EXECUTION
AMERICAN RESIDENTIAL EAGLE, INC., as Depositor,
FIRST UNION NATIONAL BANK, as Trustee
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Master Servicer
---------------------------
TRUST AGREEMENT
Dated as of June 1, 1998
---------------------------
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
Mortgage Backed Callable Certificates, Series 1998-1
TABLE OF CONTENTS
Section Page
ARTICLE I.
DEFINITIONS
1.01. Definitions...........................................................2
1.02. Calculations Respecting Accrued Interest.............................17
ARTICLE II.
DECLARATION OF TRUST; CONVEYANCE OF THE UNDERLYING BOND;
ISSUANCE OF CERTIFICATES
2.01. Conveyance of the Underlying Bond......................................18
2.02. Issuance of Certificates..............................................18
ARTICLE III.
THE CERTIFICATES
3.01. The Certificates.....................................................19
3.02. Registration.........................................................19
3.03. Transfer and Exchange of Certificates................................19
3.04. Cancellation of Certificates.........................................22
3.05. Replacement of Certificates..........................................22
3.06. Persons Deemed Owners................................................23
3.07. Temporary Certificates...............................................23
3.08. Appointment of Paying Agent..........................................23
3.09. Book-Entry Certificates..............................................24
ARTICLE IV.
ADMINISTRATION OF THE TRUST FUND
4.01. [Reserved]...........................................................25
4.02. [Reserved]...........................................................25
4.03. Reports to Certificateholders........................................25
4.04. Certificate Account..................................................28
4.05. Determination of LIBOR...............................................29
4.06. [Reserved]...........................................................30
ARTICLE V.
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
5.01. Distributions Generally..............................................31
5.02. Distributions from the Certificate Account...........................31
5.03. Allocation of Losses.................................................34
5.04. [Reserved]...........................................................35
5.05. [Reserved]...........................................................35
5.06. Reserve Fund.........................................................35
ARTICLE VI.
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
6.01. Events of Default.....................................................37
6.02. Acceleration of Maturity; Discussion and Amendment....................37
6.03. Control by Certificateholders.........................................37
6.04. Sale of Trust Estate..................................................37
6.05. Undertaking for Costs.................................................38
6.06. Sale of Trust Estate..................................................38
6.07. Duties of Trustee....................................................38
6.08. Certain Matters Affecting the Trustee................................39
6.09. Trustee Not Liable for Certificates..................................40
6.10. Trustee May Own Certificates.........................................40
6.11. Eligibility Requirements for Trustee.................................40
6.12. Resignation and Removal of Trustee...................................41
6.13. Successor Trustee....................................................42
6.14. Merger or Consolidation of Trustee...................................42
6.15. [Reserved]...........................................................42
6.16. Authenticating Agents................................................42
6.17. Indemnification of Trustee...........................................43
6.18. Fees and Expenses of Trustee.........................................44
6.19. Collection of Monies; Remedies.......................................44
6.20. Limitation of Liability...............................................44
6.21. Trustee May Enforce Claims Without Possession of Certificates.........44
6.22. Waiver of Bond Requirement............................................44
6.23. Waiver of Inventory, Accounting and Appraisal Requirement.............44
ARTICLE VII.
PURCHASE AND TERMINATION OF THE TRUST FUND; PURCHASE OF
CERTIFICATES
7.01. Termination of Trust Fund Upon Maturity or Redemption
of the Underlying Bond Special Purchase of Certificate...............45
7.02. Procedure Upon Termination of Trust Fund.............................46
ARTICLE VIII.
RIGHTS OF CERTIFICATEHOLDERS
8.01. Limitation on Rights of Holders......................................47
8.02. Access to List of Holders............................................48
8.03. Acts of Holders of Certificates......................................48
ARTICLE IX.
[RESERVED]
ARTICLE X.
FASIT ADMINISTRATION
ARTICLE XI.
MISCELLANEOUS PROVISIONS
11.01. Binding Nature of Agreement; Assignment.............................52
11.02. Entire Agreement....................................................52
11.03. Amendment...........................................................52
11.04. Voting Rights.......................................................53
11.05. Provision of Information............................................54
11.06. Governing Law.......................................................54
11.07. Notices.............................................................54
11.08. Severability of Provisions..........................................54
11.09. Indulgences; No Waivers.............................................55
11.10. Headings Not To Affect Interpretation...............................55
11.11. Benefits of Agreement...............................................55
11.12. Special Notices to the Rating Agencies..............................55
11.13. Counterparts........................................................56
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 Form of Initial Certification
Exhibit B-2 Form of Interim Certification
Exhibit B-3 Form of Final Certification
Exhibit B-4 Form of Endorsement
Exhibit C Request for Release of Documents and Receipt
Exhibit D-l Class O Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Class O Certificate Transfer Affidavit (Transferor)
Exhibit F Form of Rule 144A Transfer Certificate
Exhibit G Form of Purchaser's Letter for Institutional
Accredited Investors
Exhibit H Form of ERISA Transfer Affidavit
Exhibit I Monthly Remittance Advice
Exhibit J Monthly Electronic Data Transmission
This TRUST AGREEMENT, dated as of June 1, 1998 (the "Agreement"), is by
and between AMERICAN RESIDENTIAL EAGLE, INC., a Delaware corporation, as
depositor (the "Depositor"), FIRST UNION NATIONAL BANK, a national banking
association with its main office in Charlotte, North Carolina, as trustee (the
"Trustee") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Master
Servicer (solely for the purposes of Article IV and Article X hereof).
PRELIMINARY STATEMENT
(I) The Depositor has acquired the Underlying Bond from American
Residential Eagle Mortgage Bond Trust 0000-0 (xxx "Xxxx Xxxxxx"), and at the
Closing Date is the owner of the Underlying Bond and other property being
conveyed by it to the Trustee for inclusion in the Trust Fund. On the Closing
Date, the Depositor will acquire the Certificates from the Trust Fund, as
consideration for its transfer to the Trust Fund of the Underlying Bond and
the other property constituting the Trust Fund. The Depositor has duly
authorized the execution and delivery of this Agreement to provide for the
conveyance to the Trustee of the Underlying Bond and the other property
constituting the Trust Fund. All covenants and agreements made by the
Depositor and the Trustee herein with respect to the Underlying Bond and the
other property constituting the Trust Fund are for the benefit of the Holders
from time to time of the Certificates. The Trustee is accepting the Trust Fund
created hereby for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.
(II) The Depositor and the Trustee intend that the Trust Fund be treated
as a FASIT for federal income tax purposes and an election of FASIT status
will be made with respect to the Trust Fund. The Class A-1, Class A-2, Class
M-1, Class M-2, Class B and Class X Certificates shall be "Regular Interests"
in the FASIT. The Class O Certificate shall be the sole class of "Ownership
Interest" in the FASIT.
(III) The following table sets forth (or describes) the Class
designation, Certificate Interest Rate, initial Class Certificate Principal
Amount and the minimum denomination for each Class of Certificates comprising
the interests in the Trust Fund created hereunder.
Class Designation Certificate Interest Rate Initial Certificate Minimum
Principal Amount Denominations
Class A-1 (1) $143,970,000.00 $100,000
Class A-2 (2) 232,093,000.00 100,000
Class M-1 (3) 46,029,000.00 100,000
Class M-2 (4) 17,365,000.00 250,000
Class B (5) 17,365,000.00 250,000
Class X (6) (6) (7)
Class O (6) (6) (7)
___________________________
(1) The Certificate Interest Rate with respect to any Distribution Date
for the Class A-1 Certificates is a per annum rate equal to the least
of (i) the LIBOR plus 0.09% (the "Class A-1 Spread"), (ii) 9.50% per
annum and (iii) the Bond Interest Rate. On each Bond Distribution
Date after which the Bond Principal Balance is less than 35% of the
initial Bond Principal Balance, the Class A-1 Spread with respect to
each succeeding Distribution Date will be increased to 0.18%. The
initial Certificate Interest Rate of the Class A-1 Certificates will
be 5.75%.
(2) The Certificate Interest Rate with respect to any Distribution Date
for the Class A-2 Certificates is a per annum rate equal to the least
of (i) LIBOR plus 0.21% (the "Class A-2 Spread"), (ii) 9.50% per
annum and (iii) the Bond Interest Rate. On each Bond Distribution
Date after which the Bond Principal Balance is less than 35% of the
initial Bond Principal Balance, the Class A-2 Spread with respect to
each succeeding Distribution Date will be increased to 0.42%. The
initial Certificate Interest Rate of the Class A-2 Certificates will
be 5.87%.
(3) The Certificate Interest Rate with respect to any Distribution Date
for the Class M-1 Certificates is a per annum rate equal to the least
of (i) LIBOR plus 0.50% (the "Class M-1 Spread"), (ii) 9.50% per
annum and (iii) the Net Funds Cap. On each Bond Distribution Date
after which the Bond Principal Balance is less than 35% of the
initial Bond Principal Balance, the Class M-1 Spread with respect to
each succeeding Distribution Date will be increased to 1.00%. The
initial Certificate Interest Rate of the Class M-1 Certificates will
be 6.16%.
(4) The Certificate Interest Rate with respect to any Distribution Date
for the Class M-2 Certificates is a per annum rate equal to the least
of (i) LIBOR plus 0.70% (the "Class M-2 Spread"), (ii) 9.50% and
(iii) the Net Funds Cap. On each Bond Distribution Date after which
the Bond Principal Balance is less than 35% of the initial Bond
Principal Balance, the Class M-2 Spread with respect to each
succeeding Distribution Date will be increased to 1.20%. The initial
Certificate Interest Rate of the Class M-2 Certificates is 6.36%.
(5) The Certificate Interest Rate with respect to any Distribution Date
for the Class B Certificates is a per annum rate equal to the least
of (i) LIBOR plus 1.40% (the "Class B Spread"), (ii) 9.50% and (iii)
the Net Funds Cap. On each Bond Distribution Date after which the
Bond Principal Balance is less than 35% of the initial Bond Principal
Balance, the Class B Spread with respect to each succeeding
Distribution Date will be increased to 1.90%. The initial Certificate
Interest Rate of the Class B Certificates is 7.06%
(6) The Class X and Class O Certificates will be issued without a
Certificate Principal Amount. The Class O Certificate will not bear
interest. The Class X Certificate is an interest-only certificate and
will have a notional principal balance equal at all times to the Bond
Principal Balance. For each Accrual Period, interest will accrue on
the Class X Certificate notional principal balance at a rate equal to
the excess, if any, of (i) the Bond Interest Rate over (ii) a rate
equal to LIBOR plus a spread that equals the weighted average of the
Class A-1 Spread, the Class A-2 Spread, the Class M-1 Spread, the
Class M-2 Spread and the Class B Spread; provided, however, that if
the Certificate Interest Rate of the Class A-1, Class A-2, Class M-1,
Class M-2 or Class B Certificates is calculated on the basis of
clause (ii) or (iii) of the applicable definition of Certificate
Interest Rate, the rate calculated pursuant to this clause (ii) shall
be calculated on the basis of the weighted average of such rate or
rates.
(7) The Class X and Class O Certificates will each be issued as a single
Certificate evidencing the entire Percentage Interest in such Class.
As of the Cut-off Date, the Underlying Bond had a Principal Balance of
$456,822,000.
In consideration of the mutual agreements herein contained, the Depositor
and the Trustee hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless the
context otherwise requires, shall have the meanings set forth below.
Capitalized terms that are used but not defined in this Trust Agreement and
which are defined in the Indenture or the Master Servicing Agreement shall
have the meaning ascribed to them therein:
Accountant: A person engaged in the practice of accounting whom (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the Depositor.
Accrual Period: With respect to any Distribution Date, the one-month
period beginning on the immediately preceding Distribution Date (or on the
Closing Date, in the case of the first Accrual Period) and ending on the day
immediately preceding the related Distribution Date.
Additional Collateral: None.
Adjusted Prepayment Interest Shortfalls: With respect to any Distribution
Date, Prepayment Interest Shortfalls for such Distribution Date minus any
Compensating Interest Payments for such Distribution Date.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Loan Balance: The aggregate of the Scheduled Principal Balances
for all Mortgage Loans at the date of determination.
Aggregate Notional Amount: With respect to any Class of Notional
Certificates, the applicable aggregate notional amount set forth or described
in the Preliminary Statement hereto.
Aggregate Voting Interests: The aggregate of the Voting Interests of all
the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements
hereto.
Applied Loss Amount: With respect to any Distribution Date, the amount,
if any, by which (x) the aggregate Certificate Principal Amount after giving
effect to distributions on such date, but before giving effect to any
application of the Applied Loss Amount on such date, exceeds (y) the
Stepped-up Bond Balance as of the close of the related Collection Period.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 6.10.
Authorized Officer: Any Person who may execute an Officer's Certificate
on behalf of the Depositor.
Bankruptcy: As to any Person, the making of an assignment for the benefit
of creditors, the filing of a voluntary petition in bankruptcy, adjudication
as a bankrupt or insolvent, the entry of an order for relief in a bankruptcy
or insolvency proceeding, the seeking of reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief, or
seeking, consenting to or acquiescing in the appointment of a trustee,
receiver or liquidator, dissolution, or termination, as the case may be, of
such Person pursuant to the provisions of either the United States Bankruptcy
Code of 1986, as amended, or any other similar state laws.
Basis Risk Shortfall: With respect to any Distribution Date and each
Class of Certificates, the amount by which (a) the amount that would be
payable if clause (i) or (ii) of the definition of Certificate Interest Rate
applicable to such Class of Certificates were used to calculate interest on
such Class of Certificates exceeds (b) the amount that is payable on such
Class of Certificates calculated on the basis of the Bond Interest Rate.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee
to the effect that any proposed transfer will not (i) cause the assets of the
Trust Fund to be regarded as plan assets for purposes of the Plan Asset
Regulations or (ii) give rise to any fiduciary duty on the part of the
Depositor or the Trustee.
Bond Issuer: American Residential Eagle Bond Trust 1998-1, a Delaware
business trust.
Bond Overcollateralization Deficiency: With respect to any Distribution
Date, the amount by which the Targeted Overcollateralization Amount exceeds
the Bond Overcollateralization Amount (after giving effect to the
distributions to be made on such Distribution Date).
Bond Overcollateralization Excess Amount: With respect to each
Distribution Date, the excess of (i) the Bond Overcollateralization Amount for
such date, over (ii) the Targeted Overcollateralization Amount for such date.
Bond Trustee: First Union National Bank in its capacity as trustee under
the Indenture.
Book-Entry Certificates: Beneficial interests in Certificates designated
as "Book-Entry Certificates" in this Agreement, ownership and transfers of
which shall be evidenced or made through book entries by a Clearing Agency as
described in Section 3.09; provided, that after the occurrence of a condition
whereupon book-entry registration and transfer are no longer permitted and
Definitive Certificates are to be issued to Certificate Owners, such
Book-Entry Certificates shall no longer be "Book-Entry Certificates." As of
the Closing Date, the following Classes of Certificates constitute Book-Entry
Certificates: the Class X-0, Xxxxx X-0, Class M-1, Class M-2 and Class B
Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday and (ii) a
day on which banking institutions in New York, New York or, if other than New
York, the city in which the Corporate Trust Office of the Trustee is located,
or the State of Maryland, the State of Minnesota or the State of North
Carolina.
Carryforward Interest: With respect to any Distribution Date and each
Class of Class X-0, Xxxxx X-0, Class M-1, Class M-2 and Class B Certificates,
the sum of (i) the amount, if any, by which (x) the sum of (A) Current
Interest for such Class for the immediately preceding Distribution Date and
(B) any unpaid Carryforward Interest for such Class from previous Distribution
Dates exceeds (y) the amount distributed in respect of interest on such Class
on such immediately preceding Distribution Date, and (ii) interest on such
amount for the related Accrual Period at the applicable Certificate Interest
Rate.
Certificate: Any one of the certificates signed and countersigned by the
Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The account maintained by the Trustee in accordance
with the provisions of Section 4.04. Such account is referred to in the
Prospectus as the Distribution Account.
Certificate Interest Rate: With respect to each Class of Certificates,
the applicable per annum rate set forth or described in the Preliminary
Statement hereto.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the owner of such Book-Entry Certificate, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate other than
a Class X or Class O Certificate, at the time of determination, the maximum
specified dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the initial principal amount
set forth on the face of such Certificate, less the amount of all principal
distributions previously made with respect to such Certificate and all Applied
Loss Amounts previously allocated to such Certificate.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.02.
Certificateholder: The meaning provided in the definition of "Holder."
Class: All Certificates bearing the same class designation.
Class B Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amounts of the Class X-0,
Xxxxx X-0, Class M-1 and Class M-2 Certificates after giving effect to
distributions on such Distribution Date and (ii) the Class Certificate
Principal Amount of the Class B Certificates immediately prior to such
Distribution Date exceeds (y) the lesser of (A) the product of (i) 97.30% and
(ii) the Stepped-up Bond Balance and (B) the amount, if any, by which (i) the
Stepped-up Bond Balance exceeds (ii) $2,315,379.
Class Certificate Principal Amount: With respect to each Class of
Certificates other than the Class X and Class O Certificates, the aggregate of
the Certificate Principal Amounts of all Certificates of such Class at the
date of determination.
Class M-1 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amount of the Class A-1 and
Class A-2 Certificates after giving effect to distributions on such
Distribution Date and (ii) the Class Certificate Principal Amount of the Class
M-1 Certificates immediately prior to such Distribution Date exceeds (y) the
lesser of (A) the product of (i) 82.30% and (ii) the Stepped-up Bond Balance
and (B) the amount, if any, by which (i) the Stepped-up Bond Balance exceeds
(ii) $2,315,379.
Class M-2 Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amounts of the Class A-1,
Class A-2 and Class M-1 Certificates after giving effect to distributions on
such Distribution Date and (ii) the Class Certificate Principal Amount of the
Class M-2 Certificates immediately prior to such Distribution Date exceeds (y)
the lesser of (A) the product of (i) 89.80% and (ii) the Stepped-up Bond
Balance and (B) the amount, if any, by which (i) the Stepped-up Bond Balance
exceeds (ii) $2,315,379.
Class O Certificate: The Class O Certificate executed by the Trustee, and
authenticated by the Certificate Registrar, substantially in the form annexed
hereto as Exhibit A-3 and evidencing the sole class of Ownership Interest in
the FASIT.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. As
of the Closing Date, the Clearing Agency shall be The Depository Trust
Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency
effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
Closing Date: June 17, 1998.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Collection Period: With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month
in which such Distribution Date occurs.
Corporate Trust Office: The principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at 000 Xxxxx Xxxxx
Xxxxxx XX0000, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Structured Finance.
Current Interest: With respect to each Class of Certificates (other than
the Class O Certificates) and any Distribution Date, the aggregate amount of
interest accrued during the related Accrual Period at the applicable
Certificate Interest Rate on the Class Certificate Principal Amount (or
notional balance) of such Class immediately prior to such Distribution Date.
Current interest for each Class of Certificates with respect to any
Distribution Date shall be reduced by such Class's allocable share of Net
Prepayment Interest Shortfalls, which shall be allocated among the Classes of
Certificates, pro rata, on the basis of the amount of interest distributable
in the absence of such shortfalls.
Cut-off Date: May 1, 1998.
DCR: Duff & Xxxxxx Credit Rating Co., or any successor in interest.
Deferred Amount: With respect to any Distribution Date and each Class of
Certificates, the aggregate of Applied Loss Amounts previously applied in
reduction of the Class Certificate Principal Amount thereof, less any amounts
previously reimbursed in respect thereof.
Definitive Certificate: A Certificate of any Class issued in definitive,
fully registered, certificated form.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased from the Trust
Fund pursuant to the terms of the Master Servicing Agreement or as to which
one or more Replacement Mortgage Loans are substituted therefor.
Depositor: American Residential Eagle, Inc., a Delaware corporation
having its principal place of business in New York, or its successors in
interest.
Determination Date: With respect to each Distribution Date, the 18th day
of the month in which such Distribution Date occurs, or, if such 18th day is
not a Business Day, the next succeeding Business Day.
Distribution Date: The 25th day of each month or, if such 25th day is not
a Business Day, the next succeeding Business Day, commencing in June 1998.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company acceptable
to the Rating Agencies or (ii) an account or accounts the deposits in which
are insured by the FDIC to the limits established by such corporation,
provided that any such deposits not so insured shall be maintained in an
account at a depository institution or trust company whose commercial paper or
other short term debt obligations (or, in the case of a depository institution
or trust company which is the principal subsidiary of a holding company, the
commercial paper or other short term debt or deposit obligations of such
holding company or depository institution, as the case may be) have been rated
by each Rating Agency in its highest short-term rating category, or (iii) a
segregated trust account or accounts (which shall be a "special deposit
account") maintained with the Trustee or any other federal or state chartered
depository institution or trust company, acting in its fiduciary capacity, in
a manner acceptable to the Trustee and the Rating Agencies. Eligible Accounts
may bear interest.
Eligible Corporation: Shall mean an eligible corporation within the
definition set out in Section 860L(a)(2) of the Code.
Eligible Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully guaranteed as
to timely payment of principal and interest by, the United States of America
or any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the United
States of America ("Direct Obligations");
(ii) federal funds, or demand and time deposits in,
certificates of deposits of, or bankers' acceptances issued by, any depository
institution or trust company (including U.S. subsidiaries of foreign
depositories and the Trustee or any agent of the Trustee, acting in its
respective commercial capacity) incorporated or organized under the laws of
the United States of America or any state thereof and subject to supervision
and examination by federal or state banking authorities, so long as at the
time of investment or the contractual commitment providing for such investment
the commercial paper or other short-term debt obligations of such depository
institution or trust company (or, in the case of a depository institution or
trust company which is the principal subsidiary of a holding company, the
commercial paper or other short-term debt or deposit obligations of such
holding company or deposit institution, as the case may be) have been rated by
each Rating Agency in its highest short-term rating category or one of its two
highest long-term rating categories;
(iii) repurchase agreements collateralized by Direct
Obligations or securities guaranteed by GNMA, FNMA or FHLMC with any
registered broker/dealer subject to Securities Investors' Protection
Corporation jurisdiction or any commercial bank insured by the FDIC, if such
broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation
rated by each Rating Agency in its highest short-term rating category;
(iv) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of America
or any state thereof which have a credit rating from each Rating Agency, at
the time of investment or the contractual commitment providing for such
investment, at least equal to one of the two highest long-term credit rating
categories of each Rating Agency; provided, however, that securities issued by
any particular corporation will not be Eligible Investments to the extent that
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the Trust Fund to
exceed 20% of the sum of the Bond Principal Balance and the aggregate
principal amount of all Eligible Investments in the Certificate Account;
provided, further, that such securities will not be Eligible Investments if
they are published as being under review with negative implications from
either Rating Agency;
(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 180 days after the date of issuance thereof)
rated by each Rating Agency in its highest short-term rating category;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of the
United States of America or its agencies or instrumentalities (which
obligations are backed by the full faith and credit of the United States of
America) held by a custodian in safekeeping on behalf of the holders of such
receipts; and
(viii) any other demand, money market, common trust fund or
time deposit or obligation, or interest-bearing or other security or
investment, (A) rated in the highest rating category by each Rating Agency or
(B) that would not adversely affect the then current rating by either Rating
Agency of any of the Certificates;
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, provided that any such
investment will be a "permitted asset" within the meaning of Section 860L(c)
of the Code.
ERISA-Restricted Certificate: Any Subordinate Certificate.
Events of Default: The Events of Default with respect to the Underlying
Bond set forth in Section 5.01 of the Indenture.
Extra Principal Distribution Amount: With respect to any Distribution
Date, the lesser of (i) the Excess Mortgage Amount for such Distribution Date
as reduced by (x) amounts in respect thereof applied on such date to
distributions on the Underlying Bond pursuant to Section 2.03(b)(iii)(A) and
(B) of the Indenture and (ii) the Bond Overcollateralization Deficiency for
such date.
FASIT: A "financial asset securitization investment trust" within the
meaning of section 860L of the Code.
FASIT Provisions: The provisions of the federal income tax law relating
to FASITs which appear at sections 860H through 86OL of Subchapter M of
Chapter 1 of the Code, and related provisions, and regulations, including
proposed regulations and rulings, and administrative pronouncements
promulgated thereunder, as the foregoing may be in effect from time to time.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Final Distribution Date: May 25, 2028.
Financial Intermediary: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Clearing Agency Participant.
FNMA: The Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
GNMA: The Government National Mortgage Association, a wholly owned
corporate instrumentality of the United States within HUD.
Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Depositor, the
Trustee, the Master Servicer, any Servicer or any Affiliate thereof shall be
deemed not to be outstanding in determining whether the requisite percentage
necessary to effect any such consent has been obtained, except that, in
determining whether the Trustee shall be protected in relying upon any such
consent, only Certificates which a Responsible Officer of the Trustee knows to
be so owned shall be disregarded. The Trustee may request and conclusively
rely on certifications by the Depositor, the Master Servicer and any Servicer
in determining whether any Certificates are registered to an Affiliate of the
Depositor, the Master Servicer or such Servicer.
HUD: The United States Department of Housing and Urban Development, or
any successor thereto.
Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Securities and
Exchange Commission's Regulation S-X. When used with respect to any other
Person, a Person who (a) is in fact independent of another specified Person
and any Affiliate of such other Person, (b) does not have any material direct
financial interest in such other Person or any Affiliate of such other Person,
and (c) is not connected with such other Person or any Affiliate of such other
Person as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.
Indenture: The Indenture, dated as of June 1, 1998, between the Bond
Issuer and the Bond Trustee.
Interest Distribution Amount: With respect to any Distribution Date, the
amount of interest received by the Trustee from the Underlying Bond, which
will be equal to one month's interest (calculated on the basis of the actual
number of day elapsed and a year of 360 days) on the Bond Principal Balance at
the then applicable Bond Interest Rate plus any amounts received in respect of
Carryforward Interest, Basis Risk Shortfalls and any Unpaid Basis Risk
Shortfalls.
Interest Remittance Amount: With respect to any Distribution Date, the
sum of (i) all interest collected (other than Payaheads) or advanced in
respect of Scheduled Payments on the Mortgage Loans, including any prepayment
premiums or penalties, during the related Collection Period (less (x) expenses
calculated at the Expense Fee Rate and (y) unreimbursed Advances and other
amounts due to the Master Servicer, the Servicers or the Trustee, to the
extent allocable to interest), (ii) any amounts paid by the Servicers with
respect to Prepayment Interest Shortfalls and any Compensating Interest
Payment with respect to the related Prepayment Period, (iii) the portion of
any Substitution Amount paid during the related Prepayment Period allocable to
interest and (iv) all Net Liquidation Proceeds, Insurance Proceeds and other
recoveries collected during the related Prepayment Period, to the extent
allocable to interest, as reduced in each case by unreimbursed interest
Advances and other amounts due the Master Servicer, the Servicers or the Bond
Trustee, to the extent allocable to interest.
Xxxxxx Capital: Xxxxxx Capital, A Division of Xxxxxx Brothers Holdings
Inc., or any successor in interest.
LIBOR: The per annum rate determined pursuant to Section 4.05 on the
basis of London interbank offered rate quotations for one-month Eurodollar
deposits, as such quotations may appear on the display designated as page
"LIUS01M" on the Bloomberg Financial Markets Commodities News (or such other
page as may replace such page on that service for the purpose of displaying
London interbank offered quotations of major banks).
LIBOR Certificate: Any Class X-0, Xxxxx X-0, Class M-1, Class M-2 or
Class B Certificate.
LIBOR Determination Date: The second London Business Day immediately
preceding the commencement of each Accrual Period for any LIBOR Certificates.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
Master Servicer or the applicable Servicer has determined that all amounts
that it expects to recover on behalf of the Trust Fund from or on account of
such Mortgage Loan have been recovered.
Liquidation Expenses: Expenses that are incurred by the Master Servicer
or a Servicer in connection with the liquidation of any defaulted Mortgage
Loan and are not recoverable under the applicable Primary Mortgage Insurance
Policy, including, without limitation, foreclosure and rehabilitation
expenses, legal expenses and unreimbursed amounts expended pursuant to
Sections 9.06, 9.16 or 9.22.
Liquidation Proceeds: Cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of
the related Mortgaged Property if the Mortgaged Property is acquired in
satisfaction of the Mortgage Loan, including any amounts remaining in the
related Escrow Account.
London Business Day: Any day on which banks are open for dealing in
foreign currency and exchange in London, England and New York City.
Master Servicer: Norwest Bank Minnesota, National Association, or any
successor in interest, or if any successor master servicer shall be appointed
as herein provided, then such successor master servicer.
Master Servicing Agreement: The Master Servicing Agreement, dated as of
June 1, 1998 among the Bond Issuer, the Master Servicer and the Bond Trustee.
Mortgage: A mortgage, deed of trust or other instrument encumbering a fee
simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold,
assigned to or deposited with the Bond Issuer pursuant to the Deposit Trust
Agreement and pledged to the Bond Trustee under the Indenture.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
the related Liquidation Proceeds net of unreimbursed expenses incurred in
connection with liquidation or foreclosure and unreimbursed Advances, if any,
received and retained in connection with the liquidation of such Mortgage
Loan.
Net Prepayment Interest Shortfalls: With respect to any Distribution
Date, the excess of (i) Prepayment Interest Shortfalls for such Distribution
Date over (ii) the sum of Compensating Interest Payments and amounts
distributed pursuant to Section 5.02(b)(xiii) on such Distribution Date.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Notional Amount: With respect to any Notional Certificate and any
Distribution Date, such Certificate's Percentage Interest of the Aggregate
Notional Amount of such Class of Certificates for such Distribution Date.
Notional Certificate: The Class X Certificate.
Offering Document: The Prospectus.
Officer's Certificate: A certificate signed by the Chairman of the Board,
any Vice Chairman, the President, any Vice President or any Assistant Vice
President of a Person, and in each case delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable
in form and substance to the Trustee, and who may be in-house or outside
counsel to the Depositor but which must be Independent outside counsel with
respect to any such opinion of counsel concerning the transfer of the Class O
Certificate or concerning certain matters with respect to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the taxation,
or the federal income tax status, of the Trust Fund as a FASIT.
Ownership Certificate: Any Class O Certificate.
Paying Agent: Any paying agent appointed pursuant to Section 3.08 of this
Agreement.
Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate other than the Class X and Class O Certificates,
the Percentage Interest evidenced thereby shall equal the initial Certificate
Principal Amount thereof divided by the initial Class Certificate Principal
Amount of all Certificates of the same Class. With respect to the Class X and
Class O Certificates, the Percentage Interest evidenced thereby shall be 100%.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Placement Agent: Xxxxxx Brothers Inc.
Plan Asset Regulations: The Department of Labor regulations set forth in
29 C.F.R. 2510.3-101.
Pool Delinquency Rate: With respect to any Collection Period, the
fraction, expressed as a percentage, the numerator of which is the aggregate
outstanding principal balance of all Mortgage Loans 60 or more days delinquent
(including all foreclosures and REO Properties) as of the close of business on
the last day of such Collection Period, and the denominator of which is the
Aggregate Loan Balance as of the close of business on the last day of such
Collection Period.
Principal Distribution Amount: With respect to any Distribution Date, the
sum of (i) the excess of the Principal Remittance Amount for such date over
the Bond Overcollateralization Excess Amount, if any, for such date, plus (ii)
the Extra Principal Distribution Amount, if any, for such date.
Principal Remittance Amount: With respect to any Distribution Date, the
sum of (i) all principal collected (other than Payaheads) or advanced in
respect of Scheduled Payments on the Mortgage Loans during the related
Collection Period (less unreimbursed Advances and other amounts due to the
Master Servicer, the Servicers or the Owner Trustee, the Bond Trustee or the
Trustee, to the extent allocable to principal), (ii) the outstanding principal
balance of each Mortgage Loan that was purchased from the Bond Trust during
the related Prepayment Period, (iii) the portion of any Substitution Amount
paid during the related Prepayment Period allocable to principal, and (iv) all
Net Liquidation Proceeds, Insurance Proceeds and other recoveries collected
during the related Prepayment Period, to the extent allocable to principal, as
reduced in each case by unreimbursed Advances and other amounts due to the
Master Servicer, the Servicers, the Owner Trustee, the Bond Trustee or the
Trustee, to the extent allocable to principal.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Prospectus: The prospectus supplement dated June 15, 1998, together with
the accompanying prospectus dated June 5, 1998, relating to the Class A-1,
Class A-2 and Class M-1.
Qualified GIC: A guaranteed investment contract or surety bond providing
for the investment of funds in the Certificate Account and insuring a minimum,
fixed or floating rate of return on investments of such funds, which contract
or surety bond shall:
(a) be an obligation of an insurance company or other corporation
whose long-term debt is rated by each Rating Agency in one of its two highest
rating categories or, if such insurance company has no long-term debt, whose
claims paying ability is rated by each Rating Agency in one of its two highest
rating categories, and whose short-term debt is rated by each Rating Agency in
its highest rating category;
(b) provide that the Trustee may exercise all of the rights under
such contract or surety bond without the necessity of taking any action by any
other Person;
(c) provide that if at any time the then current credit standing of
the obligor under such guaranteed investment contract is such that continued
investment pursuant to such contract of funds would result in a downgrading of
any rating of the Certificates, the Trustee shall terminate such contract
without penalty and be entitled to the return of all funds previously invested
thereunder, together with accrued interest thereon at the interest rate
provided under such contract to the date of delivery of such funds to the
Trustee;
(d) provide that the Trustee's interest therein shall be
transferable to any successor trustee hereunder: and
(e) provide that the funds reinvested thereunder and accrued
interest thereon be returnable to the Certificate Account, as the case may be,
not later than the Business Day prior to any Distribution Date.
Rating Agency: S&P and DCR.
Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
equal to (i) the unpaid principal balance of such Mortgage Loan as of the date
of liquidation, minus (ii) Liquidation Proceeds received, to the extent
allocable to principal, net of amounts that are reimbursable therefrom to the
Master Servicer or any Servicer with respect to such Mortgage Loan (other than
Advances of principal) including expenses of liquidation. In determining
whether a Realized Loss is a Realized Loss of principal, Liquidation Proceeds
shall be allocated, first, to payment of expenses related to such Liquidated
Mortgage Loan, then to accrued unpaid interest and finally to reduce the
principal balance of the Mortgage Loan.
Record Date: With respect to any Distribution Date, the close of business
on the Business Day immediately preceding such Distribution Date.
Reference Banks: As defined in Section 4.05 hereof.
REO Property: As defined in the Master Servicing Agreement.
Replacement Mortgage Loan: As defined in the Master Servicing Agreement.
Required Reserve Fund Amount: With respect to any Distribution Date, the
amount, if any, by which the Targeted Overcollateralization Amount exceeds the
Bond Overcollateralization Amount (after giving effect to any payments to be
made on such Distribution Date).
Reserve Fund: The account established and maintained by the Trustee
pursuant to Section 5.06 hereof.
Reserve Fund Deferred Amount Deposit: As defined in Section 5.02(d)(v)
hereof.
Reserve Interest Rate: As defined in Section 4.05 hereof.
Responsible Officer: When used with respect to the Trustee, any Vice
President, Assistant Vice President, the Secretary, any assistant secretary,
the Treasurer, or any assistant treasurer, working in its corporate trust
department, or any other officer of the Trustee to whom a matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
Restricted Certificate: The Class M-2, Class B, Class X and Class O
Certificates.
Rolling Three Month Delinquency Rate: With respect to any Distribution
Date, the fraction, expressed as a percentage, equal to the average of the
Pool Delinquency Rates for each of the three (or one and two, in the case of
the first and second Distribution Dates) immediately preceding Collection
Periods.
S&P: Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx
Companies, Inc., or any successor in interest.
Senior Enhancement Percentage: With respect to any Distribution Date, the
fraction, expressed as a percentage, the numerator of which is the sum of the
aggregate Certificate Principal Amount of the Subordinate Certificates and the
Bond Overcollateralization Amount, in each case after giving effect to
distributions on such Distribution Date, and the denominator of which is the
Stepped-up Bond Balance as of the last day of the related Collection Period.
Senior Principal Distribution Amount: With respect to any Distribution
Date (a) prior to the Stepdown Date or with respect to which a Trigger Event
has occurred with respect to such Distribution Date, the Principal
Distribution Amount and (b) on or after the Stepdown Date and as long as a
Trigger Event has not occurred with respect to such Distribution Date, the
amount, if any, by which (x) the aggregate Certificate Principal Amount of the
Senior Certificates immediately prior to such Distribution Date exceeds (y)
the lesser of (A) the product of (i) 62.42% and (ii) the Stepped-up Bond
Balance and (B) the amount, if any, by which (i) the Stepped-up Bond Balance
exceeds (ii) $2,315,379.
Startup Day: The day designated as such pursuant to Section 10.01(c)
hereof.
Stepdown Date: The later to occur of (x) the Distribution Date in June
2001 and (y) the first Distribution Date on which the Senior Enhancement
Percentage (calculated for this purpose after giving effect to payments or
other recoveries in respect of the Mortgage Loans during the related
Collection Period but before giving effect to distributions on the
Certificates on such Distribution Date) is greater than to equal to 37.58%.
Subordinate Certificate: Any Class M-1, Class M-2, Class B or Class X
Certificate.
Substitution Amount: As defined in the Master Servicing Agreement.
Targeted Overcollateralization Amount: With respect to any Distribution
Date, (x) prior to the Stepdown Date, the product of 1.35% and the Aggregate
Loan Balance as of the Cut-Off Date and (y) on and after the Stepdown Date,
the greater of (i) the product of 2.70% and the Aggregate Loan Balance as of
the last day of the related Collection Period and (ii) $2,315,379.
Termination Price: As defined in Section 7.01 hereof.
Total Distribution Amount: With respect to any Distribution Date, the sum
of the Interest Distribution Amount for such date and the Principal
Distribution Amount for such date.
Trigger Event: With respect to any Distribution Date, if the Rolling
Three Month Delinquency Rate as of the last day of the immediately preceding
Collection Period equals or exceeds 50% of the Senior Enhancement Percentage
for such Distribution Date.
Trust Fund Assets: The corpus of the trust created pursuant to this
Agreement, consisting of the Underlying Bond, including all distribution
thereon after the Cut-off Date, the Certificate Account, the Reserve Fund and
the other items referred to in, and conveyed to the Trustee under, Section
2.01.
Trustee: First Union National Bank, or any successor in interest, or if
any successor trustee or any co-trustee shall be appointed as herein provided,
then such successor trustee and such co-trustee, as the case may be.
Trustee Fee: As to any Distribution Date, an amount equal to the product
of the Trustee Fee Rate and the Aggregate Loan Balance as of the first day of
the related Collection Period.
Trustee Fee Rate: 0.001% per annum.
Underlying Bond: The Collateralized Callable Mortgage Bond issued by the
Bond Issuer pursuant to the Indenture.
Unpaid Basis Risk Shortfall: With respect to any Distribution Date and
each Class of Certificates, the aggregate of all Basis Risk Shortfalls with
respect to such Class for all previous Distribution Dates, together with
interest thereon at the applicable Certificate Interest Rate, less all
payments made to the holders of the Certificates, of such Class in respect of
Basis Risk Shortfalls on or prior to such Distribution Date.
Voting Interests: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions of this Agreement. At all times during the term of this Agreement,
95% of all Voting Interests shall be allocated to the Certificates other than
the Class X Certificate, and 5% of all Voting Interests shall be allocated to
the Class X Certificate. Voting Interests shall be allocated among the other
Classes of Certificates (and among the Certificates within each such Class) in
proportion to their Class Certificate Principal Amounts (or Certificate
Principal Amounts).
Section 1.02. Calculations Respecting Accrued Interest. Accrued interest,
if any, on any Certificate shall be calculated based upon a 360-day year and
the actual number of days in each Accrual Period.
ARTICLE II.
DECLARATION OF TRUST;
CONVEYANCE OF THE UNDERLYING BOND; ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Underlying Bond. The Depositor,
concurrently with the execution and delivery of this Agreement, does hereby
transfer, convey, sell and assign to the Trustee, on behalf of the Holders of
the Certificates, without recourse, all the right, title and interest of the
Depositor in and to the Underlying Bond, including all distributions thereon
payable on and after the Cut-off Date. In connection with such assignment, the
Depositor shall have caused the Underlying Bond to be registered in the name
of, or endorsed to the order of, First Union National Bank, as trustee, or in
a nominee name of the Trustee, and to be delivered or transferred to the
Trustee. The assignment of the Underlying Bond accomplished hereby is absolute
and is intended as a sale. The Depositor represents and covenants that the
Underlying Bond as of the Closing Date is free and clear of any right, charge,
security interest or lien or claim in favor of the Depositor or any person
claiming through the Depositor and that the Depositor has, as of the Closing
Date, the right to assign the Underlying Bond to the Trustee.
It is the intention of the Depositor that the transfer and assignment of
the Underlying Bond shall constitute a sale from the Depositor to the Trust
and that such Underlying Bond not be a part of the Depositor's estate in the
event of the insolvency of the Depositor. In the event the transfer and
assignment of the Underlying Bond contemplated by the Agreement is deemed to
be other than a sale notwithstanding the intent of the parties hereto, the
Agreement shall be deemed to be and in such event hereby is the grant of a
security interest from the Depositor to the Trustee, and the Trustee shall
have all the rights, powers and privileges of a secured party under the
Uniform Commercial Code in effect in the applicable jurisdiction. In such
event, the Depositor agrees to take such action and execute such documents as
shall be necessary in order to fully realize the benefits of such secured
party status, including, without limitations, powers of attorney, financing
statements, notices of lien or other instruments or documents.
Section 2.02. Issuance of Certificates. The Trustee acknowledges the
transfer and delivery to it of the Underlying Bond in the manner described in
Section 2.01 hereof and declares that the Trustee holds and will hold such
Underlying Bond in trust for the benefit of all present and future
Certificateholders and, concurrently with such transfer and delivery, has
caused to be duly executed, authenticated and delivered to or upon the order
of the Depositor the Certificates in authorized denominations, registered in
such names as the Depositor has requested.
ARTICLE III.
THE CERTIFICATES
Section 3.01. The Certificates. (a) The Certificates shall be issuable in
registered form only and shall be securities governed by Article 8 of the New
York Uniform Commercial Code. The Book-Entry Certificates will be evidenced by
one or more certificates, beneficial ownership of which will be held in the
dollar denominations in Certificate Principal Amount or Notional Amount, as
applicable, or in the Percentage Interests, specified herein. Each Class of
Certificates (other than the Class X and Class O Certificates) will be issued
in the minimum denominations in Certificate Principal Amount specified in the
Preliminary Statement hereto and in integral multiples of $1 in excess
thereof. The Class X and Class O Certificates will each be issued as a single
Certificate and maintained in definitive, fully registered form in a
denomination equal to 100% of the Percentage Interest of such Class. The
Certificates may be issued in the form of typewritten certificates.
(b) The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by an authorized officer. Each Certificate
shall, on original issue, be authenticated by the Trustee upon the order of
the Depositor upon receipt by the Trustee of the Underlying Bond described in
Section 2.01. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by an authorized officer of the Trustee or the
Authenticating Agent, if any, by manual signature, and such certification 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. At any time and
from time to time after the execution and delivery of this Agreement, the
Depositor may deliver Certificates executed by the Depositor to the Trustee or
the Authenticating Agent for authentication and the Trustee or the
Authenticating Agent shall authenticate and deliver such Certificates as in
this Agreement provided and not otherwise.
Section 3.02. Registration. The Trustee is hereby appointed, and hereby
accepts its appointment as, Certificate Registrar in respect of the
Certificates and shall maintain books for the registration and for the
transfer of Certificates (the "Certificate Register"). The Trustee may appoint
a bank or trust company to act as Certificate Registrar. A registration book
shall be maintained for the Certificates collectively. The Certificate
Registrar may resign or be discharged or removed and a new successor may be
appointed in accordance with the procedures and requirements set forth in
Sections 6.06 and 6.07 hereof with respect to the resignation, discharge or
removal of the Trustee and the appointment of a successor Trustee. The
Certificate Registrar may appoint, by a written instrument delivered to the
Holders and the Master Servicer, any bank or trust company to act as
co-registrar under such conditions as the Certificate Registrar may prescribe;
provided, however, that the Certificate Registrar shall not be relieved of any
of its duties or responsibilities hereunder by reason of such appointment.
Section 3.03. Transfer and exchange of Certificates. (a) A Certificate
(other than Book-Entry Certificates which shall be subject to Section 3.09
hereof) may be transferred by the Holder thereof only upon presentation and
surrender of such Certificate at the office of the Certificate Registrar duly
endorsed or accompanied by an assignment duly executed by such Holder or his
duly authorized attorney in such form as shall be satisfactory to the
Certificate Registrar. Upon the transfer of any Certificate in accordance with
the preceding sentence, the Trustee shall execute, and the Trustee or any
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount as the Certificate being
transferred. No service charge shall be made to a Certificateholder for any
registration of transfer of Certificates, 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 registration of transfer of
Certificates.
(b) A Certificate may be exchanged by the Holder thereof for any
number of new Certificates of the same Class, in authorized denominations,
representing in the aggregate the same Certificate Principal Amount as the
Certificate surrendered, upon surrender of the Certificate to be exchanged at
the office of the Certificate Registrar duly endorsed or accompanied by a
written instrument of transfer duly executed by such Holder or his duly
authorized attorney in such form as is satisfactory to the Certificate
Registrar. Certificates delivered upon any such exchange will evidence the
same obligations, and will be entitled to the same rights and privileges, as
the Certificates surrendered. No service charge shall be made to a
Certificateholder for any exchange of Certificates, 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 exchange of
Certificates. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute, and the Trustee or the Authenticating Agent shall
authenticate, date and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive.
(c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate
acknowledges the restrictions on the transfer of such Certificate set forth
thereon and agrees that it will transfer such a Certificate only as provided
herein.
The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that
takes delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the
transfer of a Restricted Certificate if the requested transfer is
(x) to the Depositor or the Placement Agent, an affiliate (as
defined in Rule 144(a)(1) under the 0000 Xxx) of the Depositor or
the Placement Agent or (y) being made to a "qualified institutional
buyer" as defined in Rule 144A under the Securities Act of 1933, as
amended (the "Act") by a transferor who has provided the Trustee
with a certificate in the form of Exhibit F hereto; and
(ii) The Certificate Registrar shall register the
transfer of a Restricted Certificate if the requested transfer is
being made to an "accredited investor" under Rule 501(a)(1), (2),
(3) or (7) under the Act by a transferor who furnishes to the
Trustee a letter of the transferee substantially in the form of
Exhibit G hereto.
(d) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Trustee has
received (A) a certificate substantially in the form of Exhibit H hereto from
such transferee or (B) an Opinion of Counsel satisfactory to the Trustee and
the Depositor to the effect that the purchase and holding of such a
Certificate will not constitute or result in the assets of the Trust Fund
being deemed to be "plan assets" subject to the prohibited transactions
provisions of ERISA or Section 4975 of the Code and will not subject the
Trustee or the Depositor to any obligation in addition to those undertaken in
the Agreement; provided, however, that the Trustee will not require such
certificate or opinion in the event that, as a result of a change of law or
otherwise, counsel satisfactory to the Trustee has rendered an opinion to the
effect that the purchase and holding of an ERISA-Restricted Certificate by a
Plan or a Person that is purchasing or holding such a Certificate with the
assets of a Plan will not constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code. The preparation and delivery of the
certificate and opinions referred to above shall not be an expense of the
Trust Fund, the Trustee or the Depositor. Notwithstanding the foregoing, no
opinion or certificate shall be required for the initial issuance of the
ERISA-Restricted Certificates.
(e) As a condition of the registration of transfer or exchange of
any Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of a Certificate.
(f) Notwithstanding anything to the contrary contained herein, no
Class X or Class O Certificate may be owned, pledged or transferred, directly
or indirectly, by or to any person that is not an Eligible Corporation.
Prior to and as a condition of the registration of any transfer, sale or
other disposition of a Class O Certificate, the proposed transferee shall
deliver to the Trustee an affidavit in substantially the form attached hereto
as Exhibit D-1 representing and warranting, among other things, that such
transferee is an Eligible Corporation or an agent or nominee acting on behalf
of an Eligible Corporation (any such transferee, a "Permitted Transferee"),
and the proposed transferor shall deliver to the Trustee an affidavit in
substantially the form attached hereto as Exhibit D-2. In addition, the
Trustee may (but shall have no obligation to) require, prior to and as a
condition of any such transfer, the delivery by the proposed transferee of an
Opinion of Counsel, addressed to the Depositor and the Trustee satisfactory in
form and substance to the Depositor, that such proposed transferee or, if the
proposed transferee is an agent or nominee, the proposed beneficial owner, is
an Eligible Corporation. Notwithstanding the registration in the Certificate
Register of any transfer, sale, or other disposition of a Class O Certificate
to a transferee other than an Eligible Corporation or an agent or nominee
acting on behalf of a transferee, such registration shall be deemed to be of
no legal force or effect whatsoever and such transferee (or such agent or
nominee) shall not be deemed to be a Certificateholder for any purpose
hereunder, including, but not limited to, the receipt of distributions on such
Class O Certificate. The Trustee shall not be under any liability to any
person for any registration or transfer of a Class O Certificate to a
transferee that is not a Permitted Transferee or for the maturity of any
payments due on such Class O Certificate to the Holder thereof or for taking
any other action with respect to such Holder under the provisions of the
Agreement, so long as the transfer was effected in accordance with this
Section 3.03(f), unless the Trustee shall have actual knowledge at the time of
such transfer or the time of such payment or other action that the transferee
is not a Permitted Transferee (or an agent or nominee thereof). The Trustee
shall be entitled to recover from any Holder of a Class O Certificate that was
not a Permitted Transferee (or an agent or nominee thereof) at the time it
became a Holder or any subsequent time it ceased to be an Eligible Corporation
all payments made on such Class O Certificate at and after either such times
(and all costs and expenses, including but not limited to attorneys' fees,
incurred in connection therewith). Any payment (not including any such costs
and expenses) so recovered by the Trustee shall be paid and delivered to the
last preceding Holder of such Class O Certificate.
If any purported transferee shall become a registered Holder of a Class O
Certificate in violation of the provisions of this Section 3.03(f), then upon
receipt of written notice to the Trustee that the registration of transfer of
such Class O Certificate was not in fact permitted by this Section 3.03(f),
the last preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of such registration of transfer of
such Class O Certificate. The Trustee shall be under no liability to any
Person for any registration of transfer of a Class O Certificate that is in
fact not permitted by this Section 3.03(f), for making any payment due on such
Certificate to the registered Holder thereof or for taking any other action
with respect to such Holder under the provisions of this Agreement so long as
the transfer was registered upon receipt of the affidavit described in the
preceding paragraph of this Section 3.03(f).
(g) Each Holder of a Class X Certificate or Class O Certificate, by
such Holder's acceptance thereof, shall be deemed for all purposes to have
consented to the provisions of this section.
Section 3.04. Cancellation of Certificates. Any Certificate surrendered
for registration of transfer or exchange shall be cancelled and retained in
accordance with normal retention policies with respect to cancelled
certificates maintained by the Trustee or the Certificate Registrar.
Section 3.05. Replacement of Certificates. If (i) any Certificate is
mutilated and is surrendered to the Trustee or any Authenticating Agent or
(ii) the Trustee or any Authenticating Agent receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and there
is delivered to the Trustee or the Authenticating Agent such security or
indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Depositor and any Authenticating Agent that such
destroyed, lost or stolen Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and the Trustee or any Authenticating
Agent shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Certificate Principal Amount. Upon the issuance of any new
Certificate under this Section 3.05, the Trustee and Authenticating Agent may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee or the Authenticating Agent)
connected therewith. Any replacement Certificate issued pursuant to this
Section 3.05 shall constitute complete and indefeasible evidence of ownership
in the applicable Trust Fund, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 3.06. Persons Deemed Owners. Subject to the provisions of Section
3.09 with respect to Book-Entry Certificates, the Depositor, the Master
Servicer, the Trustee, the Certificate Registrar and any agent of any of them
may treat the Person in whose name any Certificate is registered upon the
books of the Certificate Registrar as the owner of such Certificate for the
purpose of receiving distributions pursuant to Sections 5.01 and 5.02 and for
all other purposes whatsoever, and neither the Depositor, the Master Servicer,
the Trustee, the Certificate Registrar nor any agent of any of them shall be
affected by notice to the contrary.
Section 3.07. Temporary Certificates. (a) Pending the preparation of
definitive Certificates, upon the order of the Depositor, the Trustee shall
execute and shall authenticate and deliver temporary Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Certificates in lieu of which they are issued and with such variations as the
authorized officers executing such Certificates may determine, as evidenced by
their execution of such Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
Definitive Certificates to be prepared without unreasonable delay. After the
preparation of Definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and authenticate and deliver in
exchange therefor a like aggregate Certificate Principal Amount of Definitive
Certificates of the same Class in the authorized denominations. Until so
exchanged, the temporary Certificates shall in all respects be entitled to the
same benefits under this Agreement as Definitive Certificates of the same
Class.
Section 3.08. Appointment of Paying Agent. The Trustee may appoint a
Paying Agent (which may be the Trustee) for the purpose of making
distributions to Certificateholders hereunder. The Trustee shall cause such
Paying Agent to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent will hold all
sums held by it for the payment to Certificateholders in an Eligible Account
in trust for the benefit of the Certificateholders entitled thereto until such
sums shall be paid to the Certificateholders. All funds remitted by the
Trustee to any such Paying Agent for the purpose of making distributions shall
be paid to Certificateholders on each Distribution Date and any amounts not so
paid shall be returned on such Distribution Date to the Trustee. If the Paying
Agent is not the Trustee, the Trustee shall cause to be remitted to the Paying
Agent on or before the Business Day prior to each Distribution Date, by wire
transfer in immediately available funds, the funds to be distributed on such
Distribution Date. Any Paying Agent shall be either a bank or trust company or
otherwise authorized under law to exercise corporate trust powers.
Section 3.09. Book-Entry Certificates. (a) Each Class of Book-Entry
Certificates, upon original issuance, shall be issued in the form of one or
more typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a Definitive
Certificate representing such Certificate Owner's interest in the Book-Entry
Certificates, except as provided in Section 3.09(c). Unless Definitive
Certificates have been issued to Certificate Owners of Book-Entry Certificates
pursuant to Section 3.09(c):
(i) the provisions of this Section 3.09 shall be in
full force and effect;
(ii) the Depositor, the Paying Agent, the Registrar
and the Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on the Book-Entry
Certificates) as the authorized representatives of the Certificate
Owners and the Clearing Agency shall be responsible for crediting
the amount of such distributions to the accounts of such Persons
entitled thereto, in accordance with the Clearing Agency's normal
procedures;
(iii) to the extent that the provisions of this
Section 3.09 conflict with any other provisions of this Agreement,
the provisions of this Section 3.09 shall control; and
(iv) the rights of Certificate Owners shall be
exercised only through the Clearing Agency and the Clearing Agency
Participants and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency
and/or the Clearing Agency Participants. Unless and until Definitive
Certificates are issued pursuant to Section 3.09(c), the initial
Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit distributions of
principal of and interest on the Book-Entry Certificates to such
Clearing Agency Participants.
(b) Whenever notice or other communication to the Certificateholders
is required under this Agreement, unless and until Definitive Certificates
shall have been issued to Certificate Owners pursuant to Section 3.09(c), the
Trustee shall give all such notices and communications specified herein to be
given to Holders of the Book-Entry Certificates to the Clearing Agency.
(c) If (i) (A) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities with respect to the Book-Entry Certificates, and (B) the
Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Class Certificate Principal
Amount of a Class of Book-Entry Certificates identified as such to the Trustee
by an Officer's Certificate from the Clearing Agency advise the Trustee and
the Clearing Agency through the Clearing Agency Participants in writing that
the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Certificate Owners of a Class of
Book-Entry Certificates, the Trustee shall notify or cause the Certificate
Registrar to notify the Clearing Agency to effect notification to all
Certificate Owners, through the Clearing Agency, of the occurrence of any such
event and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency for registration, the Trustee shall issue the
Definitive Certificates. Neither the Depositor nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on,
and shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or
to be performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable, with respect to such
Definitive Certificates and the Trustee shall recognize the holders of the
Definitive Certificates as Certificateholders hereunder. In addition, any
Certificate M-2 or Class B Certificate transferred to an entity other than a
"Qualified Institutional Buyer" under the Securities Act of 1933, as amended,
shall be made solely through delivery to the transferee of a Definitive
Certificate.
ARTICLE IV.
ADMINISTRATION OF THE TRUST FUND
Section 4.01. [Reserved]
Section 4.02. [Reserved]
Section 4.03. Reports to Certificateholdes. (a) On each Distribution
Date, the Trustee shall deliver or cause to be delivered by first class mail
to each Certificateholder a written report setting forth the following
information, which information the Master Servicer will determine (on the
basis of information obtained from the Servicers) and deliver to the Bond
Trustee who in turn, will deliver to the Trustee no later than one Business
Day prior to such Distribution Date:
(i) the aggregate amount of the distribution to be
made on such Distribution Date to the Holders of each Class of
Certificates, to the extent applicable, allocable to principal on
the Underlying Bond;
(ii) the aggregate amount of the distribution to be
made on such Distribution Date to the Holders of each Class of
Certificates (other than the Class O Certificate) allocable to
interest;
(iii) the amount, if any, of any distribution to the
Holders of the Class X Certificate and the Class O Certificate;
(iv) (A) the aggregate amount of any Advances
required to be made by or on behalf of the Master Servicer or any
Servicer (or the Bond Trustee) with respect to such Distribution
Date, (B) the aggregate amount of such Advances actually made, and
(C) the amount, if any, by which (A) above exceeds (B) above;
(v) the Aggregate Loan Balance as of the close of
business on the last day of the related Collection Period, after
giving effect to payments allocated to principal reported under
clause (i) above;
(vi) the Class Certificate Principal Amount (or
Aggregate Notional Amount) of each Class of Certificates, to the
extent applicable, as of such Distribution Date after giving effect
to payments allocated to principal reported under clause (i) above,
separately identifying any reduction of any of the foregoing
Certificate Principal Amounts due to Applied Loss Amounts:
(vii) any Realized Losses realized with respect to
the Mortgage Loans (x) in the applicable Prepayment Period and (y)
in the aggregate since the Cut-off Date;
(viii) the amount of the Master Servicing Fees,
Servicing Fees and Trustee Fees and expenses paid during the
Collection Period to which such distribution relates;
(ix) the number and aggregate Scheduled Principal
Balance of Mortgage Loans, as reported to the Bond Trustee by the
Master Servicer, (a) remaining outstanding (b) delinquent 30 to 59
days on a contractual basis, (c) delinquent 60 to 89 days on a
contractual basis, (d) delinquent 90 or more days on a contractual
basis, and (e) as to which foreclosure proceedings have been
commenced as of the close of business on the last Business Day of
the calendar month immediately preceding the month in which such
Distribution Date occurs;
(x) the deemed principal balance of each REO Property
as of the close of business on the last Business Day of the calendar
month immediately preceding the month in which such Distribution
Date occurs;
(xi) with respect to any Mortgage Loan that became an
REO Property during the preceding calendar month, the principal
balance of such Mortgage Loan and the number of such Mortgage Loans
as of the close of business on the Distribution Date in such
preceding month;
(xii) with respect to substitution of Mortgage Loans
in the preceding calendar month, the Scheduled Principal Balance of
each Deleted Mortgage Loan, and of each Replacement Mortgage Loan;
(xiii) the aggregate outstanding Carryforward
Interest, Net Prepayment Interest Shortfalls, Basis Risk Shortfalls
and Unpaid Basis Risk Shortfalls, if any, if any, for each Class of
Certificates, after giving effect to the distribution made on such
Distribution Date;
(xiv) the Certificate Interest Rate applicable to
such Distribution Date with respect to each Class of Certificates;
(xv) if applicable, the amount of any shortfall
(i.e., the difference between the aggregate amounts of principal and
interest which Certificateholders would have received if there were
sufficient available amounts in the Certificate Account and the
amounts actually distributed); and
(xvi) any other "loan-level" information for any
Mortgage Loans that are delinquent 90 or more days on a contractual
basis and any REO Property held by the Trust that is reported by the
Master Servicer to the Trustee;
(xvii) the Bond Principal Balance (after giving
effect to payments to be made on such Distribution Date in respect
of the Underlying Bond);
(xviii) whether or not the Underlying Bond is to be
redeemed on such Distribution Date;
(xix) the Bond Overcollateralization Amount as of
such Distribution Date (after giving effect to distributions to be
made in respect of the Underlying Bond on such Distribution Date);
(xx) the Excess Mortgage Amount, if any, to be paid
on such Distribution Date;
(xxi) the Required Reserve Fund Amount for such
Distribution Date (after giving effect to any distributions to be
made on such Distribution Date but before giving effect to any
deposit to be made to the Reserve Fund on such Distribution Date);
(xxii) the amount, if any, to be deposited to the
Reserve Fund on such Distribution Date; and
(xxiii) the amount on deposit in the Reserve Fund
(after giving effect to any deposit to be made thereto on such
Distribution Date).
In the case of information furnished pursuant to subclauses (i), (ii) and
(viii) above, the amounts shall be expressed as a dollar amount per $1,000 of
original principal amount of Certificates.
In preparing or furnishing the foregoing information to the Trustee, the
Master Servicer shall be entitled to rely conclusively on the accuracy of the
information or data regarding the Mortgage Loans and the related REO Property
that has been provided to the Master Servicer by each Servicer, and the Master
Servicer shall not be obligated to verify, recompute, reconcile or recalculate
any such information or data.
On each Distribution Date, the Trustee shall also deliver or cause to be
delivered by first class mail a copy of the above-described written report, to
the following addresses: (i) American Residential Eagle, Inc., 000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 000, Xxx Xxx, Xxxxxxxxxx 00000, Attention: Xxxx Xxxxxx, or to
such other address as the Depositor may designate, (ii) Xxxxxx Brothers Inc.,
Mortgage-Backed Securities Group, 0 Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 and (iii) Bloomberg L.P., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(b) Upon the reasonable advance written request of any
Certificateholder that is a savings and loan, bank or insurance company, which
request, if received by the Trustee, will be promptly forwarded to the Master
Servicer, the Trustee will cause the Master Servicer to provide, or cause to
be provided, (or, to the extent that such information or documentation is not
required to be provided by a Servicer under the applicable Servicing
Agreement, shall use reasonable efforts to obtain such information and
documentation from such Servicer, and provide) to such Certificateholder such
reports and access to information and documentation regarding the Mortgage
Loans as such Certificateholder may reasonably deem necessary to comply with
applicable regulations of the Office of Thrift Supervision or its successor or
other regulatory authorities with respect to an investment in the
Certificates; provided, however, that the Master Servicer shall be entitled to
be reimbursed by such Certificateholder for such Master Servicer's actual
expenses incurred in providing such reports and access.
(c) Within 90 days, or such shorter period as may be required by
statute or regulation, after the end of each calendar year, the Trustee shall
send to each Person who at any time during the calendar year was a
Certificateholder of record, and make available to Certificate Owners
(identified as such by the Clearing Agency) in accordance with applicable
regulations, a report summarizing the items provided to Certificateholders
pursuant to Section 4.03(a) on an annual basis as may be required to enable
such Holders to prepare their federal income tax returns. Such information
shall include the amount of original issue discount accrued on each Class of
Certificates and information regarding the expenses of the Trust Fund. The
Master Servicer shall provide the Trustee with such information as is
necessary for the Trustee to prepare such reports.
Section 4.04. Certificate Account. (a) The Trustee shall establish and
maintain in its name, as trustee, a special deposit trust account (the
"Certificate Account"), to be held in trust for the benefit of the
Certificateholders until disbursed pursuant to the terms of this Agreement.
The Certificate Account shall be an Eligible Account. If the existing
Certificate Account ceases to be an Eligible Account, the Trustee shall
establish a new Certificate Account that is an Eligible Account within 20
Business Days and transfer all funds on deposit in such existing Certificate
Account into such new Certificate Account. The Certificate Account shall
relate solely to the Certificates issued hereunder and funds in the
Certificate Account shall be held separate and apart from and shall not be
commingled with any other monies including, without limitation, other monies
of the Trustee held under this Agreement.
(b) The Trustee shall cause to be deposited into the Certificate
Account on the day on which, or, if such day is not a Business Day, the
Business Day immediately following the day on which, any monies are remitted
by the Bond Trustee to the Trustee, all such amounts. The Trustee shall make
withdrawals from the Certificate Account only for the following purposes:
(i) to withdraw amounts deposited in the Certificate
Account in error;
(ii) to pay itself any investment income earned with
respect to funds in the Certificate Account invested in Eligible
Investments as set forth in subsection (c) below, and to make
payment to itself and others pursuant to any provision of this
Agreement;
(iii) to make distributions to the Certificateholders
pursuant to Article V; and
(iv) to clear and terminate the Certificate Account
pursuant to Section 7.02.
(c) The Trustee shall invest, or cause to be invested, funds held in
the Certificate Account in Eligible Investments (which may be obligations of
the Trustee). All such investments must mature no later than the next
Distribution Date, and shall not be sold or disposed of prior to their
maturity. All such Eligible Investments will be made in the name of the
Trustee (in its capacity as such) or its nominee. All income and gain realized
from any such investment shall be compensation for the Trustee and shall be
subject to its withdrawal on order from time to time. The amount of any losses
incurred in respect of any such investments shall be paid by the Trustee for
deposit in the Certificate Account out of its own funds, without any right of
reimbursement therefor, immediately as realized.
Section 4.05. Determination of LIBOR. (a) If the outstanding Certificates
include any LIBOR Certificates, then on each LIBOR Determination Date the
Master Servicer shall determine LIBOR on the basis of the offered LIBOR
quotations of the Reference Banks as of 11:00 a.m. London time on such LIBOR
Determination Date as follows:
(i) If on any LIBOR Determination Date two or more of
the Reference Banks provide such offered quotations, LIBOR for the
next Accrual Period will be the arithmetic mean of such offered
quotations (rounding such arithmetic mean if necessary to the
nearest five decimal places);
(ii) If on any LIBOR Determination Date only one or
none of the Reference Banks provides such offered quotations, LIBOR
for the next Accrual Period will be whichever is the higher of (x)
LIBOR as determined on the previous LIBOR Determination Date or (y)
the Reserve Interest Rate. The "Reserve Interest Rate" will be
either (A) the rate per annum which the Master Servicer determines
to be the arithmetic mean (rounding such arithmetic mean if
necessary to the nearest five decimal places) of the one-month
Eurodollar lending rates that New York City banks selected by the
Master Servicer are quoting, on the relevant LIBOR Determination
Date, to the principal London offices of at least two leading banks
in the London interbank market or (B) in the event that the Master
Servicer can determine no such arithmetic mean, the lowest one-month
Eurodollar lending rate that the New York City banks selected by the
Master Servicer are quoting on such LIBOR Determination Date to
leading European banks;
and (iii) If on any LIBOR Determination Date the
Master Servicer is required but is unable to determine the Reserve
Interest Rate in the manner provided in paragraph (ii) above, LIBOR
for the next Accrual Period will be LIBOR as determined on the
previous LIBOR Determination Date or, in the case of the first LIBOR
Determination Date, the Initial LIBOR Rate.
(b) The establishment of LIBOR by the Master Servicer and the Master
Servicer's subsequent calculation of the Certificate Interest Rate or Rates
applicable to the LIBOR Certificates for the relevant Accrual Period, in the
absence of manifest error, will be final and binding. In all cases, the Master
Servicer may conclusively rely on quotations of LIBOR for the Reference Banks
as such quotations appear on the display designated "LIUS01M" on the Bloomberg
Financial Markets Commodities News.
(c) As used herein, "Reference Banks" shall mean four leading banks
engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) whose quotations appear on the "Bloomberg Screen LIUS01M Index
Page" (as described in the definition of LIBOR) on the applicable LIBOR
Determination Date and (iii) which have been designated as such by the Trustee
and are able and willing to provide such quotations to the Trustee on each
LIBOR Determination Date. The Reference Banks initially shall be: Barclay's
plc, Bank of Tokyo, National Westminster Bank and Trust Company and Bankers
Trust Company. If any of the initial Reference Banks should be removed from
the Bloomberg Screen LIUS01M Index Page or in any other way fail to meet the
qualifications of a Reference Bank, the Trustee shall use its best efforts to
designate alternate Reference Banks.
(d) If (i) with respect to any LIBOR Determination Date LIBOR is
determined pursuant to clause (a)(iii) of this Section and (ii) on the next
succeeding LIBOR Determination Date LIBOR would, without giving effect to this
paragraph (d), be determined pursuant to such clause (a)(iii), then the
Trustee shall select an alternative interest rate index over which the Trustee
has no control that is used for determining Eurodollar lending rates and is
calculated and published (or otherwise made available) by an independent third
party, and the Trustee shall direct the Master Servicer to use such
alternative interest rate index for calculating LIBOR for all purposes hereof.
Section 4.06. [Reserved]
ARTICLE V.
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally. (a) Subject to Section 7.01
respecting the final distribution on the Certificates, on each Distribution
Date the Trustee or the Paying Agent shall make distributions in accordance
with this Article V. Such distributions shall be made by check mailed to each
Certificateholder's address as it appears on the Certificate Register of the
Certificate Registrar (which shall initially be the Trustee) or, upon written
request made to the Trustee at least three Business Days prior to the related
Distribution Date by any Certificateholder owning an aggregate initial
Certificate Principal Amount of at least $2,500,000, or, in the case of a
Class X Certificate, a Percentage Interest of 100%, by wire transfer in
immediately available funds to an account specified in the request and at the
expense of such Certificateholder; provided, however, that the final
distribution in respect of any Certificate shall be made only upon
presentation and surrender of such Certificate at the Corporate Trust Office.
Wire transfers will be made at the expense of the Holder requesting such wire
transfer by deducting a wire transfer fee from the related distribution.
Notwithstanding such final payment of principal of any of the Certificates,
the Ownership Certificates will remain outstanding until the termination of
the FASIT and the payment in full of all other amounts due with respect to the
Ownership Certificates and at such time such final payment in retirement of
any Ownership Certificates will be made only upon presentation and surrender
of such Certificate at the Corporate Trust Office of the Trustee or at the
office of the New York Presenting Agent. If any payment required to be made on
the Certificates is to be made on a day that is not a Business Day, then such
payment will be made on the next succeeding Business Day.
(b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in
proportion to their respective initial Class Certificate Principal Amounts (or
initial Notional Amounts).
Section 5.02. Distributions from the Certificate Account. (a) On each
Distribution Date the Trustee (or the Paying Agent on behalf of the Trustee)
shall withdraw from the Certificate Account the Total Distribution Amount for
such date and shall distribute such amount as specified in this Section.
(b) On each Distribution Date, the Interest Distribution Amount for
such date will be distributed in the following order of priority:
(i) pro rata, to the Class A-1 and Class A-2
Certificates, Current Interest for each such Class and such
Distribution Date and any Carryforward Interest for each such Class
and such Distribution Date;
(ii) to the Class M-1 Certificates, Current Interest
for such Class and such Distribution Date;
(iii) to the Class M-2 Certificates, Current Interest
for such Class and such Distribution Date;
(iv) to the Class B Certificates, Current Interest
for such Class and such Distribution Date;
(v) pro rata, to the Class A-1 and Class A-2
Certificates, any Basis Risk Shortfall and Unpaid Basis Risk
Shortfall for each such Class and such Distribution Date;
(vi) to the Class M-1 Certificates, any Basis Risk
Shortfall and Unpaid Basis Risk Shortfall for such Class and such
Distribution Date;
(vii) to the Class M-2 Certificates, any Basis Risk
Shortfall and Unpaid Basis Risk Shortfall for such Class and such
Distribution Date;
(viii) to the Class B Certificates, any Basis Risk
Shortfall and Unpaid Basis Risk Shortfall for such Class and such
Distribution Date;
(ix) to the Class M-1 Certificates, any Carryforward
Interest for such Class and such Distribution Date;
(x) to the Class M-2 Certificates, any Carryforward
Interest for such Class and such Distribution Date;
(xi) to the Class B Certificates, any Carryforward
Interest for such Class and such Distribution Date;
(xii) pro rata, to each Class of Certificates, any
Adjusted Prepayment Interest Shortfalls previously allocated thereto
and remaining unpaid; and
(xiii) subject to the last paragraph of this Section
5.02(b), to the Class X Certificate, Current Interest for such Class
on such date.
To the extent a Bond Overcollateralization Deficiency exists after
distributions on the Underlying Bond required for such Distribution Date,
amounts otherwise distributable to the holder of the Class X Certificate
pursuant to clause (xiii) of this Section 5.02(b) shall be held on deposit in
the Reserve Fund until the amount in the Reserve Fund equals the Required
Reserve Fund Amount.
(c) On each Distribution Date, the Trustee shall distribute the
Principal Distribution Amount for such date as follows:
(i) On each Distribution Date (a) prior to the
Stepdown Date or (b) with respect to which a Trigger Event has
occurred, the Principal Distribution Amount for such date will be
distributed in the following order of priority:
(1) to the Class A-1 Certificates, until the Class
Certificate Principal Amount of such Class has been
reduced to zero;
(2) to the Class A-2 Certificates, until the Class
Certificate Principal Amount of such Class has been
reduced to zero;
(3) to the Class M-1 Certificates, until the Class
Certificate Principal Amount of such Class has been
reduced to zero;
(4) to the Class M-2 Certificates, until the Class
Certificate Principal Amount of such Class has been
reduced to zero; and
(5) to the Class B Certificates, until the Class
Certificate Principal Amount of such Class has been
reduced to zero;
(ii) On each Distribution Date (a) on or after the
Stepdown Date and (b) with respect to which a Trigger Event has not
occurred, the Principal Distribution Amount for such date will be
distributed in the following order of priority:
(1) to the Class A-1 and Class A-2 Certificates, an
amount equal to the lesser of (x) the Principal
Distribution Amount for such Distribution Date and (y) the
Senior Principal Distribution Amount for such date, in the
following order of priority:
first, to the Class A-1 Certificates, until the
Class Certificate Principal Amount of such Class
has been reduced to zero, and
second, to the Class A-2 Certificates, until the
Class Certificate Principal Amount of such Class
has been reduced to zero;
(2) to the Class M-1 Certificates, an amount equal to
the lesser of (x) the excess of (A) the Principal
Distribution Amount for such Distribution Date over (B)
the amount distributed to the Class A-1 and Class A-2
Certificates on such date pursuant to clause (1) above and
(y) the Class M-1 Principal Distribution Amount for such
date, until the Class Certificate Principal Amount of such
Class has been reduced to zero;
(3) to the Class M-2 Certificates, an amount equal to
the lesser of (x) the excess of (A) the Principal
Distribution Amount for such Distribution Date over (B)
the amount distributed to the Class A-1, Class A-2 and
Class M-1 Certificates on such date pursuant to clauses
(1) and (2) above and (y) the Class M-2 Principal
Distribution Amount for such date, until the Class
Certificate Principal Amount of such Class has been
reduced to zero; and
(4) to the Class B Certificates, an amount equal to
the lesser of (x) the excess of (A) the Principal
Distribution Amount for such Distribution Date over (B)
the amount distributed to the Class X-0, Xxxxx X-0, Class
M-1 and Class M-2 Certificates on such date pursuant to
clauses (1), (2) and (3) above and (y) the Class B
Principal Distribution Amount for such date, until the
Class Certificate Principal Amount of such Class has been
reduced to zero.
Notwithstanding the foregoing, on any Distribution Date on which the Class
Certificate Principal Amount of each Class of Certificates having a higher
priority of distribution has been reduced to zero, any remaining Principal
Distribution Amount will be distributed to the remaining Classes of
Certificates, in the order of priority set forth above, until the Class
Certificate Principal Amount of each such Class has been reduced to zero.
(d) On each Distribution Date, before the distribution of amounts
pursuant to subsection (c) above, any Bond Deferred Amounts received in
respect of the Underlying Bond shall be distributed in the following order of
priority:
(i) pro rata, to the Class A-1 Certificates and Class
A-2 Certificates, in respect of any Deferred Amounts previously
allocated to such Certificates and not previously reimbursed, until
such Deferred Amounts so allocated have been reduced to zero;
(ii) to the Class M-1 Certificates, in respect of any
Deferred Amounts previously allocated to the Class M-1 Certificates
and not previously reimbursed, until such Deferred Amounts so
allocated have been reduced to zero;
(iii) to the Class M-2 Certificates and not
previously reimbursed, in respect of any Deferred Amounts previously
allocated to the Class M-2 Certificates, until such Deferred Amounts
so allocated have been reduced to zero;
(iv) to the Class B Certificates and not previously
reimbursed, in respect of any Deferred Amounts previously allocated
to the Class B Certificates, until such Deferred Amounts so
allocated have been reduced to zero;
(v) to the Reserve Fund, up to an amount equal to the
amount, if any, by which the Required Reserve Fund Amount exceeds
amounts on deposit in the Reserve Fund, in respect of any amounts
previously distributed from the Reserve Fund in order to pay
Deferred Amounts (any such amount so deposited in the Reserve Fund,
the "Reserve Fund Deferred Amount Deposit"); and
(vi) subject to maintenance of the Reserve Fund in an
amount eqaul to the Required Reserve Fund Amount, to the Class X
Certificates, any remaining amount.
Section 5.03. Allocation of Losses. On each Distribution Date, the Class
Certificate Principal Amount of each Class of Certificates will be reduced by
the amount of any Applied Loss Amount for such date, in the following order of
priority:
(i) to the Class B Certificates, until the Class
Certificate Principal Amount thereof has been reduced to zero;
(ii) to the Class M-2 Certificates, until the Class
Certificate Principal Amount thereof has been reduced to zero;
(iii) to the Class M-1 Certificates, until the Class
Certificate Principal Amount thereof has been reduced to zero; and
(iv) pro rata to the Class A-1 and Class A-2
Certificates, until the Class Certificate Principal Balance of each
such Class has been reduced to zero.
Section 5.04. Reserved]
Section 5.05. [Reserved]
Section 5.06. Reserve Fund. (a) On the Closing Date, the Trustee shall
establish and maintain a trust account entitled "Reserve Fund for the benefit
of the holders of the Class X-0, Xxxxx X-0, Class M-1, Class M-2 and Class B
Certificates" (the "Reserve Fund"). The Reserve Fund shall be an Eligible
Account included as part of the Trust Fund Assets, 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 of the
Trustee held pursuant to this Agreement. The Reserve Fund shall not for any
reason be an asset of the FASIT created hereby. The Class X Certificateholder
shall be considered the owner of the Reserve Fund for federal income tax
purposes.
(b) On each Distribution Date, to the extent of funds available
therefore pursuant to the last paragraph of Section 5.02(b) and Section
5.02(d)(v), the Trustee shall transfer from the Certificate Account to the
Reserve Fund, an amount equal to the sum of (i) the amount, if any, necessary
to cause the amounts on deposit in the Reserve Fund to equal the Required
Reserve Fund Amount and (ii) the Reserve Fund Deferred Amount Deposit. The
Trustee shall make withdrawals from the Reserve Fund to make distributions
pursuant to paragraph (d) of this Section 5.06.
(c) Funds on deposit in the Reserve Fund may be invested by the
Trustee in Permitted Investments at the written direction of the Class X
Certificateholder. Net investment earnings on such investments shall be
distributed to the Class X Certificateholder pursuant to Section 5.06(d)(xv).
(d) On each Distribution Date, amounts on deposit in the Reserve
Fund will be applied, to the extent that any of the amounts listed below
remains unpaid after distributions on such Distribution Date of the Interest
Distribution Amount and Principal Distribution Amount pursuant to Section
5.02(b) and Section 5.02(c) hereof, in the following order of priority:
(i) pro rata, to the Class A-1 and Class A-2 Certificates, any
Current Interest for each such Class and such Distribution Date and any
Carryforward Interest for each such Class and such Distribution Date;
(ii) to the Class M-1 Certificates, Current Interest for such Class
and such Distribution Date;
(iii) to the Class M-2 Certificates, Current Interest for such Class
and such Distribution Date;
(iv) to the Class B Certificates, Current Interest for such Class
and such Distribution Date;
(v) pro rata, to the Class A-1 and Class A-2 Certificates, any Basis
Risk Shortfall and Unpaid Basis Risk Shortfall for each such Class and such
Distribution Date;
(vi) to the Class M-1 Certificates, any Basis Risk Shortfall and
Unpaid Basis Risk Shortfall for such Class and such Distribution Date;
(vii) to the Class M-2 Certificates, any Basis Risk Shortfall and
Unpaid Basis Risk Shortfall for such Class and such Distribution Date;
(viii) to the Class B Certificates, any Basis Risk Shortfall and
Unpaid Basis Risk Shortfall for such Class and such Distribution Date;
(ix) to the Class M-1 Certificates, any Carryforward Interest for
such Class and such Distribution Date;
(x) to the Class M-1 Certificates, any Deferred Amounts previously
allocated to such Class;
(xi) to the Class M-2 Certificates, any Carryforward Interest for
such Class and such Distribution Date;
(xii) to the Class M-2 Certificates, any Deferred Amounts previously
allocated to such Class;
(xiii) to the Class B Certificates, any Carryforward Interest for
such Class and such Distribution Date;
(xiv) to the Class B Certificates, any Deferred Amounts previously
allocated to such Class; and
(xv) to the Class X Certificates, any remaining amount in excess of
the Required Reserve Fund Amount.
ARTICLE VI.
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 0.00.Xxxxxx of Default. Upon the occurrence of any Event of
Default, the Trustee, as the holder of the Underlying Bond, will follow the
procedures set forth in this Article.
Section 6.02. Acceleration of Maturity. The Trustee will promptly furnish
to the Depositor and the Certificateholders notice of any Event of Default
known to the Trustee. The Trustee agrees, as the holder of the Underlying
Bond, to deliver a notice in writing to the Bond Issuer and the Bond Trustee
declaring the Underlying Bond to be immediately due and payable, upon the
Trustee's receipt of a direction to take such action from the Holders of
Certificates evidencing more than 50% of all Voting Interests.
At any time after an acceleration of the Underlying Bond has been made,
the Trustee further agrees to deliver a notice in writing to the Bond Issuer
and the Bond Trustee rescinding and annulling such acceleration and its
consequences, upon the Trustee's receipt of a direction to take such action
from the Holders of Certificates evidencing more than 50% of all Voting
Interests.
Section 6.03. Control by Certificateholders. The Trustee agrees, as the
holder of the Underlying Bond, to instruct the Bond Trustee as to the time,
method and place of conducting any proceeding for any remedy available to the
Bond Trustee or exercising any power or trust conferred on the Bond Trustee,
subject to the limitations and qualifications of Section 5.14 of the
Indenture, upon receipt by the Trustee of a direction to take such action from
the Holders of Certificates evidencing more than 50% of all Voting Interests.
Section 6.04. Waiver of Past Defaults. The Holders of Certificates
evidencing more than 50% of all Voting Rights may on behalf of the Holders of
all Certificates waive any past Event of Default and its consequences, except
an Event of Default:
(1) in payment of any installment of principal, or interest on, the
Underlying Bond; or
(2) in respect of a covenant or provision hereof which under Section 9.02
of the Indenture cannot be modified or amended without the consent of each
holder of the Underlying Bond affected.
Upon any such waiver, such Event of Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for
every purpose of the Indenture; but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent therefrom.
Section 6.05. Undertaking for Costs. All parties to this Agreement agree,
and each Holder of any Certificate by his or her acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under the Indenture, or in any
suit against the Bond Trustee for any action taken, suffered or omitted by it
as Bond Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the Bond
Trustee, to any suit instituted by any Certificateholder, or group of
Certificateholders, acting through the Trustee as herein provided, holding in
the aggregate Certificates evidencing more than 10% of all Voting Interests.
Section 6.06. Sale of Trust Estate. The Trustee, as holder of the
Underlying Bond, agrees to deliver a notice in writing to the Bond Trustee of
the consent to, or a direction to the Bond Trustee to make, a private sale of
all or a portion of the collateral for the Underlying Bond, pursuant to
Section 5.18(b) of the Indenture, upon receipt by the Trustee of a direction
to take such action by the Holders of Certificates evidencing 100% of all
Voting Interests.
The Trustee, as holder of the Underlying Bond, further agrees to deliver
a notice in writing to the Bond Trustee of the consent to, or a direction to
the Bond Trustee to make, a public sale of all or a portion of the collateral
for the Underlying Bond, pursuant to Section 5.18(c) of the Indenture, upon
receipt by the Trustee of a direction to take such action by the Holders of
Certificates evidencing 100% of all Voting Interests.
Section 6.07. Duties of Trustee. (a) The Trustee, except during the
occurrence of one or more of the Events of Default referred to in Section 6.01
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. In the case of the occurrence of one or more of the
Events of Default referred to in Section 6.01 above, 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 investor
would exercise or use under the circumstances in the conduct of such
investor's own affairs. Any permissive right of the Trustee provided for in
this Agreement shall not be construed as a duty of the Trustee.
(b) 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 are in the form required by this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
such resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Master Servicer, to the Trustee pursuant to
this Agreement or the Master Servicing Agreement.
(c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful
misconduct. 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 willful misconduct; provided, however, that:
(i) This paragraph (i) shall not be construed to
limit the effect of paragraph (a) of this Section 6.01.
(ii) For all purposes under this Agreement, the
Trustee shall not be deemed to have notice of any event described in
Section 6.01 other than a payment default unless a Responsible
Officer assigned to and working in the Trustee's corporate trust
division has actual knowledge thereof or unless written notice of
any event is required at the Corporate Trust Office, and such notice
references the Certificates and this Agreement.
(iii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with the direction of Holders of
Certificates as provided in Section 6.02 and 6.03 hereof;
(iv) No provision of this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it; and
(v) The Trustee shall not be responsible for any act
or omission of the Bond Trustee or the Master Servicer.
(d) 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 Certificateholders of any Class holding
Certificates which evidence, as to such Class, Percentage Interests
aggregating not less than 25% as to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement.
(e) The Trustee shall pay, out of its own funds, any fees assessed
by the Rating Agencies after the Closing Date in connection with maintaining
the ratings of the Certificates. Section 6. Except as otherwise provided in
Section 6.07 hereof:
(i) The Trustee may request, and may rely 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, approval, bond or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) The Trustee may consult with counsel and any
advice of its counsel 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 personally liable for
any action taken, suffered or omitted by it in good faith and
reasonably believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Agreement;
(iv) Unless a payment default in respect of the
Underlying Bond or other event specified in Section 6.01 shall have
occurred and be continuing and in each case is known to a
Responsible Officer of the Trustee, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
document (provided the same appears regular on its face), unless
requested in writing to do so by Holders of at least a majority in
Class Certificate Principal Amount (or Percentage Interest) of each
Class of Certificates; 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 expense or liability or payment of such estimated
expenses as a condition to proceeding. The reasonable expense
thereof shall be paid by the Holders requesting such investigation;
and
(v) 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, which agents or attorneys shall
have any or all of the rights, powers, duties and obligations of the
Trustee conferred on them by such appointment provided that the
Trustee shall continue to be responsible for its duties and
obligations hereunder.
Section 6.09. Trustee Not Liable for Certificates. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the
Certificates) or related document save that the Trustee represents that,
assuming due execution and delivery by the other parties hereto, this
Agreement has been duly authorized, executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms except that such enforceability may be subject to
(A) applicable bankruptcy and insolvency laws and other similar laws affecting
the enforcement of the rights of creditors generally, and (B) general
principles of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law.
Section 6.10. Trustee May Own Certificates. The Trustee and any Affiliate
or agent of the Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates and may transact banking and trust with the
other parties hereto with the same rights it would have if it were not Trustee
or such agent.
Section 6.11. Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be (i) an institution insured by the FDIC and (ii) a
corporation or national banking association, organized and doing business
under the laws of any State or the United States of America, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or state authority. If such corporation or national banking
association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then, for the purposes of this Section, the combined capital and surplus of
such corporation or national banking association shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section
6.12.
Section 6.12. Resignation and Removal of Trustee. (a) The Trustee may at
any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Depositor, the Master Servicer and mailing a
copy of such notice to all Holders of record. Upon receiving such notice of
resignation, the Depositor will promptly appoint a successor trustee by
written instrument, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee and one copy to the
Master Servicer. If no successor trustee shall have been so appointed and
shall have accepted appointment within 30 days after the giving of such notice
of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.11 and shall fail to resign after
written request therefor by the Depositor, (ii) the Trustee shall become
incapable of acting, 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, (iii)
a tax is imposed or threatened with respect to the Trust Fund by any state in
which the Trustee or the Trust Fund held by the Trustee is located, or (iv)
the continued use of the Trustee would result in a downgrading of the rating
by the Rating Agencies of any Class of Certificates with a rating, then the
Depositor shall remove the Trustee and appoint a successor trustee by written
instrument, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee.
(c) The Holders of more than 50% of the Class Certificate Principal
Amount (or Percentage Interest) of each Class of Certificates may at any time
upon 30 days' written notice to the Trustee and to the Depositor remove the
Trustee by such written instrument, signed by such Holders or their
attorney-in-fact duly authorized, one copy of which instrument shall be
delivered to the Depositor and one copy to the Trustee so removed; the
Depositor shall thereupon use its best efforts to appoint a mutually
acceptable successor trustee in accordance with this Section.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 6.13.
Section 6.13. Successor Trustee. (a) Any successor trustee appointed as
provided in Section 6.06 shall execute, acknowledge and deliver to the
Depositor and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as trustee herein. The predecessor trustee shall
deliver to the successor trustee and shall duly assign, transfer, deliver and
pay over to the successor trustee the entire Trust Fund Assets, together with
all necessary instruments of transfer and assignment or other documents
properly executed necessary to effect such transfer and such of the record or
copies thereof maintained by the predecessor trustee in the administration
hereof as may be requested by the successor trustee and shall thereupon be
discharged from all duties and responsibilities under this Agreement.
(b) No successor trustee shall accept appointment as provided in
this Section unless at the time of such appointment such successor trustee
shall be eligible under the provisions of Section 6.11.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail (or cause the Master
Service to mail) notice of the succession of such trustee hereunder to all
Holders of Certificates at their addresses as shown in the Certificate
Register and to the Rating Agencies. The expenses of such mailing shall be
borne by the Depositor.
Section 6.14. Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any Persons succeeding to the business of the Trustee,
shall be the successor to the Trustee 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 that such
Person shall be eligible under the provisions of Section 6.05.
Section 6.15. [Reserved]
Section 6.16. Authenticating Agents. (a) The Trustee may appoint one or
more Authenticating Agents which shall be authorized to act on behalf of the
Trustee in authenticating Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an Authenticating Agent and
a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation
organized and doing business under the laws of the United States of America or
of any state, having a combined capital and surplus of at least $15,000,000,
authorized under such laws to do a trust business and subject to supervision
or examination by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any Person succeeding to the corporate agency business of
any Authenticating Agent, shall continue to be the Authenticating Agent
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at
least 30 days' advance written notice of resignation to the Trustee and the
Depositor. The Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and the Depositor. Upon receiving a notice of resignation
or upon such a termination, or in case at any time any Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section
6.16, the Trustee may appoint a successor Authenticating Agent, shall give
written notice of such appointment to the Depositor and shall mail notice of
such appointment to all Holders of Certificates. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with
all the rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent. No
successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 6.16. No Authenticating Agent shall have
responsibility or liability for any action taken by it as such at the
direction of the Trustee. Any Authenticating Agent shall be entitled to
reasonable compensation for its services and, if paid by the Trustee, it shall
be a reimbursable expense.
Section 6.17. Indemnification of Trustee. The Trustee and its directors,
officers, employees and agents shall be entitled to indemnification from the
Trust Fund for any loss, liability or expense incurred in connection with any
legal proceeding and incurred without negligence or willful misconduct on
their part, arising out of, or in connection with, the acceptance or
administration of the trusts created hereunder, including the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:
(i) with respect to any such claim, the Trustee shall
have given the Depositor and the Holders written notice thereof
promptly after the Trustee shall have knowledge thereof;
(ii) while maintaining control over its own defense,
the Trustee shall cooperate and consult fully with the Depositor in
preparing such defense; and
(iii) notwithstanding anything to the contrary in
this Section 6.16, the Trust Fund shall not be liable for settlement
of any such claim by the Trustee entered into without the prior
consent of the Depositor, which consent shall not be unreasonably
withheld.
The provisions of this Section 6.17 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.
Section 6.18. Fees and Expenses of Trustee. The Trustee shall be entitled
to receive, and is authorized to pay to itself the Trustee Fee and as
additional compensation any amount of income or gain earned from the
investment of funds in the Certificate Account.
Section 6.19. Collection of Monies; Remedies. Except as otherwise
expressly provided in this Agreement, the Trustee may demand payment or
delivery of, and shall receive and collect, all money and other property
payable to or receivable by the Trustee pursuant to this Agreement. The
Trustee shall hold all such money and property received by it as part of the
Trust Fund Assets and shall distribute it as provided in this Agreement. If
the Trustee shall not have timely received amounts to be remitted with respect
to the Underlying Bond, the Trustee shall request that such distribution be
made as promptly as practicable or legally permitted. If the Trustee shall
subsequently receive any such amount, it may withdraw such request.
Section 6.20. 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.
Section 6.21. Trustee May Enforce Claims Without Possession of
Certificates. 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 preceding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. 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 or the Certificateholders in respect
of which such judgment has been recovered.
Section 6.22. 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 6.23. 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.
ARTICLE VII.
PURCHASE AND TERMINATION OF THE
TRUST FUND; PURCHASE OF CERTIFICATES
Section 7.01. Termination of Trust Fund Upon Maturity or Redemption of
the Underlying Bond. The obligations and responsibilities of the Trustee
(other than the obligation of the Trustee to make payments to
Certificateholders as set forth in Section 7.02) shall terminate in accordance
with Section 7.02 or on the final payment or earlier redemption of the
Underlying Bond; provided, however, that in no event shall the Trust Fund
created hereby continue beyond the expiration of 21 years from the death of
the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the late Ambassador
of the United States to the Court of St. James's, living on the date hereof
and provided further, that in no event shall the Trust Fund created hereby
continue beyond May 25, 2028.
Section 7.02. Special Purchase of Certificates. (a) On any Distribution
Date occurring on or after the Distribution Date on which the aggregate
Certificate Principal Amount of the Certificates (other than the Class X
Certificate) is less than 35% of their initial aggregate Certificate Principal
Amount, the Class O Certificateholder, so long as it holds such Certificate,
shall have the option to purchase all, but not less than all (other than the
Class X Certificate), of the Certificates remaining outstanding on such
Distribution Date for a purchase price equal to the sum of the outstanding
Certificate Principal Amounts of each such Certificate plus accrued but unpaid
interest thereon at the applicable Certificate Interest Rate (the "Acquisition
Price").
(i) In order to exercise such option, the Class O
Certificateholder must deliver to the Trustee written notice of its
intent to purchase all of the Certificates and of the Distribution
Date on which it intends to do so not less than 20 days prior to
such Distribution Date.
(ii) On the Business Day preceding the final
Distribution Date, the Class O Certificateholder shall deposit with
the Trustee cash, certificates of deposit or a letter of credit in
an amount sufficient to provide for payment of the Acquisition
Price. Such amount shall be paid by the Trustee to Holders of
Certificates upon surrender for purchase as provided below.
(iii) Notice of any purchase of the Certificates
pursuant to the provisions of this subsection, specifying the
Distribution Date upon which such purchase shall be made, shall be
given promptly by the Trustee by first class mail to Holders of the
Certificates mailed no later than five Business Days after the
Trustee has received notice from the Class O Certificateholder of
its intent to exercise its right to purchase the Certificates. Such
notice shall specify (A) the Distribution Date upon which the
Acquisition Price will be paid upon transfer of the Certificates
(the "Acquisition Date"), and the time and place at which any
Definitive Certificates must be surrendered for cancellation and (B)
that the Acquisition Price applicable to each Certificate
constitutes payment in full therefor, and that no further amounts in
respect of interest or principal will be distributable to the
Holders from whom such Certificates are purchased by the Class O
Certificateholder. The Trustee shall give such notice to the Master
Servicer and the Certificate Registrar at the time such notice is
given to Holders of the Certificates.
(iv) On the Acquisition Date, the Trustee shall (A)
make payment to each Holder of a Certificate of the Acquisition
Price therefor in the manner in which distributions are effected
under this Agreement and (B) effect the transfer of each such
Certificate (or interest therein) to the Class O Certificateholder,
which shall thereafter (unless it transfers such Certificate in
accordance with this Agreement) be the Holder (or Certificate Owner)
of such Certificate for all purposes. Notwithstanding the foregoing,
in the event that all of the Holders of Definitive Certificates do
not surrender their Certificates for purchase at the time specified
in the above-mentioned written notice, the Trustee shall give a
second written notice to such remaining Certificateholders to
surrender their Certificates for purchase. If within ten days after
the second notice any Definitive Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps
to contact the remaining Certificateholders concerning surrender of
such Certificates, and the cost thereof shall be paid out of the
amounts distributable to such Holders. Subject to applicable law,
the Trustee shall hold all amounts payable to such Holders for the
benefit of such Holders. No interest shall accrue on any amount held
by the Trustee and not distributed to a Certificateholder due to
such Certificateholder's failure to surrender its Certificate(s) for
payment of the Acquisition Price thereon in accordance with this
Section. Notwithstanding that any Definitive Certificate has not
been surrendered after notice and deposit of the Acquisition Price
as provided above, on the Acquisition Date such Certificate shall be
deemed to be canceled a transfer of such Certificate (or interest
therein) shall be deemed to be effected to the Class O
Certificateholder, which shall thereafter (unless it transfers such
Certificate in accordance with this Agreement) be the Holder (or
Certificate Owner) of such Certificate for all purposes.
Section 7.03. Procedure Upon Termination of Trust Fund. (a) Notice of any
termination pursuant to the provisions of Section 7.01, specifying the
Distribution Date upon which the final distribution shall be made, shall be
given promptly by the Trustee by first class mail to Certificateholders mailed
upon the final payment or earlier redemption of the Underlying Bond. Such
notice shall specify (A) the Distribution Date upon which final distribution
on the Certificates of all amounts required to be distributed to
Certificateholders pursuant to Section 5.02 will be made upon presentation and
surrender of the Certificates at the Corporate Trust Office, and (B) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
distribution being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. The
Trustee shall give such notice to the Master Servicer and the Certificate
Registrar at the time such notice is given to Holders of the Certificates.
Upon any such termination, the duties of the Certificate Registrar with
respect to the Certificates shall terminate and the Trustee shall terminate
the Certificate Account and any other account or fund maintained with respect
to the Certificates, subject to the Trustee's obligation hereunder to hold all
amounts payable to Certificateholders in trust without interest pending such
payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a further written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If
within one year after such notice any Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to
contact the remaining Certificateholders concerning surrender of such
Certificates, and the cost thereof shall be paid out of the amounts
distributable to such Holders. If within two years after such notice any
Certificates shall not have been surrendered for cancellation, the Trustee
shall, subject to applicable state law relating to escheatment, hold all
amounts distributable to such Holders for the benefit of such Holders. No
interest shall accrue on any amount held by the Trustee and not distributed to
a Certificateholder due to such Certificateholder's failure to surrender its
Certificate(s) for payment of the final distribution thereon in accordance
with this Section.
ARTICLE VIII.
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders. (a) The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or this Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or take any action or
proceeding in any court for a partition or winding up of this Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them. Except as otherwise expressly provided herein, no
Certificateholder, solely by virtue of its status as a Certificateholder,
shall have any right to vote or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association, nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
(b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing 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 an Event
of Default and of the continuance thereof, as hereinbefore provided, and
unless also the Holders of Certificates evidencing not less than 25% of the
Class Certificate Principal Amount (or Percentage Interest) of Certificates of
each Class affected thereby 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 cost, expenses and liabilities to be incurred
therein or thereby, and the Trustee, for sixty 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 and no direction inconsistent
with such written request has been given such Trustee during such sixty-day
period by such Certificateholders; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the benefit
of all Certificateholders. For the protection and enforcement of the
provisions of this Section, each and every Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 8.02. Access to List of Holders. (a) If the Trustee is not acting
as Certificate Registrar, the Certificate Registrar will furnish or cause to
be furnished to the Trustee, within fifteen days after receipt by the
Certificate Registrar of a request by the Trustee in writing, a list, in such
form as the Trustee may reasonably require, of the names and addresses of the
Certificateholders of each Class as of the most recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter
referred to as "Applicants") apply in writing to the Trustee, and such
application states that the Applicants desire to communicate with other
Holders with respect to their rights under this Agreement or under the
Certificates and is accompanied by a copy of the communication which such
Applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, afford such Applicants reasonable
access during the normal business hours of the Trustee to the most recent list
of Certificateholders held by the Trustee or shall, as an alternative, send,
at the Applicants' expense, the written communication proffered by the
Applicants to all Certificateholders at their addresses as they appear in the
Certificate Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing
Agency, by receiving and holding a Certificate, agrees with the Depositor, the
Certificate Registrar and the Trustee that neither the Depositor, the
Certificate Registrar nor the Trustee shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 8.03. Acts of Holders of Certificateholders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Agreement to be given or taken by Holders or Certificate
Owner, if the Holder is a Clearing Agency, may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Holders
in person or by agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee. Such instrument or
instruments (as the action embodies therein and evidenced thereby) are herein
sometimes referred to as an "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agents shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee if made in the manner
provided in this Section.
(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 any notary public or other officer
authorized by law to take acknowledgments or deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the individual executing the same, may also be
proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates
shall be overdue and notwithstanding any notation of ownership or other
writing thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee nor the Depositor shall be
affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Certificate shall bind every
future Holder of the same 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 in reliance thereon, whether or not notation of such action is
made upon such Certificate.
ARTICLE IX.
[RESERVED]
ARTICLE X.
FASIT ADMINISTRATION
Section 10.01. FASIT Administration. (a) The Holder of the Class O
Certificate or, to the extent required by applicable Treasury Regulations, the
Trustee, shall timely elect to treat the Trust as a FASIT under the Code and,
if necessary, under applicable state law. Unless otherwise required by
applicable Treasury Regulations, such election will be made on the appropriate
federal or state tax returns for the taxable year of the Holder of the Class O
Certificate in which the Certificates are issued or in any other taxable year
as required by applicable Treasury Regulations.
(b) Each Certificate (except the Class O Certificate) is hereby
designated as a separate "regular interest" (within the meaning of Section
860L(b)(1) of the Code) in the FASIT. The Class O Certificate is hereby
designated as the single class of "ownership interest" (within the meaning of
Section 860L(b)(2) of the Code) in the FASIT. The Trustee shall not permit the
creation of any other "interests" in the FASIT (within the meaning of the
FASIT Provisions) except those contemplated herein.
(c) The date of this Agreement is hereby designated as the "startup
day" of the FASIT within the meaning of Section 860L(d)(1) of the Code. Solely
for purposes of the FASIT Provisions, May 25, 2028 has been designated the
"latest possible maturity date" of each Class of regular interests in the
FASIT.
(d) Except as otherwise provided in Section 11.01 below, the Holder
of the Class O Certificate shall pay out of its own funds any tax-related
expenses of the FASIT (including, but not limited to, expenses related to
audits or any administrative or judicial proceedings with respect to the FASIT
that involve the Internal Revenue Service or state tax authorities).
(e) Within 30 days after the date of this Agreement the Trustee
shall cause the Master Servicer to prepare or cause to be prepared and submit
to the Holder of the Class O Certificate for filing with the Internal Revenue
Service Form 8811, "Information Return for Real Estate Mortgage Investment
Conduits (REMIC) and Issuers of Collateralized Debt Obligations" for the
FASIT. The Holder of the Class O Certificate and the Master Servicer shall
prepare, execute and file, or cause to be prepared, executed and filed, the
tax returns which the Holder of the Class O Certificate and the FASIT are
respectively obligated to prepare and file in accordance with the FASIT
Provisions. The expenses of preparing and filing such returns shall not be an
expense of the Trust or to the holders of the regular interests in the FASIT,
but rather be borne by the Holder of the Class O Certificate, without any
right of reimbursement therefor. The Trustee shall cause the Master Servicer
to provide on a timely basis to the Holder of the Class O Certificate or its
designee, and the Master Servicer shall provide on a timely basis to the
Trustee or its designee, such information with respect to the FASIT as is in
its possession and reasonably required by the Holder of the Class O
Certificate or the Trustee, respectively, to enable it to perform its
obligations under this Article.
The Master Servicer shall provide on a timely basis to the Trustee or its
designee such information with respect to the Trust and the FASIT, in each
case, as is in its possession, which the Master Servicer has received or
prepared by virtue of its role as master Master Servicer under the Servicing
Agreement and reasonably required by the Trustee to enable it to perform its
obligations under this Section 11.01 and the Trustee shall provide such
information on a timely basis to the Holder of the Class O Certificate or its
designee, and each of the Trustee and the Holder of the Class O Certificate
shall be entitled to rely on such information in the performance of its
obligations under this Section 11.01. The Master Servicer shall indemnify the
Holder of the Class O Certificate and the Trustee for any liability or
assessment against the Holder of the Class O Certificate, the Trustee or the
FASIT and any expenses incurred in connection with such liability or
assessment (including reasonable attorney's fees) resulting from any error in
any tax or information returns resulting from errors in the information
provided by the Master Servicer as the case may be. Such indemnification shall
survive the termination of this Agreement and any resignation or termination
of the Trustee under this Agreement.
(f) The Trustee shall report all information to Certificateholders
that is the responsibility of the FASIT under the Code, the FASIT Provisions
or other compliance guidance issued by the Internal Revenue Service or any
state or local taxing authority including, without limitation, reports
relating to interest, original issue discount and market discount or premium.
The Trustee shall provide to the Internal Revenue Service, the name, title,
address and telephone number of the Person who will serve as the
representative of the FASIT.
(g) None of the Holder of the Class O Certificate, the Master
Servicer or the Trustee shall knowingly take (or cause the FASIT to take) any
action or fail to take (or failed to cause to be taken) any action within
their respective control and within the scope of their respective duties under
this Agreement, that, under the FASIT Provisions, if taken or not taken, as
the case may be, would (i) endanger the status of the Trust as a FASIT, or
(ii) result in the imposition of a tax upon the FASIT (including but not
limited to the tax on prohibited transactions as defined in Section 860L(e) of
the Code) (any such endangerment or imposition, an "Adverse FASIT Event"),
unless the Trustee and the Master Servicer shall have obtained or received an
Opinion of Counsel (at the expense of the party requesting such action or at
the expense of the Trust if the Trustee seeks to take such action or to
refrain from acting for the benefit of the Certificateholders) to the effect
that the contemplated action will not result in an Adverse FASIT Event. The
Trustee shall not take any actions (or fail to take any action, whether or not
authorized hereunder) as to which the Holder of the Class O Certificate or the
Master Servicer has advised it in writing that either the Holder of the Class
O Certificate or the Master Servicer has received or obtain an Opinion of
Counsel to the effect that an Adverse FASIT Event would occur with respect to
such action or inaction. In addition, prior to taking any action with respect
to the FASIT, or causing the FASIT to take any action, that is not expressly
permitted under the terms of this Agreement, the Holder of the Class O
Certificate and the Master Servicer shall consult with the Trustee or its
designee, in writing, with respect to whether such action would cause an
Adverse FASIT Event to occur. The Holder of the Class O Certificate shall not
take any such action or cause the FASIT to take any such action as to which
the Trustee has advised it in writing that an Adverse FASIT Event would occur,
and the Holder of the Class O Certificate shall not have any liability
hereunder for any action taken by it in accordance with the written
instructions of the Trustee. The Trustee may consult with counsel to obtain
such written advice, and the Trustee may conclusively rely on such advice of
counsel, and the cost of same shall be borne by the party seeking to take the
action not permitted by this Agreement, but in no event at the cost or expense
of the Trust or the Trustee.
(h) If any "prohibited transactions" taxes, as defined in Section
860L(e) of the Code, or any other tax imposed by the Code or any applicable
provisions of state or local tax laws is imposed on the FASIT, such tax,
together with all incidental costs and expenses (including, without
limitation, penalties and reasonable attorneys' fees), shall be charged to and
paid by (i) the Master Servicer, if such tax arises out of or results from a
breach by the Master Servicer of any of its obligations or this Article X; or
(ii) the Holder of the Class O Certificate, if such tax arises out of a breach
of any of its obligations under this Article X.
(i) The Holder of the Class O Certificate and, to the extent that
records are maintained by the Master Servicer in the normal course of its
business, and the Master Servicer shall, for federal income tax purposes,
maintain books and records with respect to the FASIT on an accrual basis and a
taxable year corresponding to the taxable year of the Holder of the Class O
Certificate.
(j) Neither the Trustee nor the Master Servicer shall not enter into
any arrangement by which the FASIT will receive a fee or other compensation
for services (other than a fee received as a compensation for a waiver,
amendment or consent under permitted assets (other than foreclosure property)
held by the FASIT) nor permit the FASIT to receive any income from assets
other than "permitted assets" as defined in Section 860L(c) of the Code.
Section 10.02 Compliance with FASIT Provisions; Further Assurances.
(a) In order to facilitate compliance by the Trust with the FASIT
Provisions, the parties hereto agree that, insofar as the rights or
responsibilities of any party under, or actions required to be taken by any
party to, this Agreement are required to be modified as a result of the
promulgation of proposed, temporary or final Treasury Regulations or other
applicable authority, as evidenced by a notice from the Master Servicer to the
other parties hereto, based upon the advice of counsel, the parties hereto
agree (i) to enter into any amendments to this Agreement that are required to
bring this Agreement into compliance with such regulation or other authority
and/or to allow the Trust to continue to be classified as a FASIT for U.S.
federal income tax purposes or (ii) to take such actions or refrain from
taking such actions pursuant to the terms of this Agreement in a manner
consistent with such regulations or other authority necessary to maintain the
status of the Trust as a FASIT or to prevent the imposition of tax on the
Trust or the FASIT.
(b) The parties to this Agreement hereby agree to take such further
actions as may be required to effectuate this Section 10.02 and the intent
that this Trust be treated as a FASIT under the FASIT Provisions.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 11.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied,
oral or written, of any nature whatsoever with respect to the subject matter
hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof.
Section 11.03. Amendment. (a) This Agreement may be amended from time to
time by the Depositor and the Trustee, without notice to or the consent of any
of the Holders, (i) to cure any ambiguity, (ii) to cause the provisions herein
to conform to or be consistent with or in furtherance of the statements made
with respect to the Certificates, the Trust Fund or this Agreement in any
Offering Document, or to correct or supplement any provision herein which may
be inconsistent with any other provisions herein, (iii) to make any other
provisions with respect to matters or questions arising under this Agreement
or (iv) to add, delete, or amend any provisions to the extent necessary or
desirable to comply with any requirements imposed by the Code and the FASIT
Provisions. No such amendment effected pursuant to the preceding sentence
shall, as evidenced by an Opinion of Counsel, result in an Adverse FASIT
Event, nor shall such amendment effected pursuant to clause (iii) of such
sentence adversely affect in any material respect the interests of any Holder.
Prior to entering into any amendment without the consent of Holders pursuant
to this paragraph, the Trustee may require an Opinion of Counsel (at the
expense of the party requesting such amendment) to the effect that such
amendment is permitted under this paragraph. Any such amendment shall be
deemed not to adversely affect in any material respect any Holder, if the
Trustee receives written confirmation from each Rating Agency that such
amendment will not cause such Rating Agency to reduce the then current rating
assigned to the Certificates (and any Opinion of Counsel requested by the
Trustee in connection with any such amendment may rely expressly on such
confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by the
Depositor and the Trustee with the consent of the Holders of not less than
66-2/3% of the Class Certificate Principal Amount (or Percentage Interest) of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment shall be made unless the Trustee
receives an Opinion of Counsel, at the expense of the party requesting the
change, that such change will not result in an Adverse FASIT Event, and
provided further, that no such amendment may (i) reduce in any manner the
amount of, or delay the timing of, payments received on the Underlying Bond
which are required to be distributed on any Certificate, without the consent
of the Holder of such Certificate or (ii) reduce the aforesaid percentages of
Class Certificate Principal Amount (or Percentage Interest) of Certificates of
each Class, the Holders of which are required to consent to any such amendment
without the consent of the Holders of 100% of the Class Certificate Principal
Amount (or Percentage Interest) of each Class of Certificates affected
thereby. For purposes of this paragraph, references to "Holder" or "Holders"
shall be deemed to include, in the case of any Class of Book-Entry
Certificates, the related Certificate Owners.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Holder, the Depositor and to the Rating Agencies.
(d) It shall not be necessary for the consent of Holders under this
Section 11.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations
as the Trustee may prescribe.
(e) Notwithstanding anything to the contrary in any Servicing
Agreement, the Trustee shall not consent to any amendment of any Servicing
Agreement except pursuant to the standards provided in this Section with
respect to amendment of this Agreement.
Section 11.04. Voting Rights Except to the extent that the consent of all
affected Certificateholders is required pursuant to this Agreement, with
respect to any provision of this Agreement requiring the consent of
Certificateholders representing specified percentages of aggregate outstanding
Certificate Principal Amount (or Percentage Interest), Certificates owned by
the Depositor, the Master Servicer, the Trustee or any Servicer or Affiliates
thereof are not to be counted so long as such Certificates are owned by the
Depositor, the Master Servicer, the Trustee or any Servicer or any Affiliate
thereof.
Section 11.05. Provision of Information. (a) For so long as any of the
Certificates of any Series or Class are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, each of the Depositor and the Trustee
agree to cooperate with each other to provide to any Certificateholders and to
any prospective purchaser of Certificates designated by such
Certificateholder, upon the request of such Certificateholder or prospective
purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act. Any reasonable, out-of-pocket expenses incurred by the Trustee
in providing such information shall be reimbursed by the Depositor.
(b) The Trustee will provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or
documents requested, (i) a copy (excluding exhibits) of any report on Form 8-K
or Form 10-K filed with the Securities and Exchange Commission pursuant to
Section 3(i) of the Master Servicing Agreement and (ii) a copy of any other
document incorporated by reference in the Prospectus. Any reasonable
out-of-pocket expenses incurred by the Trustee in providing copies of such
documents shall be reimbursed by the Depositor.
(c) On each Distribution Date, the Trustee shall deliver or cause to
be delivered by first class mail to the Depositor, Attention: Contract
Finance, a copy of the report delivered to Certificateholders pursuant to
Section 4.03.
Section 11.06. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when received
by (a) in the case of the Depositor, American Residential Eagle, Inc., 000
Xxxxxx Xxxx Xxxxxx, Xxxxx 000, Xxx Xxx, Xxxxxxxxxx 00000, Attention: Xxxx
Xxxxxx, and (b) in the case of the Trustee, First Union National Bank, 000
Xxxxx Xxxxx Xxxxxx XX0000, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention:
Structured Finance, or as to each party such other address as may hereafter be
furnished by such party to the other parties in writing. Any notice required
or permitted to be mailed to a Holder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Holder receives such notice.
Section 11.08. Severability. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
Section 11.09. Indulgences; No Waivers. Neither the failure nor any delay
on the part of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other
or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
Section 11.10. Headings Not To Affect Interpretation. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 11.11. Benefits of Agreement. Nothing in this Agreement or in the
Certificates, express or implied, shall give to any Person, other than the
parties to this Agreement and their successors hereunder and the Holders of
the Certificates, any benefit or any legal or equitable right, power, remedy
or claim under this Agreement.
Section 11.12. Special Notices to the Rating Agencies. (a) The Depositor
shall give prompt notice to the Rating Agencies of the occurrence of any of
the following events of which it has notice:
(i) any amendment to this Agreement pursuant to
Section 11.03;
(ii) the making of a final payment pursuant to
Section 7.02; and
(iii) any termination of the rights and obligations
of any Servicer under the applicable Servicing Agreement.
(b) All notices to the Rating Agencies provided for this Section
shall be in writing and sent by first class mail, telecopy or overnight
courier, as follows:
Standard & Poor's Rating Services
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Mortgages
And
Duff & Xxxxxx Credit Rating Company
00 Xxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Residential Mortgage-Backed Securities
(c) The Trustee shall deliver to the Rating Agencies reports
prepared pursuant to Section 4.03.
Section 11.13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Depositor and the Trustee have caused their names
to be signed hereto by their respective officers hereunto duly authorized as
of the day and year first above written.
AMERICAN RESIDENTIAL EAGLE, INC.,
as Depositor
By: ________________________________________
Name: __________________________________
Title: _________________________________
FIRST UNION NATIONAL BANK,
as Trustee.
By: ________________________________________
Name: __________________________________
Title: _________________________________
ACKNOWLEDGED BY:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(solely for purposes of Article IV
and Article X hereof).
By: _______________________________________
Name: _________________________________
Title: ________________________________
EXHIBIT A
FORMS OF CERTIFICATES
EXHIBIT B-1
[RESERVED]
EXHIBIT B-2
[RESERVED]
EXHIBIT B-3
[RESERVED]
EXHIBIT B-4
[RESERVED]
EXHIBIT C
[RESERVED]
EXHIBIT D-1
FORM OF CLASS O CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], _________________ being first duly sworn, deposes
and says:
1. That he [she] is [title of officer] ___________ _____________
of [name of Purchaser] ________________________
_________________ (the "Purchaser"), a corporation duly
organized and existing under the laws of the State of
__________, on behalf of which he [she] makes this affidavit.
2. That the Purchaser's Taxpayer Identification Number is [ ].
3. That the Purchaser is and Eligible Corporation within the
meaning of Section 860L(a)(2) of the Internal Revenue Code of
1986, as amended (the "Code") and will be an Eligible
Corporation as of [date of transfer], and that the Purchaser is
not acquiring the Class O Certificate (as defined in the
Agreement) for the account of, or as agent (including a broker,
nominee, or other middleman) for, any person or entity from
which it has not received an affidavit substantially in the
form of this affidavit. For these purposes, an Eligible
Corporation is any domestic C corporation other than (i) a
corporation that is exempt from or is not subject to federal
income tax, (ii) an investment company that could qualify as a
regulated investment company under section 851(a) of the Code,
(iii) a REMIC, or (iv) a coop to which subchapter T of the Code
applies.
4. That the Purchaser is not, and on __________ [insert date of
transfer of Class O Certificate to Purchaser] will not be, and
is not and on such date will not be investing the assets of, an
employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a plan subject
to Code Section 4975 or a person or entity that is using the
assets of any employee benefit plan or other plan to acquire
the Class O Certificate.
5. That the Purchaser hereby acknowledges that under the terms of
the Trust Agreement (the "Agreement") among American
Residential Eagle, Inc., and First Union National Bank, as
Trustee, dated as of June 1, 1998, no transfer of the Class O
Certificate shall be permitted to be made to any person unless
the Trustee has received a certificate from such transferee to
the effect that such transferee is an Eligible Corporation and
not an employee benefit plan subject to ERISA or a plan subject
to Section 4975 of the Code and is not using the assets of any
employee benefit plan or other plan to acquire Class O
Certificates.
6. That the Purchaser does not hold Class O Certificate as nominee
to facilitate the clearance and settlement of such securities
through electronic book-entry changes in accounts of
participating organizations (such entity, a "Book-Entry
Nominee").
7. That the Purchaser does not have the intention to impede the
assessment or collection of any federal, state or local taxes
legally required to be paid with respect to such Class O
Certificate.
8. That the Purchaser will not transfer the Class O Certificate to
any person or entity (i) as to which the Purchaser has actual
knowledge that the requirements set forth in paragraph 3,
paragraph 6 or paragraph 10 hereof are not satisfied or that
the Purchaser has reason to believe does not satisfy the
requirements set forth in paragraph 7 hereof, and (ii) without
obtaining from the prospective Purchaser an affidavit
substantially in this form and providing to the Trustee a
written statement substantially in the form of Exhibit G to the
Agreement.
9. That the Purchaser understands that, as the holder of the Class
O Certificate, the Purchaser may incur tax liabilities in
excess of any cash flows generated by the interest and that it
intends to pay taxes associated with holding such Class O
Certificate as they become due.
10. That the Purchaser agrees to such amendments of the Trust
Agreement as may be required to further effectuate the
restrictions on transfer of the Class O Certificate to a person
other than an Eligible Corporation or a book-Entry Nominee, or
a person that does not satisfy the requirements of paragraph 7
and paragraph 10 hereof.
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its [title of officer] this _____ day of __________, 19__.
__________________________________
[name of Purchaser]
By:_______________________________
Name:
Title:
Personally appeared before me the above-named [name of officer]
________________, known or proved to me to be the same person who executed the
foregoing instrument and to be the [title of officer] _________________ of the
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.
Subscribed and sworn before me this _____ day of __________, 19__.
NOTARY PUBLIC
______________________________
COUNTY OF_____________________
STATE OF______________________
My commission expires the _____ day of __________, 19__.
EXHIBIT D-2
CLASS O CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
__________________________
Date
Re: American Residential Eagle Certificate Trust 1998-1
Mortgage Backed Callable Certificates, Series 1998-1
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no
actual knowledge that such affidavit is not true and has no reason to believe
that the information contained in paragraph 7 thereof is not true, and has no
reason to believe that the Transferee has the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to the Class O Certificate. In addition, the
Transferor has conducted a reasonable investigation at the time of the
transfer and found that the Transferee had historically paid its debts as they
came due and found no significant evidence to indicate that the Transferee
will not continue to pay its debts as they become due.
Very truly yours,
____________________________________
Name:
Title:
EXHIBIT E
[RESERVED]
EXHIBIT F
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: American Residential Eagle Certificate Trust 1998-1
Mortgage Backed Callable Certificates, Series 1998-1
Reference is hereby made to the Trust Agreement dated as of June 1,
1998 (the "Trust Agreement") among American Residential Eagle, Inc., as
Depositor, and First Union National Bank, as Trustee. Capitalized terms used
but not defined herein shall have the meanings given to them in the Trust
Agreement.
This letter relates to $_________ initial Certificate Balance of
Class Certificates which are held in the form of Definitive Certificates
registered in the name of (the "Transferor"). The Transferor has requested a
transfer of such Definitive Certificates for Definitive Certificates of such
Class registered in the name of [insert name of transferee].
In connection with such request, and in respect of such
Certificates, the Transferor hereby certifies that such Certificates are being
transferred in accordance with (i) the transfer restrictions set forth in the
Trust Agreement and the Certificates and (ii) Rule 144A under the Securities
Act to a purchaser that the Transferor reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A purchasing for its own
account or for the account of a "qualified institutional buyer," which
purchaser is aware that the sale to it is being made in reliance upon Rule
144A, in a transaction meeting the requirements of Rule 144A and in accordance
with any applicable securities laws of any state of the United States or any
other applicable jurisdiction.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Placement Agent and the Depositor.
_______________________________________
[Name of Transferor]
By:____________________________________
Name:
Title:
Dated: ___________, ____
EXHIBIT G
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
_____________________
Date
Dear Sirs:
In connection with our proposed purchase of $______________
principal amount of Mortgage Backed Callable Certificates, Series 1998-1 (the
"Privately Offered Certificates") of American Residential Eagle, Inc. (the
"Depositor"), we confirm that:
(1) We understand that the Privately Offered Certificates have not been,
and will not be, registered under the Securities Act of 1933, as
amended (the "Securities Act"), and may not be sold except as
permitted in the following sentence. We agree, on our own behalf and
on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Privately Offered Certificates
within three years of the later of the date of original issuance of
the Privately Offered Certificates or the last day on which such
Privately Offered Certificates are owned by the Depositor or any
affiliate of the Depositor (which includes the Placement Agent) we
will do so only (A) to the Depositor, (B) to "qualified institutional
buyers" (within the meaning of Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act ("QIBs"), (C)
pursuant to the exemption from registration provided by Rule 144
under the Securities Act, or (D) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act that is not a QIB (an
"Institutional Accredited Investor") which, prior to such transfer,
delivers to the Trustee under the Trust Agreement dated as of June 1,
1998 among the Depositor and First Union National Bank, as Trustee
(the "Trustee"), a signed letter in the form of this letter; and we
further agree, in the capacities stated above, to provide to any
person purchasing any of the Privately Offered Certificates from us a
notice advising such purchaser that resales of the Privately Offered
Certificates are restricted as stated herein.
(2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited
Investor, we will be required to furnish to the Trustee and the
Depositor a certification from such transferee in the form hereof to
confirm that the proposed sale is being made pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act. We further understand that the
Privately Offered Certificates purchased by us will bear a legend to
the foregoing effect.
(3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in
the Privately Offered Certificates, and we and any account for which
we are acting are each able to bear the economic risk of such
investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or
for one or more accounts (each of which is an Institutional
Accredited Investor) as to each of which we exercise sole investment
discretion.
(5) We have received such information as we deem necessary in order to
make our investment decision.
Terms used in this letter which are not otherwise defined herein
have the respective meanings assigned thereto in the Trust Agreement.
You and the Depositor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
__________________________________
[Purchaser]
By________________________________
Name:
Title:
EXHIBIT H
[FORM OF ERISA TRANSFER AFFIDAVIT]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as
follows:
1. The undersigned is the ______________________ of (the
"Investor"), a [corporation duly organized] and existing under the laws of
__________, on behalf of which he makes this affidavit.
2. The Investor either (x) is not an employee benefit plan subject
to Section 406 or Section 407 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or 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 nor a person using the assets of any such plan or
(2) if the Investor is an insurance company, such Investor is purchasing such
Certificates with funds contained in an "Insurance Company General Account"
(as such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60; or (y) shall deliver to the Trustee
and the Depositor an opinion of counsel (a "Benefit Plan Opinion")
satisfactory to the Trustee and the Depositor, and upon which the Trustee and
the Depositor shall be entitled to rely, to the effect that the purchase or
holding of such Certificate by the Investor will not result in the assets of
the Trust Fund being deemed to be plan assets and subject to the prohibited
transaction provisions of ERISA or the Code and will not subject the Trustee
or the Depositor to any obligation in addition to those undertaken by such
entities in the Trust Agreement, which opinion of counsel shall not be an
expense of the Trustee or the Depositor.
3. The Investor hereby acknowledges that under the terms of the
Trust Agreement (the "Agreement") among American Residential Eagle, Inc., as
Depositor, and First Union National Bank, as Trustee, dated as of June 1,
1998, no transfer of the ERISA-Restricted Certificates shall be permitted to
be made to any person unless the Depositor and Trustee have received a
certificate from such transferee in the form hereof.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this ____ day of _______________, 199__.
_____________________________________
[Investor]
By:__________________________________
Name:
Title:
EXHIBIT I
MONTHLY REMITTANCE ADVICE
EXHIBIT J
MONTHLY ELECTRONIC DATA TRANSMISSION
EXHIBIT K
[RESERVED]
EXHIBIT L
SPECIAL SERVICING COMPENSATION AGREEMENT
