Exhibit 4.3
CHEVY CHASE BANK, F.S.B.
as Servicer
[NAME OF THE SELLER]
as Seller
and
[NAME OF THE TRUSTEE]
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of __________, ____,
Chevy Chase Home Loan
Asset Backed Certificates
Series ______
POOLING AND SERVICING AGREEMENT, dated as of between CHEVY CHASE BANK,
F.S.B., a federal savings bank organized under the laws of the United States, as
Servicer, [Name of the Seller], a limited liability corporation organized under
the laws of [State of Organization], as Seller and [Name of the Trustee], a bank
organized and existing under the laws of the State of [State of Organization],
as Trustee,
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article.
Accelerated Principal Distribution Amount: With respect to any
Distribution Date, the amount, if any, required to reduce the Investor
Certificate Principal Balance (after giving effect to the distribution of all
other amounts actually distributed on the Investor Certificates on such
Distribution Date) so that the Invested Amount (immediately following such
Distribution Date) exceeds the Investor Certificate Principal Balance (as so
reduced) by the Required Overcollateralization Amount.
Accrual Period: As to any Distribution Date other than the first
Distribution Date, the period beginning on the immediately preceding
Distribution Date and ending on the day immediately preceding such Distribution
Date, and with respect to the first Distribution Date, the period beginning on
________, and ending on the day immediately preceding the first Distribution
Date.
Additional Balance: As to any Mortgage Loan and day, the unpaid balance
of any principal advanced under the terms of the Loan Agreement after the date
and time as of which the Cut-Off Date Trust Balance is calculated.
Aggregate Investor Liquidation Loss Amount: With respect to any
Distribution Date, the sum of the Daily Investor Liquidation Loss Amounts for
the related Collection Period.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Alternative Principal Payment: As to any Distribution Date, the greater
of (x) __% of the Investor Certificate Principal Balance immediately prior to
such Distribution Date and (y) the amount (but not less than zero) equal to the
aggregate amount of Principal Collections received during the related Collection
Period less the aggregate amount of Draws made during the related Collection
Period; provided, however, that if the Overcollateralization
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Amount exceeds the Required Overcollateralization Amount on such Distribution
Date, an amount equal to the Overcollateralization Adjustment Amount shall be
deducted from the amount calculated in clause (y) of this definition.
Appointment Day: As defined in Section 11.2
Appraised Value: As to any Mortgaged Property and time referred to
herein, the appraised value of the Mortgaged Property based upon the drive-by
appraisal or other estimate of value made by or on behalf of the Seller at the
time the related Loan Agreement was executed.
Available Funds: As to any Distribution Date, the aggregate amount on
deposit in the Certificate Account reduced by any withdrawals permitted to be
made pursuant to clauses (ii) and (iii) of Section 3.3(a)
Base Rate: As to any Mortgage Loan during a billing cycle, the rate of
interest publicly announced from time to time as the "prime" or "base" rate of
interest or any successor rate of interest charged by the index bank specified
in the related Loan Agreement or any successor rate determined as provided in
the Loan Agreement as in effect at the close of business on the last day of the
last full calendar month of the immediately preceding quarter, for loans which
have their interest rate adjusted quarterly, or the last day of the preceding
calendar month, for loans which have their interest rate adjusted monthly.
Basic Overcollateralization Amount: shall mean on any date of
determination the lesser of (i) $________ and (ii) the sum of (A) the lesser of
(x) % of the Original investor certificate Principal Balance and (y) __% of the
Investor Certificate Principal Balance as of such date of determination, (B) __%
of the Investor Certificateholders' Floating Allocation Percentage of the Trust
Balances which are 60-89 days delinquent and (C) __% of the Investor
Certificateholders' Floating Allocation Percentage of the Trust Balances which
are 90 days or more delinquent; provided, however, that if Chevy Chase has been
replaced as Servicer and the Servicing Fee Rate increases up to a maximum rate
of __%, then the rates in subclauses (A)(x) and (A) (y) shall increase by an
equal amount of up to a maximum amount of __%.
Basis Risk Payment: As to any Distribution Date where the Investor
Certificate Rate exceeds the Weighted Average Net Loan Rate, the product of (a)
the Overcollateralization Principal Component and (b) a fraction, the numerator
of which is the excess of the Overcollateralization Amount at the end of the
prior Distribution Date over the Basic Overcollateralization Amount at the end
of the prior Distribution Date and the denominator of which is the
Overcollateralization Amount at the end of the prior Distribution Date.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery, and Enhancement Act of 1989,
or if at any time after the execution of this instrument the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.
Book-Entry Certificate: Any Investor Certificate registered in the name
of the Depository, Foreign Depository or the nominee of either the Depository or
Foreign Depository, beneficial ownership of which is reflected on the books of
the Depository or the Foreign Depository or on the books of a person maintaining
an account with such Depository or Foreign
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Depository (directly or as an indirect participant in accordance with the rules
of such Depository or Foreign Depository).
Business Day: Any day other than a Saturday, a Sunday or a day on which
banking institutions in New York, New York, Chevy Chase, Maryland or the city in
which the Corporate Trust Office or the main business office of the Paying Agent
is located are obligated or authorized by law or executive order to be closed.
Certificate: Any Investor Certificate or Seller Certificate.
Certificate Account: The trust account or accounts created and
maintained in the name of the Trustee for the benefit of the Certificateholders
and the Certificate Insurer pursuant to Section 3.2(b). The Certificate Account
shall be an Eligible Account.
Certificate Insurance Draw Amount: As to any Distribution Date other
than the Dissolution Distribution Date, an amount equal to the sum of (x) the
amount by which the amount to be distributed to Investor Certificateholders
pursuant to Section 5.1(a)(ii) and (a) (iii) exceeds the amount of Investor
Interest Collections and the Basis Risk Payment, if any, on deposit in the
Certificate Account on the Business Day preceding such Distribution Date that is
available to be applied therefor and (y) the amount, if any, required to reduce
the Investor Certificate Principal Balance (after giving effect to the
distributions of Investor Interest Collections and the Basis Risk Payment, if
any, and Investor Principal Collections that are allocable to principal on the
Investor Certificates on such Distribution Date) to the Invested Amount
following such Distribution Date. Notwithstanding the foregoing, as to the
Distribution Date in __________ 20__, an amount equal to the sum of (i) any
amount calculated pursuant to the preceding sentence and (ii) an amount equal to
the remaining Investor Certificate Principal Balance after giving effect to all
other amounts distributed to Investor Certificateholders in reduction of the
Investor Certificate Principal Balance.
Certificate Insurance Policy: The certificate insurance policy number
__________ dated as of the Closing Date, issued by the Certificate Insurer to
the Trustee for the benefit of the Investor Certificateholders.
Certificate Insurer: [Name of Certificate Insurer], any successor
thereto or any replacement credit enhancer substituted pursuant to Section 4.3.
Certificate Insurer Default: The occurrence and continuance of the
failure of the Certificate insurer to make a payment required under the
Certificate Insurance Policy.
Certificate Owner: With respect to an Investor Certificate, the Person
who is the beneficial owner of a Book-Entry Certificate.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 6.2(a).
Certificateholder or Holder: The Person in whose name a certificate is
registered in the Certificate Register, except that, solely for the purpose of
the giving of any consent, waiver, request or demand pursuant to this Agreement,
unless all Certificates are then so held,
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any Certificate registered in the name of the Seller or the Servicer or any
affiliate of either shall be deemed not to be outstanding and the Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite amount of Percentage Interests necessary to effect any
such consent, waiver, request or demand shall have been obtained; provided,
however, that in determining whether the Trustee shall be protected in relying
upon any such consent, waiver, request or demand, only Certificates which a
Responsible Officer of the Trustee assigned to matters under this Agreement
actually knows to be so owned shall not be so taken into account.
Chevy Chase: Chevy Chase Bank, F.S.B., a federal savings bank organized
under the laws of the United States, or its permitted successor in interest.
Closing Date: __________, ____.
Code: The Internal Revenue Code of 1986, as the same may be amended
from time to time, any successor statutes thereto, and the applicable Department
of the Treasury temporary or final regulations thereunder.
Collection Period: As to any Distribution Date the calendar month
immediately preceding the calendar month in which such Distribution Date occurs.
Combined Loan-to-Value Ratio: As of any date and as to any Mortgage
Loan, the fraction, expressed as a percentage, the numerator of which is the sum
of (i) the Credit Limit of such Mortgage Loan as of such date and (ii) the
unpaid principal balance (as of the date of execution of the Loan Agreement for
such Mortgage Loan) of the mortgage loan, i(euro) any, that is senior in
priority to such Mortgage Loan and which is secured by the same Mortgaged
Property, and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Corporate Trust Office: The office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of execution of this Agreement is located at the
address set forth in Section 12.6.
Credit Limit: As to any Mortgage Loan, the maximum Loan Balance
permitted under the terms of the related Loan Agreement and the Servicer's
normal and customary servicing procedures.
Custodial Agent: As defined in section 2.1(a).
Cut-Off Date: __________, ____. All references in this Agreement to
"Cut-Off Date" shall be to the opening of business on such date.
Cut-Off Date Pool Balance: The aggregate of the Cut-Off Date Trust
Balances of the Mortgage Loans.
Cut-Off Date Trust Balance: As to any Mortgage Loan, the unpaid
principal balance thereof transferred to the Trust on the Cut-Off Date or, as to
any Eligible Substitute Mortgage Loan, on the date of substitution of such
Eligible Substitute Mortgage Loan.
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Cycle Date: As to any Mortgage Loan, the day of the month on which the
related billing cycle for such Mortgage Loan ends.
Daily Investor Interest Collections: As to any day, an amount equal to
the product of (i) the amount of Trust Interest received by the Servicer for
such day and (ii) the investor Certificateholders' Floating Allocation
Percentage on such day.
Daily Investor Liquidation Loss Amount: With respect to any day, the
amount equal to the product of the Investor Certificateholders' Floating
Allocation Percentage for such day and the Liquidation Loss Amounts for such
day.
Daily Investor Principal Collections: As to any day, an amount equal to
the product of (i) the aggregate amount of Principal Collections received on
such day and (ii) the Investor Fixed Allocation Percentage on, such day.
Defective Mortgage Loan: Any Mortgage Loan which is required to be
removed or replaced by the Seller pursuant to Section 2.2(c) or 2.4(b) or
purchased or replaced by the Servicer pursuant to Section 3.1.
Definitive Certificates: As defined in section 6.2(d).
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is CEDE & Co., as the registered Holder of one or
more Investor Certificates evidencing the aggregate principal amount of the
investor Certificates. The Depository at all times shall be a "clearing
corporation, as defined in Section 8-102 of the Uniform Commercial Code of the
State of New York and an organization registered as a "clearing agency" pursuant
to Section 17A of the Securities Exchange Act of 1934, as amended. The Seller,
the Servicer, the Trustee and the initial Depository shall enter into a
Depository Agreement substantially in the form of Exhibit L.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository or Foreign
Depository effects book-entry transfers and pledges of securities deposited with
the Depository or Foreign Depository.
Determination Date: With respect to any Distribution Date, the_____
Business Day prior thereto.
Dissolution Distribution Date: The date on which the proceeds from the
sale, disposition or liquidation of the Trust Balance of the Mortgage Loans
pursuant to Section 11.2 are received and distributed to Certificateholders.
Distribution Date: __________, ____ and the _____ day of each month
thereafter (or, if such day is not a Business Day, the next succeeding Business
Day).
Draw: With respect to any Mortgage Loan, an increase in the Loan
Balance subsequent to the Cut-Off Date in accordance with the related Loan
Agreement subject to Section 5.1(c).
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Electronic Ledger: The electronic master record of home equity
revolving credit line loan accounts (including the Mortgage Loans) maintained by
the Servicer.
Eligible Account: An account that is (i) maintained with a depository
institution which has a short-term certificate of deposit rating at the time of
any deposit therein in the highest short-term debt rating category by the Rating
Agencies, (ii) one or more accounts with a depository institution whose accounts
are fully insured by either SAIF or BIF of the Federal Deposit Insurance
Corporation with a minimum long-term unsecured debt rating of Baa3, (iii) a
trust account maintained with the Trustee in its corporate trust department or
(iv) or other similar arrangements, otherwise acceptable to each Rating Agency
as evidenced by a letter from such Rating Agency to the Trustee, without
reduction or withdrawal of their then current ratings of the Certificates, and
acceptable to the Certificate Insurer.
Eligible Substitute Mortgage Loan: A Mortgage Loan proposed to be
substituted by the Seller for a Defective Mortgage Loan which, on the date of
such substitution, shall (i) have an outstanding Loan Balance (except as
provided below) not less than __% of the Trust Balance of such Defective
Mortgage Loan on the date of such substitution; (ii) have a Loan Rate not less
than the Loan Rate of such Defective Mortgage Loan and not more than ___ basis
points in excess of the Loan Rate of such Defective Mortgage Loan; (iii) have a
Margin that is not less than the Margin of such Defective Mortgage Loan and not
more than ___ basis points higher than the Margin of such Defective Mortgage
Loan; (iv) have a remaining term to maturity not later nor more than ___ months
earlier than the remaining term of such Defective Mortgage Loan; (v) comply with
each representation and warranty set forth in Section 2.4(a) as if made on the
date of such substitution; (vi) other than in the case referred to in clause
(vii) below, have a Combined Loan-to-Value Ratio not greater than the Combined
Loan-to-Value Ratio of such Defective Mortgage Loan as of the Cut-Off Date;
(vii) in the case of an Eligible Substitute Mortgage Loan substituted for a
Mortgage Loan pursuant to Section 3.1, have a Combined Loan-to-Value Ratio of
not more than __% (rounded to the nearest whole percent); (viii) have a maximum
Loan Rate not lower than the maximum Loan Rate applicable to such Defective
Mortgage Loan; (ix) have a Loan Rate that is based on the same index as that of
such Defective Mortgage Loan; (x) be secured by a Mortgaged Property that is
subject to the same use (owner-occupied, second home or rental property) and
that has the same structural characteristic (attached or detached) as the
Mortgaged Property securing such Defective Mortgage Loan, provided, however,
that an owner-occupied Mortgaged Property and a detached Mortgaged Property
shall satisfy the applicable requirements of this clause (x) in all cases; and
(xi) have a Mortgage in a lien position not junior to the lien position of the
Mortgage of such Defective Mortgage Loan. If more than one Mortgage Loan is
substituted for Defective Mortgage Loans on any substitution date, the
requirements of clause (i) of this definition shall be satisfied if such
Mortgage Loans shall have aggregate Loan Balances not less than __% of the
aggregate Trust Balances of such Defective Mortgage Loans on the date of
substitution. If balances under a Mortgage loan substituted for a Defective
Mortgage Loan have been transferred to any Prior Trust or to any other Person,
the requirements of clause (i) of this definition shall be satisfied if the
unpaid principal balance of such Mortgage Loan transferred to the Trust is not
less than __% of the Trust Balance of such Defective Mortgage Loan on the date
of substitution.
Event of Default: As defined in Section 8.1.
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Foreclosure Proceedings: Proceedings or action for foreclosure,
deed in lieu of foreclosure or trustee's sale with respect to any mortgage Loan
and the related Mortgaged Property.
Insolvency Events: As defined in Section 11.1(c).
Insurance Agreement: The insurance and indemnity agreement dated as
of the date of this Agreement among Chevy Chase, in its individual capacity, the
Seller, the Servicer, the Certificate Insurer and the Trustee, including any
amendments or supplements thereto, and from and after the date any replacement
certificate insurance policy or other credit enhancement arrangements are
substituted for the Certificate Insurance Policy pursuant to Section 4.3, the
agreement relating to such replacement surety bonds or other credit enhancement
arrangements.
Insurance Proceeds: Proceeds paid to the Servicer by any insurer
other than the Certificate Insurer pursuant to any insurance policy covering a
Mortgage Loan, net of any component thereof covering any reasonable expenses
incurred by or on behalf of the Servicer in connection with obtaining such
Insurance Proceeds.
Insured Amount: With respect to any Distribution Date, the
Certificate Insurance Draw Amount for such Distribution Date.
Interest Period: As to any payment of interest on a Mortgage Loan,
the period ending on a Cycle Date during which the interest covered by such
payment accrued.
Invested Amount: With respect to any Distribution Date, an amount
equal to the original Invested Amount minus (i) the amount of Investor Principal
Collections previously distributed to Investor Certificateholders, minus (ii) an
amount equal to the Aggregate Investor Liquidation Loss Amounts as to any prior
Distribution Date and minus (iii) any Overcollateralization Adjustment Amount
previously distributed to the Seller.
Investor Certificate: Any certificate executed and authenticated by
the Trustee substantially in the form set forth in Exhibit A hereto.
Investor Certificate Interest: With respect to any Distribution
Date, interest for the related Accrual Period at the applicable Investor
Certificate Rate on the Investor Certificate Principal Balance on the first day
of such Accrual Period (after giving effect to the distributions made on the
first day of such Accrual Period.
Investor Certificate Principal Balance: With respect to any date:
(a) the Original Investor Certificate Principal Balance less (b) the aggregate
of amounts actually distributed as principal an the investor Certificates.
Investor Certificate Rate: With respect to the first Accrual Period
__%, and for any subsequent Accrual Period, the sum of (a) LIBOR and (b) __%;
provided, however, that in no event shall the Investor Certificate Rate with
respect to any Accrual Period exceed the maximum Rate.
Investor Certificateholder: The Holder of an Investor Certificate.
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Investor Certificateholders' Floating Allocating Percentage: With
respect to any day, the percentage equivalent of a fraction, the numerator of
which is the Invested Amount on the end of the preceding day and the denominator
of which is the Pool Balance, which is calculated on the end of the preceding
day (but not more than 100%).
Investor Fixed Allocation Percentage: As to any day, the greater of
(x) __% and (y) the percentage equivalent of a fraction, the numerator of which
is the Invested Amount and the denominator of which is the Pool Balance on the
end of the preceding day (but not more than 100%).
Investor Insurance Proceeds: As to any Mortgage Loan and day the
product of (i) the investor Certificateholders' Floating Allocation Percentage
on such day and (ii) Trust Insurance Proceeds received by the Servicer on such
day.
Investor Interest Collections: As to any Distribution Date, an
amount equal to the aggregate amount of Daily Investor Interest Collections for
the related Collection Period.
Investor Liquidation Proceeds: As to any Mortgage Loan and day the
product of (i) the Investor Certificateholders' Floating Allocation Percentage
on such day and (ii) Net Trust Liquidation Proceeds received by the Servicer on
such day.
Investor Loss Reduction Amount: With respect to any Distribution
Date, the portion, if any, of the Aggregate Investor Liquidation Loss Amount for
such Distribution Date and all prior Distribution Dates that has not been
distributed to Investor Certificateholders on such Distribution Date pursuant to
Sections 5.1(a) (v) or 5.1(a) (vi) or a distribution of the Certificate
Insurance Draw Amount.
Investor Principal Collections: As to any Distribution Date and the
related Collection Period, the aggregate amount of Daily Investor Principal
Collections in respect of such Distribution Date; provided that with respect to
any Distribution Date in the Managed Amortization Period, Investor Principal
Collections shall not exceed the Alternative Principal Payment for the related
Distribution Date.
LIBOR: As to the initial Accrual Period, __%. As to any subsequent
Accrual Period, as follows: (i) the arithmetic mean (rounded upwards, if
necessary, to the nearest 1/100th of a percent) of the offered rates for United
States dollar deposits for one month which appear on the Reuters Screen LIBO
Page as of [TIME], on the second LIBOR Business Day prior to commencement of
such Accrual Period, provided that at least two such offered rates appear on the
Reuters Screen LIBO Page at such time and on such date. If fewer than two
offered rates appear, LIBOR shall be determined on such date as described in
clause (ii) below. "Reuters Screen LIBO Page" means the display designated as
page "LIBO" on the Reuter Monitor Money Rates Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying London
inter-bank offered rates of major banks).
(ii) If at such time and on such date fewer than two offered rates
appear on the Reuters Screen LIBO Page as described in clause (i) above, the
Trustee shall request the principal London office of each of the reference banks
(which shall be major banks that are engaged in transactions in the London
inter-bank market, selected by the Seller) ("Reference
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Banks") to provide the Trustee with its offered quotation for United States
dollar deposits for one month to prime banks in the London inter-bank market as
of [TIME], on such date. If at least two Reference Banks provide the Trustee
with such offered quotations, then LIBOR on such date shall be the arithmetic
mean (rounded upwards, if necessary, to the nearest 1/100 of a percent) of all
such quotations. If on such date fewer than two of the Reference Banks provide
the Trustee with such an offered quotation, LIBOR on such date shall be the
arithmetic mean (rounded upwards, if necessary, to the nearest 1/100 of a
percent) of the offered per annum rates which one or more leading banks in The
City of [Name of City] selected by the Trustee (after consultation with the
Seller) are quoting as of [TIME], on such date to leading European banks for
United States dollar deposits for one month, provided, however, that if such
banks are not quoting as described above, LIBOR shall be the LIBOR applicable to
the immediately preceding Accrual Period.
LIBOR Business Day: Any Business Day other than a day on which
banking institutions in the city of London, England are obligated or authorized
by law to be closed.
Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage
Loan which was not previously a Liquidated Mortgage Loan, was in default during
the Collection Period related to such Distribution Date and in respect of which
the Servicer has determined as of the end of such Collection Period that all
amounts which it expects to recover from or on account of such Mortgage Loan
have been recovered.
Liquidation Expenses: Expenses which are incurred by the Servicer
in connection with the liquidation of any Mortgage Loan and not recovered under
any insurance policy or from any Mortgagor, including, without limitation, legal
fees and expenses, title fees and expenses, any unreimbursed amount expended by
the Servicer pursuant to Section 3.6 with respect to such Mortgage Loan
(including, without limitation, amounts advanced to cure defaults on any
mortgage loan which is senior to such Mortgage Loan or to pay in full any such
senior mortgage loan) and any related and unreimbursed expenditures for real
estate property taxes or for property restoration, preservation or insurance
against casualty loss or damage as are customary in the residential mortgage
loan servicing industry.
Liquidation Loss Amount: With respect to any Distribution Date and
any Mortgage Loan that becomes a Liquidated Mortgage Loan during the related
collection Period, the unrecovered Trust Balance thereof at the end of such
Collection Period, after giving effect to the Net Trust Liquidation Proceeds
applied in reduction of such Trust Balance.
Liquidation Proceeds: Cash (including Insurance Proceeds) received
in connection with the liquidation of Liquidated Mortgage Loans, whether through
Foreclosure Proceedings or otherwise.
Loan Agreement: As to any Mortgage Loan, the related loan agreement
executed by the Mortgagor and the Seller.
Loan Agreement Amendment: As to any Loan Agreement, either (i) the
notice mailed to the related Mortgagor on or about __________, ____, the form of
which is attached
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hereto as Exhibit D, or (ii) the comparable provision in Paragraph 6 of the form
of Home Equity Credit Line Agreement attached hereto as Exhibit D.
Loan Balance: An to any Mortgage Loan and day, the unpaid principal
balance of such Mortgage Loan upon which interest accrued for such day was
calculated.
Loan Rate: As to any Mortgage Loan and day, the current per annum
rate of interest applicable to the calculation of interest for such day on the
Loan Balance.
Managed Amortization Period: The period from and including the
Closing Date to and including the earlier of (a) the last day of the Collection
Period related to the Distribution Date in __________ and (b) the day prior to
the occurrence of a Rapid Amortization Event.
Margin: As to any Mortgage Loan, the margin of such Mortgage Loan
as set forth in the related Loan Agreement.
Maximum Principal Payment: with respect to any Distribution Date,
the- product of the aggregate amount of Principal Collections for the related
Collection Period and the Certificateholders' Fixed Allocation Percentage as of
the first day of such Collection Period; provided, however, that if the
Overcollateralization Amount exceeds the Required Overcollateralization Amount
the amount which would have otherwise equaled the "Maximum Principal Payment"
shall be reduced by the Overcollateralization Adjustment Amount.
Maximum Rate: As to any Accrual Period, a rate equal to the sum of
(a) the Weighted Average Net Loan Rate for the related Collection Period and (b)
the quotient of U) the product of (A) the sum of the Overcollateralization
Interest Component and the Overcollateralization Principal Component and (B) the
quotient obtained by dividing the excess, if any, of the Overcollateralization
Amount over the Basic Overcollateralization Amount by the Overcollateralization
Amount and (ii) the certificate Principal Balance as of the close of the
preceding Distribution Date (adjusted to an effective rate reflecting accrued
interest calculated on the basis of the actual number of days in the Accrual
Period and a year assumed to consist of 360 days).
Minimum Monthly Payment: With respect to any Mortgage Loan and any
month, the minimum amount required to be paid by the related Mortgagor pursuant
to the related Loan Agreement.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in
interest.
Mortgage: The mortgage, deed of trust or other instrument creating
a first or second lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.1(b)
pertaining to a particular Mortgage Loan and any additional documents required
to be added to such Mortgage File pursuant to this Agreement.
Mortgage Loan Schedule: As of any date, the schedule of mortgage
loans included in the Trust Fund on such date. Initially references to "Mortgage
Loan Schedule" shall
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refer to the magnetic tape delivered to the Trustee and the Custodial Agent by
the Seller. on the Closing Date, which sets forth as to each Mortgage Loan, as
of the Cut-Off Date (i) the Cut-Off Date Trust Balance, (ii) the Cut-Off Date
Credit Limit, (iii) the stated maturity upon which any outstanding Loan Balance
is due and payable, (iv) the Cycle Date and (v) the name and address of the
Mortgagor. Thereafter, "Mortgage Loan Schedule" shall refer to such schedule as
amended from time to time in accordance with Sections 2.2 (c), 2.4(b) or 3.1
hereof.
Mortgage Loans: The mortgage loans identified on the Mortgage Loan
Schedule. Any capitalized reference in this Agreement (including, without
limitation, any reference in Section 2.1(a), 2.2(c), 2.4(b) or 3.1) to a
Mortgage Loan transferred to, or removed, from, the Trust or as constituting
part of the Trust Fund shall mean such Mortgage Loan to the extent of the
related balance owned by the Trust.
Mortgaged Property: The underlying property securing a Mortgage
Loan.
Mortgagor: The obligor or obligors under a Loan Agreement.
Net Liquidation Proceeds: As to any Mortgage Loan which has been
liquidated, Liquidation Proceeds net of Liquidation Expenses.
Net Trust Liquidation Proceeds: With respect to any Liquidated
Mortgage Loan, the Trust's share of Net Liquidation Proceeds, which share is
equal to the sum of (1) Trust Interest with respect to the period from the last
day on which interest was paid in full on such Liquidated Mortgage Loan to the
day on which such Liquidated Mortgage Loan became a Liquidated Mortgage Loan and
(ii) the Trust Percentage of the amount, if any, by which (A) Net Liquidation
Proceeds for such Liquidated Mortgage Loan exceed (B) the sum of (1) the amounts
in clause (1) and (2) the aggregate of the amounts payable to each Prior Trust
pursuant to clause (i) of the definition of "Net Trust Liquidation Proceeds" in
each of the applicable Prior Trust Pooling and Servicing Agreements.
Officer's Certificate: A certificate delivered-to the Trustee and
signed by the Chairman of the Board of Directors, a vice Chairman of the Board
of Directors, the President, an Executive Vice President, a Senior Vice
President or a Vice President of the Seller, if delivered by the Seller, and by
a Servicing officer, if delivered by the Servicer.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee and the Certificate Insurer, who may be internal counsel for the Seller
or the Servicer.
Original Invested Amount: $____________.
Original investor Certificate Principal Balance: $____________.
Overall Minimum Amount: As defined in Section 2.6.
Overcollateralization Adjustment Amount: As to any Distribution
Date where the Overcollateralization Amount exceeds the Required
Overcollateralization Amount, (i) with respect to the Alternative Principal
Payment, an amount equal to the product of (A) the amount calculated in clause
(y) of the definition of Alternative Principal Payment and (B) the quotient
11
obtained by dividing such Overcollateralization Amount by the Invested Amount on
such Distribution Date and (ii) with respect to the Maximum Principal Payment,
an amount equal to the product of (A) Maximum Principal Payment and (a) the
quotient obtained by dividing such Overcollateralization Amount by the Invested
Amount on such day; provided, however, the amounts calculated in clauses (i) and
(ii) of this definition shall not exceed the excess of the Overcollateralization
Amount over the Required Overcollateralization Amount.
Overcollateralization Amount: At the time of reference thereto, the
amount, if any, by which the Invested Amount exceeds the Investor Certificate
Principal Balance.
Overcollateralization Interest Component: As to any Accrual Period,
the product of (a) the Overcollateralization Amount an of the close of the
immediately prior Distribution Date divided by the invested Amount as of such
Distribution Date and (b) the aggregate amount of investor Interest Collections
for the related Collection Period.
Overcollateralization Principal Component: As to any Accrual
Period, the product of (a) the Overcollateralization Amount as of the close of
the previous Distribution Date divided by the Invested Amount as of such
Distribution Date and (b) the aggregate amount of Investor Principal Collections
for the related Collection Period.
Ownership Interest: With respect to any Certificate, any ownership
or security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
Paying Agent: Any Person appointed by the Trustee and acting
pursuant to Section 6.6.
Percentage Interest: As to any investor Certificate, the percentage
obtained by dividing the principal denomination of such investor Certificate by
the aggregate of the principal denominations of all Investor Certificates.
Permitted Investments: One or more of the following:
(A) obligations of, or guaranteed as to the full and timely
payment of principal and interest by, the United States or
any agency or instrumentality thereof when such obligations
are backed by the full faith and credit of the United States;
(B) repurchase agreements on obligations specified in clause (i)
above maturing not more than three months from the date of
acquisition thereof, provided that the unsecured obligations
of the party agreeing to repurchase the specified obligations
are at the time of such agreement rated by each Rating Agency
in its highest short-term rating category and provided,
further, that if ▇▇▇▇▇'▇ is a Rating Agency, the short-term
debt obligations of the party agreeing to repurchase the
specified obligations shall be rated P-1 or better;
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(C) certificates of deposit, demand deposits, time deposits and
bankers' acceptances (which, if ▇▇▇▇▇'▇ is a Rating Agency,
shall each have an original maturity of not more than 90 days
and, in the case of bankers' acceptances, shall in no event
have an original maturity of more than 365 days) of any
United States depository institution or trust company
incorporated under the laws of the United States or any state
or any branch or agency of any foreign bank licensed under
the laws of the United States or any state thereof, provided
that the debt obligations of such depository institution or
trust company at the date of acquisition of such
certificates, demand deposits, time deposits or bankers'
acceptances have been rated by each Rating Agency in its
highest short-term rating category and provided, further,
that if ▇▇▇▇▇'▇ is a Rating Agency, the short-term
obligations of such depository institution or trust company
shall be rated P-1 or better;
(D) commercial paper (having original maturities of not more than
270 days) of any corporation incorporated under the laws of
the United States or any state thereof which on the date of
acquisition has been rated by each Rating Agency in its
highest short-term rating category;
(E) investments in money market funds registered under the
Investment Company Act of 1940, as amended, that, at the time
of the Trust's investment or contractual commitment to invest
therein, are rated in the highest investment category or
otherwise approved in writing by each Rating Agency; and
(F) other obligations or securities that are acceptable to each
Rating Agency and the Certificate Insurer as a Permitted
Investment hereunder and will not result in the reduction,
suspension or withdrawal of the then-current rating of the
Investor Certificates without taking into account the
Certificate Insurance Policy;
provided, however, that (a) no instrument described hereunder shall evidence the
right to receive only interest with respect to the obligations underlying such
instrument and (b) no instrument purchased hereunder may be a callable
investment purchased at a premium. The highest short-term rating of Standard &
Poor's for the investments specified in clauses (ii), (iii) and (iv) is A-l+ and
the highest investment category rating of Standard & Poor's for the investments
specified in clause (v) is either AAAm or AAAm-G.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Balance: with respect to any date, the aggregate of the Trust
Balances of all Mortgage Loans as of such date.
Principal Collections: for any day, shall equal (i) the Trust's
share of principal collections received from borrowers under the Mortgage Loans
on such day after the application
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of the allocations described in the second paragraph of Section 2.1(a), (ii) the
principal portion of the Net Trust Liquidation Proceeds and Trust Insurance
Proceeds received by the Servicer on such day and (iii) the principal portion of
the Reassignment Deposit Amount and the Substitution Adjustment Amount (which
pursuant to Section 3.2(f) is deemed to be received on the last day of the
related Collection Period).
Rapid Amortization Event: As defined in Section 11.1.
Rapid Amortization Period: The period which occurs upon the
earlier of a Rapid Amortization Event or on the first day of the collection
Period immediately prior to the Distribution Date in ________________.
Rating Agency: Moody's or Standard & Poor's, at least one of
which rated the Investor Certificates at the time of the initial issuance of
such Certificates. If Moody's or Standard & Poor's or a successor is no longer
in existence or shall cease to rate the Investor Certificates, "Rating Agency"
shall be such statistical credit rating agency, or other comparable Person, as
shall be designated by the Seller, notice of which designation shall be given to
the Trustee and the Certificate insurer, or the successor of such agency or
Person.
Reassignment Deposit Amount: With respect to any Mortgage Loan
required to be removed on any date pursuant to Section 2.2(c), 2.4(b) or 3.1, an
amount equal to the sum of (i) the Trust Balance of such Mortgage Loan as of the
last day of the Collection Period immediately preceding the date of reassignment
and (ii) accrued and unpaid interest through the Cycle Date occurring in such
Collection Period computed on a daily basis at the Loan Rate.
Record Date: As to any Distribution Date, the day immediately
preceding such Distribution Date; provided, however, that if Definitive
Certificates are issued pursuant to Section 6.2(d), the Record Date shall be the
last day of the calendar month immediately preceding such Distribution Date.
Removal Condition: As defined in Section 2.6.
Required Overcollateralization Amount: An amount equal to an
amount which is the greater of $__________ and the Basic Overcollateralization
Amount.
Responsible Officer: When used with respect to the Trustee, any
officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Assistant Vice President, Trust Officer, any
Assistant Secretary, any trust officer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
this Agreement.
Retained Rights: As defined in Section 2.1(f).
Retransfer Date: As defined in Section 2.6.
Retransfer Notice Date: As defined in Section 2.6.
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SAIF: The Savings Association Insurance Fund, as from time to
time constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Scheduled Principal Collections Distribution Amount: With respect
to any Distribution Date in respect of the managed Amortization Period, the
amount equal to the lesser of (i) the Maximum Principal Payment and (ii) the
Alternative Principal Payment. With respect to any Distribution Date in respect
of the Rapid Amortization Period, the Scheduled Principal Collections
Distribution Amount shall be the Maximum Principal Payment.
Seller: [Name of Seller], a limited liability company, organized
under the laws of [State of Organization], or its permitted successor in
interest.
Seller Certificateholder: The Holder of the Seller Certificates.
Seller Certificates: The certificates executed and authenticated
by the Trustee substantially in the form set forth in Exhibit B hereto.
Seller Principal Balance: As of the date of determination
thereof, the amount equal to (i) the Pool Balance at the end of such date of
determination less (ii) the invested Amount at the end of such day.
Servicer: Chevy Chase Bank, F.S.B., a federal savings bank
organized under the laws of the United States or its successor in interest under
Section 7.2, and any Person that is appointed as successor servicer in
accordance with the terms of this Agreement.
Servicing Certificate: A certificate completed by and executed on
behalf of the Servicer in accordance with Section 4.1.
Servicing Fee: As defined in Section 3.8.
Servicing Fee Rate: __% per annum if Chevy Chase Bank, F.S.B. or
its successor in interest under Section 7.2 is the Servicer; up to a maximum of
__% per annum if another Person (including, without limitation, the Trustee) is
appointed as successor Servicer in accordance with the terms of this Agreement.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers annexed to an Officer's Certificate
furnished to the Trustee and the Certificate Insurer by the Servicer, as such
list may be amended from time to time.
Standard & Poor's: Standard & Poor's Corporation or its successor
in interest.
Substitution Adjustment Amount: As to the Collection Period
related to a Distribution Date with respect to which the Seller or the Servicer
substitutes one or more Eligible Substitute Mortgage Loans pursuant to Section
2.2(c), 2.4(b) or 3.1, the amount, if any, by which the sum of (i) the aggregate
Loan Balances at the end of such Collection Period of all such
15
Eligible Substitute Mortgage Loans being added to the Trust Fund is less than
(ii) the aggregate Trust Balances at the end of such Collection Period of the
related Mortgage Loans being removed from the Trust Fund, such amount to be
deposited into the Certificate Account to the extent provided in Sections 2.2(d)
and 3.2(c). If balances under Eligible Substitute Mortgage Loans being added to
the Trust Fund have been transferred to any Prior Trust or to any other Person,
the amount to be deposited into the Certificate Account to the extent provided
in Section 2.2(d) and 3.2(c) shall be equal to the amount, if any, by which (i)
the sum of the unpaid principal balances of all such Eligible Substitute
Mortgage Loans being added to the Trust Fund is less, at the end of the
specified Collection Period, than (ii) the aggregate Trust Balances at the end
of such Collection Period of the related Mortgage Loans being removed from the
Trust Fund.
Transfer: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
Transfer of Retained Rights: An defined in Section 2.1(f) .
Transfer Date: With respect to any Mortgage Loan or any Trust
Balance transferred to or removed from the Trust hereunder, the date on which
such transfer or removal is made under the terms hereof, which date shall be the
Closing Date in the case of all of the Mortgage Loans originally listed on the
Mortgage Loan Schedule.
Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
Trigger Event: Any of the following events:
(i) the Seller or the Servicer fails to pay any amount payable
by the Seller or the Servicer under this Agreement and such failure continues
unremedied for five (5) Business Days after receipt by the Seller or the
Servicer, as the case may be, of notice thereof and such failure results in any
payment under the Certificate Insurance Policy;
(ii) the Seller or the Servicer fails to make any payment
required under the Insurance Agreement and such failure continues unremedied for
five (5) Business Days after receipt by the Seller or the Servicer, as the case
may be, of notice thereof;
(iii) an Event of Default; or
(iv) the Certificate Insurer determines that the performance of
the Servicer under this Agreement is not, in the reasonable opinion of the
Certificate Insurer, satisfactory.
Trust: The trust created by this Agreement and designated "Chevy
Chase Home Equity and Home Improvement Loan Trust."
Trust Balance: As to any Mortgage Loan and day, the Cut-Off Date
Trust Balance plus (i) any Additional Balance in respect of such Mortgage Loan,
minus (ii) all collections credited as principal against the Cut-Off Date Trust
Balance of any such Mortgage Loan in accordance with the related Loan Agreement.
For purposes of this definition, a
16
Liquidated Mortgage Loan shall be deemed to have a Trust Balance equal to the
Trust Balance of the related Mortgage Loan immediately prior to the final
recovery of related Liquidation Proceeds and a Trust Balance of zero thereafter.
Trust Fund: The corpus of the Trust, consisting of, to the extent
described herein, the following: the Trust Balance of each Mortgage Loan,
including all payments of interest and of principal (to the extent of the Trust
Balance of such Mortgage Loan), from whatever source derived, received on or
with respect to such Mortgage Loan on and after the Cut-Off Date and allocable
to such Trust Balance; such assets as shall from time to time be identified an
deposited into the Certificate Account (excluding, however, amounts on deposit
in the Certificate Account required to be paid to the Seller pursuant to Section
3.2(d)); the interest of the. Certificateholders to the extent of the Trust
Balances of the Mortgage Loans and interest accrued thereon in (i) any property
which secured a Mortgage Loan and which has been acquired by or on behalf of the
Trustee in Foreclosure Proceedings or otherwise, (ii) any insurance policies
related to the Mortgage Loans, and (iii) the related Mortgage, Loan Agreement
and other Mortgage File documents for each Mortgage Loan; and the proceeds of
each of the foregoing. The Certificateholders shall have the benefit of the
Certificate Insurance Policy.
Trust Insurance Proceeds: As to any Mortgage Loan and Collection
Period, the Trust's share of Insurance Proceeds, which share is equal to the
product of (i) the Trust Percentage and (ii) Insurance Proceeds received during
such Collection Period which (x) are not Liquidation Proceeds, (y) are not
applied or expected to be applied to the restoration or repair of the related
Mortgaged Property or released to the related Mortgagor in accordance with the
normal servicing procedures of the Servicer and (z) will be applied by the
Servicer in reduction of the Loan Balance of such Mortgage Loan.
Trust Interest: With respect to any Mortgage Loan, an amount
equal to the product of (a) the amount allocated to interest multiplied by
(b)(x) the amount of interest accrued at the Loan Rate on the Trust Balance
during the related Interest Period divided by (y) the amount of interest accrued
on the Loan Balance at the Loan Rate during such interest Period.
Trust Percentage: With respect to any Mortgage Loan (other than
any Liquidated Mortgage Loan) for any day, the percentage (carried to four
decimal places) obtained by dividing the Trust Balance of. such Mortgage Loan
for such day by the Loan Balance of such mortgage Loan for such day. With
respect to any Liquidated Mortgage Loan on any day, the Trust Percentage on the
day such Mortgage Loan became a Liquidated Mortgage Loan.
Trustee: The institution executing this Agreement as Trustee, or
its successor in interest, or any successor trustee that has been appointed in
accordance with the terms of this Agreement.
Unpaid Investor Certificate Interest Shortfall: With respect to
any Distribution Date, the aggregate amount, if any, of investor Certificate
Interest that was accrued in respect of a prior Distribution Date and has not
been distributed to Investor Certificateholders.
Updated Combined Loan-to-Value Ratio: As to any Mortgage Loan
with respect to which the Servicer consents to the placement of a senior lien on
the related Mortgaged
17
Property pursuant to Section 3.1(b), the fraction, expressed as a percentage,
the numerator of which is the sum of (i) the Credit Limit of such Mortgage Loan
immediately following such placement and (ii) the unpaid principal balance of
the related first mortgage loan immediately following such placement, and the
denominator of which is the appraised value of the related Mortgaged Property
based upon the drive-by appraisal or other estimate of value made by or on
behalf of the Servicer at the time of and in connection with such consent.
Weighted Average Net Loan Rate: As to any Accrual Period and the
Investor Certificates, the weighted average of the Loan Rates (rounded to the
nearest one-hundredth of a percent, with five one-thousandths of a percent
rounded upward) during the Interest Period ending on the Cycle Date occurring in
the second preceding Collection Period for the related Distribution Date
(adjusted to an effective rate reflecting accrued interest calculated on the
basis of the actual number of days in the Accrual Period and a year assumed to
consist of 360 days), less the Servicing Fee Rate.
Section 1.2 Other Definitional Provisions.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
Section 1.1, and accounting terms partly defined in Section 1.1 to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles or regulatory accounting principles, as
applicable. To the extent that the definitions of accounting terms herein are
inconsistent with the meanings of such terms under generally accepted accounting
principles or regulatory accounting principles, the definitions contained herein
shall control.
(d) The agreements, representations and warranties of Chevy
Chase Bank, F.S.B. and [Name of Seller] in this Agreement in each of their
capacities as Servicer and Seller, respectively shall be deemed to be the
agreements, representations and warranties of Chevy Chase Bank, F.S.B. and [Name
of Seller] solely in the indicated capacity for so long as the Chevy Chase Bank,
F.S.B. each act in such capacity under this Agreement.
(e) The agreements, representations and warranties of [Name of
the Trustee] in this Agreement in each of its capacities as Trustee, Paying
Agent and Certificate Registrar shall be deemed to be the agreements,
representations and warranties of [Name of Trustee] solely in the indicated
capacity if and for so long as [Name of Trustee] acts in such capacity under
this Agreement.
(f) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; the word
"including" when used in this Agreement is intended to be illustrative and not
exclusive; Section, subsection, paragraph, clause and Exhibit references
contained in this Agreement are references to Sections, subsections, paragraphs,
clauses and Exhibits in or to this Agreement unless otherwise specified; and the
definitions of terms set forth
18
herein are applicable to the singular as well as the plural forms of such terms
and to the masculine as well as the feminine and neuter genders of such terms.
Section 1.3 Interest Calculations.
All calculations of interest on any Certificates shall be made on
the basis of the actual number of days in an Accrual Period and a year assumed
to consist of 360 days.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Mortgage Loans.
(a) In consideration of the Trustee's delivery to or upon the
order of the Seller of the Investor Certificates and the Seller Certificate in
an aggregate principal amount equal to the Cut-Off Date Trust Balances, the
Seller does hereby transfer, assign, set over and otherwise convey to [Name of
the Custodial Agent], as Custodial Agent (the "Custodial Agent") for the
Trustee, in trust for the benefit of the Certificateholders and the Certificate
Insurer, without recourse (subject to Sections 2.2 and 2.4), all of the Seller's
right, title and interest in and to (i)(A) each Mortgage Loan, including its
Cut-Off Date Trust Balance and any Additional Balances and all payments of
interest and principal thereon, from whatever source derived, which are received
on or with respect to such Mortgage Loan on or after the Cut-Off Date and are
allocable to the Trust Balance thereof, (B) and (ii) to the extent of the Trust
Balances of the Mortgage Loans and interest accrued thereon, as provided in this
Agreement, (A) any Mortgaged Properties converted to ownership through
Foreclosure Proceedings or otherwise, (B) any insurance policies related to the
Mortgage Loans, and (C) the related Mortgages, Loan Agreements and other
Mortgage File documents for the Mortgage Loans; and the proceeds of each of the
foregoing. In addition, in consideration of the foregoing, the Seller has
obtained the Certificate Insurance Policy, which has been delivered to the
Trustee for the benefit of the Investor Certificateholders.
The Seller hereby grants to the custodial Agent for the benefit
of the Trustee for the benefit of the Certificateholders, a security interest in
all of the Seller's right, title and interest in and to the (i) mortgage loans
identified on the Mortgage Loan Schedule on the Cut-Off Date, (ii) Mortgage
Loans added to the Mortgage Loan Schedule from time to time, and (iii) all
property which is included in the Trust Fund to secure a loan in the amount
equal to all obligations owing on the Certificates and that this Agreement shall
constitute a security agreement under applicable law.
In connection with such assignment, transfer, and conveyance, the
Seller shall file, on or prior to the Closing Date, in the appropriate office of
any applicable state, county or other relevant jurisdiction, a UCC-1 financing
statement executed by the Seller as debtor, naming the Custodial Agent as
secured party and identifying as collateral the mortgage loans identified on the
Mortgage Loan Schedule and all property constituting the Trust Fund. In
connection with such filing, the Seller shall cause to be filed all necessary
continuation
19
statements thereof and take or cause to be taken such actions and execute such
documents as are necessary to continue the perfection and protect the
Certificateholders' interest in such property.
(b) in connection with the foregoing assignment, transfer and
conveyance by the Seller, and except as provided in the immediately following
paragraph, the Seller shall deliver to, and deposit with, the Custodial Agent,
on or before the Closing Date, the following documents or instruments with
respect to each Mortgage Loan:
(i) the related Loan Agreement and any evidence of indebtedness
executed by the related Mortgagor in connection therewith;
(ii) the related Mortgage with evidence of recording indicated
thereon; and
(iii) if such assignments are not required to be recorded as
provided in Section 2.1(d), an assignment to the Custodial
Agent of the Mortgage in recordable form.
If the Seller cannot deliver a Mortgage with evidence of
recording thereon concurrently with the execution and delivery of this
Agreement, the Seller shall deliver to the Custodial Agent an Officer's
Certificate, with a photocopy of such Mortgage attached thereto, stating that
such Mortgage has been delivered to the appropriate public recording office for
recordation. Promptly upon receipt thereof from the applicable public recording
office, the Seller shall deliver to the Custodial Agent either (i) such Mortgage
with evidence of recording indicated thereon or (ii) a true copy of such
Mortgage issued by such public recording office.
(c) The Seller hereby confirms to the Trustee and the Custodial
Agent that it has caused the portions of the Electronic Ledger relating to the
Mortgage Loans to be clearly and unambiguously marked to indicate that such
Mortgage Loans (to the extent provided herein) have been transferred and
assigned to the Custodial Agent for the benefit of the Trustee and constitute
part of the Trust Fund in accordance with the terms of the trust created
hereunder.
(d) The Seller, at its own expense, shall either (i) record the
assignment of each mortgage (to the extent of the Custodial Agent's interest
therein) in favor of the Custodial Agent (which may be a blanket assignment if
permitted by applicable law) in the appropriate real property or other records
not later than fifteen (15) days after the Closing Date or (ii) deliver to the
Custodial Agent the assignment of each Mortgage (to the extent of the Custodial
Agent's interest therein) in favor of the Custodial Agent in recordable form,
together with an opinion of Counsel to the effect that recording is not required
to perfect a first priority security interest in favor of the Custodial Agent
for the benefit of the Trustee in the related Mortgage Loan.
(e) on or prior to the Closing Date, the Seller shall deliver
the Certificate Insurance Policy to the Trustee.
Section 2.2 Acceptance by Trustee; Reassignment of Mortgage
Loans; Substitution of Mortgage Loans.
(a) The Custodial Agent acknowledges conveyance of the
documents referred to in the first paragraph of Section 2.1(b) and to be
delivered to it pursuant thereto, and declares
20
that it does hold and shall hold such documents and the other documents
constituting a part of the Mortgage Files in trust to the extent received by it,
upon the terms herein set forth, for the benefit of the Trustee for the use and
benefit of all present and future Certificateholders and the Certificate
Insurer.
(b) During the period commencing on ________, and ending on
________, the Custodian shall review each Mortgage File delivered to it pursuant
to Section 2.1(b) to ascertain that all required documents referred to in the
first paragraph of Section 2.1(b) have been executed and received, and that such
documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule;
and provided, however, that the Custodian's review of assignments of Mortgages
that have been delivered to the applicable recording office for recordation
shall be reviewed in accordance with the provisions of the following paragraph.
The Custodian may rely on the purported due execution of any such documents and
genuineness of any signature thereon. Not later than, the Custodian shall
deliver to the Seller, the Servicer and the Certificate Insurer a certificate
substantially in the form of Exhibit E. If, as set forth in such certificate,
the Custodian determines that any document constituting a part of a Mortgage
File (i) does not bear manual signatures, (ii) has not been received or (iii) is
unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule, the
Seller shall correct or cure any such specified defect on or before
________________ . Within fifteen (15) days following the substitution of any
Eligible Substitute Mortgage Loan, (i) the Custodian shall review the Mortgage
File for such Eligible Substitute Mortgage Loan for the purpose and to the
extent set forth above in this paragraph, and (ii) shall deliver to the Seller,
the Servicer and the Certificate Insurer a certificate substantially in the form
of Exhibit E specifying any defect with respect to such Mortgage File, as
described above. The Seller shall have a period of fifteen (15) days after
receipt from the Custodian of such certificate to correct or cure such defect.
The Trustee shall be under no duty or obligation (i) to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the represented
purpose or that they are other than what they purport to be on their face or
(ii) to determine whether any Mortgage File should include any of the documents
specified in Section 2.1(b).
Each original recorded assignment of mortgage referred to in
Section 2.1(d) shall be delivered to the Custodian within ten (10) days
following the date on which it is returned to the Seller by the office with
which such assignment was filed for recording. Within ten (10) days following
receipt by the Custodian of a recorded assignment, the Trustee shall review such
assignment to confirm evidence of the recording thereof of the Custodial Agent's
interest. Within ten (10) days after the end of each month, the Custodian shall
deliver to the Seller, the Servicer and the Certificate Insurer a notice,
substantially in the form of Exhibit F, with respect to any defects relating to
the recording of such assignments based upon the Custodial Agent's review. The
Seller shall have a period of thirty (30) days following receipt of such notice
to correct or cure any such defects.
Neither the Trustee nor the Custodian shall have any responsibility
for reviewing any Mortgage File except as expressly provided in this Section
2.2(b). Without limiting the effect of the preceding sentence, in reviewing any
Mortgage File, neither the Trustee nor the Custodian shall have any
responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form (except to determine if the Custodian is the assignee), whether any
document has been recorded
21
in accordance with the requirements of any applicable jurisdiction or whether a
blanket assignment is permitted in any applicable jurisdiction, but shall only
be required to determine whether a document has been executed, that it appears
to be what it purports to be, and, where applicable, that it purports to be
recorded.
(c) If the time to correct or cure any defect of which the
Custodial Agent has notified the Seller following the Custodial Agent's review
of the mortgage Files pursuant to Section 2.2(b) has expired without any
correction or cure, the Seller shall, on the Business Day immediately preceding
the Distribution Date in the month following the Collection Period in which the
time to correct or cure such defect expired, remove the related Mortgage Loan
(including any property acquired in respect thereof and any insurance policy or
insurance Proceeds with respect thereto) from the Trust either (i) in exchange
for depositing in the Trust the Reassignment Deposit Amount, which amount shall
be deposited into the Certificate Account pursuant to Section 3.2 on such
immediately preceding Business Day, or (ii) by substituting in its place an
Eligible Substitute Mortgage Loan or Loans. Promptly upon receipt by the Trustee
of, (i) in the case of a payment in respect of the removed Mortgage Loan,
written notification signed by a Servicing Officer to the effect that the
Reassignment Deposit Amount for any such Mortgage Loan has been so deposited
into the Certificate Account or (ii) in the case of a substitution, the Mortgage
File for each related Eligible Substitute Mortgage Loan and written notification
signed by a Servicing Officer to the effect that such Mortgage Loan complies
with the definition of Eligible Substitute Mortgage Loan and that the
Substitution Adjustment Amount, if any, has been deposited into the Certificate
Account as provided in Section 2.2(d), the Custodial Agent shall release to the
Seller the Mortgage File for the removed Mortgage Loan and shall execute and
deliver to the Seller an assignment substantially in the form of Exhibit 8,
without recourse, in order to vest in the Seller legal and beneficial ownership
of such removed Mortgage Loan (including any property acquired in respect
thereof and any insurance policy or Insurance Proceeds with respect thereto).
The form of assignment attached as Exhibit G may be modified from time to time
to the extent required by applicable law, as evidenced by an Opinion of Counsel
delivered to the Custodial Agent. The obligation of the Seller to remove (to the
extent permitted herein) any Mortgage Loan and either deposit the Reassignment
Deposit Amount or substitute an Eligible Substitute Mortgage Loan shall
constitute the sole remedy with respect to such defect available to
Certificateholders, the Custodian, the Trustee (for itself or on behalf of
Certificateholders) or the Certificate Insurer against the Seller.
The documents or instruments identified in such Officer's
Certificate shall be considered to be part of the Mortgage Files for all
purposes of this Agreement and shall be subject to the provisions of Section
2.1(f). The Mortgage Loan Schedule shall be amended to reflect all additions,
substitutions or deletions of Mortgage Loans provided for in this Section.
(d) The Substitution Adjustment Amount for any Collection Period
shall be deposited into the Certificate Account on the Business Day immediately
preceding the Distribution Date occurring in the month following such Collection
Period. All amounts received in respect of the Eligible Substitute Mortgage Loan
or Loans during the Collection Period in which the circumstances giving rise to
the relevant substitution occur shall not be a part of the Trust Fund and shall
not be deposited by the Servicer into the Certificate Account. All amounts
received by the Servicer during the Collection Period in which the circumstances
giving rise to such substitution occur in respect of any Mortgage Loan so
removed from the Trust Fund
22
shall be deposited by the Servicer into the Certificate Account. The Servicer
shall amend the Mortgage Loan Schedule to reflect the removal of such Mortgage
Loan from the terms of this Agreement and the substitution of the Eligible
Substitute Mortgage Loan or Loans therefor. Upon such substitution, the Eligible
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the Seller shall be deemed to have entered into
or made with respect to such Eligible Substitute Mortgage Loan or Loans, as of
the date of substitution, the covenants, representations and warranties set
forth in Section 2.4. The procedures applied by the Seller in selecting each
Eligible Substitute Mortgage Loan shall not be adverse to the interests of the
Trustee, the Certificate Insurer and the Certificateholders and shall be
comparable to the selection procedures applicable to the Mortgage Loans conveyed
hereunder as of the date of this Agreement.
The provisions of this Section 3.2(d) shall also apply to any
substitution of Eligible substitute Mortgage Loan or Loans by the Seller
pursuant to Section 2.4(b) and by the Servicer pursuant to Section 3.1.
The Mortgage Loan Schedule shall be amended to reflect all
additions, substitutions or deletions of Mortgage Loans provided for in this
Section.
Section 2.3 Representations and Warranties Regarding the Seller and
the Servicer.
Each of the Seller and the Servicer represents and warrants to each
other, the Trustee, the Certificate Insurer and the Certificateholders as of the
date of this Agreement and as of the Closing Date that:
(i) Each of the Seller and the Servicer is validly existing and
in good standing under the laws of the jurisdiction where it
was organized and has the corporate power and authority to
own its assets and to transact the business in which it is
currently engaged.
(ii) Each of the Seller and the Servicer has the corporate power
and authority to make, execute, deliver and perform this
Agreement and all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will
constitute the legal, valid and binding obligation of each of
the Seller and the Servicer enforceable in accordance with
its terms, except as enforcement of such terms may be limited
by applicable bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of
creditors' or obligees' rights generally or the rights of
creditors or obliges of federally chartered savings banks,
the deposits of which are insured by the SAIF, and except as
such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in
equity).
23
(iii) Each of the Seller and the Servicer is not required to obtain
the consent of any other party or any consent, license,
approval or authorization from, or registration or
declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement,
except for any such consent, license, approval or
authorization, or registration or declaration, as shall have
been obtained or filed, as the case may be, prior to the
Closing Date.
(iv) The execution, delivery and performance of this Agreement by
each of the Seller and the Servicer will not violate any
provision of any existing law or regulation or any order or
decree of any court applicable to each of the Seller and the
Servicer or any provision of the charter or bylaws of each of
the Seller and the Servicer, or constitute a material breach
of any mortgage, indenture, contract or other agreement to
which each of the Seller and the Servicer is a party or by
which each of the Seller and the Servicer may be bound.
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or
to the knowledge of each of the Seller and the Servicer
threatened, against each of the Seller and the Servicer or
any of its properties or with respect to this Agreement or
the Certificates which could have a material adverse effect
on the transactions contemplated by this Agreement.
(vi) The Servicer has fully complied, and will continue to
maintain full compliance, with the provisions of Section
13(e) of the Federal Deposit Insurance Act, as amended (12
U.S.C.(S) 1823(e)).
Upon discovery by the Seller, the Servicer or the Trustee of a breach of any of
the representations and warranties in this Section 2.3 which materially and
adversely affects the interests of the Certificateholders, such party shall give
prompt written notice of such breach to the other parties. Within sixty (60)
days after its discovery or receipt of notice of any such breach, or, with the
prior written consent of a Responsible Officer of the Trustee, within such
longer period specified in such consent, the Seller or the Servicer, as
applicable, shall cure such breach in all material respects.
Section 2.4 Representations and Warranties of the Seller Regarding
the Mortgage Loans; Removal and Substitution
Obligations.
(a) The Seller represents and warrants to the Trustee, the
Certificate Insurer, and the Certificateholders as of the date of this Agreement
and as of the Closing Date (unless otherwise specified) that:
(i) The information set forth on the Mortgage Loan Schedule was
true and correct in all material respects at the date or dates as of which such
information was furnished.
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(ii) As of the Closing Date, each Mortgage is a valid lien on
the related Mortgage Property, subject only to (a) the lien
of current real property taxes and assessments, (b) the
lien of the related first mortgage loan, if any, which
first mortgage loan does not contain a future advance
provision, (c) covenants, conditions and restrictions,
rights of way, easements and other matters of public record
as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage
lending institutions generally in the area wherein the
related Mortgaged Property is located or specifically
reflected in the appraisal obtained in connection with the
origination of the related Mortgage Loan obtained by the
Seller and (d) other matters to which like properties are
commonly subject which do not materially interfere with the
benefits of the security interest intended to be provided
by such Mortgage.
(iii) Immediately prior to the transfer and assignment by the
Seller to the Custodial Agent for the benefit of the
Trustee referred to in Section 2.1(a), the Seller had good
title to each Mortgage Loan, subject to no prior lien,
mortgage, security interest, pledge, charge or other
encumbrance.
(iv) As of the Closing Date, the transfer to the Trust of the
Mortgage Loans constitutes either a valid sale of all
right, title and interest of the Seller in the Mortgage
Loans (to the extent provided herein), including the
Cut-Off Date Pool Balance, to the Custodial Agent for the
benefit of the Trustee or the grant of a first priority
perfected security interest therein (to the extent provided
herein) to the Custodial Agent for the benefit of the
Trustee.
(v) As of the Cut-Off Date, no Minimum Monthly Payment on or in
respect of any Mortgage Loan is thirty (30) or more days
past due on a contractual basis.
(vi) As of the Closing Date, no Mortgaged Property is subject to
any mechanics' lien or claim for work, labor or material
which is or may be a lien prior to, or equal or coordinate
with, the lien of the related Mortgage, except those liens
which are fully insured against by the title insurance
policy referred to in clause (xv) below.
(vii) As of the Closing Date, there is no lien for any delinquent
recording fee, tax or assessment against any Mortgaged
Property.
(viii) As of the Closing Date, no Loan Agreement or Mortgage is
subject to any valid offset, defense or counterclaim.
(ix) As of the Closing Date, each Mortgaged Property is free of
material damage and is in good repair.
(x) The Loan Agreement Amendment was in effect with respect to
each Mortgage Loan on or prior to the Cut-Off Date.
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(xi) The Cut-Off Date Trust Balance for each Mortgage Loan was
not less than $____ or greater than $_____.
(xii) As of the Cut-Off Date, no Mortgage Loan had a stated
maturity date later than 240 months after the Cut-Off Date.
(xiii) The minimum variable Loan Rate for each Mortgage Loan,
excluding any introductory Loan Rate, is the applicable
base rate plus _____%.
(xiv) At the time it was made, each Mortgage Loan complied in all
material respects with applicable state and federal laws,
including, without limitation, usury, equal credit
opportunity and disclosure laws, and the consummation of
the transactions herein contemplated, including, without
limitation, the receipt of interest by Certificateholders,
will not violate such laws in any material respect.
(xv) A lender's title insurance policy or binder, or other
assurance of title customary in the relevant jurisdiction
therefor (including, without limitation, a title report),
was issued on the date of the origination of each Mortgage
Loan and is valid and remains in full force and effect with
respect to each such Mortgage Loan.
(xvi) As of the Closing Date, the Seller has not received a
notice of default of any senior mortgage loan related to a
Mortgaged Property which has not been cured by a party
other than the Seller.
(xvii) Each Loan Agreement and each Mortgage is in substantially
the form previously provided to the Trustee by the Seller
(in the case of the Loan Agreement, as amended by the
related Loan Agreement Amendment) and is an enforceable
obligation of the related Mortgagor, except as
enforceability may be limited by (a) bankruptcy, insolvency
or other similar laws now or hereafter in effect relating
to the enforcement of creditors' rights generally and (b)
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity), and, to the best knowledge of the Seller, there is
no offset, defense, claim or counterclaim to any obligation
under such Loan Agreement, as so amended, or under the
Mortgage, including the obligation of the Mortgagors to pay
principal and interest in accordance with the terms of such
Loan Agreement, as so amended.
(xviii) The definition of Base Rate in each Loan Agreement relating
to a Mortgage Loan in similar to the definition of such
term in the form of loan agreement previously provided to
the Trustee and referred to in clause (xvii) above.
(xix) As of the Cut-Off Date, the Combined Loan-to-Value Ratio
for each Mortgage Loan was not in excess of 100% (rounded
to the nearest whole percent).
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(xx) As of the Cut-Off Date, the weighted average Combined
Loan-to-Value Ratio of the Mortgage Loans was ____%
(rounded to the nearest whole percent).
(xxi) As of the Cut-Off Date, not more than ____% of the Mortgage
Loans by principal balance was secured by Mortgaged
Properties located in one United States zip code.
(xxii) No selection procedure reasonably believed by the Seller to
be adverse to the interests of the Certificateholders or
the Certificate Insurer was utilized in selecting the
Mortgage Loans.
(xxiii) The Mortgage File for each Mortgage Loan contains all
required documents referred to in the first paragraph of
Section 2.1(b), and such documents bear manual signatures
and relate to such Mortgage Loan.
(xxiv) As of the Cut-Off Date, no Loan Agreement relating to any
Mortgage Loan provided for scheduled principal payments
prior to the maturity of such Mortgage Loan.
(b) The representations and warranties set forth in Section
2.4(a) shall survive the delivery of the Mortgage Files to the Custodial Agent.
Upon discovery by the Seller, the Servicer, the Certificate Insurer or the
Trustee of a breach of any of the foregoing representations and warranties with
respect to any Mortgage Loan which materially and adversely affects the
interests of the Certificateholders in such Mortgage Loan, the party discovering
such breach shall give written notice thereof to the other parties with five (5)
days after such discovery. Within thirty (30) days after its discovery or its
receipt of notice of any such breach, the Seller shall use all reasonable
efforts to cure such breach in all material respects. Unless at the expiration
of such 30-day period, such breach has been cured in all material respects or
otherwise does not exist or continue to exist, the Seller shall, not later than
the Business Day immediately preceding the Distribution Date in the month
following the related Collection Period in which any such cure period expired,
remove such Defective Mortgage Loan (including any property acquired in respect
thereof and any insurance policy or Insurance proceeds with respect thereto) in
exchange for either (i) deposit of the Reassignment Deposit Amount or (ii)
substitution in its place of an Eligible Substitute Mortgage Loan or Loans, in
either case in the same manner and subject to the same conditions as set forth
in Section 2.2(c). In conjunction with any removal pursuant to the foregoing,
the Seller shall be entitled to receive an assignment of the removed Mortgage
Loan and a release of the related Mortgage File from the Trustee to the extent
set forth in Section 2.2(c). The obligation of the Seller to remove any Mortgage
Loan as to which a breach has occurred and is continuing shall constitute the
sole remedy against the Seller with respect to such breach available to
Certificateholders, the Trustee on behalf of Certificateholders, or the
Certificate Insurer.
A breach of the representation and warranty set forth in clause
(xxiii) of Section 2.4(a) with respect to any Mortgage Loan shall be deemed to
affect materially and adversely the interests of the Certificateholders and the
Certificate Insurer in such Mortgage Loan. Notwithstanding the first paragraph
of this Section 2.4(b) the provisions of Section 2.2(b)
27
shall control with respect to notice and cure periods applicable to the
correction of any defective Mortgage Files and the obligations of the Seller
with respect thereto.
The Mortgage Loan Schedule shall be amended to reflect all additions,
substitutions or deletions of Mortgage Loans provided for in this Section.
Section 2.5 Official Record.
The Seller and the Servicer agree that, so long as the Certificates
remain outstanding, this Agreement shall remain outstanding as an official
record of the Servicer within the meaning of Section 13(e) of the Federal
Deposit Insurance Act, as amended (12 U.S.C. (S) 1823(e)).
Section 2.6 Retransfers of Mortgage Loans at Election of Seller.
Subject to the conditions set forth below, the Seller may, but shall
not be obligated to, require the retransfer of Mortgage Loans and the related
property from the Trust to the Seller as of the last Business Day of any
Collection Period (the "Retransfer Date"). On the _____ day of the Month or if
that day is not a Business Day the next preceding Business Day (the "Retransfer
Notice Date"), the Seller shall give the Trustee a notice of the proposed
retransfer that contains a list of the Mortgage Loans and the related property
to be retransferred. Such retransfers of Mortgage Loans and the related property
shall be permitted upon satisfaction of the following conditions:
(i) the Removal Condition is satisfied;
(ii) On or before the Retransfer Date the Servicer shall have
delivered to the Trustee a revised Mortgage Loan Schedule,
reflecting the proposed retransfer;
(iii) The Seller shall represent and warrant that no selection
procedures reasonably believed by the Seller to be adverse to
the interests of the Investor Certificateholders or the
Certificate Insurer were utilized in selecting the Mortgage
Loans to be removed from the Trust;
(iv) Each Rating Agency shall have received on or prior to the
Retransfer Notice Date notice of such proposed retransfer of
Mortgage Loans and, prior to the Retransfer Date, shall not
have notified the Seller in writing that such retransfer of
Mortgage Loans would not result in a reduction or withdrawal of
its then current rating of the Investor Certificates without
taking into account the Certificate Insurance Policy;
(v) The Seller shall have delivered to the Trustee and the
Certificate Insurer an Officer's Certificate certifying that
the items set forth in subparagraphs (i) through (iv),
inclusive, have been performed or are true and correct, as the
case may be. The Trustee may conclusively rely on such
Officer's Certificate, shall have no duty to make inquiries
with regard to the matters set forth therein and shall incur no
liability in so relying.
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The "Removal Condition" is satisfied if, on the Retransfer Date, after
giving effect to such removal the sum of the Seller Principal Balance and the
Overcollateralization Amount is not less than the greater of (a) _____% of the
Pool Balance on such date and (b) _____% of the Pool Balance on the Cut-Off Date
(the "Overall Minimum Amount"); provided, however, that (i) no removal may occur
if such removal would reduce the Overcollateralization Amount below the Required
Overcollateralization Amount and (ii) in addition to the foregoing, during the
Rapid Amortization Period, no removal shall occur unless, (A) no Rapid
Amortization Event has occurred, (B) immediately prior to such removal, the Pool
Balance is at least equal to the sum of (x) the outstanding Investor Certificate
Principal Balance and (y) the Overall Minimum Amount and (C) no other removal
has occurred during the calendar year.
Upon receiving the requisite information from the Seller, the Servicer
shall perform in a timely manner those acts required of it as specified above
and shall indicate on the Electronic Ledger that the Mortgage Loans
retransferred to the Seller are no longer in the Trust. Upon satisfaction of the
above conditions to the extent provided in Section 2.2(c), on the Retransfer
Date the Custodial Agent shall deliver to the Seller the Mortgage File for each
Mortgage Loan being retransferred and the Custodial Agent shall execute and
deliver to the Seller such other documents prepared by the Seller as shall be
reasonably necessary to retransfer such Mortgage Loan and related property to
the Seller. Any such retransfer of the Trust's right, title and interest in and
to Mortgage Loans shall be without recourse, representation or warranty by or of
the Trust to the Seller.
The Mortgage Loan Schedule shall be amended to reflect all additions,
substitutions or deletions of Mortgage Loans provided for in this Section.
Section 2.7 Tax Treatment.
It is the intention of the Seller and the Investor Certificateholders
(and Certificate Owners) that the Investor Certificates will be indebtedness of
the Seller for federal, state and local income and franchise tax purposes and
for purposes of any other tax imposed on or measured by income. The Seller, the
Trustee and each Investor Certificateholder (and Certificate Owner) by
acceptance of its Investor Certificate (or, in the case of a Certificate Owner,
by virtue of such Certificate Owner's acquisition of a beneficial interest
therein) and the Certificate Insurer agrees to treat the Investor Certificates
(or beneficial interest therein), for purposes of federal, state and local
income, as indebtedness of the Seller secured by the Mortgage Loans and to
report the transactions contemplated by this Agreement on all applicable tax
returns in a manner consistent with such treatment. Each Certificateholder
agrees that it will cause any Certificate owner acquiring an interest in an
Investor Certificate through it to comply with this Agreement as to treatment as
indebtedness for federal, state and local income and franchise tax purposes and
for purposes of any other tax imposed on or measured by income. Furthermore, the
Trustee shall treat the Trust as a security device only, and shall not file tax
returns or obtain an employer identification number on behalf of the Trust.
29
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.1 The Servicer and the Seller.
(a) The Servicer shall service and administer the Mortgage Loans in
accordance with its customary procedures consistent with general industry
practice. The Servicer shall have full power and authority, acting alone or
through one or more subservicers, to do any and all things in connection with
such servicing and administration which it may deem necessary or desirable. Any
amounts received by a subservicer in respect of a Mortgage Loan shall be deemed
to have been received by the Servicer whether or not actually received by it.
Without limiting the generality of the foregoing, the Servicer shall continue,
and is hereby authorized and empowered by the Trustee, to execute and deliver,
on behalf of itself, the Certificateholders and the Trustee or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Mortgage Loans and with respect to the Mortgaged Properties. The Trustee shall
furnish the Servicer with any powers of attorney and other documents necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Trustee and Custodial Agent under this
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent.
(b) The Servicer shall not consent to the placement of a lien an
the Mortgaged Property senior to that of the related Mortgage unless (i) such
action is consistent with reasonable commercial practice and (ii) such consent
is given in any one of the following three situations:
(A) such Mortgage was in a first lien position as of the date
the related Mortgage Loan was conveyed to the Trust and is in a first
lien position immediately prior to the placement of such senior lien
and the Updated Combined Loan-to-Value Ratio of such Mortgage Loan is
not greater than the Combined Loan-to-Value Ratio of such Mortgage
Loan as of the date such Mortgage Loan was conveyed to the Trust's;
(B) such Mortgage succeeded to a first lien position after the
related Mortgage Loan was conveyed to the Trust and, immediately
following the placement of such senior lien, such Mortgage is in a
second lien position and either (i) the outstanding principal amount
of the mortgage loan secured by such senior lien is no greater than
the outstanding principal amount of the first mortgage loan secured by
the Mortgaged Property as of the date the related Mortgage Loan was
conveyed to the Trust or (ii) the Updated Combined Loan-to-Value Ratio
of such Mortgage Loan is not greater than the Combined Loan-to-
30
Value Ratio of such Mortgage Loan as of the date such Mortgage Loan
was conveyed to the Trust; or
(C) such senior lien secures a mortgage loan that refinances
an existing first mortgage loan and either (i) the outstanding
principal amount of the replacement first mortgage loan immediately
following such refinancing is not greater than the outstanding
principal amount of such existing first mortgage loan at the date of
such refinancing or (ii) the Updated Combined Loan-to-Value Ratio of
the applicable Mortgage Loan is not greater than the Combined
Loan-to-Value Ratio of such Mortgage Loan as of the date such Mortgage
Loan was conveyed to the Trust.
(c) In connection with the servicing and administration of the
Mortgage Loans, the Servicer, at the request of a Mortgagor, may increase the
Credit Limit of a Mortgage Loan specified in the related Loan Agreement by
modifying the Loan Agreement to provide for such additional amount. However, in
the event that (i) a new loan agreement rather than a modification of such Loan
Agreement is proposed to be entered into in connection with such increase or
(ii) ouch Loan Agreement is proposed to be modified to provide for an increased
Credit Limit and the Combined Loan-to-Value Ratio of such Mortgage Loan
following such increase and as a result thereof exceeds ____% (rounded to the
nearest whole percent), the Servicer, not later than the Business Day
immediately preceding the Distribution Date next following the related
Collection Period, shall either purchase the applicable Mortgage Loan or
substitute an Eligible Substitute Mortgage Loan or Loans for such Mortgage Loan.
The Mortgage Loan Schedule shall be amended to reflect all additions,
substitutions or deletions of Mortgage Loans provided for in this Section.
(d) The Servicer may agree to changes in the terms of a Mortgage
Loan, provided, however, that such changes (i) do not adversely affect the
interests of Certificatebolders or the Certificate Insurer and (ii) are
consistent with prudent business practice; provided, further, that the Servicer
may agree to any changes in the terms of the Mortgage Loans if the Servicer, not
later than the Business Day immediately preceding the Distribution Date next
following the related Collection Period shall either remove the applicable
Mortgage Loan or substitute an Eligible Mortgage Loan or Loans for such Mortgage
Loan.
(e) Any purchase of, or substitution of an Eligible Substitute
Mortgage Loan or Loans for, a Defective Mortgage Loan by the Seller pursuant to
Section 3.1 shall be effected in the same manner and subject to the same
conditions as set forth in Section 2.2(c). Upon completing any such purchase or
substitution, the Seller shall receive an assignment of such Defective Mortgage
Loan and a release of the related Mortgage File from the Trustee to the extent
set forth in Section 2.2(c).
(f) The Seller may reduce the Margin of any Mortgage Loan up to
____%. Except, as otherwise required by any requirement of law applicable to the
Seller, the Seller shall not reduce the margin of any Mortgage Loan by more than
0.25% per annum unless (a) the Seller has received an opinion of counsel that
such reduction in the Margin will not materially adversely affect the
characterization of the Investor Certificates as debt for Federal income tax
31
purposes and (b) the Seller has received confirmation from each Rating Agency
then rating the Investor Certificates that such reduction will not cause a
reduction or withdrawal of the rating of the Certificate Insurer or the Investor
Certificates or (c) the Servicer, not later than the Business Day immediately
preceding the Distribution Date next following the related Collection Period
shall either remove the applicable Mortgage Loan or substitute an Eligible
Substitute Mortgage Loan or Loans for such Mortgage Loan.
(g) The Seller may extend the maturity date on (i) any Mortgage
Loan which is then currently in default under the terms of the related Loan
Agreement, (ii) any Mortgage Loan; provided that the Seller may only grant the
extensions described in this clause (ii) in any one calendar year on Mortgage
Loans with aggregate Trust Balances of up to ____% of the Pool Balance as of the
beginning of such calendar year, (iii) any Mortgage Loan in respect of which the
Seller has delivered a certificate to the Trustee certifying that such extension
will not materially adversely affect the interests of the Investor
Certificateholders and (iv) any Mortgage Loan for which the Servicer has not
later than the Business Day next following the related Collection Period shall
have either removed the applicable Mortgage Loan or substitute an Eligible
Substitute Mortgage Loan or Loans for such Mortgage Loan; provided, however,
that no extension on a Mortgage Loan described in clauses (i), (ii) and (iii)
shall be beyond (h) Sections 3.1(f) and 3.1(g) shall be exclusive of and not
subject to Section 3.1(d).
Section 3.2 Collection of Certain Mortgage Loan Payments.
(a) The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow such collection procedures as it follows with respect to mortgage loans
in its servicing portfolio comparable to the Mortgage Loans. Consistent with,
and without limiting the generality of, the foregoing, the Servicer, in its
discretion, may (i) waive any late payment charge or any assumption fees or
other fees which may be collected in the ordinary course of the servicing of the
Mortgage Loans and (ii) arrange with a Mortgagor a schedule for the payment of
interest due and unpaid for a period of not more than ninety (90) days after the
date of the initial uncured delinquency thereon.
(b) On or before the Closing Date, the Trustee shall have
established, and shall thereafter maintain, a separate trust account in the name
of the Trustee for the benefit of the Certificateholders (the "Certificate
Account"). If such an account maintained with the Trustee would be an Eligible
Account, the Certificate Account shall be maintained with the Trustee.
(c) on the Closing Date, the Servicer shall, subject to Section
3.2(d), deposit into the Certificate Account any amounts representing payments
on, and any collections in respect of, the Mortgage Loans allocable to the
Investor Certificateholders received on or after the Cut-Off Date and through
the second Business Day before the Closing Date. Thereafter, the Servicer shall,
subject to Section 3.2(d), deposit into the Certificate Account on a daily basis
within two (2) Business Days following receipt thereof but in any case prior to
the immediately succeeding Distribution Date relating to such deposit the
following payments and collections allocable to the Trust received or made by
it:
(i) Daily Investor Interest Collections; and
32
(ii) Daily Investor Principal Collections, and subject to Section
3.2(e).
The foregoing requirements with respect to deposits to the Certificate Account
are exclusive. Without limiting the generality of the preceding sentence, the
Servicer shall not be required to deposit into the Certificate Account (a)
amounts representing fees (including, without limitation, annual fees and any
assumption fees payable pursuant to Section 3.5) or late charge penalties or
other charges payable by Mortgagors, (b) amounts received by the Servicer for
the accounts of Mortgagors for application towards the payment of taxes,
insurance premiums, assessments and similar items or (c) any payments or
proceeds (including, without limitation, insurance Proceeds and Liquidation
Proceeds) of any Mortgage Loans removed by the Seller or purchased by the
Servicer which are received after the effective date of such removal or (d)
amounts in respect of the Reassignment Deposit Amounts or Substitution
Adjustment Amount that are not included in Daily Investor Interest Collections
or Daily Investor Principal Collections.
The Trustee shall deposit into the Certificate Account the Certificate
Insurance Draw Amounts received pursuant to Section 4.2.
(d) The Trustee shall hold amounts deposited into the Certificate
Account as trustee for the Certificateholders and the Certificate Insurer to the
extent of receipts in respect of the Mortgage Loans to be included in Available
Funds and as custodian for the Seller to the extent of receipts, if any, in
excess thereof.
At the direction of the Servicer signed by a Servicing Officer, the
Trustee shall invest any funds in the Certificate Account in Permitted
Investments specified in such direction (including obligations of the Trustee or
any of its affiliates, if such obligations otherwise qualify as Permitted
Investments). Such direction shall be in writing, shall designate specific
investments and shall certify that the specified investments constitute
Permitted Investments and mature at the time required hereby. Each investment
shall mature not later than the Business Day immediately preceding the
Distribution Date next following the date of such investment (unless the obligor
in respect of such investment is the Trustee and the Trustee is acting as the
Paying Agent, in which case such investment may mature on such Distribution
Date) and shall not be sold or disposed of prior to its maturity. All net income
and gain realized from any such investment of funds constituting Available Funds
shall be distributed to Certificateholders or the Certificate Insurer pursuant
to Section 5.1(a). The Trustee shall not be liable for any loss incurred in
connection with any such investment except with respect to any investment issued
or guaranteed by the Trustee in its individual capacity.
(e) With respect of the amounts required to be deposited into the
Certificate Account pursuant item (ii) of Section 3.2(c), on any day during the
Managed Amortization Period where the amount on deposit in the Certificate
Account for the related Collection Period is greater than __% of the Investor
Certificate Principal Balance as of the immediately prior Distribution Date, the
Servicer shall be required to deposit into the Certificate Account an amount,
but not less than zero, equal to (X) the aggregate amount of Principal
Collections for the Collection Period through such date minus the aggregate
amount of Draws for such Collection Period through such date minus (Y) ___% of
the Investor Certificate Principal Balance as of the immediately prior
Distribution Date.
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(f) Any amounts received pursuant to Sections 2.2(c), 2.4(b) and
3.1, in respect of a Reassignment Deposit Amount or a Substitution Adjustment
Amount shall be deemed to be received by the Trustee and the Servicer on the
last day of prior calendar month.
Section 3.3 Permitted Withdrawals from the Certificate Account.
(a) The Trustee may, from time to time, make withdrawals from the
Certificate Account subject to the conditions and for the purposes set forth in
this Agreement, including the following:
(i) to make distributions and payments as provided in Section 5.1;
(ii) to indemnify the Servicer to the extent required or permitted
pursuant to Section 7.3(b) or 7.3(c);
(iii) to pay the Seller or the Servicer, as applicable, amounts
received in respect of Defective Mortgage Loans during the
Collection Period occurring in the month in which such
Defective Mortgage Loans were purchased or replaced or which
were otherwise reflected in the calculation of the related
Purchase Price or any Substitution Adjustment Amount; and
(iv) to clear and terminate the Certificate Account in accordance
with Section 10.1.
(b) To the extent that the amounts described in item (ii) of
Section 3.2(c) on deposit in the Certificate Account on the day that is the
second Business Day after the last day of a Collection Period, excluding any
amounts to be withdrawn pursuant to Section 3.3(a) allocable to such amounts, is
in excess of the Scheduled Principal Collections Distribution Amount plus any
Basis Risk Payment, such excess shall be withdrawn from the Certificate Account
on such day by the Trustee and paid over to the Seller. To the extent a Basis
Risk Payment on any Distribution Date in required by the terms of this Agreement
and the amounts on deposit in the Certificate Account are insufficient to pay
the Scheduled Principal Collections Distribution Amount plus such Basis Risk
Payment, the Seller will deposit the difference into the Certificate Account.
(c) Any provision herein to the contrary notwithstanding, if the
Servicer or the Seller deposits into the Certificate Account any amount not
required to be deposited therein pursuant to Section 3.2(c), the Servicer may at
any time instruct the Trustee to withdraw such amount from the Certificate
Account and to pay such amount to the Servicer. The Servicer shall deliver an
Officer's Certificate to the Trustee which states that it is submitted pursuant
to this Section 3.3(c) and specifies any amounts deposited in error. If the
facts set forth on the face of such Officer's Certificate indicate that amounts
deposited were not required to be deposited into the Certificate Account
pursuant to Section 3.2(c), the Trustee shall withdraw such amount and pay over
such amount to the Servicer. To the extent that any amounts withdrawn are
payable to the Seller, the Servicer shall receive such amounts as custodian for
the Seller.
(d) Any provision herein to the contrary notwithstanding, the
Servicer may debit against any amount required to be deposited into the
Certificate Account any amount
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previously deposited into the Certificate Account in respect of payments by
Mortgagors made by checks subsequently returned for insufficient funds or, other
reason for non-payment.
Section 3.4 Maintenance of Hazard Insurance; property Protection
Expenses.
The Servicer, in accordance with its customary servicing procedures,
shall cause to be maintained for each Mortgage Loan hazard insurance naming the
Servicer as loss payee thereunder providing extended coverage in an amount which
is at least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan from time to time or (ii) the sum of
the Loan Balance of such Mortgage Loan and the principal balance of any mortgage
loan senior to such Mortgage Loan from time to time. The Servicer shall also
maintain, on property acquired in Foreclosure Proceedings, hazard insurance with
extended coverage in an amount which is at least equal to the lesser of (i) the
maximum insurable value from time to time of the improvements which are a part
of such property or (ii) the sum of the Loan Balance of such Mortgage Loan and
the principal balance of any mortgage loan senior to such Mortgage Loan at the
time of such Foreclosure Proceedings, plus accrued interest and the good-faith
estimate of the Servicer of related Liquidation Expenses to be incurred in
connection therewith. Amounts collected by the Servicer under any such policies
shall be deposited as Liquidation Proceeds or Insurance Proceeds into the
Certificate Account to the extent provided in Section 3.2(c). In cases in which
any Mortgaged Property is located in a federally designated special flood hazard
area, the hazard insurance to be maintained for the related Mortgage Loan, or on
property acquired in Foreclosure Proceedings, shall include flood insurance. All
such flood insurance shall be in an amount equal to the lesser of (i) the
maximum amount available under standard flood insurance in such designated flood
area and (ii) the sum of the Loan Balance of the applicable Mortgage Loan and
the principal balance of any mortgage loan senior to such Mortgage Loan from
time to time. The Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance.
If the Servicer shall obtain and maintain a blanket policy issued by
an insurer acceptable to the Rating Agencies insuring against hazard losses on
all of the Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first sentence of this Section 3.4. Any such
blanket policy may contain a deductible clause. In the event that there shall
not have been maintained on the related Mortgaged Property a policy complying
with the first sentence of this Section 3.4, and there shall have been a loss
which would have been covered by such policy, the Servicer shall deposit into
the Certificate Account to the extent provided for in Section 3.2(c) the Trust
proportion (computed on the basis of the ratio of the Trust Balance to the Loan
Balance at the time of deposit) of the amount not otherwise payable under the
blanket policy because of such deductible clause.
Section 3.5 Assumption and Modification Agreements.
In any case in which a Mortgaged Property has been or is about to be
conveyed by the Mortgagor, the Servicer shall exercise its right to accelerate
the maturity of the Mortgage
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Loan secured thereby unless it is prohibited from doing so by applicable law. If
the Servicer is prevented from enforcing such right by applicable law, the
Servicer (so long as such action conforms with the Servicer's underwriting
standards at the time for new originations) is authorized to take or enter into
an assumption and modification agreement from or with the Person to whom such
Mortgaged Property has been or is about to be conveyed, pursuant to which such
Person becomes liable under the Loan Agreement and, to the extent permitted by
applicable law, the Mortgagor remains liable thereon. No change in the terms of
the related Loan Agreement may be made by the Servicer in connection with any
such assumption or modification to the extent that such change would not be
permitted to be made in respect of the original Loan Agreement pursuant to
Section 3.1. The Servicer shall notify the Trustee that any assumption and
modification agreement has been completed by delivering to the Trustee (i) an
Officer's Certificate certifying that such agreement is in compliance with this
Section 3.5 and (ii) a manually executed copy of such assumption and
modification agreement. Any such assumption and modification agreement shall,
for all purposes, be considered a part of the related Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. Any
fee collected by the Servicer for entering into any such agreement shall be
retained by the Servicer as additional servicing compensation.
Section 3.6 Realization Upon Defaulted Mortgage Loans.
The Servicer shall use its beet efforts to foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default when, in the opinion of the
Servicer based upon the practices and procedures referred to in the following
sentence, no satisfactory arrangements can be made for collection of delinquent
payments. In connection with such foreclosure or other conversion, the Servicer
shall follow such practices (including, in the case of any default on a related
senior Mortgage Loan, the advancing of funds to correct such default or to pay
in full such senior mortgage loan) and procedures as it shall deem necessary or
advisable and as shall be normal and usual in its general junior mortgage
servicing activities. Notwithstanding the foregoing, the Servicer shall not be
required to foreclose upon or otherwise take any action with respect to any
defaulted Mortgage Loan which would result in the Trust's acquisition of title
to the related Mortgaged Property if, in the reasonable judgment of the
Servicer, such Mortgaged Property is subject to toxic waste or other
environmental hazards that could subject the owner of such Mortgaged Property to
liability under applicable law in excess of the reasonable liquidation value of
such Mortgaged Property. The foregoing is subject to the proviso that the
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the correction of any default on a related senior
mortgage loan or restoration of any Mortgaged Property unless it shall
determine, in its discretion, that such foreclosure, correction or restoration
will increase Net Liquidation Proceeds.
In the event that title to any Mortgaged Property securing a Mortgage
Loan is acquired in Foreclosure Proceedings, the deed or certificate of sale
shall be issued to the Custodian, on behalf of Certificateholders to the extent
of their interest therein.
Liquidation Expenses incurred by the Servicer in connection with a
defaulted Mortgage Loan shall be recoverable by the Servicer solely out of
Liquidation Proceeds received in respect of the same defaulted Mortgage Loan,
and shall be recovered at the time that such
36
defaulted Mortgage Loan becomes a Liquidated Mortgage Loan. The Servicer's
failure to claim reimbursement for Liquidation Expenses out of Liquidation
Proceeds received in respect of the related Liquidated Mortgage Loan for any one
or more collection Periods shall not in any way be deemed a waiver of its right
in the future to seek reimbursement for such Liquidation Expenses or additional
Liquidation Expenses out of Liquidation Proceeds received in respect to the
related Mortgage Loan for subsequent Collection Periods.
Section 3.7 Trustee to Cooperate.
Upon the payment in full of the Trust Balance of any Mortgage Loan or
the distribution of all investor Liquidation Proceeds with respect to any
Mortgage Loan, the Servicer shall promptly so notify the Trustee or the
Custodial Agent by a certification, substantially in the form of Exhibit H, of a
Servicing Officer. Such certification shall include a statement to the effect
that all amounts received in connection with such payment which are required to
be deposited into the Certificate Account pursuant to Section 3.2(c) have been
so deposited. Upon any such payment or distribution, (i) the Servicer is
authorized to execute, pursuant to the authorization contained in Section
3.1(a), if the Loan Balance of such Mortgage Loan equals zero, an instrument of
satisfaction regarding the related Mortgage, which instrument of satisfaction
shall be recorded by the Servicer if required by applicable law and delivered to
the Person entitled thereto, and (ii) the Custodial Agent shall release the
related Mortgage File to the Seller. No expenses incurred in connection with
such instrument of satisfaction or assignment shall be reimbursed from amounts
at the time on deposit in the Certificate Account. No certificate or expense
incurred pursuant to this Section 3.7 shall be at the expense of the Trustee.
From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, the Custodial Agent or the Trustee shall, upon request and
at the expense of the Servicer and upon delivery to the Custodial Agent or the
Trustee of a trust receipt substantially in the form of Exhibit I signed by a
Servicing Officer, release the related Mortgage File to the Servicer solely for
the purposes specified in the Servicer's request, and the Custodial Agent shall
execute such documents prepared by and at the expense of the Servicer as shall
be necessary to the prosecution of any such proceedings or the taking of other
servicing actions by the Servicer. Such trust receipt shall obligate the
Servicer to return the Mortgage File to the Custodial Agent or the Trustee when
the need therefor by the Servicer no longer exists, unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified stating that the investor
Liquidation Proceeds with respect to such Mortgage Loan have been deposited into
the Certificate Account pursuant to section 3.2(c), the trust receipt shall be
released by the Custodial Agent to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default, the Trustee shall, if so requested in writing
by the Servicer, assign such Mortgage Loan without recourse for the purpose of
collection to the Servicer or its designee. Any such assignment shall be
prepared by the Servicer and shall unambiguously indicate that the assignment is
for the purpose of collection only. Upon such assignment, such assignee for
collection shall thereupon bring all required actions in its own name and
otherwise enforce the terms of the Mortgage Loan, and the Servicer shall deposit
the investor Liquidation Proceeds received with respect thereto into the
Certificate Account to the extent provided in Section 3.2(c). In the event that
all delinquent payments due under any such Mortgage Loan are
37
paid by the Mortgagor and any other defaults are cured, the assignee for
collection shall promptly reassign such Mortgage Loan to the Trustee.
Section 3.8 Servicing Compensation; Payment of Certain Expenses by
Servicer.
(a) As compensation for its services hereunder, the Servicer shall
receive on each Distribution Date, a monthly fee (the "Servicing Fee") equal to
the product of (x) the Servicing Fee Rate divided by 12 and (y), the Invested
Amount as of the opening of business on the first day of the preceding
Collection Period. For any Distribution Date, such fee shall be payable monthly
in arrears in accordance with Section 5.1(a). Additional servicing compensation
in the form of fees, late payment charges or otherwise shall be retained by the
Servicer as additional servicing compensation.
(b) The Servicer shall be required to pay all expenses incurred by
it in connection with its activities under this Agreement, including fees and
disbursements of the independent accountants referred to in Section 3.10, taxes
imposed on the Servicer, expenses incurred in connection with distributions and
reports to Certificateholders, all Trustee fees and expenses payable to the
Trustee pursuant to Section 9.5, and all other fees and expenses not expressly
stated hereunder to be for the account of the Certificateholders (including,
without limitation, the cost of obtaining opinions of Counsel required under
this Agreement, except as otherwise provided herein), and shall not be entitled
to reimbursement therefor except to the extent that such expenses constitute
Liquidation Expenses or as otherwise specifically provided herein.
Section 3.9 Annual Statement as to Compliance.
The Servicer shall deliver to the Trustee and the Certificate Insurer,
on or before December 31 of each year, beginning with _________ ___, ____, an
Officer's Certificate signed by an officer of the Servicer stating that (i) a
review of the activities of the Servicer during the preceding twelve (12) months
ended September 30 (or, in the case of the first such Certificate, the
applicable period ended September 30) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its material obligations under this Agreement throughout such year or applicable
period, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
Section 3.10 Annual Independent Public Accountants' Servicing Report.
The Servicer, at its expense, shall cause a firm of independent public
accountants (who shall be a member of the American Institute of Certified Public
Accountants and may also render other services to the Servicer or the Seller) to
furnish a statement to the Trustee and the Certificate Insurer on or before
December 31 of each year, beginning with ____________, _______, to the effect
that such firm has examined certain documents and records relating to the
servicing of the Mortgage Loans by the Servicer under this Agreement during the
preceding
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twelve (12) months ended September 30 (or, in the case of the first such
Certificate, the applicable period ended September 30) and that such
examination, which has been conducted substantially in accordance with (i) the
audit guide for audits of non-supervised mortgagees approved by the Department
of Housing and Urban Development for use by independent public accountants or
(ii) the requirements of the Uniform Single Audit Program for Mortgage Bankers
(to the extent that the procedures in such audit guide or audit program are
applicable to the servicing obligations hereunder), has disclosed no items of
noncompliance with the provisions of this Agreement which, in the opinion of
such firm, are material, except for such items of noncompliance as shall be set
forth in such report.
Section 3.11 Access to Certain Documentation and Information
Regarding the Mortgage Loans.
(a) The Servicer and the Seller shall provide to the
Certificateholders which are federally insured savings and loan associations,
the office of Thrift supervision (successor to the Federal Home Loan Bank
Board), the Federal Deposit Insurance Corporation and the supervisory agents and
examiners of the Office of Thrift Supervision, access to the documentation
regarding the Mortgage Loans to the extent required by applicable regulations of
the Office of Thrift Supervision and the Federal Deposit Insurance Corporation
(acting as operator of the SAIF or the BIF). The Servicer and the Seller shall
provide to the Trustee, and the Servicer, the Seller and the Trustee shall
provide to the Certificate Insurer, access to the documentation regarding the
Mortgage Loans. Such access in all cases shall be afforded without charge, but
only upon reasonable request and during normal business hours at the offices of
the Servicer, the Seller or the Trustee, as the case may be. Nothing in this
Section 3.11(a) shall derogate from the obligation of the Seller or the Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Mortgagors, and the failure of the Seller or the Servicer to provide access
as provided in this Section 3.11(a) as a result of such obligation shall not
constitute a breach of this Section 3.11(a).
(b) The Servicer shall supply information in such form as the
Trustee shall reasonably request to the Paying Agent and the Trustee, on or
before the Determination Date preceding the related Distribution Date, as is
required in the Trustee's reasonable judgment to enable the Paying Agent or the
Trustee, as the case may be, to make required distributions and to furnish the
required reports to Certificateholders and to make any drawing under the
Certificate Insurance Policy.
Section 3.12 Maintenance of Certain Servicing Policies.
The Servicer shall during the term of its service as Servicer maintain
in force (i) a policy or policies of insurance covering errors and omissions in
the performance of its obligations as servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and bond shall, together, comply with the requirements from time to
time of the Federal National Mortgage Association for persons performing
servicing for mortgage loans purchased by such Association.
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Section 3.13 Reports to the Securities and Exchange Commission.
The Servicer shall, on behalf of the Trust, cause to be filed with the
Securities and Exchange commission any periodic reports required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and the
rules, regulations or orders of the Securities and Exchange Commission
thereunder.
Section 3.14 Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments
of Mortgaged Property.
In addition to the requirements set forth in Section 3.1, the Servicer
shall prepare and file, or cause to be prepared and filed, and shall file or
cause to be filed, all federal and state information reports when and as
required by all applicable state and federal income tax laws, including, without
limitation, reports required by Section 6050J of the Code.
Section 3.15 Tax Returns.
In accordance with Section 2.7 hereof, the Trustee shall not file any
Federal or State income tax return for the Trust or apply for a taxpayer
identification number on behalf of the Trust. The Seller shall treat the
Mortgage Loans as its property for all Federal and State tax purposes and shall
report all income earned thereon (including amounts payable as fees to the
Servicer) as its income for federal income tax purposes. In the event the Trust
shall be required pursuant to an audit or administrative proceeding or change in
applicable regulations to file Federal or State tax returns, the Trustee shall
prepare and file or shall cause to be prepared and filed any tax returns
required to filed by the Trust; the Trustee shall promptly sign such returns and
deliver such returns after signature to the Servicer and such returns shall be
filed by the Servicer provided, however, that actions taken by the Trustee
pursuant to this Section 3.15 shall not be at the expense of the Trustee. The
Servicer shall also prepare or shall cause to be prepared all tax information
required by and to be distributed to Certificateholders. Except as provided
otherwise herein with respect to the Seller, in no event shall the Trustee or
the Servicer be liable for any liabilities, costs or expenses of the Trust, the
Certificateholders or the Certificate Owners in connection with or arising under
any tax law, including without limitation federal, state or local income or
excise taxes or any other tax imposed on or measured by income (or any interest
or penalty with respect thereto or arising from a failure to comply therewith).
ARTICLE IV
SERVICING CERTIFICATE; CERTIFICATE INSURANCE POLICY
Section 4.1 Servicing Certificate.
With respect to each Distribution Date, the Servicer shall, not later
than the related Determination Date, deliver to the Trustee, to the Certificate
Insurer and to the Rating Agencies a Servicing Certificate substantially in the
form of Exhibit J stating the related Collection Period, the designation of the
Certificates, the date of this Agreement, and the following information:
40
(i) the aggregate amount of collections received on the Mortgage
Loans on or prior to the Determination Date in respect of such
Collection Period;
(ii) the aggregate amount of (a) Trust Interest and (b) Principal
Collections for such Collection Period;
(iii) the Investor Certificateholder's Floating Allocation Percentage
and the Investor Fixed Allocation Percentage as of the last day
of the Collection Period;
(iv) the Investor Interest Collections for such Collection Period;
(v) the Investor Principal Collections for such Collection Period;
(vi) the aggregate amount of (a) Trust Interest and (b) Principal
Collections paid to the Seller for such Collection Period;
(vii) Investor Certificate Interest and the Investor Certificate Rate
for the related Accrual Period;
(viii) the amount, if any, of such Investor Certificate Interest that
is not payable on account of insufficient Investor Interest
Collections and amounts under the Certificate Insurance Policy;
(ix) the portion of the Unpaid Investor Certificate Interest
Shortfall, if any, plus interest thereon at the Certificate
Rate applicable from time to time (separately stated) to be
distributed on such Distribution Date;
(x) the Unpaid Investor Certificate Interest Shortfall, if any, to
remain after the distribution on such Distribution Date;
(xi) the Accelerated Principal Distribution Amount and the portion
thereof that will be distributed pursuant to Section
5.1(a)(vii);
(xii) the Scheduled Principal Collections Distribution Amount,
separately stating the components thereof;
(xiii) the sum of (x) the aggregate Reassignment Deposit Amount for
any Mortgage Loans which are required to be removed on the
Business Day immediately preceding such Distribution Date
pursuant to Section 2.2(c), 2.4(b) or 3.1 and (y) any
Substitution Adjustment Amounts required to be deposited into
the Certificate Account on the Business Day immediately
preceding such Distribution Date pursuant to Section 2.2 (c),
2.4 (b) or 3.1;
(xiv) the aggregate amount, if any, of Investor Loss Reduction
Amounts for previous Distribution Dates that have not been
previously reimbursed to Investor Certificateholders pursuant
to Section 5.1(a)(vi);
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(xv) the aggregate Trust Balance of the Mortgage Loans, as of the
end of the preceding Collection Period and the end of the
second preceding Collection Period;
(xvi) the Pool Balance as of the end of the preceding Collection
Period and the Pool Balance as of the end of the second
preceding Collection Period;
(xvii) the Invested Amount as of the end of the preceding Collection
Period;
(xviii) the Investor Certificate Principal Balance after giving effect
to the distribution on such Distribution Date;
(xix) the Seller Principal Balance as of the end of the preceding
Collection Period;
(xx) the aggregate amount of Additional Balances created during the
previous Collection Period;
(xxi) the aggregate of the Trust Balances as of the end of the
related Collection Period of all Mortgage Loans which became
Liquidated Mortgage Loans for such Distribution Date;
(xxii) whether a Rapid Amortization Event has occurred since the
prior Determination Date, specifying each such Rapid
Amortization Event if one has occurred;
(xxiii) whether an Event of Default has occurred since the prior
Determination Date, specifying each such Event of Default if
one has occurred;
(xxiv) the amount to be distributed to the Certificate Insurer
pursuant to Section 5.1(a)(iv);
(xxv) the Certificate Insurance Draw Amount, if any, for such
Distribution Date;
(xxvi) the amount to be distributed to the holder of the Seller
Certificate pursuant to Section 5.1(a)(ix).
Section 4.2 Certificate Insurance Policy.
(a) The Trustee shall submit, if necessary, the Notice of
Nonpayment and Demand for Payment of Insured Amounts (in the form specified by
the Certificate Insurance Policy) in the amount of the Certificate Insurance
Draw Amount to the Certificate Insurer no later than [TIME]), on the second
Business Day prior to each Distribution Date. Upon receipt of such Certificate
Insurance Draw Amount in accordance with the terms of the Certificate Insurance
Policy, the Trustee shall deposit such Certificate Insurance Draw Amount in the
Certificate Account for distribution to the Investor Certificateholders on the
related Distribution Date.
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(b) Subject only to the priority of payment provisions of this
Agreement, each of the Seller, the Servicer and the Trustee acknowledges that,
to the extent of any payment made by the Certificate Insurer pursuant to the
Certificate Insurance Policy, the Certificate Insurer is to be fully subrogated
to the extent of such payment (as described in Section 5.1(a)(vii) and (ix)) and
any additional interest due on any late payment, to the rights of the Investor
Certificateholders under this Agreement or otherwise. Each of the Seller, the
Servicer and the Trustee agrees to such subrogation and, further, agrees to
execute such instruments and to take such actions as, in the sole judgment of
the Certificate Insurer, as evidenced in writing to the Seller, the Servicer and
the Trustee, are necessary to evidence such subrogation and, subject to the
priority of payment provision of this Agreement, to perfect the rights of the
Certificate Insurer to receive any moneys paid or payable in respect of the
Investor Certificates under this Agreement or otherwise.
Section 4.3 Replacement Certificate Insurance Policy.
In the event the rating of the Certificate Insurer is downgraded by
any Rating Agency, such that the rating of the Investor Certificates is reduced,
suspended or withdrawn, the Servicer shall be permitted, in accordance with the
terms of the Insurance Agreement, but shall not be obligated, to substitute a
new certificate insurance policy for the Certificate Insurance Policy or may
arrange for any other form of credit enhancement; provided, however, that, in
each case, the rating of the Investor Certificates following any such
substitution shall be the highest rating available from each of the Rating
Agencies and provided, further, that the Certificate Insurer is reimbursed for
all amounts due under this Agreement and the Certificate Insurance Agreement. It
shall be a condition to substitution of any such new certificate insurance
policy or other form of credit enhancement that there be delivered to the
Trustee (i) an Officer's Certificate by the Servicer stating that the conditions
to such substitution set forth in this Section 4.3 (other than in clause (ii))
have been satisfied and (ii) a legal opinion, acceptable in form to the Trustee,
from counsel to the provider of such certificate insurance policy or other form
of credit enhancement with respect to the enforceability thereof and such other
matters as the Trustee may require. Upon receipt of written notice of any such
substitution from the Servicer and the taking of physical possession of the
replacement certificate insurance policy or other form of credit enhancement,
the Trustee shall, within five (5) Business Days following receipt of such
notice and such taking of physical possession, deliver the Certificate Insurance
Policy to the Certificate Insurer and the Certificate Insurer will have no
further liability under the Certificate Insurance Policy.
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ARTICLE V
PAYMENTS AND STATEMENTS TO
CERTIFICATEHOLDERS; RIGHTS OF CERTIFICATEHOLDERS
Section 5.1 Distributions.
(a) Distributions of Investor Interest Collections and Investment
Proceeds.
On each Distribution Date, the Trustee shall distribute out of the
certificate Account to the extent of the sum of (i) Investor Interest
Collections, (ii) the Basis Risk Payment, if any, and (iii) net income, if any,
realized from the investment of Available Funds pursuant to Section 3.2(d)
collected or earned during the related Collection Period, the following amounts
in the following order of priority to the following Persons (based on the
information set forth in the Servicing Certificate):
(i) the Servicing Fee;
(ii) the Investor Certificate Interest for such Distribution Date
to the Investor Certificateholders;
(iii) the Unpaid Investor Certificate Interest Shortfall, if any,
for such Distribution Date to the Investor Certificateholders
plus, to the extent legally permissible, interest thereon at
the Investor Certificate Rate;
(iv) the premium due under the Certificate Insurance Policy to the
Certificate Insurer;
(v) the Aggregate Investor Liquidation Lose Amount for such
Distribution Date to the Investor Certificateholders as
principal in reduction of the Investor Certificate Principal
Balance;
(vi) to Investor Certificateholders as principal in reduction of
the Investor Certificate Principal Balance the aggregate
amount of the Investor Loss Reduction Amounts, if any, for
previous Distribution Dates that have not been previously
reimbursed to Investor Certificateholders pursuant to this
clause (vi);
(vii) to reimburse the Certificate Insurer for previously
unreimbursed Certificate Insurance Draw Amounts together with
interest thereon at the applicable rate set forth in the
Insurance Agreement;
(viii) the Accelerated Principal Distribution Amount, if any, to the
Investor Certificateholders;
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(ix) to the Certificate Insurer for any amounts owed to the
Certificate Insurer pursuant to the Insurance Agreement,
excluding amounts paid pursuant to Sections 5.1(a) (iv) and
5.1(a) (viii) hereof;
(x) any remaining amount to the Seller.
(b) Distribution of Investor Principal Collections. Except on the
Distribution Date in _____, on each Distribution Date, the Trustee shall
distribute out of the Certificate Account to the Investor Certificateholders,
based upon the information set forth in the Servicing Certificate, the Investor
Principal Collections up to the Scheduled Principal Collections Distribution
Amount but not in excess of the Investor Certificate Principal Balance on the
Distribution Date in _____, the Trustee shall distribute to Investor
Certificateholders Investor Principal Collections up to the Investor Certificate
Principal Balance.
(c) For the purposes of determining the amount of Principal
Collections to be distributed to Certificateholders on any Distribution Date any
Liquidation Expense incurred by the Servicer shall not be considered a Draw
(although the Servicer shall add the amount of such Net Liquidation Expense to
the principal balance of the subject Mortgage Loan); provided, however, that if
such Mortgage Loan shall be reinstated by the Servicer, the Servicer shall, for
such purposes, consider the amount of such Liquidation Expenses for such
Mortgage Loan as a Draw.
(d) Method of Distribution. The Trustee shall make distributions
in respect of a Distribution Date to each Investor Certificateholder of record
on the related Record Date (other than as provided in Section 10.1 respecting
the final distribution) by check or money order mailed to such Investor
Certificateholder at the address appearing in the Certificate Register, or upon
written request by an Investor Certificateholder delivered to the Trustee at
least five Business Days prior to such Record Date, by wire transfer (but only
if such Certificateholder is the Depository or such Certificateholder owns of
record one or more Investor Certificates having principal denominations
aggregating at least $_____), or by such other means of payment as such Investor
Certificateholder and the Trustee shall agree. Distributions among Investor
Certificateholders shall be made in proportion to the Percentage Interests
evidenced by the Investor Certificates held by such Investor Certificateholders.
(e) Distributions on Book-Entry Certificates. Each distribution
with respect to a Book-Entry Certificate shall be paid to the Depository, which
shall credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the investor
certificates. None of the Trustee, the Paying Agent, the Certificate Registrar,
the Seller or the Servicer shall have any responsibility therefor except as
otherwise provided by applicable law. To the extent applicable and not contrary
to the rules of the Depository, the Trustee shall comply with the provisions of
the form of Investor Certificate as set forth in Exhibit A.
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(f) Distributions of Interest to the Seller. On each day on which
the Seller Principal Balance is greater than zero, the Servicer shall distribute
to the Holder of the Seller Certificate Trust Interest to the extent not
deposited into the Certificate Account pursuant to Section 3.2(c) on such day.
(g) Distributions of Principal to the Seller. On each day on which
the Seller Principal Balance is greater than zero, the Servicer shall distribute
to the Holder of the Seller Certificate Principal Collections to the extent not
deposited into the Certificate Account pursuant to Section 3.2(c) on such day.
Section 5.2 Calculation of the Investor Certificate Rate.
On the second LIBOR Business Day preceding each Accrual Period-after
the initial Accrual Period, the Trustee shall determine LIBOR for such Accrual
Period. The Trustee shall promptly advise the Servicer of such determination by
tested telex or telefax to the address set forth in Section 12.6. The
determination of LIBOR by the Trustee for each such Accrual Period shall (in the
absence of manifest error) be final, conclusive and binding upon the
Certificateholders, the Servicer and any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns.
Section 5.3 Statements to Certificateholders.
Concurrently with each distribution to Investor Certificateholders,
the Servicer shall forward to the Trustee for mailing to each such Investor
Certificateholder and the Certificate Insurer a statement with respect to such
distribution substantially in the form of Exhibit K and setting forth:
(i) the Investor Certificate holder's Floating Allocation
Percentage for the last day of the preceding Collection
Period;
(ii) the Investor Certificate distribution amount;
(iii) the amount of Investor Certificate Interest included in such
distribution, the related Investor Certificate Rate and the
portion thereof attributable to collections in respect of the
Mortgage Loans;
(iv) the amount, if any, of any unpaid Investor Certificate
Interest Shortfall included in such distribution (and the
amount of interest thereon);
(v) the amount, if any, of the remaining Unpaid Investor
Certificate Interest Shortfall after giving effect to such
distribution;
(vi) the amount, if any, of principal included in such
distribution, separately stating the components thereof
(including the portion thereof attributable to collections in
respect of the Mortgage Loans);
(vii) the amount, if any, of the reimbursement of previous Investor
Loss Reduction Amounts included in such distribution;
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(viii) the amount, if any, of the aggregate unreimbursed Investor
Lose Reduction Amounts after giving effect to such
distribution;
(ix) the Servicing Fee for such Distribution Date;
(x) the Invested Amount and the Investor Certificate Principal
Balance, each after giving effect to such distribution;
(xi) the Required Overcollateralization Amount, the Basic
Overcollateralization Amount and the Overcollateralization
Amount, if any, after giving effect to such distribution;
(xii) the Pool Balance as of the end of the preceding Collection
Period and the number and aggregate of the Trust Balances of
the Mortgage Loans as to which the minimum monthly payment is
delinquent for 30-59 days, 60-89 days and 90 or more days,
respectively, at the close of business on the last day of the
related Collection Period;
(xiii) the Accelerated Principal Distribution Amount, if any;
(xiv) the Certificate Insurance Draw Amount, if any;
(xv) the aggregate Liquidation Loss Amount for all Mortgage Loans
that became Liquidated Mortgage Loans in the preceding
Collection Period; and
(xvi) the Trust Balance of any Mortgage Loan, the related Mortgaged
Property of which is acquired by the Trust through
foreclosure.
In the case of information furnished pursuant to clauses (ii), (iii),
(iv) and (vi) above, the amounts shall be expressed as a dollar amount per
Investor Certificate with a $1,000 denomination.
Within 90 days after the end of each calendar year, the Servicer shall
prepare or cause to be prepared and shall forward to the Trustee the information
set forth in clauses (iii) and (vi) above aggregated for such calendar year.
Such obligation of the Servicer shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Code.
The Trustee shall prepare or cause to be prepared (in a manner
consistent with the treatment of the Investor Certificates as indebtedness of
the Seller) Internal Revenue Service Form 1099 (or any successor form) and any
other tax forms required to be filed or furnished to Certificateholders
(including Form 8811) in respect of distributions by the Trustee (or the Paying
Agent) on the Investor Certificates and shall file and distribute such forms as
required by law.
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Section 5.4 Rights of Certificateholders.
The Investor Certificates shall represent fractional undivided
interests in the Trust, including the benefits of the Certificate Account and
the right to receive investor Interest Collections, Investor Principal
Collections and other amounts at the times and in the amounts specified in this
Agreement; the Seller Certificates shall represent the remaining interest in the
Trust.
Section 5.5 Rights of the Certificate Insurer To Exercise Rights of
Certificateholders.
By accepting its Certificate, each Certificateholder agrees that
unless a Certificate Insurer Default exists, the Certificate Insurer shall have
its rights as set forth in this Agreement.
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates.
The Investor Certificates and Seller Certificates shall be
substantially in the forms set forth in Exhibits A and B, respectively, and
shall, on original issue, be executed, authenticated and delivered by the
Trustee to or upon the order of the Seller concurrently with the transfer of the
Mortgage Loans to the Trustee of the Trust. The Investor Certificates shall be
initially evidenced by one or more certificates representing the entire Original
Investor Certificate Principal Balance and shall be held in minimum dollar
denominations of $1,000 and integral dollar multiples in excess thereof. The sum
of the denominations of all outstanding Investor Certificates shall equal the
original Investor Certificate Principal Balance. The Seller Certificates shall
be issuable as one or more certificates representing the entire interest in the
assets of the Trust other than that represented by the Investor Certificates and
shall initially be issued to the Seller.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer under its seal imprinted thereon.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Seller shall bind the Trustee, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Trustee substantially in the form provided for
herein, and such authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 6.2(c), the Investor Certificates
shall be Book-Entry Certificates. The Seller Certificates shall not be Book
Entry Certificates.
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Section 6.2 Registration of Transfer and Exchange of Investor
Certificates; Restrictions on Transfer.
(a) The Trustee shall cause to be kept at the Corporate Trust
office a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Trustee shall provide for the registration of
Certificates and of Transfers of registered ownership of Certificates and
exchanges of Certificates as herein provided. The Trustee shall initially serve
as Certificate Registrar for the purpose of registering Certificates and
Transfers and exchanges of Certificates as herein provided.
Upon surrender for registration of Transfer of any Investor
Certificate at the Corporate Trust office maintained for such purpose pursuant
to the foregoing paragraph, the Trustee shall execute, authenticate and deliver,
in the name of the designated Transferee or Transferees, one or more new
Investor Certificates of the same aggregate Percentage Interest.
At the option of the Investor Certificateholders, Investor
Certificates may be exchanged for other Investor Certificates of authorized
denominations of the same aggregate Investor Percentage Interest, upon surrender
of the Investor Certificates to be exchanged at any such office or agency.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
execute, authenticate and deliver the Investor Certificates which the Investor
Certificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for Transfer or exchange shall (if so
required by the Trustee or the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of Transfer in form satisfactory to, the
Trustee and the Certificate Registrar and shall be duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any Transfer or exchange of
Investor Certificates, but the Trustee may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any Transfer or exchange of Investor Certificates.
All Certificates surrendered for Transfer and exchange shall be
disposed of by the Certificate Registrar in accordance with its customary
procedures.
(b) Intentionally omitted
(c) Except as provided in Section 6.2(d), the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee, and at all times: (i) registration of the Book-Entry
Certificates may not be transferred by the Trustee except to another Depository
or its nominee, or to another nominee of the current Depository; (ii) the
Depository or Foreign Depository, as the case may be, shall maintain book-entry
records with respect to the Certificate Owners and with respect to ownership and
transfers of such Investor Certificates; (iii) ownership and transfers of
registration of Investor Certificates on the books of the Depository shall be
governed by applicable rules established by the Depository; (iv) the Depository
may collect its usual and customary fees, charges and expenses from its
Depository Participants; (v) the Trustee shall deal with the Depository as
representative of the Certificate Owners of the Investor Certificates for
purposes of exercising the rights of Holders under this
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Agreement, and requests and directions for and votes of such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; and (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to directions or consents or other acts of the Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository or Foreign Depository's normal
procedures.
Whenever notice or other communication to the Investor
Certificateholders is required under this Agreement, unless and until Definitive
Certificates shall have been issued to Certificate Owners pursuant to Section
6.2(d), the Trustee shall give to the Depository all such notices and
communications specified herein to be given to Certificatebolders.
(d) if (x) (i) the Servicer advises the Trustee in writing that the
Depository is no longer willing or able properly to discharge its
responsibilities as Depository and nominee with respect to the Investor
Certificates, and (ii) the Servicer is unable to locate a qualified successor,
(y) the Servicer at its option advises the Trustee in writing that it elects to
terminate the book-entry system through the Depository, or (z) after the
occurrence of an Event of Default, Certificate Owners representing Percentage
Interests aggregating not less than 51% of the aggregate Percentage Interests of
the Investor Certificates advise the Trustee and the Depository through the
Depository Participants in writing that the continuation of a book-entry system
through the Depository (or a successor thereto, provided that such successor
maintains a system that qualifies as a book-entry system for purposes of causing
the Investor Certificates to be in registered form for purposes of the Code) to
the exclusion of any physical certificates being issued to Certificate owners is
no longer in the best interests of the Certificate Owners, the Trustee shall
notify all Certificate Owners, through the Depository, of the occurrence of any
such event and of the availability of definitive, fully registered Investor
certificates (the "Definitive Certificates") to Certificate Owners requesting
the same. Upon surrender to the Trustee of the Investor Certificates by the
Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall issue the Definitive Certificates. Neither the
Servicer 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, the Trustee
shall recognize the Holders of the Definitive Certificates as Investor
Certificateholders hereunder.
Section 6.3 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (ii) there is delivered
to the Trustee, the Servicer, the Seller and the Certificate Registrar such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new
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Certificate of like tenor and Percentage Interest. Upon the issuance of any new
Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 6.4 Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
Transfer, the Servicer, the Seller, the Trustee, the Certificate Insurer, the
Certificate Registrar and any agent of the Servicer, the Seller, the Trustee,
the Certificate Insurer or the Certificate Registrar may treat the Person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 5.1 and for all other
purposes whatsoever, and none of the Servicer, the Seller, the Trustee, the
Certificate Insurer, the Certificate Registrar or any agent of the Servicer, the
Seller, the Trustee, the Certificate Insurer or the Certificate Registrar shall
be affected by notice to the contrary.
Section 6.5 Restrictions on Transfer of Seller Certificates. (a) The
Seller Certificates shall be assigned, transferred, exchanged, pledged,
financed, hypothecated, participated or otherwise conveyed (collectively, for
purposes of this Section 6.5 and any other Section referring to the Seller
Certificates, "transferred" or a "transfer") only in accordance with this
Section 6.5.
(b) No transfer of a Seller Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. The Trustee shall require a written Opinion
of Counsel acceptable to and in form and substance satisfactory to the Trustee
and the Seller that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from which Act and
laws or is being made pursuant to said Act and laws, which Opinion of Counsel
shall not be an expense of the Trustee, and the Trustee shall require the
transferee to execute an investment letter acceptable to and in form and
substance satisfactory to the Trustee certifying to the Trustee the facts
surrounding such transfer, which investment letter shall not be an expense of
the Trustee. The Holder of a Seller Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Seller and the Certificate
Insurer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
(c) The Seller Certificates and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent: (i)
the Person that acquires a Seller Certificate shall (A) be organized and
existing under the laws of the United States of America or any state or the
District of Columbia thereof (B) expressly assume, by an agreement supplemental
hereto, executed and delivered to the Trustee, the performance of every covenant
and obligation of the Seller hereunder with respect to the Assets evidenced by
the Seller Certificates, and (C) as part of its acquisition of a Seller
Certificate, acquire all rights of the related Seller or any transferee under
this Section 6.5(c) to amounts payable to such Seller or
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such transferee under Sections 5.1(a)(x), 5.1(f) and 5.1(g); (ii) the Seller
shall deliver to the Trustee an officer's Certificate stating that such transfer
and such supplemental agreement comply with this Section 6.5(c) and that all
conditions precedent provided by this Section 6.5(c) have been complied with and
an Opinion of Counsel stating that all conditions precedent provided by this
Section 6.5(c) have been complied with, and the Trustee may conclusively rely on
such Officer's Certificate, shall have no duty to make inquiries with regard to
the matters set forth therein and shall incur no liability in so relying; (iii)
the Seller shall deliver to the Trustee a letter from each Rating Agency
confirming that its rating of the Investor Certificates, after giving effect to
such transfer without taking into account the Certificate Insurance Policy, will
not be reduced or withdrawn; (iv) the Seller shall deliver to the Trustee an
Opinion of Counsel to the effect that (a) such transfer will not adversely
affect the treatment of the Investor Certificates after such transfer as debt
for federal and applicable state income tax purposes, (b) such transfer will not
result in the Trust being subject to tax at the entity level for federal or
applicable state tax purposes, (c) such transfer will not have any material
adverse impact on the federal or applicable state income taxation of an Investor
Certificateholder or any Certificate Owner and (d) such transfer will not result
in the arrangement created by this agreement or any "portion" of the Assets,
being treated as a taxable mortgage pool as defined in Section 7701(1) of the
Code; (v) all filings and other actions necessary to continue the perfection of
the interest of the Trust in the Assets and the other property conveyed
hereunder shall have been taken or made and (vi) the transferee shall have
assumed the obligations of the Seller pursuant to Section 7.7 hereof.
Notwithstanding the foregoing, the requirement set forth in subclause (i)(A) of
this Section 6.5(c) shall not apply in the event the Trustee shall have received
a letter from each Rating Agency confirming that its rating of the Investor
Certificates, after giving effect to a proposed transfer to a Person that does
not meet the requirement set forth in subclause (i)(A) without taking into
account the Certificate Insurance Policy, shall not be reduced or withdrawn.
Section 6.6 Appointment of Paying Agent.
The Trustee is empowered to appoint a Paying Agent for the purpose of
making distributions to Certificateholders pursuant to Section 5.1. Any Paying
Agent appointed hereunder must satisfy the eligibility requirements for the
Trustee as set forth in Section 9.6, and if such Paying Agent subsequently shall
fail to satisfy such eligibility requirements, then, unless such Paying Agent
shall promptly resign as such, the Trustee, if a Responsible Officer of the
Trustee has been notified in writing or otherwise has actual knowledge of such
failure, shall terminate the appointment of such Paying Agent. The Trustee
hereby appoints itself as Paying Agent.
The Trustee shall cause such Paying Agent other than itself to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee that such Paying Agent shall hold all sums held by it for the
payment to Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders.
Section 6.7 Access to List of Certificateholders' Names and
Addresses.
The Certificate Registrar shall furnish or cause to be furnished to
the Servicer or the Certificate Insurer, within fifteen (15) days after receipt
by the Certificate Registrar of a
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request therefor from the Servicer or the Certificate Insurer in writing, a
list, in such form as the Servicer or the Certificate Insurer may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Investor Certificateholders whose aggregate
Percentage Interests evidence not less than 25% of the Percentage Interests,
apply in writing to the Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the certificates, and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Certificate Registrar shall, within five (5) Business Days
after the receipt of such application, afford such applicants access during
normal business hours to the current list of Certificateholders or shall itself
cause such communication to be distributed to Certificateholders. Each Holder,
by receiving and holding a Certificate, shall be deemed to have agreed to hold
none of the Servicer, the Trustee or the Certificate Registrar accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
Section 6.8 Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where required, to the Seller, the Certificate
Insurer or the Servicer. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Seller, the Certificate
Insurer and the Servicer, if made in the manner provided in this section.
(b) The fact and date of the execution by any Certificateholder of
any such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of Transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Trustee, the Seller or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Certificate.
(d) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
(e) The ownership of Certificates shall be proved by the
Certificate Register.
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ARTICLE VII
THE SERVICER AND THE SELLER
Section 7.1 Liability of the Servicer.
The Servicer shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Servicer
herein.
Section 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Seller.
Any corporation into which the Servicer or Seller, as the case may be,
may be merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Servicer or Seller, as the case may be,
shall be a party, or any corporation succeeding to the business of the Servicer
or Seller by any sale or transfer by the Servicer or Seller of all or
substantially all of its property and assets to such corporation, shall be the
successor of the Servicer or Seller hereunder, as the case may be, and shall
execute and deliver to the Trustee and the Certificate Insurer an agreement in
form reasonably satisfactory to the Trustee and the Certificate Insurer which
contains an assumption by such successor entity of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by the Servicer or Seller under this Agreement.
Section 7.3 Limitation on Liability of the Servicer and Others.
(a) Except as provided in Section 7.7 hereof with respect to the
Seller, no recourse under or upon any obligation or covenant of this Agreement,
or of any Certificate, or for any claim based thereon or otherwise in respect
thereof, shall be had against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Servicer, either directly or
through the Servicer, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Agreement and the obligations issued hereunder
are solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by the incorporators, shareholders,
officers or directors, as such, of the Servicer or of any successor corporation,
or any of them, because of the issuance of the Certificates, or under or by
reason of the obligations, covenants or agreements contained in this Agreement
or in any of the Certificates or implied therefrom; and that any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the issuance
of the Certificates, or under or by reason of the obligations or covenants
contained in this Agreement or in any of the Certificates or implied therefrom,
are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Agreement and the issuance of the
Certificates. The Servicer and any director, officer, employee or agent of the
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.
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(b) The Servicer shall not be under any liability to the Trust or
the Certificateholders for taking any action or for refraining from taking any
action pursuant to this Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Servicer against any liability which
would otherwise be imposed upon the Servicer by reason of its willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties as Servicer
hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Mortgage Loans in accordance with this Agreement which in its
reasonable opinion may involve it in any expense or liability; provided,
however, that the Servicer, in its sole discretion, may undertake any such
action which it may deem necessary or desirable in respect of this Agreement,
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the reasonable legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Trust, and the Servicer shall be entitled to be
reimbursed therefor pursuant to Section 3.3. The Servicer's right to
reimbursement pursuant to this Section 7.3(b) shall survive any resignation or
termination of the Servicer pursuant to Section 7.5 or 8.1 with respect to any
losses, expenses, costs or liabilities arising prior to such resignation or
termination, or arising from events that occurred prior to such resignation or
termination.
(c) The Servicer and any director, officer, employee or agent of
the Servicer shall be indemnified by the Trust and held harmless to the extent
provided herein against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except an any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by the Servicer by reason of willful misfeasance, bad faith or gross
negligence by the Servicer in the performance of its duties hereunder or by
reason of its reckless disregard of its obligations and duties hereunder. The
Servicer and any director, officer, employee or agent of the Servicer shall be
entitled to such indemnity pursuant to Section 3.3. The Servicer's right to
indemnity pursuant to this Section 7.3(c) shall survive any resignation or
termination of the Servicer pursuant to Section 7.5 or 8.1 with respect to any
losses, expenses, costs or liabilities arising prior to such resignation or
termination, or arising from events that occurred prior to such resignation or
termination. Any claims under this Section 7.3(c) by or on behalf of the
Certificateholders or the Trust shall be made only against the Servicer who
shall be liable to the extent provided herein with respect to its own acts and
omissions as well as the acts and omissions of its directors, officers,
employees and agents.
Section 7.4 Delegation of Duties.
In the ordinary course of business, and subject to the requirements of
section 7.4(b), the Servicer at any time may, with the consent of the
Certificate Insurer, delegate any of its duties hereunder to any Person,
including any of its affiliates, who agrees to conduct such duties in accordance
with standards comparable to those with which the Servicer complies pursuant to
Section 3.1. Such delegation shall not relieve the Servicer of its liabilities
and responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 7.5. The Servicer shall provide each
Rating Agency, the Trustee and the
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Certificate Insurer with written notice prior to the delegation of any of its
duties to any Person other than any of the Servicer's affiliates or their
respective successors and assigns.
Section 7.5 Servicer Not to Resign.
Subject to the provisions of section 7.2 and the last sentence of this
paragraph, the Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that the performance of its obligations
or duties hereunder is no longer permissible under applicable law or is in
material conflict by reason of applicable law with any other activities carried
on by it or its subsidiaries or other affiliates, the other activities of the
Servicer so causing such a conflict being of a type and nature carried on by the
Servicer or such subsidiaries or other affiliates at the date of this Agreement.
Any resignation under Section 7.5 shall not relieve the Servicer of
responsibility for any of the obligations specified in Sections 8.1 and 8.2 as
obligations that survive the resignation or termination of the Servicer;
provided, however, that no resignation by the Servicer shall become effective
until the Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 8.2.
The Servicer shall have no claim (whether by subrogation or otherwise) or other
action against any Certificateholder for any amounts paid by the Servicer
pursuant to any provision of this Agreement. Any determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the Certificate Insurer.
Section 7.6 Limitation on Liability of Certain Persons.
Except as provided in Section 7.7 hereof, no recourse under or upon
any obligation or covenant of this Agreement, or of any Certificate, or for any
claim based thereon or otherwise in respect thereof, shall be had against any
incorporator, shareholder, officer or director, as such, past, present or
future, of the Seller or of any successor corporation, either directly or
through the Seller, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Agreement and the obligations issued hereunder
are solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by the incorporators, shareholders,
officers or directors, as such, of the Seller, or any of them, because of the
issuance of the Certificates, or under or by reason of the obligations,
covenants or agreements contained in this Agreement or in any of the
Certificates or implied therefrom; and that any and all such personal liability,
either at common law or in equity or by constitution or statute, of, and any and
all such rights and claims against, every such incorporator, shareholder,
officer or director, as such, because of the issuance of the Certificates, or
under or by reason of the obligations, covenants or agreements contained in this
Agreement or in any of the Certificates or implied therefrom, are hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Agreement and the issuance of the Certificates. The Seller and
any director, officer, employee or agent of the Seller 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.
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Section 7.7 Liability of Seller.
Notwithstanding Section 7.6 (and notwithstanding any provisions of
this Agreement, the Seller by entering into this Agreement, by its acceptance
thereof, agrees to be liable, directly to the injured party, for the entire
amount of any losses, claims, damages or liabilities (other than those that
would be incurred by an Investor Certificateholder as an investor in the
Certificates if the Certificates were notes secured by the Mortgage Loans
including, but not limited to, as a result of the performance of the Mortgage
Loans, market fluctuations, a shortfall or failure to make payment under the
Certificate Insurance Policy or other similar market or investment risks
associated with ownership of the Certificates) arising out of or based on the
arrangement created by this Agreement or the actions of the servicer taken
pursuant hereto (to the extent that, if the Trust assets at the time the claim
is made were used to pay in full all outstanding Certificates, the Trust assets
that would remain after the Certificateholders were paid in full would be
insufficient to pay any such losses, claims, damages or liabilities) as though
this Agreement created a partnership under the New York Revised Uniform
Partnership Act in which the Seller was a general partners. The rights created
by this Section 7.7 shall run directly to and be enforceable by the injured
party subject to the limitations hereof.
Section 7.8 Seller May Own Certificates.
The Seller and any Person controlling, controlled by or under common
control with the Seller may in its individual or any other capacity become the
owner or pledgee of Investor Certificates with the same rights as it would have
if it were not the Seller or such an affiliate thereof, except as otherwise
provided in the definition of the term "Certificateholder" specified in Section
1.1. Investor Certificates so owned by or pledged to the Seller or such
controlling or commonly controlled Person shall have an equal and proportionate
benefit under the provisions of this Agreement, without preference, priority or
distinction as among all of the Certificates, except as otherwise provided in
the definition of the term "Certificateholder" specified in Section 1.1.
ARTICLE VIII
DEFAULT
Section 8.1 Events of Default.
If any one of the following events ("Events of Default") shall occur
and be continuing:
(i) any failure by the Servicer to deposit into the Certificate
Account any deposit required to be made under the terms of
this Agreement which continues unremedied for a period of five
(5) Business Days after the date upon which written notice of
such failure shall have been given to the Servicer by the
Trustee or to the Servicer and the Trustee by the Certificate
Insurer or to the Servicer, the Trustee and the Certificate
Insurer by the Holders of Investor Certificates evidencing not
less than 51% of the aggregate Percentage Interests of the
Investor Certificates; or
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(ii) failure on the part of the Servicer duly to observe or perform
in any material respect any other covenants or agreements of
the Servicer set forth in the Insurance Agreement or in this
Agreement, which covenants and agreements (A) materially
affect the rights of Certificateholders and (B) continue
unremedied for a period of sixty (60) days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer and the
Certificate Insurer by the Trustee, or to the Servicer, the
Certificate Insurer and the Trustee by the Holders of
Certificates evidencing not less than 51% of the aggregate
Percentage Interests of the Investor Certificates; or
(iii) the entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance
of any such decree or order unstayed and in effect for a
period of one hundred twenty (120) days; or
(iv) the consent by the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to the Servicer or of or
relating to substantially all of its property; or any action
by the Servicer to admit in writing its inability to pay its
debts generally as they become due, to file a petition to take
advantage of any applicable insolvency or reorganization
statute or to make an assignment for the benefit of its
creditors;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied by the Servicer, and subject to the proviso below, either the
Trustee, the Certificate Insurer (unless there is currently existing a
Certificate Insurer Default) or the Holders of Investor Certificates evidencing
not less than 51% of the aggregate Percentage Interests of the Investor
Certificates with the consent of the Certificate Insurer (if there exists no
Certificate Insurer Default) by notice then given in writing to the Servicer
(and to the Trustee if given by the Certificate Insurer or the Investor
Certificateholders), may and at the direction of the Holders of Investor
Certificates evidencing no less than 51% of the aggregate Percentage Interests
of the Investor Certificates, the Trustee shall, terminate all of the rights and
obligations of the servicer as servicer under this Agreement.
Subject to the proviso below, if a Trigger Event shall have occurred,
the Certificate Insurer may require the Trustee to deliver a notice of
termination to the Servicer and to appoint a successor servicer pursuant to
Section 8.2.
Any written notice of termination provided to the Servicer pursuant to
this section 8.1 shall be simultaneously provided to the Certificate Insurer and
the Rating Agencies. On or after the receipt by the Servicer of such written
notice, all authority and power of, and all benefits accruing to, the Servicer
under this Agreement, whether with respect to the Certificates
58
or the Mortgage Loans or otherwise, shall pass to and be vested in the Trustee
or such successor Servicer as may be appointed under Section 8.2 pursuant to and
under this section 8.1; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Mortgage Loans and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and the Trustee
in effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the successor Servicer
for the administration by it of all cash amounts that shall at the time be owned
by the predecessor Servicer for deposit, or that shall thereafter be received by
the Servicer with respect to the Mortgage Loans.
The Certificate Insurer may notify the Trustee of the occurrence of a
Trigger Event and request termination of the rights and obligations of the
Servicer hereunder because of such occurrence; provided, however, that the
Trustee shall incur no liability for voluntarily complying with such request.
No Holder of Investor Certificates will have any right under this
Agreement to institute any proceeding in its name with respect to this Agreement
unless such holder previously has given to the Trustee and the Certificate
Insurer written notice of default and unless holders of Investor Certificates
evidencing not less than 25% of the Aggregate Percentage Interests of the
Investor Certificates with the consent of the Certificate Insurer have made
written request upon the Trustee to institute such proceeding in its own name as
Trustee thereunder and have offered to the Trustee reasonable indemnity, and the
Trustee for 60 days has neglected or refused to institute any such proceeding.
The Trustee will be under no obligation to exercise any of the trusts or powers
vested in it by this Agreement or to make any investigation of matters arising
thereunder or to institute, conduct or defend any litigation thereunder or in
relation thereto at the request, order or direction of any of the Holders of
Investor Certificates or the Certificate Insurer covered by this Agreement,
unless such Holders of Investor Certificates or the Certificate Insurer have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or thereby.
Section 8.2 Trustee to Act; Appointment of Successor.
(a) Upon the Servicer's receipt of notice of termination pursuant
to Section 8.1 or the Servicer's resignation in accordance with the terms of
Section 7.5, the Trustee shall be the successor in all respects to the Servicer
in its capacity as servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the predecessor Servicer by the terms
and provisions hereof; provided, however, that the responsibilities and duties
of the predecessor Servicer with respect to the removal of Mortgage Loans
pursuant to Section 3.1 shall not terminate with regard to actions taken prior
to the appointment of the successor Servicer. As compensation therefor, the
Trustee shall be entitled to the compensation of a successor Servicer as set
forth in the definition of Servicing Fee Rate. Notwithstanding the above, if the
Trustee is unable to act as successor Servicer the Servicer shall appoint, with
the consent of the Certificate Insurer, or petition a court of competent
jurisdiction to appoint, any established housing and
59
home finance institution having a net worth of not less than $10,000,000 as the
successor to the predecessor Servicer hereunder; provided, however, that the
appointment of any such successor Servicer shall not result in the reduction,
suspension or withdrawal of the ratings assigned to the Investor Certificates by
any Rating Agency without taking into account the Certificate Insurance Policy.
Pending appointment of a successor Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Trust Balances of Mortgage Loans as it and such successor shall
agree; provided, however, that such successor shall be entitled to the
compensation of a successor Servicer as set forth in the definition of Servicing
Fee Rate. The Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor Servicer, including the Trustee during the term
of its service as Servicer, shall maintain in force (i) a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
Servicer hereunder, and (ii) a fidelity bond in respect of its officers,
employees and agents to the same extent as the Servicer is so required pursuant
to Section 3.12.
Section 8.3 Notification to Investor Certificateholders.
Upon any termination or appointment of a successor to the Servicer
pursuant to this Article VIII, the Trustee shall give prompt written notice
thereof to Investor Certificateholders at their respective addresses appearing
in the Certificate Register and to the Certificate Insurer and the Rating
Agencies.
Section 8.4 Waiver of Past Events of Default.
The Holders of Investor Certificates evidencing not less than 51% of
the aggregate Percentage Interests of the Investor Certificates together, with
the consent of the Certificate Insurer, may, on behalf of all Holders of
Certificates, waive any Event of Default by the Servicer in the performance of
its obligations hereunder and its consequences, except a default in making any
required deposits to or payments from the Certificate Account in accordance with
this Agreement. Upon any such waiver of a past Event of Default, such Event of
Default shall cease to exist and 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.
ARTICLE IX
THE TRUSTEE
Section 9.1 Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge and after the
curing of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred of which a
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Responsible Officer of the Trustee shall have actual knowledge (which has not
been cured or waived), the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs. The appointment of a successor Servicer
(including the Trustee) hereunder shall for purposes of this Article be deemed a
cure of an Event of Default
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished to the Trustee hereunder. If any such instrument is found not to
conform in any material respect to the requirements of this Agreement, the
Trustee shall notify the Investor Certificateholders of such instruments, in the
event that the Trustee, after so requesting, does not receive a satisfactorily
corrected instrument.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual
knowledge, and after the curing of all such Events of Default
which may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good
faith in accordance with this Agreement, at the direction of
Holders of Investor Certificates evidencing not less than 51%
of the aggregate Percentage Interests of the Investor
Certificates together or at the direction of the Certificate
Insurer to the extent provided in Section 8.1 with respect to
the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or
61
exercising any trust or power conferred upon the Trustee,
under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer
referred to in clauses (i) and (ii) of Section 8.1 or of any
Trigger Event unless a Responsible Officer of the Trustee
assigned to and working in the Trustee's Corporate Trustee
Administration Department obtains actual knowledge of such
failure or Trigger Event or the Trustee receives written
notice of such failure or Trigger Event from the Servicer, the
Certificate Insurer or the Holders of Investor Certificates
evidencing not less than 25% of the Percentage Interests of
the Investor Certificates.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground to believe that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement. The Trustee shall provide prior written notice to the
Certificate Insurer of any decision which it has made pursuant to this
paragraph.
Subject to the other provisions of this Agreement and without limiting
the generality of this Section 9.1, the Trustee shall have no 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
from funds available in the Certificate Account, (D) to confirm or verify the
contents of any reports or certificates of the Servicer delivered to the Trustee
pursuant to this Agreement believed by the Trustee to be genuine and to have
been signed or presented by the proper party or parties.
Section 9.2 Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 9.1:
(i) the Trustee 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, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or
presented by the proper party or parties;
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(ii) the Trustee may consult with counsel, and any Opinion of
Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with
such Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation hereunder or in
relation hereto, at the request, order or direction of any of
the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered
to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein
or thereby; nothing contained herein shall, however, relieve
the Trustee of the obligations, upon the occurrence of an
Event of Default of which a Responsible Officer of the Trustee
shall have actual knowledge (which has not been cured), to
exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in
their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(v) prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or documents,
unless requested in writing to do so by the Certificate
Insurer or Holders of Investor Certificates evidencing not
less than 25% of the Percentage Interests of the Investor
Certificates with the consent of the Certificate Insurer;
provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to
it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability
as a condition to such proceeding. The reasonable expense of
every such examination shall be paid by the Servicer or, if
paid by the Trustee, shall be reimbursed by the Servicer upon
demand. Nothing in this clause (v) shall derogate from the
obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the
Mortgagors; and
(vi) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty,
and the Trustee shall not
63
be answerable for other than its negligence or willful
misconduct in the performance of such act;
(vii) The Trustee shall not be required to give any bond or surety
in respect of the execution of the Trust Fund created hereby
or the powers granted hereunder; and
(viii) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian and shall not be
liable for any acts or omissions of such agents, attorneys or
custodians appointed by it with due care hereunder.
Section 9.3 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
signature and authentication of the Trustee on the Certificates) shall be taken
as the statements of the Seller and the Servicer, respectively, and the Trustee
assumes no responsibility for the correctness of such recitals. The Trustee
makes no representations as to the validity or sufficiency of this Agreement or
of the Certificates (other than the signature and authentication of the Trustee
on the Certificates) or of any Mortgage Loan or related document. The Trustee
shall not be accountable for the use or application by the Seller of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Seller or the Servicer in respect of the
Mortgage Loans or deposited into or withdrawn from the Certificate Account by
the Servicer or the Seller, and shall have no responsibility for filing any
financing or continuation statement in any public office at any time or
otherwise to perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any tax returns or Securities and
Exchange Commission filings for the Trust or to record this Agreement except as
required by law. The Trustee 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
Section 9.4 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates and may deal with the Seller and the Servicer
in banking transactions with the same rights as it would have if it were not
Trustee.
Section 9.5 Servicer to Pay Trustee's Fees and Expenses.
The Servicer shall pay to the Trustee from time to time, and the
Trustee shall be entitled to, reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Servicer shall pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement, except any such expense, disbursement or advance as may arise from
its negligence or bad faith or which is the responsibility of a
Certificateholder or Certificateholders hereunder. If the Trustee is appointed
64
as successor Servicer pursuant to Section 8.2, the provisions of this Section
9.5 shall not apply to expenses, disbursements or advances made or incurred by
the Trustee in its capacity as successor Servicer. The Servicer shall Indemnify
the Trustee for, and hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the Trustee's part, arising out of
or in connection with the acceptance or administration by the Trustee of the
trust or trusts hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. If and for so long as the successor
Servicer is the Trustee, all references in this Section 9.5 to the Servicer
shall be deemed to refer to Chevy Chase Bank, F.B.B. notwithstanding the
appointment of such successor Servicer.
Section 9.6 Eligibility Requirements for Trustee.
The Trustee hereunder at all times shall be a corporation (i) having
its principal office in the same state as that in which the initial Trustee
under this Agreement has its principal office and organized and doing business
under the laws of the United States of America or a state of the United States
of America; (ii) authorized under such laws to exercise corporate trust powers;
(iii) having a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by federal or state authority; and (ivy if ▇▇▇▇▇'▇
is a Rating Agency, having a rating with respect to its long-term unsecured debt
obligations of at least Baa3 from Moody's (or such lower rating to which Moody's
may agree). If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 9.6, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 9.6, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.7.
Section 9.7 Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Seller and the
Certificate Insurer. Such appointment shall be by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. Any such successor Trustee shall
be approved in writing by the Servicer, which shall not withhold such approval
if the proposed successor Trustee satisfies the eligibility requirements set
forth herein. If no successor Trustee shall have been so appointed and have
accepted appointment within thirty (30) days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.6 and shall fail to resign after written
request therefor by the Seller or the Certificate Insurer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, the Seller may remove the Trustee. Such appointment will be by
written instrument, in duplicate, one copy of which
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instrument shall be delivered to the Trustee so removed and one copy to the
successor Trustee. A copy of such instrument shall be delivered to the
Certificate Insurer.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.7 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.8.
Section 9.8 Successor Trustee.
Any successor Trustee appointed as provided in Section 9.7 shall
execute, acknowledge and deliver to the Seller, the Certificate Insurer and to
its predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Seller, the Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for more fully and certainly vesting and confirming in the successor
Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.8 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of section 9.6. The predecessor Trustee shall
notify the Certificate Insurer and each Rating Agency of the appointment of any
successor Trustee.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.8, the Servicer shall mail notice of the succession of such
Trustee hereunder to the Certificate Insurer and all holders of Certificates at
their addresses as shown in the Certificate Register. If the Servicer fails to
mail ouch notice within ten (10) days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Servicer.
Notwithstanding anything to the contrary contained herein, the
appointment of any successor trustee pursuant to any provision of this Agreement
will be subject to the prior written consent of the Certificate Insurer.
Section 9.9 Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation or banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or banking association succeeding to all or
substantially all of the trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation or banking association shall
be eligible under the provisions of Section 9.6, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 9.10 Appointment of Co-Trustee or Separate Trustee.
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Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements o(Euro) any jurisdiction in
which any part of the Trust Fund or any Mortgaged Property may at the time be
located, the Seller and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 9.10, such powers,
duties, obligations, rights and trusts as the Seller and the Trustee may
consider necessary or desirable. If the Seller shall not have joined in such
appointment within fifteen (15) days after the receipt by it of a request so to
do, or in the case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 9.6 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 9.8.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon
and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act
separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Fund
or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Seller and the Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then-separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or cc-trustee shall refer to this Agreement and the conditions
of this Article IX. 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
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Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Seller.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 9.11 Waiver of Bond Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust Fund, or any part
thereof, may be located that the Trustee post a bond or other surety with any
court, agency or body whatsoever.
Section 9.12 Waiver of Inventory, Accounting and Appraisal
Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust Fund, or any part
thereof, may be located that the Trustee file any inventory, accounting or
appraisal of the Trust Fund with any court, agency or body at any time or in any
manner whatsoever.
Section 9.13 ▇▇▇▇▇▇ Act.
Any provisions required to be contained in this Agreement by Section
126 of Article 4-A of the New York Real Property Law are hereby incorporated,
and such provisions shall be in addition to those conferred or imposed by this
Agreement; provided, however, that to the extent that such Section 126 shall not
apply to this Agreement, such Section 126 shall not have any effect, and if such
Section 126 should at any time be repealed or cease to apply to this Agreement,
or be construed by judicial decision to be inapplicable, such Section 126 shall
cease to have any further effect upon the provisions of this Agreement. In case
of a conflict between the provisions of this Agreement and any mandatory
provision of Article 4-A of the New York Real Property Law, such mandatory
provisions of such Article 4-A shall prevail, provided, however, that if such
Article 4-A shall not apply to this Agreement, or be construed by judicial
decision to be inapplicable, such mandatory provisions of such Article 4-A shall
cease to have any further effect upon the provisions of this Agreement.
ARTICLE X
TERMINATION
Section 10.1 Termination.
(a) The respective obligations and responsibilities of the
Servicer, the Seller and the Trustee created hereby (other than the obligation
of the Trustee to make certain payments to Certificateholders after the final
Distribution Date and the obligation of the Servicer to send certain notices as
hereinafter set forth) shall terminate upon the last action required to be taken
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by the Trustee on the final Distribution Date pursuant to this Article X
following the later of (A) payment in full of all amounts owing to the
Certificate Insurer and (B) the earliest of (i) the retransfer, under the
conditions specified in Section 10.1(b), to the Seller of the Investor
Certificateholders' interest in each Mortgage Loan and all property acquired in
respect of any Mortgage Loan remaining in the Trust for an amount equal to the
sum of (A) the Investor Certificate Principal Balance, (B) accrued and unpaid
Investor Certificate Interest through the day preceding the final Distribution
Date, and (C) any unpaid Investor Certificate Interest Shortfall, (ii) the day
following the Distribution Date on which the distribution made to Investor
Certificateholders has reduced the Investor Certificate Principal Balance to
zero, (iii) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust (including without limitation the disposition of the
Mortgage Loans pursuant to Section 10.2) or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan,
(iv) the Distribution Date in _______________; provided, however,
notwithstanding anything herein to the contrary the Trust shall terminate on
_____________. Upon termination in accordance with clause (i) or (ii) of this
Section 10.1, the Trustee shall execute such documents and instruments of
transfer presented by the Seller and take such other actions as the Seller may
reasonably request to effect the retransfer of the Mortgage Loans to the Seller.
(b) The Seller shall have the right to exercise the option to
effect the retransfer to the Seller of each Mortgage Loan pursuant to Section
10.1(a) above on any Distribution Date on or after the Distribution Date
immediately prior to which the Investor Certificate Principal Balance is less
than ____% of the Original Investor Certificate Principal Balance and all
amounts due and owing to the Certificate Insurer for unpaid premiums and
unreimbursed draws on the Certificate Insurance Policy, together with interest
thereon as provided under the Insurance Agreement, have been paid.
(c) Notice of any termination, specifying the Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Investor Certificateholders may surrender their Investor Certificates to the
Trustee for payment of the final distribution and cancellation, shall be given
promptly by the Trustee (upon receipt of written directions from the Servicer
given not later than the tenth (10th) day of the month immediately preceding the
month of such final distribution) by letter to Investor Certificateholders and
the Certificate Insurer mailed not later than the twentieth (20th) day of the
month immediately preceding the month of such final distribution. Such notice
shall specify (i) the Distribution Date upon which final distribution of the
Investor Certificates will be made upon presentation and surrender of Investor
Certificates at the office or agency of the Trustee therein designated, (ii) the
amount of any such final distribution and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being made
only upon presentation and surrender of the Investor Certificates at the office
or agency of the Trustee therein specified. In the event written directions are
delivered by the Servicer to the Trustee as described in the second preceding
sentence, the Servicer shall deposit into the Certificate Account on or before
the Distribution Date for such final distribution in immediately available funds
an amount equal to the purchase price for the assets of the Trust Fund computed
as above provided. Such deposit shall be in lieu of the deposit otherwise
required to be made in respect of such Distribution Date.
(d) Upon presentation and surrender of the Investor Certificates,
the Trustee shall cause to be distributed to the holders of Investor
Certificates on the Distribution Date for
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such final distribution, in proportion to the Percentage Interests of their
respective Investor Certificates, an amount equal to (i) if such final
distribution is not being made pursuant to the retransfer to the Seller pursuant
to Section 10.1(a)(i), the amount required to be distributed to Investor
Certificateholders pursuant to Section 5.1 for such Distribution Date and (ii)
if such final distribution is being made pursuant to such retransfer, the amount
specified in Section 10.1(a)(i). The distribution on such final Distribution
Date pursuant to a retransfer pursuant to Section 10.1(a)(1) shall be in lieu of
the distribution otherwise required to be made on such Distribution Date in
respect of the Certificates. On the final Distribution Date prior to having made
the distributions called for above, the Trustee will withdraw from the
Certificate Account and remit to the Certificate Insurer the lesser of (x) the
amount available for distribution on such final Distribution Date, net of any
portion thereof necessary to pay the amounts described in clauses (d)(i) and
(ii) above and (y) the unpaid amounts due and owing to the Certificate Insurer
for unpaid premiums and unreimbursed draws on the Certificate Insurance Policy,
together with interest thereon as provided under the Insurance Agreement.
(e) In the event that all of the Investor Certificateholders shall
not surrender their Investor Certificates for final payment and cancellation on
or before such final Distribution Date, the Trustee shall on such date cause all
funds in the Certificate Account not distributed in final distribution to the
Certificate Insurer or Investor Certificateholders to be withdrawn therefrom and
credited to the remaining Investor Certificateholders by depositing such funds
in a separate escrow account for the benefit of such Investor Certificateholders
and the Seller (if the Seller has exercised its right to retransfer the Mortgage
Loans) or the Trustee (in any other case) shall give a second written notice to
the remaining Investor Certificateholders to surrender their Investor
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Investor
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Investor Certificateholders concerning surrender of their
Investor Certificates, and the cost thereof shall be paid out of the funds on
deposit in such escrow account.
ARTICLE XI
RAPID AMORTIZATION EVENTS
Section 11.1 Rapid Amortization Events.
If any one of the following events shall occur during the managed
Amortization Period:
(a) failure on the part of the Seller (i) to make payment or
deposit required by the terms of this Agreement, on or before the date occurring
five Business Days after the date such payment or deposit is required to be made
herein, or (ii) to record assignments when required, or (iii) duly to observe or
perform in any material respect the covenants of the Seller set forth in Section
2.4(a) or (iv) duly to observe or perform in material respect any other
covenants or agreements of the Seller set forth in this Agreement, which
failure, in each case, materially and adversely affects the interests of the
Certificateholders or the Certificate Insurer and which, in the case of clause
(vi), continues unremedied and continues to affect materially and adversely
70
the interests of the Certificateholders for a period of 60 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Seller by the Trustee, or to the Seller and the
Trustee by the Certificate Insurer or the Holders of Investor Certificates
evidencing Percentage Interests aggregating not less than 51%;
(b) any representation or warranty made by the Seller in this
Agreement shall prove to have been incorrect in any material respect when made
and as a result of which the interests of the Investor Certificateholders or the
Certificate Insurer are materially and adversely affected and which continues to
be incorrect in any material respect and continues to affect materially and
adversely the interests of the Certificateholders or the Certificate Insurer for
a period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Seller by the
Trustee, or to the Seller and the Trustee by either the Certificate Insurer or
the Holders of Investor Certificates evidencing Percentage Interests aggregating
not less than 51%; provided, however, that an Rapid Amortization Event pursuant
to this subparagraph (b) shall not be deemed to have occurred hereunder if the
Seller have accepted retransfer of the related Mortgage Loans or all Mortgage
Loans if applicable during such period (or such longer period (not to exceed an
additional 60 days) as the Trustee may specify) in accordance with the
provisions hereof;
(c) the Seller shall voluntarily go into liquidation, consent to
the appointment of a conservator or receiver or liquidator or similar person in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Seller or of or relating to all or
substantially all of its property, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against such Seller and such decree or order shall have remained in
force undischarged or unstayed for a period of 30 days; or the Seller 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 (any such event, an "Insolvency Event");
(d) the Trust shall become subject to registration as an
"investment company" under the Investment Company Act of 1940, as amended;
(e) any Event of Default or Trigger Event shall occur (other than
the event described in clause (iv) of the definition thereof);
(f) the aggregate of Certificate Insurance Draw Amounts exceeds
____% of the Pool Balance as of the Cut-Off Date; or
(g) if at any time, Liquidation Lose Amounts incurred by the Trust
exceed $____________.
then, in the case of any event described in subparagraph (a), (b) or (e) after
the applicable grace period, if any, set forth in such subparagraphs, either the
Certificate Insurer, the Trustee or the Holders of Investor Certificates
evidencing Percentage Interests aggregating more than 51%, by
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notice given in writing to the Servicer (and to the Trustee, if given by either
the Certificate Insurer or the Investor Certificateholders) may declare that an
early amortization event (an "Rapid Amortization Event") has occurred as of the
date of such notice, and in the case of any event described in subparagraphs
(c), (d), (f) or (g), a Rapid Amortization Event shall occur without any notice
or other action on the part of the Trustee, the Certificate Insurer or the
Investor Certificateholders, immediately upon the occurrence of such event.
Section 11.2 Additional Rights Upon the Occurrence of Certain Events.
(a) If an Insolvency Event occurs with respect to the Seller, the
arrangement among the Certificateholders and the Seller shall dissolve and the
Trust shall be liquidated in accordance with the following procedures. The
Seller shall on the day of such Insolvency Event or violation (the "Appointment
Day") immediately cease to transfer Additional Balances to the Trust and shall
promptly give notice to the Trustee thereof. Notwithstanding any cessation of
the transfer to the Trust of Additional Balances, Additional Balances
transferred to the Trust prior to the occurrence of such insolvency Event and
Daily Principal Collections and Daily Interest Collections, whenever created,
accrued in respect of such the Mortgage Loans shall continue to be a part of the
Trust, and shall continue to be allocated and paid in accordance with Article V.
Within 15 days of the Appointment Day, the Trustee shall publish a notice in an
Authorized Newspaper that an Insolvency Event has occurred and that the Trustee
intends to sell, dispose of or otherwise liquidate the Trust Balances of the
Mortgage Loans as described below. The Trustee shall obtain a position listing
from the Depository as of the record date established by the Trustee and make a
reasonable attempt to solicit Certificateholders with respect to such proposed
sale. Unless within 75 days from the day the notice above is given, the Trustee
shall have received written instructions from Holders of Investor Certificates
evidencing more than 501 of the Investor Interest to the effect that such
Certificateholders disapprove of the liquidation of the Trust Balances of the
Mortgage Loans, the Trustee shall sell, dispose of or otherwise liquidate the
Trust Balances of the Mortgage Loans in a commercially reasonable manner and on
commercially reasonable terms, which shall include the solicitation of
competitive bids. The Trustee may obtain a prior determination from any such
conservator, receiver or liquidator that the terms and manner of any proposed
sale, disposition or liquidation are commercially reasonable. The provisions of
Sections 9.1 and 9.2 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Trust Balances of the Mortgage Loans pursuant to subsection (a) above (net of
the Trustee's fees and expenses, including the fees and expenses of its counsel)
shall first be paid to the Certificate Insurer to the extent of unreimbursed
draws under the Certificate Insurance Policy and other amounts owing to the
Certificate Insurer pursuant to the Insurance Agreement. Any remaining amounts
shall be treated as Collections on the Trust Balances of the Mortgage Loans and
shall be allocated and deposited in accordance with the provisions of Article V;
provided, however, that the Trustee shall determine conclusively in its sole
discretion the amount of such proceeds which are allocable to Trust Interest and
the amount of such proceeds which are allocable to Principal Collections. On the
day following the last Distribution Date in the Monthly Period during which such
proceeds are distributed to the Investor Certificateholders of each Series, the
Trust shall terminate.
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(c) The Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this Article XI with respect to competitive bids.
The Trustee may recover its reasonable actual third party expenses from the
Trust Fund (in an amount not to exceed $___________) if Certificateholders vote
not to sell the Trust Balances of the Mortgage Loans.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Amendment.
This Agreement may be amended from time to time by the Servicer, the
Seller and the Trustee, without the consent of any of the Certificateholders,
(i) to cure any ambiguity, (ii) to correct any defective provisions or to
correct or supplement any provisions herein which may be inconsistent with any
other provisions herein, (iii) to add or amend any provisions herein as required
by the Rating Agencies in order to maintain or improve the rating of the
Investor Certificates (it being understood that, after obtaining the ratings in
effect on the Closing Date, neither the Seller nor the Servicer i.e., obligated
to obtain, maintain or improve any such rating) or (iv) to add any other
provisions herein with respect to matters or questions arising hereunder;
provided, however, that, as evidenced by an Opinion of Counsel, in each case
such action shall not adversely affect in any material respect the interests of
any Certificateholder or the Certificate Insurer (and provided that any such
amendment will be deemed not to materially and adversely affect the Investor
Certificateholders if the person requesting such amendment obtains a letter from
each Rating Agency stating that such amendment would not result in a downgrading
or withdrawal of the rating of the Investor Certificates without taking into
account the Certificate Insurance Policy.
This Agreement may also be amended from time to time by the Servicer,
the Seller and the Trustee, with the consent of the Certificate Insurer and the
Holders of Investor Certificates evidencing Percentage Interests aggregating not
less than 51%, and the Servicer, the Trustee; and the Certificate Insurer may
from time to time consent to the amendment of the Certificate Insurance Policy
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or the Certificate Insurance
Policy, as the case may be, or of modifying in any manner the rights of the
Investor Certificateholders; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, collections of
payments on Mortgage Loans or distributions or payments under the Certificate
Insurance Policy which are required to be made on any Investor Certificate,
without the consent of the Holder of such Investor Certificate, (ii) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the Holder of each Investor Certificate then outstanding, or (iii)
adversely affect in any material respect the interests of the Certificate
Insurer without the consent of the Certificate Insurer.
Notwithstanding the foregoing, the Agreement may not be amended
unless, in connection with such amendment, an opinion of counsel is furnished to
the Trustee that such amendment will not (i) adversely affect the status of the
Investor Certificates as debt; (ii) result
73
in the Trust being taxed at the entity level; or (iii) result in the Trust being
taxed as a taxable mortgage pool (as defined in Section 7701(i) of the Code).
Prior to the execution of any such amendment made with the consent of
the Investor Certificateholders, the Trustee shall furnish written notification
of the substance of such amendment to each Rating Agency. Promptly after the
execution of any such amendment made with the consent of the Investor
Certificateholders, the Trustee shall furnish written notification of the
substance of such amendment to each Investor Certificateholder and fully
executed original counterparts of the instruments effecting any such amendment
to the Certificate Insurer.
It shall not be necessary for the consent of Investor
Certificateholders under this Section 12.1 to approve the particular form of any
proposed amendment or consent, 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 Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
In connection with any amendment pursuant to this Section 12.1, the
Trustee shall be entitled to receive and rely on an opinion of Counsel to the
effect that such amendment is authorized or permitted by this Agreement.
Section 12.2 Recordation of Agreement.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Servicer and at its expense on direction
by the Trustee, but only upon direction of the Trustee accompanied by an opinion
of Counsel to the effect that such recordation materially and beneficially
affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 12.3 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust, nor entitle such Certificate holder's
legal representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any such party.
No Investor Certificateholder shall have any right to vote (except as
provided in Section 12.1) or in any manner otherwise control the operation and
management of the Trust, or
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the obligations of the parties hereto, nor shall any Investor Certificateholder
be under any liability to any third person by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Investor Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Investor Certificates' evidencing not
less than 25% of the aggregate Percentage Interests of the Investor Certificates
shall have made written request upon the Trustee to institute ouch action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for sixty
(60) days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 12.3, each and every Certificate holder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 12.4 Reserved.
Section 12.5 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITS THE LAPS OF THE
STATE OF [NEW YORK] AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS; PROVIDED, HOWEVER,
THAT THE IMMUNITIES AND STANDARD OF CARE OF THE TRUSTEE IN THE ADMINISTRATION OF
ITS TRUST HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH
ITS PRINCIPAL PLACE OF BUSINESS IS LOCATED.
Section 12.6 Notices.
All demands, notices and communications hereunder shall be in writing
and personally delivered, mailed by certified mail, return receipt requested, or
telecopied, and shall be deemed to have been duly given upon receipt, (a) in the
case of the Seller or the Servicer, c/o Chevy Chase Bank, F.S.B., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: _____________, telecopy
____________, (b) in the case of the Trustee, to [Name and Address of the
Trustee], Attention: _______________________________, telecopy ___-____-___, (c)
in the case of the Certificate Insurer, to [Name and Address of the Certificate
Insurer], Attention: _________________, [(d) in the case of Moody's, ABS
Monitoring Department, 4th Floor, 99
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ telecopy: (212) 553-4773 and (e) in the
case of Standard & Poor's, Mortgage Backed Securities ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ telecopy: (▇▇▇) ▇▇▇-▇▇▇▇] or, as to each
party, at such other address or telecopy number as shall be designated by such
party in a written notice to each other party. Any notice required or permitted
to be mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice. The Trustee has agreed herein to provide
notices to the Rating Agencies as a matter of courtesy and accommodation and
shall incur no liability to any Person for any failure to provide any such
notices.
Section 12.7 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 12.8 Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 6.5, 7.2 and 7.5, this Agreement may not be assigned by the
Seller or the Servicer without the prior written consent of the Certificate
Insurer.
If the Servicer or Seller converts from one form of depository
institution charter to another form of depository institution charter, the
resulting entity shall be the Servicer or Seller, respectively, for all purposes
under this Agreement. Consistent with the preceding sentence, if the Servicer or
Seller converts from one form of depository institution charter to another form
of depository institution charter, such action shall not be considered: (i) an
"assignment" or "transfer" or otherwise be considered a "conveyance" or the
Seller Certificates (or any interest therein) for purposes of Section 6.5; (ii)
a "merger," "conversion," "assumption of obligations" or "consolidation" of the
Servicer or Seller for purposes of Section 7.2; (iii) a "resignation" of the
Servicer for purposes of Section 7.5; or (iv) an "assignment" by the Servicer or
Seller for purposes of Section 12.8.
Section 12.9 Certificates Nonassessable and Fully Paid.
The parties agree that the Certificateholders shall not be personally
liable for obligations of the Trust, that the beneficial ownership interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever, and that Certificates upon
execution, authentication and delivery thereof by the Trustee pursuant to
Section 6.1 are and shall be deemed fully paid.
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Section 12.10 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 12.11 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 12.12 Third Party Beneficiary.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, and, in addition, shall inure to the benefit of
Certificateholders and, to the extent provided herein, the Certificate Insurer
and their respective successors and permitted assigns. Except as otherwise
provided in this Agreement, no other Person shall have any right or obligation
hereunder.
Section 12.13 ▇▇▇▇▇▇ and Integration.
Except as specifically stated otherwise herein, this Agreement sets
forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, and all contemporaneous
oral understandings, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
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IN WITNESS WHEREOF, the Servicer, the Seller and the Trustee have
caused this Agreement to be duly executed by their respective officers and their
respective seals, duly attested, to be hereunto affixed, all as of the day and
year first above written.
CHEVY CHASE BANK, F.S.B.,
as Servicer
By: _____________________________________
Name:
Title:
[Name of Seller],
as Seller
By: _____________________________________
Name:
Title:
[Name of the Trustee],
as Trustee
By: _____________________________________
Name:
Title:
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