EXHIBIT 99.1
EXECUTION
SEQUOIA RESIDENTIAL FUNDING, INC.
Depositor
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
Master Servicer and Securities Administrator
and
HSBC BANK USA
Trustee
---------------------------
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 2002
---------------------------
SEQUOIA MORTGAGE TRUST 11
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................................5
Section 1.01. Definitions...................................................................5
Section 1.02. Calculations Respecting Mortgage Loans.......................................36
ARTICLE II DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES...................................36
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans.........36
Section 2.02. Acceptance of Trust Fund by Trustee; Review of Documentation for
Trust Fund...................................................................39
Section 2.03. Representations and Warranties of the Depositor..............................40
Section 2.04. Discovery of Breach; Repurchase or Substitution of Mortgage Loans............43
Section 2.05 Delivery of Subsequent Mortgage Loans........................................45
Section 2.06. Grant Clause.................................................................47
ARTICLE III THE CERTIFICATES................................................................48
Section 3.01. The Certificates.............................................................48
Section 3.02. Registration.................................................................49
Section 3.03. Transfer and Exchange of Certificates........................................50
Section 3.04. Cancellation of Certificates.................................................53
Section 3.05. Replacement of Certificates..................................................53
Section 3.06. Persons Deemed Owners........................................................54
Section 3.07. Temporary Certificates.......................................................54
Section 3.08. Appointment of Paying Agent..................................................54
Section 3.09. Book-Entry Certificates......................................................55
ARTICLE IV ADMINISTRATION OF THE TRUST FUND.................................................56
Section 4.01. Custodial Accounts; Distribution Account.....................................56
Section 4.02 The Pre-Funding Account......................................................57
Section 4.03. Reports to Trustee and Certificateholders....................................59
ARTICLE V DISTRIBUTIONS TO HOLDERS OF CERTIFICATES..........................................62
Section 5.01. Distributions Generally......................................................62
Section 5.02. Distributions from the Certificate Account...................................62
Section 5.03. Allocation of Losses.........................................................65
Section 5.04. Advances by Master Servicer..................................................65
Section 5.05. Compensating Interest Payments...............................................66
Section 5.06. Basis Risk Reserve Fund......................................................66
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ARTICLE VI CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR; EVENTS OF DEFAULT.......67
Section 6.01. Duties of Trustee and the Securities Administrator...........................67
Section 6.02. Certain Matters Affecting the Trustee and the Securities Administrator.......70
Section 6.03. Trustee and Securities Administrator Not Liable for Certificates.............71
Section 6.04. Trustee and the Securities Administrator May Own Certificates................72
Section 6.05. Eligibility Requirements for Trustee.........................................72
Section 6.06. Resignation and Removal of Trustee and the Securities Administrator..........72
Section 6.07. Successor Trustee and Successor Securities Administrator.....................73
Section 6.08. Merger or Consolidation of Trustee or the Securities Administrator...........74
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian.....................74
Section 6.10. Authenticating Agents........................................................76
Section 6.11. Indemnification of the Trustee and the Securities Administrator..............77
Section 6.12. Fees and Expenses of the Securities Administrator and the Trustee............77
Section 6.13. Collection of Monies.........................................................78
Section 6.14. Events of Default; Trustee To Act; Appointment of Successor..................78
Section 6.15. Additional Remedies of Trustee Upon Event of Default.........................82
Section 6.16. Waiver of Defaults...........................................................82
Section 6.17. Notification to Holders......................................................82
Section 6.18. Directions by Certificateholders and Duties of Trustee During Event
of Default...................................................................82
Section 6.19. Action Upon Certain Failures of the Master Servicer and Upon Event
of Default...................................................................83
Section 6.20. Preparation of Tax Returns and Other Reports.................................83
ARTICLE VII PURCHASE OF MORTGAGE LOANS AND TERMINATION OF THE TRUST FUND....................84
Section 7.01. Purchase of Mortgage Loans; Termination of Trust Fund Upon Purchase or
Liquidation of All Mortgage Loans............................................84
Section 7.02. Procedure Upon Termination of Trust Fund.....................................85
Section 7.03. Additional Trust Fund Termination Requirements...............................86
ARTICLE VIII RIGHTS OF CERTIFICATEHOLDERS...................................................87
Section 8.01. Limitation on Rights of Holders..............................................87
Section 8.02. Access to List of Holders....................................................87
Section 8.03. Acts of Holders of Certificates..............................................88
ARTICLE IX ADMINISTRATION AND SERVICING OF MORTGAGE LOANS BY THE MASTER SERVICER............89
Section 9.01. Duties of the Master Servicer; Enforcement of Servicer's and Master
Servicer's Obligations.......................................................89
Section 9.02 Assumption of Master Servicing by Trustee....................................91
Section 9.03. Representations and Warranties of the Master Servicer........................91
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Section 9.04. Compensation to the Master Servicer..........................................93
Section 9.05. Merger or Consolidation......................................................93
Section 9.06. Resignation of Master Servicer...............................................94
Section 9.07. Assignment or Delegation of Duties by the Master Servicer....................94
Section 9.08. Limitation on Liability of the Master Servicer and Others....................94
Section 9.09. Indemnification; Third-Party Claims..........................................95
ARTICLE X REMIC ADMINISTRATION..............................................................95
Section 10.01. REMIC Administration.........................................................95
Section 10.02. Prohibited Transactions and Activities.......................................98
Section 10.03. Indemnification with Respect to Prohibited Transactions or Loss of REMIC
Status.......................................................................98
Section 10.04. REO Property.................................................................99
ARTICLE XI MISCELLANEOUS PROVISIONS........................................................100
Section 11.01. Binding Nature of Agreement; Assignment.....................................100
Section 11.02. Entire Agreement............................................................100
Section 11.03. Amendment...................................................................100
Section 11.04. Voting Rights...............................................................101
Section 11.05. Provision of Information....................................................102
Section 11.06. Governing Law...............................................................102
Section 11.07. Notices.....................................................................102
Section 11.08. Severability of Provisions..................................................103
Section 11.09. Indulgences; No Waivers.....................................................103
Section 11.10. Headings Not To Affect Interpretation.......................................103
Section 11.11. Benefits of Agreement.......................................................103
Section 11.12. Special Notices to the Rating Agencies......................................103
Section 11.13. Conflicts...................................................................104
Section 11.14. Counterparts................................................................105
Section 11.15 No Petitions................................................................105
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ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit C Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit D Form of Custody Agreement
Exhibit E List of Servicing Agreements
Exhibit F List of Purchase Agreements
Exhibit G List of Limited Purpose Surety Bonds
Exhibit H Form of Rule 144A Transfer Certificate
Exhibit I Form of Purchaser's Letter for Institutional Accredited
Investors
Exhibit J Form of ERISA Transfer Affidavit
Exhibit K Form of Letter of Representations with the Depository Trust
Company
Schedule A Mortgage Loan Schedule
Schedule B Mortgage Loan Representations and Warranties of the Seller
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This POOLING AND SERVICING AGREEMENT, dated as of October 1, 2002 (the
"Agreement"), by and among SEQUOIA RESIDENTIAL FUNDING, INC., a Delaware
corporation, as depositor (the "Depositor"), HSBC Bank USA, a New York banking
corporation, as trustee (the "Trustee"), and XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, in its dual capacities as master servicer (the "Master
Servicer") and securities administrator (the "Securities Administrator") and
acknowledged by RWT HOLDINGS, INC., a Delaware corporation, as seller (the
"Seller"), for purposes of Section 2.04.
PRELIMINARY STATEMENT
The Depositor has acquired the Initial Mortgage Loans from the Seller
and at the Closing Date is the owner of the Initial Mortgage Loans and the other
property being conveyed by the Depositor to the Trustee hereunder for inclusion
in the Trust Fund. On the Closing Date, the Depositor will acquire the
Certificates from the Trustee as consideration for the Depositor's transfer to
the Trust Fund of the Initial Mortgage Loans, an initial deposit to the
Pre-Funding Account of the Original Pre-Funded Amount, an initial deposit to the
Capitalized Interest Account in an amount sufficient to satisfy the aggregate
Capitalized Interest Requirement on the Certificates during the Pre-Funding
Period, 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 Initial Mortgage Loans, any Subsequent Mortgage
Loans and the other property constituting the Trust Fund. All covenants and
agreements made by the Seller in the Mortgage Loan Purchase and Sale Agreement
and in this Agreement and by the Depositor, the Master Servicer, the Securities
Administrator and the Trustee herein with respect to the Mortgage Loans and the
other property constituting the Trust Fund are for the benefit of the Holders
from time to time of the Certificates. The Depositor, the Trustee, the Master
Servicer and the Securities Administrator are entering into this Agreement, and
the Trustee is accepting the Trust Fund created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
As provided herein, the Trustee shall elect that the Trust Fund
(exclusive of the Additional Collateral, assets held in the Basis Risk Reserve
Fund, the Capitalized Interest Account and the Pre-Funding Account) be treated
for federal income tax purposes as comprising two real estate mortgage
investment conduits (each a "REMIC" or, in the alternative, the "Lower Tier
REMIC" and the "Upper Tier REMIC," respectively). Each Certificate, other than
the Class A-R Certificate and the Class LTR Certificate, shall represent
ownership of a regular interest in the Upper Tier REMIC. In addition, each of
the LIBOR Certificates represents the right to receive payments in respect of
Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls from the Basis Risk
Reserve Fund as provided in Section 5.06. The Basis Risk Reserve Fund is
beneficially owned by the owners of the Interest Only Certificates. The Class
A-R Certificate represents the sole class of residual interest in the Upper Tier
REMIC. The Class LTR Certificate represents the sole class of residual interest
in the Lower Tier REMIC.
The Lower Tier REMIC shall issue, in addition to the Class LTR
Certificate, several classes of uncertificated Lower Tier Interests. The Upper
Tier REMIC shall hold as its assets the several classes of uncertificated Lower
Tier Interests in the Lower Tier REMIC and each such Lower Tier Interest is
hereby designated as a regular interest in the Lower Tier REMIC for purposes of
the REMIC Provisions. The Lower Tier REMIC shall hold as its assets the property
of the Trust Fund other than the uncertificated Lower Tier Interests, the
Additional Collateral, the Basis Risk Reserve Fund, the Capitalized Interest
Account and the Pre-Funding Account.
THE LOWER TIER REMIC INTERESTS
The following table sets forth (or describes) the class designation,
interest rate, initial principal amount, and corresponding class of certificates
for each class of Lower Tier Interests:
Interest Corresponding Class of
Class Designation Principal Amount Rate Certificates
----------------- ---------------- -------- ------------------------
LTA-1 $193,059,817.00 (1) Class A, Class X-1A (6)
LTA-2 $502,150,183.00 (2) Class A, Class X-1B (7)
LTB1 $ 9,726,000.00 (3) Class B-1, Class X-B (8)
LTB2 $ 5,764,000.00 (3) Class B-2
LTB3 $ 3,962,000.00 (3) Class B-3
LTB4 $ 1,801,000.00 (3) Class B-4
LTB5 $ 1,080,000.00 (3) Class B-5
LTB6 $ 2,882,787.42 (3) Class B-6
LTAR $ 100.00 (4) Class AR
LTR Certificate (5) (5) N/A
---------------
(1) The interest rate for the Class LTA-1 Interest for any Distribution
Date (and the related Accrual Period) is a per annum rate equal to the
Net WAC of the One-Month LIBOR Loans.
(2) The interest rate for the Class LTA-2 Interest for any Distribution
Date (and the related Accrual Period) is a per annum rate equal to the
Net WAC of the Six-Month LIBOR Loans.
(3) The interest rate for each of these Lower Tier Interests for any
Distribution Date (and the related Accrual Period) is a per annum rate
equal to the Net WAC.
(4) The interest rate for the Class LTAR Interest for any Distribution Date
(and the related Accrual Period) is a per annum rate equal to the Net
WAC.
(5) The Class LTR Certificate is the sole class of residual interest in the
Lower Tier REMIC. It does not have an interest rate or a principal
balance.
(6) On each Distribution Date, the Class X-1A Certificates shall be
entitled to a specified portion of the interest that accrues on the
Class LTA-1 Interest. Specifically, for each such Distribution Date,
the Class X-1A Certificate shall be entitled to interest accruals on
the Class LTA-1 Interest at a per annum rate equal to the excess, if
any, of (i) the Net WAC of the One-Month LIBOR Loans over (2) the
Certificate Interest Rate on the Class A Certificates for such
Distribution Date (for the first Distribution Date only, multiplied by
a fraction, the numerator of which is 21 and the denominator of which
is 30).
(7) On each Distribution Date, the Class X-1B Certificates shall be
entitled to a specified portion of the interest that accrues on the
Class LTA-2 Interest. Specifically, for each such Distribution Date,
the Class X-1B Certificates shall be entitled to interest accruals on
the Class LTA-2 Interest at a per annum rate equal to the excess, if
any, of (i) the Net WAC of the Six-Month LIBOR Loans over (2) the
Certificate
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Interest Rate on the Class A Certificates for such Distribution Date
(for the first Distribution Date only, multiplied by a fraction, the
numerator of which is 21 and the denominator of which is 30).
(8) On each Distribution Date, the Class X-B Certificates shall be entitled
to a specified portion of the interest accruing on the Class LTB1
Interest. Specifically, for each such Distribution Date, the Class X-B
Certificates shall be entitled to interest accruals on the Class LT1B
Interest at a per annum rate equal to the excess of (i) the Net WAC
over (ii) the Certificate Interest Rate on the Class B-1 Certificates
for such Distribution Date (for the first Distribution Date only,
multiplied by a fraction, the numerator of which is 21 and the
denominator of which is 30).
On each Distribution Date, the Securities Administrator, as Paying
Agent, shall first pay or charge as an expense of the Lower-Tier REMIC all
expenses of the Trust for such Distribution Date.
On each Distribution Date the Securities Administrator, as Paying Agent,
shall distribute interest and principal on, and shall allocate Realized Losses
among, the Lower Tier Interests in the same manner that such amounts are
distributed on and such losses are allocated among the Corresponding Classes of
Certificates; provided however, that in determining distributions and the
allocation of losses between the Class LTA-1 and Class LTA-2 Interests, the
Securities Administrator shall make allocations to the Class LTA-1 Interest in
accordance with the Class X-1A Percentage for such Distribution Date and to the
Class LTA-2 Interest in accordance with the Class X-1B Percentage for such
Distribution Date.
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THE CERTIFICATES
The following table sets forth (or describes) the Class designation,
Certificate Interest Rate, initial Class Principal Amount (or initial Class
Notional Amount), and minimum denomination for each Class of Certificates
comprising interests in the Trust Fund created hereunder.
Initial Class Minimum
Class Certificate Principal Amount or Denominations or
Designation Interest Rate Class Notional Amount Percentage Interest
--------------- ------------- --------------------- -------------------
Class A (1) $695,210,000.00 $ 25,000.00
Class X-1A (2) (8) 100%
Class X-1B (3) (9) 100%
Class X-B (4) (10) 100%
Class A-R (5) $ 100 100%
Class B-1 (6) $ 9,726,000.00 $ 25,000.00
Class B-2 (7) $ 5,764,000.00 $ 25,000.00
Class B-3 (7) $ 3,962,000.00 $ 25,000.00
Class B-4 (7) $ 1,801,000.00 $100,000.00
Class B-5 (7) $ 1,080,000.00 $100,000.00
Class B-6 (7) $ 2,882,787.42 $100,000.00
----------
(1) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class A Certificates will be the least
of (i) LIBOR plus 0.45%; (ii) the Net WAC and (iii) 11.50%; provided,
however, if the Mortgage Loans and related property are not purchased
pursuant to Section 7.01(c) on the Initial Optional Purchase Date, then
with respect to each subsequent Distribution Date the per annum rate
calculated pursuant to clause (i) above with respect to the Class A
Certificates will be LIBOR plus 0.90%.
(2) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class X-1A Certificates will equal the
excess of the Net WAC of the One-Month LIBOR Loans over the Certificate
Interest Rate on the Class A Certificates (for the first Distribution Date
only, multiplied by a fraction, the numerator of which is 21 and the
denominator of which is 30).
(3) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class X-1B Certificates will equal the
excess of the Net WAC of Six-Month LIBOR Loans over the Certificate
Interest Rate on the Class A Certificates (for the first Distribution Date
only, multiplied by a fraction, the numerator of which is 21 and the
denominator of which is 30).
(4) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class X-B Certificates will equal the
excess of the Net WAC over the Certificate Interest Rate on the Class B-1
Certificates (for the first Distribution Date only, multiplied by a
fraction, the numerator of which is 21 and the denominator of which is 30).
(5) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class A-R Certificate will equal the
Net WAC.
(6) The Certificate Interest Rate with respect to any Distribution Date (and
the related Accrual Period) for the Class B-1 Certificates will be the
least of (i) LIBOR plus 0.97%; (ii) the Net WAC and (iii) 11.50%; provided,
however, if the Mortgage Loans and related property are not purchased
pursuant to Section 7.01(c) on the Initial
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Optional Purchase Date, then with respect to each subsequent Distribution
Date the per annum rate calculated pursuant to clause (i) above with
respect to the Class B-1 Certificates will be LIBOR plus 1.455%.
(7) The Certificate Interest Rates with respect to any Distribution Date (and
the related Accrual Period) for the Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates will be equal to the Net WAC.
(8) The Class X-1A Certificate is an interest-only Class and for any
Distribution Date the Class X-1A Certificates shall bear interest at the
interest rate described above on a Class Notional Amount equal to the
product of (i) the Class Principal Amount of the Class A Certificates
immediately before such Distribution Date and (ii) the Class X-1A
Percentage for such Distribution Date.
(9) The Class X-1B Certificate is an interest-only Class and for any
Distribution Date the Class X-1B Certificates shall bear interest at the
Certificate Interest Rate described above on a Class Notional Amount equal
to the product of (i) the Class Principal Amount of the Class A
Certificates immediately before such Distribution Date and (ii) the Class
X-1B Percentage for such Distribution Date.
(10) The Class X-B Certificate is an interest-only Class and for any
Distribution Date the Class X-B Certificates shall bear interest at the
Certificate Interest Rate described above on a Class Notional Amount equal
to the Class Principal Amount of the Class B-1 Certificates immediately
before such Distribution Date.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Securities Administrator 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 following meanings:
1M Sub-account: The Sub-account established under the Pre-Funding
Account for the acquisition of Subsequent Mortgage Loans which are One-Month
LIBOR Loans.
6M Sub-account: The Sub-account established under the Pre-Funding
Account for the acquisition of Subsequent Mortgage Loans which are Six-Month
LIBOR Loans.
Accountant: A Person engaged in the practice of accounting who (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 and any Class of
LIBOR Certificates, the period commencing on the 20th day of the month preceding
the month in which the Distribution Date occurs and ending on the 19th day of
the month in which the Distribution Date occurs; provided, however, that the
first Accrual Period with respect to the LIBOR Certificates shall be the period
beginning on the Closing Date and ending on November 19, 2002. The Accrual
Period applicable to the Class X-1A, Class X-1B, Class X-B, Class A-R, Class
B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates and to each
Class of Lower-Tier Interests shall be the calendar month immediately preceding
the month in which the
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related Distribution Date occurs. Interest shall accrue on all Classes of
Certificates and on all Lower-Tier Interests on the basis of a 360-day year
consisting of twelve 30-day months.
Acknowledgements: The Assignment, Assumption and Recognition Agreements,
each dated October 30, 2002, assigning rights under the Purchase Agreements and
the Servicing Agreements from the Seller to the Depositor and from the Depositor
to the Trustee for the benefit of Certificateholders.
Act: The Securities Act of 1933, as amended.
Additional Collateral: With respect to any Additional Collateral
Mortgage Loan, the marketable securities and other acceptable collateral pledged
as collateral pursuant to the related pledge agreements.
Additional Collateral Mortgage Loan: Each Mortgage Loan identified as
such in the Mortgage Loan Schedule.
Adjustment Date: As to any Mortgage Loan, the date on which the related
Mortgage Rate adjusts in accordance with the terms of the related Mortgage Note.
Advance: With respect to a Mortgage Loan, the payments required to be
made by the Master Servicer or the applicable Servicer with respect to any
Distribution Date pursuant to this Agreement or the Servicing Agreements, as
applicable, the amount of any such payment being equal to the aggregate of the
payments of principal and interest (net of the Master Servicing Fee and/or the
applicable Servicing Fee and net of any net income in the case of any REO
Property) on the Mortgage Loans that were due on the related Due Date and not
received as of the close of business on the related Determination Date, less the
aggregate amount of any such delinquent payments that the Master Servicer or the
Servicers have determined would constitute Nonrecoverable Advances if advanced.
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 Expense Rate: With respect to any Mortgage Loan, the sum of
the Master Servicing Fee Rate and the applicable Servicing Fee Rate.
Aggregate Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances for all Mortgage Loans included in
the Mortgage Pool which were outstanding on the Due Date in the month preceding
the month of such Distribution Date.
Aggregate Voting Interests: The aggregate of the Voting Interests of all
the Certificates under this Agreement.
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Agreement: This Pooling and Servicing Agreement and all amendments and
supplements hereto.
Allocable Share: With respect to each Class of Subordinated Certificates
and any Distribution Date, the percentage equivalent of a fraction, the
numerator of which is the Class Principal Amount of such Class and the
denominator of which is the aggregate of the Class Principal Amounts of each
Class of Subordinate Certificates.
Applicable Credit Support Percentage: As to any Class of Subordinate
Certificates and any Distribution Date, the sum of the Class Percentages of all
Classes of Certificates that rank lower in priority than such Class.
Appraised Value: With respect to any Mortgage Loan, the Appraised Value
of the related Mortgaged Property shall be: (i) with respect to a Mortgage Loan
other than a Refinancing Mortgage Loan, the lesser of (a) the value of the
Mortgaged Property based upon the appraisal made at the time of the origination
of such Mortgage Loan and (b) the sales price of the Mortgaged Property at the
time of the origination of such Mortgage Loan; and (ii) with respect to a
Refinancing Mortgage Loan, the value of the Mortgaged Property based upon the
appraisal made at the time of the origination of such Refinancing Mortgage Loan.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law; provided, however, that the Trustee shall not
be responsible for determining whether any such assignment is in recordable
form.
Assumed Stated Principal Balance: As of any date of determination, the
sum of (a) the Aggregate Stated Principal Balance and (b) the Pre-Funded Amount.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 6.10 until any successor authenticating agent for the
Certificates is named, and thereafter "Authenticating Agent" shall mean any such
successor. The Authenticating Agent shall be Xxxxx Fargo Bank Minnesota,
National Association for so long as it is acting as Securities Administrator
under this Agreement.
Authorized Officer: Any Person who may execute an Officer's Certificate
on behalf of the Depositor.
Available Distribution Amount: With respect to any Distribution Date,
the total amount of all cash received by the Master Servicer on the Mortgage
Loans from each Servicer or otherwise through the Distribution Account Deposit
Date for deposit into the Distribution Account in respect of such Distribution
Date, including (1) all scheduled installments of interest (net of the related
Servicing Fees and the Master Servicing Fees) and principal collected on the
Mortgage Loans and due during the Due Period related to such Distribution Date,
together with any Advances in respect thereof, (2) all Insurance Proceeds,
Liquidation Proceeds and the
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proceeds of any Additional Collateral from the Mortgage Loans, in each case for
such Distribution Date, (3) all partial or full Principal Prepayments, together
with any accrued interest thereon, identified as having been received from the
Mortgage Loans during the related Prepayment Period, (4) any amounts paid by the
Master Servicer and/or received from the Servicers in respect of Prepayment
Interest Shortfalls with respect to the Mortgage Loans; (5) the aggregate
Purchase Price of all Defective Mortgage Loans purchased from the Trust Fund
during the related Prepayment Period; (6) any investment earnings in amounts on
deposit in the Pre-Funding Account which have been transferred to the
Distribution Account for distribution on Distribution Date; and (7) any amount
remaining on deposit in the Pre-Funding Account (including any amounts in the 1M
Sub-account or the 6M Sub-account thereof) as of December 2, 2002 which have
been transferred to the Distribution Account prior to such Distribution Date,
minus:
(A) all related charges and other amounts payable or reimbursable
to the Master Servicer, the Securities Administrator or the
Trustee under this Agreement, up to an aggregate maximum amount
of $250,000 annually, or to the Servicers under the Servicing
Agreements;
(B) in the case of (2), (3), (4) and (5) above, any related
unreimbursed expenses incurred by the related Servicers in
connection with a liquidation or foreclosure and any unreimbursed
Advances or Servicing Advances due to the Master Servicer or the
related Servicers;
(C) any related unreimbursed Nonrecoverable Advances due to the
Master Servicer or the Servicers; and
(D) in the case of (1) through (4) above, any related amounts
collected which are determined to be attributable to a subsequent
Due Period or Prepayment Period.
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 Bankruptcy Code or any other similar
state laws.
Bankruptcy Code: The United States Bankruptcy Code of 1986, as amended.
Bankruptcy Loss: With respect to any Mortgage Loan, losses that are
incurred as a result of a Deficient Valuation or Debt Service Reduction as
reported by the related Servicer to the Master Servicer.
Bankruptcy Loss Coverage Amount: As of any Distribution Date, the
Initial Bankruptcy Loss Coverage Amount as reduced by the aggregate amount of
Bankruptcy Losses allocated to the Certificates since the Cut-off Date;
provided, however, that the Bankruptcy Loss Coverage
8
Amount may also be reduced pursuant to a letter from each Rating Agency to the
Trustee to the effect that any such reduction shall not result in a downgrading
of the then current ratings assigned by such Rating Agency to the Senior
Certificates.
Bankruptcy Loss Coverage Termination Date: The date on which the
Bankruptcy Loss Coverage Amount is reduced to zero.
Basis Risk Reserve Fund: A fund consisting of the X-1 Sub-account and
the X-B Sub-account created as part of the Trust Fund pursuant to Section 5.06
of this Agreement but which is not an asset of any of the REMICs.
Basis Risk Shortfall: With respect to any Distribution Date and any
Class of LIBOR Certificates, the excess, if any, of (i) the amount of Current
Interest that would have been payable on such Class for such Distribution Date
if the Certificate Interest Rate for such Class as set forth in the Preliminary
Statement hereto were determined without regard to clause (ii) in the definition
thereof, over (ii) the actual Current Interest payable on such Class for such
Distribution Date.
BBA: The British Banker's Association.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee
and Certificate Registrar 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.
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 Book-Entry
Termination 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 A, Class X-1A, Class X-1B, Class X-B, Class B-1, Class
B-2 and Class B-3.
Book-Entry Termination: The occurrence of any of the following events:
(i) the Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book Entry Certificates, and the Depositor
is unable to locate a qualified successor; or (ii) the Depositor at its option
advises the Trustee and the Certificate Registrar in writing that it elects to
terminate the book-entry system through the Clearing Agency.
Business Day: Any day other than (i) a Saturday or a Sunday or (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 States of Maryland or Minnesota, are authorized or obligated by law or
executive order to be closed.
9
Capitalized Interest Account: The account created and maintained by the
Securities Administrator on behalf of the Trustee and the Certificateholders
pursuant to Section 4.03, which account is not an asset of any of the REMICs.
Capitalized Interest Requirement: As to any Distribution Date up to and
including the Distribution Date immediately following the close of the
Pre-Funding Period, the product of (x) the excess of (a) the Original Pre-Funded
Amount over (b) the aggregate of the Stated Principal Balances of the Subsequent
Mortgage Loans transferred to the Trust Fund for inclusion in the Mortgage Pool
prior to such Distribution Date that have a Scheduled Payment that will be
included in the amounts distributed to Certificateholders on such Distribution
Date, (y) the Net WAC and (z) a fraction, the numerator of which is 30 and the
denominator of which is 360. The Capitalized Interest Requirement shall be
reduced by any investment earnings on deposit in the Pre-Funding Account which
have been transferred to the Distribution Account for inclusion in the Available
Distribution Amount for distribution to Certificateholders on such Distribution
Date.
Certificate: Any one of the certificates signed by the Trustee and
authenticated by the Securities Administrator as Authenticating Agent in
substantially the forms attached hereto as Exhibit A.
Certificate Interest Rate: With respect to each Class of Certificates
and any Distribution Date, the applicable per annum rate 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 Notional 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 (i) the amount of all principal
distributions previously made with respect to such Certificate; (ii) all
Realized Losses allocated to such Certificate; and (iii) in the case of a
Subordinate Certificate, any Subordinate Certificate Writedown Amount allocated
to such Certificates. For purposes of Article V hereof, unless specifically
provided to the contrary, Certificate Principal Amounts shall be determined as
of the close of business of the immediately preceding Distribution Date, after
giving effect to all distributions made on such date. Notional Certificates are
issued without Certificate Principal Amounts.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.02. Xxxxx Fargo National Bank
Minnesota, National Association will act as Certificate Registrar for so long as
it is the Securities Administrator under this Agreement.
Certificateholder: The meaning provided in the definition of "Holder."
10
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
Class: Collectively, Certificates bearing the same class designation. In
the case of the Lower-Tier REMIC, the term "Class" refers to all Lower-Tier
Interests having the same alphanumeric designation.
Class Notional Amount: With respect to any Class of Notional
Certificates, the applicable class notional amount calculated as provided in the
Preliminary Statement hereto.
Class Principal Amount: With respect to each Class of Certificates
(other than a Notional Certificate) the aggregate of the Certificate Principal
Amounts of all Certificates of such Class at the date of determination.
Class Subordination Percentage: With respect to each Class of
Subordinate Certificates, for each Distribution Date, the percentage obtained by
dividing the Class Principal Amount of such Class immediately prior to such
Distribution Date by the sum of the Class Principal Amounts of all Classes of
Certificates immediately prior to such Distribution Date.
Class A-R Certificate: The Class A-R Certificate executed by the
Trustee, and authenticated and delivered by the Authenticating Agent,
substantially in the form annexed hereto as Exhibit A, and evidencing the
ownership of the residual interest in the Upper Tier REMIC.
Class LTR Certificate: The Class LTR Certificate executed by the Trustee
and authenticated and delivered by the Authenticating Agent, substantially in
the form annexed as Exhibit A and evidencing ownership of the residual interest
in the Lower-Tier REMIC.
Class X-1 Required Basis Risk Deposit: For any Distribution Date, an
amount equal to the lesser of (i) the Current Interest for the Class X-1A and
Class X-1B Certificates for such Distribution Date, and (ii) the amount required
to maintain the balance on deposit in the Class X-1 Sub-account of the Basis
Risk Reserve Fund in an amount equal to the sum of (a) the Basis Risk Shortfalls
for such Distribution Date with respect to the Class A Certificates and (b)
$5,000. For any Distribution Date for which the Class X-1 Required Basis Risk
Deposit is less than the sum of Current Interest for each such Class for such
Distribution Date, the Class X-1A and Class X-1B Certificates shall each fund a
portion of the Class X-1 Required Basis Risk Deposit in proportion to the
relative amounts of Current Interest for each such Class and for such
Distribution Date.
Class X-1A Percentage: For any Distribution Date, the percentage
equivalent of a fraction the numerator of which is (i) the sum of (a) the Stated
Principal Balances of the One-Month LIBOR Loans, and (b) the amount on deposit
in the 1M Sub-account of the Pre-Funding Account immediately prior to such
Distribution Date and the denominator of which is (ii) the sum of (a) the Stated
Principal Balances of the Mortgage Loans and (b) the amount then on deposit in
the Pre-Funding Account. For purposes of determining the Class X-1A Percentage
for any Distribution Date, the Stated Principal Balances of the Mortgage Loans
shall be determined as of the Due Date of the month preceding the month in which
such Distribution Date occurs.
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Class X-1B Percentage: For any Distribution Date, the percentage
equivalent of a fraction the numerator of which is (i) the sum of (a) the Stated
Principal Balances of the Six-Month LIBOR Loans, and (b) the amount on deposit
in the 6M Sub-account of the Pre-Funding Account immediately prior to such
Distribution Date and the denominator of which is (ii) the sum of (a) the Stated
Principal Balances of the Mortgage Loans and (b) the amount then on deposit in
the Pre-Funding Account. For purposes of determining the Class X-1B Percentage
for any Distribution Date, the Stated Principal Balances of the Mortgage Loans
shall be determined as of the Due Date of the month preceding the month in which
such Distribution Date occurs.
Class X-B Required Basis Risk Deposit: For any Distribution Date, an
amount equal to the lesser of (i) Current Interest for the Class X-B
Certificates for such Distribution Date and (ii) the amount required to maintain
the balance on deposit in the Class X-B Sub-account in an amount equal to the
sum of (a) the Basis Risk Shortfalls for such Distribution Date with respect to
the Class B-1 Certificates and (b) $5,000.
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: October 30, 2002.
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.
Compensating Interest Payment: As to any Distribution Date, the lesser
of (1) the Master Servicing Fee for such date and (2) any Prepayment Interest
Shortfall for such date.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
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Corporate Trust Office: With respect to the Trustee, the principal
corporate trust office of the Trustee located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Trustee Sequoia Mortgage Trust 11, or at such other
address as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor, the Master Servicer and the Securities
Administrator or the principal corporate trust office of any successor Trustee.
With respect to the Certificate Registrar and presentment of Certificates for
registration of transfer, exchange or final payment, Xxxxx Fargo Bank Minnesota,
National Association, 0xx Xxxxxx xxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000,
Attention: Corporate Trust, Sequoia Mortgage Trust 11.
Corresponding Classes Of Certificates: With respect to each Lower-Tier
Regular Interest, the Class or Classes of Certificates appearing opposite such
Lower-Tier Regular Interest as described in the Preliminary Statement.
Credit Support Depletion Date: The first Distribution Date, if any, on
which the aggregate Certificate Principal Amount of the Subordinate Certificates
have been reduced to zero.
Current Interest: With respect to each Class of Certificates and any
Distribution Date, the aggregate amount of interest accrued at the applicable
Certificate Interest Rate during the related Accrual Period on the Class
Principal Amount (or Class Notional Amount) of such Class immediately prior to
such Distribution Date.
Custodial Accounts: Each custodial account (other than an Escrow
Account) established and maintained by a Servicer pursuant to a Servicing
Agreement.
Custodian: A Person who is at anytime appointed by the Trustee and the
Depositor as a custodian of the Mortgage Documents and the Trustee Mortgage
Files. The initial Custodians are Deutsche Bank National Trust Company and Xxxxx
Fargo Bank Minnesota, National Association.
Custody Agreement: Each of the Custody Agreement, dated as of October 1,
2002, among the Depositor, the Seller, the Trustee and Deutsche Bank National
Trust Company, as Custodian and the Custody Agreement, dated as of October 1,
2002, among the Depositor, the Seller, the Trustee and Xxxxx Fargo Bank
Minnesota, National Association, as Custodian.
Cut-off Date: October 1, 2002.
Cut-off Date Balance: With respect to the Mortgage Loans in the Trust
Fund on the Closing Date, the Aggregate Stated Principal Balance as of the
Cut-off Date.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction in a proceeding under the Bankruptcy Code
in the Scheduled Payment for such Mortgage Loan which became final and
non-appealable, except such a reduction resulting from a Deficient Valuation or
any reduction that results in a permanent forgiveness of principal.
Defective Mortgage Loan: The meaning specified in Section 2.04.
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Deficient Valuation: With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding indebtedness under the Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any Scheduled
Payment that results in a permanent forgiveness of principal, which valuation or
reduction results from an order of such court which is final and non-appealable
in a proceeding under the Bankruptcy Code.
Definitive Certificate: A Certificate of any Class issued in definitive,
fully registered, certificated form.
Deleted Mortgage Loan: As defined in the applicable Purchase Agreement.
Delinquent: Any Mortgage Loan with respect to which the Scheduled
Payment due on a Due Date is not received.
Depositor: Sequoia Residential Funding, Inc., a Delaware corporation,
having its principal place of business in California or its successors in
interest.
Determination Date: With respect to each Distribution Date, the 10th day
of the month in which such Distribution Date occurs, or, if such 10th day is not
a Business Day, the next succeeding Business Day.
Disqualified Organization: A "disqualified organization" as defined in
Section 860(e)(5) of the Code.
Distribution Account: The separate Eligible Account created and
maintained by the Securities Administrator, on behalf of the Trustee, pursuant
to Section 4.01 in the name of the Trustee for the benefit of the
Certificateholders and designated "Xxxxx Fargo Bank Minnesota, National
Association, in trust for registered holders of Sequoia Mortgage Trust 11,
Mortgage Pass-Through Certificates." Funds in the Distribution Account
(exclusive of any earnings on investments made with funds deposited in the
Distribution Account) shall be held in trust for the Trustee and the
Certificateholders for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: The 18th day of each calendar month
after the initial issuance of the Certificates or, if such 18th day is not a
Business Day, the immediately preceding Business Day, commencing in November
2002.
Distribution Date: The 20th day of each month or, if such 20th day is
not a Business Day, the next succeeding Business Day, commencing in November
2002.
Due Date: With respect to any Mortgage Loan, the date on which a
Scheduled Payment is due under the related Mortgage Note as indicated in the
applicable Servicing Agreement.
Due Period: As to any Distribution Date, the period beginning on the
second day of the month preceding the month of such Distribution Date, and
ending on the first day of the month of such Distribution Date.
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Effective Loan-to-Value Ratio: A fraction, expressed as a percentage,
the numerator of which is the original Stated Principal Balance of the Mortgage
Loan, less the amount of Additional Collateral required to secure such Mortgage
Loan at the time of origination, if any, and the denominator of which is the
Appraised Value of the related Mortgage Property at such date.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC or the SAIF (to the
limits established by the FDIC or the SAIF) and the uninsured deposits in which
accounts are otherwise secured such that, as evidenced by an Opinion of Counsel
delivered to the Trustee and to each Rating Agency, the Certificateholders have
a claim with respect to the funds in such account or a perfected first priority
security interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
the trust department of a federal or state chartered depository institution or
trust company, acting in its fiduciary capacity or (iv) any other account
acceptable to each Rating Agency. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with
the Trustee, the Paying Agent, the Securities Administrator or the Master
Servicer.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that meets the requirements of an
Underwriter's Exemption.
ERISA-Restricted Certificate: The Class A-R, Class LTR, Class B-4, Class
B-5 or Class B-6 Certificates.
Escrow Account: As defined in Section 1 of each Servicing Agreement.
Event of Default: Any one of the conditions or circumstances enumerated
in Section 6.14.
Excess Loss: With respect to any Mortgage Loan, the amount of any (i)
Fraud Loss realized after the Fraud Loss Coverage Termination Date, (ii) Special
Hazard Loss realized after the Special Hazard Loss Coverage Termination Date or
(iii) Bankruptcy Loss realized after the Bankruptcy Loss Coverage Termination
Date.
Xxxxxx Xxx: The entity formerly known as 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.
15
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.
Fitch Ratings: Fitch, Inc., or any successor in interest.
Fraud Loss Coverage Amount: As of the Closing Date, $21,612,777, subject
to reduction from time to time by the amount of any Fraud Losses allocated to
the Certificates. In addition, on each anniversary of the Cut-Off Date, the
Fraud Loss Coverage Amount shall be reduced as follows: (a) on the first
anniversary of the Cut-Off Date, to an amount equal to the lesser of (i) 2.00%
of the then current Aggregate Stated Principal Balance and (ii) the excess of
the Fraud Loss Coverage Amount as of the Cut-Off Date over the cumulative amount
of Fraud Losses allocated to the Certificates since the Cut-Off Date; (b) on the
second, third and fourth anniversaries of the Cut-Off Date, to an amount equal
to the lesser of (i) 1.00% of the then current Aggregate Stated Principal
Balance and (ii) the excess of the Fraud Loss Coverage Amount as of the
immediately preceding anniversary of the Cut-Off Date, over the cumulative
amount of Fraud Losses allocated to the Certificates since such preceding
anniversary; and (c) on the fifth anniversary of the Cut-Off Date, to zero;
provided, however, that the Fraud Loss Coverage Amount may also be reduced
pursuant to a letter from each Rating Agency to the Trustee to the effect that
any such reduction shall not result in the downgrading of the then current
ratings assigned by such Rating Agency to the Classes of Senior Certificates.
Fraud Loss Coverage Termination Date: The date on which the Fraud Loss
Coverage Amount is reduced to zero.
Fraud Losses: Realized Losses on any Mortgage Loan sustained by reason
of a default arising from fraud, dishonesty or misrepresentation in connection
with that Mortgage Loan, as reported by the related Servicer to the Master
Servicer.
Global Securities: The global certificates representing the Book-Entry
Certificates.
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, the Securities Administrator and 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, the
Securities Administrator or any Servicer in determining whether any Certificates
are registered to an Affiliate of the Depositor, the Master Servicer, the
Securities Administrator or any Servicer.
HUD: The United States Department of Housing and Urban Development, or
any successor thereto.
16
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.
Index: As to each Mortgage Loan, the index from time to time in effect
for adjustment of the Mortgage Rate as set forth as such on the related Mortgage
Note.
Initial Bankruptcy Loss Coverage Amount: $119,754.
Initial LIBOR Rate: 1.80000%.
Initial Mortgage Loan: Any Mortgage Loan acquired by the Trust Fund on
the Closing Date for inclusion in the Mortgage Pool as indicated on the Mortgage
Loan Schedule.
Initial Optional Purchase Date: The first Distribution Date following
the date on which the Aggregate Stated Principal Balance is less than 10.00% of
the Assumed Stated Principal Balance.
Initial Trust Receipt. As defined in the related Custody Agreement.
Insurance Policy: With respect to any Mortgage Loan, any insurance
policy, including all names and endorsements thereto in effect, including any
replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid by any Insurance Policy (excluding
proceeds required to be applied to the restoration and repair of the related
Mortgaged Property or released to the Mortgagor), in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses and
(i) the proceeds from any Limited Purpose Surety Bond.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Distribution Amount: For each Class of Certificates, on any
Distribution Date, the Current Interest for such Class, as reduced by such
Class's share of Net Prepayment Interest Shortfalls, Relief Act Reductions and
the interest portion of Excess Losses. Any such shortfalls and losses shall be
allocated among all Classes of Certificates proportionately on the basis of the
Interest Distribution Amount otherwise payable thereon.
Interest-Only Certificates: Any of the Class X-1A, Class X-1B and Class
X-B Certificates.
17
Interest Shortfall: As to any Class of Certificates and any Distribution
Date, (i) the amount by which the Interest Distribution Amount (as reduced by
any Basis Risk Shortfalls) for such Class on such Distribution Date and all
prior Distribution Dates exceeds (ii) amounts distributed in respect thereof to
such Class on prior Distribution Dates.
Intervening Assignments: The original intervening assignments of the
Mortgage, notices of transfer or equivalent instrument.
Latest Possible Maturity Date: December 2032.
LIBOR: With respect to the first Accrual Period, the Initial LIBOR Rate.
With respect to each subsequent Accrual Period, a per annum rate determined on
the LIBOR Determination Date in the following manner by the Securities
Administrator on the basis of the "Interest Settlement Rate" set by the BBA for
one-month United States dollar deposits, as such rates appear on the Telerate
Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.
(a) If on such a LIBOR Determination Date, the BBA's Interest Settlement
Rate does not appear on the Telerate Page 3750 as of 11:00 a.m. (London time),
or if the Telerate Page 3750 is not available on such date, the Securities
Administrator will obtain such rate from Reuters' "page LIBOR 01" or Bloomberg's
page "BBAM." If such rate is not published for such LIBOR Determination Date,
LIBOR for such date will be the most recently published Interest Settlement
Rate. In the event that the BBA no longer sets an Interest Settlement Rate, the
Securities Administrator will designate an alternative index that has performed,
or that the Securities Administrator expects to perform, in a manner
substantially similar to the BBA's Interest Settlement Rate. The Securities
Administrator will select a particular index as the alternative index only if it
receives an Opinion of Counsel, which opinion shall be an expense reimbursed
from the Distribution Account, that the selection of such index will not cause
any of the REMICs to lose their classification as REMICs for federal income tax
purposes.
(b) The establishment of LIBOR by the Securities Administrator and the
Securities Administrator's subsequent calculation of the Certificate Interest
Rate applicable to the LIBOR Certificates for the relevant Accrual Period, in
the absence of manifest error, will be final and binding.
LIBOR Business Day: Any day on which banks in London, England and The
City of New York are open and conducting transactions in foreign currency and
exchange.
LIBOR Certificate: Any Class A and Class B-1 Certificate.
LIBOR Determination Date: The second LIBOR Business Day immediately
preceding the commencement of each Accrual Period for any LIBOR Certificates.
Limited Purpose Surety Bond: Any Limited Purpose Surety Bond listed in
Exhibit G.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the
18
month of such Distribution Date and as to which the related Servicer has
certified (in accordance with its Servicing Agreement) that it has received all
amounts it expects to receive in connection with the liquidation of such
Mortgage Loan including the final disposition of an REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of defaulted Mortgage Loans,
whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property.
Loan-To-Value Ratio: With respect to any Mortgage Loan and as to any
date of determination, the fraction (expressed as a percentage) the numerator of
which is the principal balance of the related Mortgage Loan at such date of
determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Lower Tier Interest: As described in the Preliminary Statement.
Lower Tier REMIC: As described in the Preliminary Statement.
Margin: As to each Mortgage Loan, the percentage amount set forth on the
related Mortgage Note added to the Index in calculating the Mortgage Rate
thereon.
Master Servicer: Xxxxx Fargo Bank Minnesota, National Association, a
national banking association organized under the laws of the United States in
its capacity as Master Servicer and any Person succeeding as Master Servicer
hereunder or any successor in interest, or if any successor master servicer
shall be appointed as herein provided, then such successor master servicer.
Master Servicing Fee: With respect to any Distribution Date, an amount
equal to the product of one-twelfth of the Master Servicing Fee Rate and the
Stated Principal Balance of each Mortgage Loan as of the first day of the
related Due Period.
Master Servicing Fee Rate: 0.007% per annum.
Maximum Rate: As to any Mortgage Loan, the maximum rate set forth on the
related Mortgage Note at which interest can accrue on such Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc., or any successor in interest.
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 Documents: With respect to each Mortgage Loan, the mortgage
documents required to be delivered to the Custodians pursuant to each Custody
Agreement.
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 Trustee pursuant to Section 2.01 or Section 2.05
(including any Replacement Loan and REO
19
Property), including without limitation, each Mortgage Loan listed on the
Mortgage Loan Schedule, as amended from time to time. The term "Mortgage Loans"
shall collectively refer to the Initial Mortgage Loans and any Subsequent
Mortgage Loans.
Mortgage Loan Purchase and Sale Agreement: The Mortgage Loan Purchase
and Sale Agreement, dated as of October 1, 2002 between the Seller and
Depositor.
Mortgage Loan Schedule: The schedule attached hereto as Schedule A,
which shall identify each Mortgage Loan, as such schedule may be amended by the
Depositor or the Servicer from time to time to reflect the addition of
Replacement Mortgage Loans or Subsequent Mortgage Loans to, or the deletion of
Deleted Mortgage Loans from, the Trust Fund. Such schedule shall, among other
things (i) designate the Servicer servicing such Mortgage Loan and the
applicable Servicing Fee Rate; (ii) separately identify One-Month LIBOR Loans
and Six-Month LIBOR Loans; and (iii) separately identify Additional Collateral
Mortgage Loans.
Mortgage Note: The original executed note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage under a Mortgage Loan.
Mortgage Pool: The aggregate of the Mortgage Loans.
Mortgaged Property: The underlying property, including any Additional
Collateral, securing a Mortgage Loan which, with respect to a Cooperative Loan,
is the related Cooperative Shares and Property Lease.
Mortgage Rate: As to any Mortgage Loan, the annual rate of interest
borne by the related Mortgage Notes.
Mortgagor: The obligor on a Mortgage Note.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan
or any other disposition of related Mortgaged Property, the related Liquidation
Proceeds net of Advances, Servicer Advances, related Servicing Fees and/or
Master Servicing Fees and any other accrued and unpaid servicing fees received
and retained in connection with the liquidation of such Mortgage Loan or
Mortgaged Property.
Net Mortgage Rate: With respect to any Mortgage Loan and any
Distribution Date, the related Mortgage Rate as of the Due Date in the month
preceding the month of such Distribution Date reduced by the Aggregate Expense
Rate for such Mortgage Loan.
Net Prepayment Interest Shortfall: With respect to any Mortgage Loan and
any Distribution Date, the amount by which any Prepayment Interest Shortfall for
such date exceeds the amount payable by the Master Servicer and/or the related
Servicers in respect of such shortfall.
Net WAC: As to any Distribution Date, the weighted average of the Net
Mortgage Rates of the Mortgage Loans as of the Due Date of the month preceding
the month of such Distribution Date, weighted on the basis of their outstanding
Stated Principal Balances (after giving effect to
20
the Scheduled Payments due on or before such Due Date and Principal Prepayments
received prior to such Due Date) at such time. When the term "Net WAC" is used
herein with reference to only the One-Month LIBOR Loans or only the Six-Month
LIBOR Loans, such weighted average shall be computed with reference solely to
the Mortgage Loans in the relevant group.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
Nonrecoverable Advance: Any portion of an Advance or Servicer Advance
previously made or proposed to be made by the Master Servicer and/or a Servicer
(as certified in an Officer's Certificate of the Servicer), which in the good
faith judgment of such party, shall not be ultimately recoverable by such party
from the related Mortgagor, related Liquidation Proceeds or otherwise.
Non-U.S. Person: Any person other than a "United States person" within
the meaning of Section 7701(a)(30) of the Code.
Notional Amount: With respect to any Notional Certificate and any
Distribution Date, such Certificate's Percentage Interest of the Class Notional
Amount of such Class of Certificates for such Distribution Date.
Notional Certificate: Any Class X-1A, Class X-1B and Class X-B
Certificate.
Offering Document: The Prospectus.
Officer's Certificate: A certificate signed by two Authorized Officers
of the Depositor or the Chairman of the Board, any Vice Chairman, the President,
any Vice President or any Assistant Vice President of the Master Servicer or the
Securities Administrator, and in each case delivered to the Trustee.
Officer's Certificate of the Servicer: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President (however denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of a Servicer, or (ii) if provided for herein, signed by a Servicing
Officer, as the case may be, and delivered to the Trustee or the Master
Servicer, as required hereby.
One-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for one-month U.S. dollar deposits.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable
in form and substance to the Trustee, the Securities Administrator or the Master
Servicer, as required hereby, and who may be in-house or outside counsel to the
Depositor, the Master Servicer, the Securities Administrator or the Trustee but
which must be Independent outside counsel with respect to any such opinion of
counsel concerning the transfer of any Residual Certificate or concerning
certain
21
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 each
REMIC.
Original Applicable Credit Support Percentage: With respect to each
Class of Subordinate Certificates, the corresponding percentage set forth
opposite its Class designation: Class B-1 -- 3.50%; Class B-2 -- 2.15%; Class
B-3 -- 1.35%; Class B-4 -- 0.80%; Class B-5 -- 0.55%; and Class B-6 -- 0.40%.
Original Capitalized Interest Amount: $328,564.28.
Original Pre-Funded Amount: $158,098,721.58.
Original Subordinate Principal Amount: The aggregate of the initial
Class Principal Amounts of the Classes of Subordinated Certificates.
Paying Agent: Any paying agent appointed pursuant to Section 3.08. The
initial Paying Agent shall be Xxxxx Fargo Bank Minnesota, National Association,
for so long as it is acting as Securities Administrator under 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 a Notional Certificate or the Class A-R
Certificate, the Percentage Interest evidenced thereby shall equal the initial
Certificate Principal Amount thereof divided by the initial Class Principal
Amount of all Certificates of the same Class. With respect to the Class A-R
Certificate, the Percentage Interest evidenced thereby shall be as specified on
the face thereof, or otherwise, be equal to 100%. With respect to any Notional
Certificate, the Percentage Interest evidenced thereby shall equal its initial
Notional Amount as set forth on the face thereof divided by the initial Class
Notional Amount of such Class.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided that such obligations are backed by the full faith and credit
of the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency, or such lower
rating as shall not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by the Rating Agencies, as
evidenced by a signed writing delivered by each Rating Agency;
(iii) commercial or finance company paper which is then receiving
the highest commercial or finance company paper rating of each Rating
Agency rating such paper, or such lower rating as shall not result in
the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed writing
delivered by each Rating Agency;
22
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any state
thereof and subject to supervision and examination by federal and/or
state banking authorities, provided that the commercial paper and/or
long-term unsecured debt obligations of such depository institution or
trust company (or in the case of the principal depository institution in
a holding company system, the commercial paper or long-term unsecured
debt obligations of such holding company, but only if Xxxxx'x is not the
applicable Rating Agency) are then rated one of the two highest
long-term and the highest short-term ratings of each Rating Agency for
such securities, or such lower ratings as shall not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed writing
delivered by each Rating Agency;
(v) demand or time deposits or certificates of deposit issued by
any bank or trust company or savings institution to the extent that such
deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation acceptable to the Rating Agencies
at the time of the issuance of such agreements, as evidenced by a signed
writing delivered by each Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (iv) above;
(viii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which, at the time of such investment, have one of the two
highest ratings of each Rating Agency (except if the Rating Agency is
Moody's, such rating shall be the highest commercial paper rating of
Moody's for any such series), or such lower rating as shall not result
in the downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies, as evidenced by a signed writing
delivered by each Rating Agency;
(ix) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the highest applicable rating by
each Rating Agency rating such fund or such lower rating as shall not
result in a change in the rating then assigned to the Certificates by
each Rating Agency including funds for which the Trustee, the Master
Servicer, the Securities Administrator or any of its Affiliates is
investment manager or adviser;
(x) short-term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by each applicable Rating Agency in their respective highest
applicable rating category or such lower rating as shall not result in a
23
change in the rating then specified stated maturity and bearing interest
or sold at a discount acceptable to each Rating Agency as shall not
result in the downgrading or withdrawal of the ratings then assigned to
the Certificates by the Rating Agencies; and
(xi) such other investments having a specified stated maturity
and bearing interest or sold at a discount acceptable to the Rating
Agencies as shall not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by the Rating Agencies;
provided, that no such instrument shall be a Permitted Investment if (i) such
instrument evidences the right to receive interest only payments with respect to
the obligations underlying such instrument or (ii) such instrument would require
the Depositor to register as an investment company under the Investment Company
Act of 1940, as amended.
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.
Plan Asset Regulations: The Department of Labor regulations set forth in
29 C.F.R. 2510.3-101.
Pre-Funded Amount: As of any date of determination, the aggregate
outstanding balance on deposit in the Pre-Funding Account (exclusive of any
investment earnings thereon).
Pre-Funding Account: The account established and maintained by the
Securities Administrator pursuant to Section 4.02, consisting of the 1M
Sub-account and the 6M Sub-account.
Pre-Funding Period: The period commencing on the Closing Date and ending
on the earlier of (a) December 1, 2002 and (b) the date the last Subsequent
Mortgage Loan is acquired.
Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, the excess, if any, of (i) one full
month's interest at the applicable Mortgage Rate on the outstanding principal
balance of such Mortgage Loan immediately prior to such Principal Prepayment
over (ii) the amount of interest actually received with respect to such Mortgage
Loan in connection with such Principal Prepayment.
Prepayment Period: With respect to each Distribution Date, the calendar
month immediately preceding the month in which the Distribution Date occurs.
Primary Mortgage Insurance Policy: Each policy of primary mortgage
guaranty insurance or any replacement policy therefor with respect to any
Mortgage Loan.
Principal Distribution Amount: With respect to any Distribution Date,
the sum of (a) each Scheduled Payment of principal collected or advanced on the
Mortgage Loans (before taking into account any Deficient Valuations or Debt
Service Reductions) and due during the related Due Period, (b) that portion of
the Purchase Price representing principal of any Mortgage
24
Loans purchased in accordance with Section 2.04 hereof and received during the
related Prepayment Period, (c) the principal portion of any Substitution Amount
received during the related Prepayment Period, (d) the principal portion of all
Insurance Proceeds received during the related Prepayment Period with respect to
Mortgage Loans that are not yet Liquidated Mortgage Loans, (e) the principal
portion of all Net Liquidation Proceeds received during the related Prepayment
Period with respect to Liquidated Mortgage Loans, (f) the principal portion of
the proceeds of any Additional Collateral with respect to the Mortgage Loans,
(g) the principal portion of all partial and full principal prepayments of
Mortgage Loans applied by the Servicers during the related Prepayment Period and
(h) on the Distribution Date on which the Trust Fund is to be terminated
pursuant to Article X hereof, the Redemption Price in respect of principal for
the Mortgage Pool.
Principal Prepayment: Any Mortgagor payment of principal or other
recovery of principal on a Mortgage Loan that is recognized as having been
received or recovered in advance of its scheduled Due Date and applied to reduce
the principal balance of the Mortgage Loan in accordance with the terms of the
Mortgage Note or the Servicing Agreement.
Principal Prepayment In Full: Any Principal Prepayment of the entire
principal balance of the Mortgage Loans.
Pro Rata Senior Percentage: With respect to each Distribution Date, the
percentage equivalent of a fraction the numerator of which is the aggregate
Class Principal Amount of the Class or Classes of Senior Certificates
immediately prior to such Distribution Date and the denominator of which is the
sum of (i) the Aggregate of the Stated Principal Balance for such Distribution
Date and (ii) the Pre-Funded Amount.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Proprietary Lease: With respect to any Cooperative Property, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The prospectus supplement dated October 22, 2002, together
with the accompanying prospectus dated June 26, 2002, relating to the initial
sale of the Class A, Class B-1, Class B-2, Class B-3, Class X-1A, Class X-1B,
Class X-B and Class A-R Certificates.
Purchase Agreements: Any mortgage purchase agreements listed in Exhibit
F hereto, as each such agreement may be amended or supplemented from time to
time as permitted hereunder.
Purchase Price: With respect to any Mortgage Loan required or permitted
to be purchased by the Seller or Depositor pursuant to this Agreement, by the
Servicers pursuant to the Servicing Agreements, or by the Seller pursuant to the
Purchase Agreements, an amount equal to the sum of (i) 100% of the unpaid
principal balance of the Mortgage Loan on the date of such purchase, and (ii)
accrued interest thereon at the applicable Net Mortgage Rate from the date
through which interest was last paid by the Mortgagor to the Due Date in the
month in which the
25
Purchase Price is to be distributed to Certificateholders, or such other amount
as may be specified in the related Servicing Agreement or Purchase Agreement.
Rating Agency: Each of Xxxxx'x, S&P and Fitch Ratings.
Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of the Liquidated Mortgage Loan as of the date of such liquidation, plus
(ii) interest at the Net Mortgage Rate from the Due Date as to which interest
was last paid or advanced (and not reimbursed) to Certificateholders up to the
Due Date in the month in which Liquidation Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) the Liquidation Proceeds and the proceeds of any
Additional Collateral, if any, received during the month in which such
liquidation occurred, to the extent applied as recoveries of interest at the Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect to
each Mortgage Loan which has become the subject of a Deficient Valuation, if the
principal amount due under the related Mortgage Note has been reduced, the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation.
Record Date: As to any Distribution Date (i) with respect to the LIBOR
Certificates, the last Business Day preceding such Distribution Date (or the
Closing Date, in the case of the first Distribution Date) unless such
Certificates shall no longer be Book-Entry Certificates, in which case the
Record Date shall be the last Business Day of the month preceding the month of
such Distribution Date and (ii) in the case of all other Certificates (including
LIBOR Certificates that are subsequently reissued as Definitive Certificates),
the last Business Day of the month preceding the month of each Distribution
Date.
Redemption Date: Any Distribution Date on which Certificates may be
redeemed.
Redemption Price: With respect to any Class of Certificates to be
redeemed, an amount equal to 100% of the related Class Principal Amount of the
Certificates to be so redeemed, together with interest on such amount at the
applicable Certificate Interest Rate through the related Accrual Period (as
increased by any Interest Shortfalls but excluding any Unpaid Basis Risk
Shortfalls), and including, in the case of the Redemption Price payable in
connection with the redemption and retirement of all of the Certificates, the
payment of all amounts (including, without limitation, all previously
unreimbursed Advances and Servicing Advances and accrued and unpaid Servicing
Fees) payable or reimbursable to the Trustee, the Master Servicer and the
Servicers pursuant to this Agreement and the Servicing Agreements, or to any
Custodian under the applicable Custody Agreement (to the extent such amounts are
not paid to such Custodian by the Seller).
Refinancing Mortgage Loan: Any Mortgage Loan originated in connection
with the refinancing of an existing mortgage loan.
Relief Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most
26
recently ended calendar month as a result of the application of the Civil Relief
Act, the amount, if any, by which (i) interest collectible on such Mortgage Loan
for the most recently ended calendar month is less than (ii) interest accrued
thereon for such month pursuant to the Mortgage Note.
REMIC: Each pool of assets in the Trust Fund designated as a REMIC as
described in the Preliminary Statement.
REMIC Provisions: The provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations, including proposed regulations and rulings, and administrative
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC
Provisions.
Replacement Mortgage Loan: A mortgage loan substituted by the Seller for
a Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form attached to the
applicable Custody Agreement, (i) have a Stated Principal Balance, after
deduction of the principal portion of the Scheduled Payment due in the month of
substitution, not in excess of, and not more than 10% less than, the Stated
Principal Balance of the Deleted Mortgage Loan; (ii) have a Maximum Rate not
less than (and not more than two percentage points greater than) the Maximum
Rate of the Deleted Mortgage Loan; (iii) have a gross margin not less than that
of the Deleted Mortgage Loan and, if Mortgage Loans equal to 1% or more of the
balance of the Mortgage Pool as of the Cut-off Date have become Deleted Mortgage
Loans, not more than two percentage points more than that of the Deleted
Mortgage Loan; (iv) have an Effective Loan-to-Value Ratio no higher than that of
the Deleted Mortgage Loan; (v) have Adjustment Dates that are no more or less
frequent than the Deleted Mortgage Loan; (vi) have a remaining term to maturity
no greater than (and not more than one year less than that of) the Deleted
Mortgage Loan; (vii) not permit conversion of the related Mortgage Rate to a
permanent fixed Mortgage Rate; (viii) not be a Cooperative Loan unless the
Deleted Mortgage Loan was a Cooperative Loan; (ix) have the same or better FICO
credit score; (x) have an initial interest adjustment date no earlier than five
months before (and no later than five months after) the initial adjustment date
of the Deleted Mortgage Loan, (xi) comply with each representation and warranty
set forth in Article III of each Purchase Agreement; and (xii) shall be
accompanied by an Opinion of Counsel that such Replacement Mortgage Loan would
not adversely affect the REMIC status of the Trust Estate or would not otherwise
be prohibited by this Indenture.
Required Basis Risk Deposit: Each of the Class X-1 Required Basis Risk
Deposit and the Class X-B Required Basis Risk Deposit.
Residual Certificate: The Class A-R and Class LTR Certificate.
27
Responsible Officer: With respect to the Trustee, any officer in the
corporate trust department or similar group of the Trustee with direct
responsibility for the administration of this Agreement and also, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.
Restricted Certificate: Any Class B4, Class B5, Class B6 or Class LTR
Certificate.
Restricted Global Security: As defined in Section 3.01(c).
S&P: Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx
Companies, Inc., or any successor in interest.
SAIF: The Saving's Association Insurance Fund, or any successor thereto.
Schedule of Exceptions: As defined in the related Custody Agreement.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan
which, unless otherwise specified in the Servicing Agreements, shall give effect
to any related Debt Service Reduction and any Deficient Valuation that affects
the amount of the monthly payment due on such Mortgage Loan.
Seller: RWT Holdings, Inc., a Delaware corporation.
Senior Certificate: Any one of the Class A, Class X-1A, Class X-1B,
Class X-B or Class A-R Certificates.
Securities Administrator: Xxxxx Fargo Bank Minnesota, National
Association, not in its individual capacity but solely as Securities
Administrator, or any successor in interest, or if any successor Securities
Administrator shall be appointed as herein provided, then such successor
Securities Administrator.
Senior Percentage: Except as provided in this definition, with respect
to any Distribution Date before November 2012, 100%. The Senior Percentage for
any Distribution Date occurring (i) before the Distribution Date in November
2012 but in or after November 2005 on which the Two Times Test is satisfied, or
(ii) in or after November 2012, is the Pro Rata Senior Percentage. If the Two
Times Test is satisfied with respect to any Distribution Date prior to the
Distribution Date in November 2005, the Senior Percentage is the Pro Rata Senior
Percentage plus 50% of an amount equal to 100% minus the Pro Rata Senior
Percentage. With respect to any Distribution Date after the Senior Termination
Date, the Senior Percentage will equal zero. If on any Distribution Date the
allocation to the Senior Certificates then entitled to distributions of
principal of full and partial principal prepayments and other amounts in the
percentage required above would reduce the sum of the Class Principal Amounts of
those Certificates to below zero, the Senior Percentage for such Distribution
Date shall be limited to the percentage necessary to reduce that Class Principal
Amount to zero.
28
Senior Prepayment Percentage: With respect to any Distribution Date
during the ten years beginning on the first Distribution Date, 100%. Except as
provided herein, the Senior Prepayment Percentage for each Distribution Date
occurring on or after the tenth anniversary of the first Distribution Date shall
be as follows: (i) from November 2012 through October 2013, the Senior
Percentage plus 70% of the Subordinate Percentage for that Distribution Date;
(ii) from November 2013 through October 2014, the Senior Percentage plus 60% of
the Subordinate Percentage for that Distribution Date; (iii) from November 2014
through October 2015, the Senior Percentage plus 40% of the Subordinate
Percentage for that Distribution Date; (iv) from November 2015 through October
2016, the Senior Percentage plus 20% of the Subordinate Percentage for that
Distribution Date; and (v) from and after November 2016, the Senior Percentage
for that Distribution Date; provided, however, that there shall be no reduction
in the Senior Prepayment Percentage unless both Step Down Conditions are
satisfied; and provided, further, that if on any such Distribution Date the Pro
Rata Senior Percentage exceeds the initial Pro Rata Senior Percentage, the
Senior Prepayment Percentage for that Distribution Date shall again equal 100%.
Notwithstanding the above, if on any Distribution Date the Two Times
Test is satisfied, the Senior Prepayment Percentage shall equal the Senior
Percentage for such Distribution Date. In addition, if on any Distribution Date
the allocation to the Senior Certificates then entitled to distributions of
principal of full and partial principal prepayments and other amounts in the
percentage required above would reduce the sum of the Class Principal Amounts of
those Certificates to below zero, the Senior Prepayment Percentage for such
Distribution Date shall be limited to the percentage necessary to reduce that
Class Principal Amount to zero.
Senior Principal Distribution Amount: With respect to any Distribution
Date, the sum of:
(1) the Senior Percentage of all amounts described in clauses (a)
through (d) of the definition of "Principal Distribution Amount" for
that Distribution Date;
(2) with respect to each Mortgage Loan which became a Liquidated
Mortgage Loan during the related Prepayment Period, the lesser of
(x) the Senior Percentage of the Stated Principal Balance
of that Mortgage Loan and
either
(y) the Senior Prepayment Percentage of the amount of the
Net Liquidation Proceeds allocable to principal received with
respect to that Mortgage Loan.
or
(z) if an Excess Loss was sustained with respect to such
Liquidated Mortgage Loan during such related Prepayment Period,
the Senior Percentage of the amount of Net Liquidation Proceeds
allocable to principal received with respect to that Mortgage
Loan; and
29
(3) the Senior Prepayment Percentage of the amounts described in
clause (g) of the definition of "Principal Distribution Amount";
provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
with respect to any Mortgage Loan that is not a Liquidated Mortgage Loan, the
Senior Principal Distribution Amount shall be reduced on such Distribution Date
by the Senior Percentage of the principal portion of such Bankruptcy Loss.
Senior Termination Date: The Distribution Date when the aggregate of the
Class Certificate Principal Balances of the Senior Certificates has been reduced
to zero.
Servicers: Each Servicer under a Servicing Agreement.
Servicer Advance: A "Servicing Advance" as defined in the applicable
Servicing Agreement.
Servicing Agreement: The agreements listed in Exhibit E, as each such
agreement has been modified by the related Acknowledgement and as it may be
amended or supplemented from time to time as permitted thereby.
Servicing Fee: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of (a) one-twelfth of the Servicing Fee Rate and (b)
the outstanding principal balance of such Mortgage Loan as of the first day of
the related Due Period.
Servicing Fee Rate: With respect to each Mortgage Loan and any
Distribution Date, the rate specified in the related Servicing Agreement.
Servicing Officer: Any officer of the Servicers involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Master Servicer by the Servicers on the Closing Date pursuant to the
Servicing Agreements, as such list may from time to time be amended.
Six-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for six-month U.S. dollar deposits.
Special Hazard Loss: Any Realized Loss suffered by a Mortgaged Property
on account of direct physical loss, as reported by the related Servicer to the
Master Servicer, but not including (i) any loss of a type covered by a hazard
insurance policy or a flood insurance policy required to be maintained with
respect to such Mortgaged Property to the extent of the amount of such loss
covered thereby, or (ii) any loss caused by or resulting from:
(a) normal wear and tear;
(b) fraud, conversion or other dishonest act on the part of the
Trustee, the Master Servicer, a Servicer or any of their agents
or employees (without regard to any portion of the loss not
covered by any errors and omissions policy);
30
(c) errors in design, faulty workmanship or faulty materials, unless
the collapse of the property or a part thereof ensues and then
only for the ensuing loss;
(d) nuclear or chemical reaction or nuclear radiation or radioactive
or chemical contamination, all whether controlled or
uncontrolled, and whether such loss be direct or indirect,
proximate or remote or be in whole or in part caused by,
contributed to or aggravated by a peril covered by the definition
of the term "Special Hazard Loss";
(e) hostile or warlike action in time of peace and war, including
action in hindering, combating or defending against an actual,
impending or expected attack:
1. by any government or sovereign power, de jure or de facto,
or by any authority maintaining or using military, naval or
air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
(f) any weapon of war employing nuclear fission, fusion or other
radioactive force, whether in time of peace or war; or
(g) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction
under quarantine or customs regulations, confiscation by order of
any government or public authority or risks of contraband or
illegal transportation or trade.
Special Hazard Loss Coverage Amount: With respect to the first
Distribution Date, $11,600,000. With respect to any Distribution Date after the
first Distribution Date, the lesser of (a) the greatest of (i) 1% of the
aggregate of the Assumed Stated Principal Balance, (ii) twice the Stated
Principal Balance of the largest Mortgage Loan and (iii) the aggregate of the
Stated Principal Balances of the Mortgage Loans secured by Mortgaged Properties
located in the single five-digit ZIP code area in the State of California having
the highest aggregate Stated Principal Balance of any such ZIP code area and (b)
the Special Hazard Loss Coverage Amount as of the Closing Date less the amount,
if any, of Special Hazard Losses allocated to the Certificates since the Closing
Date; provided, however, that the Special Hazard Loss Coverage Amount may also
be reduced pursuant to a letter from each Rating Agency to the Trustee and the
Securities Administrator to the effect that any such reduction shall not result
in the downgrading of the then current ratings assigned by such Rating Agency to
the Classes of Senior Certificates. All Stated Principal Balances for the
purpose of the definition will be calculated as of the first day of the calendar
month preceding the month of such Distribution Date after giving effect to
Scheduled Payments on the Mortgage Loans then due, whether paid or not.
Special Hazard Loss Coverage Termination Date: The date on which the
Special Hazard Loss Coverage Amount is reduced to zero.
31
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Stated Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid principal balance of such Mortgage Loan as of such Due Date as specified
in the amortization schedule at the time relating thereto (before any adjustment
to such amortization schedule by reason of any moratorium or similar waiver or
grace period) after giving effect to any previous partial Principal Prepayments
and Liquidation Proceeds allocable to principal (other than with respect to any
Liquidated Mortgage Loan) and to the payment of principal due on such Due Date
and irrespective of any delinquency in payment by the related Mortgagor.
Step Down Conditions: As of the first Distribution Date as to which any
decrease in any Senior Prepayment Percentage applies, (i) the outstanding Stated
Principal Balance of all Mortgage Loans 60 days or more Delinquent (including
Mortgage Loans in REO and foreclosure) (averaged over the preceding six month
period), as a percentage of the aggregate of the Class Principal Amounts of the
Classes of Subordinate Certificates on such Distribution Date, does not equal or
exceed 50% and (ii) cumulative Realized Losses with respect to the Mortgage
Loans do not exceed (a) with respect to each Distribution Date from November
2012 through October 2013, 30% of the Original Subordinate Principal Amount, (b)
with respect to each Distribution Date from November 2013 through October 2014,
35% of the Original Subordinate Principal Amount, (c) with respect to each
Distribution Date from November 2014 through October 2015, 40% of the Original
Subordinate Principal Amount, (d) with respect to each Distribution Date from
November 2015 through October 2016, 45% of the Original Subordinate Principal
Amount and (e) with respect to each Distribution Date from and after November
2016, 50% of the Original Subordinate Principal Amount.
Sub-account: Each of the X-1 Sub-account and X-B Sub-account
constituting the Basis Risk Reserve Fund and each of the 1M Sub-account and 6M
Sub-account constituting the Pre-Funding Account.
Subordinate Certificate: Any of the Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 or Class B-6 Certificates.
Subordinate Certificate Writedown Amount: The amount described in
Section 5.03(b)(iii).
Subordinate Class Percentage: As to any Distribution Date and any Class
of Subordinate Certificates, a fraction, expressed as a percentage, the
numerator of which is the Class Principal Amount of such Class on such date, and
the denominator of which is the aggregate Class Principal Amount of all Classes
of Subordinate Certificates on such date.
Subordinate Percentage: With respect to each Distribution Date, the
difference between 100% and the Senior Percentage for such Distribution Date.
Subordinate Prepayment Percentage: With respect to any Distribution
Date, the difference between 100% and the Senior Prepayment Percentage for such
Distribution Date.
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Subordinate Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to the sum of:
(1) Subordinate Percentage of all amounts described in
clauses (a) through (d) of the definition of "Principal
Distribution Amount" for that Distribution Date;
(2) with respect to each Mortgage Loan that became a
Liquidated Mortgage Loan during the related Prepayment Period the
amount of the Net Liquidation Proceeds allocated to principal
received with respect thereto remaining after application thereof
pursuant to clause (2) of the definition of "Senior Principal
Distribution Amount" for that Distribution Date, up to the
Subordinate Percentage of the Stated Principal Balance of such
Mortgage Loan; and
(3) the Subordinate Prepayment Percentage of all amounts
described in clause (g) of the definition of "Principal
Distribution Amount" for that Distribution Date;
provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
with respect to any Mortgage Loan that is not a Liquidated Mortgage Loan
Payment, the Subordinate Principal Distribution Amount shall be reduced on such
Distribution Date by the Subordinate Percentage of the principal portion of such
Bankruptcy Loss.
Subsequent Cut-Off Date: With respect to any Subsequent Mortgage Loan,
the first day of the calendar month in which the related Subsequent Transfer
Date occurs.
Subsequent Delivery Requirements: After giving effect to the acquisition
of all Subsequent Mortgage Loans (which shall all be Mortgage Loans bearing
interest at an adjustable rate of interest) the Mortgage Loans shall:
(i) have a weighted average Margin of not less than 1.500%;
(ii) have a weighted average Effective Loan-to-Value Ratio (after
giving effect to the value of any Additional Collateral) not in excess
of 68.00%;
(iii) consist of Six-Month LIBOR Loans having an aggregate Stated
Principal Balance of $114,194,706.60 greater than the aggregate Stated
Principal Balance of Six-Month LIBOR Loans on the Closing Date, and
One-Month LIBOR Loans having an aggregate Stated Principal Balance of
$43,904,014.98 greater than the aggregate Stated Principal Balance of
One-Month LIBOR Loans on the Closing Date;
(iv) have a remaining term to maturity of not greater than 360
months; and
(v) have a Loan-to-Value Ratio not greater than 100.00%.
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Subsequent Mortgage Loan: Any Mortgage Loan conveyed to the Trust Fund
and delivered to the applicable Custodian on behalf of Trustee on a Subsequent
Transfer Date.
Subsequent Transfer Date: The date on which any Subsequent Mortgage Loan
is conveyed by the Depositor to the Trust Fund.
Subsequent Transfer Date Notice: The form of Notice of Subsequent
Transfer Date attached as Exhibit A to each Mortgage Loan Purchase and Sale
Agreement, specifying the date on which a Subsequent Mortgage Loan will be
conveyed to the Trust Fund.
Substitution Amount: As defined in the second paragraph of Section
2.04(b).
Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions which shall initially be the Holder of the Class LTR Certificate.
Telerate Page 3750: The display currently so designated as "Page 3750"
on the Bridge Telerate Service (or such other page selected by the Securities
Administrator as may replace Page 3750 on that service for the purpose of
displaying daily comparable rates on prices).
Transfer Price: With respect to any Subsequent Mortgage Loan, the price
specified in the Subsequent Transfer Date Notice which shall be no less than the
Stated Principal Balance of the Subsequent Mortgage Loan, as increased by any
amount of principal and interest received on such Subsequent Mortgage Loan from
and after the related Subsequent Cut-off Date specified in the Subsequent
Transfer Date Notice.
Trust Fund: The corpus of the trust created pursuant to this Agreement,
consisting of the Mortgage Loans and all interest and principal received thereon
on or after the Cut-off Date (other than Scheduled Payments due on or prior to
the Cut-off Date), the Depositor's rights assigned to the Trustee under the
Purchase Agreements and the Servicing Agreements, as modified by the
Acknowledgements and the Mortgage Loan Purchase and Sale Agreement, the
Insurance Policies relating to the Mortgage Loans, all cash, instruments or
property held or required to be held in the Custodial Accounts, the Distribution
Account, the Capitalized Interest Account and the Pre-Funding Account, property
that secured a Mortgage Loan, the pledge, control and guaranty agreements and
Limited Purpose Surety Bonds relating to the Additional Collateral Mortgage
Loans, and the Basis Risk Reserve Fund.
Trustee: HSBC Bank USA, a New York banking corporation organized and
existing under the laws of the State of New York and any Person succeeding the
Trustee hereunder, 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 Mortgage Files: With respect to each Mortgage Loan, the Mortgage
Documents to be retained in the custody and possession of the Trustee or
Custodian on behalf of the Trustee.
Two Times Test: As to any Distribution Date, (i) the Subordinate
Percentage is at least two times the Subordinate Percentage as of the Closing
Date; (ii) the aggregate of the Stated Principal Balances of all Mortgage Loans
Delinquent 60 days or more (including Mortgage
34
Loans in REO and foreclosure) (averaged over the preceding six-month period), as
a percentage of the aggregate of the Class Principal Amount of the Subordinate
Certificates on such Distribution Date, does not equal or exceed 50%; and (iii)
cumulative Realized Losses with respect to the Mortgage Loans do not exceed 20%
of the Original Subordinate Principal Amount.
UCC: The Uniform Commercial Code as enacted in the relevant
jurisdiction.
Underwriter's Exemption: Prohibited Transaction Exemption ("PTE") 90-24
(Exemption Application No. D-8019, 55 Fed. Reg. 20548 (1990), as amended by PTE
97-34 (Exemption Application No. D-10245 and D-10246), as amended by PTE 2000-58
(Exemption Application No. D-10829), as amended by PTE 2002-41 (Exemption
Application No. D-11077, 67 Fed. Reg. 54487 (2002), or any substantially similar
administrative exemption granted by the U.S. Department of Labor to the
Underwriters.
Underwriters: Xxxxxx Xxxxxxx & Co. Incorporated, Greenwich Capital
Markets, Inc., Bear, Xxxxxxx and Co. Inc. and Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated.
Underwriting Agreement: The Underwriting Agreement, dated October 22,
2002, among the Seller, the Depositor and the Underwriters.
Uniform Commercial Code: The Uniform Commercial Code as in effect in any
applicable jurisdiction from time to time.
Unpaid Basis Risk Shortfall: With respect to any Distribution Date and
any Class of LIBOR Certificates, the aggregate of all Basis Risk Shortfalls with
respect to such Certificate remaining unpaid from previous Distribution Dates,
plus interest accrued thereon at the applicable Certificate Interest Rate
determined without regard to clause (ii) of the definition therefor to the
extent not paid on prior Distribution Dates.
Upper Tier REMIC: As described in the Preliminary Statement.
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,
97.00% of all Voting Interests shall be allocated to the Class A, Class A-R,
Class B1, Class B2, Class B3, Class B4, Class B5 and Class B6 Certificates.
Voting Interests shall be allocated among such Certificates (other than the
Class A-R Certificates) based on the product of (i) 97% and (ii) the fraction,
expressed as a percentage, the numerator of which is the aggregate Class
Principal Amounts for each Class then outstanding and the denominator of which
is the Assumed Stated Principal Balance outstanding, and the remainder of such
percentage of Voting Interests shall be allocated to the Class A-R Certificates.
At all times during the term of this Agreement, 3.00% of all Voting Interests
shall be allocated among the Class X-1A, Class X-1B, Class X-B Certificates,
while they remain outstanding in proportion to their relative Class Notional
Amounts. Voting Interests shall be allocated among the Certificates within each
such Class in proportion to their Certificate Principal Amounts or Percentage
Interests.
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Section 1.02 Calculations Respecting Mortgage Loans.
Calculations required to be made pursuant to this Agreement with respect
to any Mortgage Loan in the Trust Fund shall be made based upon current
information as to the terms of the Mortgage Loans and reports of payments
received from the Mortgagor on such Mortgage Loans and payments to be made to
the Securities Administrator as supplied to the Securities Administrator by the
Master Servicer. The Securities Administrator shall not be required to
recompute, verify or recalculate the information supplied to it by the Master
Servicer or any Servicer.
ARTICLE II
DECLARATION OF TRUST;
ISSUANCE OF CERTIFICATES
Section 2.01 Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans.
(a) Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby transfer, assign, set over, deposit with and otherwise
convey to the Trustee, without recourse, subject to Sections 2.02, 2.04 and
2.05, in trust, all the right, title and interest of the Depositor in and to the
Trust Fund. Such conveyance includes, without limitation, (i) the Initial
Mortgage Loans, including the right to all payments of principal and interest
received on or with respect to the Initial Mortgage Loans on and after the
Cut-off Date (other than Scheduled Payments due on or before such date), and all
such payments due after such date but received prior to such date and intended
by the related Mortgagors to be applied after such date; (ii) all of the
Depositor's right, title and interest in and to all amounts from time to time
credited to and the proceeds of the Distribution Account, any Custodial Accounts
or any Escrow Account established with respect to the Initial Mortgage Loans;
(iii) all of the Depositor's rights under the Purchase Agreements and the
Servicing Agreements as modified by the Acknowledgements and the Mortgage Loan
Purchase and Sale Agreement; (iv) all of the Depositor's right, title or
interest in REO Property and the proceeds thereof; (v) all of the Depositor's
rights under any Insurance Policies related to the Initial Mortgage Loans; (vi)
the Depositor's security interest in any collateral pledged to secure the
Initial Mortgage Loans, including the Mortgaged Properties and any Additional
Collateral relating to the Additional Collateral Mortgage Loans, including, but
not limited to, the pledge, control and guaranty agreements and the Limited
Purpose Surety Bonds and any proceeds of the foregoing, to have and to hold, in
trust; and the Trustee declares that, subject to the review provided for in
Section 2.02, it has received and shall hold the Trust Fund, as trustee, in
trust, for the benefit and use of the Holders of the Certificates and for the
purposes and subject to the terms and conditions set forth in this Agreement,
and, concurrently with such receipt, has caused to be executed, authenticated
and delivered to or upon the order of the Depositor, in exchange for the Trust
Fund, Certificates in the authorized denominations evidencing the entire
ownership of the Trust Fund.
The foregoing sale, transfer, assignment, set-over, deposit and
conveyance does not and is not intended to result in the creation or assumption
by the Trustee of any obligation of the
36
Depositor, the Seller or any other Person in connection with the Initial
Mortgage Loans or any other agreement or instrument relating thereto except as
specifically set forth therein.
In connection with such transfer and assignment of the Initial Mortgage
Loans, the Depositor does hereby deliver to, and deposit with, or cause to be
delivered to and deposited with, each Custodian (with respect to its related
Initial Mortgage Loans) acting on the Trustee's behalf, the following documents
or instruments with respect to each Initial Mortgage Loan (each a "Trustee
Mortgage File") so transferred and assigned:
(i) with respect to each Initial Mortgage Loan, the original
Mortgage Note endorsed without recourse in proper form to the order of
the Trustee, or in blank (in each case, with all necessary intervening
endorsements, as applicable);
(ii) with respect to each Initial Mortgage Loan (other than a
Cooperative Loan), the original mortgage, deed of trust or other
instrument creating a first lien on the underlying property securing the
Initial Mortgage Loan and bearing evidence that such instrument has been
recorded in the appropriate jurisdiction where the Mortgaged Property is
located (or, in lieu of the original of the Mortgage, a true copy of the
Mortgage certified by the originator, or a duplicate or conformed copy
of the Mortgage, together with a certificate of either the closing
attorney or an officer of the title insurer that issued the related
title insurance policy, certifying that such copy represents a true and
correct copy of the original and that such original has been or is
currently submitted to be recorded in the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property is
located);
(iii) with respect to each Initial Mortgage Loan (other than a
Cooperative Loan), the Assignment of Mortgage in form and substance
acceptable for recording in the relevant jurisdiction, such assignment
being either (A) in blank, without recourse, or (B) or endorsed to "HSBC
Bank USA, as Trustee of the Sequoia Mortgage Trust 11, Mortgage
Pass-Through Certificates, without recourse."
(iv) with respect to each Initial Mortgage Loan (other than a
Cooperative Loan), the originals or certified copies of all Intervening
Assignments of the Mortgage, if any, with evidence of recording thereon,
showing a complete chain of title to the last endorsee, including any
warehousing assignment;
(v) with respect to each Initial Mortgage Loan (other than a
Cooperative Loan), any assumption, modification, written assurance,
substitution, consolidation, extension or guaranty agreement, if
applicable;
(vi) with respect to each Initial Mortgage Loan (other than a
Cooperative Loan), the original policy of title insurance (or a true
copy thereof) with respect to any such Initial Mortgage Loan, or, if
such policy has not yet been delivered by the insurer, the title
commitment or title binder to issue same; and
(vii) if the Mortgage Note or Mortgage or any other material
document or instrument relating to the Initial Mortgage Loan has been
signed by a person on behalf of
37
the Mortgagor, the original power of attorney or other instrument that
authorized and empowered such person to sign bearing evidence that such
instrument has been recorded, if so required, in the appropriate
jurisdiction where the Mortgaged Property is located (or, in lieu
thereof, a duplicate or conformed copy of such instrument, together with
a certificate of receipt from the recording office, certifying that such
copy represents a true and complete copy of the original and that such
original has been or is currently submitted to be recorded in the
appropriate governmental recording office of the jurisdiction where the
Mortgaged Property is located).
(viii) with respect to each Initial Mortgage Loan which
constitutes a Cooperative Mortgage Loan:
(a) the original loan and security agreement;
(b) the original Cooperative Shares;
(c) a stock power executed in blank by the person in whose
name the Cooperative Shares are issued;
(d) the Proprietary Lease or occupancy agreement
accompanied by an assignment in blank of such proprietary lease;
(e) the recognition agreement executed by the Cooperative
Corporation, which requires the Cooperative Corporation to
recognize the rights of the lender and its successors in interest
and assigns, under the cooperative;
(f) UCC-1 financing statements with recording information
thereon from the appropriate governmental recording offices if
necessary to perfect the security interest of the Cooperative
Mortgage Loan under the Uniform Commercial Code in the
jurisdiction in which the cooperative project is located,
accompanied by UCC-3 financing statements executed in blank for
recordation of the change in the secured party thereunder.
(g) the original policy of title insurance or with respect
to any such Cooperative Mortgage Loan, if such policy has not yet
been delivered by the insurer, the title commitment or title
binder to issue same; and
(h) Any guarantees, if applicable.
The foregoing document delivery requirements with respect to each
Trustee Mortgage File set forth in this Section 2.01 shall equally apply to the
transfer and assignment to the Trust Fund of any Subsequent Mortgage Loan
pursuant to Section 2.05 hereof; provided that for purposes of applying such
requirements to Subsequent Mortgage Loans, references in this Section 2.01 to
"Initial Mortgage Loans" shall be replaced by "Subsequent Mortgage Loans" and
references to "Closing Date" shall be replaced by "Subsequent Transfer Date."
38
(b) The Depositor shall cause Assignments of Mortgage with respect to
each Initial Mortgage Loan other than a Cooperative Mortgage Loan to be
completed in the form specified in Sections 2.01(a)(iii) above within 30 days of
the Closing Date for purpose of their recording; provided, however, that such
Assignments need not be recorded if, on or prior to the Closing Date, the
Depositor delivers, at its own expense, an Opinion of Counsel (which must be
Independent counsel) acceptable to the Trustee, and the Rating Agencies, to the
effect that recording in such states is not required to protect the Trustee's
interest in the related Initial Mortgage Loans. Subject to the preceding
sentence, as soon as practicable after the Closing Date (but in no event more
than 270 days thereafter except to the extent delays are caused by the
applicable recording office), the Depositor at its own expense and with the
cooperation of the applicable Servicer, shall cause to be properly recorded by
each Servicer in each public recording office where the related Mortgages are
recorded each Assignment of Mortgage endorsed in the form described in Sections
2.01(a)(iii) above with respect to each such Initial Mortgage Loan.
(c) In instances where a title insurance policy is required to be
delivered to the Trustee or the applicable Custodian on behalf of the Trustee
under Sections 2.01(a)(vi) or 2.01(a)(viii)(g) above and is not so delivered,
the Depositor will provide a copy of such title insurance policy to the Trustee,
or to a Custodian on behalf of the Trustee, as promptly as practicable after the
execution and delivery hereof, but in any case within 180 days of the Closing
Date.
(d) For Initial Mortgage Loans (if any) that have been prepaid in full
after the Cut-off Date and prior to the Closing Date, the Depositor, in lieu of
delivering the above documents, herewith delivers to the Trustee, or to the
related Custodian on behalf of the Trustee, an Officer's Certificate which shall
include a statement to the effect that all amounts received in connection with
such prepayment that are required to be deposited in the Distribution Account
pursuant to Section 4.01 have been so deposited. All original documents that are
not delivered to the Trustee or the applicable Custodian on behalf of the
Trustee shall be held by the Master Servicer or the applicable Servicer in trust
for the benefit of the Trustee and the Certificateholders.
(e) The requirements set forth in paragraphs (b), (c) and (d) of this
Section 2.01 shall equally apply upon the transfer and assignment to the Trust
Fund of any Subsequent Mortgage Loans pursuant to Section 2.05; provided that
for purposes of applying such requirements to Subsequent Mortgage Loans,
references therein to "Initial Mortgage Loans" shall be replaced by "Subsequent
Mortgage Loans" and references to "Cut-off Date" and "Closing Date" shall be
replaced by "Subsequent Cut-off Date" and "Subsequent Transfer Date,"
respectively.
Section 2.02 Acceptance of Trust Fund by Trustee; Review of
Documentation for Trust Fund.
(a) The Trustee, by execution and delivery hereof, acknowledges receipt
by it or by the applicable Custodian on its behalf of the Trustee Mortgage Files
pertaining to the Initial Mortgage Loans listed on the Mortgage Loan Schedule,
subject to review thereof by the applicable Custodian on behalf of the Trustee
in accordance with Section 4(a) of each Custody Agreement (a form of which is
attached hereto as Exhibit D). Each Custodian on behalf of the Trustee, will
execute and deliver to the Trustee and the Depositor an Initial Trust Receipt
and
39
Schedule of Exceptions, on the Closing Date in the forms required by the related
Custody Agreement.
(b) Within 270 days after the Closing Date, each Custodian on behalf of
the Trustee, will, for the benefit of Holders of the Certificates, review each
related Trustee Mortgage File to ascertain that all required documents set forth
in Section 2.01 have been received and appear on their face to conform with the
requirements set forth in Section 4A and 4B of the related Custody Agreement.
(c) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee, any Custodian or the
Certificateholders of any unsatisfied duty, claim or other liability on any
Initial Mortgage Loan or to any Mortgagor.
(d) Each of the parties hereto acknowledges that each Custodian shall
perform the applicable review of the Initial Mortgage Loans and respective
certifications as provided in the related Custody Agreement.
(e) Upon execution of this Agreement, the Depositor hereby delivers to
the Trustee and the Trustee acknowledges receipt of the Acknowledgements,
together with the related Purchase Agreement and the Servicing Agreements.
(f) The requirements set fort in paragraphs (a) through (d) of this
Section 2.02 with respect to the review of the documentation of each Trustee
Mortgage File shall equally apply to the transfer and assignment to the Trust
Fund of any Subsequent Mortgage Loans; provided that for purposes of applying
such requirements to Subsequent Mortgage Loans, any references to "Initial
Mortgage Loans" and "Closing Date" in this Section 2.02 shall be replaced by
"Subsequent Mortgage Loans" and "Subsequent Transfer Date," respectively.
In addition, upon the transfer of any Subsequent Mortgage Loan on a
Subsequent Transfer Date, the Depositor shall be required to deliver to the
Trustee the related Acknowledgements, together with the underlying Purchase
Agreement and Servicing Agreements related to the Subsequent Mortgage Loans,
unless such documents were previously delivered to the Trustee on the Closing
Date.
Section 2.03 Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the Trustee, for the
benefit of the Certificateholders and to the Master Servicer and the Securities
Administrator as of the Closing Date (solely with respect to the Initial
Mortgage Loans in the case of paragraphs (vi) through (xi) below) and each
Subsequent Transfer Date (solely with respect to the Subsequent Mortgage Loans
being transferred on such Subsequent Transfer Date in the case of paragraphs
(vi) through (xi) below) or such other date as is specified, that:
(i) the Depositor is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and has full corporate power and authority to own its
property, to carry on its business as presently conducted, to enter
40
into and perform its obligations under this Agreement, and to create the
trust pursuant hereto;
(ii) the execution and delivery by the Depositor of this
Agreement have been duly authorized by all necessary corporate action on
the part of the Depositor; neither the execution and delivery of this
Agreement, nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof, will conflict with or result
in a breach of, or constitute a default under, any of the provisions of
any law, governmental rule, regulation, judgment, decree or order
binding on the Depositor or its properties or the certificate of
incorporation or bylaws of the Depositor;
(iii) the execution, delivery and performance by the Depositor of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in respect
of, any state, federal or other governmental authority or agency, except
such as has been obtained, given, effected or taken prior to the date
hereof;
(iv) this Agreement has been duly executed and delivered by the
Depositor and, assuming due authorization, execution and delivery by the
Trustee, the Master Servicer and the Securities Administrator,
constitutes a valid and binding obligation of the Depositor enforceable
against it in accordance with its terms except as 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;
(v) there are no actions, suits or proceedings pending or, to the
knowledge of the Depositor, threatened or likely to be asserted against
or affecting the Depositor, before or by any court, administrative
agency, arbitrator or governmental body (A) with respect to any of the
transactions contemplated by this Agreement or (B) with respect to any
other matter which in the judgment of the Depositor will be determined
adversely to the Depositor and will if determined adversely to the
Depositor materially and adversely affect it or its business, assets,
operations or condition, financial or otherwise, or adversely affect its
ability to perform its obligations under this Agreement;
(vi) immediately prior to the transfer and assignment of the
Mortgage Loans to the Trustee, the Depositor was the sole owner of
record and holder of each Mortgage Loan, and the Depositor had good and
marketable title thereto, and had full right to transfer and sell each
Mortgage Loan to the Trustee free and clear, subject only to (1) liens
of current real property taxes and assessments not yet due and payable
and, if the related Mortgaged Property is a condominium unit, any lien
for common charges permitted by statute, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage acceptable to
mortgage lending institutions in the area in which the related Mortgaged
Property is located and specifically referred to in the lender's title
insurance policy or attorney's opinion of title and abstract of title
delivered to the originator of such
41
Mortgage Loan, and (3) such other matters to which like properties are
commonly subject which do not, individually or in the aggregate,
materially interfere with the benefits of the security intended to be
provided by the Mortgage, of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and had full
right and authority, subject to no interest or participation of, or
agreement with, any other party, to sell and assign each Mortgage Loan
pursuant to this Agreement;
(vii) This Agreement creates a valid and continuing security
interest (as defined in the applicable Uniform Commercial Code (the
"UCC"), in the Mortgage Loans in favor of the Trustee, which security
interest is prior to all other liens, and is enforceable as such against
creditors of and purchasers from the Depositor;
(viii) The Mortgage Loans constitute "instruments" within the
meaning of the applicable UCC;
(ix) All original executed copies of each Mortgage Note that
constitute or evidence the Mortgage Loans have been delivered to the
applicable Custodian;
(x) Other than the security interest granted to the Trustee
pursuant to this Agreement, the Depositor has not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed any of the
Mortgage Loans. The Depositor has not authorized the filing of and is
not aware of any financing statement against the Depositor that includes
a description of the collateral covering the Mortgage Loans other than a
financing statement relating to the security interest granted to the
Trustee hereunder or that has been terminated. The Depositor is not
aware of any judgment or tax lien filings against the Depositor;
(xi) None of the Mortgage Loans have any marks or notations
indicating that such Mortgage Loans have been pledged, assigned or
otherwise conveyed to any Person other than the Trustee; and
(xii) The Depositor has received all consents and approvals
required by the terms of the Mortgage Loans to convey the Mortgage Loans
hereunder to the Trustee.
The foregoing representations made in this Section 2.03 shall survive
the termination of this Agreement and shall not be waived by any party hereto
42
Section 2.04 Discovery of Breach; Repurchase or Substitution of Mortgage
Loans.
(a) Pursuant to Sections 2(b) and 2(d) of the Mortgage Loan Purchase and
Sale Agreement, the Seller has made certain representations and warranties as to
the characteristics of the Initial Mortgage Loans (set forth in Schedule B of
this Agreement) as of the Closing Date (and will be deemed to have made the same
representations and warranties with respect to the Subsequent Mortgage Loan as
of the applicable Subsequent Transfer Date) and the conveyance thereof from the
Seller to the Depositor, for the benefit of the Trustee and the
Certificateholders and the Seller has agreed to comply with the provisions of
this Section 2.04 in respect of a breach of any of such representations and
warranties.
It is understood and agreed that such representations and warranties set
forth in Section 2(b) and 2(d) of the Mortgage Loan Purchase and Sale Agreement
shall survive delivery of the Trustee Mortgage Files and the Assignment of
Mortgage of each Mortgage Loan to the Trustee and shall continue throughout the
term of this Agreement. Upon discovery by the Depositor or receipt of written
notice of any materially defective document in, or, following the date of
delivery to the Trustee of a Custodian's Final Trust Receipt as required under
any Custody Agreement, that a document is missing from, a Trustee Mortgage File,
or discovery by the Depositor or the Seller of the breach by the Seller of any
representation or warranty under the Mortgage Loan Purchase and Sale Agreement
in respect of any Mortgage Loan which materially adversely affects the value of
that Mortgage Loan or the interest therein of the Certificateholders (a
"Defective Mortgage Loan") (each of such parties hereby agreeing to give written
notice thereof to the Trustee and the other of such parties), the Trustee, or
its designee, shall promptly notify the Depositor in writing of such defective
or missing document or breach and request that the Depositor deliver such
missing document or cure or cause the cure of such defect or breach within 90
days from the date that the Depositor discovered or was notified of such missing
document, defect or breach, and if the Depositor does not deliver such missing
document or cure such defect or breach in all material respects during such
period, the Trustee shall enforce the Seller's obligation under the Mortgage
Loan Purchase and Sale Agreement and cause the Seller to repurchase that
Mortgage Loan from the Trust Fund at the Purchase Price on or prior to the
Determination Date following the expiration of such 90-day period (subject to
Section 2.04(b) below); provided, however, that, in connection with any such
breach that could not reasonably have been cured within such 90-day period, if
the Seller shall have commenced to cure such breach within such 90-day period,
the Seller shall be permitted to proceed thereafter diligently and expeditiously
to cure the same within an additional 90-day period. The Purchase Price for the
repurchased Mortgage Loan shall be deposited in the related Distribution
Account, and the Trustee, or its designee, upon receipt of written certification
from the Securities Administrator of such deposit, shall release to the Seller
the related Trustee Mortgage File and shall execute and deliver such instruments
of transfer or assignment, in each case without recourse, representation or
warranties, as either party shall furnish to it and as shall be necessary to
vest in such party any Mortgage Loan released pursuant hereto and the Trustee,
or its designee, shall have no further responsibility with regard to such
Trustee Mortgage File (it being understood that the Trustee shall have no
responsibility for determining the sufficiency of such assignment for its
intended purpose). In lieu of repurchasing any such Mortgage Loan as provided
above, either party may cause such Mortgage Loan to be removed from the Trust
Fund (in which case it shall become a Deleted Mortgage Loan) and substitute one
or more Replacement Mortgage Loans in the manner
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and subject to the limitations set forth in Section 2.04(b) below. It is
understood and agreed that the obligation of the Seller to cure or to repurchase
(or to substitute for) any Mortgage Loan as to which a document is missing, a
material defect in a constituent document exists or as to which such a breach
has occurred and is continuing shall constitute the sole remedy against the such
party respecting such omission, defect or breach available to the Trustee on
behalf of the Certificateholders.
(b) Any substitution of Replacement Mortgage Loans for Deleted Mortgage
Loans made pursuant to Section 2.04(a) above must be effected prior to the last
Business Day that is within two years after the Closing Date. As to any Deleted
Mortgage Loan for which the Seller substitutes a Replacement Mortgage Loan or
Loans, such substitution shall be effected by delivering to the applicable
Custodian, on behalf of the Trustee, for such Replacement Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such
other documents and agreements, with all necessary endorsements thereon,
together with an Officers' Certificate stating that each such Replacement
Mortgage Loan satisfies the definition thereof and specifying the Substitution
Amount (as described below), if any, in connection with such substitution. The
applicable Custodian shall acknowledge receipt for such Replacement Mortgage
Loan and, within 45 days thereafter, shall review such Mortgage Documents as
specified in the related Custody Agreement and deliver to the Trustee and the
Depositor, with respect to such Replacement Mortgage Loans, a certification
substantially in the form of a revised Trust Receipt, with any exceptions noted
thereon. Within one year of the date of substitution, each applicable Custodian
shall deliver to the Trustee and the Depositor a certification substantially in
the form of a revised Final Trust Receipt, with respect to such Replacement
Mortgage Loans for which it acts as Custodian, with any exceptions noted
thereon. Monthly Payments due with respect to Replacement Mortgage Loans in the
month of substitution shall not be included as part of the Trust Fund and shall
be retained by the Seller. For the month of substitution, distributions to
Certificateholders shall reflect the collections and recoveries in respect of
such Deleted Mortgage in the Due Period preceding the month of substitution and
the Seller shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. Upon such substitution, such
Replacement Mortgage Loan shall constitute part of the Trust Fund and shall be
subject in all respects to the terms of this Agreement and the Mortgage Loan
Purchase and Sale Agreement, including all representations and warranties
thereof included in the Mortgage Loan Purchase and Sale Agreement, in each case
as of the date of substitution.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the related Servicer
shall determine the excess (each, a "Substitution Amount"), if any, by which the
aggregate Purchase Price of all such Deleted Mortgage Loans exceeds the
aggregate Stated Principal Balance of the Replacement Mortgage Loans replacing
such Deleted Mortgage Loans, together with one month's interest on such excess
amount at the applicable Net Mortgage Rate. On the date of such substitution,
the Seller shall deliver or cause to be delivered to the Servicer for deposit in
the Custodial Account an amount equal to the related Substitution Amount, if
any, and the applicable Custodian, on behalf of the Trustee, upon receipt of the
related Replacement Mortgage Loan or Loans and certification by the Servicer of
such deposit, shall release to the Seller the related Trustee Mortgage File or
Files and shall execute and deliver such instruments of transfer or assignment,
44
in each case without recourse, as the Seller shall deliver to it and as shall be
necessary to vest therein any Deleted Mortgage Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and deliver to
the Trustee and the Securities Administrator an Opinion of Counsel to the effect
that such substitution (either specifically or as a class of transactions) shall
not cause (a) any federal tax to be imposed on the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(l) of the Code or on "contributions after the startup date" under
Section 860G(d)(l) of the Code, or (b) either REMIC created hereunder to fail to
qualify as a REMIC at any time that any Certificate is outstanding. If such
Opinion of Counsel can not be delivered, then such substitution may only be
effected at such time as the required Opinion of Counsel can be given.
(c) Upon discovery by the Seller, the Depositor or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall within two
Business Days give written notice thereof to the other parties. In connection
therewith, the applicable party shall repurchase or, subject to the limitations
set forth in Section 2.04(b), substitute one or more Replacement Mortgage Loans
for the affected Mortgage Loan within 90 days of the earlier of discovery or
receipt of such notice with respect to such affected Mortgage Loan. Any such
repurchase or substitution shall be made in the same manner as set forth in
Section 2.04(a) above. The Trustee shall re-convey to the Seller the Mortgage
Loan to be released pursuant hereto in the same manner, and on the same terms
and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.
(d) The Seller indemnifies and holds the Trust Fund, the Master
Servicer, the Securities Administrator, the Trustee, the Depositor and each
Certificateholder harmless against any and all taxes, claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trust Fund, the Trustee, the Master
Servicer, the Securities Administrator, the Depositor and any Certificateholder
may sustain in connection with any actions of such party relating to a
repurchase of a Mortgage Loan other than in compliance with the terms of this
Section 2.04 and the Mortgage Loan Purchase and Sale Agreement, to the extent
that any such action causes (i) any federal or state tax to be imposed on the
Trust Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (ii) any REMIC formed
hereby to fail to qualify as a REMIC at any time that any Certificate is
outstanding.
Section 2.05 Delivery of Subsequent Mortgage Loans.
(a) On each Subsequent Transfer Date occurring during the Pre-Funding
Period, provided that each condition set forth in this Section 2.05 is
satisfied, the Depositor shall convey to the Trust Fund and the Trustee shall
purchase on behalf of the Trust Fund at the applicable Transfer Price set forth
in the related Subsequent Transfer Date Notice, all Subsequent Mortgage Loans
which satisfy the criteria set forth in this Section 2.05 then offered for sale
by the Depositor; provided, however, that the related aggregate purchase price
paid for the Subsequent Mortgage Loans shall not exceed the Original Pre-Funded
Amount; provided, further, that the
45
aggregate purchase price paid for Subsequent Mortgage Loans which (x) constitute
One-Month LIBOR Loans shall not exceed the initial deposit made to the 1M
Sub-Account of the Pre-Funding Account and (y) constitute Six-Month LIBOR Loans
shall not exceed the initial deposit made to the 6M Sub-Account of the
Pre-Funding Account, in each case as provided in Section 4.02.
(b) Subject to satisfaction of the conditions set forth in Section
2.05(c), in consideration of the Securities Administrator's delivery on the
related Subsequent Transfer Date to the Depositor or its designee, or upon the
order of the Depositor, of the Transfer Price for the related Subsequent
Mortgage Loans from amounts on deposit in the Pre-Funding Account, the
Depositor, on each Subsequent Transfer Date, shall sell, transfer, assign, set
over and otherwise convey to the Trustee on behalf of the Trust Fund for
inclusion in the Mortgage Pool, without recourse, but subject to the other terms
and provisions of this Agreement, all of the right, title and interest of the
Depositor in and to each Subsequent Mortgage Loan (including all interest and
principal thereon received after the related Subsequent Cut-off Date) identified
in the related Subsequent Transfer Date Notice delivered by the Depositor prior
to such Subsequent Transfer Date and all items in the related Trustee Mortgage
File and all cash instruments or other property held or required to be deposited
in the Capitalized Interest Account and the Pre-Funding Account. In connection
therewith, the Depositor shall amend the Mortgage Loan Schedule to reflect the
inclusion of the Subsequent Mortgage Loan in the Mortgage Pool as part of the
assets of the Trust Fund. The Depositor shall promptly deliver to the Trustee
and the Master Servicer a copy of the Mortgage Loan Schedule as so amended.
(c) The obligation of the Securities Administrator to release funds from
the Pre-Funding Account in respect of any Subsequent Mortgage Loans is subject
to satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(i) at least ten (10) days prior to the Subsequent Transfer Date,
the Depositor shall have delivered to the Trustee, the Securities
Administrator and the Master Servicer a duly executed written Subsequent
Transfer Date Notice which shall include a schedule of Subsequent
Mortgage Loans specifying the Transfer Price to be released from the
Pre-Funding Account or Sub-account.
(ii) after giving effect to the acquisition of such Subsequent
Mortgage Loans, the Mortgage Loans shall conform to the Subsequent
Delivery Requirements.
(iii) no Subsequent Mortgage Loan shall have been selected in a
manner adverse to the interest of Certificateholders;
(iv) the weighted average Mortgage Rate for all the Mortgage
Loans in the Trust Fund at the close of the Pre-Funding Period shall not
be more than 100 basis points lower than the weighted average Mortgage
Rate for the Initial Mortgage Loans transferred to the Trust Fund on the
Closing Date;
(v) the addition of the Subsequent Mortgage Loans shall not
result in the reduction, qualification or withdrawal of the then current
rating of the Certificates as evidenced by a letter from each Rating
Agency rating the Certificate delivered by the
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Depositor to the Trustee and the Securities Administrator dated the
applicable Subsequent Transfer Date;
(vi) each Subsequent Mortgage Loan shall be underwritten in
accordance with the applicable underwriting guidelines for the related
originator.
(vii) the Depositor shall have delivered to the Trustee and the
Securities Administrator a letter from an independent accountant stating
whether or not the characteristics of the Subsequent Mortgage Loans
conform to the characteristics of the Mortgage Loans required in this
Section 2.05(b);
(viii) as of each Transfer Date, neither the Depositor nor the
Seller shall be insolvent, nor will any of them be made insolvent by
such transfer;
(ix) the Pre-Funding Period shall not have ended;
(x) the Depositor shall have delivered to the Master Servicer a
copy of the related Servicing Agreement and executed Acknowledgement (if
not previously delivered to the Master Servicer on or before the Closing
Date) in respect of each such Subsequent Mortgage Loan, and such loan
level data, in electronic or other format acceptable to the Master
Servicer and the Depositor, as shall be necessary for the proper master
servicing of such Subsequent Mortgage Loans by the Master Servicer;
(xi) the Depositor shall have delivered to the Trustee and the
Securities Administrator an Officer's Certificate confirming the
satisfaction of each condition precedent specified in Section 2.05 and
Opinions of Counsel with respect to corporate, bankruptcy and tax
matters relating to the transfer of Subsequent Mortgage Loans in the
form substantially similar to those delivered on the Closing Date
pursuant to the Underwriting Agreement; and
(xii) the Depositor shall have delivered to the Trustee, the
Master Servicer, the Securities Administrator and each Rating Agency
such additional information reasonably requested by any of them with
respect to the Subsequent Mortgage Loans to be sold to the Trust on the
Subsequent Transfer Date.
The applicable Servicer shall deposit in the Custodial Account within
two Business Days following each Subsequent Transfer Date all collections in
respect to the related Subsequent Mortgage Loans received after the related
Subsequent Cut-off Date.
Section 2.06 Grant Clause.
(a) It is intended that the conveyance of the Depositor's right, title
and interest in and to property constituting the Trust Fund pursuant to this
Agreement shall constitute, and shall be construed as, a sale of such property
and not a grant of a security interest to secure a loan. However, if such
conveyance is deemed to be in respect of a loan, it is intended that: (1) the
rights and obligations of the parties shall be established pursuant to the terms
of this Agreement; (2) the Depositor hereby grants to the Trustee for the
benefit of the Holders of the Certificates a
47
first priority security interest in all of the Depositor's right, title and
interest in, to and under, whether now owned or hereafter acquired, the Trust
Fund and all proceeds of any and all property constituting the Trust Fund to
secure payment of the Certificates; and (3) this Agreement shall constitute a
security agreement under applicable law. If such conveyance is deemed to be in
respect of a loan and the trust created by this Agreement terminates prior to
the satisfaction of the claims of any Person holding any Certificate, the
security interest created hereby shall continue in full force and effect and the
Trustee shall be deemed to be the collateral agent for the benefit of such
Person, and all proceeds shall be distributed as herein provided.
(b) The Depositor shall, to the extent consistent with this Agreement,
take such reasonable actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans and
the other property described above, such security interest would be deemed to be
a perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement. The Depositor will, at
its own expense, make all initial filings on or about the Closing Date and shall
forward a copy of such filing or filings to the Trustee. Without limiting the
generality of the foregoing, the Depositor shall prepare and forward for filing,
or shall cause to be forwarded for filing, at the expense of the Depositor, all
filings necessary to maintain the effectiveness of any original filings
necessary under the relevant UCC to perfect the Trustee's security interest in
or lien on the Mortgage Loans, including without limitation (x) continuation
statements, and (y) such other statements as may be occasioned by (1) any change
of name of the Seller, the Depositor or the Trustee, (2) any change of location
of the place of business or the chief executive office of the Seller or the
Depositor, (3) any transfer of any interest of the Seller or the Depositor in
any Mortgage Loan or (4) any change under the relevant UCC or other applicable
laws. Neither the Seller nor the Depositor shall organize under the law of any
jurisdiction other than the State under which each is organized as of the
Closing Date (whether changing its jurisdiction of organization or organizing
under an additional jurisdiction) without giving 30 days prior written notice of
such action to its immediate and intermediate transferee, including the Trustee.
Before effecting such change, the Seller or the Depositor proposing to change
its jurisdiction of organization shall prepare and file in the appropriate
filing office any financing statements or other statements necessary to continue
the perfection of the interests of its immediate and mediate transferees,
including the Trustee, in the Mortgage Loans. In connection with the
transactions contemplated by this Agreement, each of the Seller and the
Depositor authorizes its immediate or mediate transferee to file in any filing
office any initial financing statements, any amendments to financing statements,
any continuation statements, or any other statements or filings described in
this paragraph (b).
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
48
held in the dollar denominations in Certificate Principal Amount, or Notional
Amount, as applicable, or in the Percentage Interests, specified herein. Each
Class of Book-Entry Certificates will be issued in the minimum denominations in
Certificate Principal Amount (or Notional Amount) specified in the Preliminary
Statement hereto and in integral multiples of $1 in excess thereof. Each Class
of Non-Book-Entry Certificates other than the Residual Certificates shall be
issued in definitive, fully registered form in the minimum denominations in
Certificate Principal Amount specified in the Preliminary Statement hereto and
in integral multiples of $1 in excess thereof. The Residual Certificates shall
be issued as single Certificates and maintained in definitive, fully registered
form in a denomination equal to 100% of the Percentage Interest of each such
Class. The Class X-1A, Class X-1B and Class X-B Certificates shall be issued as
single Certificates in a denomination equal to 100% of the Percentage Interest
of each such Class.
(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 Authenticating Agent upon the order of
the Depositor upon receipt by the Trustee of the Trustee Mortgage Files
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 Authenticating Agent, 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 Trustee to the Authenticating Agent for authentication and the
Authenticating Agent shall authenticate and deliver such Certificates as in this
Agreement provided and not otherwise.
(c) The Class B-4, Class B-5, Class B-6, Class A-R and Class LTR
Certificates offered and sold in reliance on the exemption from registration
under Rule 144A under the Act shall be issued initially in the form of one or
more permanent global Certificates in definitive, fully registered form without
interest coupons with the applicable legends set forth in Exhibit A added to the
forms of such Certificates (each, a "Restricted Global Security").
Section 3.02 Registration.
The Securities Administrator is hereby appointed, and the Securities
Administrator hereby accepts its appointment as, initial 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 successor 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 Securities Administrator and the appointment of a successor
Securities Administrator. 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;
49
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
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 (or Notional 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 (or Notional 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
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 an affiliate (as defined in Rule 405 under the 0000 Xxx) of the
Depositor or (y) being made to a "qualified institutional buyer" (a
"QIB") as defined in Rule 144A under the Securities Act of 1933, as
amended (the "Act") by a transferor that has provided the Certificate
Registrar with a certificate in the form of Exhibit H hereto; and
50
(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, or to any Person all of the equity owners in which are such
accredited investors, by a transferor who furnishes to the Certificate
Registrar a letter of the transferee substantially in the form of
Exhibit I hereto.
(d) No transfer of an ERISA-Restricted Certificate in the form of a
Definitive Certificate shall be made to any Person unless the Certificate
Registrar has received (A) a certificate substantially in the form of Exhibit J
hereto from such transferee or (B) an Opinion of Counsel satisfactory to the
Certificate Registrar 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, the
Certificate Registrar, the Master Servicer, the Securities Administrator or the
Depositor to any obligation in addition to those undertaken in the Agreement;
provided, however, that the Certificate Registrar 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 Certificate Registrar 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 certificates and opinions referred to above shall not be an
expense of the Trust Fund, the Trustee, the Certificate Registrar, the Master
Servicer, the Securities Administrator or the Depositor.
Notwithstanding the foregoing, no opinion or certificate shall be
required for the initial issuance of the ERISA-Restricted Certificates.
Notwithstanding anything to the contrary herein, any purported transfer of an
ERISA-Restricted Certificate to or on behalf of an employee benefit plan subject
to Section 406 of ERISA or a plan subject to Section 4975 of the Code without
the delivery to the Certificate Registrar of an Opinion of Counsel satisfactory
to the Certificate Registrar as described above shall be void and of no effect;
provided that the restriction set forth in this sentence shall not be applicable
if there has been delivered to the Certificate Registrar, an Opinion of Counsel
meeting the requirements of clause (B) of the first sentence of this paragraph
(d). The Trustee, the Certificate Registrar and the Depositor shall be under no
liability to any Person for any registration of transfer of any ERISA-Restricted
Certificate that is in fact not permitted by this Section 3.03(d) or for the
Paying Agent making any payments due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the provisions of
this Agreement so long as the transfer was registered by the Certificate
Registrar in accordance with the foregoing requirements. The last preceding
Holder of such Certificate that is not a plan or a Person acting on behalf of a
plan shall be entitled to recover from any purported Holder of any
ERISA-Restricted Certificate that was in fact an employee benefit plan subject
to Section 406 of ERISA or a plan subject to Section 4975 of the Code or a
Person acting on behalf of any such plan at the time it became a Holder or, at
such subsequent time as it became such a plan or Person acting on behalf of such
a plan , all payments made on such ERISA-Restricted Certificate at and after
either such time; provided that none of the Depositor, the Certificate Registrar
or the Trustee shall be responsible for such recovery if they otherwise made a
good faith effort to comply with this Section 3.03(d).
51
(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
Residual Certificate may be owned, pledged or transferred, directly or
indirectly, by or to (i) a Disqualified Organization or (ii) an individual,
corporation or partnership or other person unless such person is (A) not a
Non-U.S. Person or (B) is a Non-U.S. Person that holds a Residual Certificate in
connection with the conduct of a trade or business within the United States and
has furnished the transferor and the Certificate Registrar with an effective
Internal Revenue Service Form W-8ECI or successor form at the time and in the
manner required by the Code (any such person who is not covered by clause (A) or
(B) above is referred to herein as a "Non-permitted Foreign Holder").
Prior to and as a condition of the registration of any transfer, sale or
other disposition of a Residual Certificate, the proposed transferee shall
deliver to the Trustee and the Certificate Registrar an affidavit in
substantially the form attached hereto as Exhibit B representing and warranting,
among other things, that such transferee is neither a Disqualified Organization,
an agent or nominee acting on behalf of a Disqualified Organization, nor a
Non-permitted Foreign Holder (any such transferee, a "Permitted Transferee"),
and the proposed transferor shall deliver to the Trustee and the Certificate
Registrar an affidavit in substantially the form attached hereto as Exhibit C.
In addition, the Trustee or the Certificate Registrar 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
Trustee and the Certificate Registrar, that such proposed transferee or, if the
proposed transferee is an agent or nominee, the proposed beneficial owner, is
not a Disqualified Organization, agent or nominee thereof, or a Non-permitted
Foreign Holder. Notwithstanding the registration in the Certificate Register of
any transfer, sale, or other disposition of a Residual Certificate to a
Disqualified Organization, an agent or nominee thereof, or Non-permitted Foreign
Holder, such registration shall be deemed to be of no legal force or effect
whatsoever and such Disqualified Organization, agent or nominee thereof, or
Non-permitted Foreign Holder shall not be deemed to be a Certificateholder for
any purpose hereunder, including, but not limited to, the receipt of
distributions on such Residual Certificate. The Depositor, the Certificate
Registrar and the Trustee shall be under no liability to any Person for any
registration or transfer of a Residual Certificate to a Disqualified
Organization, agent or nominee thereof or Non-permitted Foreign Holder or for
the Paying Agent making any payments due on such Residual 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 Certificate Registrar shall
have actual knowledge at the time of such transfer or the time of such payment
or other action that the transferee is a Disqualified Organization, or an agent
or nominee thereof, or Non-permitted Foreign Holder. The Certificate Registrar
shall be entitled to recover from any Holder of a Residual Certificate that was
a Disqualified Organization, agent or nominee thereof, or Non-
52
permitted Foreign Holder at the time it became a Holder or any subsequent time
it became a Disqualified Organization, agent or nominee thereof, or
Non-permitted Foreign Holder, all payments made on such Residual 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 Certificate Registrar
shall be paid and delivered to the last preceding Holder of such Residual
Certificate.
If any purported transferee shall become a registered Holder of a
Residual 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 Residual 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 Residual Certificate. The Depositor, the Certificate Registrar and the
Trustee shall be under no liability to any Person for any registration of
transfer of a Residual Certificate that is in fact not permitted by this Section
3.03(f), or for the Paying Agent 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 or Certificate Owner of a Restricted Certificate,
ERISA-Restricted Certificate or Residual Certificate, or an interest therein, by
such Holder's or Owner'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
the Certificate Registrar or (ii) the Trustee or the Certificate Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and there is delivered to the Trustee and the Certificate Registrar
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Depositor, the Trustee or the
Certificate Registrar that such destroyed, lost or stolen Certificate has been
acquired by a protected purchaser, the Trustee shall execute and the
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, the Depositor or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee, the Depositor or
the Certificate Registrar) connected therewith. Any replacement Certificate
issued pursuant to this Section 3.05 shall constitute complete and indefeasible
evidence of ownership in the
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applicable Trust Fund, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
If after the delivery of such new Certificate, a protected purchaser of
the original Certificate in lieu of which such new Certificate was issued
presents for payment such original Certificate, the Depositor, the Certificate
Registrar and the Trustee or any agent shall be entitled to recover such new
Certificate from the Person to whom it was delivered or any Person taking
therefrom, except a protected purchaser, and shall be entitled to recover upon
the security or indemnity provided therefor to the extent of any loss, damage,
cost or expenses incurred by the Depositor, the Certificate Registrar, the
Trustee or any agent in connection therewith.
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, the Paying Agent and any agent of any of them shall 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, the Paying Agent 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 the Authenticating Agent 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 Certificate Registrar without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and the Authenticating Agent shall
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
hereby appoints the Securities Administrator as the initial Paying Agent. The
Trustee shall cause any Paying Agent, other than the Securities Administrator,
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
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for the payment to Certificateholders in an Eligible Account (which shall be the
Distribution 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. 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 Certificate Registrar, the Paying Agent and the Trustee
shall 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 and 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
Securities Administrator shall give all such notices and communications
specified herein to be given to Holders of the Book-Entry Certificates to the
Clearing Agency.
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(c) If (i) (A) the Clearing Agency or the Depositor advises the Paying
Agent 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 Depositor is unable to locate a qualified successor
satisfactory to the Depositor and the Paying Agent, (ii) the Depositor, at its
option, advises the Paying Agent 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 Principal Amount of a Class of
Book-Entry Certificates advise the Paying Agent 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 Certificate
Registrar shall 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 Certificate Registrar of the
Book-Entry Certificates by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Certificate
Registrar shall issue the Definitive Certificates. Neither the Depositor, the
Certificate Registrar 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 Certificate
Registrar, to the extent applicable, with respect to such Definitive
Certificates and the Certificate Registrar shall recognize the holders of the
Definitive Certificates as Certificateholders hereunder. Notwithstanding the
foregoing, the Certificate Registrar, upon the instruction of the Depositor,
shall have the right to issue Definitive Certificates on the Closing Date in
connection with credit enhancement programs.
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01 Custodial Accounts; Distribution Account.
(a) On or prior to the Closing Date, the Master Servicer shall have
caused the Servicers to establish and maintain one or more Custodial Accounts,
as provided in the related Servicing Agreements, into which all Scheduled
Payments and unscheduled payments with respect to the Mortgage Loans, net of any
deductions or reimbursements permitted under the related Servicing Agreement,
shall be deposited. On each Distribution Account Deposit Date, the Servicers
shall remit to the Securities Administrator for deposit into the Distribution
Account, all amounts so required to be deposited into such account in accordance
with the terms of the related Servicing Agreement.
(b) The Securities Administrator, as Paying Agent for the Trustee, shall
establish and maintain an Eligible Account entitled "Distribution Account of
HSBC Bank, USA, as Trustee for the benefit of Sequoia Mortgage Trust 11 Holders
of Mortgage Pass-Through Certificates." The Securities Administrator shall,
promptly upon receipt from the Servicers on each Distribution
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Account Deposit Date, deposit into the Distribution Account and retain on
deposit until the related Distribution Date the following amounts:
(i) the aggregate of collections with respect to the Mortgage
Loans remitted by the Servicers from the related Custodial Accounts in
accordance with the Servicing Agreements;
(ii) any amounts required to be deposited by the Master Servicer
with respect to the Mortgage Loans for the related Due Period pursuant
to this Agreement, including the amount of any Advances or Compensation
Interest Payments with respect to the Mortgage Loans not paid by the
Servicers; and
(iii) any other amounts so required to be deposited in the
Distribution Account in the related Due Period pursuant to this
Agreement.
(c) In the event the Master Servicer or a Servicer has remitted in error
to the Distribution Account any amount not required to be remitted in accordance
with the definition of Available Distribution Amount, it may at any time direct
the Securities Administrator to withdraw such amount from the Distribution
Account for repayment to the Master Servicer or Servicer, as applicable, by
delivery of an Officer's Certificate to the Securities Administrator and the
Trustee which describes the amount deposited in error.
(d) On each Distribution Date and Redemption Date, the Securities
Administrator, as Paying Agent, shall distribute the Available Distribution
Amount to the Certificateholders and any other parties entitled thereto in the
amounts and priorities set forth in Section 5.02. The Securities Administrator
may from time to time withdraw from the Distribution Account and pay the Master
Servicer, the Trustee, the Securities Administrator or any Servicer any amounts
permitted to be paid or reimbursed to such Person from funds in the Distribution
Account pursuant to the clauses (A) through (D) of the definition of Available
Distribution Amount.
(e) Funds in the Distribution Account may be invested in Permitted
Investments selected by and at the written direction of the Securities
Administrator, which shall mature not later than one Business Day prior to the
Distribution Date (except that if such Permitted Investment is an obligation of
the Securities Administrator, then such Permitted Investment shall mature not
later than such applicable Distribution Date) and any such Permitted Investment
shall not be sold or disposed of prior to its maturity. All such Permitted
Investments shall be made in the name of the Trustee (in its capacity as such)
or its nominee. All income and gain realized from any Permitted Investment shall
be for the benefit of the Securities Administrator and shall be subject to its
withdrawal or order from time to time, and shall not be part of the Trust Fund.
The amount of any losses incurred in respect of any such investments shall be
deposited in such Distribution Account by the Securities Administrator out of
its own funds, without any right of reimbursement therefor, immediately as
realized.
Section 4.02 The Pre-Funding Account
(a) The Securities Administrator, as Paying Agent for the Trustee, shall
establish and maintain an Eligible Account, to be held in trust for the benefit
of Certificateholders, entitled
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"Pre-Funding Account of HSBC Bank, USA, as Trustee, for the benefit of Sequoia
Mortgage Trust 11 Holders of Mortgage Pass-Through Certificates." The
Pre-Funding Account shall be comprised of two Sub-accounts, the first entitled
the "1M Sub-account" and the second entitled the "6M Sub-account."
(b) On the Closing Date, the Depositor will cause to be deposited to the
Pre-Funding Account the Original Pre-Funded Amount. The Original Pre-Funded
Amount shall be further allocated between the 1M Sub-account and the 6M
Sub-account as follows: $43,904,014.98 to the 1M Sub-account; and
$114,194,706.60 to the 6M Sub-account.
(c) Amounts on deposit in the 1M Sub-account (exclusive of investment
earnings thereon) shall solely be applied to acquire Subsequent Mortgage Loans
which constitute One-Month LIBOR Loans. Amounts on deposit in the 6M Sub-account
(exclusive of investment earnings thereon) shall solely be applied to acquire
Subsequent Mortgage Loans which constitute Six-Month LIBOR Loans.
(d) On any Subsequent Transfer Date, the Depositor shall instruct the
Securities Administrator, in writing, to withdraw funds from the Pre-Funding
Account (specifying the applicable Sub-account) in an amount equal to the
Transfer Price for the Subsequent Mortgage Loans to be acquired on such
Subsequent Transfer Date, and to pay such amount to the order of the Depositor.
In no event shall the Paying Agent withdraw from the Pre-Funding Account an
amount in excess of the Original Pre-Funded Amount (or portion thereof)
deposited to such Account (or Sub-account thereof) on the Closing Date.
(e) During the Pre-Funding Period, amounts on deposit in the Pre-Funding
Account may be invested in Permitted Investments by the Paying Agent at the
direction of the Depositor, or in absence of direction from the Depositor, in
money market funds described in paragraph (ix) of the definition of Permitted
Investments in Article I. All such Permitted Investments shall be made in the
name of the Trustee (in it capacity as such) or its nominee. Any investment
earnings on such Permitted Investments held in the Pre-Funding Account shall be
immediately transferred to the Distribution Account and constitute part of the
Available Distribution Amount for distribution to the related Certificateholders
on the next succeeding Distribution Date.
(f) Upon delivery to the Trustee of written certification from the
Depositor that one or more Mortgage Loans have been conveyed to the Trust Fund
on the Closing Date with an actual Stated Principal Balance as of the Cut-off
Date in excess of such balance as specified on the Mortgage Loan Schedule, then:
(i) The Securities Administrator shall promptly withdraw funds
from the Pre-Funding Account (debiting the applicable Sub-Account
thereof) in the amount specified in the Depositor's certification and
shall promptly distribute such amount to or upon the order of the
Depositor; and
(ii) The Mortgage Loan Schedule shall be amended to reflect the
correct Stated Principal Balance of such Mortgage Loan as of the Cut-off
Date.
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(g) On the Distribution Date immediately following the close of the
Pre-Funding Period, the Securities Administrator, as Paying Agent, shall
transfer any remaining Pre-Funded Amount on deposit in the Pre-Funding Account
(or Sub-account thereof) to the Distribution Account for distribution to the
Certificates as principal on such Distribution Date in accordance with the
priorities set forth in Section 5.02 and terminate such Account.
(h) The Pre-Funding Account shall not be an asset of any REMIC created
under this Agreement.
Section 4.03 The Capitalized Interest Account.
(a) The Securities Administrator, as Paying Agent, for the Trustee,
shall establish and maintain an Eligible Account, to be held in trust for the
benefit of Certificateholders, entitled "Capitalized Interest Account of HSBC
Bank, USA, as Trustee, for the benefit of Sequoia Mortgage Trust 11 Holders of
Mortgage Pass-Through Certificates." On the Closing Date, the Depositor shall
cause to be deposited in the Capitalized Interest Account the Original
Capitalized Interest Amount. On each Distribution Date, funds in the Capitalized
Interest Account equal to the Capitalized Interest Requirement for such
Distribution Date shall be withdrawn by the Securities Administrator from the
Capitalized Interest Account and deposited into the Distribution Account as
required by Section 5.02(a).
(b) During the Pre-Funding Period, amounts on deposit in the Capitalized
Interest Account may, at the direction of the Depositor, be invested in
Permitted Investments, and in the absence of such instructions shall be invested
in money market funds as described in paragraph (ix) of the definition of
Permitted Investments in Article I. All investment earnings on such Permitted
Investments in the Capitalized Interest Account shall be for the benefit of the
Depositor. At the close of the Pre-Funding period, all amounts, if any,
remaining in the Capitalized Interest Account shall be released to the Depositor
and the Securities Administrator shall terminate such Account. The Capitalized
Interest Account shall not be the asset of any REMIC created under this
Agreement.
Section 4.04 Reports to Trustee and Certificateholders.
On each Distribution Date, the Securities Administrator shall have
prepared and shall make available to the Trustee and each Certificateholder a
written report setting forth the following information (on the basis of Mortgage
Loan level information obtained from the Master Servicer and the Servicers).
(a) the amount of the distributions, separately identified, with respect
to each Class of Certificates;
(b) the amount of the distributions set forth in the clause (a)
allocable to principal, separately identifying the aggregate amount of any
Principal Prepayments or other unscheduled recoveries of principal included in
that amount;
(c) the amount of the distributions set forth in the clause (a)
allocable to interest and how it was calculated;
59
(d) the amount of any unpaid Interest Shortfall, Basis Risk Shortfall or
Unpaid Basis Risk Shortfall (if applicable) and the related accrued interest
thereon, with respect to each Class of Certificates;
(e) the Class Principal Amount of each Class of Certificates after
giving effect to the distribution of principal on that Distribution Date;
(f) the Aggregated Stated Principal Balance of the Mortgage Loans and
the applicable Net WAC of the Mortgage Loans at the end of the related
Prepayment Period;
(g) the Stated Principal Balance of the Mortgage Loans whose Mortgage
Rates adjust on the basis of the One-Month LIBOR index and the Six-Month LIBOR
index at the end of the related Prepayment Period;
(h) the Pro Rata Senior Percentage, Senior Percentage and the
Subordinate Percentage for the following Distribution Date;
(i) the Senior Prepayment Percentage and Subordinate Prepayment
Percentage for the following Distribution Date;
(j) the amount of the Master Servicing Fee and the Servicing Fee paid to
or retained by the Master Servicer and by each Servicer, respectively;
(k) the amount of Advances for the related Due Period;
(l) the number and Stated Principal Balance of the Mortgage Loans that
were (A) Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 30 to 59
days, (2) 60 to 89 days and (3) 90 or more days, (B) in foreclosure and
Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days and (C)
in bankruptcy as of the close of business on the last day of the calendar month
preceding that Distribution Date;
(m) the aggregate principal balance of the Subsequent Mortgage Loans
acquired during the preceding calendar month and on a cumulative basis since the
Closing Date;
(n) for any Mortgage Loan as to which the related Mortgaged Property was
an REO property during the preceding calendar month, the principal balance of
that Mortgage Loan as of the close of business on the last day of the related
Due Period;
(o) the total number and principal balance of any REO properties as of
the close of business on the last day of the preceding Due Period;
(p) the amount of Realized Losses incurred during the preceding calendar
month;
(q) the cumulative amount of Realized Losses incurred since the Closing
Date;
(r) the aggregate amount of Special Hazard Losses, Bankruptcy Losses and
Fraud Losses incurred during the preceding calendar month;
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(s) the cumulative amount of Special Hazard Losses, Bankruptcy Losses
and Fraud Losses incurred since the Closing Date;
(t) the Special Hazard Loss Coverage Amount, the Fraud Loss Coverage
Amount and the Bankruptcy Loss Coverage Amount, in each case as of the related
Determination Date;
(u) the Realized Losses and Excess Losses, if any, allocated to each
Class of Certificates on that Distribution Date;
(v) the Certificate Interest Rate for each Class of Certificates for
that Distribution Date;
(w) the amount, if any, remaining on deposit in the Pre-Funding Account
immediately prior to that Distribution Date; and
(x) the amount, if any, on deposit in the Capitalized Interest Account
for that Distribution Date.
The Securities Administrator shall make such reports available each
month via the Master Servicer's website at xxxx://xxx.xxxxxxx.xxx. Assistance in
using the website may be obtained by calling the Master Servicer's customer
service desk at (000) 000-0000. Certificateholders and other parties that are
unable to use the website are entitled to have a paper copy mailed to them via
first class mail by contacting the Securities Administrator and indicating such.
In preparing or furnishing the foregoing information to the Trustee, the
Securities Administrator shall be entitled to rely conclusively on the accuracy
of the information or data regarding the Mortgage Loans and the related REO
Properties that has been provided to the Securities Administrator by the Master
Servicer and the Servicers, and the Securities Administrator shall not be
obligated to verify, recompute, reconcile or recalculate any such information or
data.
Upon receipt by the Trustee (or any agent thereof) of the reasonable
advance written request of any Certificateholder that is a savings and loan,
bank or insurance company, which request shall be promptly forwarded to the
Securities Administrator, the Securities Administrator shall 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 Certificateholders such reports and access
to information and documentation regarding the Mortgage Loans as such
Certificateholders 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 Securities Administrator shall be entitled to be
reimbursed by such Certificateholders for the Securities Administrator's actual
expenses incurred in providing such reports and access.
The Securities Administrator shall prepare and file with the Internal
Revenue Service ("IRS"), on behalf of the Trust Fund, an application for an
employer identification number on IRS Form SS-4 or by any other acceptable
method. The Securities Administrator shall also file a Form 8811 as required.
The Securities Administrator, upon receipt from the IRS of the Notice of
Taxpayer Identification Number Assigned, shall upon request promptly forward a
copy of such notice to the Trustee and the Depositor. The Securities
Administrator shall furnish any other
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information that is required by the Code and regulations thereunder to be made
available to Certificateholders. The Master Servicer shall cause each Servicer
to provide the Securities Administrator with such information as is necessary
for the Securities Administrator to prepare such reports.
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 or, upon written request made
to the Securities Administrator at least five Business Days prior to the related
Record Date by any Certificateholder owning an aggregate initial Certificate
Principal Amount of at least $1,000,000, or in the case of a Class of
Interest-Only Certificates or Residual Certificate, a Percentage Interest of not
less than 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 Certificate
Registrar's Corporate Trust Office; provided, further, that the foregoing
provisions shall not apply to any Class of Certificates as long as such
Certificate remains a Book-Entry Certificate in which case all payments made
shall be made through the Clearing Agency and its Clearing Agency Participants.
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, each
Residual Certificate will remain outstanding until the termination of each REMIC
and the payment in full of all other amounts due with respect to the Residual
Certificates and at such time such final payment in retirement of any Residual
Certificate will be made only upon presentation and surrender of such
Certificate at the Certificate Registrar's Corporate Trust Office. 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 Principal Amounts or initial Class Notional
Amounts (or Percentage Interests).
Section 5.02 Distributions from the Certificate Account.
(a) Subject to Sections 5.02(h) and (i), on each Distribution Date, the
Available Distribution Amount shall be withdrawn by the Securities Administrator
from the Distribution Account (and, in the case of the first two Distribution
Dates, the Capitalized Interest Requirement shall be withdrawn from by the
Securities Administrator from the Capitalized
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Interest Account and added to the Available Distribution Amount for such
Distribution Dates) and allocated among the classes of Senior Certificates and
Subordinate Certificates in the following order of priority:
(i) Concurrently, to the payment of the Interest Distribution
Amount and any Interest Shortfalls for each Class of Senior
Certificates; provided, however, that on each Distribution Date, the
Interest Distribution Amount that would otherwise be distributable to a
Class of Interest-Only Certificates shall be deposited in the Basis Risk
Reserve Fund to the extent of the Required Basis Risk Deposit for such
Class and shall not be distributed to such Class;
(ii) Sequentially to the Class A-R and Class A Certificates, in
that order, the Senior Principal Distribution Amount for such date,
until their respective Class Principal Amounts have been reduced to
zero;
(iii) To the Class B-1 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class on such
date;
(iv) To the Class B-1 Certificates, such Class' Subordinate Class
Percentage of the Subordinate Principal Distribution Amount, until its
Class Principal Amount has been reduced to zero;
(v) From the Basis Risk Reserve Fund, for payment to the Class A
and Class B-1 Certificates, sequentially in that order, any related
Basis Risk Shortfall or related Unpaid Basis Risk Shortfall for such
date;
(vi) To the Class B-2 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(vii) To the Class B-2 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount for
such date, until its Class Principal Amount has been reduced to zero;
(viii) To the Class B-3 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(ix) To the Class B-3 Certificates, such Class' Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for such
date, until its Class Principal Amount has been reduced to zero;
(x) To the Class B-4 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(xi) To the Class B-4 Certificates, such Class' Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for such
date, until its Class Principal Amount has been reduced to zero;
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(xii) To the Class B-5 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(xiii) To the Class B-5 Certificates, such Class' Subordinate
Class Percentage of the Subordinate Principal Distribution Amount for
such date, until its Class Principal Amount has been reduced to zero;
(xiv) To the Class B-6 Certificates, the Interest Distribution
Amount and any Interest Shortfalls, in each case, for such Class and
date;
(xv) To the Class B-6 Certificates, such Class' Subordinate Class
Percentage of the Subordinate Principal Distribution Amount for such
date, until its Class Principal Amount has been reduced to zero; and
(xvi) To the Class A-R Certificate and the Class LTR Certificate,
any remaining amount.
(b) On each Distribution Date on and after the Credit Support Depletion
Date, the Available Distribution Amount shall be distributed to the remaining
Classes of Senior Certificates, on a pro rata basis, first, to pay the Interest
Distribution Amount and any accrued but unpaid Interest Shortfalls; second, to
pay the Senior Principal Distribution Amount; third, to pay any related Basis
Risk Shortfall or any related Unpaid Basis Risk Shortfall; and fourth, to the
Class A-R and Class LTR Certificate, any remaining Available Distribution
Amount.
(c) Notwithstanding the priority and allocation set forth in Section
5.02(a)(vi) above, if with respect to any Class of Subordinate Certificates on
any Distribution Date the sum of the related Class Subordination Percentages of
such Class and of all other Classes of Subordinate Certificates which have a
higher numerical Class designation than such Class is less than the Original
Applicable Credit Support Percentage for such Class, no distribution of
Principal Prepayments shall be made to any such Classes and the amount of such
Principal Prepayment otherwise distributable to such Classes shall be
distributed to any Classes of Subordinate Certificates having lower numerical
Class designations than such Class, pro rata, based on the Class Principal
Amounts of the respective Classes immediately prior to such Distribution Date
and shall be distributed in the sequential order provided in Section 5.02(a)(vi)
above.
(d) Amounts distributed to the Residual Certificates pursuant to
subparagraph (a)(vii) of this Section 5.02 on any Distribution Date shall be
allocated among the REMIC residual interests represented thereby such that each
such interest is allocated the excess of funds available to the related REMIC
over required distributions to the regular interests in such REMIC on such
Distribution Date.
(e) To the extent a Basis Risk Shortfall is experienced on the Class A
or Class B-1 Certificates, the Securities Administrator shall withdraw from the
related Sub-account of the Basis Risk Reserve Fund an amount for distribution to
such Class equal to the lesser of (1) the amount of such Basis Risk Shortfall
and (2) the amounts available therefor on deposit in the related Sub-account as
provided in Section 5.06.
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(f) For purposes of distributions of interest in paragraph (a) such
distributions to a Class of Certificates on any Distribution Date shall be made
first, in respect of Current Interest; and second, in respect of Interest
Shortfalls.
Section 5.03 Allocation of Losses.
(a) On or prior to each Distribution Date, the Master Servicer shall
aggregate the information provided by each Servicer with respect to the total
amount of Realized Losses, including Excess Losses, with respect to the Mortgage
Loans for the related Distribution Date.
(b) On each Distribution Date, the principal portion of Realized Losses,
Bankruptcy Losses, Fraud Losses and Special Hazard Losses with respect to such
Distribution Date shall be allocated as follows:
(i) Realized Losses, Bankruptcy Losses, Fraud Losses and Special
Hazard Losses (other than Excess Losses) shall be allocated in the
following order:
first, to the Classes of Subordinate Certificates in
reverse order of their respective numerical Class designations
(beginning with the Class of Subordinate Certificates with the
highest numerical Class designation) until the Class Principal
Amount of each such Class is reduced to zero; and
second, to each Class of Senior Certificates, in each
case, until the Class Principal Amount of such Class of Senior
Certificates is reduced to zero;
(ii) the principal portion of any Excess Losses shall be
allocated proportionately on a pro rata basis to the Classes of
Certificates on the basis of their Class Certificate Principal Amounts.
(iii) The Class Principal Amount of the Class of Subordinate
Certificates then outstanding with the highest numerical Class
designation shall be reduced on each Distribution Date by the amount, if
any, by which the aggregate of the Class Principal Amounts of all
outstanding Classes of Certificates (after giving effect to the
distribution of principal and the allocation of Realized Losses,
Bankruptcy Losses, Fraud Losses and Special Hazard Losses and Excess
Losses on such Distribution Date) exceeds the Aggregate Stated Principal
Balance for the following Distribution Date.
(iv) Any allocation of a loss pursuant to this section to a Class
of Certificates shall be achieved by reducing the Class Principal Amount
thereof by the amount of such loss.
Section 5.04 Advances by Master Servicer.
If any Servicer fails to remit any Advance required to be made under the
applicable Servicing Agreement, the Master Servicer shall itself make, or shall
cause the successor Servicer to make, such Advance. If the Master Servicer
determines that an Advance is required, it shall on the Business Day preceding
the related Distribution Date immediately following such
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Determination Date remit to the Securities Administrator from its own funds (or
funds advanced by the applicable Servicer) for deposit in the Account
immediately available funds in an amount equal to such Advance. The Master
Servicer and each Servicer shall be entitled to be reimbursed for all Advances
made by it. Notwithstanding anything to the contrary herein, in the event the
Master Servicer determines in its reasonable judgment that an Advance is
non-recoverable, the Master Servicer shall be under no obligation to make such
Advance. If the Master Servicer determines that an Advance is non-recoverable,
it shall, on or prior to the related Distribution Date, deliver an Officer's
Certificate to the Trustee to such effect.
Section 5.05 Compensating Interest Payments.
The amount of the aggregate Master Servicing Fees payable to the Master
Servicer in respect of any Distribution Date shall be reduced (but not below
zero) by the amount of any Compensating Interest Payment for such Distribution
Date, but only to the extent that Prepayment Interest Shortfalls relating to
such Distribution Date are required to be paid but not actually paid by the
Servicers. Such amount shall not be treated as an Advance and shall not be
reimbursable to the Master Servicer.
Section 5.06 Basis Risk Reserve Fund.
(a) On the Closing Date, the Securities Administrator shall establish
and maintain in the Trustee's name, in trust for the benefit of the holders of
the LIBOR Certificates and the Interest Only Certificates, a Basis Risk Reserve
Fund, into which the Depositor shall deposit $10,000. The Basis Risk Reserve
Fund shall be an Eligible Account, and funds on deposit therein shall be held
separate and apart from, and shall not be commingled with, any other moneys,
including, without limitation, other moneys of the Trustee held pursuant to this
Agreement. The Basis Risk Reserve Fund shall not be an asset of any REMIC
established hereby.
(b) The Basis Risk Reserve Fund will be comprised of two Sub-accounts:
the "Class X-1 Sub-account," and the "Class X-B Sub-account." On each
Distribution Date, Current Interest that would otherwise be distributable with
respect to the Class X-1A, Class X-1B and Class X-B Certificates shall instead
be deposited in the Sub-account with the same numerical designation as such
Class (or alphabetical designation in the case of the Class X-B Certificates) to
the extent of the applicable Class X-1 Required Basis Risk Deposit or Class X-B
Required Basis Risk Deposit.
(c) On any Distribution Date for which a Basis Risk Shortfall exists
with respect to the Class A Certificates, the Securities Administrator shall
withdraw from the Class X-1 Sub-account the amount of such Basis Risk Shortfall
for distribution on such Distribution Date pursuant to Section 5.02(f).
(d) On any Distribution Date for which a Basis Risk Shortfall exists
with respect to the Class B-1 Certificates, the Securities Administrator shall
withdraw from the Class X-B Sub-account the amount of such Basis Risk Shortfall
for distribution on such Distribution Date pursuant to Section 5.02(f).
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(e) Funds in each of the Class X-1 Sub-account and Class X-B Sub-account
shall be invested in Permitted Investments. Any earnings on amounts in the Class
X-1 Sub-account shall be for the benefit of the Class X-1A and Class X-1B
Certificateholders and any earnings on amounts in the Class X-B Sub-account
shall be for the benefit of the Class X-B Certificateholders. The Interest-Only
Certificates shall evidence ownership of the related Sub-account for federal
income tax purposes and the Holders thereof shall direct the Securities
Administrator, in writing, as to investment of amounts on deposit therein. The
applicable Interest-Only Certificateholder(s) shall be liable for any losses
incurred on such investments. In the absence of written instructions from the
applicable Interest-Only Certificateholder as to investment of funds on deposit
in the related Sub-account, such funds shall be invested in money market funds
as described in paragraph (ix) of the definition of Permitted Investments in
Article I. For all Federal income tax purposes, amounts transferred by the
Upper-Tier REMIC to the Basis Risk Reserve Fund shall be treated as amounts
distributed by the Upper-Tier REMIC to the applicable Interest-Only
Certificateholders.
(f) Upon termination of the Trust Fund any amounts remaining in the
related Sub-account shall be distributed to the applicable Interest-Only
Certificateholders.
ARTICLE VI
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR; EVENTS OF
DEFAULT
Section 6.01 Duties of Trustee and the Securities Administrator.
(a) The Trustee, except during the continuance of an Event of Default,
and the Securities Administrator undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement. Any permissive right of
the Trustee or the Securities Administrator provided for in this Agreement shall
not be construed as a duty of the Trustee or the Securities Administrator. If an
Event of Default has occurred and has not otherwise been cured or waived, the
Trustee or the Securities Administrator shall exercise such of the rights and
powers vested in it by this Agreement and use the same degree of care and skill
in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs, unless the Trustee is
acting as Master Servicer, in which case it shall use the same degree of care
and skill as the Master Servicer hereunder.
(b) Each of the Trustee and the Securities Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to the Trustee or the Securities
Administrator 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 neither the Trustee
nor the Securities Administrator shall 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 or any
Servicer to the Trustee or the Securities Administrator pursuant to this
Agreement, and shall not be required to recalculate or verify any numerical
information furnished to the Trustee or the Securities Administrator pursuant to
this Agreement. Subject to the immediately
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preceding sentence, if any such resolution, certificate, statement, opinion,
report, document, order or other instrument is found not to conform to the form
required by this Agreement in a material manner the Trustee shall take such
action as it deems appropriate to cause the instrument to be corrected, and if
the instrument is not corrected to the Trustee's satisfaction, the Trustee will
provide notice thereof to the Certificateholders and will, at the expense of the
Trust Fund, which expense shall be reasonable given the scope and nature of the
required action, take such further action as directed by the Certificateholders.
(c) Neither the Trustee nor the Securities Administrator shall have any
liability arising out of or in connection with this Agreement, except for its
negligence or willful misconduct. Notwithstanding anything in this Agreement to
the contrary, neither the Trustee nor the Securities Administrator shall be
liable for special, indirect or consequential losses or damages of any kind
whatsoever (including, but not limited to, lost profits). No provision of this
Agreement shall be construed to relieve the Trustee or the Securities
Administrator from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) Neither the Trustee nor the Securities Administrator shall 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 6.18 hereof;
(ii) For all purposes under this Agreement, the Trustee shall not
be deemed to have notice of any Event of Default (other than resulting
from a failure by the Master Servicer (i) to remit funds (or to make
Advances) or (ii) to furnish information to the Trustee when required to
do so) unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Holders of the Certificates and
this Agreement;
(iii) For all purposes under this Agreement, the Securities
Administrator shall not be deemed to have notice of any Event of Default
(other than resulting from a failure by the Master Servicer to furnish
information to the Securities Administrator when required to do so)
unless a Responsible Officer of the Securities Administrator has actual
knowledge thereof or unless written notice of any event which is in fact
such a default is received by the Securities Administrator at the
address provided in Section 11.07, and such notice references the
Holders of the Certificates and this Agreement;
(iv) No provision of this Agreement shall require the Trustee or
the Securities Administrator 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 none of the provisions contained in this
Agreement shall in any event require the Trustee or the Securities
Administrator to perform, or be responsible for the manner of
performance of, any of the obligations of the Master Servicer under this
Agreement;
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(v) Neither the Trustee nor the Securities Administrator shall be
responsible for any act or omission of the Master Servicer, the
Depositor, the Seller or any Custodian.
(d) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice or other document it may receive or which may
be alleged to have been delivered to or served upon it by the parties as a
consequence of the assignment of any Mortgage Loan hereunder; provided, however,
that the Trustee shall promptly remit to the applicable Servicer upon receipt
any such complaint, claim, demand, notice or other document (i) which is
delivered to the Corporate Trust Office of the Trustee, (ii) of which a
Responsible Officer has actual knowledge, and (iii) which contains information
sufficient to permit the Trustee to make a determination that the real property
to which such document relates is a Mortgaged Property.
(e) Neither the Trustee nor the Securities Administrator shall be
personally liable with respect to any action taken, suffered or omitted to be
taken by it in good faith in accordance with the direction of the
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 the Securities Administrator or exercising any trust or power conferred upon
the Trustee or the Securities Administrator, as applicable, under this
Agreement.
(f) Neither the Trustee nor the Securities Administrator shall be
required to perform services under this Agreement, or to expend or risk its own
funds or otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the timely payment of its fees and expenses
or the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it, and none of the provisions contained
in this Agreement shall in any event require the Trustee or the Securities
Administrator, as applicable, to perform, or be responsible for the manner of
performance of, any of the obligations of the Master Servicer or any Servicer
under this Agreement or any Servicing Agreement except during such time, if any,
as the Trustee shall be the successor to, and be vested with the rights, duties,
powers and privileges of, the Master Servicer in accordance with the terms of
this Agreement.
(g) The Trustee shall not be held liable by reason of any insufficiency
in the Distribution Account or the Basis Risk Reserve Fund resulting from any
investment loss on any Permitted Investment included therein (except to the
extent that the Trustee is the obligor and has defaulted thereon).
(h) Except as otherwise provided herein, neither the Trustee nor the
Securities Administrator shall have any duty (A) to see to any recording,
filing, or depositing of this Agreement or any agreement referred to herein or
any financing statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such recording or filing or
depositing or to any rerecording, refiling or redepositing of any thereof, (B)
to see to any insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Trust Fund
other than from funds available in the Distribution Account, or (D) to confirm
or verify the contents of any reports or certificates of the Master Servicer or
any Servicer delivered to the Trustee or the Securities Administrator pursuant
to this
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Agreement believed by the Trustee or the Securities Administrator, as
applicable, to be genuine and to have been signed or presented by the proper
party or parties.
(i) Neither the Securities Administrator nor the Trustee shall be liable
in its individual capacity for an error of judgment made in good faith by a
Responsible Officer or other officers of the Trustee or the Securities
Administrator, as applicable, unless it shall be proved that the Trustee or the
Securities Administrator, as applicable, was negligent in ascertaining the
pertinent facts.
(j) Notwithstanding anything in this Agreement to the contrary, neither
the Securities Administrator nor the Trustee shall be liable for special,
indirect or consequential losses or damages of any kind whatsoever (including,
but not limited to, lost profits), even if the Trustee or the Securities
Administrator, as applicable, has been advised of the likelihood of such loss or
damage and regardless of the form of action.
(k) Neither the Securities Administrator nor the Trustee shall be
responsible for the acts or omissions of the other, it being understood that
this Agreement shall not be construed to render them agents of one another.
Section 6.02 Certain Matters Affecting the Trustee and the Securities
Administrator.
Except as otherwise provided in Section 6.01:
(i) Each of the Trustee and the Securities Administrator 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) Each of the Trustee and the Securities Administrator 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) Neither the Trustee nor the Securities Administrator shall
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 an Event of Default shall have occurred and be
continuing, neither the Trustee nor the Securities Administrator shall
be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
document (provided the same appears regular on its face), unless
requested in writing to do so by the Holders of at least a majority in
Class Principal Amount (or Percentage Interest) of each Class of
Certificates; provided, however, that, if the payment within a
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reasonable time to the Trustee or the Securities Administrator, as
applicable, of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee or the Securities Administrator, as applicable, not reasonably
assured to the Trustee or the Securities Administrator by the security
afforded to it by the terms of this Agreement, the Trustee or the
Securities Administrator, as applicable, may require reasonable
indemnity against such expense or liability or payment of such estimated
expenses from the Certificateholders as a condition to proceeding. The
reasonable expense thereof shall be paid by the party requesting such
investigation and if not reimbursed by the requesting party shall be
reimbursed to the Trustee by the Trust Fund;
(v) Each of the Trustee and the Securities Administrator may
execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, custodians or
attorneys, which agents, custodians or attorneys shall have any and all
of the rights, powers, duties and obligations of the Trustee and the
Securities Administrator conferred on them by such appointment, provided
that each of the Trustee and the Securities Administrator shall continue
to be responsible for its duties and obligations hereunder to the extent
provided herein, and provided further that neither the Trustee nor the
Securities Administrator shall be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed with due
care by the Trustee or the Securities Administrator, as applicable;
(vi) Neither the Trustee nor the Securities Administrator shall
be under any obligation to exercise any of the trusts or powers vested
in it by this Agreement or to institute, conduct or defend any
litigation hereunder or in relation hereto, in each case at the request,
order or direction of any of the Certificateholders pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee or the Securities Administrator, as applicable,
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(vii) The right of the Trustee and the Securities Administrator
to perform any discretionary act enumerated in this Agreement shall not
be construed as a duty, and neither the Trustee nor the Securities
Administrator shall be answerable for other than its negligence or
willful misconduct in the performance of such act; and
(viii) Neither the Trustee nor the Securities Administrator shall
be required to give any bond or surety in respect of the execution of
the Trust Fund created hereby or the powers granted hereunder.
Section 6.03 Trustee and Securities Administrator Not Liable for
Certificates.
The Trustee and the Securities Administrator make 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 of any Mortgage
Loan, or related document save that the Trustee and the Securities Administrator
represent 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
71
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. The Trustee and
the Securities Administrator shall not be accountable for the use or application
by the Depositor of funds paid to the Depositor in consideration of the
assignment of the Mortgage Loans to the Trust Fund by the Depositor or for the
use or application of any funds deposited into the Distribution Account or any
other fund or account maintained with respect to the Certificates. The Trustee
and the Securities Administrator shall not be responsible for the legality or
validity of this Agreement or the validity, priority, perfection or sufficiency
of the security for the Certificates issued or intended to be issued hereunder.
Except as otherwise provided herein, the Trustee and the Securities
Administrator shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 6.04 Trustee and the Securities Administrator May Own
Certificates.
The Trustee and the Securities Administrator and any Affiliate or agent
of either of them in its individual or any other capacity may become the owner
or pledgee of Certificates and may transact banking and trust business with the
other parties hereto and their Affiliates with the same rights it would have if
it were not Trustee, Securities Administrator or such agent.
Section 6.05 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be (i) an institution insured
by the FDIC, (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 and (iii) not an Affiliate of the
Master Servicer or any Servicer. 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 6.06.
Section 6.06 Resignation and Removal of Trustee and the Securities
Administrator.
(a) Each of the Trustee and the Securities Administrator may at any time
resign and be discharged from the trust hereby created by giving written notice
thereof to the Trustee or the Securities Administrator, as applicable, the
Depositor and the Master Servicer. Upon receiving such notice of resignation,
the Depositor will promptly appoint a successor trustee or a successor
securities administrator, as applicable, by written instrument, one copy of
which instrument shall be delivered to the resigning Trustee or resigning
Securities Administrator, as applicable, one copy to the successor trustee or
successor securities administrator, as applicable, and one copy to the Master
Servicer. If no successor trustee or successor securities administrator shall
have been
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so appointed and shall have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Trustee or resigning Securities
Administrator, as applicable, may petition any court of competent jurisdiction
for the appointment of a successor trustee or successor securities
administrator, as applicable.
(b) If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.05 and shall fail to resign after
written request therefor by the Depositor, (ii) the Trustee or the Securities
Administrator shall become incapable of acting, or shall be adjudged a bankrupt
or insolvent, or a receiver of the Trustee or the Securities Administrator of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or the Securities Administrator or of either of their
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 or Securities Administrator
would result in a downgrading of the rating by any Rating Agency of any Class of
Certificates with a rating, then the Depositor shall remove the Trustee or the
Securities Administrator, as applicable, and the Depositor shall appoint a
successor trustee or successor securities administrator, as applicable,
acceptable to the Master Servicer by written instrument, one copy of which
instrument shall be delivered to the Trustee or Securities Administrator so
removed, one copy each to the successor trustee or successor securities
Administrator, as applicable, and one copy to the Master Servicer.
(c) The Holders of more than 50% of the Class Principal Amount (or
Percentage Interest) of each Class of Certificates may at any time upon 30 days'
written notice to the Trustee or the Securities Administrator, as applicable,
and to the Depositor remove the Trustee or the Securities Administrator, as
applicable, 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, one copy to the Trustee or Securities Administrator,
as applicable and one copy to the Master Servicer; the Depositor shall thereupon
appoint a successor trustee or successor securities administrator, as
applicable, in accordance with this Section.
(d) Any resignation or removal of the Trustee or the Securities
Administrator, as applicable, and appointment of a successor trustee or
successor securities administrator pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the successor
trustee or the successor securities administrator, as applicable, as provided in
Section 6.07.
Section 6.07 Successor Trustee and Successor Securities Administrator.
(a) Any successor trustee or successor securities administrator
appointed as provided in Section 6.06 shall execute, acknowledge and deliver to
the Depositor and to its predecessor trustee or predecessor securities
administrator, as applicable, an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
or predecessor securities administrator, as applicable, shall become effective
and such successor trustee or successor securities administrator, as applicable,
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 or securities administrator, as
applicable, herein. The predecessor trustee or predecessor securities
73
administrator, as applicable, shall deliver to the successor trustee (or assign
to the Trustee its interest under each Custody Agreement, to the extent
permitted thereunder) or successor securities administrator, as applicable, all
Trustee Mortgage Files and documents and statements related to each Trustee
Mortgage File held by it hereunder, and shall duly assign, transfer, deliver and
pay over to the successor trustee the entire Trust Fund, together with all
necessary instruments of transfer and assignment or other documents properly
executed necessary to effect such transfer and such of the records 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. In addition, the Depositor
and the predecessor trustee or predecessor securities administrator, as
applicable, shall execute and deliver such other instruments and do such other
things as may reasonably be required to more fully and certainly vest and
confirm in the successor trustee or successor securities administrator, as
applicable, all such rights, powers, duties and obligations.
(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 6.05.
(c) Upon acceptance of appointment by a successor trustee or successor
securities administrator, as applicable, as provided in this Section, the
predecessor trustee or predecessor securities administrator, as applicable,
shall mail notice of the succession of such trustee or securities administrator,
as applicable, hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to any Rating Agency. The expenses of such
mailing shall be borne by the Master Servicer.
Section 6.08 Merger or Consolidation of Trustee or the Securities
Administrator.
Any Person into which the Trustee or Securities Administrator may be
merged or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which the Trustee or Securities
Administrator shall be a party, or any Persons succeeding to the business of the
Trustee or Securities Administrator, shall be the successor to the Trustee or
Securities Administrator 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, in the case of the Trustee, such
Person shall be eligible under the provisions of Section 6.05.
Section 6.09 Appointment of Co-Trustee, Separate Trustee or Custodian.
(a) Notwithstanding any other provisions hereof, at any time, the
Trustee, the Depositor or the Certificateholders evidencing more than 50% of the
Class Principal Amount (or Percentage Interest) of every Class of Certificates
shall have the power from time to time to appoint one or more Persons, approved
by the Trustee, to act either as co-trustees jointly with the Trustee, or as
separate trustees, or as custodians, for the purpose of holding title to,
foreclosing or otherwise taking action with respect to any Mortgage Loan outside
the state where the Trustee has its principal place of business where such
separate trustee or co-trustee is necessary or advisable (or the Trustee has
been advised by the Master Servicer that such separate trustee or co-trustee is
necessary or advisable) under the laws of any state in which a property securing
a
74
Mortgage Loan is located or for the purpose of otherwise conforming to any legal
requirement, restriction or condition in any state in which a property securing
a Mortgage Loan is located or in any state in which any portion of the Trust
Fund is located. The separate Trustees, co-trustees, or custodians so appointed
shall be trustees or custodians for the benefit of all the Certificateholders
and shall have such powers, rights and remedies as shall be specified in the
instrument of appointment; provided, however, that no such appointment shall, or
shall be deemed to, constitute the appointee an agent of the Trustee. The
obligation of the Master Servicer to make Advances pursuant to Section 5.04
hereof shall not be affected or assigned by the appointment of a co-trustee.
(b) Every separate trustee, co-trustee, and custodian shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall
be exercised solely by the Trustee;
(ii) all other rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee,
co-trustee, or custodian jointly, except to the extent that under any
law of any jurisdiction in which any particular act or acts are to be
performed the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations, including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction, shall be exercised and
performed by such separate trustee, co-trustee, or custodian;
(iii) no trustee or custodian hereunder shall be personally
liable by reason of any act or omission of any other trustee or
custodian hereunder; and
(iv) the Trustee may at any time, by an instrument in writing
executed by it, with the concurrence of the Depositor, accept the
resignation of or remove any separate trustee, co-trustee or custodian,
so appointed by it or them, if such resignation or removal does not
violate the other terms of this Agreement.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee, co-trustee or custodian shall refer to this Agreement and the
conditions of this Article VI. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy given
to the Master Servicer.
(d) Any separate trustee, co-trustee or custodian may, at any time,
constitute the Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to
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do any lawful act under or in respect of this Agreement on its behalf and in its
name. If any separate trustee, co-trustee or custodian shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee.
(e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.
(f) The Trustee agrees to instruct the co-trustees, if any, to the
extent necessary to fulfill the Trustee's obligations hereunder.
(g) The Trust shall pay the reasonable compensation of the co-trustees
(which compensation shall not reduce any compensation payable to the Trustee
under such Section).
Section 6.10 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. The Trustee hereby appoints the Securities Administrator as
initial Authenticating Agent, and the Securities Administrator accepts such
appointment. 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 6.10, 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
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named as Authenticating Agent. No successor authenticating agent shall be
appointed unless eligible under the provisions of this Section 6.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee.
Section 6.11 Indemnification of the Trustee and the Securities
Administrator.
The Trustee and the Securities Administrator and their respective
directors, officers, employees and agents shall be entitled to indemnification
from the Depositor and the Trust Fund (provided that the Trust Fund's
indemnification under this Section 6.11 is limited by Section 4.01(d) for any
loss, liability or expense (including, without limitation, reasonable attorneys'
fees and disbursements (and, in the case of the Trustee, in connection with each
Custody Agreement, including the reasonable compensation and the expenses and
disbursements of its agents or counsel), 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 or in connection with the
performance of their duties 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 or the Securities
Administrator, as applicable, shall have given the Depositor written
notice thereof promptly after the Trustee, the Securities Administrator,
as applicable, shall have knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee
or the Securities Administrator, as applicable, shall cooperate and
consult fully with the Depositor in preparing such defense; and
(iii) notwithstanding anything to the contrary in this Section
6.11, the Trust Fund shall not be liable for settlement of any such
claim by the Trustee or the Securities Administrator, as applicable,
entered into without the prior consent of the Depositor, which consent
shall not be unreasonably withheld.
The provisions of this Section 6.11 shall survive any termination of
this Agreement and the resignation or removal of the Trustee or the Securities
Administrator, as applicable, and shall be construed to include, but not be
limited to any loss, liability or expense under any environmental law.
Section 6.12 Fees and Expenses of the Securities Administrator and the
Trustee.
(a) Compensation for the services of the Securities Administrator
hereunder shall be paid by the Master Servicer. The Securities Administrator
shall be entitled to all disbursements and advancements incurred or made by the
Securities Administrator in accordance with this Agreement (including fees and
expenses of its counsel and all persons not regularly in its employment), except
any such expenses arising from its negligence, bad faith or willful misconduct.
(b) As compensation for its services hereunder, the Trustee shall be
entitled to receive a Trustee fee (which shall not be limited by any provision
of law in regard to the compensation of
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a trustee of an express trust) which shall be paid by the Master Servicer
pursuant to a separate agreement between the Trustee and the Master Servicer.
Any expenses incurred by the Trustee shall be reimbursed in accordance with
Section 6.11.
Section 6.13 Collection of Monies.
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 and shall distribute it as provided in this Agreement.
Section 6.14 Events of Default; Trustee To Act; Appointment of
Successor.
(a) The occurrence of any one or more of the following events shall
constitute an "Event of Default":
(i) Any failure by the Master Servicer to furnish the Securities
Administrator the Mortgage Loan data sufficient to prepare the reports
described in Section 4.04 which continues unremedied for a period of one
Business Day after the date upon which written notice of such failure
shall have been given to such Master Servicer by the Trustee or the
Securities Administrator or to such Master Servicer, the Securities
Administrator and the Trustee by the Holders of not less than 25% of the
Class Principal Amount (or Class Notional Amount) of each Class of
Certificates affected thereby; or
(ii) Any failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this
Agreement which continues unremedied for a period of 30 days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the Trustee or
the Securities Administrator, or to the Master Servicer, the Securities
Administrator and the Trustee by the Holders of more than 50% of the
Aggregate Voting Interests of the Certificates; or
(iii) A decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer, and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days or
any Rating Agency reduces or withdraws or threatens to reduce or
withdraw the rating of the Certificates because of the financial
condition or loan servicing capability of such Master Servicer; or
(iv) The Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities, voluntary liquidation or
similar proceedings of or relating to the Master Servicer or of or
relating to all or substantially all of its property; or
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(v) The Master Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
(vi) The Master Servicer shall be dissolved, or shall dispose of
all or substantially all of its assets, or consolidate with or merge
into another entity or shall permit another entity to consolidate or
merge into it, such that the resulting entity does not meet the criteria
for a successor servicer as specified in Section 9.05 hereof; or
(vii) If a representation or warranty set forth in Section 9.03
hereof shall prove to be incorrect as of the time made in any respect
that materially and adversely affects the interests of the
Certificateholders, and the circumstance or condition in respect of
which such representation or warranty was incorrect shall not have been
eliminated or cured within 30 days after the date on which written
notice of such incorrect representation or warranty shall have been
given to the Master Servicer by the Trustee or the Securities
Administrator, or to the Master Servicer, the Securities Administrator
and the Trustee by the Holders of more than 50% of the Aggregate Voting
Interests of the Certificates; or
(viii) A sale or pledge of any of the rights of the Master
Servicer hereunder or an assignment of this Agreement by the Master
Servicer or a delegation of the rights or duties of the Master Servicer
hereunder shall have occurred in any manner not otherwise permitted
hereunder and without the prior written consent of the Trustee and
Certificateholders holding more than 50% of the Aggregate Voting
Interests of the Certificates; or
(ix) After receipt of notice from the Trustee, any failure of the
Master Servicer to make any Advances required to be made hereunder.
If an Event of Default described in clauses (i) through (ix) of this
Section shall occur, then, in each and every case, subject to applicable law, so
long as any such Event of Default shall not have been remedied within any period
of time prescribed by this Section, the Trustee, by notice in writing to the
Master Servicer may, and shall, if so directed by Certificateholders evidencing
more than 50% of the Class Principal Amount (or Class Notional Amount) of each
Class of Certificates, terminate all of the rights and obligations of the Master
Servicer hereunder and in and to the Mortgage Loans and the proceeds thereof. On
or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer, and only in its capacity as Master
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee; and the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the defaulting
Master Servicer as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents or otherwise. The defaulting Master Servicer agrees to
cooperate with the Trustee and the Securities Administrator in effecting the
termination of the defaulting Master Servicer's responsibilities and rights
hereunder as Master Servicer including, without limitation, notifying Servicers
of the assignment of the master servicing function and providing the Trustee or
its
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designee all documents and records in electronic or other form reasonably
requested by it to enable the Trustee or its designee to assume the defaulting
Master Servicer's functions hereunder and the transfer to the Trustee for
administration by it of all amounts which shall at the time be or should have
been deposited by the defaulting Master Servicer in the Distribution Account and
any other account or fund maintained with respect to the Certificates or
thereafter received with respect to the Mortgage Loans. The Master Servicer
being terminated shall bear all costs of a master servicing transfer, including
but not limited to those of the Trustee or Securities Administrator reasonably
allocable to specific employees and overhead, legal fees and expenses,
accounting and financial consulting fees and expenses, and costs of amending the
Agreement, if necessary.
Notwithstanding the termination of its activities as Master Servicer,
each terminated Master Servicer shall continue to be entitled to reimbursement
under this Agreement to the extent such reimbursement relates to the period
prior to such Master Servicer's termination.
If any Event of Default shall occur, the Trustee, upon becoming aware of
the occurrence thereof, shall promptly notify the Securities Administrator and
each Rating Agency of the nature and extent of such Event of Default. The
Trustee or the Securities Administrator shall immediately give written notice to
the Master Servicer upon the Master Servicer's failure to make Advances as
required under this Agreement.
(b) On and after the time the Master Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14(a) or the Trustee receives
the resignation of the Master Servicer evidenced by an Opinion of Counsel
pursuant to Section 9.06, the Trustee, unless another master servicer shall have
been appointed, shall be the successor in all respects to the Master Servicer in
its capacity as such under this Agreement and the transactions set forth or
provided for herein and shall have all the rights and powers and be subject to
all the responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Master Servicer hereunder, including the obligation to
make Advances; provided, however, that any failure to perform such duties or
responsibilities caused by the Master Servicer's failure to provide information
required by this Agreement shall not be considered a default by the Trustee
hereunder. In addition, the Trustee shall have no responsibility for any act or
omission of the Master Servicer prior to the issuance of any notice of
termination. The Trustee shall have no liability relating to the representations
and warranties of the Master Servicer set forth in Section 9.03. In the
Trustee's capacity as such successor, the Trustee shall have the same
limitations on liability herein granted to the Master Servicer. As compensation
therefor, the Trustee shall be entitled to receive all compensation payable to
the Master Servicer under this Agreement, including the Master Servicing Fee.
(c) Notwithstanding the above, the Trustee may, if it shall be unwilling
to continue to so act, or shall, if it is unable to so act, petition a court of
competent jurisdiction to appoint, or appoint on its own behalf any established
housing and home finance institution servicer, master servicer, servicing or
mortgage servicing institution having a net worth of not less than $15,000,000
and meeting such other standards for a successor master servicer as are set
forth in this Agreement, as the successor to such Master Servicer in the
assumption of all of the responsibilities, duties or liabilities of a master
servicer, like the Master Servicer. Any entity
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designated by the Trustee as a successor master servicer may be an Affiliate of
the Trustee; provided, however, that, unless such Affiliate meets the net worth
requirements and other standards set forth herein for a successor master
servicer, the Trustee, in its individual capacity shall agree, at the time of
such designation, to be and remain liable to the Trust Fund for such Affiliate's
actions and omissions in performing its duties hereunder. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted to the Master Servicer hereunder. The Trustee and such
successor shall take such actions, consistent with this Agreement, as shall be
necessary to effectuate any such succession and may make other arrangements with
respect to the servicing to be conducted hereunder which are not inconsistent
herewith. The Master Servicer shall cooperate with the Trustee and any successor
master servicer in effecting the termination of the Master Servicer's
responsibilities and rights hereunder including, without limitation, notifying
Mortgagors of the assignment of the master servicing functions and providing the
Trustee and successor master servicer, as applicable, all documents and records
in electronic or other form reasonably requested by it to enable it to assume
the Master Servicer's functions hereunder and the transfer to the Trustee or
such successor master servicer, as applicable, all amounts which shall at the
time be or should have been deposited by the Master Servicer in the Distribution
Account and any other account or fund maintained with respect to the
Certificates or thereafter be received with respect to the Mortgage Loans.
Neither the Trustee nor any other successor master servicer shall be deemed to
be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Master Servicer to deliver, or any delay in delivering, cash,
documents or records to it, (ii) the failure of the Master Servicer to cooperate
as required by this Agreement, (iii) the failure of the Master Servicer to
deliver the Mortgage Loan data to the Trustee as required by this Agreement or
(iv) restrictions imposed by any regulatory authority having jurisdiction over
the Master Servicer. No successor master servicer shall be deemed to be in
default hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Trustee to deliver, or any delay in delivering cash, documents or records to it
related to such distribution, or (ii) the failure of Trustee to cooperate as
required by this Agreement.
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Section 6.15 Additional Remedies of Trustee Upon Event of Default.
During the continuance of any Event of Default, so long as such Event of
Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 6.14, shall have the right, in its own name and as trustee
of the Trust Fund, to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to protect the
interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, and each
and every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default.
Section 6.16 Waiver of Defaults.
More than 50% of the Aggregate Voting Interests of Certificateholders
may waive any default or Event of Default by the Master Servicer in the
performance of its obligations hereunder, except that a default in the making of
any required deposit to the Distribution Account that would result in a failure
of the Trustee to make any required payment of principal of or interest on the
Certificates may only be waived with the consent of 100% of the affected
Certificateholders. Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.
Section 6.17 Notification to Holders.
Upon termination of the Master Servicer or appointment of a successor to
the Master Servicer, in each case as provided herein, the Trustee shall promptly
mail notice thereof by first class mail to the Securities Administrator, and the
Certificateholders at their respective addresses appearing on the Certificate
Register. The Trustee shall also, within 45 days after the occurrence of any
Event of Default known to the Trustee, give written notice thereof to the
Securities Administrator and the Certificateholders, unless such Event of
Default shall have been cured or waived prior to the issuance of such notice and
within such 45-day period.
Section 6.18 Directions by Certificateholders and Duties of Trustee
During Event of Default.
Subject to the provisions of Section 8.01 hereof, during the continuance
of any Event of Default, Holders of Certificates evidencing not less than 25% of
the Class Principal Amount (or Percentage Interest) of each Class of
Certificates affected thereby may direct 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; provided,
however, that the Trustee shall be under no obligation to pursue any such
remedy, or to exercise any of the trusts or powers vested in it by this
Agreement (including, without limitation, (i) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto and (ii) the
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terminating of the Master Servicer or any successor master servicer from its
rights and duties as master servicer hereunder) at the request, order or
direction of any of the Certificateholders, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the cost,
expenses and liabilities which may be incurred therein or thereby; and, provided
further, that, subject to the provisions of Section 8.01, the Trustee shall have
the right to decline to follow any such direction if the Trustee, in accordance
with an Opinion of Counsel, determines that the action or proceeding so directed
may not lawfully be taken or if the Trustee in good faith determines that the
action or proceeding so directed would involve it in personal liability for
which it is not indemnified to its satisfaction or be unjustly prejudicial to
the non-assenting Certificateholders.
Section 6.19 Action Upon Certain Failures of the Master Servicer and
Upon Event of Default.
In the event that the Trustee shall have actual knowledge of any action
or inaction of the Master Servicer that would become an Event of Default upon
the Master Servicer's failure to remedy the same after notice, the Trustee shall
give notice thereof to the Master Servicer.
Section 6.20 Preparation of Tax Returns and Other Reports.
(a) The Securities Administrator shall prepare or cause to be prepared
on behalf of the Trust Fund, based upon information calculated in accordance
with this Agreement pursuant to instructions given by the Depositor, and the
Securities Administrator shall file federal tax returns, all in accordance with
Article X hereof. If the Trustee notifies the Securities Administrator in
writing that a state tax return or other return is required, then, at the sole
expense of the Trust Fund, the Securities Administrator shall prepare and file
such state income tax returns and such other returns as may be required by
applicable law relating to the Trust Fund, and, if required by state law, and
shall file any other documents to the extent required by applicable state tax
law (to the extent such documents are in the Securities Administrator's
possession). The Securities Administrator shall forward copies to the Depositor
of all such returns and Form 1099 supplemental tax information and such other
information within the control of the Securities Administrator as the Depositor
may reasonably request in writing, and shall forward to the Trustee for
distribution to each Certificateholder such forms and furnish such information
within the control of the Securities Administrator as are required by the Code
and the REMIC Provisions to be furnished to them, and will prepare and
disseminate to the Trustee for distribution to Certificateholders Form 1099
(supplemental tax information) (or otherwise furnish information within the
control of the Securities Administrator and the Trustee) to the extent required
by applicable law. The Master Servicer will indemnify the Securities
Administrator and the Trustee for any liability of or assessment against the
Securities Administrator and the Trustee, as applicable, resulting from any
error in any of such tax or information returns directly resulting from errors
in the information provided by such Master Servicer.
(b) The Securities Administrator shall prepare and file with the
Internal Revenue Service ("IRS"), on behalf of each of the Lower Tier REMIC and
Upper Tier REMIC, an application on IRS Form SS-4. The Securities Administrator,
upon receipt from the IRS of the Notice of Taxpayer Identification Number
Assigned for each REMIC, shall promptly forward copies of
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such notices to the Master Servicer, the Trustee and the Depositor. The
Securities Administrator will file an IRS Form 8811.
(c) The Depositor shall prepare or cause to be prepared the initial
current report on Form 8-K. Thereafter, within 15 days after each Distribution
Date, the Depositor shall, in accordance with industry standards, file with the
Securities and Exchange Commission (the "Commission") via the Electronic Data
Gathering and Retrieval System (XXXXX), a Form 8-K with a copy of the statement
to the Certificateholders for such Distribution Date as an exhibit thereto.
Prior to January 31, 2003, the Depositor shall, in accordance with industry
standards, file a Form 15 Suspension Notification with respect to the Trust
Fund, if applicable. Prior to January 31, 2003, the Depositor shall file a Form
10-K, in substance conforming to industry standards, with respect to the Trust
Fund. The Depositor shall be responsible for preparing all filings and
certificates required by the Xxxxxxxx-Xxxxx Act of 2002. Each of the Securities
Administrator, the Trustee and the Master Servicer agrees to promptly furnish to
the Depositor, from time to time upon request, certifications as to such further
information, reports, and financial statements within its control related to
this Agreement and the Mortgage Loans as the Depositor reasonably deems
appropriate to prepare and file all necessary reports with the Commission.
ARTICLE VII
PURCHASE OF MORTGAGE LOANS AND
TERMINATION OF THE TRUST FUND
Section 7.01 Purchase of Mortgage Loans; Termination of Trust Fund
Upon Purchase or Liquidation of All Mortgage Loans.
(a) The respective obligations and responsibilities of the Trustee, the
Securities Administrator and the Master Servicer created hereby (other than the
obligation of the Securities Administrator to make payments to
Certificateholders as set forth in Section 7.02), shall terminate on the
earliest of (i) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust Fund and the disposition of all REO Property, (ii) the
sale of the property held by the Trust Fund in accordance with Section 7.01(b)
and (iii) the Latest Possible Maturity Date; 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. Any termination of the Trust Fund shall be carried out in such a
manner so that the termination of each REMIC included therein shall qualify as a
"qualified liquidation" under the REMIC Provisions.
(b) On any Distribution Date occurring on or after the Initial Optional
Purchase Date, the Depositor has the option to cause the Trust Fund to adopt a
plan of complete liquidation pursuant to Section 7.03(a)(i) hereof to sell all
of its property. If the Depositor elects to exercise such option, it shall no
later than 30 days prior to the Distribution Date selected for purchase of the
assets of the Trust Fund (the "Purchase Date") deliver notices to the Trustee
and the Securities Administrator and either (a) deposit in the Distribution
Account the Redemption Price or (b) state in such notice that the Redemption
Price shall be deposited in the Distribution Account not
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later than 10:00 a.m., New York City time on the applicable Purchase Date. Upon
exercise of such option, the property of the Trust Fund shall be sold to the
Depositor at a price equal to the Redemption Price.
(c) The Depositor, the Master Servicer, each Servicer, the Securities
Administrator and each Custodian shall be reimbursed from the Redemption Price
for any Advances, Servicer Advances, accrual and unpaid Servicing Fees or other
amounts with respect to the Mortgage Loans that are reimbursable to such parties
under this Agreement, the related Servicing Agreement or the related Custody
Agreement.
Section 7.02 Procedure Upon Redemption Termination of Trust Fund.
(a) Notice of any redemption termination pursuant to the provisions of
Section 7.01, specifying the Distribution Date upon which the final distribution
shall be made or the Redemption Date of the Certificates, shall be given
promptly by the Trustee by first class mail to Certificateholders mailed in the
case of a redemption of the Certificate, no less than the first day of the month
in which the Distribution Date selected for redemption of the Certificates
occurs or upon (x) the sale of all of the property of the Trust Fund by the
Trustee or in the case of a sale of assets of the Trust Fund, or (y) upon the
final payment or other liquidation of the last Mortgage Loan or REO Property in
the Trust Fund. Such notice shall specify (A) the Redemption Date, 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 Certificate
Registrar's 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
Securities Administrator, 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 or request the
Master Servicer to terminate, the Distribution 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 second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice 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 the second 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.
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(c) Any reasonable expenses incurred by the Trustee in connection with
any redemption or termination or liquidation of the Trust Fund shall be
reimbursed from proceeds received from the liquidation of the Trust Fund.
Section 7.03 Additional Trust Fund Termination Requirements.
(a) Any termination of the Trust Fund shall be effected in accordance
with the following additional requirements, unless the Trustee seeks (at the
request of the party exercising the option to purchase all of the Mortgage Loans
pursuant to Section 7.01(b)), and subsequently receives, an Opinion of Counsel
(at the expense of such requesting party), addressed to the Trustee to the
effect that the failure of the Trust Fund to comply with the requirements of
this Section 7.03 will not (I) result in the imposition of taxes on any REMIC
under the REMIC Provisions or (II) cause any REMIC established hereunder to fail
to qualify as a REMIC at any time that any Certificates are outstanding:
(i) Within 89 days prior to the time of the making of the final
payment on the Certificates, upon notification by the Depositor that it
intends to exercise its option to cause the termination of the Trust
Fund, the Trustee shall adopt a plan of complete liquidation of the
Trust Fund on behalf of each REMIC, meeting the requirements of a
qualified liquidation under the REMIC Provisions;
(ii) Any sale of the assets of the Trust Fund pursuant to Section
7.02 shall be a sale for cash and shall occur at or after the time of
adoption of such a plan of complete liquidation and prior to the time of
making of the final payment on the Certificates;
(iii) On the date specified for final payment of the
Certificates, the Securities Administrator shall make final
distributions of principal and interest on the Certificates in
accordance with Section 5.02 and, after payment of, or provision for any
outstanding expenses, distribute or credit, or cause to be distributed
or credited, to the Holders of the Residual Certificates all cash on
hand after such final payment (other than cash retained to meet claims),
and the Trust Fund (and each REMIC) shall terminate at that time; and
(iv) In no event may the final payment on the Certificates or the
final distribution or credit to the Holders of the Residual Certificates
be made after the 89th day from the date on which the plan of complete
liquidation is adopted.
(b) By its acceptance of a Residual Certificate, each Holder thereof
hereby agrees to accept the plan of complete liquidation adopted by the Trustee
under this Section and to take such other action in connection therewith as may
be reasonably requested by the Securities Administrator or any Servicer.
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Section 7.04 [Reserved].
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 Master Servicer or
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
Principal Amount or Class Notional 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, the Securities Administrator 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.
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(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
Master Servicer, the Securities Administrator, the Certificate Registrar and the
Trustee that neither the Depositor, the Master Servicer, the Securities
Administrator, 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 Certificates.
(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 Owners, 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 and
the Securities Administrator and, where expressly required herein, to the Master
Servicer. 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, the
Securities Administrator and the Master Servicer, if made in the manner provided
in this Section. Each of the Trustee, the Securities Administrator and the
Master Servicer shall promptly notify the others of receipt of any such
instrument by it, and shall promptly forward a copy of such instrument to the
others.
(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
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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, the Securities Administrator, the
Master Servicer, 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 or
the Master Servicer in reliance thereon, whether or not notation of such action
is made upon such Certificate.
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
BY THE MASTER SERVICER
Section 9.01 Duties of the Master Servicer; Enforcement of Servicer's
and Master Servicer's Obligations.
(a) The Master Servicer, on behalf of the Trustee, the Depositor and the
Certificateholders shall monitor the performance of the Servicers under the
Servicing Agreements, and shall use its reasonable good faith efforts to cause
the Servicers duly and punctually to perform all of their duties and obligations
thereunder. Upon the occurrence of a default of which an Authorized Officer of
the Master Servicer has actual knowledge under a Servicing Agreement, the Master
Servicer shall promptly notify the Trustee thereof, and shall specify in such
notice the action, if any, the Master Servicer is taking in respect of such
default. So long as any such default shall be continuing, the Master Servicer
may, and shall if it determines such action to be in the best interests of
Certificateholders, (i) terminate all of the rights and powers of such Servicer
pursuant to the applicable provisions of the Servicing Agreement; (ii) exercise
any rights it may have to enforce the Servicing Agreement against such Servicer;
and/or (iii) waive any such default under the Servicing Agreement or take any
other action with respect to such default as is permitted thereunder.
Notwithstanding any provision of this Agreement or any Servicing Agreement to
the contrary, the Master Servicer shall have no duty or obligation to supervise,
monitor or oversee the activities of, or to enforce the obligations of, (i) the
Servicer under its Servicing Agreement with respect to any Additional Collateral
or any Limited Purpose Surety Bond relating thereto, including, without
limitation, the collection of any amounts owing to the Trust Fund in respect
thereof (unless and until the Master Servicer shall have assumed the obligations
of such Servicer as successor servicer under the related Servicing Agreement
pursuant to this Section 9.01, in which case, as successor servicer, it shall
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be bound to serve and administer the Additional Collateral and any related
Limited Purpose Surety Bond in accordance with the provisions of such Servicing
Agreement) or (ii) the Servicer under its Servicing Agreement with respect to
the servicing or administration of defaulted or delinquent Mortgage Loans and
the management and disposition of any REO Properties or for any actions of the
Trustee in connection therewith.
(b) Upon any termination by the Master Servicer of a Servicer's rights
and powers pursuant to its Servicing Agreement, the rights and powers of the
Servicer with respect to the Mortgage Loans shall vest in the Master Servicer
and the Master Servicer shall be the successor in all respects to such Servicer
in its capacity as Servicer with respect to such Mortgage Loans under the
related Servicing Agreement, unless or until the Master Servicer shall have
appointed, with the consent of the Trustee and the Rating Agencies, such consent
not to be unreasonably withheld, and in accordance with the applicable
provisions of the Servicing Agreement, a new Xxxxxx Xxx- or FHLMC-approved
Person to serve as successor to the Servicer; provided, however, that it is
understood and agreed by the parties hereto that there will be a period of
transition (not to exceed 90 days) before the actual servicing functions can be
fully transferred to a successor servicer (including the Master Servicer). With
such consent, the Master Servicer may elect to continue to serve as successor
servicer under the Servicing Agreement. Upon appointment of a successor
servicer, as authorized under this Section 9.01(b), unless the successor
servicer shall have assumed the obligation of the terminated Servicer under such
Servicing Agreement, the Trustee and such successor servicer shall enter into a
servicing agreement in a form substantially similar to the affected Servicing
Agreement. In connection with any such appointment, the Master Servicer may make
such arrangements for the compensation of such successor as it and such
successor shall agree, but in no event shall such compensation of any successor
servicer (including the Master Servicer) be in excess of that payable to the
Servicer under the affected Servicing Agreement.
The Master Servicer shall pay the costs of such enforcement (including
the termination of any Servicer, the appointment of a successor servicer or the
transfer and assumption of the servicing by the Master Servicer) at its own
expense and shall be reimbursed therefor initially (i) by the terminated
Servicer, (ii) from a general recovery resulting from such enforcement only to
the extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans, (iii) from a specific recovery of costs, expenses or
attorney's fees against the party against whom such enforcement is directed, or
(iv) to the extent that such amounts described in (i)-(iii) above are
insufficient to reimburse the Master Servicer for such costs of enforcement,
from the Trust Fund, as provided in Section 9.04.
If the Master Servicer assumes the servicing with respect to any of the
Mortgage Loans, it will not assume liability for the representations and
warranties of any Servicer it replaces or for the errors or omissions of such
Servicer.
(c) Upon any termination of a Servicer's rights and powers pursuant to
its Servicing Agreement, the Master Servicer shall promptly notify the Trustee
and the Rating Agencies, specifying in such notice that the Master Servicer or
any successor servicer, as the case may be, has succeeded the Servicer under the
Servicing Agreement, which notice shall also specify the name and address of any
such successor servicer.
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(d) Neither the Depositor nor the Trustee shall consent to the
assignment by any Servicer of such Servicer's rights and obligations under the
Servicing Agreement without the prior written consent of the Master Servicer,
which consent shall not be unreasonably withheld.
Section 9.02 Assumption of Master Servicing by Trustee.
(a) In the event the Master Servicer shall for any reason no longer be
the Master Servicer (including by reason of any Event of Default under this
Agreement), the Trustee shall thereupon assume all of the rights and obligations
of such Master Servicer hereunder and under each Servicing Agreement entered
into with respect to the Mortgage Loans or shall appoint a Xxxxxx-Xxx or
FHLMC-approved server as successor with servicer acceptable to the Depositor and
the Rating Agencies. The Trustee, its designee or any successor master servicer
appointed by the Trustee shall be deemed to have assumed all of the Master
Servicer's interest herein and therein to the same extent as if such Servicing
Agreement had been assigned to the assuming party, except that the Master
Servicer shall not thereby be relieved of any liability or obligations of the
Master Servicer under such Servicing Agreement accruing prior to its replacement
as Master Servicer, and shall be liable to the Trustee, and hereby agrees to
indemnify and hold harmless the Trustee from and against all costs, damages,
expenses and liabilities (including reasonable attorneys' fees) incurred by the
Trustee as a result of such liability or obligations of the Master Servicer and
in connection with the Trustee's assumption (but not its performance, except to
the extent that costs or liability of the Trustee are created or increased as a
result of negligent or wrongful acts or omissions of the Master Servicer prior
to its replacement as Master Servicer) of the Master Servicer's obligations,
duties or responsibilities thereunder.
(b) The Master Servicer that has been terminated shall, upon request of
the Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to each Servicing Agreement and the
related Mortgage Loans and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
each Servicing Agreement to the assuming party.
Section 9.03 Representations and Warranties of the Master Servicer.
(a) The Master Servicer hereby represents and warrants to the Depositor,
the Securities Administrator and the Trustee, for the benefit of the
Certificateholders, as of the Closing Date that:
(i) it is validly existing and in good standing under the laws of
the United States of America as a national banking association, and as
Master Servicer has full power and authority to transact any and all
business contemplated by this Agreement and to execute, deliver and
comply with its obligations under the terms of this Agreement, the
execution, delivery and performance of which have been duly authorized
by all necessary corporate action on the part of the Master Servicer;
(ii) the execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this
Agreement will not (A) violate the Master Servicer's charter or bylaws,
(B) violate any law or regulation or any administrative decree or order
to which it is subject or (C) constitute a default (or an
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event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party or
by which it is bound or to which any of its assets are subject, which
violation, default or breach would materially and adversely affect the
Master Servicer's ability to perform its obligations under this
Agreement;
(iii) this Agreement constitutes, assuming due authorization,
execution and delivery hereof by the other respective parties hereto, a
legal, valid and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors' rights
in general, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(iv) the Master Servicer is not in default with respect to any
order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency to the extent that any such
default would materially and adversely affect its performance hereunder;
(v) the Master Servicer is not a party to or bound by any
agreement or instrument or subject to any charter provision, bylaw or
any other corporate restriction or any judgment, order, writ,
injunction, decree, law or regulation that may materially and adversely
affect its ability as Master Servicer to perform its obligations under
this Agreement or that requires the consent of any third person to the
execution of this Agreement or the performance by the Master Servicer of
its obligations under this Agreement;
(vi) no litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement;
(vii) the Master Servicer, or an affiliate thereof the primary
business of which is the servicing of conventional residential mortgage
loans, is a Xxxxxx Mae- or FHLMC-approved seller/servicer;
(viii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Master Servicer of or compliance by the Master
Servicer with this Agreement or the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders (if any) as have been obtained; and
(ix) the consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Master Servicer;
(b) It is understood and agreed that the representations and warranties
set forth in this Section shall survive the execution and delivery of this
Agreement. The Master Servicer shall indemnify the Depositor, the Securities
Administrator and the Trustee and hold them harmless
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against any loss, damages, penalties, fines, forfeitures, legal fees and related
costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a material
breach of the Master Servicer's representations and warranties contained in
Section 9.03(a). It is understood and agreed that the enforcement of the
obligation of the Master Servicer set forth in this Section to indemnify the
Depositor, the Securities Administrator and the Trustee as provided in this
Section constitutes the sole remedy (other than as set forth in Section 6.14) of
the Depositor, the Securities Administrator and the Trustee, respecting a breach
of the foregoing representations and warranties. Such indemnification shall
survive any termination of the Master Servicer as Master Servicer hereunder, and
any termination of this Agreement.
Any cause of action against the Master Servicer relating to or arising
out of the breach of any representations and warranties made in this Section
shall accrue upon discovery of such breach by either the Depositor, the Master
Servicer or the Trustee or notice thereof by any one of such parties to the
other parties.
Section 9.04 Compensation to the Master Servicer.
The Master Servicer shall be entitled to be paid by the Trust Fund, and
either retain or withdraw from the Distribution Account, (i) its Master
Servicing Fee with respect to each Distribution Date, (ii) amounts necessary to
reimburse itself for any previously unreimbursed Advances, Servicer Advances and
Nonrecoverable Advances in accordance with the definition of "Available
Distribution Amount" and (iii) amounts representing assumption fees, late
payment charges or other ancillary income not included in the definition of
"Available Distribution Amount" and which are not required to be remitted by the
Servicers to the Securities Administrator or deposited by the Securities
Administrator into the Distribution Account. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder and shall not be entitled to reimbursement therefor except as provided
in this Agreement.
In addition, Depositor agrees, except as otherwise expressly provided
herein, to reimburse the Master Servicer, upon its request, for all reasonable
expenses, disbursements and advances incurred or made by the Master Servicer in
connection with the performance of its duties hereunder (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), to the extent not otherwise reimbursed pursuant to this Agreement,
except any such expense, disbursement or advance as may be attributable to its
willful misfeasance, bad faith or negligence.
Section 9.05 Merger or Consolidation.
Any Person into which the Master Servicer may be merged or consolidated,
or any Person resulting from any merger, conversion, other change in form or
consolidation to which the Master Servicer shall be a party, or any Person
succeeding to the business of the Master Servicer, shall be the successor to the
Master Servicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or resulting
Person to the Master
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Servicer shall be a Person that shall be qualified and approved to service
mortgage loans for Xxxxxx Xxx or FHLMC and shall have a net worth of not less
than $15,000,000.
Section 9.06 Resignation of Master Servicer.
Except as otherwise provided in Sections 9.05 and 9.07 hereof, the
Master Servicer shall not resign from the obligations and duties hereby imposed
on it unless the Master Servicer's duties hereunder are no longer permissible
under applicable law or are in material conflict by reason of applicable law
with any other activities carried on by it and cannot be cured. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel that shall be Independent to such effect
delivered to the Trustee. No such resignation shall become effective until the
Trustee shall have assumed, or a successor master servicer shall have been
appointed by the Trustee and until such successor shall have assumed, the Master
Servicer's responsibilities and obligations under this Agreement. Notice of such
resignation shall be given promptly by the Master Servicer and the Depositor to
the Trustee.
If, at any time, the Master Servicer resigns under this Section 9.06, or
transfers or assigns its rights and obligations under Section 9.07, or is
removed as Master Servicer pursuant to Section 6.14, then at such time as Xxxxx
Fargo Bank Minnesota, National Association also shall resign (and shall be
entitled to resign) as Securities Administrator, Paying Agent, Authenticating
Agent and Certificate Registrar under this Agreement. In such event, the
obligations of each such party shall be assumed by the Trustee or such successor
master servicer appointed by the Trustee (subject to the provisions of Section
9.02(c)).
Section 9.07 Assignment or Delegation of Duties by the Master Servicer.
Except as expressly provided herein, the Master Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder; provided, however, that the Master
Servicer shall have the right with the prior written consent of the Trustee and
the Depositor (which consent shall not be unreasonably withheld), and upon
delivery to the Trustee and the Depositor of a letter from each Rating Agency to
the effect that such action shall not result in a downgrading of the
Certificates, to delegate or assign to or subcontract with or authorize or
appoint any qualified Person to perform and carry out any duties, covenants or
obligations to be performed and carried out by the Master Servicer hereunder.
Notice of such permitted assignment shall be given promptly by the Master
Servicer to the Depositor and the Trustee. If, pursuant to any provision hereof,
the duties of the Master Servicer are transferred to a successor master
servicer, the entire amount of the Master Servicing Fees and other compensation
payable to the Master Servicer pursuant hereto shall thereafter be payable to
such successor master servicer. Such successor Master Servicer shall also pay
the fees of the Trustee and the Securities Administrator, as provided herein.
Section 9.08 Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Trustee or the Certificateholders for any action
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taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Master Servicer or any such person against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in its performance of its duties or by reason of reckless
disregard for its obligations and duties under this Agreement. The Master
Servicer and any director, officer, employee or agent of the Master Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Master
Servicer shall be under no obligation to appear in, prosecute or defend any
legal action that is not incidental to its duties to master service the Mortgage
Loans in accordance with this Agreement and that in its opinion may involve it
in any expenses or liability; provided, however, that the Master Servicer may in
its sole discretion undertake any such action that it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto and the interests of the Certificateholders hereunder. In such event, the
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities of the Trust Fund and the Master
Servicer shall be entitled to be reimbursed therefor out of the Distribution
Account.
The Master Servicer shall not be liable for any acts or omissions of any
Servicer except to the extent that damages or expenses are incurred as a result
of such act or omissions and such damages and expenses would not have been
incurred but for the negligence, willful misfeasance, bad faith or recklessness
of the Master Servicer in supervising, monitoring and overseeing the obligations
of the Servicers in this Agreement.
Section 9.09 Indemnification; Third-Party Claims.
The Master Servicer agrees to indemnify the Depositor, the Securities
Administrator and the Trustee, and hold them harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, liability, fees and expenses that the Depositor,
the Securities Administrator or the Trustee may sustain as a result of the
Master Servicer's willful misfeasance, bad faith or negligence in the
performance of its duties hereunder or by reason of its reckless disregard for
its obligations and duties under this Agreement. The Depositor, the Securities
Administrator and the Trustee shall immediately notify the Master Servicer if a
claim is made by a third party with respect to this Agreement or the Mortgage
Loans entitling the Depositor, the Securities Administrator or the Trustee to
indemnification under this Section 9.09, whereupon the Master Servicer shall
assume the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or them in respect of such
claim.
ARTICLE X
REMIC ADMINISTRATION
Section 10.01 REMIC Administration.
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(a) REMIC elections as set forth in the Preliminary Statement shall be
made on Forms 1066 or other appropriate federal tax or information return for
the taxable year ending on the last day of the calendar year in which the
Certificates are issued. The regular interests and residual interest in each
REMIC shall be as designated in the Preliminary Statement.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 86OG(a)(9) of the Code. The latest possible
maturity date for purposes of Treasury Regulation 1.86OG-1(a)(4) will be the
Latest Possible Maturity Date.
(c) The Securities Administrator shall represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority with respect thereto. The Securities Administrator
shall pay any and all tax related expenses (not including taxes) of each REMIC,
including but not limited to any professional fees or expenses related to audits
or any administrative or judicial proceedings with respect to such REMIC that
involve the Internal Revenue Service or state tax authorities, but only to the
extent that (i) such expenses are ordinary or routine expenses, including
expenses of a routine audit but not expenses of litigation (except as described
in (ii)); or (ii) such expenses or liabilities (including taxes and penalties)
are attributable to the negligence or willful misconduct of the Securities
Administrator in fulfilling its duties hereunder (including its duties as tax
return preparer). The Securities Administrator shall be entitled to
reimbursement of expenses to the extent provided in clause (i) above from the
Securities Administration Account, provided, however, the Securities
Administrator shall not be entitled to reimbursement for expenses incurred in
connection with the preparation of tax returns and other reports as required by
Section 6.20 and this Section.
(d) The Securities Administrator shall prepare, and the Trustee shall
sign and file, as instructed by the Securities Administrator, all of each
REMIC's federal and appropriate state tax and information returns as such
REMIC's direct representative. The expenses of preparing and filing such returns
shall be borne by the Securities Administrator.
(e) The Securities Administrator or its designee shall perform on behalf
of each REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions, or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, if required by the Code, the REMIC
Provisions, or other such guidance, the Securities Administrator shall provide,
upon receipt of additional reasonable compensation, (i) to the Treasury or other
governmental authority such information as is necessary for the application of
any tax relating to the transfer of a Residual Certificate to any disqualified
person or organization pursuant to Treasury Regulation 1.860E-2(a)(5) and any
person designated in Section 860E(e)(3) of the Code and (ii) to the Trustee such
information as is necessary for the Trustee to provide to the Certificateholders
such information or reports as are required by the Code or REMIC Provisions.
(f) The Trustee, the Securities Administrator, the Master Servicer and
the Holders of Certificates shall take any action or cause any REMIC to take any
action necessary to create or maintain the status of any REMIC as a REMIC under
the REMIC Provisions and shall assist each other as necessary to create or
maintain such status. Neither the Trustee, the Securities Administrator, the
Master Servicer nor the Holder of any Residual Certificate shall knowingly take
any action, cause any REMIC to take any action or fail to take (or fail to cause
to be taken)
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any action that, under the REMIC Provisions, if taken or not taken, as the case
may be, could (i) endanger the status of any REMIC as a REMIC or (ii) result in
the imposition of a tax upon any REMIC (including but not limited to the tax on
prohibited transactions as defined in Code Section 860F(a)(2) and the tax on
prohibited contributions set forth on Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee, the Securities
Administrator and the Master Servicer have received an Opinion of Counsel (at
the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such status or result in the imposition of
such a tax. In addition, prior to taking any action with respect to any REMIC or
the assets therein, or causing any REMIC to take any action, which is not
expressly permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee, the Securities Administrator, the
Master Servicer or their respective designees, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur with respect to
any REMIC, and no such Person shall take any such action or cause any REMIC to
take any such action as to which the Trustee, the Securities Administrator or
the Master Servicer has advised it in writing that an Adverse REMIC Event could
occur; provided, however, that if no Adverse REMIC Event would occur but such
action could result in the imposition of additional taxes on the Residual
Certificateholders, no such Person shall take any such action, or cause any
REMIC to take any such action without the written consent of the Residual
Certificateholders.
(g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC by federal or state governmental authorities.
To the extent that such taxes are not paid by a Residual Certificateholder, the
Trustee or the Paying Agent shall pay any remaining REMIC taxes out of current
or future amounts otherwise distributable to the Holder of the Residual
Certificate in any such REMIC or, if no such amounts are available, out of other
amounts held in the Collection Account, and shall reduce amounts otherwise
payable to holders of regular interests in any such REMIC, as the case may be.
(h) The Securities Administrator shall, for federal income tax purposes,
maintain books and records with respect to each REMIC on a calendar year and on
an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement.
(j) Neither the Securities Administrator nor the Master Servicer shall
enter into any arrangement by which any REMIC will receive a fee or other
compensation for services.
(k) The Trustee and the Securities Administrator shall treat the Basis
Risk Reserve Fund as an outside reserve fund within the meaning of Treasury
Regulation Section 1.860G-2(h) that is owned by the holders of the Interest-Only
Certificates and that is not an asset of any REMIC. The Trustee and the
Securities Administrator shall treat the rights of the Holders of the LIBOR
Certificates to receive distributions from the Basis Risk Reserve Fund to cover
Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls as payments under a cap
contract written by the Holders of the Class X-1A, Class X-1B and Class X-B
Certificates in favor of the Holders of the LIBOR Certificates. Thus, each Class
A and Class B1 Certificates shall be treated as representing not only ownership
of regular interests in a REMIC, but also ownership of an interest in an
interest rate cap contract. For purposes of determining the issue prices of the
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Certificates, the interest rate cap contracts shall be assumed to have a zero
value unless and until required otherwise by an applicable taxing authority.
(l) "The Class LTR Holder shall act as "tax matters person" with respect
to the Lower-Tier REMIC and shall act as agent for the Class A-R
Certificateholder as "tax matters person" with respect to the Upper-Tier REMIC
and the Securities Administrator shall act as agent for the Class LTR Holder in
such roles, unless and until another party is so designated by the Class LTR
Holder."
Section 10.02 Prohibited Transactions and Activities.
Neither the Depositor, the Master Servicer nor the Trustee shall sell,
dispose of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of each REMIC pursuant to Article VII of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
repurchase of Mortgage Loans pursuant to Article II of this Agreement, nor
acquire any assets for any REMIC, nor sell or dispose of any investments in the
Distribution Account for gain, nor accept any contributions to any REMIC after
the Closing Date, unless it has received an Opinion of Counsel (at the expense
of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of any such REMIC as a REMIC or of the interests therein
other than the Residual Certificate as the regular interests therein, (b) affect
the distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause any such REMIC to be
subject to any tax including a tax on prohibited transactions or prohibited
contributions pursuant to the REMIC Provisions.
Section 10.03 Indemnification with Respect to Prohibited Transactions or
Loss of REMIC Status.
In the event that a REMIC fails to qualify as a REMIC, loses its status
as a REMIC, or incurs federal, state or local taxes as a result of a prohibited
transaction or prohibited contribution under the REMIC Provisions due to the
negligent performance by the Securities Administrator of its duties and
obligations set forth herein, the Securities Administrator shall indemnify the
Certificateholders of the related Residual Certificate against any and all
losses, claims, damages, liabilities or expenses ("Losses") resulting from such
negligence; provided, however, that the Securities Administrator shall not be
liable for any such Losses attributable to the action or inaction of the
Depositor, the Trustee or the Holder of the Residual Certificate, nor for any
such Losses resulting from misinformation provided by any of the foregoing
parties on which the Securities Administrator has relied. Notwithstanding the
foregoing, however, in no event shall the Securities Administrator have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement or under any Servicing Agreement or under any
Acknowledgement, (2) for any Losses other than arising out of malfeasance,
willful misconduct or negligent performance by the Service Administrator of its
duties and obligations set forth herein, and (3) for any special or
consequential damages to Certificateholders of the related Residual Certificate
(in addition to payment of principal and interest on the Certificates).
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Section 10.04 REO Property.
(a) Notwithstanding any other provision of this Agreement, the Master
Servicer, acting on behalf of the Trustee hereunder, shall not, except to the
extent provided in the applicable Servicing Agreement, knowingly permit any
Servicer to, rent, lease, or otherwise earn income on behalf of any REMIC with
respect to any REO Property which might cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of section 860G(a)(8) of
the Code or result in the receipt by any REMIC of any "income from non-permitted
assets" within the meaning of section 860F(a)(2) of the Code or any "net income
from foreclosure property" which is subject to tax under the REMIC Provisions
unless the applicable Servicer has provided to the Trustee an Opinion of Counsel
concluding that, under the REMIC Provisions, such action would not adversely
affect the status of any REMIC as a REMIC and any income generated for any REMIC
by the REO Property would not result in the imposition of a tax upon such REMIC.
(b) The Depositor shall cause the applicable Servicer (to the extent
provided in its Servicing Agreement) to make reasonable efforts to sell any REO
Property for its fair market value. In any event, however, the Depositor shall,
or shall cause the applicable Servicer (to the extent provided in its Servicing
Agreement) to, dispose of any REO Property within three years of its acquisition
by the Trust Fund unless the Depositor or the applicable Servicer (on behalf of
the Trust Fund) has received a grant of extension from the Internal Revenue
Service to the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, the REMIC may hold REO Property for
a longer period without adversely affecting the REMIC status of such REMIC or
causing the imposition of a Federal or state tax upon such REMIC. If such an
extension has been received, then the Depositor, acting on behalf of the Trustee
hereunder, shall, or shall cause the applicable Servicer to, continue to attempt
to sell the REO Property for its fair market value for such period longer than
three years as such extension permits (the "Extended Period"). If such an
extension has not been received and the Depositor or the applicable Servicer,
acting on behalf of the Trust Fund hereunder, is unable to sell the REO Property
within 33 months after its acquisition by the Trust Fund or if such an
extension, has been received and the Depositor or the applicable Servicer is
unable to sell the REO Property within the period ending three months before the
close of the Extended Period, the Depositor shall cause the applicable Servicer,
before the end of the three year period or the Extended Period, as applicable,
to (i) purchase such REO Property at a price equal to the REO Property's fair
market value or (ii) auction the REO Property to the highest bidder (which may
be the applicable Servicer) in an auction reasonably designed to produce a fair
price prior to the expiration of the three-year period or the Extended Period,
as the case may be.
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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,
the Master Servicer, the Securities Administrator, and the Trustee, without
notice to or the consent of any of the Holders, (i) to cure any ambiguity or
mistake, (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 or with the provisions of any Servicing Agreement, (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 REMIC Provisions. No such amendment effected pursuant to the preceding
sentence shall, as evidenced by an Opinion of Counsel, adversely affect the
status of any REMIC created pursuant to this Agreement, 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
shall be provided with an Opinion of Counsel (at the expense of the party
requesting such amendment) to the effect that such amendment is permitted under
this Section. 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.
(b) This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Securities Administrator and the Trustee,
with the consent of the Holders of not less than 66-2/3% of the Class 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
100
change will not adversely affect the status of any REMIC as a REMIC or cause a
tax to be imposed on such REMIC; and provided further, that no such amendment
may (i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate, without the consent of the Holder of such Certificate or (ii)
reduce the aforesaid percentages of Class Principal Amount or Class Notional
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 Principal Amount or Class Notional 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 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 Class
Notional Amount (or Percentage Interest), Certificates owned by the Depositor,
the Master Servicer, the Securities Administrator, the Trustee, any Servicer or
any Affiliates thereof are not to be counted so long as such Certificates are
owned by the Depositor, the Master Servicer, the Securities Administrator, the
Trustee, any Servicer or any Affiliate thereof.
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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, the Master Servicer and the Trustee agree to cooperate with
each other to provide to any Certificateholders and to any prospective purchaser
of Certificates designated by such holder, upon the request of such holder 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,
the Master Servicer or the Securities Administrator in providing such
information shall be reimbursed by the Depositor.
(b) The Securities Administrator shall 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 9.23(b) and (ii) a copy of any other document incorporated
by reference in the Prospectus. Any reasonable out-of-pocket expenses incurred
by the Securities Administrator in providing copies of such documents shall be
reimbursed by the Depositor.
(c) On each Distribution Date, the Securities Administrator shall
deliver or cause to be delivered by first class mail or make available on its
website to the Depositor, Attention: Contract Finance, a copy of the report
delivered to Certificateholders pursuant to Section 4.02.
Section 11.06 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 11.07 Notices.
All requests, demands, notices, authorizations, directions, consents,
waivers 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, Sequoia
Residential Funding, Inc., 000 Xxxxxxx Xxxxxxx, Xxxxx 0000, Xxxx Xxxxxx, XX
00000, telecopy number (000) 000-0000, Attention: Sequoia Mortgage Trust 11, (b)
in the case of the Seller, RWT Holdings, Inc., 000 Xxxxxxx Xxxxxxx, Xxxxx 0000,
Xxxx Xxxxxx, XX 00000, telecopy number (000) 000-0000, Attention: Sequoia
Mortgage Trust 11, (c) in the case of the Master Servicer or the Securities
Administrator, Xxxxx Fargo Bank Minnesota, National Association, X.X. Xxx 00,
Xxxxxxxx, Xxxxxxxx 00000, telecopy number (000) 000-0000, Attention: Sequoia
Mortgage Trust 11, and (d) with respect to the Trustee or the Certificate
Registrar, its respective Corporate Trust Office, or as to each party such other
address as may hereafter be furnished by such party to the other parties in
writing. All demands, notices and communications to a party hereunder shall be
in writing and shall be deemed to have been duly given when delivered to such
party at the relevant
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address, facsimile number or electronic mail address set forth above or at such
other address, facsimile number or electronic mail address as such party may
designate from time to time by written notice in accordance with this Section
11.07.
Section 11.08 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.09 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, except to
the extent specified in Section 11.15.
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) any Assignment by the Master Servicer of its rights
hereunder or delegation of its duties hereunder;
(iii) the occurrence of any Event of Default described in Section
6.14;
(iv) any notice of termination given to the Master Servicer
pursuant to Section 6.14 and any resignation of the Master Servicer
hereunder;
103
(v) the appointment of any successor to any Master Servicer
pursuant to Section 6.14;
(vi) the making of a final payment pursuant to Section 7.02; and
(vii) 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:
If to Moody's, to:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Mortgages
If to S&P, to:
Standard & Poor's Ratings Service,
a Division of The XxXxxx-Xxxx
Companies, Inc.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Mortgages
If to Fitch Ratings, to:
Fitch, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Mortgages
(c) The Securities Administrator shall provide or make available to the
Rating Agencies reports prepared pursuant to Section 4.02. In addition, the
Securities Administrator shall, at the expense of the Trust Fund, make available
to each Rating Agency such information as such Rating Agency may reasonably
request regarding the Certificates or the Trust Fund, to the extent that such
information is reasonably available to the Securities Administrator.
(d) The Depositor hereby represents to S&P that, to the Depositor's
knowledge, the information provided to such Rating Agency, including the loan
level detail, is true and correct according to such Rating Agency's
requirements.
Section 11.13 Conflicts.
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To the extent that the terms of this Agreement conflict with the terms
of any Servicing Agreement, the related Servicing Agreement shall govern.
Section 11.14 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.
Section 11.15 No Petitions.
The Trustee and the Master Servicer, by entering into this Agreement,
hereby covenant and agree that they shall not at any time institute against the
Depositor, or join in any institution against the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to this Agreement or any of the
documents entered into by the Depositor in connection with the transactions
contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers hereunto duly authorized as of the
day and year first above written.
SEQUOIA RESIDENTIAL FUNDING, INC.,
as Depositor
By:
-------------------------------------
Xxxx X. Xxxxxxxxxxx
Vice President
HSBC BANK USA,
as Trustee
By:
-------------------------------------
Xxxx Xxxxx
Vice President
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Master Servicer
By:
-------------------------------------
Xxxxx X. Xxxxxxxxx
Vice President
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Securities
Administrator
By:
-------------------------------------
Xxxxxx Xxxxxxxxxx
Assistant Vice President
106
Solely for purposes of Section 2.04 accepted and agreed to by:
RWT HOLDINGS, INC.
By:
-------------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President
107
EXHIBIT A
FORMS OF CERTIFICATES
EXHIBIT B
FORM OF RESIDUAL 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 _______________________ [description of type
of entity] duly organized and existing under the laws of the
[State of __________] [United States], on behalf of which he
[she] makes this affidavit.
2. That the Purchaser's Taxpayer Identification Number is
[ ].
3. That the Purchaser is not a Disqualified Organization (as defined
in the Agreement) within the meaning of Section 860E(e)(5) of the
Internal Revenue Code of 1986, as amended (the "Code") and will
not be a Disqualified Organization as of [date of transfer], and
that the Purchaser is not acquiring a Residual Certificate (as
defined 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.
4. That the Purchaser either (x) is not, and on __________________
[date of transfer] will not be, 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 Code, the trustee of any such plan or a person acting on
behalf of any such plan or investing the assets of any such plan
to acquire a Residual Certificate; (y) is an insurance company
that is purchasing the Certificate with funds contained in an
"insurance company general account" as defined in Section V(e) of
Prohibited Transaction Class Exemption ("PTCE") 95-60 and the
purchase and holding of the Certificate are covered under Section
I and III of PTCE 95-60; or (z) herewith delivers to the Trustee
and the Certificate Registrar an opinion of counsel (a "Benefit
Plan Opinion") satisfactory to the Trustee and the Certificate
Registrar, and upon which the Trustee and the Certificate
Registrar shall be entitled to rely, to the effect that the
purchase or holding of such Residual 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,
the Securities Administrator, the Master Servicer or the
Depositor to any obligation in addition to those undertaken by
such entities in the Pooling and Servicing
B-1
Agreement, which opinion of counsel shall not be an expense of
the Trustee or the Certificate Registrar.
5. That the Purchaser hereby acknowledges that under the terms of
the Pooling and Servicing Agreement dated as of October 1, 2002
(the "Agreement"), by and among Sequoia Residential Funding,
Inc., as Depositor, Xxxxx Fargo Bank Minnesota, National
Association, as Master Servicer and as Securities Administrator
and HSBC Bank USA, as Trustee with respect to Sequoia Mortgage
Trust 11 Mortgage Pass-Through Certificates, no transfer of the
Residual Certificates shall be permitted to be made to any person
unless the Certificate Registrar and Trustee have received a
certificate from such transferee containing the representations
in paragraphs 3 and 4 hereof.
6. That the Purchaser does not hold REMIC residual securities as
nominee to facilitate the clearance and settlement of such
securities through electronic book-entry changes in accounts of
participating organizations (such entity, a "Book-Entry
Nominee").
7. That the Purchaser does not have the intention to impede the
assessment or collection of any federal, state or local taxes
legally required to be paid with respect to such Residual
Certificate.
8. That the Purchaser will not transfer a Residual Certificate to
any person or entity (i) as to which the Purchaser has actual
knowledge that the requirements set forth in paragraph 3,
paragraph 6 or paragraph 10 hereof are not satisfied or that the
Purchaser has reason to believe does not satisfy the requirements
set forth in paragraph 7 hereof, and (ii) without obtaining from
the prospective Purchaser an affidavit substantially in this form
and providing to the Trustee and the Certificate Registrar a
written statement substantially in the form of Exhibit C to the
Agreement.
9. That the Purchaser understands that, as the holder of a Residual
Certificate, the Purchaser may incur tax liabilities in excess of
any cash flows generated by the interest and that it intends to
pay taxes associated with holding such Residual Certificate as
they become due.
10. That the Purchaser (i) is not a Non-U.S. Person or (ii) is a
Non-U.S. Person that holds a Residual Certificate in connection
with the conduct of a trade or business within the United States
and has furnished the transferor, the Trustee and the Certificate
Registrar with an effective Internal Revenue Service Form W-8ECI
(Certificate of Foreign Person's Claim for Exemption From
Withholding on Income Effectively Connected With the Conduct of a
Trade or Business in the United States) or successor form at the
time and in the manner required by the Code or (iii) is a
Non-U.S. Person that has delivered to the transferor, the Trustee
and the Certificate Registrar an opinion of a nationally
recognized tax counsel to the effect that the transfer of such
Residual Certificate to it is in accordance with the requirements
of the Code and the regulations promulgated thereunder and that
B-2
such transfer of a Residual Certificate will not be disregarded
for federal income tax purposes. "Non-U.S. Person" means a person
other than a "United States Person" within the meaning of Section
7701(a)(30) of the Code.
11. The Purchaser will not cause income from the Residual Certificate
to be attributable to a foreign permanent establishment or fixed
base of the Purchaser or another U.S. taxpayer.
12. That the Purchaser agrees to such amendments of the Pooling and
Servicing Agreement as may be required to further effectuate the
restrictions on transfer of any Residual Certificate to a
Disqualified Organization, an agent thereof, a Book-Entry
Nominee, or a person that does not satisfy the requirements of
paragraph 7 and paragraph 10 hereof.
13. That the Purchaser consents to the designation of the Securities
Administrator to act as agent for the "tax matters person" of
each REMIC created by the Trust Fund pursuant to the Pooling and
Servicing Agreement.
B-3
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[title of officer] this _____ day of __________, 20__.
------------------------------------
[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 __________ 20__.
NOTARY PUBLIC
------------------------------
COUNTY OF
---------------------
STATE OF
----------------------
My commission expires the _____ day of __________ 20__.
B-4
EXHIBIT C
RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
----------------------------
Date
Re: Sequoia Mortgage Trust 11
Mortgage Pass-Through Certificates
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to a Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.
Very truly yours,
-----------------------------------
Name:
Title:
C-1
EXHIBIT D
FORM OF CUSTODY AGREEMENT
D-1
EXHIBIT E
LIST OF SERVICING AGREEMENTS
1. The Master Servicing Agreement between RWT Holdings, Inc. ("RWT") and
Xxxxxx Xxxxxxx Xxxx Xxxxxx Credit Corporation, dated as of August 1,
2002, as modified by the related Acknowledgements.
2. The Mortgage Loan Flow Purchase, Sale and Servicing Agreement, dated as
of August 1, 2002, between RWT and GreenPoint Mortgage Funding, Inc., as
modified by the related Acknowledgements.
3. The Mortgage Loan Flow Purchase, Sale & Servicing Agreement among RWT,
Cendant Mortgage Corporation ("Cendant") and Xxxxxx'x Gate Residential
Mortgage Trust (formerly known as Cendant Residential Mortgage Trust),
as Sellers, and Cendant, as Servicer, dated as of August 1, 2002, and
the Additional Collateral Servicing Agreement between RWT and Cendant,
dated as of August 1, 2002, each as modified by the related
Acknowledgements.
E-1
EXHIBIT F
LIST OF PURCHASE AGREEMENTS
1. The Master Mortgage Loan Purchase Agreement between RWT Holdings, Inc.
("RWT") and Xxxxxx Xxxxxxx Xxxx Xxxxxx Credit Corporation, dated as of
August 1, 2002, as modified by the related Acknowledgements.
2. The Mortgage Loan Flow Purchase, Sale and Servicing Agreement, dated as
of August 1, 2002, between RWT and GreenPoint Mortgage Funding, Inc., as
modified by the related Acknowledgements.
3. The Mortgage Loan Flow Purchase, Sale & Servicing Agreement among RWT,
Cendant Mortgage Corporation ("Cendant") and Xxxxxx'x Gate Residential
Mortgage Trust (formerly known as Cendant Residential Mortgage Trust),
as Sellers, and Cendant, as Servicer, dated as of August 1, 2002, as
modified by the related Acknowledgements.
4. The Master Mortgage Loan Purchase Agreement, dated as of April 1, 1998,
between RWT and Xxxxxxx Xxxxx Credit Corporation, as amended by
Amendment No. 1 dated December 14, 1999 and Amendment No. 2, dated as of
September 26, 2002, as modified by the related Acknowledgements.
F-1
EXHIBIT G
LIST OF LIMITED PURPOSE SURETY BONDS
1. Ambac Assurance Corporation Surety Bond No. AB0240BE, issued March 17,
1999, for Xxxxxx Xxxxxxx Xxxx Xxxxxx Credit Corporation loans.
2. Ambac Assurance Corporation Surety Bond No. AB0039BE, issued February
26, 1996, for Xxxxxxx Xxxxx Credit Corporation loans.
G-1
EXHIBIT H
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Sequoia Mortgage Trust 11
Mortgage Pass-Through Certificates
Reference is hereby made to the Pooling and Servicing Agreement, dated
as of October 1, 2002 (the "Pooling and Servicing Agreement"), by and among
Sequoia Residential Funding, Inc., as Depositor, Xxxxx Fargo Bank Minnesota,
National Association, as Master Servicer and as Securities Administrator and
HSBC Bank USA, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Pooling and Servicing 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 Pooling and
Servicing 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 Underwriters and the Depositor.
-------------------------------------
[Name of Transferor]
By:
----------------------------------
Name:
Title:
Dated: ,
----------- ----
H-1
EXHIBIT I
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
Date
Dear Sirs:
In connection with our proposed purchase of $______________ principal
amount of Sequoia Mortgage Trust 11 Mortgage Pass-Through Certificates (the
"Privately Offered Certificates") of Sequoia Residential Funding, 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 two 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 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 Certificate Registrar under the Pooling and Servicing
Agreement, dated as of October 1, 2002, by and among Sequoia Residential
Funding, Inc., as Depositor, Xxxxx Fargo Bank Minnesota, National
Association, as Master Servicer and as Securities Administrator and HSBC
Bank USA, as 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 Certificate Registrar 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.
I-1
(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.
(6) If we are acquiring ERISA-Restricted Certificates, we understand that in
accordance with ERISA, the Code and the Exemption, no Plan and no person
acting on behalf of such a Plan may acquire such Certificate except in
accordance with Section 3.03(d) of the Pooling and Servicing Agreement.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Pooling and Servicing Agreement.
I-2
You 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:
I-3
EXHIBIT J
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, and on ___________ [date of
transfer] will not be, 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 or investing the assets of any such plan; (y) if the
Certificate has been the subject of an ERISA-Qualifying Underwriting, is an
insurance company that is purchasing the Certificate with funds contained in
an "insurance company general account" as defined in Section V(e) of
Prohibited Transaction Class Exemption ("PTCE") 95-60 and the purchase and
holding of the Certificate are covered under Section I and III of PTCE
95-60; or (z) herewith delivers to the Certificate Registrar an opinion of
counsel (a "Benefit Plan Opinion") satisfactory to the Certificate
Registrar, and upon which the Certificate Registrar 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, the Master Servicer, the
Certificate Registrar, the Securities Administrator or the Depositor to any
obligation in addition to those undertaken by such entities in the Pooling
and Servicing Agreement, which opinion of counsel shall not be an expense of
the Trust Fund, the Trustee, the Certificate Registrar, the Securities
Administrator or the Depositor.
3. The Investor hereby acknowledges that under the terms of the
Pooling and Servicing Agreement dated as of October 1, 2002 (the
"Agreement"), by and among Sequoia Residential Funding, Inc., as Depositor,
Xxxxx Fargo Bank Minnesota, National Association, as Master Servicer and as
Securities Administrator and HSBC Bank USA, as Trustee, no transfer of the
ERISA-Restricted Certificates shall be permitted to be made to any person
unless the Certificate Registrar has received a certificate from such
transferee in the form hereof.
J-1
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 _______________ 20___.
------------------------------------
[Investor]
By:
---------------------------------
Name:
Title:
ATTEST:
-----------------------------
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named ________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the ____________________ of the Investor, and
acknowledged that he executed the same as his free act and deed and the
free act and deed of the Investor.
Subscribed and sworn before me this _____ day of _________ 20___.
-----------------------------------
NOTARY PUBLIC
My commission expires the
_____ day of __________,
20___.
J-2
EXHIBIT K
FORM OF LETTER OF REPRESENTATIONS
WITH THE DEPOSITORY TRUST COMPANY
K-1
SCHEDULE A
MORTGAGE LOAN SCHEDULE
SCHEDULE B
MORTGAGE LOAN REPRESENTATIONS AND
WARRANTIES OF THE SELLER
PLEDGED MORTGAGE REPRESENTATIONS AND WARRANTIES
ON LOANS PURCHASED DIRECTLY FROM ORIGINATORS
I. MORTGAGE LOANS PURCHASED UNDER THE MASTER MORTGAGE LOAN PURCHASE
AGREEMENT DATED AS OF AUGUST 1, 2002 BETWEEN RWT HOLDINGS, INC. ("RWT
HOLDINGS") AND XXXXXX XXXXXXX XXXX XXXXXX CREDIT CORPORATION (THE
"SELLER/SERVICER") (THE "XXXXXX-RWT AGREEMENT").
With respect to each Mortgage Loan, RWT Holdings hereby makes the
following representations and warranties. Such representations and warranties
speak as of the Closing Date with respect to the Initial Mortgage Loans and the
Subsequent Transfer Date with respect to the Subsequent Mortgage Loans (as such
capitalized terms are defined in the Pooling and Servicing Agreement), unless
otherwise indicated. Capitalized terms are as defined in this Schedule B or in
the Xxxxxx-RWT Agreement.
(i) The information set forth in the Mortgage Loan Schedule is true and
correct in all material respects;
(ii) The information provided to the rating agencies, including the loan
level detail, is true and correct according to the rating agency requirements;
(iii) As of the Closing Date, the Mortgage Loan is not delinquent more
than 29 days, the Mortgage Loan has never been delinquent for more than 59 days
and the Mortgage Loan has not been dishonored. To RWT Holdings' knowledge, there
are no material defaults under the terms of the Mortgage Loan. The
Seller/Servicer has not advanced funds, or induced or, solicited any advance of
funds from a party other than the owner of the Mortgaged Property subject to the
Mortgage, directly or indirectly, for the payment of any amount required by the
Mortgage Loan;
(iv) With respect to those Mortgage Loans which are required to deposit
funds into an escrow account for payment of taxes, assessments, insurance
premiums and similar items as they become due, all escrow deposits have been
collected, are under the control of the Seller/Servicer, and have been applied
by the Seller/Servicer to the payment of such items in a timely fashion, in
accordance with such Mortgage. There exist no deficiencies in connection
therewith for which customary arrangements for repayment thereof have not been
met. With respect to those Mortgage Loans for which escrow deposits are not
required, to RWT Holdings' knowledge, there are no delinquent taxes or other
outstanding charges affecting the related Mortgaged Property which constitute a
lien on the related Mortgaged Property;
(v) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments contained in the Trustee Mortgage File, approved, if necessary, by
the insurer under any Primary Mortgage Insurance Policy and recorded in all
places necessary to maintain the first priority of the lien, the substance of
which waiver, alteration or modification is reflected on the Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in part, except by
operation of law or in connection with an assumption agreement which assumption
agreement is part of the Trustee Mortgage File and the terms of which are
reflected in the Mortgage Loan Schedule;
(vi) Neither the Mortgage Note nor the Mortgage is subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and, to RWT
Holdings' knowledge, no such right of recission, set-off, counterclaim or
defense has been asserted by any Person with respect thereto;
(vii) All buildings upon the Mortgaged Property are required to be
insured by a generally acceptable insurer against loss by fire, hazards of
extended coverage and such other hazards as are customarily included in extended
coverage in the area where the Mortgaged Property is located, pursuant to
standard property insurance policies in compliance with the Seller/Servicer's
policies as from time to time in effect. On the date of origination, all such
property policies were in effect, and contained a standard mortgage clause
naming the Seller/Servicer or the originator of the Mortgage Loan and their
respective successors in interest as mortgagee; to the knowledge of RWT
Holdings, such policy and clause or a replacement is in effect and, to RWT
Holdings' knowledge, all premiums due thereon have been paid. If the Mortgaged
Property is located in an area identified by the Federal Emergency Management
Agency as having special flood hazards under the National Flood Insurance Act of
1994, as amended, such Mortgaged Property is covered by flood insurance in the
amount required under the National Flood Insurance Act of 1994. The Mortgage
obligates the Mortgagor to maintain such insurance and authorizes the holder of
the Mortgage to maintain such insurance at Mortgagor's cost and expense should
the Mortgagor fail to do so and to seek reimbursement therefor from the
Mortgagor;
(viii) At the time of origination of such Mortgage Loan and thereafter,
all requirements of any federal or state law, including usury, truth-in-lending,
real estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws required to be complied with by the
Seller/Servicer as the originator of the Mortgage Loan and applicable to the
Mortgage Loan have been complied with in all material respects;
(ix) The Mortgage has not been satisfied as of the Closing Date,
canceled or subordinated, in whole, or rescinded, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part (except for
a release that does not
B-2
materially impair the security of the Mortgage Loan or a release the effect of
which is reflected in the Loan-to-Value Ratio for the Mortgage Loan as set forth
in the Mortgage Loan Schedule);
(x) Ownership of the Mortgaged Property is held in fee simple or
leasehold estate. With respect to Mortgage Loans that are secured by a leasehold
estate: (i) the lease is valid, in full force and effect, and conforms to all of
Xxxxxx Mae's requirements for leasehold estates; (ii) all rents and other
payments due under the lease have been paid; (iii) the lessee is not in default
under any provision of the lease; (iv) the term of the lease exceeds the
maturity date of the related Mortgage Loan by at least five (5) years; and (v)
the terms of the lease provide a Mortgagee with an opportunity to cure any
defaults. Except as permitted by the fourth sentence of this paragraph (x), the
Mortgage is a valid, subsisting and enforceable first lien on the Mortgaged
Property securing the Mortgage Note's original principal balance. Such lien is
free and clear of all adverse claims, liens and encumbrances having priority
over the first lien of the Mortgage, subject only to (1) the lien of
non-delinquent current real property taxes and assessments not yet due and
payable, (2) liens, covenants, conditions and restrictions, rights of way,
easements and other matters reflected in the public record as of the date of
recording which are acceptable to mortgage lending institutions generally, or
which are referred to (specifically or generally) in the lender's title
insurance policy delivered to the originator of the Mortgage Loan and either (A)
which are referred to or otherwise considered in such title insurance policy or
the appraisal made for the originator of the Mortgage Loan, or (B) which do not
in the aggregate adversely affect the appraised value of the Mortgaged Property
as set forth in such appraisal, and (3) other matters to which like properties
are commonly subject which do not in the aggregate materially interfere with the
benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property. With
respect to each Cooperative Loan, the security instruments create a valid,
enforceable and subsisting first priority security interest in the Cooperative
Apartment securing the related Mortgage Note subject only to (a) the lien of the
related cooperative for unpaid assessments representing the Mortgagor's pro rata
share of payments for a blanket mortgage, if any, current and future real
property taxes, insurance premiums, maintenance fees and other assessments, and
(b) other matters to which the collateral is commonly subject which do not
materially interfere with the benefits of the security intended to be provided;
provided, however, that the related proprietary lease for the Cooperative
Apartment may be subordinated or otherwise subject to the lien of a Mortgage on
the cooperative building;
(xi) The Mortgage Note and the related Mortgage are genuine and are in
proper form to constitute a legal, valid and binding obligation of the maker
thereof in all material respects, enforceable in accordance with its terms,
subject to bankruptcy, insolvency and other laws of general application
affecting the rights of creditors, and general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law), and assuming that the maker thereof had the legal capacity to enter into
the Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage.
The Mortgage Note and the Mortgage have been duly and properly
B-3
executed by such parties. An obligor of the debt evidenced by the Mortgage Note
is a natural person. The proceeds of the Mortgage Loan have been fully disbursed
and there is no requirement for future advances thereunder, and any and all
requirements in the Mortgage as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with;
(xii) RWT Holdings has good title to, and the full right to transfer and
sell, the Mortgage Loan and the Mortgage Note free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest including, to the
knowledge of RWT Holdings, any lien, claim or other interest arising by
operation of law;
(xiii) The Mortgage Loan is covered by either an ALTA lender's title
insurance policy or other generally acceptable form of policy or insurance
acceptable to Xxxxxx Xxx or Xxxxxxx Mac, issued by a title insurer acceptable to
Xxxxxx Mae or Xxxxxxx Mac and qualified to do business in the jurisdiction where
the Mortgaged Property is located, insuring (subject to the exceptions contained
in paragraph (x) (1), (2) and (3) above) to the Seller/Servicer, its successors
and assigns, the first priority lien of the Mortgage in the original principal
amount of the Mortgage Loan. The Seller/Servicer is the sole insured of such
lender's title insurance policy, such title insurance policy has been duly and
validly endorsed to the Trustee (as defined in the Pooling and Servicing
Agreement) or the assignment to such Trustee of the Seller/Servicer's interest
does not require the consent of or notification to the insurer and such lender's
title insurance policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by the Xxxxxx-RWT
Agreement. To RWT Holdings' knowledge, no claims have been made under such
lender's title insurance policy, and no prior holder of the related Mortgage has
done, by act or omission, anything which would impair the coverage of such
lender's title insurance policy;
(xiv) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and, to RWT Holdings'
knowledge, no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event permitting acceleration, except for any Mortgage Loan Payment
which is not late by more than 30 days, and the Seller/Servicer has not waived
any default, breach, violation or event permitting acceleration;
(xv) To RWT Holdings' knowledge, all material improvements subject to
the Mortgage, lie wholly within the boundaries and building restrictions lines
of the Mortgaged Property (and wholly within the project with respect to a
condominium unit) and no improvements on adjoining properties materially
encroach upon the Mortgaged Property, except those which are insured against by
the title insurance policy referred to in paragraph (xiii) above and all
improvements on the property comply with all applicable zoning and subdivision
laws and ordinances;
(xvi) The Mortgage Loan (unless designated as originated by others on
any Mortgage Loan Schedule) was originated by the Seller/Servicer (or the
corporate predecessor of the Seller/Servicer), and at the time of each such
origination of such
B-4
Mortgage Loan the Seller/Servicer was (unless designated as "originated prior to
HUD approval" on any Mortgage Loan Schedule) a mortgagee approved by the
Secretary of Housing and Urban Development (the "Secretary") pursuant to
Sections 203 and 211 of the National Housing Act. Each such Mortgage Loan was
underwritten in accordance with the Underwriting Guide as in effect at the time
of origination, except to the extent the Seller/Servicer believed as such time
that a variance from such Underwriting Guide was warranted by compensating
factors. The Mortgage contains the usual and customary provision of the
Seller/Servicer, if any, in the applicable jurisdiction at the time of
origination for the acceleration of the payment of the unpaid principal balance
of the Mortgage Loan if the related Mortgaged Property is sold without the prior
consent of the Mortgagee thereunder;
(xvii) The Mortgaged Property at origination or acquisition was and, to
RWT Holdings' knowledge, is free of material damage and waste and at origination
there was, and to RWT Holdings' knowledge there is, no proceeding pending for
the total or partial condemnation thereof;
(xviii) The related Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits of
the security provided thereby;
(xix) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act as such, has been properly
designated and currently so serves as named in the Mortgage, and no fees or
expenses are or will become payable to the trustee under the deed of trust,
except in connection with a trustee's sale or attempted sale after default by
the Mortgagor;
(xx) With respect to the Mortgage Loan, there is an appraisal on a
Xxxxxx Xxx-approved form (or a narrative residential appraisal) of the related
Mortgaged Property that conforms to the applicable requirements of the Financial
Institutions Reform Recovery and Enforcement Act of 1989 and that was signed
prior to the approval of such Mortgage Loan application by a qualified
appraiser, appointed by the Seller/Servicer or the originator of such Mortgage
Loan, as appropriate, who has no interest, direct or indirect, in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is
not affected by the approval or disapproval of such Mortgage Loan;
(xxi) The Mortgage Loan contains no "subsidized buydown" or graduated
payment features;
(xxii) The Mortgaged Property has a single-family (one to four-unit)
dwelling residence erected thereon, or is an individual condominium unit in a
condominium, or a Cooperative Apartment or an individual unit in a planned unit
development or in a de minimis planned unit development as defined by Xxxxxx
Mae. No such residence is a mobile home or a manufactured dwelling which is not
permanently attached to the land;
B-5
(xxiii) Except as set forth on the Mortgage Loan Schedule the Mortgage
Loan is not a Converted Mortgage Loan. The Mortgage Loan does not provide for
negative amortization;
(xxiv) The Mortgage Loan does not have an original term in excess of
thirty (30) years and one month;
(xxv) If the Mortgage Loan is a Cooperative Loan, (a) there is no
provision in any proprietary lease which requires the Mortgagor to offer for
sale the cooperative shares owned by such Mortgagor first to the cooperative,
(b) there is no prohibition in the proprietary lease against pledging the
cooperative shares or assigning the proprietary lease, (c) to RWT Holdings'
knowledge, the Cooperative Apartment is lawfully occupied under applicable law,
and (d) to RWT Holdings' knowledge, all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Cooperative Apartment and the related project have been made or obtained from
the appropriate authorities;
(xxvi) There has been no fraud, material misrepresentation or deceit on
the part of any Mortgagor or any third party in connection with the Mortgage
Loan (including the application, processing, appraisal and origination) which
would cause a material economic loss to the owner of the Mortgage Loan,
including, but not limited to, material misrepresentation of such Mortgagor's
income, funds on deposit or employment;
(xxvii) The origination, collection and other servicing practices used
by the Seller/Servicer with respect to the Mortgage Loans are in compliance with
all material requirements of applicable laws and regulations;
(xxviii) The Seller/Servicer shall cause to be maintained for each
Mortgage Loan primary hazard insurance with extended coverage on the related
mortgage property in an amount equal to the lessor of (i) full replacement value
of improvements and (ii) the outstanding principal balance;
(xxix) RWT Holdings has no knowledge of any homestead or other exemption
available to the mortgagor which would interfere with the right to sell the
mortgage property at trustee's sale or the right to foreclose the mortgage;
(xxx) At the time of origination of such Mortgage Loan, and thereafter,
all material requirements of any federal, state or local law including usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws required to be complied with by the
Seller/Servicer as the originator of the Mortgage Loan have been complied with
in all material respects; and
(xxxi) The Additional Collateral Mortgage Loans are insured under the
terms and provisions of the Surety Bond subject to the limitations set forth
therein. The Seller/Servicer will deliver to the Surety Bond issuer an
"Assignment and Notice of Transfer" in the form of Attachment to the Surety
Bond, or any other similar instrument required to be delivered under the Surety
Bond, executed by the Seller/Servicer and XXX
X-0
Holdings, and that all other requirements for transferring coverage under the
Surety Bond in respect of such Additional Collateral Mortgage Loans to the
Trustee (as defined in the Pooling and Servicing Agreement) shall be complied
with.
II. WITH RESPECT TO MORTGAGE LOANS PURCHASED UNDER THE MORTGAGE LOAN FLOW
PURCHASE, SALE AND SERVICING AGREEMENT, DATED AS OF AUGUST 1, 2002,
BETWEEN RWT HOLDINGS AND GREENPOINT MORTGAGE FUNDING, INC. (THE
"SELLER") (THE "GREENPOINT-RWT AGREEMENT")
With respect to each Mortgage Loan, RWT Holdings hereby makes the
following representations and warranties. Such representations and warranties
speak as of the Closing Date with respect to the Initial Mortgage Loans and the
Subsequent Transfer Date with respect to the Subsequent Mortgage Loans (as such
capitalized terms are defined in the Pooling and Servicing Agreement), unless
otherwise indicated. Capitalized terms are as defined in this Schedule B or in
the GreenPoint-RWT Agreement.
(i) The information set forth in the Mortgage Loan Schedule is true,
complete and correct in all material respects as of the Cut-Off Date;
(ii) The information provided to the rating agencies, including the loan
level detail, is true and correct according to the rating agency requirements;
(iii) The Mortgage creates a first lien on or a first priority ownership
interest in real property securing the related Mortgage Note, free and clear of
all adverse claims, liens and encumbrances having priority over the first lien
of the Mortgage subject only to (1) the lien of non-delinquent current real
property taxes and assessments not yet due and payable, (2) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording which are acceptable to mortgage
lending institutions generally and, with respect to any Mortgage Loan for which
an appraisal was made prior to the Cut-Off Date, either (A) which are referred
to or otherwise considered in the appraisal made for the originator of the
Mortgage Loan, or (B) which do not adversely affect the appraised value of the
Mortgaged Property as set forth in such appraisal, and (C) other matters to
which like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged Property. If the
Mortgaged Property includes a leasehold estate, the lease is valid, in full
force and affect, and conforms to the Xxxxxx Xxx requirements for leasehold
estates. Any security agreement, chattel mortgage or equivalent document related
to and delivered in connection with the Mortgage Loan establishes and creates a
valid, subsisting and enforceable first lien and first priority security
interest on the property described therein;
(iv) The Mortgage Loan has not been delinquent thirty (30) days or more
at any time during the twelve (12) month period prior to the Cut-off Date for
such Mortgage Loan. To RWT Holdings' knowledge, there are no defaults under the
terms of the Mortgage Loan; and the Seller has not advanced funds, or induced,
solicited or knowingly received
B-7
any advance of funds from a party other than the owner of the Mortgaged Property
subject to the Mortgage, directly or indirectly, for the payment of any amount
required by the Mortgage Loan;
(v) To RWT Holdings' knowledge, there are no delinquent taxes which are
due and payable, ground rents, assessments or other outstanding charges
affecting the related Mortgaged Property;
(vi) The terms of the Mortgage Note of the related Mortgagor and the
Mortgage have not been impaired, waived, altered or modified in any respect,
except by written instruments which have been recorded to the extent any such
recordation is required by applicable law or is necessary to protect the
interests of the Purchaser, and which have been approved by the title insurer
and the primary mortgage insurer, as applicable, and copies of which written
instruments are included in the Mortgage File. No other instrument of waiver,
alteration or modification has been executed, and no Mortgagor has been
released, in whole or in part, from the terms thereof except in connection with
an assumption agreement, which assumption agreement is part of the Mortgage File
and the terms of which are reflected on the Mortgage Loan Schedule;
(vii) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage Note or
Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and, to RWT Holdings' knowledge, no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto;
(viii) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer pursuant to standard hazard policies conforming to
the requirements of Xxxxxx Mae and Xxxxxxx Mac. All such standard hazard
policies are in effect and on the date of origination contained a standard
mortgagee clause naming the Seller and its successors in interest as loss payee
and such clause is still in effect and, to RWT Holdings' knowledge, all premiums
due thereon have been paid. If the Mortgaged Property is located in an area
identified by the Federal Emergency Management Agency as having special flood
hazards under the Flood Disaster Protection Act of 1973, as amended, such
Mortgaged Property is covered by flood insurance by a generally acceptable
insurer in an amount not less than the requirements of Xxxxxx Mae and Xxxxxxx
Mac. The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and on the Mortgagor's failure to
do so, authorizes the holder of the Mortgage to maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(ix) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with in all material
respects;
B-8
(x) The Mortgage has not been satisfied, canceled or subordinated, in
whole or in part, or rescinded, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part nor has any instrument been
executed that would effect any such satisfaction, release, cancellation,
subordination or rescission;
(xi) The Mortgage Note and the related Mortgage are original and genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in all respects in accordance with its terms subject to bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors, and the Seller has taken all action necessary to transfer such rights
of enforceability to the Purchaser. All parties to the Mortgage Note and the
Mortgage had the legal capacity to enter into the Mortgage Loan and to execute
and deliver the Mortgage Note and the Mortgage. The Mortgage Note and the
Mortgage have been duly and properly executed by such parties. The proceeds of
the Mortgage Note have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow funds
therefor have been complied with;
(xii) Immediately prior to the transfer and assignment to the Purchaser,
the Mortgage Note and the Mortgage were not subject to an assignment or pledge,
and the Seller had good and marketable title to and was the sole owner thereof
and had full right to transfer and sell the Mortgage Loan to the Purchaser free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest;
(xiii) The Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy of insurance, with all
necessary endorsements, issued by a title insurer qualified to do business in
the jurisdiction where the Mortgaged Property is located, insuring (subject to
the exceptions contained in clause (b) (1), (2) and (3) above) the Seller, its
successors and assigns, as to the first priority lien of the Mortgage in the
original principal amount of the Mortgage Loan. Such title insurance policy
affirmatively insures ingress and egress and against encroachments by or upon
the Mortgaged Property or any interest therein. The Seller is the sole insured
of such lender's title insurance policy, such title insurance policy has been
duly and validly endorsed to the Purchaser or the assignment to the Purchaser of
the Seller's interest therein does not require the consent of or notification to
the insurer and such lender's title insurance policy is in full force and effect
and will be in full force and effect upon the consummation of the transactions
contemplated by the GreenPoint-RWT Agreement. To RWT Holdings' knowledge, no
claims have been made under such lender's title insurance policy, and no prior
holder of the related Mortgage has done, by act or omission, anything which
would impair the coverage of such lender's title insurance policy;
(xiv) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and, to RWT Holdings'
knowledge, no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default, breach,
violation or event permitting acceleration; and
B-9
neither the Seller nor any prior mortgagee has waived any default, breach,
violation or event permitting acceleration;
(xv) To the best of RWT Holdings' knowledge, there are no mechanics, or
similar liens or claims which have been filed for work, labor or material
affecting the related Mortgaged Property which are or may be liens prior to or
equal to the lien of the related Mortgage;
(xvi) To RWT Holdings' knowledge, all improvements subject to the
Mortgage lie wholly within the boundaries and building restriction lines of the
Mortgaged Property (and wholly within the project with respect to a condominium
unit) and no improvements on adjoining properties encroach upon the Mortgaged
Property except those which are insured against by the title insurance policy
referred to in clause (xiii) above and all improvements on the property comply
with all applicable zoning and subdivision laws and ordinances;
(xvii) The Mortgage Loan was originated by the Seller or by an eligible
correspondent of the Seller. The Mortgage Loan complies in all material respects
with all the terms, conditions and requirements of the Seller's underwriting
standards attached to the GreenPoint-RWT Agreement as Exhibit G. The Mortgage
Notes and Mortgages are on forms acceptable to Xxxxxx Xxx or Xxxxxxx Mac;
(xviii) The Mortgage Loan contains the usual and enforceable provisions
of the originator at the time of origination for the acceleration of the payment
of the unpaid principal amount if the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder. The Mortgage Loan has an original
term to maturity of not more than 30 years, with interest payable in arrears on
the first day of each month. Except as otherwise set forth on the Mortgage Loan
Schedule, the Mortgage Loan does not contain terms or provisions which would
result in negative amortization nor contain "graduated payment" features;
(xix) The Mortgaged Property at origination of the Mortgage Loan was
and, to RWT Holdings' knowledge, currently is free of damage and waste and at
origination of the Mortgage Loan there was, and, to RWT Holdings' knowledge,
there currently is, no proceeding pending for the total or partial condemnation
thereof;
(xx) The related Mortgage contains enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (2) otherwise by judicial foreclosure;
(xxi) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable
B-10
by the Purchaser to the trustee under the deed of trust, except in connection
with a trustees sale or attempted sale after default by the Mortgagor;
(xxii) If required by the applicable processing style, the Mortgage File
contains an appraisal of the related Mortgaged Property made and signed prior to
the final approval of the mortgage loan application by a qualified appraiser
satisfying the requirements of Title XI of The Financial Institutions Reform,
and Enforcement Act of 1989, as amended, and the regulations promulgated
thereunder, that is acceptable to Xxxxxx Mae or Xxxxxxx Mac and approved by the
Seller. The appraisal, if applicable, is in a form generally acceptable to
Xxxxxx Mae or Xxxxxxx Mac;
(xxiii) All parties which have had any interest in the Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (A) in substantial
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (B) (1) organized under the
laws of such state, or (2) qualified to do business in such state, or (3)
federal savings and loan associations, national banks, a Federal Home Loan Bank
or the Federal Reserve Bank, or (4) not doing business in such state;
(xxiv) To the best of RWT Holdings' knowledge, there does not exist any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that could reasonably
be expected to cause private institutional investors to regard the Mortgage Loan
as an unacceptable investment, to cause the Mortgage Loan to become delinquent,
or to materially adversely affect the value or marketability of the Mortgage
Loan;
(xxv) Each of the Mortgaged Properties consists of a single parcel of
real property with a detached single-family residence erected thereon, or a two-
to four-family dwelling, or a townhouse, or an individual condominium unit in a
condominium project or an individual unit in a planned unit development. Any
condominium unit or planned unit development either conforms with applicable
Xxxxxx Mae or Xxxxxxx Mac requirements regarding such dwellings or is covered by
a waiver confirming that such condominium unit or planned unit development is
acceptable to Xxxxxx Mae or Xxxxxxx Mac or is otherwise "warrantable" with
respect thereto. No such residence is a mobile home or manufactured dwelling;
(xxvi) The ratio of the original outstanding principal amount of the
Mortgage Loan to the lesser of the appraised value (or stated value if an
appraisal was not a requirement of the applicable processing style) of the
Mortgaged Property at origination or the purchase price of the Mortgaged
Property securing each Mortgage Loan (the "Loan-to-Value Ratio") is not in
excess of 95.00%. The original Loan-to-Value Ratio of each Mortgage Loan either
was not more than 95.00% or the excess over 80.00% is insured as to payment
defaults by a Primary Mortgage Insurance Policy issued by a primary mortgage
insurer acceptable to Xxxxxx Mae or Xxxxxxx Mac;
B-11
(xxvii) The Seller is either, and each Mortgage Loan was originated by,
a savings and loan association, savings bank, commercial bank, credit union,
insurance company or similar institution which is supervised and examined by a
federal or State authority, or by a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Section 203 and 211 of the National
Housing Act;
(xxviii) The origination, collection and servicing practices with
respect to each Mortgage Note and Mortgage have been legal in all material
respects. With respect to escrow deposits and payments that the Seller collects,
all such payments are in the possession of, or under the control of, the Seller,
and there exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. No escrow deposits or
other charges or payments due under the Mortgage Note have been capitalized
under any Mortgage or the related Mortgage Note;
(xxix) No fraud or misrepresentation of a material fact with respect to
the origination of a Mortgage Loan has taken place on the part of the Seller;
and
(xxix) No Mortgage Loan contains a provision whereby the related
Mortgagor can convert the related Mortgage Loan to a fixed rate instrument.
III. WITH RESPECT TO MORTGAGE LOANS PURCHASED UNDER THE MORTGAGE LOAN FLOW
PURCHASE, SALE & SERVICING AGREEMENT, DATED AS OF AUGUST 1, 2002 (THE
"CENDANT AGREEMENT"), AMONG RWT HOLDINGS, INC. ("RWT HOLDINGS"), AND
CENDANT MORTGAGE CORPORATION ("CENDANT") AND XXXXXX'X GATE RESIDENTIAL
MORTGAGE TRUST (FORMERLY KNOWN AS CENDANT RESIDENTIAL MORTGAGE TRUST)
("XXXXXX'X GATE", AND TOGETHER WITH CENDANT, THE "SELLER/SERVICER"), AND
THE ADDITIONAL COLLATERAL SERVICING AGREEMENT DATED AS OF AUGUST 1,
2002, BETWEEN CENDANT AND RWT HOLDINGS, AS PURCHASER (THE "ADDITIONAL
COLLATERAL AGREEMENT").
With respect to each Mortgage Loan, Redwood Trust hereby makes the
following representations and warranties. Such representations and warranties
speak as of the Closing Date with respect to the Initial Mortgage Loans and the
Subsequent Transfer Date with respect to the Subsequent Mortgage Loans (as such
capitalized terms are defined in the Pooling and Servicing Agreement), unless
otherwise indicated. Capitalized terms are as defined in this Schedule B or in
the Cendant Agreement.
(1) Mortgage Loan as Described. Such Mortgage Loan complies with the
terms and conditions set forth in the Cendant Agreement, and all of the
information set forth with respect thereto on the Mortgage Loan Schedule is true
and correct in all material respects, and the information provided to the rating
agencies, including the loan level detail, is true and correct according to the
rating agency requirements;
(2) Complete Mortgage Files. The instruments and documents specified in
Section 2.02 of the Cendant Agreement with respect to such Mortgage Loan have
been delivered in compliance with the requirements of Article II of the Cendant
Agreement. Cendant is in possession of a Mortgage File respecting such Mortgage
Loan, except for such documents as have been previously delivered to the
Custodian;
B-12
(3) Mortgagee of Record. The Mortgage relating to such Mortgage Loan has
been duly recorded in the appropriate recording office, and the applicable
Seller/Servicer is the mortgagee of record of such Mortgage Loan and the
indebtedness evidenced by the related Mortgage Note;
(4) Payments Current. All payments required to be made up to and
including the Funding Date for such Mortgage Loan under the terms of the
Mortgage Note have been made, such that such Mortgage Loan is not delinquent 30
days or more on the Funding Date. Unless otherwise disclosed in the Offering
Materials or the Mortgage Loan Schedule, there has been no delinquency,
exclusive of any period of grace, in any payment by the Mortgagor thereunder
during the twelve months preceding the Funding Date; and, if the Mortgage Loan
is a Cooperative Loan, no foreclosure action or private or public sale under the
Uniform Commercial Code has ever been threatened or commenced with respect to
the Cooperative Loan;
(5) No Outstanding Charges. There are no delinquent taxes, insurance
premiums, assessments, including assessments payable in future installments, or
other outstanding charges affecting the Mortgaged Property related to such
Mortgage Loan;
(6) Original Terms Unmodified. The terms of the Mortgage Note, the
Mortgage and the Additional Collateral Agreement related to such Mortgage Loan
(and the Proprietary Lease and the Pledge Instruments with respect to each
Cooperative Loan,) have not been impaired, waived, altered or modified in any
material respect, except as specifically set forth in the related Mortgage Loan
Schedule;
(7) No Defenses. The Mortgage Note, the Mortgage and the Additional
Collateral Agreement related to such Mortgage Loan (and the Acceptance of
Assignment and Assumption of Lease Agreement related to each Cooperative Loan)
are not subject to any right of rescission, set-off or defense, including the
defense of usury, nor will the operation of any of the terms of such Mortgage
Note and such Mortgage (or the Additional Collateral Agreement), or the exercise
of any right thereunder, render such Mortgage (or the Additional Collateral
Agreement) unenforceable, in whole or in part, or subject to any right of
rescission, set-off or defense, including the defense of usury and no such right
of rescission, set-off or defense has been asserted with respect thereto;
(8) Hazard Insurance. (a) All buildings upon the Mortgaged Property
related to such Mortgage Loan are insured by an insurer acceptable to FNMA or
FHLMC against loss by fire, hazards of extended coverage and such other hazards
as are customary in the area where such Mortgaged Property is located, pursuant
to insurance policies conforming to the requirements of either Section 5.10 or
Section 5.11 of the Cendant Agreement. All such insurance policies
(collectively, the "hazard insurance policy") contain a standard mortgagee
clause naming the originator of such Mortgage Loan, its successors and assigns,
as mortgagee. Such policies are the valid and binding obligations of the
insurer, and, to the knowledge of RWT Holdings, all premiums thereon due to date
have been paid. The related Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at such Mortgagor's cost and expense, and on such
Mortgagor's failure to do so, authorizes the holder of such Mortgage to maintain
such insurance at such Mortgagor's cost and expense and to seek reimbursement
therefor from such Mortgagor; or (b) in the case of a condominium or unit in a
planned unit development ("PUD")
B-13
project that is not covered by an individual policy, the condominium or PUD
project is covered by a "master" or "blanket" policy and there exists and is in
the Seller/Servicer's Mortgage File a certificate of insurance showing that the
individual unit that secures the first mortgage is covered under such policy.
The insurance policy contains a standard mortgagee clause naming the originator
of such Mortgage Loan (and its successors and assigns), as insured mortgagee.
Such policies are the valid and binding obligations of the insurer, and, to the
knowledge of RWT Holdings, all premiums thereon have been paid. The insurance
policy provides for advance notice to the Seller/Servicer if the policy is
canceled or not renewed, or if any other change that adversely affects the
Seller/Servicer's interests is made; the certificate includes the types and
amounts of coverage provided, describes any endorsements that are part of the
"master" policy and would be acceptable pursuant to the FNMA Guide;
(9) Compliance With Applicable Laws. All requirements of any federal,
state or local law (including usury, truth in lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws) applicable to the origination and servicing of such Mortgage Loan have
been complied with in all material respects;
(10) No Satisfaction of Mortgage. The Mortgage related to such Mortgage
Loan has not been satisfied, canceled or subordinated, in whole or in part, or
rescinded, and the related Mortgaged Property has not been released from the
lien of such Mortgage, in whole or in part, nor has any instrument been executed
that would effect any such release, cancellation, subordination or rescission;
(11) Valid First Lien. The Mortgage including any Negative Amortization,
related to such Mortgage Loan is a valid, subsisting and enforceable perfected
first lien on the related Mortgaged Property, including all improvements on the
related Mortgaged Property, which Mortgaged Property is free and clear of any
encumbrances and liens having priority over the first lien of the Mortgage
subject only to (a) the lien of current real estate taxes and special
assessments not yet due and payable, (b) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of the date
of recording of such Mortgage which are acceptable to mortgage lending
institutions generally, are referred to in the lender's title insurance policy
and do not adversely affect the market value or intended use of the related
Mortgaged Property, and (c) other matters to which like properties are commonly
subject which do not individually or in the aggregate materially interfere with
the benefits of the security intended to be provided by such Mortgage or the
use, enjoyment, or market value of the related Mortgaged Property; with respect
to each Cooperative Loan, each Acceptance of Assignment and Assumption of Lease
Agreement creates a valid, enforceable and subsisting first security interest in
the collateral securing the related Mortgage Note subject only to (a) the lien
of the related Cooperative Corporation for unpaid assessments representing the
obligor's pro rata share of the Cooperative Corporation's payments for its
blanket mortgage, current and future real property taxes, insurance premiums,
maintenance fees and other assessments to which like collateral is commonly
subject and (b) other matters to which like collateral is commonly subject which
do not materially interfere with the benefits of the security intended to be
provided by the Acceptance of Assignment and Assumption of Lease Agreement;
provided, however, that the
B-14
appurtenant Proprietary Lease may be subordinated or otherwise subject to the
lien of any mortgage on the Cooperative Project;
(12) Validity of Documents. The Mortgage Note and the Mortgage related
to such Mortgage Loan (and the Acceptance of Assignment and Assumption of Lease
Agreement with respect to each Cooperative Loan) are genuine and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
(regardless whether such enforcement is considered in a proceeding in equity or
at law);
(13) Valid Execution of Documents. All parties to the Mortgage Note and
the Mortgage related to such Mortgage Loan had legal capacity to enter into such
Mortgage Loan and to execute and deliver the related Mortgage Note and the
related Mortgage and the related Mortgage Note and the related Mortgage have
been duly and properly executed by such parties; with respect to each
Cooperative Loan, all parties to the Mortgage Note and the Mortgage Loan had
legal capacity to execute and deliver the Mortgage Note, the Acceptance of
Assignment and Assumption of Lease Agreement, the Proprietary Lease, the Stock
Power, the Recognition Agreement, the Financing Statement and the Assignment of
Proprietary Lease and such documents have been duly and properly executed by
such parties; each Stock Power (i) has all signatures guaranteed or (ii) if all
signatures are not guaranteed, then such Cooperative Shares will be transferred
by the stock transfer agent of the Cooperative Corporation if the
Seller/Servicer undertakes to convert the ownership of the collateral securing
the related Cooperative Loan;
(14) Full Disbursement of Proceeds. Such Mortgage Loan has closed and
the proceeds of such Mortgage Loan have been fully disbursed prior to the
Funding Date; provided that, with respect to any Mortgage Loan originated within
the previous 120 days, alterations and repairs with respect to the related
Mortgaged Property or any part thereof may have required an escrow of funds in
an amount sufficient to pay for all outstanding work within 120 days of the
origination of such Mortgage Loan, and, if so, such funds are held in escrow by
the applicable Seller/Servicer, a title company or other escrow agent;
(15) Ownership. The Mortgage Note and the Mortgage related to such
Mortgage Loan have not been assigned, pledged or otherwise transferred by RWT
Holdings, in whole or in part, and RWT Holdings has good and marketable title
thereto, and the RWT Holdings is the sole owner thereof (and with respect to any
Cooperative Loan, the sole owner of the related Acceptance of Assignment and
Assumption of Lease Agreement)and has full right and authority to transfer and
sell such Mortgage Loan, and is transferring such Mortgage Loan free and clear
of any encumbrance, equity, lien, pledge, charge, claim or security interest;
(16) Doing Business. All parties that have had any interest in such
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) in
compliance with any and all
B-15
applicable licensing requirements of the laws of the state wherein the related
Mortgaged Property is located;
(17) Title Insurance. (a) Such Mortgage Loan is covered by an ALTA
lender's title insurance policy or short form title policy acceptable to FNMA
and FHLMC (or, in jurisdictions where ALTA policies are not generally approved
for use, a lender's title insurance policy acceptable to FNMA and FHLMC), issued
by a title insurer acceptable to FNMA and FHLMC and qualified to do business in
the jurisdiction where the related Mortgaged Property is located, insuring
(subject to the exceptions contained in clauses (11)(a) and (b) above) the
applicable Seller/Servicer, its successors and assigns as to the first priority
lien of the related Mortgage in the original principal amount of such Mortgage
Loan including any Negative Amortization and in the case of ARM Loans, against
any loss by reason of the invalidity or unenforceability of the lien resulting
from the provisions of such Mortgage providing for adjustment to the applicable
Note Rate and Monthly Payment. Additionally, either such lender's title
insurance policy affirmatively insures that there is ingress and egress to and
from the Mortgaged Property or the Seller/Servicer warrants that there is
ingress and egress to and from the Mortgaged Property and the lender' s title
insurance policy affirmatively insures against encroachments by or upon the
related Mortgaged Property or any interest therein or any other adverse
circumstance that either is disclosed or would have been disclosed by an
accurate survey. The applicable Seller/Servicer is the sole insured of such
lender's title insurance policy, and such lender's title insurance policy is in
full force and effect and will be in full force and effect upon the consummation
of the transactions contemplated by the Cendant Agreement and will inure to the
benefit of RWT Holdings without any further act. No claims have been made under
such lender's title insurance policy, neither the applicable Seller/Servicer,
nor to the best of RWT Holdings' knowledge, any prior holder of the related
Mortgage has done, by act or omission, anything that would impair the coverage
of such lender's insurance policy, and there is no act, omission, condition, or
information that would impair the coverage of such lender's insurance policy;
(b) The mortgage title insurance policy covering each unit mortgage in a
condominium or PUD project related to such Mortgage Loan meets all requirements
of FNMA and FHLMC;
(18) No Defaults. (a) There is no default, breach, violation or event of
acceleration existing under the Mortgage, the Mortgage Note, and Additional
Collateral Agreement or any other agreements, documents, or instruments related
to such Mortgage Loan; (b) to the best of the RWT Holdings' knowledge, there is
no event that, with the lapse of time, the giving of notice, or both, would
constitute such a default, breach, violation or event of acceleration; (c) the
Mortgagor(s) with respect to such Mortgage Loan is (1) not in default under any
other Mortgage Loan or (2) the subject of an Insolvency Proceeding; (d) no event
of acceleration has previously occurred, and no notice of default has been sent,
with respect to such Mortgage Loan; (e) in no event has the applicable
Seller/Servicer waived any of its rights or remedies in respect of any default,
breach, violation or event of acceleration under the Mortgage, the Mortgage
Note, and Additional Collateral Agreement or any other agreements, documents, or
instruments related to such Mortgage Loan; and (f) with respect to each
Cooperative Loan, there is no default in complying with the terms of the
Mortgage Note, the Acceptance of Assignment and Assumption of Lease Agreement
and the Proprietary
B-16
Lease and all maintenance charges and assessments (including assessments payable
in the future installments, which previously became due and owing) have been
paid, and the Seller/Servicer has the right under the terms of the Mortgage
Note, Acceptance of Assignment and Assumption of Lease Agreement and Recognition
Agreement to pay any maintenance charges or assessments owed by the Mortgagor;
(19) No Mechanics' Liens. As of the date of origination of such Mortgage
Loan, there were no mechanics' or similar liens, except such liens as are
expressly insured against by a title insurance policy, or claims that have been
filed for work, labor or material (and no rights are outstanding that under law
could give rise to such lien) affecting the related Mortgaged Property that are
or may be liens prior to, or equal or coordinate with, the lien of the related
Mortgage;
(20) Location of Improvements; No Encroachments. As of the date of
origination of such Mortgage Loan, to the best of RWT Holdings' knowledge, all
improvements that were considered in determining the Appraised Value of the
related Mortgaged Property lay wholly within the boundaries and building
restriction lines of such Mortgaged Property, and no improvements on adjoining
properties encroach upon such Mortgaged Property except as permitted under the
terms of the FNMA Guide and the FHLMC Selling Guide; to the best of RWT
Holdings' knowledge, no improvement located on or part of any Mortgaged Property
is in violation of any applicable zoning law or regulation, and all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of such Mortgaged Property, and with respect to the use and
occupancy of the same, including certificates of occupancy, have been made or
obtained from the appropriate authorities;
(21) Origination; Payment Terms. Principal payments on such Mortgage
Loan commenced or will commence no more than 60 days after funds were disbursed
in connection with such Mortgage Loan. If the interest rate on the related
Mortgage Note is adjustable, the adjustment is based on the Index set forth on
the related Mortgage Loan Schedule. The related Mortgage Note is payable on the
first day of each month in arrears, in accordance with the payment terms
described on the related Mortgage Loan Schedule. With respect to any Mortgage
Loan subject to Negative Amortization the Monthly Payments are sufficient during
the period following each Payment Adjustment Date to fully amortize the
outstanding principal balance as of the first day of such period (including any
Negative Amortization) over the original term thereof in accordance with the
terms and conditions set forth in the Mortgage Note;
(22) Due On Sale. Except as noted otherwise on the Mortgage Loan
Schedule, the related Mortgage contains the usual and customary "due-on-sale"
clause or other similar provision for the acceleration of the payment of the
Unpaid Principal Balance of such Mortgage Loan if the related Mortgaged Property
or any interest therein is sold or transferred without the prior consent of the
mortgagee thereunder;
(23) Prepayment Penalty. Except as noted otherwise on the Mortgage Loan
Schedule, such Mortgage Loan is not subject to any Prepayment Penalty;
(24) Mortgaged Property Undamaged; No Condemnation. To the best of RWT
Holdings' knowledge, as of the Funding Date, the related Mortgaged Property (and
with
B-17
respect to a Cooperative Loan, the related Cooperative Project and Cooperative
Unit) is free of material damage and waste and there is no proceeding pending
for the total or partial condemnation thereof;
(25) Customary Provisions. The related Mortgage contains customary and
enforceable provisions that render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of the
benefits of the security provided thereby, including, (a) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (b) in the case
of a Mortgage, otherwise by judicial foreclosure;
(26) Conformance With Underwriting Standards. Such Mortgage Loan was
underwritten in accordance with the Cendant Guide;
(27) Appraisal. The Mortgage File contains an appraisal of the related
Mortgaged Property on forms and with riders approved by FNMA and FHLMC, signed
prior to the approval of such Mortgage Loan application by an appraiser, duly
appointed by the originator of such Mortgage Loan, whose compensation is not
affected by the approval or disapproval of such Mortgage Loan and who met the
minimum qualifications of FNMA and FHLMC for appraisers. Each appraisal of the
Mortgage Loan was made in accordance with the relevant provisions of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989;
(28) Deeds of Trust. If the related Mortgage constitutes a deed of
trust, then a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable to the trustee under such
deed of trust, except in connection with a trustee's sale after default by the
related Mortgagor;
(29) LTV; Primary Mortgage Insurance Policy. Except with respect to
Additional Collateral Mortgage Loans (as defined in Exhibit 11 to the Cendant
Agreement), if such Mortgage Loan had a Loan-to-Value Ratio of more than 80% at
origination, such Mortgage Loan is and will be subject to a Primary Insurance
Policy issued by a Qualified Mortgage Insurer, which insures the applicable
Seller/Servicer, its successors and assigns and insureds in the amount set forth
on the Mortgage Loan Schedule; provided that, a Primary Mortgage Insurance
Policy will not be required for any Cooperative Loan if (i) the proceeds of such
Cooperative Loan were used to purchase a Cooperative Unit at the "insider's
price" when the building was converted to a Cooperative Corporation, (ii) the
value of the Cooperative Unit for purposes of establishing the LTV at
origination was such "insider's price", (iii) the principal amount of the
Cooperative Loan at origination was not more than 100% of such "insider's price"
and (iv) the LTV at origination, as calculated using the Appraised Value at
origination, was less than or equal to 80%. To the knowledge of RWT Holdings,
all provisions of such Primary Insurance Policy have been and are being complied
with, such policy is in full force and effect, and, to the knowledge of RWT
Holdings, all premiums due thereunder have been paid. Any related Mortgage
subject to any such Primary Insurance Policy (other than a "lender-paid" Primary
Insurance Policy) obligates the Mortgagor thereunder to maintain such insurance
for the time period required by law and to pay all premiums and charges in
connection therewith. As of the date of origination, the Loan-
B-18
to-Value Ratio of such Mortgage Loan is as specified in the applicable Mortgage
Loan Schedule;
(30) Occupancy. As of the date of origination of such Mortgage Loan, to
the best of RWT Holdings' knowledge, the related Mortgaged Property (or with
respect to a Cooperative Loan, the related Cooperative Unit) is lawfully
occupied under applicable law and all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Mortgaged Property (or with respect to a Cooperative Loan, the related
Cooperative Unit) and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities;
(31) Supervision and Examination by a Federal or State Authority. Each
Mortgage Loan either was (a) closed in the name of the Cendant Mortgage, or (b)
closed in the name of another entity that is either a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or an institution which is supervised and examined by a federal or state
authority, or a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act (a "HUD
Approved Mortgagee"), and was so at the time such Mortgage Loan was originated
(Cendant Mortgage or such other entity, the "Originator") or (c) closed in the
name of a loan broker under the circumstances described in the following
sentence. If such Mortgage Loan was originated through a loan broker, such
Mortgage Loan met the Originator's underwriting criteria at the time of
origination and was originated in accordance with the Originator's policies and
procedures and the Originator acquired such Mortgage Loan from the loan broker
contemporaneously with the origination thereof. The Mortgage Loans that Bishops'
Gate Residential Mortgage Trust sold to RWT Holdings were originated by or on
behalf of Cendant Mortgage and subsequently assigned to the Bishops' Gate
Residential Mortgage Trust.
(32) Adjustments. All of the terms of the related Mortgage Note
pertaining to interest rate adjustments, payment adjustments and adjustments of
the outstanding principal balance, if any, are enforceable and such adjustments
will not affect the priority of the lien of the related Mortgage; all such
adjustments on such Mortgage Loan have been made properly and in accordance with
the provisions of such Mortgage Loan;
(33) Insolvency Proceedings; Soldiers' and Sailors' Relief Act. To the
best of RWT Holdings' knowledge, the related Mortgagor (1) is not the subject of
any Insolvency Proceeding; and (2) has not requested any relief allowed to such
Mortgagor under the Soldiers' and Sailors' Civil Relief Act of 1940;
(34) FNMA/FHLMC Documents. Such Mortgage Loan was closed on standard
FNMA or FHLMC documents or on such documents otherwise acceptable to them;
(35) Unless otherwise disclosed in the Offering Materials or the
Mortgage Loan Schedule, no Mortgage Loan contains provisions pursuant to which
Monthly Payments are (a) paid or partially paid with funds deposited in any
separate account established by the Seller/Servicer, the Mortgagor, or anyone on
behalf of the Mortgagor, (b) paid by any source other than the Mortgagor or (c)
contains any other similar
B-19
provisions which may constitute a "buydown" provision. The Mortgage Loan is not
a graduated payment mortgage loan and the Mortgage Loan does not have a shared
appreciation or other contingent interest feature;
(36) The Assignment is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is
located;
(37) Any principal advances made to the Mortgagor prior to the Cut-off
Date have been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan plus any Negative
Amortization;
(38) Unless otherwise disclosed in the Offering Materials or the
Mortgage Loan Schedule, no Mortgage Loan has a balloon payment feature. With
respect to any Mortgage Loan with a balloon payment feature, the Mortgage Note
is payable in Monthly Payments based on a thirty year amortization schedule and
has a final Monthly Payment substantially greater than the proceeding Monthly
Payment which is sufficient to amortize the remaining principal balance of the
Mortgage Loan;
(39) If the residential dwelling on the Mortgaged Property is a
condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project meets the eligibility requirements of the Cendant Guide;
(40) No Mortgage Loan is subject to the provisions of the Homeownership
and Equity Protection Act of 1994;
(41) Unless otherwise disclosed in the Offering Materials or the
Mortgage Loan Schedule, no Mortgage Loan was made in connection with (a) the
construction or rehabilitation of a Mortgaged Property or (b) facilitating the
trade-in or exchange of a Mortgaged Property;
(42) RWT Holdings has no knowledge of any circumstances or condition
with respect to the Mortgage, the Mortgage Property (or with respect to a
Cooperative Loan, the Acceptance of Assignment and Assumption of Lease
Agreement, the Cooperative Unit or the Cooperative Project), the Mortgagor or
the Mortgagor's credit standing that can reasonably be expected to cause the
Mortgage Loan to be an unacceptable investment, cause the Mortgage Loan to
become delinquent, or adversely affect the value of the Mortgage Loan;
(43) Interest on each Mortgage Loan is calculated on the basis of a
360-day year consisting of twelve 30-day months;
(44) To the best of RWT Holdings' knowledge, the Mortgaged Property is
in material compliance with all applicable environmental laws pertaining to
environmental hazards including, without limitation, asbestos, and neither the
Seller/Servicer nor, to RWT Holdings' knowledge, the related Mortgagor, has
received any notice of any violation or potential violation of such law;
(45) Unless otherwise disclosed in the Offering Materials or the
Mortgage Loan Schedule, no Mortgage Loan is subject to negative amortization;
B-20
(46) With respect to each Cooperative Loan, a Cooperative Lien Search
has been made by a company competent to make the same which company is
acceptable to FNMA and qualified to do business in the jurisdiction where the
Cooperative Unit is located;
(47) With respect to each Cooperative Loan, (i) the terms of the related
Proprietary Lease is longer than the terms of the Cooperative Loan, (ii) there
is no provision in any Proprietary Lease which requires the Mortgagor to offer
for sale the Cooperative Shares owned by such Mortgagor first to the Cooperative
Corporation, (iii) there is no prohibition in any Proprietary Lease against
pledging the Cooperative Shares or assigning the Proprietary Lease and (iv) the
Recognition Agreement is on a form of agreement published by the Aztech Document
Systems, Inc. or includes provisions which are no less favorable to the lender
than those contained in such agreement;
(48) With respect to each Cooperative Loan, each original UCC financing
statement, continuation statement or other governmental filing or recordation
necessary to create or preserve the perfection and priority of the first
priority lien and security interest in the Cooperative Shares and Proprietary
Lease has been timely and properly made. Any security agreement, chattel
mortgage or equivalent document related to the Cooperative Loan and delivered to
the Mortgagor or its designee establishes in the Mortgagor a valid and
subsisting perfected first lien on and security interest in the Mortgaged
Property described therein, and the Mortgagor has full right to sell and assign
the same;
(49) With respect to each Cooperative Loan, each Acceptance of
Assignment and Assumption of Lease Agreement contains enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization of the benefits of the security provided thereby. The Acceptance of
Assignment and Assumption of Lease Agreement contains an enforceable provision
for the acceleration of the payment of the unpaid principal balance of the
Mortgage Note in the event the Cooperative Unit is transferred or sold without
the consent of the holder thereof;
(50) No fraud, error, omission, misrepresentation, or negligence with
respect to a Mortgage Loan has taken place on the part of any person, including
without limitation, the Mortgagor, any appraiser, any builder or developer or
any other party involved in the origination of the Mortgage Loan; and
(51) The Additional Collateral Mortgage Loans are insured under the
terms and provisions of the Surety Bond subject to the limitations set forth
therein. All requirements for transferring coverage under the Surety Bond in
respect of such Additional Collateral Mortgage Loans to the Trustee (as defined
in the Pooling and Servicing Agreement) shall be complied with.
B-21
IV. MORTGAGE LOANS PURCHASED UNDER THE MASTER MORTGAGE LOAN PURCHASE
AGREEMENT DATED AS OF APRIL 1, 1998 BETWEEN RWT HOLDINGS, INC. ("RWT
HOLDINGS" OR THE "SELLER") AND XXXXXXX XXXXX CREDIT CORPORATION
("XXXXXXX XXXXX") (AS AMENDED OR MODIFIED TO THE DATE HEREOF, THE
"MASTER PURCHASE AGREEMENT").
With respect to each Mortgage Loan, RWT Holdings hereby makes the
following representations and warranties. Such representations and warranties
speak as of the Closing Date with respect to the with respect to the Initial
Mortgage Loans and the Subsequent Transfer Date with respect to the Subsequent
Mortgage Loans (as such capitalized terms are defined in the Pooling and
Servicing Agreement), unless otherwise indicated. Capitalized terms are as
defined in this Schedule B or in the Pooling and Servicing Agreement or the
Master Purchase Agreement), unless otherwise indicated. The Seller hereby
represents and warrants, as to each Mortgage Loan as of each respective Closing
Date or such other date as may be specified below, that:
(i) The information set forth in the Mortgage Loan Schedule is
true and correct in all material respects;
(ii) The information provided to the rating agencies, including
the loan level detail, is true and correct according to the rating
agency requirements;
(iii) As of the related Closing Date, the Mortgage Loan is not
delinquent in payment more than 29 days and the Mortgage Loan has not
been dishonored; the Mortgage Loan has never been delinquent in payment
for more than 59 days and has not more than once during the twelve
months preceding the Cut-Off Date been delinquent in payment for more
than 30 days; there are no material defaults under the terms of the
Mortgage Loan; the Seller has not advanced funds, or induced, solicited
or knowingly received any advance of funds from a party other than the
owner of the Mortgaged Property subject to the Mortgage, directly or
indirectly, for the payment of any amount required by the Mortgage Loan;
(iv) To the best of the Seller's knowledge, there are no
delinquent taxes or other outstanding charges affecting the related
Mortgaged Property which would permit a taxing authority to initiate
foreclosure proceedings against the Mortgaged Property;
(v) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments contained in the Mortgage File, the substance of which
waiver, alteration or modification is reflected on the Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement which assumption agreement is
part of the Mortgage File and the terms of which are reflected in the
Mortgage Loan Schedule;
B-22
(vi) The Mortgagor has not asserted that the Mortgage Note and
the Mortgage are subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Mortgage Note and the Mortgage, or
the exercise of any right thereunder, render the Mortgage unenforceable,
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury and to the best
of the Seller's knowledge, no such right of rescission, set-off,
counterclaim or defense has been asserted by any Person other than the
obligor with respect thereto;
(vii) Pursuant to the terms of the Mortgage, all buildings or
other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area where the
Mortgaged Property is located. If required by the Flood Disaster
Protection Act of 1973, as amended, the Mortgage Loan is covered by a
flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration. All individual
insurance policies contain a standard mortgagee clause naming the Seller
and its successors and assigns as mortgagee, and all premiums thereon
have been paid. The Mortgage obligates the Mortgagor thereunder to
maintain the hazard insurance policy at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at such
Mortgagor's cost and expense, and to seek reimbursement therefor from
the Mortgagor. Where required by state law or regulation, the Mortgagor
has been given an opportunity to choose the carrier of the required
hazard insurance, provided the policy is not a "master" or "blanket"
hazard insurance policy covering a condominium or any hazard insurance
policy covering the common facilities of a planned unit development. To
the best of the Seller's knowledge the hazard insurance policy is the
valid and binding obligation of the insurer, is in full force and
effect, and will be in full force and effect and insure to the benefit
of the Trustee upon the consummation of the transactions contemplated by
the Pooling and Servicing Agreement. The Seller has not engaged in, and
has no knowledge of the Mortgagor's having engaged in, any act or
omission which would impair the coverage of any such policy, the
benefits of the endorsement provided for in the Master Purchase
Agreement, or the validity and binding effect of either including,
without limitation, no unlawful fee, commission, kickback or other
unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other person or entity,
and no such unlawful items have been received, retained or realized by
the Seller;
(viii) At the time of origination of such Mortgage Loan and
thereafter, all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws required to be complied with by the
Seller as the originator of the Mortgage Loan and applicable to the
Mortgage Loan have been complied with in all material respects;
B-23
(ix) The Mortgage has not been satisfied as of the Closing Date,
canceled or subordinated, in whole, or rescinded, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole
or in part (except for a release that does not materially impair the
security of the Mortgage Loan or a release the effect of which is
reflected in the Loan-to-Value Ratio for the Mortgage Loan as set forth
in the Mortgage Loan Schedule), nor to the best of the Seller's
knowledge has any instrument been executed that would effect any such
release, cancellation, subordination or rescission;
(x) Ownership of the Mortgaged Property is held in fee simple
(except for Mortgage Loans as to which the related land is held in a
leasehold which extends at least five years beyond the maturity date of
the Mortgage Loan). Except as permitted by the fourth sentence of this
paragraph (x), the Mortgage is a valid, subsisting and enforceable first
lien on the Mortgaged Property, including all buildings on the Mortgaged
Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems affixed to such buildings, and all
additions, alterations and replacements made at any time with respect to
the foregoing securing the Mortgage Note's original principal balance.
The Mortgage and the Mortgage Note do not contain any evidence on their
face of any security interest or other interest or right thereto. Such
lien is free and clear of all adverse claims, liens and encumbrances
having priority over the first lien of the Mortgage subject only to (1)
the lien of non-delinquent current real property taxes and assessments
not yet due and payable, (2) covenants, conditions and restrictions,
rights of way, easements and other matters of the public record as of
the date of recording which are acceptable to mortgage lending
institutions generally, or which are specifically referred to in the
lender's title insurance policy delivered to the originator of the
Mortgage Loan and either (A) which are referred to or otherwise
considered in the appraisal made for the originator of the Mortgage
Loan, or (B) which do not in the aggregate adversely affect the
appraised value of the Mortgaged Property as set forth in such
appraisal, and (3) other matters to which like properties are commonly
subject which do not in the aggregate materially interfere with the
benefits of the security intended to be provided by the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged
Property. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable first lien
and first priority security interest on the property described therein;
(xi) The Mortgage Note is not subject to a third party's security
interest or other rights or interest therein;
(xii) The Mortgage Note and the Mortgage and any other agreement
executed and delivered by a Mortgagor in connection with a Mortgage Loan
are genuine, and each is the legal, valid and binding obligation of the
maker thereof enforceable in accordance with its terms. All parties to
the Mortgage Note, the Mortgage and any other such related agreement had
legal capacity to enter into the
B-24
Mortgage Loan and to execute and deliver the Mortgage Note, the Mortgage
and any such agreement, and the Mortgage Note, the Mortgage and any
other such related agreement have been duly and properly executed by
other such related parties. No fraud, error, omission,
misrepresentation, or negligence with respect to a Mortgage Loan has
taken place on the part of any Person, including without limitation, the
Mortgagor, any appraiser, any builder or developer, or any other party
involved in the origination of the Mortgage Loan. The Mortgage Loan has
been closed and the proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances thereunder,
and any and all requirements as to completion of any on-site or off-site
improvement and as to disbursements of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in making or
closing the Mortgage Loan and the recording of the Mortgage were paid,
and the Mortgagor is not entitled to any refund of any amounts paid or
due under the Mortgage Note or Mortgage;
(xiii) Immediately prior to the transfer and assignment, the
Mortgage Note and the Mortgage were not subject to an assignment or
pledge, and the Seller had good title to and was the sole owner thereof
and had full right to transfer and sell the Mortgage Loan free and clear
of any encumbrance, equity, lien, pledge, charge, claim or security
interest, including, to the best knowledge of the Seller, any lien,
claim or other interest arising by operation of law;
(xiv) The Mortgage Loan is covered by either (i) an attorney's
opinion of title and abstract of title, the form and substance of which
is acceptable to prudent mortgage lending institutions making mortgage
loans in the area wherein the Mortgaged Property is located or (ii) an
ALTA lender's title insurance policy or other generally acceptable form
of policy or insurance acceptable to FNMA or FHLMC and each such title
insurance policy is issued by a title insurer acceptable to FNMA or
FHLMC and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the Seller, its successors and
assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan, subject only to the exception
contained in clauses (1), (2) and (3) of paragraph (ix) of Section 5 of
the Master Purchase Agreement, and in the case of adjustable rate
Mortgage Loans, against any loss by reason of the invalidity or
unenforceability of the lien resulting from the provisions of the
Mortgage providing for adjustment to the Mortgage Interest Rate and
Monthly Payment. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of the
required mortgage title insurance. Additionally, such lender's title
insurance policy insures against encroachments by or upon the Mortgaged
Property. The Seller, its successor and assigns, are the sole insurereds
of such lender's title insurance policy, and such lender's title
insurance policy is valid and remains in full force and effect and will
be in force and effect upon the consummation of the transactions
contemplated by the Master Purchase Agreement. No claims have been made
under such lender's title insurance policy, and to the best of Seller's
knowledge no prior holder of the related Mortgage, including the Seller,
has done, by act or omission, anything which would impair the coverage
of
B-25
such lender's title insurance policy, including without limitation, no
unlawful fee, commission, kickback or other unlawful compensation or
value of any kind has been or will be received, retained or realized by
any attorney, firm or other person or entity, and no such unlawful items
have been received, retained or realized by the Seller;
(xv) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Mortgage Note
and no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event permitting acceleration, except for any
Mortgage Loan payment which is not late by more than 30 days, and the
Seller has not waived any default, breach, violation or event permitting
acceleration;
(xvi) As of the date of origination or purchase or the Mortgage
Loans by the Seller there were no mechanics' or similar liens or claims
which had been filed for work, labor or material (and, to the best of
the Seller's knowledge, no rights are outstanding that under law could
give rise to such lien) affecting the related Mortgaged Property which
are or may be liens prior to, or equal or coordinate with, the lien of
the related Mortgage;
(xvii) All improvements subject to the Mortgage lay wholly within
the boundaries and building restriction lines of the Mortgaged Property
(and wholly within the project with respect to a condominium unit) and
no improvements on adjoining properties encroach upon the Mortgaged
Property except those which are insured against by the title insurance
policy referred to in paragraph (xiv) above and all improvements on the
property comply with all applicable zoning and subdivision laws and
ordinances;
(xviii) Each Mortgage Loan (except for the Mortgage Loans
referred to in the next sentence) was originated by the Seller, and at
the time of each such origination the Seller was a mortgagee approved by
the Secretary of Housing and Urban Development (the "Secretary")
pursuant to Sections 203 and 211 of the National Housing Act. Each
Mortgage Loan was underwritten in accordance with the Underwriting Guide
as in effect at the time of origination, except to the extent the Seller
believed at such time that a variance from such Underwriting Guide was
warranted by compensating factors with respect to such Mortgage Loan.
The Mortgage contains the usual and customary provision of the Seller at
the time of origination for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan if the related Mortgaged
Property is sold without the prior consent of the mortgagee thereunder;
(xix) The Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado, or other
casualty which damage is not fully insured against by a current and
active insurance policy (or at least insured up to the outstanding
principal balance of the Mortgage Loan) and, to the best of
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Seller's knowledge is in good repair. There have not been any
condemnation proceedings with respect to the Mortgaged Property and
there are no pending proceedings;
(xx) The related Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of
the benefits of the security provided thereby, including, (1) in the
case of a Mortgage designated as a deed of trust, by trustee's sale or
judicial foreclosure, and (2) otherwise by judicial foreclosure. The
Seller has no knowledge of any homestead or other exemption available to
the Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage;
(xxi) If the Mortgage constitutes a deed of trust, a trustee,
duly qualified if required under applicable law to act as such, has been
properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable to the
trustee under the deed of trust, except in connection with a trustee's
sale or attempted sale after default by the Mortgagor;
(xxii) The Mortgage File contains an appraisal of the related
Mortgage Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Seller, who
had no interest, direct or indirect in the Mortgaged Property or in any
loan made on the security thereof, and whose compensation is not
affected by the approval or disapproval of the Mortgage Loan, and the
appraisal and appraiser both satisfy the requirements of FNMA or FHLMC
and any applicable requirement of Title XI of the Federal Institutions
Reform, Recovery, and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the Mortgage Loan
was originated;
(xxiii) No Mortgage Loan contains "subsidized buydown" or
"graduated payment" features;
(xxiv) The Mortgaged Property is a single-family (one- to
four-unit) dwelling residence erected thereon, or an individual
condominium unit in a condominium, a cooperative, or an individual unit
in a planned unit development or in a de minimis planned unit
development. No such residence is a mobile home or a manufactured
dwelling which is not permanently attached to the land;
(xxv) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity and disclosure laws applicable to the Mortgage Loan have
been complied with, the consummation of the transactions contemplated
hereby will not involve the violation of any such laws or regulations,
and the Seller shall maintain in its possession, available for
inspection, and shall deliver to the Trustee upon demand, evidence of
compliance with all such requirements; The Mortgagor has received all
disclosure materials required by
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Section 226 19(b) of the Federal Reserve Board's Regulation Z and
otherwise required by applicable law with respect to the making of
adjustable rate mortgage loans;
(xxvi) There are no circumstances or conditions with respect to
the Mortgage, the Mortgaged Property, the Mortgage File, or, to the best
of Seller's knowledge, the Mortgagor or the Mortgagor's credit standing
that can reasonably be expected to cause private institutional investors
to regard the Mortgage Loan as an unacceptable investment, cause the
Mortgage to become delinquent, or adversely affect the value or
marketability of the Mortgage Loan; and
(xxvii) The Mortgage Note, the Mortgage, the Assignment of
Mortgage and any other documents required to be delivered for each
Mortgage Loan pursuant to Section 3(b) of the Master Purchase Agreement
have been or shall be delivered to the Custodian pursuant to Section
3(b). The Seller is in possession of a Mortgage File as described in
Exhibit 1 to the Master Purchase Agreement, which contains the
applicable documents described in Exhibit 1 for the applicable loan
program, except for such documents the originals of which have been
delivered to the Custodian. Except for the absence of recording
information, the Assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located.
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