requested by the [Master Servicer].
118
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Amendment.
This Agreement may be amended from time to time by parties hereto, without
the consent of any of the Certificateholders to cure any ambiguity, to correct
or supplement any provisions herein (including to give effect to the
expectations of investors), to change the manner in which the Master Servicer
Collection Account maintained by the Master Servicer or the Protected Account
maintained by the Company is maintained or to make such other provisions with
respect to matters or questions arising under this Agreement as shall not be
inconsistent with any other provisions herein if such action shall not, as
evidenced by an Opinion of Counsel addressed to the Trustee, adversely affect in
any material respect the interests of any Certificateholder; provided that any
such amendment shall be deemed not to adversely affect in any material respect
the interests of the Certificateholders and no such Opinion of Counsel shall be
required if the Person requesting such amendment obtains a letter from each
Rating Agency stating that such amendment would not result in the downgrading or
withdrawal of the respective ratings then assigned to the Certificates.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the parties hereto may at any time and from time to time
amend this Agreement to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or appropriate to maintain the qualification
of the REMIC Trust as a REMIC under the Code or to avoid or minimize the risk of
the imposition of any tax on the REMIC Trust pursuant to the Code that would be
a claim against the REMIC Trust at any time prior to the final redemption of the
Certificates, provided that the Trustee has been provided an Opinion of Counsel
addressed to the Trustee, which opinion shall be an expense of the party
requesting such opinion but in any case shall not be an expense of the Trustee,
the Securities Administrator or the Trust Fund, to the effect that such action
is necessary or appropriate to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the parties hereto
and the Holders of each Class of Certificates affected thereby evidencing over
50% of the Voting Rights of such Class or Classes for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, payments required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii) cause
the REMIC Trust to cease to qualify as a REMIC or (iii) reduce the aforesaid
percentages of Certificates of each Class the Holders of which are required to
consent to any such amendment without the consent of the Holders of all
Certificates of such Class then outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee shall
not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel addressed to the Trustee , which opinion shall be
an expense of the party requesting such
119
amendment but in any case shall not be an expense of the Trustee or the
Securities Administrator, to the effect that such amendment will not (other than
an amendment pursuant to clause (ii) of, and in accordance with, the preceding
paragraph) cause the imposition of any tax on the REMIC Trust or the
Certificateholders or cause the REMIC Trust to cease to qualify as a REMIC at
any time that any Certificates are outstanding. Further, nothing in this
Agreement shall require the Trustee to enter into an amendment without receiving
an Opinion of Counsel, satisfactory to the Trustee that (i) such amendment is
permitted and is not prohibited by this Agreement and that all requirements for
amending this Agreement (including any consent of the applicable
Certificateholders) have been complied with.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Section 12.02 Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere. The Master Servicer shall effect such recordation at the
Trust's expense upon the request in writing of a Certificateholder, but only if
such direction is accompanied by an Opinion of Counsel (provided at the expense
of the Certificateholder requesting recordation) to the effect that such
recordation would materially and beneficially affect the interests of the
Certificateholders or is required by law.
For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.
Section 12.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS).
120
Section 12.04 Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Seller to the
Depositor, and by the Depositor to the Trustee be, and be construed as, an
absolute sale thereof to the Depositor or the Trustee, as applicable. It is,
further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Seller to the Depositor, or by the Depositor to the
Trustee. However, in the event that, notwithstanding the intent of the parties,
such assets are held to be the property of the Seller or the Depositor, as
applicable, or if for any other reason this Agreement is held or deemed to
create a security interest in such assets, then (i) this Agreement shall be
deemed to be a security agreement within the meaning of the Uniform Commercial
Code of the State of New York and (ii) each conveyance provided for in this
Agreement shall be deemed to be an assignment and a grant by the Seller or the
Depositor, as applicable , for the benefit of the Certificateholders, of a
security interest in all of the assets that constitute the Trust Fund, whether
now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement.
Section 12.05 Notices.
(a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency with respect to each of the following of which a
Responsible Officer of the Trustee has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured;
(iii) The resignation or termination of the Master Servicer, the
Securities Administrator or the Trustee and the appointment of any
successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02, 2.03, 4.21 and 11.01; and
(v) The final payment to Certificateholders.
(b) All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when delivered at or mailed by
registered mail, return receipt requested, postage prepaid, or by recognized
overnight courier, or by facsimile transmission to a number provided by the
appropriate party if receipt of such transmission is confirmed to (i) in the
case of the Depositor, Bear Xxxxxxx Asset Backed Securities I LLC, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Chief Counsel; (ii) in the case of
the Seller or the Company,
121
______________________________________________________________ or such other
address as may be hereafter furnished to the other parties hereto by the Master
Servicer in writing; (iv) in the case of the Trustee, at each Corporate Trust
Office or such other address as the Trustee may hereafter furnish to the other
parties hereto; (v) in the case of the Master Servicer or the Securities
Administrator, ________________________________________ (or, for overnight
deliveries, _______________________________________ or such other address as may
be hereafter furnished to the other parties hereto by the Securities
Administrator in writing and (vi) in the case of the Rating Agencies, (x)
[Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Home Equity Monitoring] and (y) [Standard & Poor's, 00 Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mortgage Surveillance Group].
Any notice delivered to the Seller, the Master Servicer, the Securities
Administrator or the Trustee under this Agreement shall be effective only upon
receipt. Any notice required or permitted to be mailed to a Certificateholder,
unless otherwise provided herein, shall be given by first-class mail, postage
prepaid, at the address of such Certificateholder as shown in the Certificate
Register; any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 12.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 12.07 Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 8.02, this Agreement may not be assigned by the
Master Servicer, the Seller or the Depositor.
Section 12.08 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
122
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee or the Securities
Administrator, as appropriate, a written notice of an Event of Default and of
the continuance thereof, as hereinbefore provided, the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates
shall also have made written request to the Trustee or the Securities
Administrator, as appropriate to institute such action, suit or proceeding in
its own name as Trustee or the Securities Administrator, as appropriate,
hereunder and shall have offered to the Trustee or the Securities Administrator,
as appropriate, such reasonable indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee or
the Securities Administrator, as appropriate, for 60 days after its receipt of
such notice, request and offer of indemnity shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 12.08, each and every Certificateholder, the
Trustee or the Securities Administrator shall be entitled to such relief as can
be given either at law or in equity.
Section 12.09 Inspection and Audit Rights. The Master Servicer agrees that,
on reasonable prior notice, it will permit any representative of the Depositor
or the Trustee during the Master Servicer's normal business hours, to examine
all the books of account, records, reports and other papers of the Master
Servicer relating to the Mortgage Loans, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants
selected by the Depositor or the Trustee and to discuss its affairs, finances
and accounts relating to such Mortgage Loans with its officers, employees and
independent public accountants (and by this provision the Master Servicer hereby
authorizes such accountants to discuss with such representative such affairs,
finances and accounts), all at such reasonable times and as often as may be
reasonably requested. Any out-of-pocket expense incident to the exercise by the
Depositor or the Trustee of any right under this Section 12.09 shall be borne by
the party requesting such inspection, subject to such party's right to
reimbursement hereunder (in the case of the Trustee, pursuant to Section 10.05
hereof).
Section 12.10 Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.
* * *
123
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Seller, the
Company, the Securities Administrator and the Trustee have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
BEAR XXXXXXX ASSET BACKED
SECURITIES I LLC,
as Depositor
By:_______________________________________
Name:_____________________________________
Title:____________________________________
_________________________________________,
as Seller and Company
By:_______________________________________
Name:_____________________________________
Title:____________________________________
_________________________________________,
as Securities Administrator and Master
Servicer
By:_______________________________________
Name:_____________________________________
Title:____________________________________
_________________________________________,
as Trustee
By:_______________________________________
Name:_____________________________________
Title:____________________________________
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of ________ 200__, before me, a notary public in and
for said State, appeared ______________, personally known to me on the basis of
satisfactory evidence to be an authorized representative of Bear Xxxxxxx Asset
Backed Securities I LLC, one of the entities that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such corporation and acknowledged to me that such entity executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of ________ 200__, before me, a notary public in and
for said State, appeared _______________, personally known to me on the basis of
satisfactory evidence to be an authorized representative of
_________________________________ that executed the within instrument, and also
known to me to be the person who executed it on behalf of such corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ________ 200__, before me, a notary public in and
for said State, appeared _________________, personally known to me on the basis
of satisfactory evidence to be an authorized representative of
________________________, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such corporation and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of ________ 200__, before me, a notary public in and
for said State, appeared _______________, personally known to me on the basis of
satisfactory evidence to be an authorized representative of
_____________________ that executed the within instrument, and also known to me
to be the person who executed it on behalf of such corporation, and acknowledged
to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
