EXHIBIT 4.1
EXECUTION COPY
==============================================================================
BOND SECURITIZATION, L.L.C.,
Depositor
CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC,
Seller
XXXXXX LOAN SERVICING LP,
Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 2003
Bond Securitization Trust 2003-1
Bond Securitization Asset-Backed Certificates, Series 2003-1
==============================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.................................................................................5
Section 1.02 Accounting...................................................................................35
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.................................................................35
Section 2.02 Acceptance by Trustee........................................................................37
Section 2.03 Repurchase or Substitution of Mortgage Loans by the Seller...................................39
Section 2.04 Representations and Warranties of the Seller with Respect to the Mortgage Loans..............41
Section 2.05 Representations, Warranties and Covenants of the Servicer....................................42
Section 2.06 Representations and Warranties of the Depositor..............................................44
Section 2.07 Issuance of Certificates.....................................................................46
Section 2.08 Representations and Warranties of the Seller.................................................46
Section 2.09 Covenants of the Seller......................................................................48
Section 2.10 Repurchase of Mortgage Loans by the Originator...............................................48
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer..................................................................49
Section 3.02 Collection of Mortgage Loan Payments.........................................................51
Section 3.03 Realization Upon Defaulted Mortgage Loans....................................................51
Section 3.04 Collection Account and Distribution Account..................................................52
Section 3.05 Permitted Withdrawals From the Collection Account............................................54
Section 3.06 Establishment of Escrow Accounts; Deposits in Escrow Account.................................55
Section 3.07 Permitted Withdrawals From Escrow Account....................................................56
Section 3.08 Payment of Taxes, Insurance and Other Charges; Collections Thereunder........................56
Section 3.09 Transfer of Accounts.........................................................................57
Section 3.10 Maintenance of Hazard Insurance..............................................................57
Section 3.11 Maintenance of Mortgage Impairment Insurance Policy..........................................58
Section 3.12 Fidelity Bond, Errors and Omissions Insurance................................................58
Section 3.13 Title, Management and Disposition of REO Property............................................59
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution Agreements..................................61
-i-
Section 3.15 [Reserved]...................................................................................62
Section 3.16 Optional Purchases of Mortgage Loans by Servicer.............................................62
Section 3.17 Trustee to Cooperate; Release of Files.......................................................62
Section 3.18 Servicing Compensation.......................................................................64
Section 3.19 Annual Statement as to Compliance............................................................64
Section 3.20 Annual Independent Certified Public Accountants' Reports.....................................64
Section 3.21 Access to Certain Documentation and Information Regarding the Mortgage Loans.................65
Section 3.22 Filing of Reports with the Securities and Exchange Commission................................65
Section 3.23 Obligations of the Servicer in Respect of Compensating Interest..............................67
Section 3.24 Obligations of the Servicer in Respect of Mortgage Interest Rates and Monthly
Payments.....................................................................................67
Section 3.25 Investment of Funds in the Collection Account and the Distribution Account...................67
Section 3.26 Liability of Servicer; Indemnification.......................................................68
Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged Properties...............................69
Section 3.28 Protection of Assets.........................................................................69
Section 3.29 Advance Facility.............................................................................70
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest Distributions.......................................................................72
Section 4.02 Distributions of Principal and Monthly Excess Cashflow Amounts...............................73
Section 4.03 Allocation of Losses.........................................................................76
Section 4.04 Method of Distribution.......................................................................76
Section 4.05 Distributions on Book-Entry Certificates.....................................................77
Section 4.06 Statements...................................................................................77
Section 4.07 Remittance Reports; Advances.................................................................80
Section 4.08 Basis Risk Reserve Fund......................................................................82
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates.............................................................................83
Section 5.02 Registration of Transfer and Exchange of Certificates........................................84
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates............................................89
Section 5.04 Persons Deemed Owners........................................................................89
Section 5.05 Appointment of Paying Agent..................................................................89
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the Depositor......................................90
-ii-
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations of, the Seller, the
Servicer or the Depositor....................................................................90
Section 6.03 Limitation on Liability of the Servicer and Others...........................................90
Section 6.04 Servicer Not to Resign.......................................................................91
Section 6.05 Delegation of Duties.........................................................................92
ARTICLE VII
SERVICER EVENTS OF TERMINATION
Section 7.01 Servicer Events of Termination...............................................................92
Section 7.02 Trustee to Act; Appointment of Successor.....................................................94
Section 7.03 Waiver of Defaults...........................................................................95
Section 7.04 Notification to Certificateholders...........................................................95
Section 7.05 Survivability of Servicer Liabilities........................................................96
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee............................................................................96
Section 8.02 Certain Matters Affecting the Trustee........................................................97
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans........................................99
Section 8.04 Trustee May Own Certificates.................................................................99
Section 8.05 Seller to Pay Trustee Fees and Expenses.....................................................100
Section 8.06 Eligibility Requirements for Trustee........................................................100
Section 8.07 Resignation or Removal of Trustee...........................................................101
Section 8.08 Successor Trustee...........................................................................101
Section 8.09 Merger or Consolidation of Trustee..........................................................102
Section 8.10 Appointment of Co-Trustee or Separate Trustee...............................................102
Section 8.11 Limitation of Liability.....................................................................103
Section 8.12 Trustee May Enforce Claims Without Possession of Certificates...............................104
Section 8.13 Suits for Enforcement.......................................................................104
Section 8.14 Waiver of Bond Requirement..................................................................104
Section 8.15 Waiver of Inventory, Accounting and Appraisal Requirement...................................104
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01 REMIC Administration........................................................................105
Section 9.02 Prohibited Transactions and Activities......................................................107
Section 9.03 Indemnification with Respect to Certain Taxes and Loss of REMIC Status......................107
Section 9.04 REO Property................................................................................108
-iii-
ARTICLE X
TERMINATION
Section 10.01 Termination.................................................................................108
Section 10.02 Additional Termination Requirements.........................................................110
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment...................................................................................111
Section 11.02 Recordation of Agreement; Counterparts......................................................112
Section 11.03 Limitation on Rights of Certificateholders..................................................113
Section 11.04 Governing Law; Jurisdiction.................................................................113
Section 11.05 Notices.....................................................................................114
Section 11.06 Severability of Provisions..................................................................114
Section 11.07 Article and Section References..............................................................114
Section 11.08 Notice to the Rating Agencies...............................................................115
Section 11.09 Further Assurances..........................................................................115
Section 11.10 Benefits of Agreement.......................................................................116
Section 11.11 Acts of Certificateholders..................................................................116
-iv-
EXHIBITS
--------
Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2 Certificates
Exhibit B-1 Form of Class B-1 Certificates
Exhibit B-2 Form of Class B-2 Certificates
Exhibit C-1 Form of Class R Certificates
Exhibit C-2 Form of Class M-1 Certificates
Exhibit C-3 Form of Class M-2 Certificates
Exhibit C-4 Form of Class X Certificates
Exhibit D Mortgage Loan Schedule
Exhibit E Form of Request for Release
Exhibit F-1 Form of Trustee's or Custodian's Initial Certification
Exhibit F-2 Form of Trustee's or Custodian's Final Certification
Exhibit F-3 Form of Receipt of Mortgage Note
Exhibit G Mortgage Loan Purchase Agreement
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of ERISA Representation
Exhibit J Form of Investment Letter
Exhibit K Form of Residual Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate
Exhibit M Form of Certification to Be Provided by the Servicer with Form 10-K
Exhibit N Form of Certification to Be Provided to the Servicer by the Trustee
Exhibit O Monthly Information Delivered by Servicer
Exhibit P Form of Officer's Certificate with Respect to Prepayments
Exhibit Q Form of Power of Attorney
-v-
This Pooling and Servicing Agreement is dated as of November 1, 2003
(the "Agreement"), among BOND SECURITIZATION, L.L.C., as depositor (the
"Depositor"), CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC, as seller
(the "Seller"), XXXXXX LOAN SERVICING LP, as servicer (the "Servicer"), and
U.S. BANK NATIONAL ASSOCIATION, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple
Classes, which in the aggregate will evidence the entire beneficial ownership
interest in the Trust Fund created hereunder. The Certificates will consist of
eight Classes of Certificates, designated as the Class X-0, Xxxxx X-0, Class
M-1, Class M-2, Class B-1, Class B-2, the Class X, the Class R-1 and Class R-2
Certificates.
The Depositor hereby assigns to the Trustee, acting on behalf of the
Certificateholders its interests and rights in the Mortgage Loans. As provided
herein, the Trustee will make multiple elections to treat segregated pools of
assets subject to this Agreement for federal income tax purposes as the
following five separate real estate mortgage investment conduits (each, a
"REMIC"): the Subsidiary REMIC, the Master REMIC, the Class B-1 REMIC, the
Class B-2 REMIC, and the Class X REMIC. The Subsidiary REMIC will consist of
all of the assets constituting the Mortgage Loans. The Subsidiary REMIC will
issue (1) uncertificated REMIC regular interests designated with a "1-" and
payable from the monies received from the Mortgage Loans (the "Subsidiary
REMIC Regular Interests"). The Subsidiary REMIC Regular Interests will be
uncertificated and will represent the "regular interests" in the Subsidiary
REMIC and the SR Interest will represent the single "residual interest" in the
Subsidiary REMIC.
The Trustee will hold the Subsidiary REMIC Regular Interests for the
benefit of the Master REMIC. The Master REMIC will consist of the Subsidiary
REMIC Regular Interests and will be evidenced by (i) the Regular Certificates
(other than the Class B-1, Class B-2 and Class X Certificates) and the Class
B-1 Interest, Class B-2 Interest, and Class X Interest, which will represent
the "regular interests" in the Master REMIC and (ii) the Class MR Interest,
which will represent the single "residual interest" in the Master REMIC.
The Trustee will hold the Class B-1 Interest for the benefit of the
Class B-1 REMIC. The Class B-1 REMIC will consist of the Class B-1 Interest
and will be evidenced by (i) the Class B-1 Certificates, which will represent
the "regular interests" in the Class B-1 REMIC and (ii) the Class B1R
Interest, which will represent the single "residual interest" in the Class B-1
REMIC.
The Trustee will hold the Class B-2 Interest for the benefit of the
Class B-2 REMIC. The Class B-2 REMIC will consist of the Class B-2 Interest
and will be evidenced by (i) the Class B-2 Certificates, which will represent
the "regular interests" in the Class B-2 REMIC and (ii) the Class B2R
Interest, which will represent the single "residual interest" in the Class B-2
REMIC.
-1-
The Trustee will hold the Class X Interest for the benefit of the
Class X REMIC. The Class X REMIC will consist of the Class X Interest and will
be evidenced by (i) the Class X Certificates, which will represent the
"regular interests" in the Class X REMIC and (ii) the Class XR Interest, which
will represent the single "residual interest" in the Class X REMIC. As
discussed in section 9.01 of the Agreement, the Class X Certificates will
represent the beneficial interest in the Class X Interest.
The Class R-1 Certificates will represent the Class SR and Class MR
Interests, and the Class R-2 Certificates will represent the Class B1R, Class
B2R and Class XR Interests. The "latest possible maturity date" for federal
income tax purposes of all REMICs, and regular and residual interests created
hereunder will be the Distribution Date in October 2034.
The Subsidiary REMIC
--------------------
The following table sets forth Class Designation, the Initial
Principal Balance and the Pass-Through Rate for each Subsidiary Regular
Interest:
================================================================================================================
Pass-Through
Class Designation Principal Balance Rate Corresponding Master REMIC Class
----------------------------------------------------------------------------------------------------------------
Class 1-A-1 (1) (2) Class A-1
----------------------------------------------------------------------------------------------------------------
Class 1-A-2 (1) (2) Class A-2
----------------------------------------------------------------------------------------------------------------
Class 1-M-1 (1) (2) Class M-1
----------------------------------------------------------------------------------------------------------------
Class 1-M-2 (1) (2) Class M-2
----------------------------------------------------------------------------------------------------------------
Class 1-B-1 (1) (2) Class B-1
----------------------------------------------------------------------------------------------------------------
Class 1-B-2 (1) (2) Class B-2
----------------------------------------------------------------------------------------------------------------
1-Accrual (1) (2) N/A
----------------------------------------------------------------------------------------------------------------
Class SR $0 N/A N/A
================================================================================================================
(1) The 1-A-1 Interest, 1-A-2 Interest, 1-M-1 Interest, 1-M-2 Interest, 1-B-1
Interest and 1-B-2 Interest (each such class hereafter referred to as an
"Accretion Directed Class") each have a principal balance that is
initially equal to 50% of its corresponding Master REMIC Class. The
principal balance of the 1-Accrual Interest initially equals the excess
of the principal balance of the Mortgage Loans over the aggregate
principal balance of the 1-A-1 Interest, 1-A-2 Interest, 1-M-1 Interest,
1-M-2 Interest, 1-B-1 Interest and 1-B-2 Interest. Principal payments,
both scheduled and prepaid, Realized Losses, and interest accruing on the
1-Accrual Interest will be allocated to each of the foregoing classes to
maintain each Class' size relative to its Corresponding Master REMIC
Class (i.e., 50%) with any excess payments of principal and Realized
Losses being allocated to the 1-Accrual Interest in such manner as to
cause the principal balance of the 1-Accrual Interest to have a principal
balance equal to (a) 50% of the principal balances of the Mortgage Loans
plus (b) 50% of the Overcollateralization Amount for such Distribution
Date.
(2) The Net Rate Cap.
(3) The Class SR Interest does not have a principal balance and does not pay
interest.
-2-
The Master REMIC
----------------
The following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in excess
thereof in which such Classes shall be issuable (except that one Certificate
of each Class of Certificates may be issued in a different amount):
===========================================================================================================
Certificate Pass-Through Rate Minimum Integral Multiples in
Principal Balance Denomination Excess of Minimum
-----------------------------------------------------------------------------------------------------------
Class A-1 $78,075,000 (1) $25,000.00 $1.00
-----------------------------------------------------------------------------------------------------------
Class A-2 $17,623,000 (1) $25,000.00 $1.00
-----------------------------------------------------------------------------------------------------------
Class M-1 $14,785,000 (1) $25,000.00 $1.00
-----------------------------------------------------------------------------------------------------------
Class M-2 $11,830,000 (1) $25,000.00 $1.00
-----------------------------------------------------------------------------------------------------------
Class B-1 $9,970,000 (1) $25,000.00 $1.00
-----------------------------------------------------------------------------------------------------------
Class B-2 $4,057,000 (1) $25,000.00 $1.00
-----------------------------------------------------------------------------------------------------------
Class X (2) (2) N/A N/A
-----------------------------------------------------------------------------------------------------------
Class MR $0 N/A
===========================================================================================================
--------------
1) The related Pass-Through Rate.
2) As to any Distribution Date, the Class X Interest will have a notional
balance equal to the aggregate Pool Balance as of the first day of the
related Collection Period, and a Pass-Through Rate equal to the excess
of: (i) the Net Rate Cap over (ii) the product of: (A) two and (B) the
weighted average Pass-Through Rate of the Subsidiary REMIC Regular
Interests, where the 1-Accrual Interest is subject to a cap equal to zero
and each Accretion Directed Class is subject to a cap equal to the
Pass-Through Rate on its Corresponding Master REMIC Class. The Class X
Interest will also be entitled to all Prepayment Charges.
The Class B-1 REMIC
-------------------
The Class B-1 Interest will be the sole asset of the Class B-1 REMIC
and has a Pass-Through Rate equal to the Pass-Through Rate on the
Corresponding Master REMIC Class. The following table sets forth
characteristics of the Class B-1 Certificates and the Class B1R Interest,
together with the minimum denominations and integral multiples in excess
thereof:
===========================================================================================================
Certificate Pass-Through Minimum Integral Multiples in Excess
Principal Balance Rate Denomination of Minimum
-----------------------------------------------------------------------------------------------------------
Class B-1 $9,970,000 (1) $25,000.00 $1.00
-----------------------------------------------------------------------------------------------------------
Class X0X x0 X/X X/X X/X
===========================================================================================================
--------------
(1) A rate equal to 100% of the Pass-Through Rate on the Class B-1 Interest.
The Class B-2 REMIC
-------------------
The Class B-2 Interest will be the sole asset of the Class B-2 REMIC
and has a Pass-Through Rate equal to the Pass-Through Rate on the
Corresponding Master REMIC Class.
-3-
The following table sets forth characteristics of the Class B-2 Certificates
and the Class B2R Interest, together with the minimum denominations and
integral multiples in excess thereof:
===========================================================================================================
Certificate Pass-Through Minimum Integral Multiples in Excess
Principal Balance Rate Denomination of Minimum
-----------------------------------------------------------------------------------------------------------
Class B-2 $4,057,000 (1) $25,000.00 $1.00
-----------------------------------------------------------------------------------------------------------
Class X0X x0 X/X X/X X/X
===========================================================================================================
--------------
(1) A rate equal to 100% of the Pass-Through Rate on the Class B-2 Interest.
The Class X REMIC
The Class X REMIC
-----------------
The Class X Interest will be the sole asset of the Class X REMIC and
has a Pass-Through Rate equal to the Pass-Through Rate on the Corresponding
Master REMIC Class. The following table sets forth characteristics of the
Class X Certificates and the Class XR Interest, together with the minimum
denominations and integral multiples in excess thereof:
===========================================================================================================
Class Certificate Pass-Through Minimum Integral Multiples in Excess
Balance Rate Denomination of Minimum
-----------------------------------------------------------------------------------------------------------
Class X (1) (1) N/A N/A
-----------------------------------------------------------------------------------------------------------
Class XR $0 N/A N/A N/A
===========================================================================================================
--------------
(1) The Class X Certificates will have a notional balance equal to the
notional balance of the Class X Interest, and a rate equal to 100% of the
Pass-Through Rate on the Class X Interest.
The following provisions in the Preliminary Statement are intended to
cause net interest and principal collections in respect of the Mortgage Loans
to be distributed from the Subsidiary REMIC to the Master REMIC and, except in
the case of the Class B-1 Interest, Class B-2 Interest and Class X Interest,
from the Master REMIC to each Class of Certificates. In addition, in the case
of the Class B-1 Interest, Class B-2 Interest and Class X Interest, all
interest and principal collections will be treated as paid to the Class B-1
REMIC, the Class B-2 REMIC and the Class X REMIC on behalf of the Class B-1
Certificate, the Class B-2 Certificate, and the Class X Certificates,
respectively. The Preliminary Statement will be interpreted and applied
consistently with such intent.
For any purpose for which the pass-through rates is calculated, the
interest rate on the Mortgage Loans shall be appropriately adjusted to account
for the difference between the monthly day count convention of the Mortgage
Loans and the monthly day count convention of the regular interests issued by
each of the REMICs. For purposes of calculating the pass-through rates for
each of the interests issued by the Subsidiary REMIC, the Master REMIC, the
Class B-1 REMIC, the Class B-2 REMIC and the Class X REMIC such rates shall be
adjusted to equal a monthly day count convention based on the actual number of
days in the preceding Collection
-4-
Period and a 360-day year so that the Mortgage Loans and all regular interests
will be using the same monthly day count convention.
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
"1933 Act": The Securities Act of 1933, as amended.
"60+ Day Delinquent Loan": Each Mortgage Loan with respect to which
any portion of a Monthly Payment is, as of the last day of the prior
Collection Period, two months or more past due, each Mortgage Loan in
foreclosure, all REO Property and each Mortgage Loan for which the Mortgagor
has filed for bankruptcy after the Closing Date.
"Account": Any of the Collection Account, the Distribution Account
and the Basis Risk Reserve Fund.
"Accretion Directed Class": As defined in the Preliminary Statement.
"Accrued Certificate Interest": With respect to each Distribution
Date and Class of Offered Certificates an amount equal to the interest accrued
at the applicable rate set forth or described opposite such Class in the table
in the Preliminary Statement during the related Interest Accrual Period on the
Certificate Principal Balance of such Class of Certificates, reduced by such
Class' Interest Percentage of Relief Act Interest Shortfalls for such
Distribution Date. Unless otherwise specified, interest on the Floating Rate
Certificates will be calculated on the basis of the actual number of days in
the related Interest Accrual Period and a 360-day year. Interest the Class X
Certificates will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
"Actuarial Mortgage Loan": Any Mortgage Loan other than a Simple
Interest Mortgage Loan.
"Advance": As to any Mortgage Loan or REO Property, any advance made
by the Servicer in respect of any Distribution Date pursuant to the first
paragraph of Section 4.07(b).
"Advance Facility": As defined in Section 3.29(a) hereof.
"Advance Facility Notice": As defined in Section 3.29(b) hereof.
"Advance Financing Person": As defined in Section 3.29(a) hereof.
"Advance Reimbursement Amounts": As defined in Section 3.29(b)
hereof.
-5-
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise and "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments
and supplements hereto.
"Applicable Regulations": As to any Mortgage Loan, all federal, state
and local laws, statutes, rules and regulations applicable thereto.
"Applied Realized Loss Amount": As defined in Section 4.03 hereof.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale of the Mortgage.
"Assigned Rights": The rights and remedies of the Depositor under
Sections 3.01 through 3.02(d) of the Originator Mortgage Loan Purchase
Agreement and the Bring Down Letter.
"Available Funds": As to any Distribution Date, an amount equal to
the excess of (i) the sum of (a) the aggregate of the Monthly Payments due and
collected during the related Collection Period and received by the Trustee one
Business Day prior to the related Distribution Date, (b) any unscheduled
recoveries of principal and interest and Principal Prepayments, Insurance
Proceeds and Liquidation Proceeds in respect of the Mortgage Loans during the
related Prepayment Period, (c) the aggregate of any Advances and Timing
Advances made by the Servicer for such Distribution Date and any Compensating
Interest for such Distribution Date, (d) the Purchase Price for any
repurchased Mortgage Loan deposited to the Collection Account during the
related Prepayment Period (including, with respect to Mortgage Loans
repurchased by the Originator, amounts deposited by the Seller and the
Originator towards the payment of the Purchase Price), (e) any Substitution
Adjustment Amounts deposited in the Collection Account during the related
Prepayment Period, and (f) on the Distribution Date on which the Trust is to
be terminated pursuant to Section 10.01 hereof, the Termination Price, over
(ii) the sum of (a) amounts reimbursable or payable to the Servicer pursuant
to Section 3.05, (b) Stayed Funds, (c) the Servicing Fee, and (d) amounts
deposited in the Collection Account or the Distribution Account, as the case
may be, in error.
"Bankruptcy Code": Title 11 of the United States Code, as amended.
"Basis Risk Reserve Fund": As defined in Section 4.08 hereof.
"Basis Risk Reserve Fund Deposit": With respect to each Distribution
Date, an amount equal to the lesser of: (1) the sum of (a) the Net Rate
Carryover Amounts for such Distribution Date and (b) the Required Basis Risk
Reserve Fund Deposit; and (2) any Monthly
-6-
Excess Cashflow Amount remaining on such Distribution Date following the
distributions pursuant to Section 4.02(b)(i)-(xiv).
"Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant," or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the
Closing Date, the Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class B-1 and
Class B-2 Certificates shall be Book-Entry Certificates.
"Bring Down Letter": The Bring Down Letter dated as of the Closing
Date, pursuant to which the Originator's representations and warranties set
forth in the Originator Mortgage Loan Purchase Agreement (except those set
forth in Section 3.03(e)) are brought down as of the Closing Date.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in the State of Delaware, the State of New York,
the State of Texas or in the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law or executive order to be
closed.
"Certificate": Any Regular Certificate, Class X or Residual
Certificate.
"Certificate Custodian": Initially, U.S. Bank National Association;
thereafter any other Certificate Custodian acceptable to the Depository and
selected by the Trustee.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of
Certificates (other than the Class X and Residual Certificates) and any
Distribution Date, the Original Class Certificate Principal Balance reduced by
the sum of (i) all amounts actually distributed in respect of principal of
such Class on all prior Distribution Dates and (ii) Applied Realized Loss
Amounts allocated thereto. The Class X and Residual Certificates do not have a
Certificate Principal Balance. With respect to any Certificate (other than a
Class X or a Residual Certificate) of a Class and any Distribution Date, the
portion of the Certificate Principal Balance of such Class represented by such
Certificate equal to the product of the Percentage Interest evidenced by such
Certificate and the Certificate Principal Balance of such Class.
"Certificate Register" and "Certificate Registrar": The register
maintained and registrar appointed pursuant to Section 5.02 hereof.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of a
Residual Certificate for any purpose hereof.
"Certification" As defined in Section 3.22(b) hereof.
-7-
"Class": Collectively, Certificates or REMIC Regular Interests which
have the same priority of payment and bear the same class designation and the
form of which is identical except for variation in the Percentage Interest
evidenced thereby.
"Class A Certificate": Any one of the Certificates with a "A"
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-1 (the "Class A-1 Certificates") and Exhibit A-2 (the "Class A-2
Certificates"), executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class A Certificateholders": The Holders of the Class A
Certificates.
"Class A-1 Certificate Margin": For each Distribution Date (a) on or
prior to the Optional Termination Date, 0.400% per annum, and (b) following
the Optional Termination Date, 0.800% per annum.
"Class A-1 Pass-Through Rate": For each Distribution Date, the lesser
of (a) the sum of (i) LIBOR as of the related LIBOR Determination Date and
(ii) the Class A-1 Certificate Margin and (b) the Net Rate Cap for such
Distribution Date.
"Class A-2 Certificate Margin": For each Distribution Date (a) on or
prior to the Optional Termination Date, 0.700% per annum, and (b) following
the Optional Termination Date, 1.400% per annum.
"Class A-2 Pass-Through Rate": For each Distribution Date, the lesser
of (a) the sum of (i) LIBOR as of the related LIBOR Determination Date and
(ii) the Class A-2 Certificate Margin and (b) the Net Rate Cap for such
Distribution Date.
"Class B Certificate": Any one of the Certificates with a "B"
designated on the face thereof substantially in the form annexed hereto as
Exhibit B-1 (the "Class B-1 Certificates") and Exhibit B-2 (the "Class B-2
Certificates"), executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class B Certificateholders": Collectively, the Holders of the Class
B Certificates.
"Class B-1 Certificate Margin": For each Distribution Date (a) on or
prior to the Optional Termination Date, 3.500% per annum, and (b) following
the Optional Termination Date, 5.250% per annum.
"Class B-1 Interest": As defined in the Preliminary Statement.
"Class B-1 Pass-Through Rate": For each Distribution Date, the lesser
of (a) the sum of (i) LIBOR as of the related LIBOR Determination Date and
(ii) the Class B-1 Certificate Margin and (b) the Net Rate Cap for such
Distribution Date.
-8-
"Class B-1 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the Certificate Principal Balance of
the Senior Certificates (after taking into account the payment of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the
payment of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the payment of the Class M-2 Principal Distribution
Amount on such Distribution Date), and (iv) the Certificate Principal Balance
of the Class B-1 Certificates immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 72.01% and (ii) the Pool Balance as
of the last day of the related Collection Period and (B) the excess of the
Pool Balance as of the last day of the related Collection Period over the
product of (i) 0.50% and (ii) the Pool Balance on the Cut-off Date.
"Class B-2 Certificate Margin": For each Distribution Date (a) on or
prior to the Optional Termination Date, 3.500% per annum, and (b) following
the Optional Termination Date, 5.250% per annum.
"Class B-2 Interest": As defined in the Preliminary Statement.
"Class B-2 Pass-Through Rate": For each Distribution Date, the lesser
of (a) the sum of (i) LIBOR as of the related LIBOR Determination Date and
(ii) the Class B-2 Certificate Margin and (b) the Net Rate Cap for such
Distribution Date.
"Class B-2 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the Certificate Principal Balance of
the Senior Certificates (after taking into account the payment of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the
payment of the Class M-1 Principal Distribution Amount on such Distribution
Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates
(after taking into account the payment of the Class M-2 Principal Distribution
Amount on such Distribution Date), (iv) the Certificate Principal Balance of
the Class B-1 Certificates (after taking into account the payment of the Class
B-1 Principal Distribution Amount on such Distribution Date), and (v) the
Certificate Principal Balance of the Class B-2 Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 77.50%
and (ii) the Pool Balance as of the last day of the related Collection Period
and (B) the excess of the Pool Balance as of the last day of the related
Collection Period over the product of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class M Certificate": Any one of the Certificates with an "M"
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-2 (the "Class M-1 Certificates") and Exhibit C-3 (the "Class M-2
Certificates"), executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the
right to distributions as set forth herein and therein.
"Class M Certificateholders": Collectively, the Holders of the Class
M Certificates.
-9-
"Class M-1 Certificate Margin": For each Distribution Date (a) on or
prior to the Optional Termination Date, 1.750% per annum, and (b) following
the Optional Termination Date, 2.625% per annum.
"Class M-1 Pass-Through Rate": For each Distribution Date, the lesser
of (a) the sum of (i) LIBOR as of the related LIBOR Determination Date and
(ii) the Class M-1 Certificate Margin and (b) the Net Rate Cap for such
Distribution Date.
"Class M-1 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the Certificate Principal Balance of
the Senior Certificates (after taking into account the payment of the Senior
Principal Distribution Amount on such Distribution Date) and (ii) the
Certificate Principal Balance of the Class M-1 Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 42.51%
and (ii) the Pool Balance as of the last day of the related Collection Period
and (B) the excess of the Pool Balance as of the last day of the related
Collection Period over the product of (i) 0.50% and (ii) the Pool Balance on
the Cut-off Date.
"Class M-2 Certificate Margin": For each Distribution Date (a) on or
prior to the Optional Termination Date, 2.250% per annum, and (b) following
the Optional Termination Date, 3.375% per annum.
"Class M-2 Pass-Through Rate": For each Distribution Date, the lesser
of (a) the sum of (i) LIBOR as of the related LIBOR Determination Date and
(ii) the Class M-2 Certificate Margin and (b) the Net Rate Cap for such
Distribution Date.
"Class M-2 Principal Distribution Amount": As of any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the excess of (x) the sum of (i) the Certificate Principal Balance of
the Senior Certificates (after taking into account the payment of the Senior
Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the
payment of the Class M-1 Principal Distribution Amount on such Distribution
Date) and (iii) the Certificate Principal Balance of the Class M-2
Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 58.52% and (ii) the Pool Balance as of the last day
of the related Collection Period and (B) the excess of the Pool Balance as of
the last day of the related Collection Period minus the product of (i) 0.50%
and (ii) the Pool Balance on the Cut-off Date.
"Class R Certificate": Any one of the Class R-1 and Class R-2
Certificates.
"Class R-1 Certificate": Any one of the Certificates with an "R-1"
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-1, executed by the Trustee on behalf of the Trust and authenticated
and delivered by the Certificate Registrar, representing the right to
distributions as set forth herein and therein.
"Class R-2 Certificate": Any one of the Certificates with an "R-2"
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-1, executed by the Trustee
-10-
on behalf of the Trust and authenticated and delivered by the Certificate
Registrar, representing the right to distributions as set forth herein and
therein.
"Class X Certificate": Any one of the Certificates with an "X"
designated on the face thereof substantially in the form annexed hereto as
Exhibit C-4, executed by the Trustee on behalf of the Trust and authenticated
and delivered by the Certificate Registrar, representing the right to
distributions as set forth herein and therein.
"Class X Distributable Amount": With respect to any Distribution
Date, the aggregate of amounts distributable on the Class X Interest for such
Distribution Date as provided in the Preliminary Statement.
"Class X Interest": As defined in the Preliminary Statement.
"Closing Date": December 10, 2003.
"Code": The Internal Revenue Code of 1986, as it may be amended from
time to time.
"Collection Account": The account or accounts created and maintained
by the Servicer pursuant to Section 3.04, which shall be entitled "Collection
Account, Xxxxxx Loan Servicing LP, as Servicer for the Trust under the Pooling
and Servicing Agreement dated as of November 1, 2003 among Bond
Securitization, L.L.C., as Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller, Xxxxxx Loan Servicing LP, as Servicer, and U.S.
Bank National Association, as Trustee, in trust for registered Holders of Bond
Securitization Trust 2003-1, Bond Securitization Asset-Backed Certificates,
Series 2003-1," and which must be an Eligible Account.
"Collection Period": With respect to any Distribution Date, the
period from the second day of the calendar month preceding the month in which
such Distribution Date occurs through the first day of the month in which such
Distribution Date occurs.
"Combined Loan-to-Value Ratio": As of any date and Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Principal
Balance of the Mortgage Loan plus the principal balance of any related senior
mortgage loan or loans, and the denominator of which is the Value of the
related Mortgaged Property.
"Compensating Interest": As defined in Section 3.23 hereof.
"Condemnation Proceeds": All awards or settlements in respect of a
taking of a Mortgaged Property by exercise of the power of eminent domain or
condemnation.
"Corporate Trust Office": With respect to the Trustee, the principal
corporate trust office of the Trustee at which at any particular time its
corporate trust business in connection with this Agreement shall be
administered, which office at the date of the execution of this instrument is
located at 00 Xxxxxxxxxx Xxxxxx, XX-XX-XX0X, Xx. Xxxx, Xxxxxxxxx 00000,
Attention: Structured Finance, Bond Securitization Trust 2003-1, or at such
other address
-11-
as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor, the Servicer and the Seller.
"Custodial Agreement": The Custodial Agreement, dated as of November
1, 2003, among the Trustee, the Servicer and the Custodian, as the same may be
amended or supplemented pursuant to the terms thereof.
"Custodian": The Bank of New York, a New York banking corporation, or
any successor custodian appointed pursuant to the terms of the Custodial
Agreement.
"Cut-off Date": November 1, 2003.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the Cut-off Date after application
of funds received or advanced on or before such date (or as of the applicable
date of substitution with respect to an Eligible Substitute Mortgage Loan).
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court
of competent jurisdiction in a proceeding under the Bankruptcy Code, except
such a reduction resulting from a Deficient Valuation.
"Defective Mortgage Loan": A Mortgage Loan replaced or to be replaced
by one or more Eligible Substitute Mortgage Loans.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.02(c) hereof.
"Delinquent": Any Mortgage Loan, the Monthly Payment due on a Due
Date with respect to which such monthly payment is not made by the close of
business on the next scheduled Due Date for such Mortgage Loan.
"Depositor": Bond Securitization, L.L.C., a Delaware limited
liability company, or any successor in interest.
"Depository": The initial depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as
a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of
the Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
-12-
"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 10th
day of the calendar month in which such Distribution Date occurs or, if such
10th day is not a Business Day, the Business Day immediately preceding such
10th day.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation
of such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust other than through
an Independent Contractor; provided, however, that the Trustee (or the
Servicer under this Agreement) shall not be considered to Directly Operate an
REO Property solely because the Trustee (or the Servicer under this Agreement)
establishes rental terms, chooses tenants, enters into or renews leases, deals
with taxes and insurance, or makes decisions as to repairs or capital
expenditures with respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of: (i) the
United States, any state or political subdivision thereof, any possession of
the United States, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (ii) any organization
(other than a cooperative described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code unless such organization
is subject to the tax imposed by Section 511 of the Code, (iii) any
organization described in Section 1381(a)(2)(C) of the Code, or (iv) any other
Person so designated by the Trustee based upon an Opinion of Counsel provided
by nationally recognized counsel to the Trustee that the holding of an
ownership interest in a Residual Certificate by such Person may cause the
Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the
transfer of an ownership interest in a Residual Certificate to such Person. A
corporation will not be treated as an instrumentality of the United States or
of any state or political subdivision thereof if all of its activities are
subject to tax and a majority of its board of directors is not selected by a
governmental unit. The term "United States," "state" and "international
organization" shall have the meanings set forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.04(b) which shall be entitled
"Distribution Account, U.S. Bank National Association, as Trustee, in trust
for the registered Holders of Bond Securitization Trust 2003-1, Bond
Securitization Asset-Backed Certificates, Series 2003-1" and which must be an
Eligible Account.
"Distribution Date": The 25th day of any calendar month, or if such
25th day is not a Business Day, the Business Day immediately following such
25th day, commencing on December 26, 2003.
-13-
"Due Date": With respect to each Mortgage Loan and any Distribution
Date, the day of the calendar month in which such Distribution Date occurs on
which the Monthly Payment for such Mortgage Loan was due, exclusive of any
grace period.
"Eligible Account": Any of (i) an account or accounts maintained with
a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a
depository institution or trust company that is the principal subsidiary of a
holding company, the short-term unsecured debt obligations of such holding
company) are rated A-1 (or the equivalent) by each of the Rating Agencies at
the time any amounts are held on deposit therein, (ii) an account or accounts
the deposits in which are fully insured by the FDIC (to the limits established
by such corporation), the uninsured deposits in which account are otherwise
secured such that, as evidenced by an Opinion of Counsel delivered to the
Trustee and to each Rating Agency, the Certificateholders will have a claim
with respect to the funds in such account or a perfected first priority
security interest against such collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account
is maintained, (iii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution, national
banking association or trust company acting in its fiduciary capacity or (iv)
an account otherwise acceptable to each Rating Agency without reduction or
withdrawal of their then current ratings of the Certificates as evidenced by a
letter from each Rating Agency to the Trustee. Eligible Accounts may bear
interest.
"Eligible Substitute Mortgage Loan": A mortgage loan substituted for
a Defective Mortgage Loan pursuant to the terms of this Agreement which must,
on the date of such substitution, (i) have an outstanding principal balance,
after application of all scheduled payments of principal and interest due
during or prior to the month of substitution, not in excess of, and not more
than 5% less than, the outstanding principal balance of the Defective Mortgage
Loan as of the Due Date in the calendar month during which the substitution
occurs, (ii) have a Mortgage Interest Rate, not less than the Mortgage
Interest Rate of the Defective Mortgage Loan and not more than 1% in excess of
the Mortgage Interest Rate of such Defective Mortgage Loan, (iii) have a
remaining term to maturity not greater than (and not more than one year less
than) that of the Defective Mortgage Loan, (iv) be current as of the date of
substitution, (v) have a Combined Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Combined Loan-to-Value Ratio of the
Defective Mortgage Loan as of such date, (vi) have a risk grading determined
by the Seller at least equal to the risk grading assigned on the Defective
Mortgage Loan, (vii) have a with a constant annual rate at which interest
accrues in accordance with the provisions of the related Mortgage Note; and
(viii) conform to each representation and warranty set forth in Section 2.04
hereof and Section 3.02 of the Originator Mortgage Loan Purchase Agreement
applicable to the Defective Mortgage Loan. In the event that one or more
mortgage loans are substituted for one or more Defective Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Mortgage Interest Rates described in clause
(ii) hereof shall be determined on the basis of weighted average Mortgage
Interest Rates, the risk gradings described in clause (v) hereof shall be
satisfied as to each such mortgage loan, the terms described in clause (iii)
hereof shall be determined on the basis of weighted average remaining term to
maturity, the Combined Loan-to-Value Ratios described in clause (iv) hereof
shall be satisfied as to each such mortgage loan and, except to the extent
otherwise provided in this sentence, the representations and warranties
-14-
described in clause (viii) hereof must be satisfied as to each Eligible
Substitute Mortgage Loan or in the aggregate, as the case may be.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA-Qualifying Underwriting": A best efforts or firm commitment
underwriting that satisfies the requirements of Prohibited Transaction
Exemption 2002-41, 67 Fed. Reg. 54487 (August 22, 2002), or any substantially
similar exemption.
"ERISA-Restricted Certificates": Any of the Class M-1, Class M-2,
Class B-1, Class B-2, Class X, Class R-1 and Class R-2 Certificates, and any
Certificates of any other Class that has ceased to satisfy the requirements of
Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487 (August 22,
2002), or any substantially similar exemption.
"Escrow Account": The account or accounts created and maintained
pursuant to Section 3.06.
"Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard
insurance premiums and other payments if required to be escrowed by the
Mortgagor with the mortgagee pursuant to any Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel of real
property.
"Exchange Act": As defined in Section 3.22(a) hereof.
"Expense Fee Rate": With respect to each Mortgage Loan and any
Distribution Date, the sum of (i) the Trustee Fee Rate and (ii) the Servicing
Fee Rate.
"Expiration Date": With respect to the Originator Mortgage Loan
Purchase Agreement, September 30, 2008.
"Extended Period": As defined in Section 9.04(b).
"Extra Principal Distribution Amount": As of any Distribution Date,
the lesser of (x) the Monthly Excess Cashflow Amount for such Distribution
Date less the amount distributed, if any, pursuant to Section 4.02(b)(i) and
(y) the Overcollateralization Deficiency for such Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FHA": The Federal Housing Administration, an agency within HUD.
"FHA Approved Mortgagee": Those institutions which are approved by
FHA to act as servicer and mortgagee of record pursuant to FHA Regulations.
-15-
"FHA Regulations": Regulations promulgated by HUD under the National
Housing Act, codified in 24 Code of Federal Regulations, and other HUD
issuances relating to FHA Loans, including the related handbooks, circulars,
notices and mortgagee letters.
"Fidelity Bond": Shall have the meaning assigned thereto in Section
3.12.
"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 Servicer pursuant to or as contemplated by
Section 2.03 or 10.01), a determination made by the Servicer that all
Insurance Proceeds, Liquidation Proceeds and other payments or recoveries
which the Servicer, in its reasonable good faith judgment, expects to be
finally recoverable in respect thereof have been so recovered. The Servicer
shall maintain records, prepared by a Servicing Officer, of each Final
Recovery Determination made thereby.
"Fitch": Fitch Ratings and its successors, and if such company shall
for any reason no longer perform the functions of a securities rating agency,
"Fitch" shall be deemed to refer to any other "nationally recognized
statistical rating organization" as set forth on the most current list of such
organizations released by the Securities and Exchange Commission.
"Floating Rate Certificates": The Class A, Class M and Class B
Certificates.
"Foreclosure Price": The amount reasonably expected to be received
from the sale of the related Mortgaged Property net of any expenses associated
with foreclosure proceedings.
"Foreclosure Restricted Mortgage Loan" Any Mortgage Loan in respect
of which three or more Monthly Payments are contractually past due as of the
Closing Date.
"HUD": The United States Department of Housing and Urban Development,
or any successor thereto and including the Federal Housing Commissioner and
the Secretary of Housing and Urban Development where appropriate under the FHA
Regulations.
"Independent": When used with respect to any specified Person, any
such Person who (i) is in fact independent of the Depositor, the Servicer and
their respective Affiliates, (ii) does not have any direct financial interest
in or any material indirect financial interest in the Depositor or the
Servicer or any Affiliate thereof, and (iii) is not connected with the
Depositor or the Servicer or any Affiliate thereof as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar
functions; provided, however, that a Person shall not fail to be Independent
of the Depositor or the Servicer or any Affiliate thereof merely because such
Person is the beneficial owner of 1% or less of any Class of securities issued
by the Depositor or the Servicer or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the
Servicer) that would be an "independent contractor" with respect to the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund
were a real estate investment trust (except that the ownership tests set forth
in that section shall be considered to be met by any Person that owns,
directly or indirectly, 35 percent or more of any Class of Certificates), so
long as the Trust Fund does not receive or derive any income from such Person
and provided that the relationship
-16-
between such Person and the Trust Fund is at arm's length, all within the
meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including the Servicer) if the Trustee has received an Opinion of Counsel,
which Opinion of Counsel shall be an expense of the Trust Fund, to the effect
that the taking of any action in respect of any REO Property by such Person,
subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
"Initial Certificate Principal Balance": With respect to any
Certificate other than a Class X or Residual Certificate, the amount
designated "Initial Certificate Principal Balance" on the face thereof.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan to the extent such proceeds
are not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Servicer
would follow in servicing mortgage loans held for its own account, subject to
the terms and conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution Date and
(i) with respect to the Floating Rate Certificates, the period from the
preceding Distribution Date to the day prior to the current Distribution Date
(or, in the case of the first Distribution Date, the period from the Closing
Date through December 25, 2003), and (ii) with respect to the Class X
Certificates, the calendar month immediately preceding the month in which such
Distribution Date occurs.
"Interest Carry Forward Amount": For any Class of Certificates (other
than the Class X and Residual Certificates) and any Distribution Date, the sum
of (a) the excess, if any, of the Accrued Certificate Interest and any
Interest Carry Forward Amount for the prior Distribution Date, over the amount
in respect of interest actually distributed on such Class on such prior
Distribution Date and (b) interest on such excess at the applicable
Pass-Through Rate for the actual number of days elapsed on the basis of a
360-day year since the prior Distribution Date.
"Interest Percentage": With respect to any Class of Offered
Certificates and any Distribution Date, the ratio (expressed as a decimal
carried to six places) of the Accrued Certificate Interest for such Class to
the sum of the Accrued Certificate Interest for the Offered Certificates, in
each case with respect to such Distribution Date and without taking into
account any Relief Act Interest Shortfalls for such Distribution Date.
"Interest Remittance Amount": With respect to any Distribution Date,
that portion of the Available Funds for such Distribution Date attributable to
interest received or advanced with respect to the Mortgage Loans or to
Compensating Interest paid by the Servicer with respect to the Mortgage Loans.
-17-
"Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any
related Collection Period, whether as late payments of Monthly Payments or as
Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of principal and/or interest due (without regard to
any acceleration of payments under the related Mortgage and Mortgage Note) but
delinquent on a contractual basis for such Collection Period and not
previously recovered.
"Lender": As defined in Section 3.29(a) hereof.
"LIBOR": With respect to each Interest Accrual Period, the rate
determined by the Trustee on the related LIBOR Determination Date on the basis
of the offered rate for one-month United States dollar deposits, as such rate
appears on the Moneyline Telerate Page 3750, as of 11:00 a.m. (London time) on
such LIBOR Determination Date. If no such quotations are available on an LIBOR
Determination Date, LIBOR for the related Interest Accrual Period will be
established by the Trustee as follows:
(i) If on such LIBOR Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the related Interest Accrual
Period shall be the arithmetic mean of such offered quotations (rounded
upwards if necessary to the nearest whole multiple of 0.001%);
(ii) If on such LIBOR Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Interest
Accrual Period shall be the arithmetic mean of the rates quoted by one or
more major banks in New York City, selected by the Trustee after
consultation with the Depositor, as of 11:00 A.M., New York City time, on
such date for loans in U.S. Dollars to leading European banks for a
period of one month in amounts approximately equal to the aggregate
Certificate Principal Balance of the Offered Certificates; and
(iii) If no such quotations can be obtained, LIBOR for the related
Interest Accrual Period shall be LIBOR for the prior Distribution Date.
"LIBOR Business Day": Any day on which banks in London, England and
The City of New York are open and conducting transactions in foreign currency
and exchange.
"LIBOR Determination Date": With respect to the Floating Rate
Certificates, (i) for the first Distribution Date, the second LIBOR Business
Day preceding the Closing Date and (ii) for each subsequent Distribution Date,
the second LIBOR Business Day prior to the immediately preceding Distribution
Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage
Loan in respect of which the Servicer has determined, in accordance with the
servicing procedures specified herein, as of the end of the related Prepayment
Period, that all Liquidation Proceeds and Insurance Proceeds which it expects
to recover with respect to the liquidation of the Mortgage Loan or disposition
of the related REO Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to
-18-
such Mortgage Loan; or (iii) such Mortgage Loan is removed from the Trust Fund
by reason of its being purchased, sold or replaced pursuant to or as
contemplated by Section 2.03 or Section 10.01. With respect to any REO
Property, either of the following events: (i) a Final Recovery Determination
is made as to such REO Property; or (ii) such REO Property is removed from the
Trust Fund by reason of its being sold or purchased pursuant to Section 3.13
or Section 10.01.
"Liquidation Proceeds": The amount (other than amounts received in
respect of the rental of any REO Property prior to REO Disposition) received
by the Servicer in connection with (i) the taking of all or a part of a
Mortgaged Property by exercise of the power of eminent domain or condemnation
or (ii) the liquidation of a defaulted Mortgage Loan by means of a trustee's
sale, foreclosure sale or otherwise.
"Liquidation Report": As to any Distribution Date, the report with
respect to any Liquidated Mortgage Loans for such Distribution Date in such
form and containing such information as is agreed to by the Servicer and the
Trustee.
"Losses": As defined in Section 9.03.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which
the original Mortgage Note has been permanently lost or destroyed and has not
been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost, misplaced or destroyed (together with a copy of
the related Mortgage Note and indemnifying the Trust against any loss, cost or
liability resulting from the failure to deliver the original Mortgage Note) in
the form of Exhibit H hereto.
"Majority Certificateholders": The Holders of Certificates evidencing
at least 51% of the Voting Rights.
"Makewhole Amount": With respect to any Mortgage Loan that is being
purchased by the Originator from the Trust through the assignment of certain
of the Seller's rights under the Originator Mortgage Loan Purchase Agreement,
an amount equal to the excess of the Originator Purchase Price over the
Purchase Price, with respect to such Mortgage Loan.
"Master REMIC Regular Interest": As defined in the Preliminary
Statement.
"Moneyline Telerate Page 3750": The display page currently so
designated on the Moneyline Telerate Service (or such other page as may
replace the Moneyline Telerate Page 3750 page on that service for the purpose
of displaying London interbank offered rates of major banks).
"Monthly Excess Cashflow Amount": With respect to each Distribution
Date, the sum of the Monthly Excess Interest Amount for such Distribution
Date, the Overcollateralization Release Amount for such Distribution Date and
(without duplication) any portion of the Principal Distribution Amount
remaining after all distributions made pursuant to Section 4.02(a) hereof on
such Distribution Date.
"Monthly Excess Interest Amount": With respect to each Distribution
Date, the amount, if any, by which the Interest Remittance Amount for such
Distribution Date exceeds the
-19-
aggregate amount distributed on such Distribution Date pursuant to Section
4.01 (a) through (f) hereof.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment on such Mortgage Loan which is payable by the related
Mortgagor from time to time under the related Mortgage Note, determined: (a)
after giving effect to (i) any Deficient Valuation and/or Debt Service
Reduction with respect to such Mortgage Loan and (ii) any reduction in the
amount of interest collectible from the related Mortgagor pursuant to the
Relief Act or other similar state laws; (b) without giving effect to any
extension granted or agreed to by the Servicer pursuant to Section 3.01; and
(c) on the assumption that all other amounts, if any, due under such Mortgage
Loan are paid when due.
"Monthly Statement": The statement prepared and distributed by the
Trustee pursuant to Section 4.06(a).
"Moody's": Xxxxx'x Investors Service, Inc. and its successors, and if
such company shall for any reason no longer perform the functions of a
securities rating agency, "Moody's" shall be deemed to refer to any other
"nationally recognized statistical rating organization" as set forth on the
most current list of such organizations released by the Securities and
Exchange Commission.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first or second lien on, or first or second priority security interest in, a
Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Interest Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time
in accordance with the provisions of the related Mortgage Note, which rate
shall remain constant at the rate set forth in the Mortgage Loan Schedule as
the Mortgage Interest Rate in effect immediately following the Cut-off Date.
With respect to each Mortgage Loan that becomes an REO Property, as of any
date of determination, the annual rate determined in accordance with the
immediately preceding sentence as of the date such Mortgage Loan became an REO
Property.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03(d) as from time to time held
as a part of the Trust Fund, the Mortgage Loans so held being identified on
the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the Seller
and the Depositor, dated as of December 10, 2003, regarding the transfer of
the Mortgage Loans by the Seller to or at the direction of the Depositor, as
may be amended, restated or supplemented from time to time.
"Mortgage Loan Schedule": As of any date (i) with respect to the
Mortgage Loans, the list of such Mortgage Loans included in the Trust Fund on
such date attached hereto
-20-
as Exhibit D. The Mortgage Loan Schedule shall be prepared by the Seller and
shall set forth the following information with respect to each Mortgage Loan:
(1) the Seller's Mortgage Loan identifying number;
(2) the city, state, and zip code of the Mortgaged Property;
(3) the type of Residential Dwelling constituting the Mortgaged Property
or a designation that the Mortgaged Property is a multi-family property;
(4) the occupancy status of the Mortgaged Property at origination;
(5) the original months to maturity;
(6) the date of origination;
(7) the first payment date;
(8) the stated maturity date;
(9) the stated remaining months to maturity;
(10) the original principal amount of the Mortgage Loan;
(11) the Principal Balance of each Mortgage Loan as of the Cut-off Date;
(12) [reserved];
(13) the Mortgage Interest Rate of the Mortgage Loan as of the Cut-off
Date;
(14) the current principal and interest payment of the Mortgage Loan as
of the Cut-off Date;
(15) the contractual interest paid to date of the Mortgage Loan;
(16) the Combined Loan-to-Value Ratio at origination;
(17) a code indicating the loan performance status of the Mortgage Loan
as of the Cut-off Date;
(18) a code indicating whether the Mortgage Loan is a Simple Interest
Mortgage Loan or an Actuarial Mortgage Loan;
(19) a code indicating whether the Mortgaged Property is in bankruptcy or
in its forbearance period as of the Cut-off Date;
(20) a code indicating whether the Mortgage Loan is conventional or
insured by the FHA;
-21-
(21) a code indicating whether the Mortgage Loan has a Prepayment Charge
and the type of Prepayment Charge;
(22) [reserved];
(23) a code indicating whether the Mortgage Loan is subject to negative
amortization;
(24) a code indicating whether the Mortgage Loan is a second lien; and
(25) a code indicating if the underlying property securing a Mortgage
Loan is on vacant land.
The Mortgage Loan Schedule shall set forth the following information,
as of the Cut-off Date, with respect to the Mortgage Loans: (1) the number of
Mortgage Loans; (2) the current Principal Balance of the Mortgage Loans; (3)
the weighted average Mortgage Interest Rate of the Mortgage Loans; and (4) the
weighted average maturity of the Mortgage Loans. The Mortgage Loan Schedule
shall be amended from time to time by the Seller in accordance with the
provisions of this Agreement. With respect to any Eligible Substitute Mortgage
Loan, Cut-off Date shall refer to the related Cut-off Date for such Mortgage
Loan, determined in accordance with the definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Exhibit D
from time to time, and any REO Properties acquired in respect thereof.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property
improved by a Residential Dwelling or multi-family dwelling, with the
exception of those identified in the Mortgage Loan Schedule as being on vacant
land.
"Mortgagor": The obligor on a Mortgage Note.
"Net Excess Spread": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is equal to the
product of (i) the excess of (x) the Pool Balance as of the last day of the
related Collection Period, multiplied by 1/12th of the Weighted Average Net
Mortgage Rate over (y) the sum of Accrued Certificate Interest for the Offered
Certificates for such Distribution Date, and (ii) 12, and the denominator of
which is the Pool Balance as of the last day of the related Collection Period.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage
Loan or any other disposition of related Mortgaged Property (including REO
Property) the related Liquidation Proceeds net of unreimbursed Advances,
unreimbursed Timing Advances, unreimbursed Servicing Advances, Servicing Fees
and any other accrued and unpaid servicing fees received and retained in
connection with the liquidation of such Mortgage Loan or Mortgaged Property.
-22-
"Net Mortgage Interest Rate": With respect to any Mortgage Loan and
any Collection Period, the Mortgage Interest Rate borne by such Mortgage Loan
minus the Expense Fee Rate for such Mortgage Loan and such Collection Period.
"Net Rate Cap": For any Distribution Date, a per annum rate equal to
the weighted average of the Net Mortgage Interest Rate of the Mortgage Loans
as of the first day of the related Collection Period (adjusted as necessary to
an effective rate reflecting the accrual of interest on an actual/360 basis).
"Net Rate Carryover Amount": If on any Distribution Date, the Accrued
Certificate Interest for any Offered Certificate is based upon the Net Rate
Cap, the excess of (i) the amount of interest accrued on such Certificate
based on the related Pass-Through Rate (without regard to the Net Rate Cap),
over (ii) the amount of interest accrued on such Certificate based on the Net
Rate Cap, together with the unpaid portion of any such excess from prior
Distribution Dates (and interest accrued thereon at the then applicable
Pass-Through Rate (without regard to the Net Rate Cap) on such Certificate.
"Nonrecoverable Advance": Any Advance, Timing Advance or Servicing
Advance previously made or proposed to be made in respect of a Mortgage Loan
that, in the good faith business judgment of the Servicer, will not or, in the
case of a proposed Advance, Timing Advance or Servicing Advance, would not be
ultimately recoverable from Late Collections on such Mortgage Loan as provided
herein.
"Offered Certificates": The Class X-0, Xxxxx X-0, Class M-1, Class
M-2, Class B-1 and Class B-2 Certificates.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), or by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Servicer, the Seller or
the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Servicer except
that any opinion of counsel relating to (a) the qualification of any REMIC as
a REMIC or (b) compliance with the REMIC Provisions must be an opinion of
Independent counsel.
"Optional Termination Date": The first Distribution Date on which the
Servicer or an Affiliate of the Servicer may opt to terminate the Mortgage
Pool pursuant to Section 10.01.
"Original Class Certificate Principal Balance": With respect to each
Class of Certificates, the Certificate Principal Balance thereof on the
Closing Date, as set forth opposite such Class in the Preliminary Statement,
except with respect to the Class X and Residual Certificates, which have an
Original Class Certificate Principal Balance of zero.
"Originator": Bank One, National Association in its capacity as
seller under the Originator Mortgage Loan Purchase Agreement.
-23-
"Originator Mortgage Loan Purchase Agreement": The Master Mortgage
Loan Purchase and Sale Agreement, dated as of September 30, 2003, between the
Originator and the Seller relating to the purchase of the Mortgage Loans by
the Seller, as may be amended, restated or supplemented from time to time.
"Originator Purchase Price": With respect to any Mortgage Loan, means
the Repurchase Price to be paid by the Originator pursuant to Section 3.03(b)
of the Originator Mortgage Loan Purchase Agreement.
"Overcollateralization Amount": As of any Distribution Date, the
excess, if any, of (x) the Pool Balance as of the last day of the immediately
preceding Collection Period over (y) the aggregate Certificate Principal
Balances of all Classes of Certificates (after taking into account all
distributions of principal on such Distribution Date).
"Overcollateralization Deficiency": As of any Distribution Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount for such
Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking into account the
reduction on such Distribution Date of the Certificate Principal Balances of
all Classes of Certificates resulting from the distribution of the Principal
Distribution Amount (but not the Extra Principal Distribution Amount) on such
Distribution Date, but prior to taking into account any Applied Realized Loss
Amounts on such Distribution Date.
"Overcollateralization Release Amount": With respect to any
Distribution Date after the Stepdown Date on which a Trigger Event is not in
effect, the lesser of (x) the Principal Remittance Amount for such
Distribution Date and (y) the excess, if any, of (i) the Overcollateralization
Amount for such Distribution Date, assuming that 100% of the Principal
Remittance Amount is applied as a principal distribution on the Certificates
on such Distribution Date, over (ii) the Targeted Overcollateralization Amount
for such Distribution Date.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": Any of the Class A-1 Pass-Through Rate, the
Class A-2 Pass-Through Rate, the Class M-1 Pass-Through Rate, the Class M-2
Pass-Through Rate, the Class B-1 Pass-Through Rate and the Class B-2
Pass-Through Rate.
"Paying Agent": Any paying agent appointed pursuant to Section 5.05.
"Percentage Interest": With respect to any Certificate (except a
Class X or Residual Certificate), a fraction, expressed as a percentage, the
numerator of which is the Initial Certificate Principal Balance, represented
by such Certificate and the denominator of which is the Original Class
Certificate Principal Balance of the related Class. With respect to a Class X
or Residual Certificate, the portion of the Class evidenced thereby, expressed
as a percentage, as stated on the face of such Certificate; provided, however,
that the sum of all such percentages for each such Class totals 100%.
-24-
"Permitted Investments": Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued or managed by the Depositor, the Servicer, the Trustee or
any of their respective Affiliates or for which an Affiliate of the Trustee
serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed
by the full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agents acting
in their respective commercial capacities) incorporated under the laws of
the United States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities, so long
as, at the time of such investment or contractual commitment providing
for such investment, such depository institution or trust company or its
ultimate parent has a short-term uninsured debt rating in one of the two
highest available rating categories of S&P and Moody's and the highest
available rating category of Fitch and provided that each such investment
has an original maturity of no more than 365 days and (B) any other
demand or time deposit or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (i) above and entered into
with a depository institution or trust company (acting as principal)
rated A-1 or higher by S&P and Fitch and rated A2 or higher by Moody's,
provided, however, that collateral transferred pursuant to such
repurchase obligation must be of the type described in clause (i) above
and must (A) be valued daily at current market prices plus accrued
interest or (B) pursuant to such valuation, be equal, at all times, to
105% of the cash transferred by the Trustee in exchange for such
collateral and (C) be delivered to the Trustee or, if the Trustee is
supplying the collateral, an agent for the Trustee, in such a manner as
to accomplish perfection of a security interest in the collateral by
possession of certificated securities;
(iv) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of the United
States of America or any State thereof and that are rated by each Rating
Agency in its highest long-term unsecured rating categories at the time
of such investment or contractual commitment providing for such
investment;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30 days after the date of acquisition
thereof) that is rated by each Rating Agency in its highest short-term
unsecured debt rating available at the time of such investment;
(vi) units of money market funds registered under the Investment
Company Act of 1940 including funds managed or advised by the Trustee or
affiliates thereof having the highest rating category by the applicable
Rating Agency; and
-25-
(vii) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation, security
or investment, as may be acceptable to the Rating Agencies in writing as
a permitted investment of funds backing securities having ratings
equivalent to its highest initial rating of the Class A Certificates;
provided, that no instrument described hereunder shall evidence either the
right to receive (a) only interest with respect to the obligations underlying
such instrument or (b) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal payments
with respect to such instrument provide a yield to maturity at par greater
than 120% of the yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any transferee of a Residual Certificate
other than a Disqualified Organization or a non-U.S. Person.
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, limited liability company,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pool Balance": As of any date of determination, the aggregate
Principal Balance of the Mortgage Loans.
"Prepayment Charge": With respect to any Prepayment Period, any
prepayment premium, fee or charge payable by the Mortgagor in connection with
any Principal Prepayment pursuant to the terms of the related Mortgage Note.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment in full that was applied by the Servicer to
reduce the outstanding principal balance of such loan on a date preceding the
related Due Date, an amount equal to interest at the applicable Mortgage
Interest Rate (net of the Servicing Fee Rate) on the amount of such Principal
Prepayment for the number of days commencing on the date on which the
prepayment is applied and ending on the last day of the related Prepayment
Period.
"Prepayment Period": With respect to any Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs.
"Principal Balance": As to any Mortgage Loan and any day, other than
a Liquidated Mortgage Loan, the related Cut-off Date Principal Balance, minus
all collections credited against the principal balance of any such Mortgage
Loan. For purposes of this definition, a Liquidated Mortgage Loan shall be
deemed to have a Principal Balance equal to the Principal Balance of the
related Mortgage Loan as of the final recovery of related Liquidation Proceeds
and a Principal Balance of zero thereafter. As to any REO Property and any
day, the Principal Balance of the related Mortgage Loan immediately prior to
such Mortgage Loan becoming REO Property minus any REO Principal Amortization
received with respect thereto on or prior to such day.
"Principal Distribution Amount": As to any Distribution Date, the sum
of (i) the Principal Remittance Amount minus, for Distribution Dates occurring
on and after the Stepdown
-26-
Date and for which a Trigger Event is not in effect, the Overcollateralization
Release Amount, if any, and (ii) the Extra Principal Distribution Amount, if
any.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the
full amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.
"Principal Remittance Amount": With respect to any Distribution Date,
to the extent of funds available therefor, the sum (less amounts available for
reimbursement of Advances, Timing Advances and Servicing Advances pursuant to
Section 3.05 and expenses reimbursable pursuant to Section 6.03) of: (i) each
payment of principal on a Mortgage Loan due during the related Collection
Period and received by the Servicer on or prior to the related Determination
Date, (ii) all full and partial Principal Prepayments received by the Servicer
on the Mortgage Loans during the related Prepayment Period, (iii) the Net
Liquidation Proceeds allocable to principal actually collected by the Servicer
on the Mortgage Loans during the related Prepayment Period, (iv) with respect
to Defective Mortgage Loans that are repurchased with respect to such
Prepayment Period, the portion of the Purchase Price allocable to principal,
(v) any Substitution Adjustment Amounts received on or prior to the previous
Determination Date and not yet distributed and (vi) on the Distribution Date
on which the Trust is to be terminated in accordance with Section 10.01
hereof, that portion of the Termination Price in respect of principal on the
Mortgage Loans.
"Private Certificates": Any of the Class X and Residual Certificates.
"Property Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are received by the Servicer and are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with the Servicer's servicing procedures, subject to the terms and
conditions of the related Mortgage Note and Mortgage.
"Purchase Price": With respect to any Mortgage Loan or REO Property
to be purchased pursuant to or as contemplated by Section 2.03, 2.10 or 10.01,
and as confirmed by an Officer's Certificate from the Servicer to the Trustee,
an amount equal to the sum of (i) 100% of the Principal Balance thereof as of
the date of purchase (or such other price as provided in Section 10.01), (ii)
in the case of (x) a Mortgage Loan, accrued interest on such Principal Balance
at the applicable Mortgage Interest Rate in effect from time to time from the
Due Date as to which interest was last covered by a payment by the Mortgagor
or an Advance or Timing Advance by the Servicer, which payment, Advance or
Timing Advance had as of the date of purchase been distributed pursuant to
Section 4.01, through the end of the calendar month in which the purchase is
to be effected, and (y) an REO Property, its fair market value, determined in
good faith by the Servicer, (iii) any unreimbursed Servicing Advances, Timing
Advances and Advances and any unpaid Servicing Fees allocable to such Mortgage
Loan or REO Property, (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant
to Section 3.13, and (v) in the case of a Mortgage Loan required to be
purchased pursuant to Section 2.03, expenses reasonably incurred or to be
incurred by the Servicer or the Trustee in respect of the breach or defect
giving rise to the purchase obligation
-27-
including any costs and damages incurred by the Trust Fund in connection with
any violation by such loan of any predatory or abusive lending law.
"Rating Agency" or "Rating Agencies": Fitch, Xxxxx'x and S&P, or
their respective successors. If such agencies or their successors are no
longer in existence, "Rating Agencies" shall be such nationally recognized
statistical rating organizations as set forth on the most current list of such
organizations released by the Securities and Exchange Commission and
designated by the Depositor, notice of which designation shall be given to the
Trustee and the Servicer.
"Realized Loss": With respect to a Liquidated Mortgage Loan, the
amount by which the remaining unpaid principal balance of the Mortgage Loan
exceeds the amount of Net Liquidation Proceeds applied to the principal
balance of the related Mortgage Loan.
"Record Date": With respect to the Floating Rate Certificates and any
Distribution Date, the Business Day immediately preceding such Distribution
Date; provided, however, that if any such Certificate becomes a Definitive
Certificate, the Record Date for such Certificate shall be the last Business
Day of the month immediately preceding the month in which such Distribution
Date occurs. With respect to the Class X and Residual Certificates and any
Distribution Date, the last Business Day of the month immediately preceding
the month in which such Distribution Date occurs (or the Closing Date, in the
case of the first Distribution Date).
"Reference Banks": Those banks (i) with an established place of
business in London, England, (ii) not controlling, under the control of or
under common control with the Depositor or the Trustee, (iii) whose quotations
appear on the Moneyline Telerate Page 3750 on the relevant LIBOR Determination
Date and (iv) which have been designated as such by the Trustee; provided,
however, that if fewer than two of such banks provide a LIBOR rate, then any
leading banks selected by the Trustee which are engaged in transactions in
United States dollar deposits in the international Eurocurrency market.
"Regular Certificate": Any of the Offered Certificates.
"Related Documents": With respect to any Mortgage Loan, the related
Mortgage Note, Mortgage and other documents required by Section 2.01.
"Relief Act": The Soldiers' and Sailors Civil Relief Act of 1940, as
amended.
"Relief Act Interest Shortfall": With respect to any Distribution
Date, for any Mortgage Loan with respect to which there has been a reduction
in the amount of interest collectible thereon for the most recently ended
Collection Period, the amount by which (i) interest collectible on such
Mortgage Loan during such Collection Period as a result of the application of
the Relief Act or other similar state laws is less than (ii) one month's
interest on the Principal Balance of such Mortgage Loan at the Mortgage
Interest Rate for such Mortgage Loan before giving effect to the application
of the Relief Act or other similar state laws.
"REMIC": As defined in the Preliminary Statement.
-28-
"REMIC Provisions:" Provisions of the federal income tax law relating
to real estate mortgage investment conduits which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
"REMIC Regular Interest": Any of the Master REMIC Regular Interests,
the Subsidiary REMIC Regular Interests, the Class B-1 Interest, the Class B-2
Interest and the Class X Interest.
"Remittance Report": A report prepared by the Servicer and delivered
to the Trustee pursuant to Section 4.07, containing the information attached
hereto as Exhibit O.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.
"REO Disposition": The sale or other disposition of an REO Property
on behalf of the Trust Fund.
"REO Principal Amortization": With respect to any REO Property, for
any calendar month, the aggregate of all amounts received in respect of such
REO Property during such calendar month, whether in the form of rental income,
sale proceeds (including, without limitation, that portion of the Termination
Price paid in connection with a purchase of all of the Mortgage Loans and REO
Properties pursuant to Section 10.01 that is allocable to such REO Property)
or otherwise, net of any portion of such amounts (i) payable pursuant to
Section 3.13 in respect of the proper operation, management and maintenance of
such REO Property or (ii) payable or reimbursable to the Servicer pursuant to
Section 3.13 for unpaid Servicing Fees in respect of the related Mortgage Loan
and unreimbursed Servicing Advances, Timing Advances and Advances in respect
of such REO Property or the related Mortgage Loan.
"REO Property": A Mortgaged Property acquired by the Servicer on
behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure,
as described in Section 3.13.
"Repurchase Price": With respect to any Mortgage Loan, means the
Repurchase Price as defined in the Originator Mortgage Loan Purchase
Agreement.
"Request for Release": A release signed by a Servicing Officer, in
the form of Exhibit E attached hereto.
"Required Basis Risk Reserve Fund Amount": With respect to any
Distribution Date on which the related Net Excess Spread is less than 0.25%,
an amount equal to the lesser of (x) $15,000 and (y) the product of (i) 0.50%
and (ii) the Pool Balance as of the last day of the related Collection Period.
With respect to any Distribution Date on which the Net Excess Spread is equal
to or greater than 0.25%, an amount equal to $5,000.
"Required Basis Risk Reserve Fund Deposit": With respect to any
Distribution Date, the excess, if any, of (i) the Required Basis Risk Reserve
Fund Amount over (ii) the amount of funds on deposit in the Basis Risk Reserve
Fund as of the close of business on the Business Day immediately preceding
such Distribution Date.
-29-
"Residential Dwelling": Any one of the following: (i) a one-family
dwelling, (ii) a two- to four-family dwelling, (iii) a one-family dwelling
unit in a Xxxxxx Xxx eligible condominium project, (iv) a one-family dwelling
in a planned unit development, which is not a co-operative, or (v) a mobile or
manufactured home (as defined in 00 Xxxxxx Xxxxxx Code, Section 5402(6)).
"Residual Certificates": The Class R Certificates.
"Residual Interest": The sole Class of "residual interests" in each
REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, any
officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Assistant Vice President, Trust Officer, any
Assistant Secretary, any trust officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above designated officers and in each case having direct responsibility for
the administration of this Agreement.
"Rules and Regulations": The rules and regulations promulgated under
the Exchange Act issued by the Commission.
"S&P": Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., and its successors, and if such company shall for
any reason no longer perform the functions of a securities rating agency,
"S&P" shall be deemed to refer to any other "nationally recognized statistical
rating organization" as set forth on the most current list of such
organizations released by the Securities and Exchange Commission.
"Seller": Credit-Based Asset Servicing and Securitization LLC, or its
successor in interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.
"Senior Certificates": The Class A Certificates.
"Senior Enhancement Percentage": For any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balances of the Subordinate Certificates and (ii) the
Overcollateralization Amount, in each case before taking into account the
distribution of the Principal Distribution Amount on such Distribution Date by
(y) the Pool Balance as of the last day of the related Collection Period.
"Senior Principal Distribution Amount": As of any Distribution Date
on or after the Stepdown Date and as long as a Trigger Event is not in effect,
the excess of (x) the Certificate Principal Balance of the Senior Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 22.50% and (ii) the Pool Balance as of the last day of the
related Collection Period and (B) the excess of the Pool Balance as of the
last day of the related Collection Period over the product of (i) 0.50% and
(ii) the Pool Balance on the Cut-off Date.
"Senior Specified Enhancement Percentage": On any date of
determination thereof, 77.50%.
-30-
"Servicer": Xxxxxx Loan Servicing LP, a Delaware limited partnership,
or any successor servicer appointed as herein provided, in its capacity as
Servicer hereunder.
"Servicer Affiliate": A Person (i) controlling, controlled by or
under common control with the Servicer or which is 50% or more owned by the
Servicer and (ii) which is qualified to service residential mortgage loans.
"Servicer Event of Termination": One or more of the events described
in Section 7.01.
"Servicer Remittance Date": With respect to any Distribution Date,
the Business Day immediately preceding such Distribution Date.
"Servicer's Assignee": As defined in Section 3.29(b) hereof.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred by the Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Section 3.08.
"Servicing Fee": With respect to each Mortgage Loan (including each
REO Property) and for any calendar month, an amount equal to one month's
interest (or in the event of any payment of interest which accompanies a
Principal Prepayment in full made by the Mortgagor during such calendar month,
interest for the number of days covered by such payment of interest) at the
Servicing Fee Rate on the same principal amount on which interest on such
Mortgage Loan accrues for such calendar month.
"Servicing Fee Rate": With respect to each Mortgage Loan, 0.6250% per
annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose
name and specimen signature appear on a list of servicing officers furnished
by the Servicer to the Trustee and the Depositor on the Closing Date, as such
list may from time to time be amended.
"Servicing Rights Pledgee": One or more lenders, selected by the
Servicer, to which the Servicer may pledge and assign all of its right, title
and interest in, to and under this Agreement, including Wachovia Bank,
National Association, as the representative of certain lenders.
"Servicing Standard": Shall mean the standards set forth in Section
3.01.
"Simple Interest Method": The method of allocating a payment to
principal and interest, pursuant to which the portion of such payment that is
allocated to interest is equal to the product of the fixed rate of interest
multiplied by the unpaid principal balance multiplied by the period of time
elapsed since the preceding payment of interest was made and divided by either
-31-
360 or 365, as specified in the related Mortgage Note, and the remainder of
such payment is allocated to principal.
"Simple Interest Mortgage Loan": Any Mortgage Loan under which the
portion of a payment allocable to interest and the portion of such payment
allocable to principal is determined in accordance with the Simple Interest
Method.
"Special Hazard Losses": Realized Losses that result from direct
physical damage to Mortgaged Properties caused by natural disasters and other
hazards (i) which are not covered by hazard insurance policies (such as
earthquakes) and (ii) for which claims have been submitted and rejected by the
related hazard insurer and any shortfall in insurance proceeds for partial
damage due to the application of the co-insurance clauses contained in hazard
insurance policies.
"SPV": As defined in Section 3.29(a) hereof.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stayed Funds": Any payment required to be made under the terms of
the Certificates and this Agreement but which is not remitted by the Servicer
because the Servicer is the subject of a proceeding under the Bankruptcy Code
and the making of such remittance is prohibited by Section 362 of the
Bankruptcy Code.
"Stepdown Date": The later to occur of (x) the earlier to occur of
(A) the Distribution Date in December 2006 and (B) the Distribution Date on
which the aggregate Certificate Principal Balance of the Senior Certificates
is reduced to zero, and (y) the first Distribution Date on which the Senior
Enhancement Percentage is greater than or equal to the Senior Specified
Enhancement Percentage.
"Subordinate Certificates": The Class M-1, Class M-2, Class B-1,
Class B-2, Class X, Class R-1 and Class R-2 Certificates.
"Subsidiary REMIC Regular Interest": As defined in the Preliminary
Statement.
"Substitution Adjustment Amount": As defined in Section 2.03(d)
hereof.
"Targeted Overcollateralization Amount": As of any Distribution Date,
(x) prior to the Stepdown Date, 11.25% of the initial Pool Balance and (y) on
and after the Stepdown Date, (A) so long as a Trigger Event is not in effect
as of such Distribution Date, the greater of (i) 0.50% of the initial Pool
Balance and (ii) 22.50% of the Pool Balance as of the last day of the related
Collection Period, or (B) if a Trigger Event is in effect as of such
Distribution Date, the Targeted Overcollateralization Amount as of the
immediately preceding Distribution Date.
"Tax Matters Person": The tax matters person appointed pursuant to
Section 9.01(e) hereof.
"Tax Returns": The federal income tax returns on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q
-32-
thereto, Quarterly Notice to Residual Interest Holders of the REMIC Taxable
Income or Net Loss Allocation, or any successor forms, to be filed on behalf
of the Trust for each of the eight REMICs created pursuant to this Agreement
under the REMIC Provisions, together with any and all other information
reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal,
state or local tax laws.
"Term Representation and Warranties": The representations and
warranties made by the Originator in Section 3.02 of the Originator Mortgage
Loan Purchase agreement, except those made in Sections 3.02(f), (h), (j), (k),
(aa), (cc), (qq) and (rr).
"Termination Price": As defined in Section 10.01(a) hereof.
"Timing Advance": As to any Mortgage Loan, any advance made by the
Servicer in respect of any Distribution Date pursuant to the second paragraph
of Section 4.07(b).
"Trigger Event": With respect to any Distribution Date, if (i) the
six-month rolling average of 60+ Day Delinquent Loans equals or exceeds 11.00%
of the Senior Enhancement Percentage; or (ii) the aggregate amount of Realized
Losses incurred since the Cut-off Date through the last day of the related
Collection Period divided by the initial Pool Balance exceeds the applicable
percentages set forth below with respect to such Distribution Date:
Distribution Date Occurring In Percentage
December 2006 through November 2007 6.80%
December 2007 through November 2008 10.20%
December 2008 through November 2009 13.60%
December 2009 and thereafter 17.00%
"Trust": Bond Securitization Trust 2003-1, the trust created
hereunder.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered
hereunder, with respect to a portion of which five REMIC elections are to be
made, such entire Trust Fund consisting of: (i) such Mortgage Loans as from
time to time are subject to this Agreement, together with the Mortgage Files
relating thereto, and together with all collections thereon and proceeds
thereof, (ii) any REO Property, together with all collections thereon and
proceeds thereof, (iii) the Trustee's rights with respect to the Mortgage
Loans under all insurance policies required to be maintained pursuant to this
Agreement and any proceeds thereof, (iv) the Depositor's rights under the
Mortgage Loan Purchase Agreement (including any security interest created
thereby), (v) the Depositor's Assigned Rights and (vi) the Collection Account,
the Distribution Account, the Basis Risk Reserve Fund and any REO Account and
such assets that are deposited therein from time to time and any investments
thereof, together with any and all income, proceeds and payments with respect
thereto.
"Trustee": U.S. Bank National Association, a national banking
association, or any successor Trustee appointed as herein provided.
-33-
"Trustee Certification": As defined in Section 3.22(c) hereof.
"Trustee Fee": With respect to any Distribution Date, the product of
(x) one-twelfth of the Trustee Fee Rate and (y) the aggregate of the Principal
Balances of all Mortgage Loans as of the opening of business on the first day
of the related Collection Period.
"Trustee Fee Rate": With respect to any Distribution Date, 0.014% per
annum.
"Underwriters": Banc One Capital Markets, Inc., Citigroup Global
Markets Inc. and Xxxxxx Xxxxxx & Company, Inc., as underwriters with respect
to the Class A and Class M Certificates.
"United States Person" or "U.S. Person": (i) A citizen or resident of
the United States, (ii) a corporation, partnership or other entity treated as
a corporation or partnership for United States federal income tax purposes
organized in or under the laws of the United States or any state thereof or
the District of Columbia (unless, in the case of a partnership, Treasury
regulations provide otherwise) or (iii) an estate the income of which is
includible in gross income for United States tax purposes, regardless of its
source, or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial decisions
of the trust. Notwithstanding the preceding sentence, to the extent provided
in Treasury regulations, certain Trusts in existence on August 20, 1996, and
treated as United States persons prior to such date, that elect to continue to
be treated as United States persons will also be a U.S. Person.
"Unpaid Realized Loss Amount": With respect to each Class of
Subordinate Certificates and any Distribution Date, the excess of (x) the
cumulative amount of Applied Realized Loss Amounts allocated to such class
pursuant to Section 4.03 for all Distribution Dates over (y) the cumulative
amount of payments in respect of Unpaid Realized Loss Amounts to such Class
for all prior Distribution Dates pursuant to Section 4.02(b) hereof.
"Value": With respect to any Mortgaged Property, the value thereof as
determined by an independent appraisal made at the time of the origination of
the related Mortgage Loan or the sale price, if the appraisal is not
available; except that, with respect to any Mortgage Loan that is a purchase
money mortgage loan, the lesser of (i) the value thereof as determined by an
independent appraisal made at the time of the origination of such Mortgage
Loan, if any, and (ii) the sales price of the related Mortgaged Property.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. The Voting Rights
allocated among Holders of the Offered Certificates shall be 98%. Such Voting
Rights shall be allocated among each such Class according to the fraction,
expressed as a percentage, the numerator of which is the aggregate Certificate
Principal Balance of all the Certificates of such Class then outstanding and
the denominator of which is the aggregate Certificate Principal Balance of all
of the Offered Certificates then outstanding. The Voting Rights allocated to
each such Class of Certificates shall be allocated among all Holders of each
such Class in proportion to the outstanding Certificate Principal Balance of
such Certificates; provided, however, that any Certificate registered in the
name of the Servicer, the Depositor, the Trustee or any of their respective
-34-
affiliates shall not be included in the calculation of Voting Rights; provided
that only such Certificates as are known by a Responsible Officer of the
Trustee to be so registered will be so excluded. The percentage of all the
Voting Rights allocated among the Holders of the Class X Certificates shall be
2%. The Residual Certificates shall have no Voting Rights.
"Weighted Average Net Mortgage Rate": The weighted average (based on
Principal Balance as of the first day of the related Collection Period or, in
the case of the first Distribution Date, the Cut-Off Date) of the Net Mortgage
Interest Rates of the Mortgage Loans, expressed as an annual rate and
calculated on the basis of twelve months consisting of 30 days each and a
360-day year.
"Written Order to Authenticate": A written order by which the
Depositor directs the Trustee to execute, authenticate and deliver the
Certificates.
Section 1.02 Accounting.
Unless otherwise specified herein, for the purpose of any definition
or calculation, whenever amounts are required to be netted, subtracted or
added or any distributions are taken into account such definition or
calculation and any related definitions or calculations shall be determined
without duplication of such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee, on
behalf of the Trust, without recourse for the benefit of the
Certificateholders all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in
and to (i) each Mortgage Loan identified on the Mortgage Loan Schedule,
including the related Cut-off Date Principal Balance, all interest accruing
thereon after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of
foreclosure; (iii) its interest in any insurance policies in respect of the
Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of
the Depositor under the Mortgage Loan Purchase Agreement, (vi) the Assigned
Rights of the Depositor; and (vii) all other assets included or to be included
in the Trust Fund. Such assignment includes all interest and principal due to
the Depositor or the Servicer after the Cut-off Date with respect to the
Mortgage Loans.
In connection with such transfer and assignment, the Seller does
hereby deliver or cause to be delivered to, and deposit with the Trustee, or
its designated agent (the "Custodian"), the following documents or instruments
with respect to each Mortgage Loan (a "Mortgage File") so transferred and
assigned:
-35-
(i) the original Mortgage Note, endorsed either (A) in blank or (B) in
the following form: "Pay to the order of U.S. Bank National
Association, as Trustee under the Pooling and Servicing Agreement,
dated as of November 1, 2003, among Credit-Based Asset Servicing and
Securitization LLC, Bond Securitization, L.L.C., Xxxxxx Loan
Servicing LP and U.S. Bank National Association, Bond Securitization
Asset-Backed Certificates, Series 2003-1, without recourse," or with
respect to any lost Mortgage Note, an original Lost Note Affidavit,
together with a copy of the related Mortgage Note;
(ii) the original Mortgage with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed
pursuant to a power of attorney, with evidence of recording thereon
or, if such Mortgage or power of attorney has been submitted for
recording but has not been returned from the applicable public
recording office, has been lost or is not otherwise available, a copy
of such Mortgage or power of attorney, as the case may be, certified
to be a true and complete copy of the original submitted for
recording;
(iii) an original Assignment of Mortgage, in form and substance
acceptable for recording. The Mortgage shall be assigned either (A)
in blank or (B) to "U.S. Bank National Association, as Trustee under
the Pooling and Servicing Agreement, dated as of November 1, 2003,
among Credit-Based Asset Servicing and Securitization LLC, Bond
Securitization, L.L.C., Xxxxxx Loan Servicing LP and U.S. Bank
National Association, Bond Securitization Asset-Backed Certificates,
Series 2003-1, without recourse";
(iv) an original, or a certified copy thereof, of any intervening
assignment of Mortgage showing a complete chain of assignments;
(v) the original or a certified copy of lender's title insurance policy;
and
(vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.
If any of the documents referred to in Section 2.01(ii), (iii) or
(iv) above has as of the Closing Date been submitted for recording but either
(x) has not been returned from the applicable public recording office or (y)
has been lost or such public recording office has retained the original of
such document, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Trustee or the Custodian no
later than the Closing Date, of a copy of each such document certified by the
Seller in the case of (x) above or the applicable public recording office in
the case of (y) above to be a true and complete copy of the original that was
submitted for recording and (2) if such copy is certified by the Seller,
delivery to the Trustee or the Custodian, promptly upon receipt thereof of
either the original or a copy of such document certified by the applicable
public recording office to be a true and complete copy of the original. The
Seller shall deliver or cause to be delivered to the Trustee or the Custodian
promptly upon receipt thereof any other documents constituting a part of a
Mortgage File received with respect to any Mortgage Loan, including, but not
limited to, any original documents evidencing an assumption or modification of
any Mortgage Loan.
-36-
Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, a Mortgage File, the Seller
shall have 120 days to cure such defect or 150 days following the Closing
Date, in the case of missing Mortgages or Assignments or deliver such missing
document to the Trustee or the Custodian. If the Seller does not cure such
defect or deliver such missing document within such time period, the Seller
shall either repurchase or substitute for such Mortgage Loan in accordance
with Section 2.03.
The Servicer shall cause the Assignments of Mortgage which were
delivered in blank to be completed and shall cause all Assignments referred to
in Section 2.01(iii) hereof and, to the extent necessary, in Section 2.01(iv)
hereof to be recorded. The Servicer shall be required to deliver such
assignments for recording within 30 days of the Closing Date. The Servicer
shall furnish the Trustee, or its designated agent, with a copy of each
Assignment of Mortgage submitted for recording. In the event that any such
Assignment is lost or returned unrecorded because of a defect therein, the
Servicer shall promptly have a substitute Assignment prepared or have such
defect cured, as the case may be, and thereafter cause each such Assignment to
be duly recorded.
In the event that any Mortgage Note is endorsed in blank as of the
Closing Date, promptly following the Closing Date the Servicer shall cause to
be completed such endorsements in the following form: "Pay to the order of
U.S. Bank National Association, as Trustee under the Pooling and Servicing
Agreement, dated as of November 1, 2003, among Credit-Based Asset Servicing
and Securitization LLC, Bond Securitization, L.L.C., Xxxxxx Loan Servicing LP
and U.S. Bank National Association, Bond Securitization Asset-Backed
Certificates, Series 2003-1, without recourse."
The Depositor herewith delivers to the Trustee executed copies of the
Mortgage Loan Purchase Agreement.
Section 2.02 Acceptance by Trustee.
The Trustee acknowledges the receipt of, subject to the provisions of
Section 2.01 and subject to the review described below and any exceptions
noted on the exception report described in the next paragraph below, the
documents referred to in Section 2.01 above and all other assets included in
the definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage
File, and that it holds or will hold all such assets and such other assets
included in the definition of "Trust Fund" in trust for the exclusive use and
benefit of all present and future Certificateholders.
The Trustee agrees to execute and deliver (or cause the Custodian to
execute and deliver) to the Depositor on or prior to the Closing Date an
acknowledgment of receipt of the original Mortgage Note (with any exceptions
noted), substantially in the form attached as Exhibit F-3 hereto.
The Trustee agrees, for the benefit of the Certificateholders, to
review (or cause the Custodian to review) each Mortgage File within 60 days
after the Closing Date (or, with respect to any document delivered after the
Startup Day, within 60 days of receipt and with respect to any Eligible
Substitute Mortgage, within 60 days after the assignment thereof) and to
-37-
certify (or cause the Custodian to certify) in substantially the form attached
hereto as Exhibit F-1 that, as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the exception report annexed thereto as not being
covered by such certification), (i) all documents required to be delivered to
it pursuant to Section 2.01 of this Agreement are in its possession, (ii) such
documents have been reviewed by it and have not been mutilated, damaged or
torn and relate to such Mortgage Loan, (iii) based on its examination and only
as to the foregoing, the information set forth in the Mortgage Loan Schedule
that corresponds to items (1), (2), (3), (5), (13) and (21) (in the case of
(21), only as to whether there is a Prepayment Charge) of the Mortgage Loan
Schedule accurately reflects information set forth in the Mortgage File, (iv)
all Assignments of Mortgage or intervening assignments of mortgage, as
applicable, have been submitted for recording and (v) each Mortgage Note has
been endorsed as provided in Section 2.01(i) of this Agreement and each
Mortgage has been assigned in accordance with Section 2.01(iii) of this
Agreement. It is herein acknowledged that, in conducting such review, the
Trustee (or the Custodian, as applicable) is under no duty or obligation to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate
for the represented purpose or that they have actually been recorded or that
they are other than what they purport to be on their face.
Prior to the first anniversary date of this Agreement the Trustee
shall deliver (or cause the Custodian to deliver) to the Depositor and the
Servicer a final certification in the form annexed hereto as Exhibit F-2
evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the
Trustee (or the Custodian, as applicable) finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect, at the conclusion of its review the Trustee, upon its
notification by the Custodian, if applicable, shall so notify the Seller, the
Depositor and the Servicer. In addition, upon the discovery by the Seller,
Depositor, the Trustee or the Servicer (or upon receipt by the Trustee of
written notification of such breach) of a breach of any of the representations
and warranties made by the Seller in the Mortgage Loan Purchase Agreement in
respect of any Mortgage Loan which materially adversely affects such Mortgage
Loan or the interests of the related Certificateholders in such Mortgage Loan,
the party discovering such breach shall give prompt written notice to the
other parties.
The Depositor and the Trustee intend that the assignment and transfer
herein contemplated constitute a sale of the Mortgage Loans and the Related
Documents, conveying good title thereto free and clear of any liens and
encumbrances, from the Depositor to the Trustee and that such property not be
part of the Depositor's estate or property of the Depositor in the event of
any insolvency by the Depositor. In the event that such conveyance is deemed
to be, or to be made as security for, a loan, the parties intend that the
Depositor shall be deemed to have granted and does hereby grant to the
Trustee, on behalf of the Trust, a first priority perfected security interest
in all of the Depositor's right, title and interest in and to the Mortgage
Loans and the Related Documents, and that this Agreement shall constitute a
security agreement under applicable law.
-38-
Section 2.03 Repurchase or Substitution of Mortgage Loans by the
Seller.
(a) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage File or
of the breach by the Seller of any representation, warranty or covenant under
the Mortgage Loan Purchase Agreement or in Section 2.04 in respect of any
Mortgage Loan which materially adversely affects the value of such Mortgage
Loan or the interest therein of the Certificateholders, the Trustee (or the
Custodian, as applicable) shall promptly notify the Seller and the Servicer of
such defect, missing document or breach and request that the Seller deliver
such missing document or cure such defect or breach within 120 days or 150
days following the Closing Date, in the case of missing Mortgages or
Assignments from the date the Seller was notified of such missing document,
defect or breach, and if the Seller does not deliver such missing document or
cure such defect or breach in all material respects during such period, the
Trustee, shall enforce the Seller's obligation under the Mortgage Loan
Purchase Agreement and inform the Seller of its obligation to repurchase such
Mortgage Loan from the Trust Fund at the Purchase Price on or prior to the
Determination Date following the expiration of such 120 day period (subject to
Section 2.03(e)). The Purchase Price for the repurchased Mortgage Loan shall
be deposited in the Collection Account, and the Trustee, upon receipt of
written certification from the Servicer of such deposit, shall release to the
Seller the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty as the Seller shall furnish to it and as shall be
necessary to vest in the Seller any Mortgage Loan released pursuant hereto and
the Trustee shall have no further responsibility with regard to such Mortgage
File. In lieu of repurchasing any such Mortgage Loan as provided above, the
Seller may cause such Mortgage Loan to be removed from the Trust Fund (in
which case it shall become a Defective Mortgage Loan) and substitute one or
more Eligible Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.03(d). It is understood and agreed that the
obligation of the Seller to cure or to repurchase (or to substitute for) any
Mortgage Loan as to which a document is missing, a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy against the Seller respecting such
omission, defect or breach available to the Trustee, on behalf of the
Certificateholders.
(b) [reserved].
(c) Within 90 days of the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any representation,
warranty or covenant of the Servicer set forth in Section 2.05 which
materially and adversely affects the interests of the Certificateholders in
any Mortgage Loan, the Servicer shall cure such breach in all material
respects.
(d) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to Section 2.03(a) must be effected
prior to the last Business Day that is within two years after the Closing
Date. As to any Defective Mortgage Loan for which the Seller substitutes an
Eligible Substitute Mortgage Loan or Loans, such substitution shall be
effected by the Seller delivering to the Trustee, for such Eligible Substitute
Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the
Trustee, and such other documents and agreements, with all necessary
endorsements thereon, as are required by Section
-39-
2.01, together with an Officer's Certificate providing that each such Eligible
Substitute Mortgage Loan satisfies the definition thereof and specifying the
Substitution Adjustment Amount (as described below), if any, in connection
with such substitution. The Trustee shall acknowledge receipt for such
Eligible Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, shall review such documents as specified in Section 2.02 and
deliver (or cause the Custodian to deliver) to the Servicer, with respect to
such Eligible Substitute Mortgage Loan or Loans, a certification substantially
in the form attached hereto as Exhibit F-1, with any applicable exceptions
noted thereon. Within one year of the date of substitution, the Trustee shall
deliver (or cause the Custodian to deliver) to the Servicer a certification
substantially in the form of Exhibit F-2 hereto with respect to such Eligible
Substitute Mortgage Loan or Loans, with any applicable exceptions noted
thereon. Monthly Payments due with respect to Eligible Substitute Mortgage
Loans in the month of substitution are not part of the Trust Fund and will be
retained by the Seller. For the month of substitution, distributions to
Certificateholders will reflect the collections and recoveries in respect of
such Defective Mortgage Loan in the Collection Period preceding the month of
substitution and the Depositor or the Seller, as the case may be, shall
thereafter be entitled to retain all amounts subsequently received in respect
of such Defective Mortgage Loan. The Seller shall give or cause to be given
written notice to the Certificateholders that such substitution has taken
place, shall amend the Mortgage Loan Schedule to reflect the removal of such
Defective Mortgage Loan from the terms of this Agreement and the substitution
of the Eligible Substitute Mortgage Loan or Loans and shall deliver a copy of
such amended Mortgage Loan Schedule to the Trustee and the Custodian. Upon
such substitution, such Eligible Substitute Mortgage Loan or Loans shall
constitute part of the Mortgage Pool and shall be subject in all respects to
the terms of this Agreement and, in the case of a substitution effected by the
Seller, the Mortgage Loan Purchase Agreement, including, in the case of a
substitution effected by the Seller all applicable representations and
warranties thereof included in the Mortgage Loan Purchase Agreement and all
applicable representations and warranties thereof set forth in Section 2.04,
in each case as of the date of substitution.
For any month in which the Seller substitutes one or more Eligible
Substitute Mortgage Loans for one or more Defective Mortgage Loans, the
Servicer will determine the amount (the "Substitution Adjustment Amount"), if
any, by which the aggregate Purchase Price of all such Defective Mortgage
Loans exceeds the aggregate, as to each such Eligible Substitute Mortgage
Loan, of the principal balance thereof as of the date of substitution,
together with one month's interest on such principal balance at the applicable
Net Mortgage Interest Rate. On the date of such substitution, the Seller will
deliver or cause to be delivered to the Servicer for deposit in the Collection
Account an amount equal to the Substitution Adjustment Amount, if any, and the
Trustee, upon receipt of the related Eligible Substitute Mortgage Loan or
Loans and certification by the Servicer of such deposit, shall release to the
Seller the related Mortgage File or Files and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty as the Seller shall deliver to it and as shall be
necessary to vest therein any Defective Mortgage Loan released pursuant
hereto.
In addition, the Seller shall obtain at its own expense and deliver
to the Trustee an Opinion of Counsel to the effect that such substitution will
not cause (a) any federal tax to be imposed on the Trust Fund, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(l) of the Code or on "contributions after the startup date"
under Section 860G(d)(l) of the Code, or (b) any REMIC to fail to qualify as a
REMIC at any
-40-
time that any Certificate is outstanding. If such Opinion of Counsel can not
be delivered, then such substitution may only be effected at such time as the
required Opinion of Counsel can be given.
(e) Upon discovery by the Seller, the Servicer or the Trustee that
any Mortgage Loan does not constitute a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code, the party discovering such fact
shall within two Business Days give written notice thereof to the other
parties. In connection therewith, the Seller shall repurchase or, subject to
the limitations set forth in Section 2.03(d), substitute one or more Eligible
Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Loan. In addition, upon discovery that a Mortgage Loan is defective
in a manner that would cause it to be a "defective obligation" within the
meaning of Treasury regulations relating to REMICs, the Seller shall cure the
defect or make the required purchase or substitution no later than 90 days
after the earlier of the discovery of the defect and receipt of notification
of the defect. Any such repurchase or substitution shall be made in the same
manner as set forth in Section 2.03(a), if made by the Seller. The Trustee
shall reconvey to the Seller the Mortgage Loan to be released pursuant hereto
in the same manner, and on the same terms and conditions, as it would a
Mortgage Loan repurchased for breach of a representation or warranty.
Notwithstanding anything to the contrary contained herein, the
parties hereto acknowledge that the functions of the Trustee, with respect to
the custody, acceptance, inspection and release of the Mortgage Files pursuant
to Sections 2.01, 2.02 and 2.03 and preparation and delivery of the
certifications in the form of Exhibit F-1, Exhibit F-2 and Exhibit F-3 shall
be performed by the Custodian pursuant to the terms and conditions of the
Custodial Agreement. The fees and expenses of the Custodian shall be paid by
the Servicer.
Section 2.04 Representations and Warranties of the Seller with
Respect to the Mortgage Loans.
The Seller hereby represents and warrants to the Trustee for the
benefit of the Certificateholders and the Depositor that as of the Closing
Date or as of such other date specifically provided herein:
(a) The representations and warranties made by the Seller pursuant to
Section 3.01 of the Mortgage Loan Purchase Agreement are hereby being made to
the Trustee and are true and correct as of the Closing Date.
(b) [reserved]
(c) On date following the Expiration Date, the Term Representations
and Warranties are hereby being made to the Trustee and are true and correct
as of the Closing Date.
With respect to the representations and warranties set forth in this
Section 2.04 that are made to the best of the Seller's knowledge (or in the
case of the Term Representations and Warranties, the Originator's knowledge)
or as to which the Seller has no knowledge (or in the case of the Term
Representations and Warranties, the Originator had no knowledge), if it is
discovered by the Depositor, the Seller, the Servicer, the Trustee or the
Custodian that the
-41-
substance of such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan or the interest therein of the Certificateholders then, notwithstanding
the Seller's (or in the case of the Term Representations and Warranties, the
Originator's) lack of knowledge with respect to the substance of such
representation and warranty being inaccurate at the time the representation or
warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.
Upon discovery by the Depositor, the Seller, the Servicer, the
Trustee or the Custodian of a breach of any of the representations and
warranties contained in this Section that materially and adversely affects the
value of any Mortgage Loan or the interest therein of the Certificateholders,
the party discovering the breach shall give prompt written notice to the
others and in no event later than two Business Days from the date of such
discovery. Within ninety days of its discovery or its receipt of notice of any
such missing or materially defective documentation or any such breach of a
representation or warranty, the Seller shall promptly deliver such missing
document or cure such defect or breach in all material respects, or in the
event such defect or breach cannot be cured, the Seller shall repurchase the
affected Mortgage Loan or cause the removal of such Mortgage Loan from the
Trust Fund and substitute for it one or more Eligible Substitute Mortgage
Loans, in either case, in accordance with Section 2.03. Notwithstanding
anything to the contrary contained herein, the Seller's obligations with
respect to the Term Representations and Warranties shall apply only with
respect to notices received on or after the date following the Expiration
Date.
It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the Mortgage Files to
the Trustee and shall inure to the benefit of the Certificateholders and the
Depositor notwithstanding any restrictive or qualified endorsement or
assignment. It is understood and agreed that the obligations of the Seller set
forth in this Section 2.04 to cure, substitute for or repurchase a Mortgage
Loan pursuant to Section 2.03(a) and the Mortgage Loan Purchase Agreement
constitute the sole remedies available to the Certificateholders, the
Depositor or to the Trustee on their behalf respecting a breach of the
representations and warranties contained in this Section 2.04.
Section 2.05 Representations, Warranties and Covenants of the
Servicer.
The Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the Trustee and the Certificateholders and
to the Depositor that as of the Closing Date or as of such date specifically
provided herein:
(i) The Servicer is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its formation and has all
licenses necessary to carry on its business as now being conducted,
except for such licenses, certificates and permits the absence of which,
individually or in the aggregate, would not have a material adverse
effect on the ability of the Servicer to conduct its business as it is
presently conducted, and is licensed, qualified and in good standing in
the states where the Mortgaged Property is located if the laws of such
state require licensing or qualification in order to conduct business of
the type conducted by the Servicer or to ensure the enforceability or
validity of each Mortgage Loan; the Servicer has the power and authority
to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery
-42-
and performance of this Agreement (including all instruments of transfer
to be delivered pursuant to this Agreement) by the Servicer and the
consummation of the transactions contemplated hereby have been duly and
validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Servicer, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally; and all requisite
corporate action has been taken by the Servicer to make this Agreement
valid and binding upon the Servicer in accordance with its terms;
(ii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Servicer and will
not result in the breach of any term or provision of the certificate of
limited partnership or the partnership agreement of the Servicer or
result in the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of any
obligation under, any agreement, indenture or loan or credit agreement or
other instrument to which the Servicer or its property is subject, or
result in the violation of any law, rule, regulation, order, judgment or
decree to which the Servicer or its property is subject;
(iii) The Servicer is an approved seller/servicer of conventional
mortgage loans for Xxxxxx Xxx, is an FHA Approved Mortgagee in good
standing to service mortgages, and has not been suspended as a mortgagee
or servicer by the FHA and has the facilities, procedures and experienced
personnel necessary for the sound servicing of mortgage loans of the same
type as the Mortgage Loans. The Servicer is, and shall remain for as long
as it is servicing the Mortgage Loans hereunder, in good standing as a
FHA Approved Mortgagee and to service mortgage loans for HUD, Xxxxxx Mae
or Xxxxxxx Mac, and no event has occurred, including but not limited to a
change in insurance coverage, which would make the Servicer unable to
comply with HUD, Xxxxxx Mae, Xxxxxxx Mac or FHA eligibility requirements
or which would require notification to any of HUD, Xxxxxx Mae, Xxxxxxx
Mac or FHA;
(iv) This Agreement, and all documents and instruments contemplated
hereby which are executed and delivered by the Servicer, constitute and
will constitute valid, legal and binding obligations of the Servicer,
enforceable in accordance with their respective terms, except as the
enforcement thereof may be limited by applicable bankruptcy laws and
general principles of equity;
(v) The Servicer does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(vi) There is no action, suit, proceeding or investigation pending
or, to its knowledge, threatened against the Servicer that, either
individually or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or
assets of the Servicer, or in any material impairment of the right or
ability of the Servicer to carry on its business substantially as now
conducted, or in any material liability on the part of the Servicer, or
that would draw into question the validity or enforceability of this
Agreement or of any action taken or to be taken in connection with
-43-
the obligations of the Servicer contemplated herein, or that would be
likely to impair materially the ability of the Servicer to perform under
the terms of this Agreement;
(vii) No consent, approval or order of any court or governmental
agency or body is required for the execution, delivery and performance by
the Servicer of or compliance by the Servicer with this Agreement or the
consummation of the transactions contemplated by this Agreement, except
for such consents, approvals, authorizations and orders, if any, that
have been obtained;
(viii) Neither this Agreement nor any information, certificate of an
officer, statement furnished in writing or report delivered to the
Trustee by the Servicer in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary in order to make
the statements contained therein, in light of the circumstances under
which they were made, not misleading; and
(ix) The Servicer has accurately and fully reported, and will
continue to accurately and fully report, its borrower credit files to
each of the credit repositories in a timely manner.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the
Mortgage Files to the Trustee and shall inure to the benefit of the Trustee,
the Depositor and the Certificateholders. Upon discovery by any of the
Depositor, the Servicer, the Seller or the Trustee of a breach of any of the
foregoing representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan or the interests therein of
the Certificateholders, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the other parties hereto.
Section 2.06 Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders as follows:
(i) This agreement constitutes a legal, valid and binding obligation
of the Depositor, enforceable against the Depositor in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect affecting the enforcement of creditors' rights
in general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the Depositor to
the Trustee on behalf of the Trust of each Mortgage Loan, the Depositor
had good and marketable title to each Mortgage Loan (insofar as such
title was conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or
other encumbrance or other interest of any nature;
-44-
(iii) As of the Closing Date, the Depositor has transferred all of
its right, title interest in the Mortgage Loans to the Trustee on behalf
of the Trust;
(iv) The Depositor has not transferred the Mortgage Loans to the
Trustee on behalf of the Trust with any intent to hinder, delay or
defraud any of its creditors;
(v) The Depositor has been duly formed and is validly existing as a
limited liability company in good standing under the laws of the State of
Delaware, with full limited liability company power and authority to own
its assets and conduct its business as presently being conducted;
(vi) The Depositor is not in violation of its certificate of
formation or limited liability company agreement or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Depositor is a
party or by which it or its properties may be bound, which default might
result in any material adverse changes in the financial condition,
earnings, affairs or business of the Depositor or which might materially
and adversely affect the properties or assets, taken as a whole, of the
Depositor;
(vii) The execution, delivery and performance of this Agreement by
the Depositor, and the consummation of the transactions contemplated
thereby, do not and will not result in a material breach or violation of
any of the terms or provisions of, or, to the knowledge of the Depositor,
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Depositor is a
party or by which the Depositor is bound or to which any of the property
or assets of the Depositor is subject, nor will such actions result in
any violation of the provisions of the certificate of formation or
limited liability company agreement of the Depositor or, to the best of
the Depositor's knowledge without independent investigation, any statute
or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Depositor or any of its properties or
assets (except for such conflicts, breaches, violations and defaults as
would not have a material adverse effect on the ability of the Depositor
to perform its obligations under this Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency
or body of the United States or any other jurisdiction is required for
the issuance of the Certificates, or the consummation by the Depositor of
the other transactions contemplated by this Agreement, except such
consents, approvals, authorizations, registrations or qualifications as
(a) may be required under State securities or Blue Sky laws, (b) have
been previously obtained or (c) the failure of which to obtain would not
have a material adverse effect on the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement;
and
(ix) There are no actions, proceedings or investigations pending
before or, to the Depositor's knowledge, threatened by any court,
administrative agency or other
-45-
tribunal to which the Depositor is a party or of which any of its
properties is the subject: (a) which if determined adversely to the
Depositor would have a material adverse effect on the business, results
of operations or financial condition of the Depositor; (b) asserting the
invalidity of this Agreement or the Certificates; (c) seeking to prevent
the issuance of the Certificates or the consummation by the Depositor of
any of the transactions contemplated by this Agreement, as the case may
be; (d) which might materially and adversely affect the performance by
the Depositor of its obligations under, or the validity or enforceability
of, this Agreement.
Section 2.07 Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery to it (or the Custodian, as bailee and Custodian of the
Trustee) of the Mortgage Files, subject to the provisions of Sections 2.01 and
2.02, and the Trustee acknowledges the assignment to it of all other assets
included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such assignment and delivery and in exchange therefor, the
Trustee, pursuant to the Written Order to Authenticate executed by an officer
of the Depositor, has executed, and the Certificate Registrar has
authenticated and delivered to or upon the order of the Depositor, the
Certificates (other than the Class X and Residual Certificates) in minimum
dollar denominations or $25,000 and integral dollar multiples of $1 in excess.
The Class X Certificates and the Residual Certificates are issuable only in
minimum Percentage Interests of 10%. The interests evidenced by the
Certificates constitute the entire beneficial ownership interest in the Trust
Fund.
Section 2.08 Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trust and the
Trustee on behalf of the Certificateholders that as of the Closing Date or as
of such date specifically provided herein:
(i) The Seller is duly organized, validly existing and in good
standing as a limited liability company under the laws of the State of
Delaware and has the power and authority to own its assets and to
transact the business in which it is currently engaged. The Seller is
duly qualified to do business and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which
the failure to so qualify would have a material adverse effect on (a) its
business, properties, assets or condition (financial or other), (b) the
performance of its obligations under this Agreement, (c) the value or
marketability of the Mortgage Loans, or (d) its ability to foreclose on
the related Mortgaged Properties.
(ii) The Seller has the power and authority to make, execute, deliver
and perform this Agreement and to consummate all of the transactions
contemplated hereunder and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement. When executed
and delivered, this Agreement will constitute the Seller's legal, valid
and binding obligations enforceable in accordance with its terms, except
as enforcement of such terms may be limited by (1) bankruptcy,
insolvency, reorganization, receivership, moratorium or similar laws
affecting the
-46-
enforcement of creditors' rights generally and by the availability of
equitable remedies, (2) general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or at law) or
(3) public policy considerations underlying the securities laws, to the
extent that such policy considerations limit the enforceability of the
provisions of this Agreement which purport to provide indemnification
from securities laws liabilities.
(iii) The Seller holds all necessary licenses, certificates and
permits from all governmental authorities necessary for conducting its
business as it is presently conducted, except for such licenses,
certificates and permits the absence of which, individually or in the
aggregate, would not have a material adverse effect on the ability of the
Seller to conduct its business as it is presently conducted. It is not
required to obtain the consent of any other party or any consent,
license, approval or authorization from, or registration or declaration
with, any governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except for such consents, licenses, approvals or
authorizations, or registrations or declarations as shall have been
obtained or filed, as the case may be, prior to the Closing Date.
(iv) The execution, delivery and performance of this Agreement by the
Seller will not conflict with or result in a breach of, or constitute a
default under, any provision of any existing law or regulation or any
order or decree of any court applicable to the Seller or any of its
properties or any provision of its Limited Liability Company Agreement,
or constitute a material breach of, or result in the creation or
imposition of any lien, charge or encumbrance upon any of its properties
pursuant to any mortgage, indenture, contract or other agreement to which
it is a party or by which it may be bound.
(v) No certificate of an officer, written statement or report
delivered pursuant to the terms hereof by the Seller contains any untrue
statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(vi) The transactions contemplated by this Agreement are in the
ordinary course of the Seller's business.
(vii) The Seller is not insolvent, nor will the Seller be made
insolvent by the transfer of the Mortgage Loans to the Depositor, nor is
the Seller aware of any pending insolvency.
(viii) The Seller is not in violation of, and the execution and
delivery of this Agreement by it and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect
to any order or decree of any court, or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction,
which violation would materially and adversely affect the Seller's
condition (financial or otherwise) or operations or any of the Seller's
properties, or materially and adversely affect the performance of any of
its duties hereunder.
-47-
(ix) There are no actions or proceedings against, or investigations
of, the Seller pending or, to its knowledge, threatened, before any
court, administrative agency or other tribunal (i) that, if determined
adversely, would prohibit the Seller from entering into this Agreement,
(ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or (iii) that, if determined adversely,
would prohibit or materially and adversely affect the Seller's
performance of any of its respective obligations under, or the validity
or enforceability of, this Agreement.
(x) The Seller did not transfer the Mortgage Loans to the Depositor
with any intent to hinder, delay or defraud any of its creditors.
(xi) The Seller acquired title to the Mortgage Loans in good faith,
without notice of any adverse claims.
(xii) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller to the Depositor are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
Section 2.09 Covenants of the Seller. The Seller hereby covenants
that except for the transfer to the Depositor, the Seller will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur,
assume or suffer to exist any lien on any Mortgage Loan, or any interest
therein; the Seller will notify the Trustee, as assignee of the Depositor, of
the existence of any lien on any Mortgage Loan immediately upon discovery
thereof, and the Seller will defend the right, title and interest of the
Trust, as assignee of the Depositor, in, to and under the Mortgage Loans,
against all claims of third parties claiming through or under the Seller;
provided, however that nothing in this Section 2.09 shall prevent or be deemed
to prohibit the Seller from suffering to exist upon any of the Mortgage Loans
any liens for municipal or other local taxes and other governmental charges if
such taxes or governmental charges shall not at the time be due and payable or
if the Seller shall currently be contesting the validity thereof in good faith
by appropriate proceedings and shall have set aside on its books adequate
reserves with respect thereto.
Section 2.10 Repurchase of Mortgage Loans by the Originator.
The Depositor hereby assigns to the Trustee for the benefit of the
Certificateholders all of its right, title and interest in respect of its
Assigned Rights. The Trustee is not assuming any of the duties, liabilities or
obligations of the Depositor or the Seller under the Originator Mortgage Loan
Purchase Agreement or the Bring Down Letter. Insofar as the Originator
Mortgage Loan Purchase Agreement relates to the representations and warranties
made by the Originator in respect of any Mortgage Loans and any remedies
provided thereunder for any breach of such representations and warranties and
the enforcement thereof, such right, title and interest may be enforced by the
Trustee on behalf of the Certificateholders. Upon discovery by the Depositor,
the Seller, the Servicer or the Trustee of a breach of any of the
representations and warranties contained in Sections 3.01 or 3.02 of the
Originator Mortgage Loan Purchase Agreement that materially and adversely
affects the value of any Mortgage Loan or the interest therein of the
Certificateholders, the party discovering the breach shall give prompt written
notice to the other parties hereto and in no event later than two Business
Days
-48-
from the date of such discovery. The Servicer shall promptly notify the
Originator of such breach and request that the Originator promptly cure such
breach in all material respects, or in the event such defect or breach cannot
be cured, repurchase the affected Mortgage Loan from the Trust Fund, in
accordance with Section 3.03 of the Originator Mortgage Loan Purchase
Agreement. In the event of any such repurchase of a Mortgage Loan, the
Servicer shall notify the Originator of the Originator Purchase Price and the
Seller of the Makewhole Amount with respect to such Mortgage Loan and, (x) the
Originator shall deposit the Originator Purchase Price for the repurchased
Mortgage Loan in the Collection Account and (y) the Seller shall deposit the
Makewhole Amount for the repurchased Mortgage Loan in the Collection Account,
and the Trustee, upon receipt of written certification from the Servicer of
such deposits, shall release to the Originator the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as the Originator shall furnish to it and as shall be
necessary to vest in the Originator any Mortgage Loan released pursuant hereto
and the Trustee shall have no further responsibility with regard to such
Mortgage File.
It is understood and agreed that the representations and warranties
set forth in Section 3.01 and 3.02 of the Originator Mortgage Loan Purchase
Agreement shall survive delivery of the Mortgage Files to the Trustee and
shall inure to the benefit of the Certificateholders notwithstanding any
restrictive or qualified endorsement or assignment, which delivery shall in no
way affect the ability of the Seller to enforce its rights under the
Originator Mortgage Loan Purchase Agreement as provided in the Mortgage Loan
Purchase Agreement. It is understood and agreed that the obligations of the
Originator to cure or repurchase an Originator Mortgage Loan pursuant to the
Originator Mortgage Loan Purchase Agreement shall constitute the sole remedy
against the Originator respecting such breach available to the Trustee on
behalf of the Certificateholders.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01 Servicer to Act as Servicer.
The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with this Agreement and the normal
and usual standards of practice of prudent mortgage servicers, and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which the Servicer
may deem necessary or desirable and consistent with the terms of this
Agreement including, (the "Servicing Standards").
Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's reasonable and prudent determination such
waiver, modification, postponement or indulgence is not materially adverse to
the Certificateholders; provided, however that the Servicer shall not make
future advances and (unless the Mortgagor is in default with respect to the
Mortgage Loan or such default is, in the judgment of the Servicer, reasonably
foreseeable) the Servicer shall not
-49-
permit any modification with respect to any Mortgage Loan that would (i)
change the Mortgage Interest Rate, defer or forgive the payment thereof of any
principal or interest payments, reduce the outstanding principal amount
(except for actual payments of principal) or extend the final maturity date
with respect to such Mortgage Loan, (ii) affect adversely the status of any
REMIC as a REMIC or (iii) cause any REMIC to be subject to a tax on
"prohibited transactions" or "contributions" pursuant to the REMIC Provisions.
Notwithstanding the foregoing, the Servicer shall not permit any modification
with respect to any Mortgage Loan that would both (x) effect an exchange or
reissuance of such Mortgage Loan under Section 1.860G-2(b) of the Treasury
Regulations and (y) cause any REMIC constituting part of the Trust Fund to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions" after the Startup Day under the
REMIC Provisions. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered to execute and
deliver on behalf of itself, and the Trustee, all instruments of satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Property. The Servicer shall make all required Servicing
Advances and shall service and administer the Mortgage Loans in accordance
with Applicable Regulations, and shall provide to the Mortgagor any reports
required to be provided to them thereby. If reasonably required by the
Servicer, the Trustee shall furnish the Servicer with a power of attorney in
the Form of Exhibit Q and other documents necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties under this
Agreement and the Trustee shall have no liability with respect to any misuse
of such power of attorney and shall be indemnified by the Servicer for any
costs, liabilities or expenses incurred by the Trustee in connection
therewith.
Notwithstanding anything in this Agreement to the contrary, the
Servicer shall be prohibited from foreclosing on any Mortgage Loan based on
the delinquency status thereof as of the Cut-off Date.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures including collection procedures and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted
mortgage servicing practices of prudent lending institutions, and the
Certificateholders' reliance on the Servicer.
The Servicer shall give prompt notice to the Trustee of any action,
of which the Servicer has actual knowledge, that purports to (i) assert a
claim against the Trust Fund or (ii) assert jurisdiction over the Trust Fund.
Notwithstanding anything in this Agreement to the contrary, in the
event of a Principal Prepayment in full of a Mortgage Loan, the Servicer may
not waive any Prepayment Charge or portion thereof required by the terms of
the related Mortgage Note unless (i) the Servicer determines that such waiver
would maximize recovery of Liquidation Proceeds for such Mortgage Loan, taking
into account the value of such Prepayment Charge, or (ii) (A) the
enforceability thereof is limited (1) by bankruptcy, insolvency, moratorium,
receivership, or other similar law relating to creditors' rights generally or
(2) due to acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability is otherwise limited or prohibited by
applicable law. In the event of a Principal Prepayment in full with respect to
any
-50-
Mortgage Loan, the Servicer shall deliver to the Trustee an Officer's
Certificate substantially in the form of Exhibit P no later than the date on
which the Servicer delivers the Remittance Report to the Trustee and the
Trustee shall make such Officer's Certificate available on its website to the
Class X Certificateholders. If the Servicer has waived or does not collect all
or a portion of a Prepayment Charge relating to a Principal Prepayment in full
due to any action or omission of the Servicer, other than as provided above,
the Servicer shall, within 90 days of the date on which the Principal
Prepayment in full is remitted to the Trustee, deliver to the Trustee the
amount of such Prepayment Charge (or such portion thereof as had been waived
for deposit) into the Distribution Account for distribution in accordance with
the terms of this Agreement.
The Trustee shall make available on its website to the Depositor and
the owner of the Class X Certificates, on a monthly basis, a statement setting
forth the amounts received with respect to Prepayment Charges.
Section 3.02 Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on
all Mortgage Loans are paid in full, the Servicer will diligently collect all
payments due under each Mortgage Loan when the same shall become due and
payable and shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any Applicable Regulations, follow
such collection procedures as it follows with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Further, with
respect to any first lien Mortgage Loans that require Escrow Payments, the
Servicer will take special care in ascertaining and estimating annual ground
rents, taxes, assessments, water rates, fire and hazard insurance premiums,
mortgage insurance premiums, and all other charges that, as provided in the
Mortgage, will become due and payable to that end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Section 3.03 Realization Upon Defaulted Mortgage Loans.
In the event that any payment due under any Mortgage Loan is not paid
when the same becomes due and payable, or in the event the Mortgagor fails to
perform any other covenant or obligation under the Mortgage Loan and such
failure continues beyond any applicable grace period, the Servicer shall take
such action as it shall deem to be in the best interest of the
Certificateholders. With respect to any defaulted Mortgage Loan, the Servicer
shall have the right to review the status of the related forbearance plan and,
subject to the second paragraph of Section 3.01, may modify such forbearance
plan; including, extending the Mortgage Loan repayment date for a period of
one year or reducing the Mortgage Interest Rate up to 50 basis points. In
addition, the Servicer may write-off any second-lien Mortgage that is 180 days
or more delinquent.
In connection with a foreclosure or other conversion, the Servicer
shall exercise such rights and powers vested in it hereunder and use the same
degree of care and skill in its exercise as prudent mortgage servicers would
exercise or use under the circumstances in the conduct of their own affairs
and consistent with Applicable Regulations and the servicing standards set
forth in the Xxxxxx Xxx Guide, including, without limitation, advancing funds
for the payment of taxes and insurance premiums with respect to first lien
Mortgage Loans.
-51-
Notwithstanding the foregoing provisions of this Section 3.03, with
respect to any Mortgage Loan as to which the Servicer has received actual
notice of, or has actual knowledge of, the presence of any toxic or hazardous
substance on the related Mortgaged Property, the Servicer shall not either (i)
obtain title to such Mortgaged Property as a result of or in lieu of
foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any
other action with respect to, such Mortgaged Property if, as a result of any
such action, the Trust Fund would be considered to hold title to, to be a
mortgagee-in-possession of, or to be an owner or operator of such Mortgaged
Property within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, or any
comparable law, unless the Servicer has also previously determined, based on
its reasonable judgment and a prudent report prepared by a Person who
regularly conducts environmental audits using customary industry standards,
that:
A. such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic interest
of the Certificateholders to take such actions as are necessary to bring the
Mortgaged Property into compliance therewith; and
B. there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, hazardous wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any federal, state or local law or regulation, or that if
any such materials are present for which such action could be required, that
it would be in the best economic interest of the Certificateholders to take
such actions with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section 3.03 shall be advanced by the Servicer, subject to the Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.05(ii).
If the Servicer determines, as described above, that it is in the
best economic interest of the Certificateholders to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials,
hazardous wastes, or petroleum-based materials affecting any such Mortgaged
Property, then the Servicer shall take such action as it deems to be in the
best economic interest of the Certificateholders. The cost of any such
compliance, containment, cleanup or remediation shall be advanced by the
Servicer, subject to the Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.05(ii).
Section 3.04 Collection Account and Distribution Account.
(a) The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan separate and apart from any of its own
funds and general assets and shall establish and maintain one or more
Collection Accounts. Each Collection Account shall be an Eligible Account.
-52-
The Servicer shall deposit in the Collection Account on a daily basis
within two Business Days of receipt, and retain therein, the following
payments and collections received or made by it after the Cut-off Date with
respect to the Mortgage Loans:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Interest Rate less the Servicing Fee Rate;
(iii) all proceeds from a Final Recovery Determination;
(iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 3.10, other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Servicer's
normal servicing procedures, the loan documents or applicable law;
(v) all Condemnation Proceeds affecting any Mortgaged Property which
are not released to the Mortgagor in accordance with the Servicer's
normal servicing procedures, the loan documents or applicable law; and
(vi) any amounts required to be deposited by the Servicer in
connection with any REO Property pursuant to Section 3.13.
Any interest paid on funds deposited in the Collection Account,
subject to Section 3.25, shall accrue to the benefit of the Servicer and the
Servicer shall be entitled to retain and withdraw such interest from the
Collection Account pursuant to Section 3.05(v). The foregoing requirements for
deposit from the Collection 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, prepayment charges that are not Prepayment
Charges, and assumption fees need not be deposited by the Servicer in the
Collection Account.
(b) On behalf of the Trust Fund and the Trustee, the Trustee shall
establish and maintain one or more accounts (such account or accounts, the
"Distribution Account"), held in trust for the benefit of the
Certificateholders. On behalf of the Trust Fund, the Servicer shall deliver to
the Trustee in immediately available funds for deposit in the Distribution
Account by the close of business New York time on the Servicer Remittance
Date, that portion of the Available Funds (calculated without regard to the
references in the definition thereof to amounts that may be deposited to the
Distribution Account from a different source as provided herein) then on
deposit in the Collection Account.
(c) Funds in the Collection Account and the Distribution Account may
be invested in Permitted Investments in accordance with the provisions set
forth in Section 3.25. The Servicer shall give notice to the Trustee of the
location of the Collection Account maintained by it when established and prior
to any change thereof. The Trustee shall give notice to the Servicer and the
Depositor of the location of the Distribution Account when established and
prior to any change thereof.
-53-
(d) In the event the Servicer shall deliver to the Trustee for
deposit in the Distribution Account any amount not required to be deposited
therein, it may at any time request that the Trustee withdraw such amount from
the Distribution Account and remit to the Servicer any such amount, any
provision herein to the contrary notwithstanding. In addition, the Servicer
shall deliver to the Trustee from time to time for deposit, and the Trustee
shall so deposit, in the Distribution Account:
(i) any Advances and Timing Advances, as required pursuant to Section
4.07;
(ii) any Stayed Funds, as soon as permitted by the federal bankruptcy
court having jurisdiction in such matters;
(iii) any Prepayment Charges or amounts in connection with the waiver
of such Prepayment Charges, in each case required to be deposited
pursuant to Section 3.01;
(iv) any amounts required to be deposited in the Distribution Account
pursuant to Sections 3.04, 3.15, 3.16, 3.23 or 4.07; and
(v) any amounts required to be deposited by the Servicer pursuant to
Section 3.11 in connection with the deductible clause in any blanket
hazard insurance policy, such deposit being made from the Servicer's own
funds, without reimbursement therefor.
(e) Promptly upon receipt of any Stayed Funds, whether from the
Servicer, a trustee in bankruptcy, or federal bankruptcy court or other
source, the Trustee shall notify the Servicer of such receipt and deposit such
funds in the Distribution Account, subject to withdrawal thereof as permitted
hereunder.
Section 3.05 Permitted Withdrawals From the Collection Account.
The Servicer may, from time to time, withdraw from the Collection
Account for the following purposes:
(i) to remit to the Trustee for deposit in the Distribution Account
the amounts required to be so remitted pursuant to Sections 3.04(b) and
3.04(d);
(ii) to reimburse itself for (x) Advances, Timing Advance and
Servicing Advances; the Servicer's right to reimburse itself pursuant to
this subclause (ii) being limited to amounts received on the related
Mortgage Loan which represent payments of (a) interest respecting which
any such Advance was made and (b) Condemnation Proceeds, Insurance
Proceeds or Liquidation Proceeds respecting which any such Advance,
Servicing Advance or Timing Advance was made or (y) any unreimbursed
Advances or Timing Advances made pursuant to Section 4.07(b) to the
extent of funds held in the Collection Account for future distribution
that were not included in Available Funds for the preceding Distribution
Date
(iii) to reimburse itself for unreimbursed Servicing Advances, any
unpaid Servicing Fees and for unreimbursed Timing Advances and Advances
to the extent that such amounts are deemed to be Nonrecoverable Advances,
and to reimburse itself for
-54-
such amounts to the extent that such amounts are nonrecoverable from the
disposition of REO Property pursuant to Section 3.03 or Section 3.13
hereof;
(iv) to reimburse itself for any amounts paid pursuant to Section
3.03 (and not otherwise previously reimbursed);
(v) to pay to itself as servicing compensation (a) any interest
earned on funds in the Collection Account (all such interest to be
withdrawn monthly not later than each Servicer Remittance Date) and (b)
the Servicing Fee from that portion of any payment or recovery as to
interest to a particular Mortgage Loan to the extent not retained
pursuant to Section 3.04(ii);
(vi) to pay or reimburse itself or any other party for any amounts
payable or paid pursuant to Section 3.26 or Section 6.03 (and not
otherwise previously reimbursed); and
(vii) to clear and terminate the Collection Account upon the
termination of this Agreement.
The foregoing requirements for withdrawal from the Collection Account
shall be exclusive. In the event the Servicer shall deposit in the Collection
Account any amount not required to be deposited therein, it may at any time
withdraw such amount from the Collection Account, any provision herein to the
contrary notwithstanding.
Section 3.06 Establishment of Escrow Accounts; Deposits in Escrow
Account.
The Servicer shall segregate and hold all funds collected and
received pursuant to each Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of time
deposit or demand accounts. A copy of such letter agreement shall be furnished
to the Trustee upon request. The Escrow Account shall be an Eligible Account.
The Servicer shall deposit in the Escrow Account(s) on a daily basis
within two Business Days of receipt, and retain therein, (i) all Escrow
Payments collected on account of the Mortgage Loans, for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement, and (ii) all Insurance Proceeds which are to be applied to the
restoration or repair of any Mortgaged Property. The Servicer shall make
withdrawals therefrom only to effect such payments as are required under this
Agreement, and for such other purposes as shall be set forth in, or in
accordance with, Section 3.07. The Servicer shall be entitled to retain any
interest paid on funds deposited in the Escrow Account by the depository
institution other than interest on escrowed funds required by law to be paid
to the Mortgagor and, to the extent required by the related Mortgage Loan or
Applicable Regulations, the Servicer shall pay interest on escrowed funds to
the Mortgagor notwithstanding that the Escrow Account is non-interest bearing
or that interest paid thereon is insufficient for such purposes.
-55-
Section 3.07 Permitted Withdrawals From Escrow Account.
Withdrawals from the Escrow Account may be made by the Servicer (i)
to effect timely payments of ground rents, taxes, assessments, water rates,
fire, flood and hazard insurance premiums, and comparable items, (ii) to
reimburse the Servicer for any Servicing Advance made by the Servicer with
respect to a related Mortgage Loan but only from amounts received on the
related Mortgage Loan which represent late payments or Late Collections of
Escrow Payments thereunder, (iii) to refund to the Mortgagor any funds as may
be determined to be overages, (iv) for transfer to the Collection Account in
accordance with the terms of this Agreement, (v) for application to
restoration or repair of the Mortgaged Property, (vi) to pay to the Servicer,
or to the Mortgagor to the extent required by the related Mortgage Loan or
Applicable Regulations, any interest paid on the funds deposited in the Escrow
Account, (vii) to clear and terminate the Escrow Account on the termination of
this Agreement or (viii) to transfer to the Collection Account any insurance
proceeds. As part of its servicing duties, the Servicer shall pay to the
Mortgagor interest on funds in the Escrow Account, to the extent required by
the related Mortgage Loan or Applicable Regulations, and to the extent that
interest earned on funds in the Escrow Account is insufficient, shall pay such
interest from its own funds, without any reimbursement therefor.
In the event the Servicer shall deposit in the Escrow Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Escrow Account, any provision herein to the contrary
notwithstanding.
Section 3.08 Payment of Taxes, Insurance and Other Charges;
Collections Thereunder.
With respect to each first lien Mortgage Loan that provides for
Escrow Payments, the Servicer shall maintain accurate records reflecting the
status of ground rents, taxes, assessments, water rates and other charges
which are or may become a lien upon the Mortgaged Property and the status of
fire, flood and hazard insurance coverage and shall obtain, from time to time,
all bills for the payment of such charges (including renewal premiums) and
shall effect payment thereof prior to the applicable penalty or termination
date and at a time appropriate for securing maximum discounts allowable,
employing for such purpose deposits of the Mortgagor in the Escrow Account
which shall have been estimated and accumulated by the Servicer in amounts
sufficient for such purposes, as allowed under the terms of the Mortgage or
Applicable Regulations. To the extent that a Mortgage does not provide for
Escrow Payments, the Servicer shall (i) determine whether any such payments
are made by the Mortgagor in a manner and at a time that is necessary to avoid
the loss of the Mortgaged Property due to a tax sale or the foreclosure as a
result of a tax lien and (ii) ensure that all insurance required to be
maintained on the Mortgaged Property pursuant to this Agreement is maintained.
If any such payment has not been made and the Servicer receives notice of a
tax lien with respect to the Mortgage Loan being imposed, the Servicer will,
to the extent required to avoid loss of the Mortgaged Property, advance or
cause to be advanced funds necessary to discharge such lien on the Mortgaged
Property. The Servicer assumes full responsibility for the payment of all such
bills and shall effect payments of all such bills irrespective of the
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make Servicing Advances from its own funds to effect
such payments.
-56-
Section 3.09 Transfer of Accounts.
The Servicer may transfer the Collection Account or the Escrow
Account to a different depository institution from time to time. Upon such
transfer, the Servicer shall deliver to the Trustee and the Depositor, a
certification or letter agreement, as the case may be, as required pursuant to
Sections 3.04 and 3.06.
Section 3.10 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained for each first lien
Mortgage Loan fire and hazard insurance with extended coverage as is customary
in the area where the Mortgaged Property is located in an amount which is at
least equal to the lesser of (i) the amount necessary to fully compensate for
any damage or loss to the improvements which are a part of such property on a
replacement cost basis or (ii) the Principal Balance of the Mortgage Loan, in
each case in an amount not less than such amount as is necessary to prevent
the Mortgagor and/or the Mortgagee from becoming a co-insurer. If the
Mortgaged Property is in an area identified in the Federal Register by the
Flood Emergency Management Agency as having special flood hazards and flood
insurance has been made available, the Servicer will cause to be maintained a
flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration with a generally acceptable insurance
carrier, in an amount representing coverage not less than the least of (i) the
Principal Balance of the Mortgage Loan, (ii) the maximum insurable value of
the improvements securing such Mortgage Loan or (iii) the maximum amount of
insurance which is available under the Flood Disaster Protection Act of 1973,
as amended. The Servicer shall also maintain on the REO Property for the
benefit of the Certificateholders, (x) fire and hazard insurance with extended
coverage in an amount which is at least equal to the replacement cost of the
improvements which are a part of such property, (y) public liability insurance
and, (z) to the extent required and available under the Flood Disaster
Protection Act of 1973, as amended, flood insurance in an amount as provided
above. Any amounts collected by the Servicer under any such policies other
than amounts to be deposited in the Escrow Account and applied to the
restoration or repair of the Mortgaged Property or REO Property, or released
to the Mortgagor in accordance with the Servicer's normal servicing
procedures, shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.05. It is understood and agreed that no
earthquake or other additional insurance is required to be maintained by the
Servicer or the Mortgagor or maintained on property acquired in respect of the
Mortgage Loan, other than pursuant to such Applicable Regulations as shall at
any time be in force and as shall require such additional insurance. All such
policies shall be endorsed with standard mortgagee clauses with loss payable
to the Servicer and shall provide for at least thirty days prior written
notice of any cancellation, reduction in the amount of or material change in
coverage to the Servicer. The Servicer shall not interfere with the
Mortgagor's freedom of choice in selecting either his insurance carrier or
agent, provided, however, that the Servicer shall not accept any such
insurance policies from insurance companies unless such companies currently
reflect a general policy rating of B:VI or better in Best's Key Rating Guide
and are licensed to do business in the state wherein the property subject to
the policy is located.
-57-
Section 3.11 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a blanket
policy issued by an insurer that has a general policy rating of B:VI or better
in Best's Key Rating Guide insuring against hazard losses on all of the
Mortgage Loans, then, to the extent such policy provides coverage in an amount
equal to the amount required pursuant to Section 3.10 and otherwise complies
with all other requirements of Section 3.10, it shall conclusively be deemed
to have satisfied its obligations as set forth in Section 3.10, it being
understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property or REO Property a policy
complying with Section 3.10, and there shall have been a loss which would have
been covered by such policy, deliver to the Trustee for deposit in the
Distribution Account the amount not otherwise payable under the blanket policy
because of such deductible clause, which amount shall not be reimbursable to
the Servicer from the Trust Fund. In connection with its activities as
servicer of the Mortgage Loans, the Servicer agrees to prepare and present, on
behalf of the Trustee, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy. Upon request of the
Trustee, the Servicer shall cause to be delivered to the Trustee a certified
true copy of such policy and a statement from the insurer thereunder that such
policy shall in no event be terminated or materially modified without thirty
days prior written notice to the Trustee.
Section 3.12 Fidelity Bond, Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity
bond (the "Fidelity Bond") and an errors and omissions insurance policy, with
broad coverage with financially responsible companies on all officers,
employees or other persons acting in any capacity with regard to the Mortgage
Loans to handle funds, money, documents and papers relating to the 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
Servicer 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 Servicer against losses in connection with the
failure to maintain any insurance policies required pursuant to this Agreement
and the release or satisfaction of a Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby. No provision of this
Section 3.12 requiring the Fidelity Bond and errors and omissions insurance
shall diminish or relieve the Servicer 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 Xxxxxx Xxx in the Xxxxxx Mae MBS Selling and Servicing Guide or by Xxxxxxx
Mac in the Xxxxxxx Mac Servicer's Guide. Upon request of the Trustee, the
Servicer shall cause to be delivered to the requesting party a certified true
copy of the Fidelity Bond and errors and omissions insurance policy and a
statement from the surety and the insurer that such Fidelity Bond and errors
and omissions insurance policy shall in no event be terminated or materially
modified without thirty days' prior written notice to the Trustee.
-58-
Section 3.13 Title, Management and Disposition of REO Property.
(a) In the event that title to a Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken (pursuant to a limited power of attorney to be provided by the
Trustee to the Servicer) in the name of the Trustee, on behalf of the
Certificateholders, or in the event the Trustee is not authorized or permitted
to hold title to real property in the state where the REO Property is located,
or would be adversely affected under the "doing business" or tax laws of such
state by so holding title, the deed or certificate of sale shall be taken in
the name of such Person or Persons as shall be consistent with an Opinion of
Counsel obtained by the Servicer from an attorney duly licensed to practice
law in the state where the REO Property is located. Any Person or Persons
holding such title other than the Trustee shall acknowledge in writing that
such title is being held as nominee for the benefit of the Trustee.
(b) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such REO Property before the end
of the third calendar year beginning after the year of its acquisition by the
Trust Fund for purposes of Section 860G(a)(8) of the Code or, at the expense
of the Trust Fund, request from the Internal Revenue Service, more than 60
days before the day on which the above-mentioned grace period would otherwise
expire, an extension of the above-mentioned grace period, unless the Servicer
obtains an Opinion of Counsel, addressed to the Servicer and the Trustee, to
the effect that the holding by the Trust Fund of such REO Property subsequent
to such period will not: (i) result in the imposition of any tax on
"prohibited transactions" as defined in Section 860F of the Code; or (ii)
cause any REMIC constituting any part of the Trust Fund 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 REO Property (subject to any conditions
contained in such Opinion of Counsel). The Servicer shall be entitled to be
reimbursed from the Collection Account for any costs incurred in obtaining
such Opinion of Counsel, as provided in Section 3.05.
Subject to compliance with applicable laws and regulations as shall
at any time be in force, and notwithstanding any other provisions of this
Agreement, no REO Property acquired by the Trust Fund shall be rented (or
allowed to continue to be rented) or otherwise used by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would: (i) cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code; or (ii) subject any REMIC
constituting part of the Trust Fund to the imposition of any federal income
taxes on the income earned from such REO Property, including any taxes imposed
by reason of Sections 860F or 860G(c) of the Code, unless the Servicer has
agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders and the Trust Fund solely for the purpose
of its prompt disposition and sale in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by the related REMIC
of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code, or any "net income from foreclosure property" which
is subject to taxation under
-59-
the REMIC Provisions. The Servicer shall cause each REO Property to be
inspected promptly upon the acquisition of title thereto and shall cause each
REO Property to be inspected at least annually thereafter. The Servicer shall
make or cause to be made a written report of each such inspection. Such
reports shall be retained in the Mortgage Servicing File and copies thereof
shall be forwarded by the Servicer to the Trustee upon request. The Servicer
shall attempt to sell the same (and may temporarily rent the same) on such
terms and conditions as the Servicer deems to be in the best interest of the
Certificateholders and the Trust Fund.
With respect to each REO Property, the Servicer shall account
separately for each REO Property with respect to all funds collected and
received in connection with the operation of such REO Property.
The Servicer shall deposit or cause to be deposited, on a daily
basis, within two Business Days of receipt, in the Collection Account, all
revenues received with respect to each REO Property and shall withdraw
therefrom funds necessary for the proper operation, management and maintenance
of the related REO Property, including the cost of maintaining any hazard
insurance pursuant to Section 3.10 hereof and the fees of any managing agent
acting on behalf of the Servicer.
The Servicer shall furnish to the Trustee, on each Servicer
Remittance Date, an operating statement for each REO Property covering the
operation of each REO Property for the previous month. Such operating
statement shall be accompanied by such other information as the Trustee shall
reasonably request.
The Servicer shall use its best efforts to dispose of the REO
Property as promptly as is practically consistent with protecting the
Certificateholders' interests.
Each REO Disposition shall be carried out by the Servicer at such
price and upon such terms and conditions as the Servicer deems to be in the
best interest of the Certificateholders. If as of the date title to any REO
Property was acquired by the Servicer there were outstanding unreimbursed
Servicing Advances with respect to the REO Property, the Servicer, upon an REO
Disposition of such REO Property, shall be entitled to reimbursement for any
related unreimbursed Servicing Advances from proceeds received in connection
with such REO Disposition. The proceeds from the REO Disposition, net of any
payment to the Servicer as provided above, shall be deposited in the
Collection Account for distribution on the succeeding Servicer Remittance Date
in accordance with Section 4.01.
Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration and an Opinion of Counsel is obtained by the Servicer to the
effect that such sale shall not cause any REMIC constituting part of the Trust
Fund to fail to qualify as a REMIC).
The Servicer shall not complete, or allow to be completed, a
foreclosure or accept a deed in lieu of a foreclosure with respect to any
Foreclosure Restricted Mortgage Loan if it would cause the Trust to hold REO
Property from Foreclosure Restricted Mortgage Loans with an aggregate Value
(as defined in this paragraph below) in excess of 0.75% of the Pool Balance as
of the end of the prior Collection Period. If the Value of REO Property from
Foreclosure
-60-
Restricted Mortgage Loans equals or exceeds 1% of the Pool Balance as of the
end of a Collection Period, the Servicer shall sell on or prior to the related
Distribution Date sufficient REO Property from Foreclosure Restricted Mortgage
Loans to cause the Trust to hold REO Property from Foreclosure Restricted
Mortgage Loans with a Value of less than 1% of the Pool Balance and such
proceeds shall be treated as received during the Collection Period. For
purposes of this Section 3.13(b), the Value of REO Property from a Foreclosure
Restricted Mortgage Loan shall be treated as equal to the Principal Balance of
the related Foreclosure Restricted Mortgage Loan plus interest that had
accrued on such Mortgage Loan as of the date of acquisition of the REO
Property.
Section 3.14 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such
conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Mortgage Loan under any "due-on-sale" clause contained
in the related Mortgage or Mortgage Note; provided, however, that the Servicer
shall not exercise any such right if the "due-on-sale" clause, in the
reasonable belief of the Servicer, is not enforceable under applicable law. An
Opinion of Counsel at the expense of the Servicer (which expense shall
constitute a Servicing Advance) delivered to the Trustee and the Depositor to
the foregoing effect shall conclusively establish the reasonableness of such
belief. In such event, the Servicer shall make reasonable efforts to enter
into an assumption and modification agreement 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
law or the Mortgage, the Mortgagor remains liable thereon. If the foregoing is
not permitted under applicable law, the Servicer is authorized 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 Note. The Mortgage Loan, as assumed,
shall conform in all respects to the requirements, representations and
warranties of this Agreement. The Servicer shall notify the Trustee that any
such assumption or substitution agreement has been completed by forwarding to
the Trustee (or the Custodian, as the case may be) the original copy of such
assumption or substitution agreement (indicating the Mortgage File to which it
relates) which copy shall be added by the Trustee (or the Custodian, as the
case may be) to the related Mortgage File and which 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. The Servicer shall be
responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, the Monthly
Payment on the related Mortgage Loan shall not be changed but shall remain as
in effect immediately prior to the assumption or substitution, the stated
maturity or outstanding principal amount of such Mortgage Loan shall not be
changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by the Servicer for consenting to any
such conveyance or entering into an assumption or substitution agreement shall
be retained by or paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or
-61-
any assumption which the Servicer may be restricted by law from preventing,
for any reason whatsoever.
Section 3.15 [Reserved].
Section 3.16 Optional Purchases of Mortgage Loans by Servicer.
The Servicer (or an affiliate of the Servicer) may, at its option,
repurchase a Mortgage Loan or REO Property which becomes 120 or more days
Delinquent or for which the Servicer has accepted a deed in lieu of
foreclosure, during the period commencing on the first day of the calendar
quarter succeeding the calendar quarter in which the Initial Delinquency Date
occurred with respect to such Mortgage Loan and ending on the last Business
Day of such calendar quarter. If the Servicer (or an affiliate of the
Servicer) does not exercise its purchase right with respect to a Mortgage Loan
during the period specified in the preceding sentence, such Mortgage Loan
shall thereafter again become eligible for purchase pursuant to the preceding
sentence only after the Mortgage Loan ceases to be 120 days or more Delinquent
and thereafter becomes 120 days Delinquent again. The "Initial Delinquency
Date" of a Mortgage Loan shall mean the date on which the Mortgage Loan first
became 120 days Delinquent. Prior to repurchase pursuant to this Section 3.16,
the Servicer shall be required to continue to make monthly advances pursuant
to Section 4.07. The Servicer shall not use any procedure in selecting
Mortgage Loans to be repurchased which is materially adverse to the interests
of the Certificateholders. The Servicer shall purchase such (i) delinquent
Mortgage Loan at a price equal to the Principal Balance of the Mortgage Loan
plus accrued interest thereon at the Mortgage Interest Rate from the date to
which interest has last been paid to the Trust Fund to the date of purchase
plus any unreimbursed Servicing Advances, Timing Advances and Advances or (ii)
REO Property at its fair market value as determined in good faith by the
Servicer. Any such repurchase of a Mortgage Loan or REO Property pursuant to
this Section 3.16 shall be accomplished by delivery to the Trustee for deposit
in the Distribution Account of the amount of the purchase price. The Trustee
shall immediately effectuate the conveyance of such delinquent Mortgage Loan
or REO Property to the Servicer to the extent necessary, including the prompt
delivery of all documentation to the Servicer.
Section 3.17 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including any
liquidation of such Mortgage Loan through foreclosure or otherwise, or the
receipt by the Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes), the Servicer shall deliver
to the Trustee (or the Custodian as the case may be) two executed copies of a
completed "Request for Release" in the form of Exhibit E. Upon receipt of such
Request for Release of Documents, the Trustee (or the Custodian as the case
may be) shall promptly release the related Mortgage File, in trust to (i) the
Servicer, or (ii) such other party identified in the related Request for
Release. Upon any such payment in full, or the receipt of such notification
that such funds have been placed in escrow, the Servicer shall direct the
Trustee in writing to execute an instrument of satisfaction (or assignment of
Mortgage without recourse) regarding the Mortgaged Property relating to such
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 payment in full, it being understood and agreed that no expense
incurred in
-62-
connection with such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the Collection Account. In lieu of executing any
such satisfaction or assignment, as the case may be, the Servicer may prepare
and submit to the Trustee a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Trustee with all requisite information completed by the Servicer; in such
event, the Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the related Mortgage
File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any insurance policy
relating to a Mortgage Loan, the Trustee shall (except in the case of the
payment or liquidation pursuant to which the related Mortgage File is released
to an escrow agent or an employee, agent or attorney of the Trustee), upon
written request of the Servicer and delivery to the Trustee (or the Custodian,
as the case may be) of two executed copies of a "Request for Release" in the
form of Exhibit E signed by a Servicing Officer, release the related Mortgage
File to the Servicer and shall execute such documents as shall be necessary to
the prosecution of any such proceedings, including, without limitation, an
assignment without recourse, representation or warranty of the related
Mortgage to the Servicer. Such receipt shall obligate the Servicer to return
the Mortgage File to the Trustee (or the Custodian, as the case may be) when
the need therefor by the Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a Request for Release
evidencing such liquidation, the receipt shall be released by the Trustee (or
the Custodian, as the case may be) to the Servicer.
(c) Subject to Section 3.01, the Servicer shall have the right to
accept applications of Mortgagors for consent to (i) partial releases of
Mortgages, (ii) alterations, (iii) removal, demolition or division of
properties subject to Mortgages and (iv) second mortgage subordination
agreements. No application for approval shall be considered by the Servicer
unless: (w) it has received an Opinion of Counsel, addressed to the Trustee
(which opinion shall not be an expense of the Trustee or the Trust Fund) that
such sale, disposition, substitution, acquisition or contribution will not
affect adversely the status of any REMIC constituting part of the Trust Fund
as a REMIC or cause any REMIC constituting part of the Trust Fund to be
subject to a tax on "prohibited transactions" or "contributions" pursuant to
the REMIC Provisions; (x) the provisions of the related Mortgage Note and
Mortgage have been complied with; (y) the Combined Loan-to-Value Ratio and
debt-to-income ratio after any release does not exceed the maximum Combined
Loan-to-Value Ratio and debt-to-income ratio established in accordance with
the standards related to the sale of the Mortgage Loans to the Trust; and (z)
the lien priority of the related Mortgage is not affected. Upon receipt by the
Trustee of a Servicing Officer's certificate setting forth the action proposed
to be taken in respect of a particular Mortgage Loan and certifying that the
criteria set forth in the immediately preceding sentence have been satisfied,
the Trustee shall execute and deliver to the Servicer the consent or partial
release so requested by the Servicer. A proposed form of consent or partial
release, as the case may be, shall accompany any Servicing Officer's
certificate delivered by the Servicer pursuant to this paragraph.
-63-
Section 3.18 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each
Mortgage Loan (including REO Properties). The Servicer shall be entitled to
retain additional servicing compensation in the form of release fees, bad
check charges, assumption fees, modification or extension fees, late payment
charges, customary real estate referral fees or any other service-related
fees, Insurance Proceeds and Liquidation Proceeds not required to be deposited
in the Collection Account and similar items, to the extent collected from
Mortgagors.
Section 3.19 Annual Statement as to Compliance.
(a) The Servicer, at its own expense, will deliver to the Trustee and
the Depositor, not later than March 15th of each calendar year commencing in
2004, a Servicing Officer's certificate stating, as to each signer thereof,
that (i) a review of the activities of the Servicer during such preceding
calendar year (or such shorter period in the case of the first such report)
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 Servicer has fulfilled all its obligations under this Agreement
for such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the
nature and status thereof including the steps being taken by the Servicer to
remedy such default.
(b) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and their receipt of such shall not
constitute constructive notice of any information contained therein or
determinable, from information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).
Section 3.20 Annual Independent Certified Public Accountants'
Reports.
(a) Not later than March 15th of each calendar year commencing in
2004, the Servicer, at its expense, shall cause a nationally recognized firm
of independent certified public accountants to furnish to the Trustee and the
Depositor a report stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Servicer which includes
an assertion that the Servicer has complied with certain minimum residential
mortgage loan servicing standards, identified in either the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America or the Audit Program for Mortgages serviced by Xxxxxxx
Mac, with respect to the servicing of residential mortgage loans during the
most recently completed calendar year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the
American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. Immediately upon receipt of such
report, the Servicer shall furnish a copy of such report to the Trustee, the
Depositor and each Rating Agency. Copies of such statement shall be provided
by the Trustee to any Certificateholder upon request at the Servicer's
expense, provided that such statement is delivered by the Servicer to the
Trustee.
-64-
(b) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and its receipt of such shall not
constitute constructive notice of any information contained therein or
determinable, from information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).
Section 3.21 Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Servicer shall provide to the Trustee, Certificateholders or
Certificate Owners that are federally insured savings and loan associations,
the Office of Thrift Supervision, the FDIC and the supervisory agents and
examiners of each of the foregoing (which, in the case of supervisory agents
and examiners, may be required by applicable state and federal regulations)
access to the documentation regarding the Mortgage Loans, such access being
afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer designated by it.
Section 3.22 Filing of Reports with the Securities and Exchange
Commission.
(a) The Trustee and the Servicer shall reasonably cooperate with the
Depositor in connection with satisfying the reporting requirements under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Trustee
shall prepare and file (via the Securities and Exchange Commission's
Electronic Data Gathering and Retrieval System) on behalf of the Trust Fund
any Forms 8-K and 10-K (and the Servicer shall sign any Form 10-K) customary
for similar securities as required by the Exchange Act and the Rules and
Regulations of the Securities and Exchange Commission thereunder.
(b) Each Form 8-K shall be filed by the Trustee within 15 days after
each Distribution Date, with a copy of the statement to the Certificateholders
for such Distribution Date as an exhibit thereto. Prior to March 30th of each
year (or such earlier date as may be required by the Exchange Act and the
Rules and Regulations of the Securities and Exchange Commission), the Trustee
shall file a Form 10-K, in substance as required by applicable law or
applicable Securities and Exchange Commission staff's interpretations. Such
Form 10-K shall include as exhibits the Servicer's annual statement of
compliance described under Section 3.19 and the accountant's report described
under Section 3.20, in each case to the extent they have been timely delivered
to the Trustee. The Trustee shall have no liability with respect to (a) any
failure to properly prepare or file such periodic reports resulting from or
relating to the Trustee's inability or failure to obtain any information not
resulting from its own negligence, willful misconduct or bad faith or (b) any
inaccuracy in such periodic reports resulting from incorrect information
provided to the Trustee by the Servicer in a Remittance Report or otherwise.
The Form 10-K shall also include a certification in the form attached hereto
as Exhibit M (the "Certification"), which shall be signed by the senior
officer of the Servicer in charge of servicing.
(c) In addition, the Trustee shall sign a certification (in the form
attached hereto as Exhibit N) for the benefit of the Servicer and its
officers, directors and Affiliates regarding certain aspects of the
Certification (the "Trustee Certification") (provided, however,
-65-
that the Trustee shall not undertake an analysis of the accountant's report
attached as an exhibit to the Form 10-K). Such certification shall be
delivered to the Servicer no later than the 20th day prior to the latest date
on which the Form 10-K is permitted to be filed, without regard to extension
(or if such day is not a Business Day, the immediately preceding Business Day)
and the Servicer shall deliver the Certification to be filed to the Trustee no
later than the 10th day prior to the latest date on which the Form 10-K is
permitted to be filed, without regard to extension (or if such day is not a
Business Day, the immediately preceding Business Day).
(d) In addition, (i) the Trustee shall, subject to the provisions of
Sections 8.01 and 8.02 hereof, indemnify and hold harmless the Depositor, the
Servicer and each of its officers, directors and Affiliates from and against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments and other costs and expenses arising
out of or based upon (a) a breach of the Trustee's obligations under this
Section 3.22(b), (b) the Trustee's negligence, bad faith or willful misconduct
in connection therewith or (c) any inaccuracy in the Trustee Certification and
(ii) the Servicer shall indemnify and hold harmless the Depositor, the Trustee
and their respective officers, directors and Affiliates from and against any
actual losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses
arising out of or based upon (a) the failure of the Servicer to timely deliver
the Certification or (b) any material misstatement in the Certification. If
the indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then (i) the Trustee agrees that it shall contribute
to the amount paid or payable by the Depositor as a result of the losses,
claims, damages or liabilities of the Depositor in such proportion as is
appropriate to reflect the relative fault of the Depositor on the one hand and
the Trustee on the other in connection with a breach of the Trustee's
obligations under this Section 3.22(b) or the Trustee's negligence, bad faith
or willful misconduct in connection therewith and (ii) the Servicer agrees
that it shall contribute to the amount paid or payable by the Depositor as a
result of the losses, claims, damages or liabilities of the Depositor in such
proportion as is appropriate to reflect the relative fault of the Depositor on
the one hand and the Servicer on the other in connection with a breach of the
Servicer's obligations under this Section 3.22(b) or the Servicer's
negligence, bad faith or willful misconduct in connection therewith.
(e) Upon any filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor and the Servicer a copy of any
executed report, statement or information.
(f) Prior to January 30th of the first year in which the Trustee is
able to do so under applicable law, the Trustee shall file a Form 15
Suspension Notification with respect to the Trust Fund.
(g) To the extent that, following the Closing Date, the Depositor
certifies that reports and certifications differing from those required under
this Section 3.22 comply with the reporting requirements under the Exchange
Act, the Trustee and the Servicer hereby agree that they will reasonably
cooperate to amend the provisions of this Section 3.22 in order to comply with
such amended reporting requirements and such amendment of this Section 3.22.
Any such amendment may result in the reduction of the reports filed by the
Depositor under the Exchange Act. Notwithstanding the foregoing, the parties
hereto shall not be obligated to enter into any
-66-
amendment pursuant to this Section 3.22 that adversely affects its obligations
and immunities under this Agreement.
Section 3.23 Obligations of the Servicer in Respect of Compensating
Interest. Not later than the close of business on each Servicer Remittance
Date, the Servicer shall deliver to the Trustee for deposit in the
Distribution Account an amount ("Compensating Interest") equal to the lesser
of (A) the aggregate of the Prepayment Interest Shortfalls on the Mortgage
Loans for the related Distribution Date resulting from Principal Prepayments
on the Mortgage Loans during the related Prepayment Period and (B) 50% of its
aggregate Servicing Fee received in the related Collection Period.
Compensating Interest shall be applied to offset any Prepayment Interest
Shortfalls on the Mortgage Loans. The Servicer shall not have the right to
reimbursement for any amounts remitted to the Trustee in respect of
Compensating Interest. Such amounts so remitted shall be included in the
Available Funds and distributed therewith on the next Distribution Date. The
Servicer shall not be obligated to pay Compensating Interest with respect to
Relief Act Interest Shortfalls.
Section 3.24 Obligations of the Servicer in Respect of Mortgage
Interest Rates and Monthly Payments.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Interest Rates, Monthly Payments or Principal Balances that were made
by the Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of
notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor
and any successor servicer in respect of any such liability. Such indemnities
shall survive the termination or discharge of this Agreement.
Section 3.25 Investment of Funds in the Collection Account and the
Distribution Account.
(a) The Servicer may direct any depository institution maintaining
the Collection Account to invest the funds in the Collection Account in one or
more Permitted Investments bearing interest or sold at a discount, and
maturing, unless payable on demand, (i) no later than the Business Day
immediately preceding the date on which such funds are required to be
withdrawn from such account pursuant to this Agreement, if a Person other than
the Trustee is the obligor thereon, and (ii) no later than the date on which
such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trustee is the obligor thereon. In the absence of such
direction, funds in the Collection Account shall remain uninvested. Any such
Permitted Investments shall be held to maturity, unless payable on demand.
Funds in the Distribution Account shall be uninvested. Any investment of funds
in the Collection Account shall be made in the name of the Trustee or the
Servicer, as applicable (in its capacity as such) or in the name of a nominee
of the Trustee. In the event amounts on deposit in the Collection Account are
at any time invested in a Permitted Investment payable on demand, the Trustee
shall at the direction of the Servicer:
-67-
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an
amount equal to the lesser of (1) all amounts then payable
thereunder and (2) the amount required to be withdrawn on
such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that
such Permitted Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit in the
Collection Account.
(b) All income and gain realized from the investment of funds in the
Collection Account shall be for the benefit of the Servicer. The Servicer
shall deposit in the Collection Account the amount of any loss incurred in
respect of any such Permitted Investment made with funds in such account
immediately upon realization of such loss.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment,
or if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section
8.02(a)(v), upon the request of the Holders of Certificates representing more
than 50% of the Voting Rights allocated to any Class of Certificates, shall
take such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate proceedings.
The Trustee shall not in any way be held liable by reason of any
insufficiency in any Account held by the Trustee resulting from any investment
loss on any Permitted Investment included therein (except to the extent that
the Trustee is the obligor and has defaulted thereon).
Section 3.26 Liability of Servicer; Indemnification.
(a) Subject to clause (b) below and Section 6.03, the Servicer
(except the Trustee if it is required to succeed the Servicer hereunder)
indemnifies and holds the Trustee, the Seller, the Depositor and each
Certificateholder harmless against any and all claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and
any other costs, fees and expenses that the Trustee, the Depositor and any
Certificateholder may sustain in any way related to the failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance
with the Servicing Standards. The Servicer shall immediately notify the
Trustee, the Depositor and each Certificateholder if a claim is made that may
result in such claims, losses, penalties, fines, forfeitures, legal fees or
related costs, judgments, or any other costs, fees and expenses, and the
Servicer shall assume (with the consent of the Trustee) the defense of any
such claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Trustee, the Depositor and/or
Certificateholder in respect of such claim. The provisions of this Section
3.26 shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
-68-
(b) None of the Depositor, the Seller, the Servicer, or any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
Depositor, the Seller or the Servicer or any such Person against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Servicer for a breach of the Servicing Standard, or against any
liability which would otherwise be imposed by reason of its respective willful
misfeasance, bad faith, fraud or negligence in the performance of its duties
or by reasons of negligent disregard of its respective obligations or duties
hereunder.
The Depositor, the Servicer, the Seller and any director, officer,
employee or agent of the Depositor, the Seller or the Servicer, may rely in
good faith on any document of any kind which, prima facie, is properly
executed and submitted by any appropriate Person with respect to any matters
arising hereunder. The Depositor, the Servicer, the Seller, and any director,
officer, employee or agent of the Depositor, the Seller or the Servicer shall
be indemnified and held harmless by the Trust Fund against any loss, liability
or expense incurred in connection with any legal action relating to this
Agreement or the Certificates, other than any loss, liability or expense
incurred in connection with any legal action incurred by reason of its
respective misfeasance, bad faith, fraud or negligence, a breach of a
representation or warranty hereunder or (in the case of the Servicer) a breach
of the Servicing Standard in the performance of its respective duties or by
reason of negligent disregard of its respective obligations or duties
hereunder. Neither the Depositor, the Seller nor the Servicer shall be under
any obligation to appear in, prosecute or defend any legal action unless such
action is related to its respective duties under this Agreement and in its
opinion does not expose it to any expense or liability; provided, however,
that the Depositor, the Seller or the Servicer may in its discretion undertake
any action related to its obligations hereunder 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.
Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged
Properties.
On or before the last day of February of each year beginning in 2004,
the Servicer shall file the reports of foreclosure and abandonment of any
Mortgaged Property required by Section 6050J of the Code with the Internal
Revenue Service and provide an Officer's Certificate certifying its compliance
with this Section 3.27 to the Trustee. The reports from the Servicer shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Section 6050J.
Section 3.28 Protection of Assets.
(a) Except for transactions and activities entered into in connection
with the securitization that is the subject of this Agreement, the Trust is
not authorized and has no power to:
(1) borrow money or issue debt;
-69-
(2) merge with another entity, reorganize, liquidate or sell assets;
or
(3) engage in any business or activities.
(b) Each party to this Agreement agrees that it will not file an
involuntary bankruptcy petition against the Trustee or the Trust Fund or
initiate any other form of insolvency proceeding until after the Certificates
have been paid.
Section 3.29 Advance Facility.
(a) The Servicer is hereby authorized to enter into a financing or
other facility (any such arrangement, an "Advance Facility"), the
documentation for which complies with Section 3.29(e) below, under which (1)
the Servicer assigns or pledges its rights under this Agreement to be
reimbursed for any or all Advances, Timing Advances and/or Servicing Advances
to (i) a Person, which may be a special-purpose bankruptcy-remote entity (an
"SPV"), (ii) a Person, which may simultaneously assign or pledge such rights
to an SPV or (iii) a lender (a "Lender"), which, in the case of any Person or
SPV of the type described in either of the preceding clauses (i) or (ii), may
directly or through other assignees and/or pledgees, assign or pledge such
rights to a Person, which may include a trustee acting on behalf of holders of
debt instruments (any such Person or any such Lender, an "Advance Financing
Person"), and/or (2) an Advance Financing Person agrees to fund all the
Advances, Timing Advances and/or Servicing Advances required to be made by the
Servicer pursuant to this Agreement. No consent of the Trustee,
Certificateholders or any other party shall be required before the Servicer
may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an
Advance Financing Person to the Servicer. Notwithstanding the existence of any
Advance Facility under which an Advance Financing Person agrees to fund
Advances, Timing Advances and/or Servicing Advances, (A) the Servicer (i)
shall remain obligated pursuant to this Agreement to make Advances, Timing
Advances and/or Servicing Advances pursuant to and as required by this
Agreement and (ii) shall not be relieved of such obligations by virtue of such
Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.
(b) If the Servicer enters into an Advance Facility, the Servicer and
the related Advance Financing Person shall deliver to the Trustee at the
address set forth in Section 11.05 hereof a written notice (an "Advance
Facility Notice"), stating (a) the identity of the Advance Financing Person
and (b) the identity of the Person (the "Servicer's Assignee") that will,
subject to Section 3.30(c) hereof, have the right to make withdrawals from the
Collection Account pursuant to Section 3.05 hereof to reimburse previously
unreimbursed Advances, Timing Advances and/or Servicing Advances and to
receive the amounts distributable to the Servicer in respect of unreimbursed
Timing Advances as set forth in Section 4.02(b) hereof ("Advance Reimbursement
Amounts"). Advance Reimbursement Amounts (i) shall consist solely of amounts
in respect of Advances, Timing Advances and/or Servicing Advances for which
the Servicer would be permitted to reimburse itself in accordance with Section
3.05 hereof, assuming the Servicer had made the related Advance(s), Timing
Advance(s) and/or Servicing
-70-
Advance(s), (ii) amounts in respect of Timing Advances distributable to the
Servicer on the final Distribution Date pursuant to Section 4.02(b) hereof and
(iii) shall not consist of amounts payable to a successor Servicer in
accordance with Section 3.05 hereof to the extent permitted under Section
3.30(e) below.
(c) Notwithstanding the existence of an Advance Facility, the
Servicer, on behalf of the Advance Financing Person, shall be entitled to
receive reimbursements of Advances, Timing Advances and/or Servicing Advances
in accordance with Section 3.05 hereof and, with respect to Timing Advances,
pursuant to Section 4.02(b) hereof on the final Distribution Date, which
entitlement may be terminated by the Advance Financing Person pursuant to a
written notice to the Trustee in the manner set forth in Section 11.05 hereof.
Upon receipt of such written notice, the Servicer shall no longer be entitled
to receive reimbursement for any Advance Reimbursement Amounts and the
Servicer's Assignee shall immediately have the right to receive from the
Collection Account all Advance Reimbursement Amounts or in the case of Timing
Advances, on the final Distribution Date pursuant to Section 4.02(b) hereof.
Notwithstanding the foregoing, and for the avoidance of doubt, (i) the
Servicer and/or the Servicer's Assignee shall only be entitled to
reimbursement of Advance Reimbursement Amounts hereunder pursuant to Section
3.05 of this Agreement or in the case of Timing Advances, on the final
Distribution Date pursuant to Section 4.02(b) hereof and shall not otherwise
be entitled to make withdrawals or receive amounts that shall be deposited in
the Distribution Account pursuant to Section 3.04(b) hereof, and (ii) none of
the Trustee or the Certificateholders shall have any right to, or otherwise be
entitled to, receive any Advance Reimbursement Amounts to which the Servicer
or Servicer's Assignee, as applicable, shall be entitled pursuant to Section
3.05 hereof or in the case of Timing Advances, on the final Distribution Date
pursuant to Section 4.02(b) hereof. An Advance Facility may be terminated by
the joint written direction of the Servicer and the related Advance Financing
Person. Written notice of such termination shall be delivered to the Trustee
in the manner set forth in Section 11.05 hereof. The Trustee shall have no
duty or liability with respect to the calculation of any Advance Reimbursement
Amount and shall be entitled to rely without independent investigation on the
Advance Facility Notice and on such Servicer's report of the amount of Advance
Reimbursement Amounts and Servicing Advance Reimbursement Amounts that were
included in the remittance from such Servicer to the Trustee pursuant to
Section 4.03. Such Servicer shall maintain and provide to any successor
Servicer a detailed accounting on a loan-by-loan basis as to amounts advanced
by, pledged or assigned to, and reimbursed to any Advance Financing Person.
The successor Servicer shall be entitled to rely on any such information
provided by the predecessor Servicer, and the successor Servicer shall not be
liable for any errors in such information.
(d) An Advance Financing Person who receives an assignment or pledge
of rights to receive Advance Reimbursement Amounts and/or whose obligations
are limited to the funding of Advances, Timing Advances and/or Servicing
Advances pursuant to an Advance Facility shall not be required to meet the
criteria for qualification as a Sub-Servicer.
(e) As between a predecessor Servicer and its Advance Financing
Person, on the one hand, and a successor Servicer and its Advance Financing
Person, if any, on the other hand, Advance Reimbursement Amounts on a
loan-by-loan basis with respect to each Mortgage Loan as to which an Advance,
Timing Advance and/or Servicing Advance shall have been made
-71-
and be outstanding shall be allocated on a "first-in, first out" basis. In the
event the Servicer's Assignee shall have received some or all of an Advance
Reimbursement Amount related to Advances, Timing Advances and/or Servicing
Advances that were made by a Person other than such predecessor Servicer or
its related Advance Financing Person in error, then such Servicer's Assignee
shall be required to remit any portion of such Advance Reimbursement Amount to
each Person entitled to such portion of such Advance Reimbursement Amount.
Without limiting the generality of the foregoing, the Servicer shall remain
entitled to be reimbursed by the Advance Financing Person for all Advances,
Timing Advances and/or Servicing Advances funded by the Servicer to the extent
the related Advance Reimbursement Amounts have not been assigned or pledged to
such Advance Financing Person or Servicer's Assignee.
(f) For purposes of any certification of a Servicing Officer of the
Servicer made pursuant to Section 4.07(d), any Nonrecoverable Advance or
Nonrecoverable Servicing Advance referred to therein may have been made by
such Servicer or any predecessor Servicer. In making its determination that
any Advance, Timing Advance or Servicing Advance theretofore made has become a
Nonrecoverable Advance or Nonrecoverable Servicing Advance, the Servicer shall
apply the same criteria in making such determination regardless of whether
such Advance, Timing Advance or Servicing Advance shall have been made by the
Servicer or any predecessor Servicer.
(g) The Trustee shall not, as a result of the existence of any
Advance Facility, have any additional responsibility to track or monitor
Advance Reimbursement Amounts or any Advance Facility, and, except as
expressly provided in Section 3.30(a) above, is not and shall not be obligated
to make any payment with respect to any Advance Reimbursement Amount. The
Servicer hereby indemnifies the Depositor, the Trustee, the Trust Fund and any
successor Servicer, as applicable, from and against any claims, losses,
liabilities or damages resulting from any claim by the related Advancing
Person, except to the extent that such claim, loss, liability or damage
resulted from or arose out of negligence, recklessness or willful misconduct
on the part of the Depositor, the Trustee or the successor Servicer, or
failure by the successor Servicer, the Depositor, or the Trustee to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor Servicer, the Depositor, or the Trustee, and the passage
of any applicable cure or grace period, such that an Event of Default under
this Agreement occurs or such entity is subject to termination for cause under
this Agreement.
ARTICLE IV
FLOW OF FUNDS
Section 4.01 Interest Distributions.
On each Distribution Date, the Trustee shall withdraw from the
Distribution Account the Interest Remittance Amount and apply it in the
following order of priority (based upon the Mortgage Loan information provided
to it in the Remittance Report, upon which the Trustee may conclusively rely,
and the calculations required to be made by the Trustee), in each case to the
extent of the Interest Remittance Amount remaining for such Distribution Date:
-72-
(a) first, to the Trustee, the portion of the Trustee Fee for such
Distribution Date;
(b) second, concurrently to the Class A-1 and Class A-2 Certificates,
the Accrued Certificate Interest and Interest Carry Forward Amount thereon for
such Distribution Date, allocated pro rata based on entitlement pursuant to
this clause (b);
(c) third, to the Class M-1 Certificates, the Accrued Certificate
Interest thereon for such Class and Distribution Date;
(d) fourth, to the Class M-2 Certificates, the Accrued Certificate
Interest thereon for such Class and Distribution Date;
(e) fifth, to the Class B-1 Certificates, the Accrued Certificate
Interest thereon for such Class and Distribution Date;
(f) sixth, to the Class B-2 Certificates, the Accrued Certificate
Interest thereon for such Class and Distribution Date; and
(g) the amount, if any, of the Interest Remittance Amount remaining
after application with respect to the priorities set forth above will be
applied as described under Section 4.02(b) hereof.
Section 4.02 Distributions of Principal and Monthly Excess Cashflow
Amounts.
(a) On each Distribution Date, the Trustee shall distribute the
Principal Distribution Amount in the following amounts and order of priority
(based upon the Mortgage Loan information provided to it in the Remittance
Report), and the calculations required to be made by the Trustee, in each case
to the extent of the Principal Distribution Amount remaining for such
Distribution Date:
(i) With respect to any Distribution Date before the Stepdown Date or
with respect to which a Trigger Event is in effect the Principal
Distribution Amount will be distributed:
(A) first, to Senior Certificates, sequentially, in the
following order:
(1) to the Class A-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and
(2) to the Class A-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(B) second, to the Class M-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(C) third, to the Class M-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
-73-
(D) fourth, to the Class B-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(E) fifth, to the Class B-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and
(F) the amount, if any, of the Principal Distribution Amount
remaining after application with respect to the priorities set forth
above will constitute part of the "Monthly Excess Cashflow Amount"
for such Distribution Date and will be applied as set forth in
Section 4.02(b) hereof.
Notwithstanding the foregoing order of priority, on any Distribution
Date on which the aggregate Certificate Principal Balance of the Senior
Certificates is equal to or greater than the aggregate Principal Balance of
the Mortgage Loans, any amount in respect of principal to be distributed to
the Senior Certificates will be distributed pro rata and not sequentially
based on their respective Certificate Principal Balances.
(ii) With respect to any Distribution Date on or after the Stepdown
Date and with respect to which a Trigger Event is not in effect the
Principal Distribution Amount will be distributed:
(A) first, to the Senior Certificates, the Senior Principal
Distribution Amount, sequentially, in the following order:
(1) to the Class A-1 Certificates, until the Certificate
Principal Balance of such Class has been reduced to zero; and
(2) to the Class A-2 Certificates, until the Certificate
Principal Balance of such Class has been reduced to zero;
(B) second, to the Class M-1 Certificates, the Class M-1
Principal Distribution Amount, until the Certificate Principal
Balance of such Class has been reduced to zero;
(C) third, to the Class M-2 Certificates, the Class M-2
Principal Distribution Amount, until the Certificate Principal
Balance of such Class has been reduced to zero;
(D) fourth, to the Class B-1 Certificates, the Class B-1
Principal Distribution Amount, until the Certificate Principal
Balance of such Class has been reduced to zero;
(E) fifth, to the Class B-2 Certificates, the Class B-2
Principal Distribution Amount, until the Certificate Principal
Balance of such Class has been reduced to zero; and
(F) the amount, if any, of the Principal Distribution Amount
remaining after application with respect to the priorities set forth
above will constitute part
-74-
of the "Monthly Excess Cashflow Amount" for such Distribution Date
and will be applied as set forth in Section 4.02(b) hereof.
Notwithstanding the foregoing order of priority, on any Distribution
Date on which the aggregate Certificate Principal Balance of the Senior
Certificates is equal to or greater than the aggregate Principal Balance of
the Mortgage Loans, any amount in respect of principal to be distributed to
the Senior Certificates will be distributed pro rata and not sequentially
based on their respective Certificate Principal Balances.
(b) On each Distribution Date, any Monthly Excess Cashflow Amount
shall be distributed, to the extent available, in the following order of
priority on such Distribution Date:
(i) concurrently to the Class A-1 and Class A-2 Certificates, the
Accrued Certificate Interest and Interest Carry Forward Amount thereon
for such Distribution Date, if any, allocated pro rata based on
entitlement pursuant to this clause (i);
(ii) to the Class or Classes of Certificates then entitled to receive
distributions in respect of principal, in an amount equal to the Extra
Principal Distribution Amount for such Distribution Date, payable to such
holders as part of the related Principal Distribution Amount;
(iii) to the Class M-1 Certificates, any remaining Accrued
Certificate Interest for such Class and Distribution Date;
(iv) to the Class M-1 Certificates, the Interest Carry Forward Amount
for such Class and Distribution Date, if any;
(v) to the Class M-1 Certificates, the Unpaid Realized Loss Amount
for such Class and Distribution Date;
(vi) to the Class M-2 Certificates, any remaining Accrued Certificate
Interest for such Class and Distribution Date;
(vii) to the Class M-2 Certificates, the Interest Carry Forward
Amount for such Class and Distribution Date, if any;
(viii) to the Class M-2 Certificates, the Unpaid Realized Loss Amount
for such Class and Distribution Date;
(ix) to the Class B-1 Certificates, any remaining Accrued Certificate
Interest for such Class and Distribution Date;
(x) to the Class B-1 Certificates, the Interest Carry Forward Amount
for such Class and Distribution Date, if any;
(xi) to the Class B-1 Certificates, the Unpaid Realized Loss Amount
for such Class and Distribution Date;
-75-
(xii) to the Class B-2 Certificates, any remaining Accrued
Certificate Interest for such Class and Distribution Date;
(xiii) to the Class B-2 Certificates, the Interest Carry Forward
Amount for such Class and Distribution Date, if any;
(xiv) to the Class B-2 Certificates, the Unpaid Realized Loss Amount
for such Class and Distribution Date;
(xv) to the Basis Risk Reserve Fund, the Basis Risk Reserve Fund
Deposit; and
(xvi) to the Class X Certificates, the Class X Distributable Amount.
On each Distribution Date, there shall be distributed to Holders of
the Residual Certificates, any remaining amount in the Distribution
Account on such date after the application pursuant to Sections 4.01,
4.02(a), 4.02(b)(i)-(xvi) and 4.02(c); provided that to the extent of
funds available therefor, on the final Distribution Date, the Servicer
shall be entitled to receive an amount equal to all unreimbursed Timing
Advances prior to distribution of any remaining amount to the Holders of
the Residual Certificates.
(c) On each Distribution Date, all Prepayment Charges (including
amounts deposited in connection with the full or partial waiver of such
Prepayment Charges pursuant to Section 3.01) shall be allocated to the Class X
Certificates.
Section 4.03 Allocation of Losses.
If, after giving effect to the distribution of the Principal
Distribution Amount on any Distribution Date the aggregate Certificate
Principal Balance of the Offered Certificates exceeds the Pool Balance as of
the end of the related Collection Period, such excess will be allocated to
reduce the Certificate Principal Balance of the Class B-2, Class B-1, Class
M-2 and Class M-1 Certificates, in that order, until the respective
Certificate Principal Balances thereof are reduced to zero. Any reduction of a
Certificate Principal Balance of a class of Certificates is an "Applied
Realized Loss Amount" for such class.
Special Hazard Losses will be allocated as described above, except
that to the extent that the aggregate amount of such losses, as of any date of
determination, exceeds the greatest of (i) 1.0% of the Principal Balance of
the Mortgage Loans as of the Cut-off Date, (ii) two times the amount of the
Principal Balance of the largest Mortgage Loan as of the date of determination
and (iii) an amount equal to the current Principal Balances of the Mortgage
Loans in the largest zip-code concentration in the State of Michigan as of the
date of determination, such excess losses will be allocated to reduce the
Certificate Principal Balance of each outstanding Class of Subordinate
Certificates, pro rata, based on their respective Certificate Principal
Balances.
Section 4.04 Method of Distribution.
The Trustee shall make distributions in respect of a Distribution
Date to each Certificateholder of record on the related Record Date (other
than as provided in Section 10.01
-76-
respecting the final distribution), in the case of Certificateholders of the
Certificates, by wire transfer in immediately available funds to the account
of the Person entitled thereto if such Person shall have so notified the
Trustee in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of
such Certificates the aggregate initial Certificate Principal Balance of which
is in excess of $5,000,000, or by check mailed by first class mail to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register, provided that the Trustee may deduct a reasonable
wire transfer fee from any payment made by wire transfer. Distributions among
Certificateholders shall be made in proportion to the Percentage Interests
evidenced by the Certificates held by such Certificateholders.
Section 4.05 Distributions on Book-Entry Certificates.
Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing
such distribution to the Certificate Owners that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Certificate Owners that it represents.
All such credits and disbursements with respect to a Book-Entry Certificate
are to be made by the Depository and the Depository Participants in accordance
with the provisions of the Certificates. None of the Trustee, the Depositor,
the Servicer or the Seller shall have any responsibility therefor except as
otherwise provided by applicable law.
Section 4.06 Statements.
(a) On each Distribution Date, based, as applicable, on the Mortgage
Loan information contained in the Remittance Report, the Trustee shall (i)
prepare and forward by mail to each Holder of the Regular Certificates and
(ii) make available on its website at xxx.xxxxxx.xxx/xxx for access by each
Holder of the Regular Certificates, a statement as to the distributions made
on such Distribution Date:
(i) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Certificates allocable to principal,
separately identified;
(ii) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Certificates allocable to interest or Class
X Distributable Amount, separately identified;
(iii) the Overcollateralization Amount, the Overcollateralization
Release Amount, the Overcollateralization Deficiency and the
Overcollateralization Target Amount as of such Distribution Date and the
Monthly Excess Interest Amount and Monthly Excess Cashflow Amount for
such Distribution Date;
(iv) the aggregate amount of servicing compensation received by the
Servicer during the related Collection Period;
-77-
(v) the aggregate amount of Advances and Timing Advances for the
related Collection Period;
(vi) the Pool Balance at the close of business at the end of the
related Collection Period;
(vii) the number, weighted average remaining term to maturity and
weighted average Mortgage Interest Rate of the Mortgage Loans as of the
related Due Date;
(viii) the number and aggregate unpaid Principal Balance of Mortgage
Loans (a) 30 to 59 days past due on a contractual basis, (b) 60 to 89
days past due on a contractual basis, (c) 90 or more days past due on a
contractual basis, (d) as to which foreclosure proceedings have been
commenced and (e) in bankruptcy as of the close of business on the last
day of the calendar month preceding such Distribution Date;
(ix) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number of such Mortgage
Loan, the unpaid principal balance and the Principal Balance of such
Mortgage Loan as of the date it became an REO Property;
(x) the book value of any REO Property as of the close of business on
the last Business Day of the calendar month preceding the Distribution
Date, and, cumulatively, the total number and cumulative principal
balance of all REO Properties as of the close of business of the last day
of the preceding Collection Period;
(xi) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xii) the aggregate amount of Prepayment Charges collected (including
amounts deposited in connection with the full or partial waiver of such
Prepayment Charges pursuant to Section 3.01) during the related
Collection Period and the amounts thereof allocable to the Class X
Certificates;
(xiii) the aggregate amount of Realized Losses incurred during the
related Collection Period and the cumulative amount of Realized Losses;
(xiv) the Certificate Principal Balance of each Class of
Certificates, after giving effect to the distributions, and allocations
of Realized Losses or Applied Realized Loss Amounts, as applicable, made
on such Distribution Date, separately identifying any reduction thereof
due to allocations of Realized Losses or Applied Realized Loss Amounts
and the Unpaid Realized Loss Amount, if any, with respect to each Class
of Certificates;
(xv) the Accrued Certificate Interest in respect of each Class of
Offered Certificates for such Distribution Date, separately identifying
the portions thereof attributable to Net Rate Carryover Amounts, and the
respective portions thereof, if any, remaining unpaid following the
distributions made in respect of such Certificates on such Distribution
Date;
-78-
(xvi) [Reserved];
(xvii) the aggregate amount of any Prepayment Interest Shortfalls for
such Distribution Date, to the extent not covered by payments by the
Servicer pursuant to Section 3.23;
(xviii) the amount of the Trustee Fee paid;
(xix) the beginning and ending balances of the Basis Risk Reserve
Fund on such Distribution Date, the Basis Risk Reserve Fund Deposit for
such Distribution Date, and the Required Basis Risk Reserve Fund Amount
for such Distribution Date;
(xx) the Net Rate Carryover Amounts distributed on such Distribution
Date, and any Net Rate Carryover Amounts remaining after giving effect to
distributions thereof on such Distribution Date;
(xxi) any Overcollateralization Deficiency after giving effect to the
distribution of principal on such Distribution Date;
(xxii) whether a Trigger Event has occurred and is continuing, and
the cumulative Realized Losses, as a percentage of the original Pool
Balance;
(xxiii) the Available Funds;
(xxiv) the rate at which interest accrues for each Class of
Certificates for such Distribution Date;
(xxv) the Liquidation Report for such Distribution Date;
(xxvi) the aggregate Principal Balance of Mortgage Loans purchased by
the Servicer or Seller during the related Collection Period and
indicating the Section of this Agreement requiring or allowing the
purchase of each such Mortgage Loan; and
(xxvii) the aggregate Principal Balance of the Mortgage Loans
repurchased by the Servicer (or an affiliate) during the related
Collection Period in connection with Section 3.16.
The Trustee may fully rely upon and shall have no liability with
respect to information with respect to the Mortgage Loans provided by the
Servicer.
In the case of information furnished pursuant to subclauses (i)
through (iii) above, the amounts shall be expressed in a separate section of
the report as a dollar amount for each Class for each $1,000 original dollar
amount as of the Cut-off Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Certificateholder of a Regular Certificate, if requested
in writing by such Person, such information as is reasonably necessary to
provide to such Person a statement containing the
-79-
information set forth in subclauses (i), (ii), (xv) and (xx) above, aggregated
for such calendar year or applicable portion thereof during which such Person
was a Certificateholder. Such obligation of the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be prepared and furnished by the Trustee to Certificateholders pursuant
to any requirements of the Code as are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the
Residual Certificateholders a copy of the reports forwarded to the Regular
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished to
Residual Certificateholders by the Trustee pursuant to any requirements of the
Code as from time to time in force.
Section 4.07 Remittance Reports; Advances.
(a) On the second Business Day following each Determination Date but
in no event less than four Business Days prior to the related Distribution
Date, the Servicer shall deliver to the Trustee by telecopy (or by such other
means as the Servicer and the Trustee may agree from time to time) a
Remittance Report with respect to the related Distribution Date. On the same
date, the Servicer shall forward to the Trustee by overnight mail a computer
readable magnetic tape or diskette or in such other medium as may be agreed
between the Servicer and the Trustee containing the information set forth in
such Remittance Report with respect to the related Distribution Date. Not
later than the close of business New York time on the Servicer Remittance
Date, the Servicer shall deliver or cause to be delivered to the Trustee in
addition to the information provided on the Remittance Report, such other
information reasonably available to it with respect to the Mortgage Loans as
the Trustee may reasonably request or order in order for the Trustee to
perform the calculations necessary to make the distributions contemplated by
Section 4.01, 4.02 and 4.03 and to prepare the statements to
Certificateholders contemplated by Section 4.06. The Trustee shall not be
responsible to recompute, recalculate or verify any information provided to it
by the Servicer.
(b) The amount of Advances to be made by the Servicer for any
Distribution Date shall equal, subject to Section 4.07(d), the sum of (i) the
aggregate of payments of interest on the Mortgage Loans (net of the Servicing
Fees) that were due during the related Collection Period (assuming 30 days of
interest are due on each Mortgage Loan with respect to each Collection Period)
and were delinquent on a contractual basis as of the close of business on the
related Determination Date and (ii) with respect to each REO Property, which
REO Property was acquired during or prior to the related Prepayment Period and
as to which such REO Property an REO Disposition did not occur during the
related Prepayment Period, an amount equal to the excess, if any, of the
interest portion of the Monthly Payments (net of the related Servicing Fee)
that would have been due on the related Due Date in respect of the related
Mortgage Loans, over the net income from such REO Property deposited in the
Collection Account pursuant to Section 3.13 for distribution on such
Distribution Date.
The amount of Timing Advances to be made by the Servicer for any
Distribution Date, subject to Section 4.07(d), for each Mortgage Loan (except
those for which a Principal
-80-
Prepayment in full was applied during the prior Prepayment Period), shall be
an amount equal to the excess of 30 days interest on the Mortgage Loan at the
Mortgage Interest Rate (net of the Servicing Fee Rate) over the portion of the
Monthly Payment on the Mortgage Loan during the related Collection Period that
is applied to interest.
On or before the close of business New York time on the Servicer
Remittance Date, the Servicer shall remit in immediately available funds to
the Trustee for deposit in the Distribution Account an amount equal to the
aggregate amount of Advances and Timing Advances, if any, to be made in
respect of the Mortgage Loans and REO Properties for the related Distribution
Date either (i) from its own funds or (ii) from the Collection Account, to the
extent of funds held therein for future distribution (in which case it will
cause to be made an appropriate entry in the records of the Collection Account
that amounts held for future distribution have been, as permitted by this
Section 4.07, used by the Servicer in discharge of any such Advance or Timing
Advance and in the case of Timing Advances shall be made on a "first-in,
first-out basis" from amounts on deposit in the Collection Account in respect
of payments received by Mortgagors for which the portion of the Monthly
Payment on the Mortgage Loan during the related Collection Period that is
applied to interest exceeds 30 days of interest on the Mortgage Loan at the
Mortgage Interest Rate (net of the Servicing Fee Rate)) or (iii) in the form
of any combination of (i) and (ii) aggregating the total amount of Advances
and Timing Advances to be made by the Servicer with respect to the Mortgage
Loans and REO Properties.
In addition, the Servicer shall have the right to reimburse itself
for any Advances and Timing Advances previously made from the Collection
Account, to the extent of funds held therein for future distribution. Any
amounts held for future distribution and so used shall be appropriately
reflected in the Servicer's records and replaced by the Servicer by deposit in
the Collection Account on or before any future Servicer Remittance Date to the
extent that the Available Funds for the related Distribution Date (determined
without regard to Advances or Timing Advances to be made on the Servicer
Remittance Date) shall be less than the total amount that would be distributed
to the Classes of Certificateholders pursuant to Section 4.01 and 4.02 on such
Distribution Date if such amounts held for future distributions had not been
so used to make Advances or Timing Advances.
The Trustee will provide notice to the Servicer by telecopy by the
close of business on any Servicer Remittance Date in the event that the amount
remitted by the Servicer to the Trustee on such date is less than the Advances
or Timing Advances required to be made by the Servicer for the related
Distribution Date, as set forth in the related Remittance Report.
(c) The obligation of the Servicer to make such Advances and Timing
Advances is mandatory, notwithstanding any other provision of this Agreement
but subject to (d) below, and, with respect to any Mortgage Loan or REO
Property, shall continue until the earlier of such time as such Mortgage Loan
is paid in full by the Mortgagor or disposed of by the Trust, or until the
recovery of all Liquidation Proceeds thereon.
(d) Notwithstanding anything herein to the contrary, no Advance,
Timing Advance or Servicing Advance shall be required to be made hereunder by
the Servicer if such Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the
-81-
Servicer that it has made a Nonrecoverable Advance or that any proposed
Advance or Timing Advance, if made, would constitute a Nonrecoverable Advance,
shall be evidenced by an Officer's Certificate of the Servicer delivered to
the Depositor and the Trustee.
Section 4.08 Basis Risk Reserve Fund.
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Class X-0, Xxxxx X-0,
Class M-1, Class M-2, Class B-1 and Class B-2 Certificates, the Basis Risk
Reserve Fund. The Basis Risk Reserve Fund shall be an Eligible Account, and
funds on deposit therein shall be held separate and apart from, and shall not
be commingled with, any other moneys, including without limitation, other
moneys held by the Trustee pursuant to this Agreement.
(b) On the Closing Date, $5,000 will be deposited by the Depositor
into the Basis Risk Reserve Fund. On each Distribution Date, the Trustee shall
transfer from the Distribution Account to the Basis Risk Reserve Fund pursuant
to Section 4.02(b)(xv), the Basis Risk Reserve Fund Deposit and following such
deposit shall withdraw any amounts on deposit in the Basis Risk Reserve Fund
in the following amounts and order of priority:
(i) concurrently, to the Class A-1 and Class A-2 Certificates, any
unpaid Net Rate Carryover Amounts for such Classes, pro rata based on the
Net Carryover Amounts for such Classes;
(ii) to the Class M-1 Certificates, any unpaid Net Rate Carryover
Amounts for such Class;
(iii) to the Class M-2 Certificates, any unpaid Net Rate Carryover
Amounts for such Class;
(iv) to the Class B-1 Certificates, any unpaid Net Rate Carryover
Amounts for such Class; and
(v) to the Class B-2 Certificates, any unpaid Net Rate Carryover
Amounts for such Class.
Any such amounts distributed shall be treated for federal tax
purposes as amounts distributed by the Class X REMIC to the Class X
Certificates. On any Distribution Date, any amounts on deposit in the Basis
Risk Reserve Fund in excess of the Required Basis Risk Reserve Fund Amount
shall be distributed to the Class X Certificates pursuant to Section
4.02(b)(xvi).
(c) Funds in the Basis Risk Reserve Fund may be invested in Eligible
Investments by the Trustee at the direction of the majority holder of the
Class X Certificates. In the absence of such direction, funds in the Basis
Risk Reserve Fund shall remain uninvested. Any net investment earnings on such
amounts shall be payable to the Class X Certificates. Amounts held in the
Basis Risk Reserve Fund from time to time shall continue to constitute assets
of the Trust Fund, but not of any REMIC created hereunder, until released from
the Basis Risk Reserve Fund pursuant to this Section 4.08. The Basis Risk
Reserve Fund constitutes an "outside reserve fund" within the meaning of
Treasury Regulation ss.1.860G-2(h) and is not an
-82-
asset of any REMIC created hereunder. For all federal tax purposes, amounts
transferred by the Class X REMIC to the Basis Risk Reserve Fund shall be
treated as amounts distributed by the Class X REMIC to the Class X
Certificate. The Class X Certificate shall evidence ownership of the Basis
Risk Reserve Fund for federal tax purposes and the Holders thereof shall
direct the Trustee in writing as to the investment of amounts therein. In the
absence of such written direction, all funds in the Basis Risk Reserve Fund
shall remain uninvested. The Trustee shall have no liability for losses on
investments in Eligible Investments made pursuant to this Section 4.08(c)
(other than as obligor on any such investments). Upon termination of the Trust
Fund, any amounts remaining in the Basis Risk Reserve Fund shall be
distributed to the Class X Certificate in the same manner as if distributed
pursuant to Section 4.02(b)(xvi) hereof.
(d) On the Distribution Date immediately after the Distribution Date
on which the aggregate Class Principal Balance of the Class A-1, Class A-2,
Class M-1, Class M-2, Class B-1 and Class B-2 Certificates equals zero, any
amounts on deposit in the Basis Risk Reserve Fund not payable on the Class
X-0, Xxxxx X-0, Class M-1, Class M-2, Class B-1 and Class B-2 Certificates
shall be distributed to the Class X Certificate in the same manner as if
distributed pursuant to Section 4.02(b)(xvi) hereof.
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates.
Each of the Class A-1, Class A-2, Class M-1, Class M-2, Class B-1,
Class B-2, Class X, Class R-1 and Class R-2 Certificates shall be
substantially in the forms annexed hereto as exhibits, and shall, on original
issue, be executed by the Trustee and authenticated and delivered by the
Certificate Registrar to or upon the receipt of a Written Order to
Authenticate from the Depositor concurrently with the sale and assignment to
the Trustee of the Trust Fund. Each Class of the Offered Certificates shall be
initially evidenced by one or more Certificates representing a Percentage
Interest with a minimum dollar (or notional amount) denomination of $25,000
and integral multiples of $1 in excess thereof. The Class X, Class R-1 and
Class R-2 Certificates are issuable only in minimum Percentage Interests of
10%.
The Certificates shall be executed on behalf of the Trust by manual
or facsimile signature on behalf of the Trustee by a Responsible 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 Trust, notwithstanding that such
individuals or any of them have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices
at the date of such Certificate. No Certificate shall be entitled to any
benefit under this Agreement or be valid for any purpose, unless such
Certificate shall have been manually authenticated by the Certificate
Registrar substantially in the form provided for herein, and such
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Subject to Section 5.02(c), the Offered Certificates shall be Book-Entry
Certificates. The Class X, Class
-83-
R-1 and Class R-2 Certificates shall not be Book-Entry Certificates but shall
be issued in fully registered certificate form.
Section 5.02 Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be kept at the Corporate
Trust Office of the Trustee a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, the Certificate Registrar shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall initially serve as
Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided. The Trustee as
Certificate Registrar shall be subject to the same standards of care,
limitations on liability and rights to indemnity as the Trustee, and the
provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14 and 8.15 shall apply
to the Certificate Registrar to the same extent as they apply to the Trustee.
Any Certificate Registrar appointed in accordance with this Section 5.02(a)
may at any time resign by giving at least 30 days' advance written notice of
resignation to the Trustee, the Servicer and the Depositor, such resignation
to become effective upon appointment of a successor Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of a Residual
Certificate, upon satisfaction of the conditions set forth below, the Trustee
on behalf of the Trust shall execute and the Certificate Registrar shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same aggregate Percentage
Interest.
At the option of the Certificateholders, Certificates may be
exchanged for other Certificates in authorized denominations and the same
aggregate Percentage Interests, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute on behalf of the Trust and
the Certificate Registrar shall authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of transfer or exchange
shall (if so required by the Trustee or the Certificate Registrar) be duly
endorsed by, or be accompanied by a written instrument of transfer
satisfactory to the Trustee and the Certificate Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(b) Upon original issuance, the Book-Entry Certificates shall be
issued in the form of one or more typewritten certificates, to be delivered to
the Depository, the initial Depository, by, or on behalf of, the Depositor; or
to, and deposited with the Certificate Custodian, on behalf of the Depository,
if directed to do so pursuant to instructions from the Depository. Except as
provided in paragraph (c) below, the Book-Entry Certificates shall at all
times remain registered in the name of the Depository or its nominee and at
all times: (i) registration of such Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Certificates; (iii) ownership and transfers of
registration of such Certificates on the books of the Depository shall be
governed by applicable rules established by the Depository; (iv) the
Depository may collect its usual and
-84-
customary fees, charges and expenses from its Depository Participants; (v) the
Trustee shall for all purposes deal with the Depository as representative of
the Certificate Owners of the Certificates for purposes of exercising the
rights of Holders under this Agreement, and requests and directions for and
votes of such representative shall not be deemed to be inconsistent if they
are made with respect to different Certificate Owners; (vi) the Trustee may
rely and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and
Persons shown on the books of such indirect participating firms as direct or
indirect Certificate Owners; and (vii) the direct participants of the
Depository shall have no rights under this Agreement under or with respect to
any of the Certificates held on their behalf by the Depository, and the
Depository may be treated by the Trustee and its agents, employees, officers
and directors as the absolute owner of the Certificates for all purposes
whatsoever.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners that it represents or of brokerage firms for which it acts
as agent in accordance with the Depository's normal procedures. The parties
hereto are hereby authorized to execute a Letter of Representations with the
Depository or take such other action as may be necessary or desirable to
register a Book-Entry Certificate to the Depository.
(c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole
option, with the consent of the Trustee, elects to terminate the book-entry
system through the Depository or (iii) after the occurrence of a Servicer
Event of Termination, the Certificate Owners of each Class of Book-Entry
Certificates representing Percentage Interests of such Classes aggregating not
less than 51% advises the Trustee and Depository through the Financial
Intermediaries and the Depository Participants in writing that the
continuation of a book-entry system through the Depository to the exclusion of
definitive, fully registered certificates (the "Definitive Certificates") to
Certificate Owners is no longer in the best interests of the Certificate
Owners. Upon surrender to the Certificate Registrar of the Book-Entry
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall, at the Depositor's
expense, in the case of (ii) above, or the Seller's expense, in the case of
(i) and (iii) above, execute on behalf of the Trust and the Certificate
Registrar shall authenticate the Definitive Certificates. None of the
Depositor or the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates, the
Trustee, the Certificate Registrar, the Servicer, any Paying Agent and the
Depositor shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
(d) Except with respect to the initial transfer of the Private
Certificates by the Depositor, no transfer, sale, pledge or other disposition
of any Private Certificate shall be made unless such disposition is exempt
from the registration requirements of the 1933 Act, and any applicable state
securities laws or is made in accordance with the 1933 Act and laws. In the
event of any such transfer, (i) unless such transfer is made in reliance upon
Rule 144A (as evidenced by the investment letter delivered to the Certificate
Registrar, in substantially the form
-85-
attached hereto as Exhibit J) under the 1933 Act, the Certificate Registrar
and the Depositor shall require a written Opinion of Counsel (which may be
in-house counsel) acceptable to and in form and substance reasonably
satisfactory to the Certificate Registrar and the Depositor that such transfer
may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from the 1933 Act or is being made pursuant to the 1933
Act, which Opinion of Counsel shall not be an expense of the Certificate
Registrar or the Depositor or (ii) the Certificate Registrar shall require the
transferor to execute a transferor certificate (in substantially the form
attached hereto as Exhibit L) and the transferee to execute an investment
letter (in substantially the form attached hereto as Exhibit J) acceptable to
and in form and substance reasonably satisfactory to the Depositor and the
Certificate Registrar certifying to the Depositor and the Certificate
Registrar the facts surrounding such transfer, which investment letter shall
not be an expense of the Certificate Registrar or the Depositor. The Holder of
a Private Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Certificate Registrar and the Depositor against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made unless
the Certificate Registrar shall have received either (i) a representation from
the transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Servicer, the Certificate Registrar and the Depositor,
(except as provided below, such requirement is satisfied only by the
Certificate Registrar's receipt of a representation letter from the transferee
substantially in the form of Exhibit I hereto, as appropriate), to the effect
that (a) such transferee is not an employee benefit plan or arrangement
subject to Section 406 of ERISA or a plan or arrangement subject to Section
4975 of the Code, nor a person acting on behalf of any such plan or
arrangement or using the assets of any such plan or arrangement to effect such
transfer or (b) in the case of a Class M-1 or Class M-2 Certificates, and in
the case of the Class B-1 and Class B-2 Certificates if they have been the
subject of an ERISA-Qualifying Underwriting, if the purchaser is an insurance
company, a representation that the purchaser is an insurance company which is
purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60") and that the purchase and
holding of such Certificates satisfy the requirements for exemptive relief
under Sections I and III of PTCE 95-60 or (ii) in the case of any
ERISA-Restricted Certificate presented for registration in the name of an
employee benefit plan subject to ERISA or a plan or arrangement subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee or any other person acting on behalf of any such
plan or arrangement or using such plan's or arrangement's assets, an Opinion
of Counsel satisfactory to the Servicer, the Certificate Registrar and the
Depositor (which Opinion of Counsel shall not be at the expense of the
Depositor, the Certificate Registrar or the Servicer or the Trust), and upon
which the Trustee, the Servicer, the Depositor and the Certificate Registrar
shall be entitled to rely, to the effect that the purchase or holding of such
ERISA-Restricted Certificate will not result in a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code and will not subject the
Trustee, the Depositor or the Servicer to any obligation in addition to those
expressly undertaken in this Agreement or to any liability. For purposes of
clause (i) of the preceding sentence, one of such representations, as
appropriate, shall be deemed to have been made to the Certificate Registrar by
the acceptance by a Certificate Owner of the beneficial interest in any such
Class of ERISA-Restricted Certificates, unless the Certificate Registrar shall
have received from the transferee an alternative representation or opinion
acceptable in form and substance to the Servicer, the
-86-
Certificate Registrar and the Depositor. 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 ERISA or to the Code in
violation of this paragraph as described above shall be void and of no effect.
Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Depositor or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Certificate Registrar of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Residual Certificate, the Certificate Registrar shall as a
condition to registration of the transfer, require delivery to it, in
form and substance satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit K hereto from the
proposed transferee to the effect that, among other things, such
transferee is a Permitted Transferee and that it is not acquiring its
Ownership Interest in the Residual Certificate that is the subject of
the proposed transfer as a nominee, trustee or agent for any Person
who is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that the
proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest in
a Residual Certificate in violation of the provisions of this Section
shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall, in violation of
the provisions of this Section, become a Holder of a Residual
Certificate, then the prior Holder of such Residual Certificate that is a
Permitted Transferee shall, upon discovery that the registration of
transfer of such Residual Certificate was not in fact permitted by this
Section, be restored to all rights as Holder thereof retroactive to the
date of registration of transfer of such Residual Certificate. The
Certificate Registrar shall be under no liability to any Person for any
registration of transfer of a Residual Certificate that is in fact not
permitted by this Section or for making any distributions due on such
Residual Certificate to the Holder thereof or taking any other action
with respect to such Holder under the provisions of this Agreement so
-87-
long as the Certificate Registrar received the documents specified in
clause (iii). The Trustee shall be entitled to recover from any Holder of
a Residual Certificate that was in fact not a Permitted Transferee at the
time such distributions were made all distributions made on such Residual
Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the prior Holder of such
Residual Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section, then the Certificate Registrar shall have
the right but not the obligation, without notice to the Holder of such
Residual Certificate or any other Person having an Ownership Interest
therein, to notify the Depositor to arrange for the sale of such Residual
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Depositor or its affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of such Residual
Certificate that is a Permitted Transferee, except that in the event that
the Trustee determines that the Holder of such Residual Certificate may
be liable for any amount due under this Section or any other provisions
of this Agreement, the Trustee may withhold a corresponding amount from
such remittance as security for such claim. The terms and conditions of
any sale under this clause (v) shall be determined in the sole discretion
of the Trustee and it shall not be liable to any Person having an
Ownership Interest in a Residual Certificate as a result of its exercise
of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section, then the Trustee will provide to the
Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations. The Trustee shall be entitled to
reasonable compensation for providing such information from the person to
whom it is provided.
The foregoing provisions of this Section shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Certificate Registrar, in form and substance satisfactory to
the Certificate Registrar, (i) written notification from each Rating Agency
that the removal of the restrictions on Transfer set forth in this Section
will not cause such Rating Agency to downgrade its rating of the Certificates
and (ii) an Opinion of Counsel to the effect that such removal will not cause
any REMIC hereunder to fail to qualify as a REMIC.
(e) No service charge shall be made for any registration of transfer
or exchange of Certificates of any Class, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of
Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be cancelled by the Certificate Registrar and disposed of pursuant to
its standard procedures.
-88-
Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate and (ii) there is
delivered to the Trustee, the Depositor and the Certificate Registrar such
security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute on behalf of the Trust, and the Certificate
Registrar shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like tenor and Percentage Interest. Upon the issuance of any new Certificate
under this Section, the Trustee or the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee and the Certificate Registrar) in connection
therewith. Any duplicate Certificate issued pursuant to this Section, shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04 Persons Deemed Owners.
The Servicer, the Depositor, the Trustee, the Certificate Registrar,
any Paying Agent and any agent of the Servicer, the Depositor, the Certificate
Registrar, any Paying Agent or the Trustee may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section
4.01, 4.02 and 4.08 and for all other purposes whatsoever, and none of the
Servicer, the Trust, the Trustee nor any agent of any of them shall be
affected by notice to the contrary.
Section 5.05 Appointment of Paying Agent.
The Paying Agent shall make distributions to Certificateholders from
the Distribution Account pursuant to Section 4.01 and 4.02 and from the Basis
Risk Reserve Fund pursuant to Section 4.08, and shall report the amounts of
such distributions to the Trustee. The duties of the Paying Agent may include
the obligation (i) to withdraw funds from the Collection Account pursuant to
Section 3.05 and for the purpose of making the distributions referred to above
and (ii) to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be an entity duly incorporated and validly existing under the laws
of the United States of America or any state thereof, authorized under such
laws to exercise corporate trust powers and subject to supervision or
examination by federal or state authorities. The Paying Agent shall initially
be the Trustee. The Trustee may appoint a successor to act as Paying Agent,
which appointment shall be reasonably satisfactory to the Depositor and the
Rating Agencies. The Trustee as Paying Agent shall be subject to the same
standards of care, limitations on liability and rights to indemnity as the
Trustee, and the provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14 and
8.15 shall apply to the Paying Agent to the same extent as they apply to the
Trustee. Any Paying Agent appointed in accordance with this Section 5.05 may
at any time resign by giving at least 30 days' advance written notice of
resignation to the Trustee, the Servicer and the Depositor, such resignation
to become effective upon appointment of a successor Paying Agent.
-89-
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the Depositor.
The Seller and the Servicer shall be liable in accordance herewith
only to the extent of the obligations specifically imposed upon and undertaken
by the Seller or Servicer, as the case may be, herein. The Depositor shall be
liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Depositor.
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the Servicer or the Depositor.
Any entity into which the Seller, the Servicer or the Depositor may
be merged or consolidated, or any entity resulting from any merger, conversion
or consolidation to which the Seller, the Servicer or the Depositor shall be a
party, or any corporation succeeding to the business of the Seller, the
Servicer or the Depositor, shall be the successor of the Seller, the Servicer
or the Depositor, as the case may be, hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however
that the successor Servicer shall satisfy all the requirements of Section 7.02
with respect to the qualifications of a successor Servicer.
Section 6.03 Limitation on Liability of the Servicer and Others.
Neither the Servicer, the Depositor nor any of the directors or
officers or employees or agents of the Servicer or the Depositor shall be
under any liability to the Trust or the Certificateholders for any action
taken or for refraining from the taking of any action by the Servicer in good
faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer, the Depositor or
any such Person against any liability which would otherwise be imposed by
reason of its willful misfeasance, bad faith or gross negligence in the
performance of duties of the Servicer or the Depositor or by reason of its
reckless disregard of its obligations and duties of the Servicer or the
Depositor hereunder; provided, further, that this provision shall not be
construed to entitle the Servicer to indemnity in the event that amounts
advanced by the Servicer to retire any senior lien exceed Liquidation Proceeds
(in excess of related liquidation expenses) realized with respect to the
related Mortgage Loan. The Servicer, the Depositor and any director or officer
or employee or agent of the Servicer or the Depositor may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer, the Depositor
and any director or officer or employee or agent of the Servicer or the
Depositor shall be indemnified by the Trust and held harmless against any
loss, liability or expense incurred in connection with any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense incurred by reason of its willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of its reckless
disregard of obligations and duties hereunder. The Servicer or the Depositor
may undertake any such action which it may deem necessary or desirable in
respect of this Agreement, and the rights and duties of the parties hereto and
the interests of the
-90-
Certificateholders hereunder. In such event, the reasonable legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Trust and the Servicer and the Depositor shall be
entitled to pay such expenses from the proceeds of the Trust or to be
reimbursed therefor pursuant to Section 3.05 upon presentation to the Trustee
of documentation of such expenses, costs and liabilities. The Servicer's right
to indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Servicer pursuant to Section 6.04 or 7.01
with respect to any losses, expenses, costs or liabilities arising prior to
such resignation or termination (or arising from events that occurred prior to
such resignation or termination). This paragraph shall apply to the Servicer
and the Depositor solely in their respective capacities as Servicer and
Depositor hereunder and in no other capacities.
Section 6.04 Servicer Not to Resign.
Subject to the provisions of Section 7.01 and Section 6.02, the
Servicer shall not resign from the obligations and duties hereby imposed on it
except (i) upon determination that the performance of its obligations or
duties hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities
carried on by it or its subsidiaries or Affiliates, the other activities of
the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer to the Trustee in writing and such
proposed successor servicer is reasonably acceptable to the Trustee; and (b)
each Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the successor servicer stating that the proposed appointment of
such successor servicer as Servicer hereunder will not result in the reduction
or withdrawal of the then current rating of the Regular Certificates or the
ratings that are in effect; provided, however, that no such resignation by the
Servicer shall become effective until such successor servicer or, in the case
of (i) above, the Trustee shall have assumed the Servicer's responsibilities
and obligations hereunder or the Trustee shall have designated a successor
servicer in accordance with Section 7.02. Any such resignation shall not
relieve the Servicer of responsibility for any of the obligations specified in
Sections 7.01 and 7.02 as obligations that survive the resignation or
termination of the Servicer. Any such determination permitting the resignation
of the Servicer pursuant to clause (i) above shall be evidenced by an Opinion
of Counsel to such effect delivered to the Trustee. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee.
The Trustee and the Depositor hereby specifically (i) consent to the
pledge and assignment by the Servicer of all the Servicer's right, title and
interest in, to and under this Agreement to the Servicing Rights Pledgee, for
the benefit of certain lenders, and (ii) provided that no Servicer Event of
Termination exists, agree that upon delivery to the Trustee by the Servicing
Rights Pledgee of a letter signed by the Servicer whereunder the Servicer
shall resign as Servicer under this Agreement, the Trustee shall appoint the
Servicing Rights Pledgee or its designee as successor Servicer, provided that
at the time of such appointment, the Servicing Rights Pledgee or such designee
meets the requirements of a successor Servicer pursuant to Section 7.02(a) and
agrees to be subject to the terms of this Agreement. If, pursuant to any
provision hereof, the duties of the Servicer are transferred to a successor,
the entire amount of the
-91-
Servicing Fee and other compensation payable to the Servicer pursuant hereto
shall thereafter be payable to such successor.
Section 6.05 Delegation of Duties.
In the ordinary course of business, the Servicer at any time may
delegate any of its duties hereunder to any Person, including any of its
Affiliates, who agrees to conduct such duties in accordance with standards
comparable to those set forth in Section 3.01. Such delegation shall not
relieve the Servicer of its liabilities and responsibilities with respect to
such duties and shall not constitute a resignation within the meaning of
Section 6.04. The Servicer shall provide the Trustee and the Rating Agencies
with 60 days prior written notice prior to the delegation of any of its duties
to any Person other than any of the Servicer's Affiliates or their respective
successors and assigns.
ARTICLE VII
SERVICER EVENTS OF TERMINATION
Section 7.01 Servicer Events of Termination.
(a) If any one of the following events ("Servicer Events of
Termination") shall occur and be continuing:
(i) (A) The failure by the Servicer to make any Advance or Timing
Advance; or (B) any other failure by the Servicer to deposit in the
Collection Account or Distribution Account any deposit required to be
made under the terms of this Agreement which continues unremedied for a
period of one Business Day after the date upon which written notice of
such failure shall have been given to the Servicer by the Trustee or by
any Holder of a Regular Certificate evidencing at least 25% of the Voting
Rights; or
(ii) The failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 30 days, or
the failure by the Servicer duly to observe or perform, in any material
respect, any other covenants, obligations or agreements of the Servicer
as set forth in this Agreement, which failure continues unremedied for a
period of 30 days, after the date (A) on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee or by any Holder of a Regular Certificate
evidencing at least 25% of the Voting Rights or (B) actual knowledge of
such failure by a Servicing Officer of the Servicer; or
(iii) The entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises
for the appointment of a trustee, conservator, receiver or liquidator in
any insolvency, conservatorship, receivership, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 days; or
(iv) The Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator or receiver or liquidator or similar
person in any
-92-
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Servicer or of or relating
to all or substantially all of its property; or a decree or order of a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver, liquidator or
similar person 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 Servicer
and such decree or order shall have remained in force undischarged,
unbonded or unstayed for a period of 60 days; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations; or
(v) The aggregate amount of cumulative Realized Losses incurred since
the Cut-off Date through the last day of the related Collection Period
divided by the initial Pool Balance exceeds the applicable percentages
set forth below with respect to such Distribution Date:
Distribution Date Occurring In Percentage
December 2006 through November 2007 10%
December 2007 through November 2008 14%
December 2008 through November 2009 17%
December 2009 and thereafter 20%
(b) Then, and in each and every such case, so long as a Servicer
Event of Termination shall not have been remedied within the applicable grace
period, (x) with respect solely to clause (i)(A) above, if such Advance or
Timing Advance is not made by 2:00 P.M., New York time, on the Business Day
immediately following the Servicer Remittance Date, the Trustee may terminate
all of the rights and obligations of the Servicer under this Agreement and the
Trustee, or a successor servicer appointed in accordance with Section 7.02,
shall immediately make such Advance and assume, pursuant to Section 7.02, the
duties of a successor Servicer and (y) in the case of (i)(B), (ii), (iii),
(iv) and (v) above, the Trustee shall, at the direction of the Holders of each
Class of Regular Certificates evidencing Percentage Interests aggregating not
less than 51%, by notice then given in writing to the Servicer and to the
Trustee, terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency, the Depositor and the Seller. On or after the
receipt by the Servicer and the Trustee of such written notice or such
automatic termination pursuant to clause (x) above, all authority and power of
the Servicer under this Agreement, whether with respect to the Certificates or
the Mortgage Loans or otherwise, shall pass to and be vested in the Trustee
pursuant to and under this Section; and, without limitation, the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan and Related
Documents or otherwise. The Servicer agrees to cooperate with the Trustee (or
the applicable successor Servicer) in effecting the termination of the
responsibilities and rights of the Servicer
-93-
hereunder, including, without limitation, the delivery to the successor
Servicer of all documents and records requested by it to enable it to assume
the Servicer's functions under this Agreement within ten Business Days
subsequent to such notice or such automatic termination pursuant to clause (x)
above, the transfer within one Business Day subsequent to such notice to the
Trustee (or the applicable successor Servicer) for the administration by it of
all cash amounts that shall at the time be held by the Servicer and to be
deposited by it in the Collection Account, the Distribution Account, any REO
Account or any Escrow Account or that have been deposited by the Servicer in
such accounts or thereafter received by the Servicer with respect to the
Mortgage Loans or any REO Property received by the Servicer. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
transferring the servicing to the successor Servicer and amending this
Agreement to reflect such succession as Servicer pursuant to this Section
shall be paid by the predecessor Servicer (or if the predecessor Servicer is
the Trustee, the initial Servicer) upon presentation of reasonable
documentation of such costs and expenses.
Section 7.02 Trustee to Act; Appointment of Successor.
(a) Within 90 days of the time the Servicer and the Trustee receives
a notice of termination or resignation pursuant to Section 7.01 or 6.04, the
Trustee (or such other successor Servicer as is approved in accordance with
this Agreement) shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof arising on and after its succession. As compensation
therefor, the Trustee (or such other successor Servicer) shall be entitled to
such compensation as the Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the above, (i) if
the Trustee is unwilling to act as successor Servicer or (ii) if the Trustee
is legally unable so to act, the Trustee shall appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, bank or other mortgage loan or home equity loan servicer having a
net worth of not less than $50,000,000 as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder; provided, that the appointment of
any such successor Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Certificates or the ratings that are
in effect by the Rating Agencies as evidenced by a letter to such effect from
the Rating Agencies. Pending appointment of a successor to the Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.18 (or such other compensation as the Trustee and such successor
shall agree, not to exceed the Servicing Fee). The successor servicer shall be
entitled to withdraw from the Collection Account all costs and expenses
associated with the transfer of the servicing to the successor servicer. The
appointment of a successor servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer to pay any deductible under an insurance policy
pursuant to Section 3.11 or to indemnify the parties indicated in Section 3.22
or Section 3.26 pursuant to the terms thereof, nor shall any successor
Servicer be liable for any acts or omissions of the predecessor Servicer or
for any breach by such Servicer of any of its representations or warranties
contained herein or in any related document or agreement. The Trustee and such
-94-
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
In the event of a Servicer Event of Termination, notwithstanding
anything to the contrary above, the Trustee and the Depositor hereby agree
that upon delivery to the Trustee by the Servicing Rights Pledgee of a letter
signed by the Servicer within ten Business Days of when notification of such
event shall have been provided to the Trustee, whereunder the Servicer shall
resign as Servicer under this Agreement, the Servicing Rights Pledgee or its
designee shall be appointed as successor Servicer (provided that at the time
of such appointment the Servicing Rights Pledgee or such designee meets the
requirements of a successor Servicer set forth above) and the Servicing Rights
Pledgee agrees to be subject to the terms of this Agreement.
(b) Any successor, including the Trustee, to the Servicer as servicer
shall during the term of its service as servicer continue to service and
administer the Mortgage Loans for the benefit of Certificateholders, and
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
Fidelity Bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.
Section 7.03 Waiver of Defaults.
The Majority Certificateholders may, on behalf of all
Certificateholders, waive any events permitting removal of the Servicer as
servicer pursuant to this Article VII, provided, however, that the Majority
Certificateholders may not waive a default in making a required distribution
on a Certificate without the consent of the Holder of such Certificate. Upon
any waiver of a past default, such default shall cease to exist and any
Servicer Event of Termination 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 thereto except
to the extent expressly so waived. Notice of any such waiver shall be given by
the Trustee to the Rating Agencies.
Section 7.04 Notification to Certificateholders.
(a) On any termination or appointment of a successor the Servicer
pursuant to this Article VII or Section 6.04, the Trustee shall give prompt
written notice thereof to the Certificateholders at their respective addresses
appearing in the Certificate Register and each Rating Agency.
(b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute
a Servicer Event of Termination for five Business Days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Certificateholders notice of such
occurrence unless such default or Servicer Event of Termination shall have
been waived or cured. Such notice shall be given to the Rating Agencies
promptly after any such occurrence.
-95-
Section 7.05 Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon termination of
the Servicer hereunder, any liabilities of the Servicer which accrued prior to
such termination shall survive such termination.
ARTICLE VIII
THE TRUSTEE
Section 8.01 Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of
Termination of which a Responsible Officer of the Trustee shall have actual
knowledge and after the curing of all Servicer Events of Termination which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Event of Termination
has occurred (which has not been cured) of which a Responsible Officer has
actual knowledge, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee, which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform to the requirements of this Agreement; provided, however
that the Trustee shall not be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Servicer, the Seller or the Depositor hereunder.
If any such instrument is found not to conform in any material respect to the
requirements of this Agreement, the Trustee shall notify the
Certificateholders of such instrument in the event that the Trustee, after so
requesting, does not receive a satisfactorily corrected instrument.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however that:
(i) prior to the occurrence of a Servicer Event of Termination, and
after the curing of all such Servicer Events of Termination which may
have occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
-96-
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee
unless it shall be proved that the Trustee was negligent in ascertaining
or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Majority Certificateholders relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising or omitting to exercise any trust
or power conferred upon the Trustee under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer referred
to in clauses (i) and (ii) of Section 7.01(a) or any Servicer Event of
Termination unless a Responsible Officer of the Trustee at the Corporate
Trust Office obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer or the Majority
Certificateholders. In the absence of such receipt of such notice, the
Trustee may conclusively assume that there is no Servicer Event of
Termination.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested
with the rights, duties, powers and privileges of, the Servicer in accordance
with the terms of this Agreement.
The Trustee shall not have any duty (A) to see any recording, filing,
or depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security interest,
or to see to the maintenance of any such recording or filing or depositing or
to any rerecording, refiling or redepositing of any thereof, (B) to see to any
insurance or (C) to see to the payment or discharge of any tax, assessment, or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust Fund other than
from funds available in the Distribution Account.
Section 8.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon, and shall be protected in
acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine
and to have been signed or presented by the proper party or parties;
-97-
(ii) the Trustee may consult with counsel and any advice or Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(iii) the Trustee shall not be under any obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of the Certificateholders pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby;
the right of the Trustee to perform any discretionary act enumerated in
this Agreement shall not be construed as a duty, and the Trustee shall
not be answerable for other than its negligence or willful misconduct in
the performance of any such act;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) prior to the occurrence of a Servicer Event of Termination and
after the curing of all Servicer Events of Termination which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or documents, unless requested in writing to do so by
the Majority Certificateholders; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such
cost, expense or liability as a condition to such proceeding. The
reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer
upon demand. Nothing in this clause (v) shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have any liability
or make any representation as to any acts or omissions hereunder of the
Servicer until such time as the Trustee may be required to act as
Servicer pursuant to Section 7.02;
(vii) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys or a custodian and the Trustee shall not be responsible for
any misconduct or negligence on the part of any such agent, attorney or
custodian appointed by it with due care; and
(viii) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act.
-98-
Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representation as to the
validity or sufficiency of this Agreement or of the Certificates (other than
the signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or Related Document. The Trustee shall not be accountable for
the use or application by the Servicer, or for the use or application of any
funds paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall not
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 or its ability to generate the payments to be distributed to
Certificateholders under this Agreement, including, without limitation: the
existence, condition and ownership of any Mortgaged Property; the existence
and enforceability of any hazard insurance thereon (other than if the Trustee
shall assume the duties of the Servicer pursuant to Section 7.02); the
validity of the assignment of any Mortgage Loan to the Trustee or of any
intervening assignment; the completeness of any Mortgage Loan; the performance
or enforcement of any Mortgage Loan (other than if the Trustee shall assume
the duties of the Servicer pursuant to Section 7.02); the compliance by the
Depositor, the Seller or the Servicer with any warranty or representation made
under this Agreement or in any related document or the accuracy of any such
warranty or representation prior to the Trustee's receipt of notice or other
discovery of any non-compliance therewith or any breach thereof; any
investment of monies by or at the direction of the Servicer or any loss
resulting therefrom, it being understood that the Trustee shall remain
responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Servicer (other than if the
Trustee shall assume the duties of the Servicer pursuant to Section 7.02), or
any Mortgagor; any action of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 7.02), taken in the name
of the Trustee; the failure of the Servicer to act or perform any duties
required of it as agent of the Trustee hereunder; or any action by the Trustee
taken at the instruction of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 7.02); provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement. The Trustee shall not 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.
Section 8.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not Trustee and may transact any banking and trust business with the
Seller, the Servicer, the Depositor or their Affiliates.
-99-
Section 8.05 Seller to Pay Trustee Fees and Expenses.
The Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself its fees in an aggregate amount equal to
the Trustee Fee pursuant to Section 4.01(a), to the Interest Remittance Amount
is any time insufficient for such purpose, the Seller shall pay such fees as
reasonable compensation (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) for all services
rendered by it in the execution of the trusts hereby created and in the
exercise and performance of any of the powers and duties hereunder of the
Trustee, and the Seller will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from such party's negligence or bad faith
or which is the responsibility of Certificateholders or the Trustee.
Notwithstanding any other provision of this Agreement, including Section
2.03(a) and Section 2.04, to the contrary, the Seller covenants and agrees to
indemnify the Trustee and its officers, directors, employees and agents from,
and hold each of them harmless against, any and all losses, liabilities,
damages, claims or expenses incurred in connection with any legal action
relating to this Agreement, the Certificates or incurred in connection with
the administration of the Trust, other than with respect to a party, any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence of such party in the performance of its duties hereunder or by
reason of such party's reckless disregard of obligations and duties hereunder.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Trustee 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 has been advised of the likelihood of such loss or damage and
regardless of the form of action. The Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified, to the extent not paid
by the Seller pursuant to this Section, by the Trust Fund and held harmless
against any loss, liability or expense (not including expenses, disbursements
and advances incurred or made by the Trustee, in the ordinary course of the
Trustee's performance in accordance with the provisions of this Agreement)
incurred by the Trustee, or such party arising out of or in connection with
the acceptance or administration of its duties under this Agreement, other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance by the Trustee of its duties under
this Agreement or by reason of the reckless disregard of the Trustee's
obligations and duties under this Agreement. This section shall survive
termination of this Agreement or the resignation or removal of any Trustee
hereunder.
Section 8.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a Department of Housing
and Urban Development and Federal Housing Administration approved mortgagee,
an entity duly organized and validly existing under the laws of the United
States of America or any state thereof, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and a minimum long-term debt rating of BBB by Fitch and S&P and a
long term debt rating of at least A1 or better by Xxxxx'x, and subject to
supervision or examination by federal or state authority. If such entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining
-100-
authority, then for the purposes of this Section 8.06, the combined capital
and surplus of such entity shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
principal office of the Trustee (other than the initial Trustee) shall be in a
state with respect to which an Opinion of Counsel has been delivered to such
Trustee at the time such Trustee is appointed Trustee to the effect that the
Trust will not be a taxable entity under the laws of such state. In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07.
Section 8.07 Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Servicer
and each Rating Agency. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. If no successor Trustee shall
have been so appointed and having accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor
Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Depositor may remove the Trustee. If the Depositor or the Servicer removes
the Trustee under the authority of the immediately preceding sentence, the
Depositor shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee.
The Majority Certificateholders may at any time remove the Trustee by
written instrument or instruments delivered to the Servicer, the Depositor and
the Trustee and any expenses incurred by the Trustee in connection with such
removal shall be reimbursed to it by the Majority Certificateholders promptly
upon demand therefor; the Depositor shall thereupon use its best efforts to
appoint a successor Trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor Trustee
as provided in Section 8.08.
Section 8.08 Successor Trustee.
Any successor Trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor, the Rating Agencies, the
Servicer and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective, and such successor
-101-
Trustee, without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Trustee. The Depositor,
the Servicer and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully
and certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 8.06 and the appointment of
such successor Trustee shall not result in a downgrading of the Regular
Certificates by either Rating Agency, as evidenced by a letter from each
Rating Agency.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 8.08, the successor Trustee shall mail notice of the appointment
of a successor Trustee hereunder to all Holders of Certificates at their
addresses as shown in the Certificate Register and to each Rating Agency.
Section 8.09 Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
entity succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided such entity shall be eligible under the
provisions of Section 8.06 and 8.08, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust or any Mortgaged Property may at the time be located,
the Depositor 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, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. Any such co-trustee or separate trustee shall be
subject to the written approval of the Servicer. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, or in the case a Servicer Event of Termination shall have
occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor Trustee under Section
8.06, and no notice to Certificateholders of the appointment of any co-trustee
or separate trustee shall be required under Section 8.08. The Servicer shall
be responsible for the fees of any co-trustee or separate trustee appointed
hereunder.
-102-
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust 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 Servicer and the Trustee, acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee
except that following the occurrence of a Servicer Event of Termination,
the Trustee acting alone may accept the resignation or remove any
separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VIII. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Depositor, the Rating Agencies and the
Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
Section 8.11 Limitation of Liability.
The Certificates are executed by the Trustee, not in its individual
capacity but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it by this Agreement. Each of the
undertakings and agreements made on the part of the Trustee in the
Certificates is made and intended not as a personal undertaking or agreement
by the Trustee but is made and intended for the purpose of binding only the
Trust.
-103-
Section 8.12 Trustee May Enforce Claims Without Possession of
Certificates.
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee for the benefit
of all Holders of such Certificates, subject to the provisions of this
Agreement. Any recovery of judgment shall, after provision for the payment of
the reasonable compensation, expenses, disbursement and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the Servicer
and each Certificateholder upon reasonable notice during normal business
hours, access to all records maintained by the Trustee in respect of its
duties hereunder and access to officers of the Trustee responsible for
performing such duties. The Trustee shall cooperate fully with the Seller, the
Servicer, the Depositor and such Certificateholder and shall make available to
the Seller, the Servicer, the Depositor and such Certificateholder for review
and copying at the expense of the party requesting such copies, such books,
documents or records as may be requested with respect to the Trustee's duties
hereunder. The Seller, the Depositor, the Servicer and the Certificateholders
shall not have any responsibility or liability for any action or failure to
act by the Trustee and are not obligated to supervise the performance of the
Trustee under this Agreement or otherwise.
Section 8.13 Suits for Enforcement.
In case a Servicer Event of Termination or other default by the
Servicer or the Seller hereunder shall occur and be continuing, the Trustee
may proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution
of any power granted in this Agreement or for the enforcement of any other
legal, equitable or other remedy, as the Trustee, being advised by counsel,
and subject to the foregoing, shall deem most effectual to protect and enforce
any of the rights of the Trustee and the Certificateholders.
Section 8.14 Waiver of Bond Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee post a bond or other surety with any
court, agency or body whatsoever.
Section 8.15 Waiver of Inventory, Accounting and Appraisal
Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee file any inventory, accounting or
appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.
-104-
ARTICLE IX
REMIC ADMINISTRATION
Section 9.01 REMIC Administration.
(a) The Trustee shall make or cause to be made REMIC elections for
each REMIC designated as such in the Preliminary Statement on Forms 1066 or
other appropriate federal tax or information return for the taxable year
ending on the last day of the calendar year in which the Certificates are
issued. The regular interests and residual interest in each REMIC shall be as
designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of
each REMIC within the meaning of section 860G(a)(9) of the Code.
(c) The Servicer shall pay any and all tax related expenses (not
including taxes) of each REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial
proceedings with respect to such REMIC that involve the Internal Revenue
Service or state tax authorities, but only to the extent that (i) such
expenses are ordinary or routine expenses, including expenses of a routine
audit but not expenses of litigation (except as described in (ii)); or (ii)
such expenses or liabilities (including taxes and penalties) are attributable
to the negligence or willful misconduct of the Servicer in fulfilling its
duties hereunder. The Servicer shall be entitled to reimbursement of expenses
to the extent provided in clause (i) above from the Collection Account.
(d) The Trustee shall prepare or cause to be prepared and shall file
or cause to be filed, each REMIC's federal and state tax and information
returns as such REMIC's direct representative. The expenses of preparing and
filing such returns shall be borne by the Trustee.
(e) The Holder of the Residual Certificates with respect to each
REMIC holding the largest Percentage Interest shall be the "tax matters
person" as defined in the REMIC Provisions (the "Tax Matters Person") with
respect to the applicable REMIC or REMICs, and the Trustee is irrevocably
designated as and shall act as attorney-in-fact and agent for such Tax Matters
Person for each REMIC. The Trustee, as agent for the Tax Matters Person, shall
perform, on behalf of each REMIC, all reporting and other tax compliance
duties that are the responsibility of such REMIC under the Code, the REMIC
Provisions, or other compliance guidance issued by the Internal Revenue
Service or any state or local taxing authority. Among its other duties, if
required by the Code, the REMIC Provisions, or other such guidance, the
Trustee, as agent for the Tax Matters Person, shall provide (i) to the
Treasury or other governmental authority such information as is necessary for
the application of any tax relating to the transfer of a Residual Certificate
to any disqualified person or organization and (ii) to the Certificateholders
such information or reports as are required by the Code or REMIC Provisions.
(f) The Trustee, the Servicer, and the Holders of Certificates shall
take any action or cause any REMIC to take any action necessary to create or
maintain the status of such REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status.
Neither the Trustee, the Servicer, nor the Holder of any Residual
-105-
Certificate shall take any action or cause any REMIC to take any action or
fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of such REMIC as a REMIC or (ii) result in the imposition of a tax upon
such REMIC (including but not limited to the tax on prohibited transactions as
defined in Code Section 860F(a)(2) and the tax on prohibited contributions set
forth on Section 860G(d) of the Code) (either such event, an "Adverse REMIC
Event") unless such action or failure to act is expressly permitted under the
terms of this Agreement or the Trustee and the Servicer have received an
Opinion of Counsel (at the expense of the party seeking to take such action)
to the effect that the contemplated action will not endanger such status or
result in the imposition of such a tax. In addition, prior to taking any
action with respect to any REMIC or the assets therein, or causing such REMIC
to take any action, which is not expressly permitted under the terms of this
Agreement, any Holder of a Residual Certificate will consult with the Trustee
and the Servicer, or their respective designees, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur with respect
to such REMIC, and no such Person shall take any such action or cause such
REMIC to take any such action as to which the Trustee or the Servicer has
advised it in writing that an Adverse REMIC Event could occur.
(g) Each Holder of a Residual Certificate shall pay when due its pro
rata share of any and all taxes imposed on any REMIC by federal or state
governmental authorities. To the extent that such REMIC taxes are not paid by
Residual Certificateholders, the Trustee shall pay any remaining REMIC taxes
out of current or future amounts otherwise distributable to the Holder of the
Residual Certificate in each REMIC or, if no such amounts are available, out
of other amounts held in the Collection Account, and shall reduce amounts
otherwise payable to Holders of the REMIC Regular Interests or the
Certificates, as the case may be.
(h) The Trustee, shall, for federal income tax purposes, maintain or
cause to be maintained books and records with respect to each REMIC on a
calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement with respect to Eligible
Substitute Mortgage Loans.
(j) Neither the Trustee nor the Servicer shall enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.
(k) On or before April 15 of each calendar year beginning in 2004,
the Servicer shall deliver to the Trustee and each Rating Agency an Officer's
Certificate stating the Servicer's compliance with the provisions of this
Section 9.01.
(l) The Trustee shall treat the rights of the Offered Certificates to
receive Net Rate Carryover Amounts as a right in interest rate cap contracts
written by the Holders of the Class X Certificates in favor of the Holders of
the Offered Certificates, and the Trustee shall account for such as property
held separate and apart from the regular interests it holds in each of the
REMICs created hereunder. This provision is intended to satisfy the
requirements of Treasury Regulations Section 1.860G-2(i) for the treatment of
property rights coupled with regular interests to be separately respected and
shall be interpreted consistent with such regulation. On each Distribution
Date, to the extent the Offered Certificates receive interest in
-106-
excess of the Net Rate Cap, such interest will be treated as distributed to
the Class X Certificates in respect of interest on the Class X Interest and
then paid to the respective Class of Offered Certificates pursuant to the
related interest rate cap agreement. For purposes of determining the issue
price of the REMIC Regular Interests, the Trustee shall assume that the
interest rate cap agreement has an aggregate value of $10,000.
Section 9.02 Prohibited Transactions and Activities.
Neither the Seller, the Depositor, the Servicer nor the Trustee shall
sell, dispose of, or substitute for any of the Mortgage Loans, except in a
disposition pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the
bankruptcy of the Trust Fund, (iii) the termination of any REMIC pursuant to
Article X of this Agreement, (iv) a substitution pursuant to Article II of
this Agreement or (v) a repurchase of Mortgage Loans pursuant to Article II of
this Agreement, nor acquire any assets for any REMIC, nor sell or dispose of
any investments in the Distribution Account for gain, nor accept any
contributions to any REMIC after the Closing Date, unless it has received an
Opinion of Counsel (at the expense of the party causing such sale,
disposition, or substitution) that such disposition, acquisition,
substitution, or acceptance will not (a) affect adversely the status of such
REMIC as a REMIC or of the interests therein other than the Residual
Certificates as the regular interests therein, (b) affect the distribution of
interest or principal on the Certificates, (c) result in the encumbrance of
the assets transferred or assigned to the Trust Fund (except pursuant to the
provisions of this Agreement) or (d) cause such REMIC to be subject to a tax
on prohibited transactions or prohibited contributions pursuant to the REMIC
Provisions.
Section 9.03 Indemnification with Respect to Certain Taxes and Loss
of REMIC Status.
In the event that any REMIC formed hereunder fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as
a result of a prohibited transaction or prohibited contribution under the
REMIC Provisions due to the negligent performance by the Servicer of its
duties and obligations set forth herein, the Servicer shall indemnify the
Holder of the related Residual Certificate against any and all losses, claims,
damages, liabilities or expenses ("Losses") resulting from such negligence;
provided, however, that the Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor or the
Holder of such Residual Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of such Residual
Certificate on which the Servicer has relied. The foregoing shall not be
deemed to limit or restrict the rights and remedies of the Holder of such
Residual Certificate now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Servicer have
any liability (1) for any action or omission that is taken in accordance with
and in compliance with the express terms of, or which is expressly permitted
by the terms of, this Agreement, (2) for any Losses other than arising out of
a negligent performance by the Servicer of its duties and obligations set
forth herein, and (3) for any special or consequential damages to
Certificateholders (in addition to payment of principal and interest on the
Certificates).
-107-
Section 9.04 REO Property.
(a) Subject to compliance with applicable laws and regulations as
shall at any time be in force, and notwithstanding any other provision of this
Agreement, the Servicer, acting on behalf of the Trust hereunder, shall not
rent, lease, or otherwise earn income on behalf of any REMIC with respect to
any REO Property which might cause such REO Property to fail to qualify as
"foreclosure" property within the meaning of section 860G(a)(8) of the Code or
result in the receipt by any REMIC of any "income from non-permitted assets"
within the meaning of section 860F(a)(2) of the Code or any "net income from
foreclosure property" which is subject to tax under the REMIC Provisions
unless the Servicer has advised, or has caused the applicable Servicer to
advise, the Trustee in writing to the effect that, under the REMIC Provisions,
such action would not adversely affect the status of any REMIC as a REMIC and
any income generated for such REMIC by the REO Property would not result in
the imposition of a tax upon such REMIC.
(b) The Servicer shall make reasonable efforts to sell any REO
Property for its fair market value. In any event, however, the Servicer shall
dispose of any REO Property before the close of the third calendar year
beginning after the year of its acquisition by the Trust Fund unless the
Servicer has received a grant of extension from the Internal Revenue Service
to the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, any REMIC may hold REO Property
for a longer period without adversely affecting its REMIC status or causing
the imposition of a Federal or state tax upon any REMIC. If the Servicer has
received such an extension, then the Servicer shall continue to attempt to
sell the REO Property for its fair market value as determined in good faith by
the Servicer for such longer period as such extension permits (the "Extended
Period"). If the Servicer has not received such an extension and the Servicer
is unable to sell the REO Property within 33 months after its acquisition by
the Trust Fund or if the Servicer has received such an extension, and the
Servicer is unable to sell the REO Property within the period ending three
months before the close of the Extended Period, the Servicer shall, before the
end of the applicable period, (i) purchase such REO Property at a price equal
to the REO Property's fair market value as determined in good faith by the
Servicer or (ii) auction the REO Property to the highest bidder (which may be
the Servicer) in an auction reasonably designed to produce a fair price prior
to the expiration of the applicable period.
ARTICLE X
TERMINATION
Section 10.01 Termination.
(a) The respective obligations and responsibilities of the Seller,
the Servicer, the Depositor, the Trustee and the Certificate Registrar (other
than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate
upon notice to the Trustee upon the earliest of (i) the Distribution Date on
which the Certificate Principal Balance of each Class of Certificates has been
reduced to zero, (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust, and (iii) the optional purchase by the
-108-
Servicer or an Affiliate of the Servicer of the Mortgage Loans as described
below. Notwithstanding the foregoing, in no event shall the trust created
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the
United States to the Court of St. James's, living on the date hereof.
The Servicer or an Affiliate of the Servicer may, at its option,
terminate the Mortgage Loans in the Trust Fund and retire the Certificates on
the next succeeding Distribution Date upon which the aggregate current Pool
Balance is less than 10% of the aggregate Pool Balance of the Mortgage Loans
as of the Cut-off Date by purchasing all of the outstanding (i) Mortgage Loans
in the Trust Fund at a price equal to the sum of the outstanding Principal
Balance of the Mortgage Loans and except to the extent previously advanced by
the Servicer, accrued and unpaid interest thereon (including any Interest
Carry Forward Amounts) at the weighted average of the Mortgage Interest Rates
through the end of the Collection Period preceding the final Distribution Date
plus unreimbursed Servicing Advances, Advances, Timing Advances and any unpaid
Servicing Fees allocable to such Mortgage Loans and (ii) REO Properties in the
Trust Fund at a price equal to their fair market value as determined in good
faith by the Servicer (the "Termination Price").
In connection with any such purchase pursuant to the preceding
paragraph, the Servicer shall deliver to the Trustee for deposit in the
Distribution Account all amounts then on deposit in the Collection Account
(less amounts permitted to be withdrawn by the Servicer pursuant to Section
3.05), which deposit shall be deemed to have occurred immediately following
such purchase.
Any such purchase shall be accomplished by delivery to the Trustee
for deposit into the Distribution Account as part of Available Funds on the
Determination Date before such Distribution Date of the Termination Price.
(b) Notice of any termination, specifying the Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee upon the Trustee receiving notice of such date from the Servicer
or an Affiliate of the Servicer, by letter to the Certificateholders mailed
not earlier than the 15th day of the month preceding the month of such final
distribution and not later than the 15th day of the month of such final
distribution specifying (1) the Distribution Date upon which final
distribution of the Certificates will be made upon presentation and surrender
of such Certificates at the office or agency of the Trustee therein
designated, (2) the amount of any such final distribution and (3) 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 or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Holders of the Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Class and to the extent that funds are available
for such purpose, an amount equal to the amount required to be
-109-
distributed to such Holders in accordance with the provisions of Sections 4.01
and 4.02 for such Distribution Date.
(d) In the event that all Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for
the benefit of such Certificateholders, and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (in any
other case) 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 nine months
after the second notice all the Certificates shall not have been surrendered
for cancellation, the Class R-1 Certificateholders shall be entitled to all
unclaimed funds and other assets which remain subject hereto (except with
respect to the Class B-1, Class B-2, and Class X Certificates and the assets
of the Class B-1 REMIC, the Class B-2 REMIC and the Class X REMIC) and the
Trustee upon transfer of such funds shall be discharged of any responsibility
for such funds, and such Certificateholders shall look to the Class R-1
Certificateholders for payment. The Class R-2 Certificateholders shall be
entitled to all unclaimed funds and other assets with respect to the Class B-1
REMIC, the Class B-2 REMIC and the Class X REMIC. Holders of the Class B-1
Certificates (representing beneficial ownership of the Class B-1 Interest),
the Class B-2 Certificates (representing beneficial ownership of the Class B-2
Interest) and Class X Certificates (representing beneficial ownership in the
Class X REMIC Regular Interest) shall be entitled to look only to the Class
R-2 Certificateholder for payment.
Section 10.02 Additional Termination Requirements.
(a) In the event that the Servicer exercises its purchase option as
provided in Section 10.01, the Trust shall be terminated in accordance with
the following additional requirements, unless the Trustee shall have been
furnished with an Opinion of Counsel to the effect that the failure of the
Trust to comply with the requirements of this Section will not (i) result in
the imposition of taxes on "prohibited transactions" of the Trust as defined
in Section 860F of the Code or (ii) cause any REMIC constituting part of the
Trust Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(i) The Trustee shall designate a date within 90 days prior to the
final Distribution Date as the date of adoption of plans of complete
liquidation of each of the Master REMIC, the Subsidiary REMIC, the Class
B-1 REMIC, the Class B-2 REMIC and the Class X REMIC and shall specify
such date in the final federal income tax return of each REMIC;
(ii) After the date of adoption of such plans of complete liquidation
and at or prior to the final Distribution Date, the Trustee shall sell
all of the assets of the Trust to the Servicer for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited in the following
-110-
order of priority (A) to the Holders of the Class X-0, Xxxxx X-0, Class
M-1, Class M-2, Class B-1 and Class B-2 Certificates, the related
Certificate Principal Balance, as applicable, plus one month's interest
thereon at the applicable Pass-Through Rate, (B) to the Class X
Certificates in respect of the Class X Interest, the amount of any
remaining Monthly Excess Cash Flow Amounts not previously distributed
thereon, (C) to the remaining REMIC Regular Interests the amounts
allocable thereto pursuant to Section 4.08 and (D) to the Class R
Certificateholders, all cash on hand in respect of the related REMIC or
REMICs after such payment (other than cash retained to meet claims) and
the Trust shall terminate at such time.
(b) By their acceptance of Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) designate such
date of adoption of plans of complete liquidation and (ii) to take such other
action in connection therewith as may be reasonably required to carry out such
plans of complete liquidation all in accordance with the terms hereof.
(c) Notwithstanding any other provision of this Agreement, the Class
B-1 REMIC and the Class B-2 REMIC will terminate on the last Distribution Date
on which the Class B-1 Certificates or the Class B-2 Certificates,
respectively, are entitled to distributions pursuant to this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment.
This Agreement may be amended from time to time by the Seller, the
Depositor, the Servicer and the Trustee; and without the consent of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement
any provisions herein which may be defective or inconsistent with any other
provisions herein, (iii) to amend the provisions of Section 3.22 or (iv) to
make any other provisions with respect to matters or questions arising under
this Agreement, which shall not be inconsistent with the provisions of this
Agreement; provided, however, that any such action listed in clause (i)
through (iv) above shall not adversely affect in any respect the interests of
any Certificateholder, as evidenced by (i) notice in writing to the Depositor,
the Servicer and the Trustee from the Rating Agencies that such action will
not result in the reduction or withdrawal of the rating of any outstanding
Class of Certificates with respect to which it is a Rating Agency, or (ii) an
Opinion of Counsel delivered to the Servicer and the Trustee.
In addition, this Agreement may be amended from time to time by
Seller, the Depositor, the Servicer and the Trustee, with the consent of the
Majority Certificateholders for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment or waiver shall (x) reduce in any
manner the amount of, or delay the timing of, payments on the Certificates
which are required to be made on any Certificate without the consent of the
Holder of such Certificate, (y) adversely
-111-
affect in any material respect the interests of the Holders of any Class of
Certificates (provided that such amendment shall be deemed not to adversely
affect in any material respect the interests of the holders of the
Certificates if the Depositor, the Servicer and the Trustee have received
written notice from the Rating Agencies that such action will not result in
the reduction or withdrawal of the rating of any outstanding Class of
Certificates with respect to which it is a Rating Agency, or an Opinion of
Counsel to that effect delivered to the Servicer and the Trustee) in a manner
other than as described in clause (x) above, without the consent of the
Holders of Certificates of such Class evidencing at least a 66% Percentage
Interest in such Class, or (z) reduce the percentage of Voting Rights required
by clause (y) above without the consent of the Holders of all Certificates of
such Class then outstanding. Upon approval of an amendment, a copy of such
amendment shall be sent to the Rating Agencies. Prior to the execution of any
amendment to this Agreement, the Trustee shall be entitled to receive and rely
upon an Opinion of Counsel (at the expense of the Person seeking such
amendment) stating that the execution of such amendment is authorized or
permitted by this Agreement. The Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties
or immunities under this Agreement.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense
of) the Person seeking such Amendment, to the effect that such amendment will
not result in the imposition of a tax on any REMIC constituting part of the
Trust Fund pursuant to the REMIC Provisions or cause any REMIC constituting
part of the Trust to fail to qualify as a REMIC at any time that any
Certificates are outstanding and that the amendment is being made in
accordance with the terms hereof.
Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is the Seller or the Servicer (but in no event at the expense of the
Trustee), otherwise at the expense of the Trust, a copy of such amendment and
the Opinion of Counsel referred to in the immediately preceding paragraph to
the Servicer and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment;
instead 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 11.02 Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Trust, but only upon direction of
Certificateholders, accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.
-112-
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall together constitute
but one and the same instrument.
Section 11.03 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i)
operate to terminate this Agreement or the Trust, (ii) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
to take any action or proceeding in any court for a partition or winding up of
the Trust, or (iii) otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
Except as expressly provided for herein, no Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third person by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as herein provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder
with every other Certificateholder and the Trustee, that no one or more
Holders of Certificates shall have any right in any manner whatever by virtue
of any provision of this Agreement to affect, disturb or prejudice the rights
of the Holders of any other of such Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 11.03 each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 11.04 Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the
State of New York, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws. With respect to
any claim arising out of this Agreement, each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and
-113-
the United States District Court located in the Borough of Manhattan in The
City of New York, and each party irrevocably waives any objection which it may
have at any time to the laying of venue of any suit, action or proceeding
arising out of or relating hereto brought in any such courts, irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum and further irrevocably
waives the right to object, with respect to such claim, suit, action or
proceeding brought in any such court, that such court does not have
jurisdiction over such party, provided that service of process has been made
by any lawful means.
Section 11.05 Notices.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed
by first class mail, postage prepaid, or by express delivery service, to (a)
in the case of the Seller, Credit-Based Asset Servicing and Securitization
LLC, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, Attention: Director -
Mortgage Finance (telecopy number (000) 000-0000), or such other address or
telecopy number as may hereafter be furnished to the Depositor and the Trustee
and in writing by the Seller, (b) in the case of the Trustee, U.S. Bank
National Association, 00 Xxxxxxxxxx Xxxxxx, XX-XX-XX0X, Xx. Xxxx, Xxxxxxxxx
00000-0000, Attn: Structured Finance-Bond Securitization, 2003-1, or such
other address as may hereafter be furnished to the Depositor, the Seller and
the Servicer in writing by the Trustee, (c) in the case of the Depositor, Bond
Securitization, L.L.C., Xxx Xxxx Xxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, or such
other address as may be furnished to the Seller, the Servicer and the Trustee
in writing by the Depositor, and (d) in the case of the Servicer, Xxxxxx Loan
Servicing LP, 0000 Xxxx Xxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention: Xxxxxx
XxXxxxx, or such other address as may be furnished to the Seller, the
Depositor and the Trustee in writing by the Servicer. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Notice of any Servicer Event of Termination shall be
given by telecopy and by certified mail. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have duly been
given when mailed, whether or not the Certificateholder receives such notice.
A copy of any notice required to be telecopied hereunder shall also be mailed
to the appropriate party in the manner set forth above.
Section 11.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.07 Article and Section References.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
-114-
Section 11.08 Notice to the Rating Agencies.
(a) Each of the Trustee and the Servicer shall be obligated to use
its best reasonable efforts promptly to provide notice to the Rating Agencies
with respect to each of the following of which a Responsible Officer of the
Trustee or the Servicer, as the case may be, has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Event of Termination that has not
been cured or waived;
(iii) the resignation or termination of the Servicer or the Trustee;
(iv) the final payment to Holders of the Certificates of any Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor Servicer pursuant to
Section 7.02 hereof, any event that would result in the inability of the
Trustee to make Advances.
(vii) In addition, the Servicer shall promptly furnish to each Rating
Agency copies of the following:
(A) each annual statement as to compliance described in Section
3.19 hereof;
(B) each annual independent public accountants' servicing report
described in Section 3.20 hereof; and
(C) each notice delivered pursuant to Section 7.01(a) hereof
which relates to the fact that the Servicer has not made an Advance
or a Timing Advance.
Any such notice pursuant to this Section 11.08 shall be in writing
and shall be deemed to have been duly given if personally delivered or mailed
by first class mail, postage prepaid, or by express delivery service to
Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Managing Director, Residential Mortgage-Backed Securities; Fitch
Ratings, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Managing
Director, Residential Mortgage-Backed Securities; and Standard & Poor's
Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Mortgage Surveillance Group.
Section 11.09 Further Assurances.
Notwithstanding any other provision of this Agreement, neither the
Regular Certificateholders nor the Trustee shall have any obligation to
consent to any amendment or modification of this Agreement unless they have
been provided reasonable security or indemnity
-115-
against their out-of-pocket expenses (including reasonable attorneys' fees) to
be incurred in connection therewith.
Section 11.10 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.11 Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or
by agent duly appointed in writing; and such action shall become effective
when such instrument or instruments are delivered to the Trustee, the Seller
and the Servicer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "act"
of the Certificateholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and conclusive in favor
of the Trustee and the Trust, if made in the manner provided in this Section
11.11.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Whenever such execution is by a signer acting in a capacity other than his or
her individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Trustee or
the Trust in reliance thereon, whether or not notation of such action is made
upon such Certificate.
-116-
IN WITNESS WHEREOF, the Seller, the Depositor, the Servicer and the
Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
BOND SECURITIZATION, L.L.C., as
Depositor
By:/s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
CREDIT-BASED ASSET SERVICING AND
SECURITIZATION LLC, as Seller
By: /s/ Xxxx Xxxxxxx
------------------------------
Name: Xxxx Xxxxxxx
Title: Senior Vice President
XXXXXX LOAN SERVICING LP, as
Servicer
By: /s/ Xxxxxx XxXxxxx
------------------------------
Name: Xxxxxx XxXxxxx
Title: Senior Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ X. Xxxxxxxxxxxxxx
------------------------------
Name: X. Xxxxxxxxxxxxxx
Title: Vice President
-117-
STATE OF )
) ss.:
COUNTY OF )
On the [ ] day of December, 2003 before me, a notary public in and
for said State, personally appeared ______________, known to me to be the
_____________ of Bond Securitization, L.L.C., a Delaware limited liability
company that executed the within instrument, and also known to me to be the
person who executed it on behalf of said limited liability company, 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
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the [ ] day of December, 2003 before me, a notary public in and
for said State, personally appeared _________________ known to me to be a
______________ of Credit-Based Asset Servicing and Securitization LLC, a
limited liability company that executed the within instrument, and also known
to me to be the person who executed it on behalf of said limited liability
company, and acknowledged to me that such limited liability company 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
STATE OF ____________ )
) ss.:
COUNTY OF ___________ )
On the [ ] day of December, 2003 before me, a notary public in and
for said State, personally appeared ____________, known to me to be a Vice
President of U.S. Bank National Association, a national banking association
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said association, and acknowledged to me that such
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
STATE OF TEXAS )
) ss.:
COUNTY OF )
On the [ ] day of December, 2003 before me, a notary public in and
for said State, personally appeared _______________, known to me to be a
_______________ of Xxxxxx Loan Servicing LP, a Delaware limited partnership,
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said limited partnership, and acknowledged to me that
such limited partnership 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
EXHIBIT A-1
[FORM OF CLASS A-1 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : November 1, 2003
First Distribution Date : December 26, 2003
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $78,075,000
Original Class Certificate
Principal Balance of this
Class : $78,075,000
Percentage Interest : 100%
Initial Pass-Through Rate : Variable
CUSIP : 00000X XX 7
Class : A-1
Assumed Maturity Date : October 25, 0000
Xxxx Xxxxxxxxxxxxxx Asset-Backed Certificates,
Series 2003-1
Class A-1
evidencing the Percentage Interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to the Trust
consisting of first and second lien mortgage loans (the "Mortgage
Loans")
BOND SECURITIZATION, L.L.C., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class A-1
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Seller, the Servicer, or the Trustee referred
to below or any of their respective affiliates.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Class A-1 Certificate (obtained by dividing the
Denomination of this Class A-1 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Bond Securitization,
L.L.C. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among the Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller (the "Seller"), Xxxxxx Loan Servicing LP, as
Servicer (the "Servicer"), and U.S. Bank National Association, as Trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Class A-1 Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class A-1 Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class A-1
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
This Class A-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2003
By: U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By _____________________________________
This is one of the Class A-1 Certificates
referenced in the within-mentioned Agreement
By ________________________________
Authorized Signatory of
U.S. Bank National Association, as Trustee
3
[Reverse of Class A-1 Certificate]
Bond Securitization Asset-Backed Certificates,
Series 2003-1
This Certificate is one of a duly authorized issue of Certificates
designated as Bond Securitization Asset-Backed Certificates, Series 2003-1
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business
on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to
be distributed to Holders of Certificates of the Class to which this
Certificate belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Regular Certificates of a Class having Denominations aggregating at least
$5,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Seller, the Servicer and the Trustee with the
consent of Holders of the requisite percentage of the Percentage Interests of
each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Seller, Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
Servicer, the Seller, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the Pool Balance is
less than 10% of the Pool Balance as of the Cut-off Date, the Servicer (or one
of its Affiliates) may purchase, in whole, from the Trust the Mortgage Loans
at a purchase price determined as provided in the Agreement. In the event that
no such optional termination occurs, the obligations and responsibilities
created by the Agreement will terminate upon the earlier of (i) the
Distribution Date on which the Certificate Principal Balance of each Class of
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of
the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to
assignee on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________.
Dated: _______________
________________________________________
Signature by or on behalf of assignor
6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_______________________________________________________________________________
_______________________________________________________________________________
for the account of____________________________________________________________,
account number ________________________, or, if mailed by check, to ___________
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________.
This information is provided by ________________________________________,
the assignee named above, or__________________________________________________,
as its agent.
7
EXHIBIT A-2
[FORM OF CLASS A-2 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : November 1, 2003
First Distribution Date : December 26, 2003
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $17,623,000
Original Class Certificate
Principal Balance of this
Class : $17,623,000
Percentage Interest : 100%
Initial Pass-Through Rate : Variable
CUSIP : 09788R AB 5
Class : A-2
Assumed Maturity Date : October 25, 0000
Xxxx Xxxxxxxxxxxxxx Asset-Backed Certificates,
Series 2003-1
Class A-2
evidencing the Percentage Interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to the Trust
consisting of first and second lien mortgage loans (the "Mortgage
Loans")
BOND SECURITIZATION, L.L.C., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class A-2
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Seller, the Servicer, or the Trustee referred
to below or any of their respective affiliates.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Class A-2 Certificate (obtained by dividing the
Denomination of this Class A-2 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Bond Securitization,
L.L.C. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among the Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller (the "Seller"), Xxxxxx Loan Servicing LP, as
Servicer (the "Servicer"), and U.S. Bank National Association, as Trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Class A-2 Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class A-2 Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class A-2
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
This Class A-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2003
By: U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By _____________________________________
This is one of the Class A-2 Certificates
referenced in the within-mentioned Agreement
By ________________________________
Authorized Signatory of
U.S. Bank National Association, as Trustee
3
[Reverse of Class A-2 Certificate]
Bond Securitization Asset-Backed Certificates,
Series 2003-1
This Certificate is one of a duly authorized issue of Certificates
designated as Bond Securitization Asset-Backed Certificates, Series 2003-1
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business
on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to
be distributed to Holders of Certificates of the Class to which this
Certificate belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Regular Certificates of a Class having Denominations aggregating at least
$5,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Seller, the Servicer and the Trustee with the
consent of Holders of the requisite percentage of the Percentage Interests of
each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
4
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Seller, Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
Servicer, the Seller, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the Pool Balance is
less than 10% of the Pool Balance as of the Cut-off Date, the Servicer (or one
of its Affiliates) may purchase, in whole, from the Trust the Mortgage Loans
at a purchase price determined as provided in the Agreement. In the event that
no such optional termination occurs, the obligations and responsibilities
created by the Agreement will terminate upon the earlier of (i) the
Distribution Date on which the Certificate Principal Balance of each Class of
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of
the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to
assignee on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________.
Dated: _____________
______________________________________
Signature by or on behalf of assignor
6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_______________________________________________________________________________
_______________________________________________________________________________
for the account of____________________________________________________________,
account number ________________________, or, if mailed by check, to ___________
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________.
This information is provided by ________________________________________,
the assignee named above, or _________________________________________________,
as its agent.
7
EXHIBIT B-1
[FORM OF CLASS B-1 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986 (THE "CODE").
THIS CLASS B-1 CERTIFICATE IS SUBORDINATE TO THE CLASS X-0, XXXXX X-0, CLASS
M-1 AND CLASS M-2 CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN
AND IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE CERTIFICATE REGISTRAR EITHER A REPRESENTATION
LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION 4975 OF
THE CODE, NOR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR
USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO EFFECT SUCH TRANSFER, OR
IF THIS CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING,
THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY WHICH IS PURCHASING CERTIFICATES
WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" AS SUCH TERM IS
DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE
95-60"), AND THAT THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED
UNDER SECTION I AND III OF PTCE 95-60, OR AN OPINION OF COUNSEL IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. A TRANSFEREE WHO DOES
NOT DELIVER AN OPINION OF COUNSEL OR A REPRESENTATION LETTER, AS DESCRIBED
ABOVE, WILL BE DEEMED TO HAVE MADE ONE OF THE FOREGOING REPRESENTATIONS, AS
APPROPRIATE. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY
PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN SUBJECT TO ERISA OR TO SECTION 4975 OF THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
Certificate No. : 1
Cut-off Date : November 1, 2003
First Distribution Date : December 26, 2003
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $9,970,000
Original Class Certificate
Principal Balance of this
Class : $9,970,000
Percentage Interest : 100%
Initial Pass-Through Rate : Variable
CUSIP : 09788R AE 9
Class : B-1
Assumed Maturity Date : October 25, 2034
2
Bond Securitization Asset-Backed Certificates,
Series 2003-1
Class B-1
evidencing the Percentage Interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to the Trust
consisting of first and second lien mortgage loans (the "Mortgage
Loans")
BOND SECURITIZATION, L.L.C., as Depositor
Principal in respect of this Certificate is distributable monthly
as set forth herein. Accordingly, the Certificate Principal Balance of this
Class B-1 Certificate at any time may be less than the Initial Certificate
Principal Balance set forth on the face hereof, as described herein. This
Class B-1 Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Seller, the Servicer, or the
Trustee referred to below or any of their respective affiliates.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Class B-1 Certificate (obtained by dividing the
Denomination of this Class B-1 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Bond Securitization,
L.L.C. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among the Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller (the "Seller"), Xxxxxx Loan Servicing LP, as
Servicer (the "Servicer"), and U.S. Bank National Association, as Trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Class B-1 Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class B-1 Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class B-1
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
This Class B-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2003
U.S. BANK NATIONAL ASSOCIATION not in its
individual capacity, but solely as Trustee
By _____________________________________
This is one of the Class B-1 Certificates
referenced in the within-mentioned Agreement
By ______________________________________
Authorized Signatory of
U.S. Bank National Association, as Trustee
4
[Reverse of Class B-1 Certificate]
Bond Securitization Asset-Backed Certificates,
Series 2003-1
This Certificate is one of a duly authorized issue of Certificates
designated as Bond Securitization Asset-Backed Certificates, Series 2003-1
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business
on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to
be distributed to Holders of Certificates of the Class to which this
Certificate belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Regular Certificates of a Class having Denominations aggregating at least
$5,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Seller, the Servicer and the Trustee with the
consent of Holders of the requisite percentage of the Percentage Interests of
each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon
5
this Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Seller, Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
Servicer, the Seller, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the Pool Balance is
less than 10% of the Pool Balance as of the Cut-off Date, the Servicer (or one
of its Affiliates) may purchase, in whole, from the Trust the Mortgage Loans
at a purchase price determined as provided in the Agreement. In the event that
no such optional termination occurs, the obligations and responsibilities
created by the Agreement will terminate upon the earlier of (i) the
Distribution Date on which the Certificate Principal Balance of each Class of
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of
the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) ___________________________________
_______________________________________________________________________________
a Percentage Interest equal to ____% evidenced by the within Asset-Backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_______________________________________________________________________________
for the account of _____________________, account number _____________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to _____________________________________
This information is provided by ______________________________________________,
the assignee named above, or ____________________________________, as its agent.
8
EXHIBIT B-2
[FORM OF CLASS B-2 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986 (THE "CODE").
THIS CLASS B-2 CERTIFICATE IS SUBORDINATE TO THE CLASS X-0, XXXXX X-0, CLASS
M-1, CLASS M-2 AND CLASS B-1 CERTIFICATES OF THIS SERIES TO THE EXTENT
DESCRIBED HEREIN AND IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE CERTIFICATE REGISTRAR EITHER A REPRESENTATION
LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION 4975 OF
THE CODE, NOR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR
USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO EFFECT SUCH TRANSFER, OR
OF THIS CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING,
THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY WHICH IS PURCHASING CERTIFICATES
WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" AS SUCH TERM IS
DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE
95-60"), AND THAT THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED
UNDER SECTION I AND III OF PTCE 95-60, OR AN OPINION OF COUNSEL IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. A TRANSFEREE WHO DOES
NOT DELIVER AN OPINION OF COUNSEL OR A REPRESENTATION LETTER, AS DESCRIBED
ABOVE, WILL BE DEEMED TO HAVE MADE ONE OF THE FOREGOING REPRESENTATIONS, AS
APPROPRIATE. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY
PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN SUBJECT TO ERISA OR TO SECTION 4975 OF THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
Certificate No. : 1
Cut-off Date : November 1, 2003
First Distribution Date : December 26, 2003
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $4,057,000
Original Class Certificate
Principal Balance of this
Class : $4,057,000
Percentage Interest : 100%
Initial Pass-Through Rate : Variable
CUSIP : 09788R AF 6
Class : B-2
Assumed Maturity Date : October 25, 2034
2
Bond Securitization Asset-Backed Certificates,
Series 2003-1
Class B-2
evidencing the Percentage Interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to the Trust
consisting of first and second lien mortgage loans (the "Mortgage
Loans")
BOND SECURITIZATION, L.L.C., as Depositor
Principal in respect of this Certificate is distributable monthly
as set forth herein. Accordingly, the Certificate Principal Balance of this
Class B-2 Certificate at any time may be less than the Initial Certificate
Principal Balance set forth on the face hereof, as described herein. This
Class B-2 Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Seller, the Servicer, or the
Trustee referred to below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class B-2 Certificate (obtained by dividing the
Denomination of this Class B-2 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Bond Securitization,
L.L.C. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among the Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller (the "Seller"), Xxxxxx Loan Servicing LP, as
Servicer (the "Servicer"), and U.S. Bank National Association, as Trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Class B-2 Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class B-2 Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class B-2
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
This Class B-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2003
U.S. BANK NATIONAL ASSOCIATION not in its
individual capacity, but solely as Trustee
By _____________________________________
This is one of the Class B-2 Certificates
referenced in the within-mentioned Agreement
By ________________________________
Authorized Signatory of
U.S. Bank National Association, as Trustee
4
[Reverse of Class B-2 Certificate]
Bond Securitization Asset-Backed Certificates,
Series 2003-1
This Certificate is one of a duly authorized issue of Certificates
designated as Bond Securitization Asset-Backed Certificates, Series 2003-1
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business
on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to
be distributed to Holders of Certificates of the Class to which this
Certificate belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Regular Certificates of a Class having Denominations aggregating at least
$5,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Seller, the Servicer and the Trustee with the
consent of Holders of the requisite percentage of the Percentage Interests of
each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon
5
this Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Seller, Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
Servicer, the Seller, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the Pool Balance is
less than 10% of the Pool Balance as of the Cut-off Date, the Servicer (or one
of its Affiliates) may purchase, in whole, from the Trust the Mortgage Loans
at a purchase price determined as provided in the Agreement. In the event that
no such optional termination occurs, the obligations and responsibilities
created by the Agreement will terminate upon the earlier of (i) the
Distribution Date on which the Certificate Principal Balance of each Class of
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of
the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) ___________________________________
_______________________________________________________________________________
a Percentage Interest evidenced by the within Certificate and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a
like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address: ____________________________________
Dated:
______________________________________
Signature by or on behalf of assignor
______________________________________
Signature Guaranteed
7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_______________________________________________________________________________
for the account of _____________________, account number _____________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to _____________________________________
This information is provided by ______________________________________________,
the assignee named above, or ____________________________________, as its agent.
8
EXHIBIT C-1-I
[FORM OF CLASS R-1 CERTIFICATE]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R-1 CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST
AND WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE CERTIFICATE REGISTRAR EITHER A REPRESENTATION
LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION 4975 OF
THE CODE, NOR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR
USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO EFFECT SUCH TRANSFER, OR
AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT
REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY
PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN SUBJECT TO ERISA OR TO SECTION 4975 OF THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
Certificate No. 1
Percentage Interest: 100%
Bond Securitization Asset-Backed Certificates,
Series 2003-1
Class R-1
evidencing the Percentage Interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to the Trust
consisting of first and second lien mortgage loans (the "Mortgage
Loans")
BOND SECURITIZATION, L.L.C., as Depositor
This Class R-1 Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Seller, the Servicer,
or the Trustee referred to below or any of their respective affiliates.
This certifies that _______________________________ is the registered
owner of the Percentage Interest evidenced by this Class R-1 Certificate in
certain monthly distributions with respect to a Trust consisting primarily of
the Mortgage Loans deposited by Bond Securitization, L.L.C. (the "Depositor").
The Trust was created pursuant to a Pooling and Servicing Agreement dated as
of the Cut-off Date specified above (the "Agreement") among the Depositor,
Credit-Based Asset Servicing and Securitization LLC, as Seller (the "Seller"),
Xxxxxx Loan Servicing LP, as Servicer (the "Servicer"), and U.S. Bank National
Association, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement.
This Class R-1 Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class R-1 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class R-1
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
This Class R-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2003
U.S. BANK NATIONAL ASSOCIATION not in its
individual capacity, but
solely as Trustee
By ___________________________
This is one of the Class R-1 Certificates
referenced in the within-mentioned Agreement
By ________________________________
Authorized Signatory of
U.S. Bank National Association, as Trustee
3
[Reverse of Class R-1 Certificate]
Bond Securitization Asset-Backed Certificates,
Series 2003-1
This Certificate is one of a duly authorized issue of Certificates
designated as Bond Securitization Asset-Backed Certificates, Series 2003-1
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business
on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to
be distributed to Holders of Certificates of the Class to which this
Certificate belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Regular Certificates of a Class having Denominations aggregating at least
$5,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Seller, the Servicer and the Trustee with the
consent of Holders of the requisite percentage of the Percentage Interests of
each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and
4
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Seller, Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
Servicer, the Seller, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the Pool Balance is
less than 10% of the Pool Balance as of the Cut-off Date, the Servicer (or one
of its Affiliates) may purchase, in whole, from the Trust the Mortgage Loans
at a purchase price determined as provided in the Agreement. In the event that
no such optional termination occurs, the obligations and responsibilities
created by the Agreement will terminate upon the earlier of (i) the
Distribution Date on which the Certificate Principal Balance of each Class of
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of
the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to
assignee on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
Dated: _____________
______________________________________
Signature by or on behalf of assignor
6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_______________________________________________________________________________
_______________________________________________________________________________
for the account of____________________________________________________________,
account number ________________________, or, if mailed by check, to ___________
______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________.
This information is provided by ________________________________________,
the assignee named above, or _________________________________________________,
as its agent.
7
EXHIBIT C-1-II
[FORM OF CLASS R-2 CERTIFICATE]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R-2 CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST
AND WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE CERTIFICATE REGISTRAR EITHER A REPRESENTATION
LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION 4975 OF
THE CODE, NOR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR
USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO EFFECT SUCH TRANSFER, OR
AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT
REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY
PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN SUBJECT TO ERISA OR TO SECTION 4975 OF THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
Certificate No. 1
Percentage Interest: 100%
Bond Securitization Asset-Backed Certificates,
Series 2003-1
Class R-2
evidencing the Percentage Interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to the Trust
consisting of first and second lien mortgage loans (the "Mortgage
Loans")
BOND SECURITIZATION, L.L.C., as Depositor
This Class R-2 Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Seller, the Servicer,
or the Trustee referred to below or any of their respective affiliates.
This certifies that ______________________________ is the registered
owner of the Percentage Interest evidenced by this Class R-2 Certificate in
certain monthly distributions with respect to a Trust consisting primarily of
the Mortgage Loans deposited by Bond Securitization, L.L.C. (the "Depositor").
The Trust was created pursuant to a Pooling and Servicing Agreement dated as
of the Cut-off Date specified above (the "Agreement") among the Depositor,
Credit-Based Asset Servicing and Securitization LLC, as Seller (the "Seller"),
Xxxxxx Loan Servicing LP, as Servicer (the "Servicer"), and U.S. Bank National
Association, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement.
This Class R-2 Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class R-2 Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class R-2
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
This Class R-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2003
U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By ___________________________
This is one of the Class R-2 Certificates
referenced in the within-mentioned Agreement
By ________________________________
Authorized Signatory of
U.S. Bank National Association, as Trustee
3
[Reverse of Class R-2 Certificate]
Bond Securitization Asset-Backed Certificates,
Series 2003-1
This Certificate is one of a duly authorized issue of Certificates
designated as Bond Securitization Asset-Backed Certificates, Series 2003-1
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business
on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to
be distributed to Holders of Certificates of the Class to which this
Certificate belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Regular Certificates of a Class having Denominations aggregating at least
$5,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Seller, the Servicer and the Trustee with the
consent of Holders of the requisite percentage of the Percentage Interests of
each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and
4
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Seller, Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
Servicer, the Seller, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the Pool Balance is
less than 10% of the Pool Balance as of the Cut-off Date, the Servicer (or one
of its Affiliates) may purchase, in whole, from the Trust the Mortgage Loans
at a purchase price determined as provided in the Agreement. In the event that
no such optional termination occurs, the obligations and responsibilities
created by the Agreement will terminate upon the earlier of (i) the
Distribution Date on which the Certificate Principal Balance of each Class of
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of
the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to
assignee on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
______________________________________________________________________________
Dated: _____________
______________________________________
Signature by or on behalf of assignor
6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
_______________________________________________________________________________
_______________________________________________________________________________
for the account of____________________________________________________________,
account number ________________________, or, if mailed by check, to ___________
______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
______________________________________________________________________________.
This information is provided by ________________________________________,
the assignee named above, or _________________________________________________,
as its agent.
7
EXHIBIT C-2
[FORM OF CLASS M-1 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986 (THE "CODE").
THIS CLASS M-1 CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 AND CLASS A-2
CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE CERTIFICATE REGISTRAR EITHER A REPRESENTATION
LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION 4975 OF
THE CODE, NOR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR
USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO EFFECT SUCH TRANSFER, OR
THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY WHICH IS PURCHASING CERTIFICATES
WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" AS SUCH TERM IS
DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE
95-60"), AND THAT THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED
UNDER SECTION I AND III OF PTCE 95-60, OR AN OPINION OF COUNSEL IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING
ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS
CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO
SECTION 4975 OF THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE
TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
Certificate No. : 1
Cut-off Date : November 1, 2003
First Distribution Date : December 26, 2003
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $14,785,000
Original Class Certificate
Principal Balance of this
Class : $14,785,000
Percentage Interest : 100%
Initial Pass-Through Rate : Variable
CUSIP : 09788R AC 3
Class : M-1
Assumed Maturity Date : October 25, 2034
2
Bond Securitization Asset-Backed Certificates,
Series 2003-1
Class M-1
evidencing the Percentage Interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to the Trust
consisting of first and second lien mortgage loans (the "Mortgage
Loans")
BOND SECURITIZATION, L.L.C., as Depositor
Principal in respect of this Certificate is distributable monthly
as set forth herein. Accordingly, the Certificate Principal Balance of this
Class M-1 Certificate at any time may be less than the Initial Certificate
Principal Balance set forth on the face hereof, as described herein. This
Class M-1 Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Seller, the Servicer, or the
Trustee referred to below or any of their respective affiliates.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Class M-1 Certificate (obtained by dividing the
Denomination of this Class M-1 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Bond Securitization,
L.L.C. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among the Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller (the "Seller"), Xxxxxx Loan Servicing LP, as
Servicer (the "Servicer"), and U.S. Bank National Association, as Trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Class M-1 Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-1 Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class M-1
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
This Class M-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2003
U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By _____________________________________
This is one of the Class M-1 Certificates
referenced in the within-mentioned Agreement
By ________________________________
Authorized Signatory of
U.S. Bank National Association, as Trustee
4
[Reverse of Class M-1 Certificate]
Bond Securitization Asset-Backed Certificates,
Series 2003-1
This Certificate is one of a duly authorized issue of Certificates
designated as Bond Securitization Asset-Backed Certificates, Series 2003-1
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business
on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to
be distributed to Holders of Certificates of the Class to which this
Certificate belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Regular Certificates of a Class having Denominations aggregating at least
$5,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Seller, the Servicer and the Trustee with the
consent of Holders of the requisite percentage of the Percentage Interests of
each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
5
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Seller, Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
Servicer, the Seller, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the Pool Balance is
less than 10% of the Pool Balance as of the Cut-off Date, the Servicer (or one
of its Affiliates) may purchase, in whole, from the Trust the Mortgage Loans
at a purchase price determined as provided in the Agreement. In the event that
no such optional termination occurs, the obligations and responsibilities
created by the Agreement will terminate upon the earlier of (i) the
Distribution Date on which the Certificate Principal Balance of each Class of
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of
the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto __________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) ___________________________________
_______________________________________________________________________________
a Percentage Interest evidenced by the within and hereby authorize(s) the
registration of transfer of such interest to assignee on the Certificate
Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a like
Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
_______________________________________________________________________________
for the account of _____________________, account number _____________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to _____________________________________
This information is provided by ______________________________________________,
the assignee named above, or ____________________________________, as its agent.
8
EXHIBIT C-3
[FORM OF CLASS M-2 CERTIFICATE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986 (THE "CODE").
THIS CLASS M-2 CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2 AND
CLASS M-1 CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE CERTIFICATE REGISTRAR EITHER A REPRESENTATION
LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION 4975 OF
THE CODE, NOR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR
USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO EFFECT SUCH TRANSFER, OR
THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY WHICH IS PURCHASING CERTIFICATES
WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" AS SUCH TERM IS
DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE
95-60"), AND THAT THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED
UNDER SECTION I AND III OF PTCE 95-60, OR AN OPINION OF COUNSEL IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING
ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS
CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO
SECTION 4975 OF THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE
TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
Certificate No. : 1
Cut-off Date : November 1, 2003
First Distribution Date : December 26, 2003
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $11,830,000
Original Class Certificate
Principal Balance of this
Class : $11,830,000
Percentage Interest : 100%
Initial Pass-Through Rate : Variable
CUSIP : 09788R AD 1
Class : M-2
Assumed Maturity Date : October 25, 2034
2
Bond Securitization Asset-Backed Certificates,
Series 2003-1
Class M-2
evidencing the Percentage Interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to the Trust
consisting of first and second lien mortgage loans (the "Mortgage
Loans")
BOND SECURITIZATION, L.L.C., as Depositor
Principal in respect of this Certificate is distributable monthly
as set forth herein. Accordingly, the Certificate Principal Balance of this
Class M-2 Certificate at any time may be less than the Initial Certificate
Principal Balance set forth on the face hereof, as described herein. This
Class M-2 Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Seller, the Servicer, or the
Trustee referred to below or any of their respective affiliates.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Class M-2 Certificate (obtained by dividing the
Denomination of this Class M-2 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Bond Securitization,
L.L.C. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of the Cut-off Date specified above (the
"Agreement") among the Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller (the "Seller"), Xxxxxx Loan Servicing LP, as
Servicer (the "Servicer"), and U.S. Bank National Association, as Trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Class M-2 Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-2 Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class M-2
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
This Class M-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2003
U.S. BANK NATIONAL ASSOCIATION not in its
individual capacity, but solely as Trustee
By _____________________________________
This is one of the Class M-2 Certificates
referenced in the within-mentioned Agreement
By ________________________________
Authorized Signatory of
U.S. Bank National Association, as Trustee
4
[Reverse of Class M-2 Certificate]
Bond Securitization Asset-Backed Certificates,
Series 2003-1
This Certificate is one of a duly authorized issue of Certificates
designated as Bond Securitization Asset-Backed Certificates, Series 2003-1
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business
on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to
be distributed to Holders of Certificates of the Class to which this
Certificate belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Regular Certificates of a Class having Denominations aggregating at least
$5,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Seller, the Servicer and the Trustee with the
consent of Holders of the requisite percentage of the Percentage Interests of
each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
5
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Seller, Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
Servicer, the Seller, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the Pool Balance is
less than 10% of the Pool Balance as of the Cut-off Date, the Servicer (or one
of its Affiliates) may purchase, in whole, from the Trust the Mortgage Loans
at a purchase price determined as provided in the Agreement. In the event that
no such optional termination occurs, the obligations and responsibilities
created by the Agreement will terminate upon the earlier of (i) the
Distribution Date on which the Certificate Principal Balance of each Class of
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of
the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) ___________________________________
_______________________________________________________________________________
a Percentage Interest evidenced by the within Certificate and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a
like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to
____________________________________________________________________________
_______________________________________________________________________________
for the account of _____________________, account number _____________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to _____________________________________
This information is provided by ______________________________________________,
the assignee named above, or ____________________________________, as its agent.
8
EXHIBIT C-4
[FORM OF CLASS X CERTIFICATE]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986 (THE "CODE").
THIS CLASS X CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES TO THE
EXTENT DESCRIBED HEREIN AND IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CLASS X CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS X CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION
THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE CERTIFICATE REGISTRAR EITHER A REPRESENTATION
LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED, OR A PLAN OR ARRANGEMENT SUBJECT TO SECTION 4975 OF
THE CODE, NOR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT OR
USING THE ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO EFFECT SUCH TRANSFER, OR
AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT
REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY
PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN SUBJECT TO ERISA OR TO SECTION 4975 OF THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
Certificate No. : 1
Cut-off Date : November 1, 2003
First Distribution Date : December 26, 2003
Percentage Interest : 100%
Initial Pass-Through Rate : Variable
Class : X
Assumed Maturity Date : October 25, 2034
2
Bond Securitization Asset-Backed Certificates,
Series 2003-1
Class X
evidencing the Percentage Interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to the Trust
consisting of first and second lien mortgage loans (the "Mortgage
Loans")
BOND SECURITIZATION, L.L.C., as Depositor
This Class X Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Seller, the Servicer,
or the Trustee referred to below or any of their respective affiliates.
This certifies that Credit-Based Asset Servicing and Securitization LLC
is the registered owner of the Percentage Interest evidenced by this Class X
Certificate obtained by dividing the Denomination of this Class X Certificate
by the Original Class Certificate Principal Balance in certain monthly
distributions with respect to a Trust consisting primarily of the Mortgage
Loans deposited by Bond Securitization, L.L.C. (the "Depositor"). The Trust
was created pursuant to a Pooling and Servicing Agreement dated as of the
Cut-off Date specified above (the "Agreement") among the Depositor,
Credit-Based Asset Servicing and Securitization LLC, as Seller (the "Seller"),
Xxxxxx Loan Servicing LP, as Servicer (the "Servicer"), and U.S. Bank National
Association, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement.
This Class X Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class X Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Reference is hereby made to the further provisions of this Class X
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
This Class X Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: December __, 2003
U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By _____________________________________
This is one of the Class X Certificates
referenced in the within-mentioned Agreement
By ________________________________
Authorized Signatory of
U.S. Bank National Association, as Trustee
4
[Reverse of Class X Certificate]
Bond Securitization Asset-Backed Certificates,
Series 2003-1
This Certificate is one of a duly authorized issue of Certificates
designated as Bond Securitization Asset-Backed Certificates, Series 2003-1
(herein collectively called the "Certificates"), and representing a beneficial
ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business
on the applicable Record Date in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to
be distributed to Holders of Certificates of the Class to which this
Certificate belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Regular Certificates of a Class having Denominations aggregating at least
$5,000,000, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Seller, the Servicer and the Trustee with the
consent of Holders of the requisite percentage of the Percentage Interests of
each Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon
5
this Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the office or agency maintained by the Trustee in New York, New York
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Seller, Trustee and the Certificate
Registrar and any agent of the Depositor, the Servicer, the Seller, Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
Servicer, the Seller, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the Pool Balance is
less than 10% of the Pool Balance as of the Cut-off Date, the Servicer (or one
of its Affiliates) may purchase, in whole, from the Trust the Mortgage Loans
at a purchase price determined as provided in the Agreement. In the event that
no such optional termination occurs, the obligations and responsibilities
created by the Agreement will terminate upon the earlier of (i) the
Distribution Date on which the Certificate Principal Balance of each Class of
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of
the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee) ___________________________________
_______________________________________________________________________________
a Percentage Interest evidenced by the within Certificate and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a
like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:____________________________________
______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _____________________, account number _____________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to _____________________________________
This information is provided by ______________________________________________,
the assignee named above, or ____________________________________, as its agent.
8
EXHIBIT D
MORTGAGE LOAN SCHEDULE
ON FILE WITH TRUSTEE
D-1
EXHIBIT E
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
To: U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx,
XX-XX-XX0X, Xx. Xxxx, Xxxxxxxxx 00000-0000
Attn: Bond Securitization Asset-Backed Certificates, Series 2003-1
Re: Pooling and Servicing Agreement dated as of November 1, 2003
among Bond Securitization, L.L.C., as depositor, Credit-Based
Asset Servicing and Securitization LLC, as seller, Xxxxxx Loan
Servicing LP, as servicer and U.S. Bank National Association, as
trustee
-----------------------------------------------------------------
All capitalized terms used herein shall have the means ascribed to
them in the Pooling and Servicing Agreement (the "Agreement") referenced
above.
In connection with the administration of the Mortgage Loans held
by you as Trustee pursuant to the Agreement, we request the release, and
hereby acknowledge receipt, of the Trustee's Mortgage File for the Mortgage
Loan described below, for the reason indicated.
Mortgage Loan Number:
--------------------
Mortgagor Name, Address & Zip Code:
----------------------------------
Reason for Requesting Documents (check one):
-------------------------------------------
_____ 1. Mortgage Paid in Full
_____ 2. Foreclosure
_____ 3. Substitution
_____ 4. Other Liquidation (Repurchases, etc.)
E-1
_____ 5. Nonliquidation Reason:_________________________
By:_______________________
(authorized signer)
Issuer:___________________
Address:__________________
__________________________
Date:_____________________
Custodian
---------
The Bank of New York
Please acknowledge the execution of the above request by your signature and
date below:
_____________________________ ______________________
Signature Date
Documents returned to Custodian:
_____________________________ ______________________
Custodian Date
E-2
EXHIBIT F-1
FORM OF TRUSTEE'S INITIAL CERTIFICATION
[Date]
Bond Securitization, L.L.C.
Xxx Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of November 1, 2003 among Bond
Securitization, L.L.C., as depositor, Credit-Based Asset
Servicing and Securitization LLC, as seller, Xxxxxx Loan
Servicing LP, as servicer and U.S. Bank National
Association, as trustee with respect to Bond Securitization
Asset-Backed Certificates, Series 2003-1
-----------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that it received
confirmation from the Custodian that the Custodian has received the documents
listed in Section 2.01 of the Pooling and Servicing Agreement for each
Mortgage File pertaining to each Mortgage Loan listed on Schedule A, to the
Pooling and Servicing Agreement, subject to any exceptions noted on Schedule I
hereto.
Capitalized words and phrases used herein and not otherwise
defined herein shall have the respective meanings assigned to them in the
Pooling and Servicing Agreement. This Certificate is subject in all respects
to the terms of Section 2.02 of the Pooling and Servicing Agreement and the
Pooling and Servicing Agreement sections cross-referenced therein.
U.S. BANK NATIONAL ASSOCIATION
as Trustee
By:___________________________________
Name:
Title:
F-1-1
EXHIBIT F-2
FORM OF TRUSTEE'S FINAL CERTIFICATION
[Date]
Bond Securitization, L.L.C.
Xxx Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of November 1, 2003 among Bond
Securitization, L.L.C., as depositor, Credit-Based Asset
Servicing and Securitization LLC, as seller, Xxxxxx Loan
Servicing LP, as servicer and U.S. Bank National
Association, as trustee with respect to Bond Securitization
Asset-Backed Certificates, Series 2003-1
-----------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on Schedule I hereto) it received confirmation
from the Custodian that the Custodian has received the applicable documents
listed in Section 2.01 of the Pooling and Servicing Agreement.
The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed
on Schedule I hereto, it has reviewed the documents listed above and has
determined that each such document appears to be complete and, based on an
examination of such documents, the information set forth in the Mortgage Loan
Schedule is correct.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
This Certificate is qualified in all respects by the terms of said Pooling and
Servicing Agreement.
U.S. BANK NATIONAL ASSOCIATION as
Trustee
By:
-------------------------------------
Name:
Title:
F-2-1
EXHIBIT F-3
FORM OF RECEIPT OF MORTGAGE NOTE
Bond Securitization, L.L.C.
Xxx Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Bond Securitization Asset-Backed Certificates,
Series 2003-1
---------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.01 of the Pooling and Servicing Agreement,
dated as of November 1, 2003, among Bond Securitization, L.L.C., as depositor,
Credit-Based Asset Servicing and Securitization LLC, as seller, Xxxxxx Loan
Servicing LP, as servicer and U.S. Bank National Association, as trustee (the
"Trustee"), we hereby acknowledge the receipt of the original Mortgage Note (a
copy of which is attached hereto as Exhibit 1) with any exceptions thereto
listed on Exhibit 2.
U.S. BANK NATIONAL ASSOCIATION as
Trustee
By:
-------------------------------------
Name:
Title:
F-3-1
EXHIBIT G
MORTGAGE LOAN PURCHASE AGREEMENT
SEE TAB 4
G-1
EXHIBIT H
FORM OF LOST NOTE AFFIDAVIT
Personally appeared before me the undersigned authority to administer
oaths, ______________________ who first being duly sworn deposes and says:
Deponent is ______________________ of ______________________________,
successor by merger to _________________________________________ ("Seller")
and who has personal knowledge of the facts set out in this affidavit.
On ___________________, _________________________ did execute and
deliver a promissory note in the principal amount of $__________.
That said note has been misplaced or lost through causes unknown and
is presently lost and unavailable after diligent search has been made.
Seller's records show that an amount of principal and interest on said note is
still presently outstanding, due, and unpaid, and Seller is still owner and
holder in due course of said lost note.
Seller executes this Affidavit for the purpose of inducing U.S. Bank
National Association, as trustee on behalf of Bond Securitization Asset-Backed
Certificates, Series 2003-1, to accept the transfer of the above described
loan from Seller.
Seller agrees to indemnify and hold harmless U.S. Bank National
Association, Bond Securitization, L.L.C., Banc One Capital Markets, Inc.,
Citigroup Global Markets Inc. and Xxxxxx Xxxxxx & Company, Inc. for any losses
incurred by such parties resulting from the above described promissory note
has been lost or misplaced.
By:___________________________________
STATE OF )
) SS:
COUNTY OF )
On this ____ day of _______ 20__, before me, a Notary Public, in and
for said County and State, appeared ________________________, who acknowledged
the extension of the foregoing and who, having been duly sworn, states that
any representations therein contained are true.
Witness my hand and Notarial Seal this ____ day of _______ 20__.
_______________________________
_______________________________
My commission expires ________________.
H-1
EXHIBIT I
FORM OF ERISA REPRESENTATION
Bond Securitization, L.L.C.
Xxx Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Bond Securitization Asset-Backed Certificates, Series
2003-1, Class [ ]
-----------------------------------------------------
Ladies and Gentlemen:
1. The undersigned is the ______________________ of (the
"Transferee") a [corporation] duly organized and existing under the laws of
__________, on behalf of which he/she makes this affidavit.
2. The Transferee hereby acknowledges that under the terms of the
Pooling and Servicing Agreement (the "Agreement") among Bond Securitization,
L.L.C., as depositor (the "Depositor"), Credit-Based Asset Servicing and
Securitization LLC, as seller, Xxxxxx Loan Servicing LP, as servicer and U.S.
Bank National Association, as trustee (the "Trustee"), no transfer of the
ERISA-Restricted Certificates shall be permitted to be made to any person
unless the Depositor and the Trustee (as defined in the Agreement) have
received a certificate from such transferee in the form hereof.
3. The Transferee either (x)(i) is not an employee benefit plan or
arrangement subject to Section 406 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), a plan or arrangement subject to Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code"), the
Trustee of any such plan or a person acting on behalf of any such plan or
arrangement or using the assets of any such plan or arrangement or (ii)
(except in the case of the Class X and Residual Certificates and, until they
have been the subject of an ERISA-Qualifying Underwriting, the Class B-1 and
Class B-2 Certificates) is an insurance company which is purchasing such
Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60") and the purchase and holding of such
Certificates are covered under Sections I and III of PTCE 95-60 or (y) has
delivered to the Certificate Registrar an opinion of counsel satisfactory to
the Certificate Registrar, the Servicer and the Depositor, and upon which the
Trustee, the Depositor, the Servicer and the Certificate Registrar shall be
entitled to rely, to the effect that the purchase or holding of such
Certificate by the Transferee will not result in a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code and will not subject the
Trustee, the Depositor or the Servicer to any obligation in addition to those
undertaken by such entities in the Pooling and Servicing Agreement, which
opinion of counsel shall not be an expense of the Trust, the Depositor, the
Certificate Registrar or the Servicer.
Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Agreement.
I-1
IN WITNESS WHEREOF, the Transferee has executed this certificate.
___________________________________
[Transferee]
By:________________________________
Name:
Title:
I-2
EXHIBIT J
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Bond Securitization, L.L.C.
Xxx Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx,
XX-XX-XX0X,
Xx. Xxxx, Xxxxxxxxx 00000-0000
Re: Bond Securitization Asset-Backed Certificates, Series 2003-1
------------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the Bond Securitization
Asset-Backed Certificates, Series 2003-1 (the "Certificates"), we certify that
(a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws
and are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are acquiring the Certificates for
investment for our own account and not with a view to any distribution of such
Certificates (but without prejudice to our right at all times to sell or
otherwise dispose of the Certificates in accordance with clause (g) below),
(e) we agree that the Certificates must be held indefinitely by us and we
acknowledge that we are able to bear the economic risk of investment in the
Certificates, (f) we have not offered or sold any Certificates to, or
solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, or taken any
other action which would result in a violation of Section 5 of the Act, (g) we
will not sell, transfer or otherwise dispose of any Certificates unless (1)
such sale, transfer or other disposition is made pursuant to an effective
registration statement under the Act or is exempt from such registration
requirements, and if requested, we will at our expense provide an opinion of
counsel satisfactory to the addressees of this Certificate that such sale,
transfer or other disposition may be made pursuant to an exemption from the
Act, (2) the purchaser or transferee of such Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with
any conditions for transfer set forth in the
J-1
Pooling and Servicing Agreement and (h) we acknowledge that the Certificates
will bear a legend setting forth the applicable restrictions on transfer.
Very truly yours,
[NAME OF TRANSFEREE]
By:___________________________________
Authorized Officer
J-2
FORM OF RULE 144A INVESTMENT LETTER
[DATE]
Bond Securitization, L.L.C.
Xxx Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
U.S. Bank National Association
00 Xxxxxxxxxx Xxxxxx,
XX-XX-XX0X,
Xx. Xxxx, Xxxxxxxxx 00000-0000
Re: Bond Securitization Asset-Backed Certificates, Series 2003-1
------------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the Bond Securitization
Asset-Backed Certificates, Series 2003-1 (the "Certificates"), we certify that
(a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws
and are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto
or any additional information deemed necessary to our decision to purchase the
Certificates, (c) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, that would
constitute a distribution of the Certificates under the Securities Act or that
would render the disposition of the Certificates a violation of Section 5 of
the Securities Act or require registration pursuant thereto, nor will act, nor
has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (d) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that such Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be
a qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.
J-3
Very truly yours,
[NAME OF TRANSFEREE]
By:___________________________________
Authorized Officer
J-4
ANNEX 1 TO EXHIBIT J
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
i. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
ii. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $_____ 1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts
or similar business trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision over
any such institutions or is a foreign savings and loan association
or equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
_______________
1 Buyer must own and/or invest on a discretionary basis at least $__________
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $__________ in securities.
J-5
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State, territory
or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
___ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisors
Act of 1940.
iii. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned
but subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
iv. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used
the cost of such securities to the Buyer and did not include any of the
securities referred to in the preceding paragraph, except (i) where the Buyer
reports its securities holdings in its financial statements on the basis of
their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market. Further, in
determining such aggregate amount, the Buyer may have included securities
owned by subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared in accordance
with generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Buyer's direction. However, such securities
were not included if the Buyer is a majority-owned, consolidated subsidiary of
another enterprise and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
v. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule 144A.
J-6
vi. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of
any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Buyer is a bank or savings and loan is provided above, the
Buyer agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
________________________________________
Print Name of Buyer
By: ____________________________________
Name:
Title:
Date: __________________________________
J-7
ANNEX 2 TO EXHIBIT J
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year. For purposes of determining the amount of securities owned
by the Buyer or the Buyer's Family of Investment Companies, the cost of such
securities was used, except (i) where the Buyer or the Buyer's Family of
Investment Companies reports its securities holdings in its financial
statements on the basis of their market value, and (ii) no current information
with respect to the cost of those securities has been published. If clause
(ii) in the preceding sentence applies, the securities may be valued at
market.
___ The Buyer owned $_____ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with
Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $_____ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with
Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue
of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed
by the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii)
currency, interest rate and commodity swaps.
J-8
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to
which this certification relates of any changes in the information and
conclusions herein. Until such notice is given, the Buyer's purchase of the
Certificates will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
_______________________________________
Print Name of Buyer or Adviser
By: ___________________________________
Name:
Title:
IF AN ADVISER:
_______________________________________
Print Name of Buyer
Date: _________________________________
J-9
EXHIBIT K
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT
BOND SECURITIZATION ASSET-BACKED CERTIFICATES, SERIES 2003-1
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is the proposed Transferee of an Ownership
Interest in the [Class R-1 and/or Class R-2 Certificates] (the "Certificates")
issued pursuant to the Pooling and Servicing Agreement, (the "Agreement"),
relating to the above-referenced Certificates, among Bond Securitization,
L.L.C., as depositor, Credit-Based Asset Servicing and Securitization LLC, as
seller, Xxxxxx Loan Servicing LP, as servicer, and U.S. Bank National
Association, as trustee (the "Trustee"). Capitalized terms used, but not
defined herein shall have the meanings ascribed to such terms in the
Agreement. The Transferee has authorized the undersigned to make this
affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificates either (i) for its own account or (ii)
as nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit.
The Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a
tax will be imposed on Transfers of the Certificates to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificates if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
K-1
5. The Transferee has reviewed the provisions of Section 5.02(d) of
the Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificates including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 5.02(d) of the Agreement and the
restrictions noted on the face of the Certificates. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificates, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth in this Exhibit K to the Agreement (a "Transferor Certificate")
to the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect
to the Certificates.
8. The Transferee's taxpayer identification number is _____________.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificates may be a
"noneconomic residual interest" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan or other plan or
arrangement that is subject to ERISA or to Section 4975 of the Code, nor is
the Transferee acting on behalf of or investing plan assets of such a plan or
arrangement.
K-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ______ day of ____________, 20__.
[NAME OF TRANSFEREE]
By: ____________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
___________________________
Authorized Signatory
Personally appeared before me the above-named _____________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the ______________________ of the Transferee, and
acknowledged that he executed the same as his free act and deed and the free
act and deed of the Transferee.
Subscribed and sworn before me this _____ day of ________, 20___.
___________________________________
NOTARY PUBLIC
My Commission expires the _____ day
of ___________, 20__.
K-3
EXHIBIT L
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Bond Securitization, L.L.C.
Xxx Xxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Bond Securitization Asset-Backed Certificates, Series 2003-1
------------------------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the Bond Securitization
Asset-Backed Certificates, Series 2003-1 (the "Certificates"), we certify that
(a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us
in a transaction that is exempt from the registration requirements of the Act,
(b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or
taken any other action which would result in, a violation of Section 5 of the
Act, (c) to the extent we are disposing of a Class [ ] Certificate, we have no
knowledge the Transferee is not a Permitted Transferee and (d) no purpose of
the proposed disposition of a Class [ ] Certificate is to impede the
assessment or collection of tax.
Very truly yours,
[________________________]
By: _____________________
L-1
EXHIBIT M
FORM CERTIFICATION TO BE PROVIDED BY THE SERVICER WITH FORM 10-K
Re: Bond Securitization Asset-Backed Certificates, Series 2003-1
I, [identify the certifying individual], certify that:
l. I have reviewed this annual report on Form 10-K, and all reports
on Form 8-K containing distribution and servicing reports filed in respect of
periods included in the year covered by this annual report, of Bond
Securitization, L.L.C. (the "Registrant");
2. Based on my knowledge, the information in these reports, taken as
a whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by this annual report;
3. Based on my knowledge, the distribution information, and the
servicing information required to be provided to the Trustee by the Servicer
under the Pooling and Servicing Agreement, is included in these reports;
4. I am responsible for reviewing the activities performed by the
Servicer under the Pooling and Servicing Agreement and based upon the review
required under the Pooling and Servicing Agreement, and except as disclosed in
the report, the Servicer has fulfilled its obligations under the Pooling and
Servicing Agreement; and
5. I have disclosed to the Registrant's certified public accountants
all significant deficiencies relating to the Servicer's compliance with the
minimum servicing standards in accordance with a review conducted in
compliance with the Uniform Single Attestation Program for Mortgage Bankers or
similar standard as set forth in the Pooling and Servicing Agreement.
In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties: U.S. Bank
National Association.
M-1
Capitalized terms used but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement, dated November 1,
2003 (the "Pooling and Servicing Agreement"), among the Registrant as
depositor, Credit-Based Asset Servicing and Securitization LLC, as seller,
Xxxxxx Loan Servicing LP, as servicer and U.S. Bank National Association, as
trustee.
XXXXXX LOAN SERVICING LP
By:________________________________
Name:
Title:
Date:
M-2
EXHIBIT N
FORM CERTIFICATION TO BE
PROVIDED TO THE SERVICER BY THE TRUSTEE
Re: Bond Securitization Asset-Backed Certificates, Series 2003-1
I, [identify the certifying individual], certify to Xxxxxx Loan
Servicing LP (the "Servicer"), and its officers, directors and affiliates, and
with the knowledge and intent that they will rely upon this certification,
that:
1. I have reviewed the annual report on Form 10 K for the fiscal
year [___], and all reports on Form 8-K containing Monthly Statements filed in
respect of periods included in the year covered by that annual report, of Bond
Securitization, L.L.C. (the "Depositor") relating to the above referenced
trust;
2. Subject to paragraph 4 hereof, based on my knowledge, the
Distribution Information in the Monthly Statements prepared by the Trustee,
taken as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading as
of the last day of the period covered by that annual report; and
3. Based on my knowledge, the Distribution Information required to
be provided by the Trustee under the Pooling and Servicing Agreement is
included in these reports.
4. In compiling the Distribution Information and making the
foregoing certifications, the Trustee has relied upon information furnished to
it by the Servicer under the Pooling and Servicing Agreement. The Trustee
shall have no responsibility or liability for any inaccuracy in such reports
resulting from information so provided to it by the Servicer.
Capitalized terms used but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement, dated November 1,
2003 (the "Pooling and Servicing Agreement"), among the Depositor as
depositor, Credit-Based Asset Servicing and Securitization LLC, as seller, the
Servicer, as servicer and U.S. Bank National Association, as trustee.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:__________________________________
Name:
Title:
Date:
N-1
EXHIBIT O
MONTHLY INFORMATION DELIVERED BY SERVICER
1. With respect to the Mortgage Pool, the number and Principal Balances of all
Mortgage Loans which were the subject of Principal Prepayments during the
related Due Period.
2. With respect to the Mortgage Pool, the amount of all curtailments which
were received during the related Due Period.
3. With respect to the Mortgage Pool, the aggregate amount of principal
portion of all Monthly Payments received during the related Due Period.
4. With respect to the Mortgage Pool, the amount of interest received on the
Mortgage Loans during the related Due Period.
5. With respect to the Mortgage Pool, the aggregate amount of the Advances
made and recovered with respect to such Distribution Date.
6. With respect to the Mortgage Pool, the delinquency and foreclosure
information and the amount of Mortgage Loan Losses during the related Due
Period.
7. With respect to the Mortgage Pool, the weighted average maturity, the
weighted average Mortgage Interest Rate and the weighted average Net
Mortgage Interest Rate as of the last day of the Due Period preceding of
the related Accrual Period.
8. The Servicing Fees paid and Servicing Fees accrued during the related Due
Period.
9. The amount of all payments or reimbursements to the Servicer paid or to be
paid since the prior Distribution Date (or in the case of the first
Distribution Date, since the Closing Date).
10. The Pool Balance.
11. With respect to the Mortgage Pool, the number of Mortgage Loans
outstanding at the beginning and at the end of the related Due Period.
12. The aggregate interest accrued on the Mortgage Loans at their respective
Mortgage Interest Rates for the related Due Period.
13. The amount deposited in the Collection Account which may not be withdrawn
therefrom pursuant to an Order of a United States Bankruptcy Court of
competent jurisdiction imposing a stay pursuant to Section 362 of U.S.
Bankruptcy Code.
14. The aggregate Realized Losses since the Cut-off Date as of the end of the
related Due Period.
O-1
EXHIBIT P
OFFICER'S CERTIFICATE WITH RESPECT TO PREPAYMENTS
Officer's Certificate
Bond Securitization Asset-Backed Certificates, Series 2003-1
[Date]
Via Facsimile
U.S. Bank National Association, as Trustee
000 Xxxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Pre-Payments
------------
Dear Sir or Madam:
__________________ hereby certifies that he/she is an officer of the
Servicer, holding the office set forth beneath his/her name and hereby further
certifies as follows:
With respect to the Mortgage Loans set forth in the attached
schedule:
1. A Principal Prepayment in full was received during the related Collection
Period;
2. Any prepayment penalty due under the terms of the Mortgage Note with
respect to such Principal Prepayment in full was received from the
mortgagor and deposited in the Collection Account; ____ Yes ____ No
3. As to each Mortgage Loan so noted on the attached schedule, all or part of
the prepayment penalty required in connection with the Principal Prepayment
in full was waived based upon (Circle one): (i) the Servicer's
determination that such waiver would maximize recovery of Liquidation
Proceeds for such Mortgage Loan, taking into account the value of such
prepayment penalty, or (ii)(A) the enforceability thereof be limited (1) by
bankruptcy insolvency, moratorium, receivership, or other similar law
relating to creditors' rights generally or (2) due to acceleration in
connection with a foreclosure or other involuntary payment, or (B) the
enforceability is otherwise limited or prohibited by applicable law;
4. We certify that all amounts due in connection with the waiver of a
prepayment penalty inconsistent with number 3 above which are required to
be deposited by the Servicer pursuant to Section 3.01 of the Pooling and
Servicing Agreement, have been or will be so deposited.
P-1
Capitalized terms used herein shall have the meanings ascribed to
such terms in the Pooling and Servicing Agreement, dated as of November 1,
2003, (the "Pooling and Servicing Agreement") among the Bond Securitization,
L.L.C., as depositor, Credit-Based Asset Servicing and Securitization LLC, as
seller, Xxxxxx Loan Servicing LP, as servicer, and U.S. Bank National
Association, as trustee.
By: XXXXXX LOAN SERVICING LP
______________________________
Name:
Title:
P-2
EXHIBIT Q
LIMITED POWER OF ATTORNEY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
XXXXXX LOAN SERVICING LP
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn:_____________________________
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that U.S. Bank National Assocition, having its
principal place of business at 00 Xxxxxxxxxx Xxxxxx, XX-XX-XX0X, Xx. Xxxx,
Xxxxxxxxx 00000-0000, as Trustee (the "Trustee") pursuant to that Pooling and
Servicing Agreement dated as of November 1, 2003 (the "Pooling and Servicing
Agreement") among Bond Securitization, L.L.C. (the "Depositor"), Credit-Based
Asset Servicing and Securitization LLC, Xxxxxx Loan Servicing LP (the
"Servicer"), and the Trustee, hereby constitutes and appoints the Servicer, by
and through the Servicer's officers, the Trustee's true and lawful
Attorney-in-Fact, in the Trustee's name, place and stead and for the Trustee's
benefit, in connection with all mortgage loans serviced by the Servicer
pursuant to the Pooling and Servicing Agreement for the purpose of performing
all acts and executing all documents in the name of the Trustee as may be
customarily and reasonably necessary and appropriate to effectuate the
following enumerated transactions in respect of any of the mortgages or deeds
of trust (the "Mortgages" and the "Deeds of Trust", respectively) and
promissory notes secured thereby (the "Mortgage Notes") for which the
undersigned is acting as Trustee for various certificateholders (whether the
undersigned is named therein as mortgagee or beneficiary or has become
mortgagee by virtue of endorsement of the Mortgage Note secured by any such
Mortgage or Deed of Trust) and for which the Servicer is acting as servicer,
all subject to the terms of the Pooling and Servicing Agreement..
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage or Deed of Trust, where
said modification or re-recordings is for the purpose of correcting the
Mortgage or Deed of Trust to conform same to the original intent of the
parties thereto or to correct title errors discovered after such title
insurance was issued and said modification or re-recording, in either
instance, does not adversely affect the lien of the Mortgage or Deed of
Trust as insured.
2. The subordination of the lien of a Mortgage or Deed of Trust to an
easement in favor of a public utility company of a government agency or
unit with powers of eminent domain; this section shall include, without
limitation, the execution of partial satisfactions/releases, partial
reconveyances or the execution or requests to trustees to accomplish
same.
Q-1
3. The conveyance of the properties to the mortgage insurer, or the closing
of the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
4. The completion of loan assumption agreements.
5. The full satisfaction/release of a Mortgage or Deed of Trust or full
conveyance upon payment and discharge of all sums secured thereby,
including, without limitation, cancellation of the related Mortgage
Note.
6. The assignment of any Mortgage or Deed of Trust and the related Mortgage
Note, in connection with the repurchase of the mortgage loan secured and
evidenced thereby.
7. The full assignment of a Mortgage or Deed of Trust upon payment and
discharge of all sums secured thereby in conjunction with the
refinancing thereof, including, without limitation, the assignment of
the related Mortgage Note.
8. With respect to a Mortgage or Deed of Trust, the foreclosure, the taking
of a deed in lieu of foreclosure, or the completion of judicial or
non-judicial foreclosure or termination, cancellation or rescission of
any such foreclosure, including, without limitation, any and all of the
following acts:
a. the substitution of trustee(s) serving under a Deed of Trust, in
accordance with state law and the Deed of Trust;
b. the preparation and issuance of statements of breach or
non-performance;
c. the preparation and filing of notices of default and/or notices of
sale;
d. the cancellation/rescission of notices of default and/or notices
of sale;
e. the taking of a deed in lieu of foreclosure; and
f. the preparation and execution of such other documents and
performance of such other actions as may be necessary under the
terms of the Mortgage, Deed of Trust or state law to expeditiously
complete said transactions in paragraphs 8.a. through 8.e., above.
The undersigned gives said Attorney-in-Fact full power and authority to
execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or
could do, and hereby does ratify and confirm to all that said Attorney-in-Fact
shall lawfully do or cause to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect and has not
been revoked unless an instrument of revocation has been made in writing by
the undersigned.
Q-2
IN WITNESS WHEREOF, U.S. Bank National Association as Trustee pursuant to that
Pooling and Servicing Agreement among the Depositor, Credit-Based Asset
Servicing and Securitization LLC, the Servicer, and the Trustee, dated as of
November 1, 2003 (Bond Securitization Asset Backed Certificates, Series
2003-1), has caused its corporate seal to be hereto affixed and these presents
to be signed and acknowledged in its name and behalf by ____________________
its duly elected and authorized Vice President this ____ day of __________,
200__.
____________________________________
as Trustee for _____ Bond
Securitization Asset Backed
Certificates, Series 2003-1
By __________________________________
STATE OF
COUNTY OF
On December 10, 2003, before me, the undersigned, a Notary Public in and for
said state, personally appeared ________________, Vice President of
___________________________ as Trustee for Bond Securitization Asset Backed
Certificates, Series 2003-1, personally known to me to be the person whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed that same in his/her authorized capacity, and that by his/her
signature on the instrument the entity upon behalf of which the person acted
and executed the instrument.
WITNESS my hand and official seal.
(SEAL)
____________________________________
Notary Public
My Commission Expires ________________________
Q-3
