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CWABS, INC.,
as Depositor,
[COUNTRYWIDE HOME LOANS, INC.]
as Seller and Master Servicer,
and
[___________________________________]
as Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of _________________, 199__
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Revolving Home Equity Loan Asset Backed Certificates
Series 199__-__
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TABLE OF CONTENTS
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ARTICLE I
Definitions
Section 1.01. Definitions......................................................... 1
Section 1.02. Interest Calculations............................................... 20
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates;
Tax Treatment
Section 2.01. Conveyance of Mortgage Loans; Retention
of Obligation to Fund Advances Under
Credit Line Agreements....................................... 21
Section 2.02. Acceptance by Trustee; Retransfer of
Mortgage Loans............................................... 25
Section 2.03. Representations and Warranties Regarding
the Master Servicer.......................................... 27
Section 2.04. Representations and Warranties of the
Seller Regarding the Mortgage Loans;
Retransfer of Certain Mortgage Loans......................... 29
Section 2.05. Covenants of the Depositor.......................................... 35
Section 2.06. Retransfers of Mortgage Loans at
Election of Transferor....................................... 36
Section 2.07. Execution and Authentication of
Certificates................................................. 38
Section 2.08. Tax Treatment....................................................... 38
Section 2.09. Representations and Warranties of the
Depositor.................................................... 38
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Master Servicer................................................. 40
Section 3.02. Collection of Certain Mortgage Loan
Payments..................................................... 42
Section 3.03. Withdrawals from the Collection Account............................ 44
Section 3.04. Maintenance of Hazard Insurance;
Property Protection Expenses................................. 44
Section 3.05. Assumption and Modification Agreements............................. 45
Section 3.06. Realization Upon Defaulted Mortgage
Loans; Repurchase of Certain Mortgage Loans.................. 46
Section 3.07. Trustee to Cooperate............................................... 47
Section 3.08. Servicing Compensation; Payment of
Certain Expenses by Master Servicer.......................... 48
Section 3.09. Annual Statement as to Compliance................................... 48
Section 3.10. Annual Servicing Report............................................. 49
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Section 3.11. Annual Opinion of Counsel........................................... 49
Section 3.12. Access to Certain Documentation and
Information Regarding the Mortgage Loans..................... 49
Section 3.13. Maintenance of Certain Servicing
Insurance Policies........................................... 50
Section 3.14. Reports to the Securities and Exchange
Commission................................................... 50
Section 3.15. Tax Returns........................................................ 50
Section 3.16. Information Required by the Internal
Revenue Service Generally and Reports of
Foreclosures and Abandonments of
Mortgaged Property........................................... 51
ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate............................................... 52
Section 4.02. Claims upon the Policy; Policy Payments
Account...................................................... 55
Section 4.03. Spread Account..................................................... 56
Section 4.04. Effect of Payments by the Credit
Enhancer; Subrogation........................................ 57
Section 4.05. Optional Advances of the Master
Servicer..................................................... 58
ARTICLE V
Payments and Statements to
Certificateholders; Rights of Certificateholders
Section 5.01. Distributions....................................................... 59
Section 5.02. Calculation of the Investor Certificate
Rate......................................................... 61
Section 5.03. Statements to Certificateholders.................................... 62
Section 5.04. Rights of Certificateholders........................................ 63
ARTICLE VI
The Certificates
Section 6.01. The Certificates................................................... 64
Section 6.02. Registration of Transfer and Exchange of
Investor Certificates; Appointment of
Registrar.................................................... 64
Section 6.03. Mutilated, Destroyed, Lost or Stolen
Certificates................................................. 67
Section 6.04. Persons Deemed Owners.............................................. 67
Section 6.05. Restrictions on Transfer of Transferor
Certificates................................................. 67
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Section 6.06. Appointment of Paying Agent......................................... 69
Section 6.07. Acceptance of Obligations........................................... 70
ARTICLE VII
The Master Servicer, the Seller and the Depositor
Section 7.01. Liability of the Seller, the Master
Servicer and the Depositor................................... 71
Section 7.02. Merger or Consolidation of, or
Assumption of the Obligations of, the
Master Servicer or the Depositor............................. 71
Section 7.03. Limitation on Liability of the Master
Servicer and Others.......................................... 71
Section 7.05. Delegation of Duties................................................ 73
Section 7.06. Indemnification of the Trust by the
Master Servicer.............................................. 73
Section 7.07. Indemnification of the Trust by the
Transferor................................................... 73
Section 7.08. Limitation on Liability of the
Transferor................................................... 74
ARTICLE VIII
Servicing Termination
Section 8.01. Events of Servicing Termination.................................... 75
Section 8.02. Trustee to Act; Appointment of
Successor.................................................... 77
Section 8.03. Notification to Certificateholders................................. 78
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee.................................................. 79
Section 9.02. Certain Matters Affecting the Trustee.............................. 80
Section 9.03. Trustee Not Liable for Certificates or
Mortgage Loans............................................... 82
Section 9.04. Trustee May Own Certificates....................................... 83
Section 9.05. Master Servicer to Pay Trustee's Fees
and Expenses................................................. 83
Section 9.06. Eligibility Requirements for Trustee............................... 83
Section 9.07. Resignation or Removal of Trustee.................................. 84
Section 9.08. Successor Trustee.................................................. 85
Section 9.09. Merger or Consolidation of Trustee................................. 85
Section 9.10. Appointment of Co-Trustee or Separate
Trustee...................................................... 86
Section 9.11. Limitation of Liability............................................. 87
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Section 9.12. Trustee May Enforce Claims Without
Possession of Certificates................................... 87
Section 9.13. Suits for Enforcement............................................... 88
ARTICLE X
Termination
Section 10.01. Termination......................................................... 89
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events........................................... 92
Section 11.02. Additional Rights Upon the Occurrence
of Certain Events........................................... 93
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment........................................................... 96
Section 12.02. Recordation of Agreement............................................ 98
Section 12.03. Limitation on Rights of Certificate-
holders..................................................... 98
Section 12.04. Governing Law....................................................... 99
Section 12.05. Notices............................................................. 99
Section 12.06. Severability of Provisions..........................................100
Section 12.07. Assignment..........................................................100
Section 12.08. Certificates Nonassessable and Fully
Paid........................................................100
Section 12.09. Third-Party Beneficiaries...........................................100
Section 12.10. Counterparts........................................................100
Section 12.11. Effect of Headings and Table of
Contents....................................................101
Section 12.12. Insurance Agreement................................................ 101
EXHIBIT A - FORM OF INVESTOR CERTIFICATE...................................................A-1
EXHIBIT B - FORM OF TRANSFEROR CERTIFICATE.................................................B-1
EXHIBIT C - MORTGAGE LOAN SCHEDULE.........................................................C-1
EXHIBIT D - ANNUAL OPINION OF COUNSEL......................................................D-1
EXHIBIT E - FORM OF CREDIT LINE AGREEMENT..................................................E-1
EXHIBIT F - FORM OF LETTER OF REPRESENTATIONS..............................................F-1
EXHIBIT G - FORM OF INVESTMENT LETTER......................................................G-1
EXHIBIT H - FORM OF REQUEST FOR RELEASE....................................................H-1
1
This Pooling and Servicing Agreement, dated as of ____________, 199__, among
CWABS, Inc., as Depositor (the "Depositor"), [Countrywide Home Loans, Inc.], as
Seller and Master Servicer (in such capacities, the "Seller" and the "Master
Servicer", respectively), and [______________________], as Trustee (the
"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 1.01. 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.
Additional Balance: As to any Mortgage Loan and day, the aggregate
amount of all Draws conveyed to the Trust pursuant to Section 2.01.
[Adjustment Date: With respect to any Interest Period, the second LIBOR
Business Day preceding the first day of such Interest Period.]
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Alternative Principal Payment: As to any Distribution Date, the greater
of (x) _____% of the Investor Certificate Principal
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Balance immediately prior to the Distribution Date or (y) the amount (but not
less than zero) equal to Principal Collections for such Distribution Date less
the aggregate of Draws under the Credit Line Agreements during the related
Collection Period.
Appraised Value: As to any Mortgaged Property, the value established by
any of the following: (i) with respect to Credit Line Agreements with Credit
Limits greater than $________, by a full appraisal, (ii) with respect to Credit
Line Agreements with Credit Limits equal to or less than $_________, by a drive
by inspection of such Mortgaged Property made to establish compliance with the
underwriting criteria then in effect in connection with the application for the
Mortgage Loan secured by such Mortgaged Property.
Asset Balance: As to any Mortgage Loan, other than a Liquidated Mortgage
Loan, and day, the related Cut-off Date Asset Balance, plus (i) any Additional
Balance in respect of such Mortgage Loan, minus (ii) all collections credited as
principal against the Asset Balance of any such Mortgage Loan in accordance with
the related Credit Line Agreement. For purposes of this definition, a Liquidated
Mortgage Loan shall be deemed to have an Asset Balance equal to the Asset
Balance of the related Mortgage Loan immediately prior to the final recovery of
related Liquidation Proceeds and an Asset Balance of zero thereafter.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction.
Authorized Newspaper: A newspaper of general circulation in the Borough
of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
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.
Billing Cycle: With respect to any Mortgage Loan and Collection Period,
the billing period specified in the related Credit Line Agreement and with
respect to which amounts billed are received during such Collection Period.
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Book-Entry Certificate: Any Investor Certificate registered in the name
of the Depository or its nominee, ownership of which is reflected on the books
of the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of New York, California or
___________ are required or authorized by law to be closed.
Certificate: An Investor Certificate or a Transferor Certificate.
Certificate Owner: 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 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (x)
any Investor Certificate registered in the name of the Transferor, or any Person
known to a Responsible Officer to be an Affiliate of either the Depositor or the
Transferor and (y) any Investor Certificate for which the Transferor, or any
Person known to a Responsible Officer to be an Affiliate of either such entity
is the Certificate Owner shall be deemed not to be outstanding (unless to the
knowledge of a Responsible Officer (i) the Transferor, or such Affiliate is
acting as trustee or nominee for a Person who is not an Affiliate of the
Transferor and who makes the voting decision with respect to such Investor
Certificate or (ii) the Transferor, or such Affiliate is the Certificate Owner
of all the Investor Certificates) 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, direction, waiver or
request has been obtained.
Closing Date: _______________, 199___.
Code: The Internal Revenue Code of 1986, as the same may be
amended from time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Investor Certificateholders and the Credit
Enhancer pursuant to Section 3.02(b). The Collection Account shall be an
Eligible Account.
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Collection Period: With respect to any Distribution Date (other than the
first Collection Period) and any Mortgage Loan, the calendar month preceding
such Distribution Date. With respect to the first Distribution Date, the period
from _______________, 199___ through _______________, 199___.
Combined Loan-to-Value Ratio: With respect to any Mortgage Loan as of
any date, the percentage equivalent of the fraction, the numerator of which is
the sum of (i) the Credit Limit and (ii) the outstanding principal balance as of
the date of execution of the related original Credit Line Agreement (or any
subsequent date as of which such outstanding principal balance may be determined
in connection with an increase in the Credit Limit for such Mortgage Loan) of
any mortgage loan or mortgage loans that are senior or equal in priority to the
Mortgage Loan and which is secured by the same Mortgaged Property and the
denominator of which is the Valuation of the related Mortgaged Property.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate business shall be administered, which office
on the Closing Date is located at __________________________________, Attention:
_________________.
Credit Enhancement Draw Amount: As to any 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 5.01(a)(iii) exceeds the amount
of Investor Interest Collections on deposit in the Collection Account on the
Business Day preceding such Distribution Date that is available to be applied
therefor and the sum of the amount if any deposited in the Collection Account in
respect of such Distribution Date pursuant to Section 4.05 and any amount
transferred from the Spread Account to the Collection Account pursuant to
Section 4.03, (y) the Guaranteed Principal Distribution Amount and (z) any
Preference Claim for such Distribution Date.
Credit Enhancer: _______________________________, a
________________________ company, any successor thereto or any replacement
credit enhancer substituted pursuant to Section 4.03.
Credit Enhancer Default: The failure by the Credit Enhancer to make a
payment required under the Policy in accordance with the terms thereof.
Credit Limit: As to any Mortgage Loan, the maximum Asset Balance
permitted under the terms of the related Credit Line Agreement.
Credit Limit Utilization Rate: As to any Mortgage Loan, the percentage
equivalent of a fraction the numerator of which is the Cut-off Date Asset
Balance for such Mortgage Loan and the denominator of which is the related
Credit Limit.
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Credit Line Agreement: With respect to any Mortgage Loan, the related
credit line account agreement executed by the related Mortgagor and any
amendment or modification thereof.
Custodial Agreement: Any Custodial Agreement between any Custodian and
the Trustee, which is reasonably acceptable in form and substance to the Credit
Enhancer, relating to the custody of the Mortgage Loans and the Related
Documents.
Custodian: Any custodian appointed by the Trustee under a Custodial
Agreement to maintain all or a portion of the Mortgage Files pursuant to Section
2.01(b).
Cut-off Date: ______________, 199___.
Cut-off Date Asset Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-off Date.
Cut-off Date Pool Balance: The Pool Balance calculated as of the Cut-off
Date.
Defective Mortgage Loan: A Mortgage Loan subject to retransfer pursuant
to Section 2.02, 2.04 or 2.09.
Definitive Certificates: As defined in Section 6.02(c).
Delivery Event: As defined in Section 2.01.
Depositor: CWABS, Inc., or its successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of
Investor Certificates evidencing $______________ in initial aggregate principal
amount of the Investor Certificates. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(3) of the UCC of the State of
New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the third
Business Day prior to such Distribution Date.
Distribution Date: The ________th day of each month, or if such day is
not a Business Day, then the next Business Day, beginning in the month
immediately following the month of the initial issuance of the Certificates.
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Draw: With respect to any Mortgage Loan, an additional borrowing by the
Mortgagor subsequent to the Cut-off Date in accordance with the related Mortgage
Note.
Due Date: As to any Mortgage Loan, the fifteenth day of the month.
Electronic Ledger: The electronic master record of home equity credit
line mortgage loans maintained by the Master Servicer or by the Seller, as
appropriate.
Eligible Account: (i) An account that is maintained with a depository
institution whose debt obligations [throughout] the time of any deposit therein
are rated in the highest short-term debt rating category by the Rating Agencies,
(ii) one or more accounts with a depository institution having a minimum
long-term unsecured debt rating of "_______" by ________________ and "_____" by
__________________, which accounts are fully insured by either SAIF or BIF,
(iii) a segregated trust account maintained with the Trustee or an Affiliate of
the Trustee in its fiduciary capacity, or (iv) an account otherwise acceptable
to each Rating Agency and the Credit Enhancer, as evidenced at closing by
delivery of a rating letter by each Rating Agency and thereafter by delivery of
a letter from each Rating Agency and the Credit Enhancer to the Trustee, within
30 days of receipt of notice of such deposit, to reduce or withdraw its
then-current rating of the Certificates without regard to the Policy.
Eligible Investments: (i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full faith and credit of
the United States; (ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency rating the related Series of
Securities, or such lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by each such Rating
Agency; (iii) commercial or finance company paper (including, without
limitation, commercial paper issued by Countrywide Home Loans, Inc. or any of
its Affiliates) which is then receiving the highest commercial or finance
company paper rating of each such Rating Agency, or such lower rating as will
not result in the downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency; (iv) certificates of deposit, demand or
time deposits, or bankers' acceptances issued by any depository institution or
trust company incorporated under the laws of the United States or of any state
thereof and subject to supervision and examination by federal and/or state
banking authorities, provided that the commercial paper and/or long term
unsecured debt obligations of such depository institution or trust company (or
in the case of the principal depository institution in a holding company system,
the commercial paper or long-term unsecured debt obligations of such holding
company, but only if
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▇▇▇▇▇'▇ Investors Service, Inc. ("▇▇▇▇▇'▇") is not a Rating Agency) are then
rated one of the two highest long-term and the highest short-term ratings of
each such Rating Agency for such securities, or such lower ratings as will not
result in the downgrading or withdrawal of the rating then assigned to the
Certificates by any such Rating Agency; (iv) demand or time deposits or
certificates of deposit issued by any bank or trust company or savings
institution to the extent that such deposits are fully insured by the FDIC; (v)
guaranteed reinvestment agreements issued by any bank, insurance company or
other corporation containing, at the time of the issuance of such agreements,
such terms and conditions as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any such Rating Agency; (vi)
repurchase obligations with respect to any security described in clauses (i) and
(ii) above, in either case entered into with a depository institution or trust
company (acting as principal) described in clause (iv) above; (vii) securities
(other than stripped bonds, stripped coupons or instruments sold at a purchase
price in excess of 115% of the face amount thereof) bearing interest or sold at
a discount issued by any corporation incorporated under the laws of the United
States or any state thereof which, at the time of such investment, have one of
the two highest ratings of each Rating Agency (except if the Rating Agency is
Moody's, such rating shall be the highest commercial paper rating of Moody's for
any such securities), or such lower rating as will not result in the downgrading
or withdrawal of the rating then assigned to the Certificates by any such Rating
Agency, as evidenced by a signed writing delivered by each such Rating Agency;
and (viii) such other investments having a specified stated maturity and bearing
interest or sold at a discount acceptable to each Rating Agency as will not
result in the downgrading or withdrawal of the rating then assigned to the
Securities of such Series by any such Rating Agency, as evidenced by a signed
writing delivered by each such Rating Agency; provided that no such instrument
shall be a Permitted Investment if such instrument evidences the right to
receive interest only payments with respect to the obligations underlying such
instrument.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Defective Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Asset Balance), not ____ percent more or ____ percent less than the
Transfer Deficiency, if any, relating to such Defective Mortgage Loan; (ii) have
a Loan Rate not less than the Loan Rate of the Defective Mortgage Loan and not
more than ___% in excess of the Loan Rate of such Defective Mortgage Loan; (iii)
have a Loan Rate based on the same Index with adjustments to such Loan Rate made
on the same Interest Rate Adjustment Date as that of the Defective Mortgage
Loan; (iv) have a Gross Margin that is not less than the Gross Margin of the
Defective Mortgage Loan and not more
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than _____ basis points higher than the Gross Margin for the Defective Mortgage
Loan; (v) have a Mortgage of the same or higher level of priority as the
Mortgage relating to the Defective Mortgage Loan at the time such Mortgage was
transferred to the Trust; (vi) have a remaining term to maturity not more than
____ months earlier and not more than _____ months later than the remaining term
to maturity of the Defective Mortgage Loan; (vii) comply with each
representation and warranty set forth in Section 2.04 (deemed to be made as of
the date of substitution); and (viii) have an original Combined Loan-to-Value
Ratio not greater than that of the Defective Mortgage Loan. More than one
Eligible Substitute Mortgage Loan may be substituted for a Defective Mortgage
Loan if such Eligible Substitute Mortgage Loans meet the foregoing attributes in
the aggregate and such substitution is approved in writing in advance by the
Credit Enhancer.
Endorsement: As defined in the Policy.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
Event of Servicing Termination: As defined in Section 8.01.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
Fiscal Agent: As defined in the Policy.
Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Asset Balance (plus accrued and unpaid interest thereon
at the applicable Loan Rate from the date interest was last paid through the
date of receipt of the final Liquidation Proceeds) of such Liquidated Mortgage
Loan immediately prior to the final recovery of its Liquidation Proceeds.
Gross Margin: As to any Mortgage Loan, the percentage set forth as the
"Gross Margin" for such Mortgage Loan on Exhibit C hereto.
Guaranteed Distribution: With respect to any Distribution Date, the sum
of the (i) the Guaranteed Principal Distribution Amount and (ii) the amount to
be distributed to Certificateholders pursuant to Section 5.01(a)(iii) for such
Distribution Date.
Guaranteed Principal Distribution Amount: With respect to any
Distribution Date, (i) on any such Distribution Date, other than the
Distribution Date in ___________ 20___, the amount, if any, required to reduce
the Investor Certificate Principal Balance (after giving effect to the
distributions of Interest Collections and Principal Collections that are
allocable to
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principal on the Investor Certificates on such Distribution Date) to the
Invested Amount immediately following such Distribution Date or (ii) on the
Distribution Date in _____________ 20___, the amount by which the outstanding
Investor Certificate Principal Balance (after giving effect to Interest
Collections allocable and distributable to principal on the Investor
Certificates on such Distribution Date) exceeds the sum of the amounts on
deposit in the Collection Account available to be distributed to the Investor
Certificateholders pursuant to Section 5.01(b) hereof.
Increased Senior Lien Limitation: As defined in Section 3.01(a).
Index: With respect to each Interest Rate Adjustment Date for a Mortgage
Loan, the highest Prime Rate as published in the "Money Rates" table of The Wall
Street Journal as of the first business day of the calendar month.
Insolvency Event: As defined in Section 11.02.
Insurance Agreement: The insurance and indemnity agreement dated as of
____________, 19___ among the Depositor, the Seller, the Master Servicer, the
Trustee and the Credit Enhancer, including any amendments and supplements
thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the Credit
Enhancer) pursuant to any insurance policy covering a Mortgage Loan, or amounts
required to be paid by the Master Servicer pursuant to the last sentence of
Section 3.04, net of any component thereof (i) covering any expenses incurred by
or on behalf of the Master Servicer in connection with obtaining such proceeds,
(ii) that is applied to the restoration or repair of the related Mortgaged
Property, (iii) released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures or (iv) required to be paid to any holder
of a mortgage senior to such Mortgage Loan.
Interest Collections: As to any Distribution Date, the sum of all
payments by or on behalf of Mortgagors and any other amounts constituting
interest (including without limitation such portion of Insurance Proceeds and
Net Liquidation Proceeds as is allocable to interest on the applicable Mortgage
Loan) collected by the Master Servicer under the Mortgage Loans (excluding any
fees (including annual fees) or late charges or similar administrative fees paid
by Mortgagors) during the related Collection Period minus the Servicing Fee
payable to the Master Servicer with respect to the related Collection Period.
The terms of the related Credit Line Agreement shall determine the portion of
each payment in respect of such Mortgage Loan that constitutes principal or
interest.
Interest Period: With respect to any Distribution Date other than the
first Distribution Date, the period beginning on
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the preceding Distribution Date and ending on the day preceding such
Distribution Date, and in the case of the first Distribution Date, the period
beginning on the Closing Date and ending on the day preceding the first
Distribution Date.
Interest Rate Adjustment Date: With respect to each Mortgage Loan, any
date on which the Loan Rate is adjusted in accordance with the related Credit
Line Agreement.
Invested Amount: With respect to any Distribution Date, an amount equal
to the Original Invested Amount minus (i) the amount of Principal Collections
previously distributed to Investor Certificateholders and minus (ii) the
Investor Loss Amounts for prior Distribution Dates.
Investor Certificate: Any certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A hereto.
Investor Certificate Distribution Amount: As to any Distribution Date,
the sum of all amounts to be distributed to the Holders of Investor Certificates
pursuant to Article V and Article XI hereof.
Investor Certificate Interest: With respect to any Distribution Date,
interest for the related Interest Period at the applicable Investor Certificate
Rate on the Investor Certificate Principal Balance as of the first day of such
Interest Period (after giving effect to the distributions made on the first day
of such Interest Period).
Investor Certificate Principal Balance: With respect to any Distribution
Date, (a) the Original Investor Certificate Principal Balance less (b) the
aggregate of amounts actually distributed as principal on the Investor
Certificates.
Investor Certificate Rate: The sum of [(a) LIBOR as of the second LIBOR
Business Day prior to the immediately preceding Distribution Date (or as of two
LIBOR Business Days prior to the Closing Date, in the case of the first
Distribution Date) and (b) _____% per annum]; provided, however, that in no
event shall the Investor Certificate Rate with respect to any Interest Period
exceed the Maximum Rate for such Interest Period.
Investor Certificateholder: The Holder of an Investor Certificate.
Investor Floating Allocation Percentage: With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the Invested Amount at the close of business on the preceding
Distribution Date (or at the Closing Date in the case of the first Distribution
Date) and the denomi-
11
nator of which is the Pool Balance, calculated as of the beginning of the
related Collection Period.
Investor Fixed Allocation Percentage: ____%.
Investor Interest Collections: As to any Distribution Date, the product
of (i) the Interest Collections during the related Collection Period and (ii)
the Investor Floating Allocation Percentage for such Distribution Date.
Investor Loss Amount: With respect to any Distribution Date, the amount
equal to the product of (i) the Investor Floating Allocation Percentage for such
Distribution Date and (ii) the aggregate of the Liquidation Loss Amounts for
such Distribution Date.
Investor Loss Reduction Amount: With respect to any Distribution Date,
the portion, if any, of the Investor 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 Section 5.01(a)(iv) or
5.01(a)(v) or by way of the Credit Enhancement Draw Amount.
Investor Principal Collections: As to any Distribution Date, the
Investor Fixed Allocation Percentage of Principal Collections in respect of such
Distribution Date.
Investor Servicing Fee: With respect to any Distribution Date, the
product of (i) the Investor Floating Allocation Percentage for such Distribution
Date and (ii) the Servicing Fee for such Distribution Date.
[LIBOR: As to any date, the rate for United States dollar deposits for
one month which appear on the Telerate Screen LIBOR Page 3750 as of 11:00 A.M.,
London time. If such rate does not appear on such page (or such other page as
may replace that page on that service, or if such service is no longer offered,
such other service for displaying LIBOR or comparable rates as may be reasonably
selected by the Depositor after consultation with the Trustee), the rate will be
the Reference Bank Rate. If no such quotations can be obtained and no Reference
Bank Rate is available, LIBOR will be LIBOR applicable to the preceding
Distribution Date.]
[LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.]
Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential
12
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing; provided, however, that any assignment pursuant
to Section 7.02 hereof shall not be deemed to constitute a Lien.
Lifetime Rate Cap: With respect to each Mortgage Loan with respect to
which the related Mortgage Note provides for a lifetime rate cap, the maximum
Loan Rate permitted over the life of such Mortgage Loan under the terms of the
related Credit Line Agreement, as set forth on Exhibit C hereto.
Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage Loan
in respect of which the Master Servicer has determined, in accordance with the
servicing procedures specified herein, as of the end of the related Collection
Period, that all Liquidation Proceeds which it expects to recover with respect
to the disposition of such Mortgage Loan or the related REO have been recovered.
Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead)
which are incurred by the Master Servicer in connection with the liquidation of
any Mortgage Loan and not recovered under any insurance policy, including,
without limitation, legal fees and expenses, any unreimbursed amount expended
pursuant to Section 3.06 (including, without limitation, amounts advanced to
correct defaults on any mortgage loan which is senior to such Mortgage Loan and
amounts advanced to keep current or pay off a mortgage loan that is senior to
such Mortgage Loan) respecting the related Mortgage Loan and any related and
unreimbursed expenditures with respect to real estate property taxes, water or
sewer taxes, condominium association dues, property restoration or preservation
or insurance against casualty, loss or damage.
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 Asset Balance thereof at the end of such
Collection Period, after giving effect to the Net Liquidation Proceeds applied
in reduction of such Asset Balance.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but not
including amounts drawn under the Policy) received in connection with the
liquidation of any Mortgage Loan or related REO, whether through trustee's sale,
foreclosure sale or otherwise.
Loan Rate: With respect to any Mortgage Loan and as of any day, the per
annum rate of interest applicable under the related
13
Credit Line Agreement to the calculation of interest for such day on the Asset
Balance of such Mortgage Loan.
Loan Rate Cap: With respect to each Mortgage Loan, the lesser of (i) the
Lifetime Rate Cap, if any, or (ii) the applicable state usury ceiling, if any.
Managed Amortization Period: The period from the Closing Date to and
including the Rapid Amortization Commencement Date.
Master Servicer: [Countrywide Home Loans, Inc., a New York] corporation
and any successor thereto and any successor hereunder.
Maximum Principal Payment: With respect to any Distribution Date, the
Investor Fixed Allocation Percentage of the Principal Collections for such
Distribution Date.
Maximum Rate: As to any Interest Period, the Weighted Average Net Loan
Rate for the Collection Period during which such Interest Period begins
(adjusted to an effective rate reflecting accrued interest calculated on the
basis of the actual number of days in the Collection Period commencing in the
month in which such Interest Period commences 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 in that
month.
Minimum Transferor Interest: With respect to any date, an amount equal
to the lesser of (a) ___% of the Pool Balance on such date and (b) the
Transferor Principal Balance as of the Closing Date.
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 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Loan Schedule: With respect to any date, the schedule of
Mortgage Loans included in the Trust on such date. The initial schedule of
Mortgage Loans as of the Cut-off Date is the schedule set forth herein as
Exhibit C, which schedule sets forth as to each Mortgage Loan (i) the Cut-off
Date Asset Balance, (ii) the Credit Limit, (iii) the Gross Margin, (iv) the
14
Lifetime Rate Cap, (v) the account number, (vi) the current Loan Rate, (vii) the
Combined Loan-to-Value Ratio, (viii) a code specifying the property type, (ix) a
code specifying documentation type and (x) a code specifying lien position. The
Mortgage Loan Schedule will be deemed to be amended from time to time to reflect
Additional Balances.
Mortgage Loans: The mortgage loans, including Additional Balances with
respect thereto, that are transferred and assigned to the Trustee pursuant to
Section 2.01, together with the Related Documents, exclusive of Mortgage Loans
that are retransferred to the Depositor, the Master Servicer or the Seller from
time to time pursuant to Section 2.02, 2.04, 2.05, 2.06, 2.09 or 3.01 as from
time to time are held as a part of the Trust. The mortgage loans originally so
held are identified in the Mortgage Loan Schedule delivered on the Closing Date.
The Mortgage Loans shall also include any Eligible Substitute Mortgage Loan
Substituted by the Seller for a Defective Mortgage Loan pursuant to Sections
2.02 and 2.04.
Mortgage Note: With respect to a Mortgage Loan, the Credit Line
Agreement pursuant to which the related mortgagor agrees to pay the indebtedness
evidenced thereby and secured by the related Mortgage.
Mortgaged Property: The underlying property, including any
real property and improvements thereon, securing a Mortgage Loan.
Mortgagor: The obligor or obligors under a Credit Line
Agreement.
Net Liquidation Proceeds: With respect to any Liquidated
Mortgage Loan, Liquidation Proceeds net of Liquidation Expenses.
Net Loan Rate: With respect to any Mortgage Loan and as to any day, the
Loan Rate less the Servicing Fee Rate, the Premium Fee Rate and the Trustee Fee
Rate.
Officer's Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Managing Director, a
Vice President (however denominated), an Assistant Vice President, the
Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor, the Transferor or the Master Servicer, or (ii), if
provided for in this Agreement, signed by a Servicing Officer, as the case may
be, and delivered to the Depositor and the Trustee, as the case may be, as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee, who may be in-house counsel for the Depositor, the Seller, the Master
Servicer or the Transferor (except that any opinion pursuant to Section 7.04 or
relating to taxation must
15
be an opinion of independent outside counsel) and who, in the case of opinions
delivered to the Credit Enhancer and the Rating Agency, is reasonably acceptable
to it.
Original Invested Amount: $_____________.
Original Investor Certificate Principal Balance: $________________.
Overcollateralization Amount: At the time of reference thereto, the
amount, if any, by which the Invested Amount exceeds the Investor Certificate
Principal Balance.
Paying Agent: Any paying agent appointed pursuant to Section 6.06.
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.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy: The financial guaranty insurance policy number ___________, and
all endorsements thereto, dated as of the Closing Date, issued by the Credit
Enhancer to the Trustee for the benefit of the Investor Certificateholders.
Policy Payments Account: As defined in Section 4.02.
Pool Balance: With respect to any date, the aggregate of the Asset
Balances of all Mortgage Loans as of such date.
Pool Factor: With respect to any Distribution Date, the percentage,
carried to seven places, obtained by dividing the Investor Certificate Principal
Balance for such Distribution Date by the Original Investor Certificate
Principal Balance.
Preference Claim: As defined in Section 4.02.
Premium Fee Rate: As described in the Insurance Agreement.
Principal Collections: As to any Distribution Date, the sum of all
payments by or on behalf of Mortgagors and any other amounts constituting
principal (including but not limited to any portion of Insurance Proceeds or Net
Liquidation Proceeds allocable to principal of the applicable Mortgage Loan, and
Transfer Deposit Amounts, but excluding Foreclosure Profits) collected by the
Master Servicer under the Mortgage Loans during the related Collection Period.
The terms of the related Credit Line
16
Agreement shall determine the portion of each payment in respect of a Mortgage
Loan that constitutes principal or interest.
Purchase Agreement: The Mortgage Loan Purchase Agreement, dated as of
the Cut-off Date, between [Countrywide Home Loans, Inc.], as seller, and the
Depositor, as purchaser, with respect to the Mortgage Loans.
Rapid Amortization Commencement Date: The earlier of (i) the
Distribution Date in ____________ 200__ and (ii) the Distribution Date next
succeeding the Collection Period in which a Rapid Amortization Event is deemed
to occur pursuant to Section 11.01.
Rapid Amortization Event: As defined in Section 11.01.
Rapid Amortization Period: The period following the Managed
Amortization Period until the termination of the Trust pursuant
to Section 10.01.
Rating Agency: Any statistical credit rating agency, or its successor,
that rated the Investor Certificates at the request of the Depositor at the time
of the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Depositor and the Credit
Enhancer, notice of which designation shall be given to the Trustee. References
herein to the highest short term unsecured rating category of a Rating Agency
shall mean A-1+ or better in the case of ____________________ and P-1 or better
in the case of _______________ and in the case of any other Rating Agency shall
mean the ratings such other Rating Agency deems equivalent to the foregoing
ratings. References herein to the highest long-term rating category of a Rating
Agency shall mean "AAA" in the case of ____________________ and "Aaa" in the
case of _______________ and in the case of any other Rating Agency, the rating
such other Rating Agency deems equivalent to the foregoing ratings.
Record Date: The last day preceding the related Distribution Date;
provided, however, that following the date on which Definitive Certificates are
available pursuant to Section 6.02(c) the Record Date shall be the last day of
the calendar month preceding the month in which the related Distribution Date
occurs.
Reference Bank Rate: As to any Interest Period as follows: the
arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth of
a percent) of the offered rates for United States dollar deposits for one month
which are offered by the Reference Banks as of A.M., London time, on the
second LIBOR Business Day prior to the first day of such Interest Period to
prime banks in the London interbank market for a period of one month in amounts
approximately equal to the Outstanding Investor
17
Certificate Principal Balance; provided that at least two such Reference Banks
provide such rate. If fewer than two offered rates appear, the Reference Bank
Rate will be the arithmetic mean of the rates quoted by one or more major banks
in New York City, selected by the Depositor after consultation with the Trustee,
as of A.M., New York City time, on such date for loans in U.S. Dollars to
leading European Banks for a period of one month in amounts approximately equal
to the outstanding Investor Certificate Principal Balance. If no such quotations
can be obtained, the Reference Bank Rate shall be the Reference Bank Rate
applicable to the preceding Interest Period.
Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Depositor after consultation with the Trustee.
Related Documents: As defined in Section 2.01.
REO: A Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
Required Overcollateralization Amount: As defined in the
Insurance Agreement.
Responsible Officer: When used with respect to the Trustee, any officer
of the Trustee with direct responsibility for the administration of this
Agreement and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
Revolving Period: With respect to each Mortgage Loan, the period
specified for such Mortgage Loan in the related Credit Line Agreement, during
which the Mortgagor is permitted to make Draws.
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 during the Managed Amortization Period and the Investor
Certificates, an 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 Maximum Principal Payment.
Seller: [Countrywide Home Loans, Inc., a New York] corporation and any
successor thereto.
18
Servicing Certificate: A certificate completed and executed
by a Servicing Officer in accordance with Section 4.01.
Servicing Fee: With respect to any Distribution Date, the product of (i)
the Servicing Fee Rate divided by 12 and (ii) the aggregate Asset Balance of the
Mortgage Loans on the first day of the Collection Period preceding such
Distribution Date (or at the Cut-off Date with respect to the first Distribution
Date).
Servicing Fee Rate: _____% per annum.
Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee (with a copy to the Credit Enhancer) by the Master Servicer on the
Closing Date, as such list may be amended from time to time.
Spread Account: The account created pursuant to Section
4.03 and maintained pursuant to the Insurance Agreement.
Spread Account Maximum: As defined in the Insurance Agreement.
Telerate Screen LIBO Page 3750: The display designated as page 3750 on
the Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London inter-bank offered rates of major
banks).
Transfer Date: As defined in Section 2.06.
Transfer Deficiency: As defined in Section 2.02.
Transfer Deposit Amount: As defined in Section 2.02.
Transfer Notice Date: As defined in Section 2.06.
Transferor or Transferor Certificateholders: The Holders of
the Transferor Certificates.
Transferor Certificates: The certificates executed and
authenticated by the Trustee substantially in the form set forth
in Exhibit B hereto.
Transferor Collections: As to any period, the sum of Transferor Interest
Collections and Transferor Principal Collections for such period.
Transferor Interest Collections: Interest Collections that
are not Investor Interest Collections, reduced by the Transferor
Servicing Fee.
19
Transferor Principal Balance: As of any date of determination, the
amount equal to (i) the Pool Balance at the end of the day next preceding such
date of determination less (ii) the Invested Amount as of the close of business
on the preceding Distribution Date.
Transferor Principal Collections: On any Distribution Date, Principal
Collections received during the related Collection Period minus the amount of
such Principal Collections required to be distributed to Investor
Certificateholders pursuant to Section 5.01(b).
Transferor Servicing Fee: With respect to any Distribution
Date, the Servicing Fee for such Distribution Date less the
Investor Servicing Fee for such Distribution Date.
Trust: The trust created by this Agreement, the corpus of which consists
of the Mortgage Loans, such other assets as shall from time to time be
identified as deposited in the Collection Account in accordance with this
Agreement, property that secured a Mortgage Loan and that has become REO, the
interest of the Depositor in certain hazard insurance policies maintained by the
Mortgagors or the Master Servicer in respect of the Mortgage Loans, the Policy,
an assignment of the Depositor's rights under the Purchase Agreement and all
proceeds of each of the foregoing (exclusive of payments of accrued interest on
the Mortgage Loans which are due on or prior to the Cut-off Date or due in the
month of ____________).
Trustee: ____________________________ or any successor
Trustee appointed in accordance with this Agreement that has
accepted such appointment in accordance with this Agreement.
Trustee Fee: A fee which is separately agreed to between
the Master Servicer and the Trustee.
Trustee Fee Rate: The per annum rate at which the Trustee
Fee is calculated.
UCC: The Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction.
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.
Valuation: With respect to any Mortgaged Property and time referred to
herein, the lesser of (i) the Appraised Value of the Mortgaged Property and (ii)
in the case of a Mortgaged Property purchased within one year of the origination
of the related Mortgage loan, the purchase price of the Mortgaged Property.
20
Weighted Average Net Loan Rate: As to any Collection Period, the average
of the daily Net Loan Rate for each Mortgage Loan for each day during the
related Billing Cycle, weighted on the basis of the daily average of the related
Asset Balances outstanding for each day in such Billing Cycle for each Mortgage
Loan as determined by the Master Servicer in accordance with the Master
Servicer's normal servicing procedures.
Section 1.02. Interest Calculations. All calculations of interest
hereunder that are made in respect of the Asset Balance of a Mortgage Loan shall
be made on a daily basis using a 365-day year. All calculations of interest on
the Investor Certificates shall be made on the basis of the actual number of
days in an Interest Period and a year assumed to consist of 360 days. The
calculation of the Servicing Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All dollar amounts calculated hereunder
shall be rounded to the nearest ▇▇▇▇▇ with one-half of one ▇▇▇▇▇ being rounded
down.
21
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates;
Tax Treatment
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements. The Depositor, concurrently with the
execution and delivery of this Agreement, does hereby transfer, assign, set over
and otherwise convey to the Trust without recourse (subject to Sections 2.02 and
2.04) all of its right, title and interest in and to (i) each Mortgage Loan,
including its Asset Balance (including all Additional Balances) and all
collections in respect thereof received on or after the Cut-off Date (excluding
payments in respect of accrued interest due prior to the Cut-off Date or due in
the month of ____________); (ii) property that secured a Mortgage Loan that is
acquired by foreclosure or deed in lieu of foreclosure; (iii) the Depositor's
rights under the Purchase Agreement; (iv) [the Depositor's rights under the
hazard insurance policies,] (v) the Collection Account and the [Security Account
for the Certificates] (excluding net earnings thereon); (vi) the Policy, (vii)
the Spread Account and (viii) all other assets included or to be included in the
Trust for the benefit of Certificateholders; provided, however, neither the
Trustee nor the Trust assumes the obligation under any Credit Line Agreement
that provides for the funding of future advances to the Mortgagor thereunder,
and neither the Trust nor the Trustee shall be obligated or permitted to fund
any such future advances. Additional Balances shall be part of the related Asset
Balance and are hereby transferred to the Trust on the Closing Date pursuant to
this Section 2.01, and therefore part of the Trust property. In addition, on or
prior to the Closing Date, the Depositor shall cause the Credit Enhancer to
deliver the Policy to the Trustee for the benefit of the Investor
Certificateholders. The foregoing transfer, assignment, set-over and conveyance
to the Trust shall be made to the Trustee, on behalf of the Trust, and each
reference in this Agreement to such transfer, assignment, set-over and
conveyance shall be construed accordingly.
The Depositor agrees to take or cause to be taken such actions and
execute such documents (including without limitation the filing of all necessary
continuation statements for the UCC-1 financing statements filed in the State of
__________ (which shall have been filed within 90 days of the Closing Date)
describing the Cut-off Date Asset Balances and Additional Balances and naming
the Depositor as debtor and the Trustee as secured party and any amendments to
UCC-1 financing statements required to reflect a change in the name or corporate
structure of the Depositor or the filing of any additional UCC-1 financing
statements due to the change in the principal office of the Depositor (within 90
days of any event necessitating such filing)
22
as are necessary to perfect and protect the Certificateholders' and Credit
Enhancer's interests in each Cut-off Date Asset Balance and Additional Balances
and the proceeds thereof (other than maintaining possession by the Trustee of
the Mortgage Loans and the Mortgage Files, which possession will, subject to the
terms hereof, be maintained by the Master Servicer as custodian and bailee of
the Trustee).
In connection with such transfer and assignment by the Depositor, the
Master Servicer acknowledges that it is holding as custodian and bailee for the
Trustee the following documents or instruments (the "Related Documents") with
respect to each Mortgage Loan:
(i) the original Mortgage Note endorsed in blank;
(ii) an original Assignment of Mortgage in blank in
recordable form;
(iii) the original recorded Mortgage or, if, in connection
with any Mortgage Loan, the original recorded Mortgage with evidence of
recording thereon cannot be delivered on or prior to the Closing Date
because of a delay caused by the public recording office where such
original Mortgage has been delivered for recordation or because such
original Mortgage has been lost, the Seller, at the direction of the
Depositor, shall deliver or cause to be delivered to the Custodian, as
agent for the Trustee, a true and correct copy of such Mortgage,
together with (i) in the case of a delay caused by the public recording
office, an Officer's Certificate of the Depositor stating that such
original Mortgage has been dispatched to the appropriate public
recording official or (ii) in the case of an original Mortgage that has
been lost, a certificate by the appropriate county recording office
where such Mortgage is recorded;
(iv) if applicable, the original intervening assignments, if
any ("Intervening Assignments"), with evidence of recording thereon,
showing a complete chain of title to the Mortgage from the originator to
the Depositor or, if any such original Intervening Assignment has not
been returned from the applicable recording office or has been lost, a
true and correct copy thereof, together with (i) in the case of a delay
caused by the public recording office, an Officer's Certificate of the
Seller stating that such original Intervening Assignment has been
dispatched to the appropriate public recording official for recordation
or (ii) in the case of an original Intervening Assignment that has been
lost, a certificate by the appropriate county recording office where
such Mortgage is recorded;
23
(v) either (1) for each Mortgage Loan with a Credit Limit in
excess of $_________, a title policy or (2) for all other Mortgage
Loans, either a title policy, a title search or guaranty of title with
respect to the related Mortgaged Property;
(vi) the original of any guaranty executed in
connection with the Mortgage Note;
(vii) the original of each assumption, modification,
consolidation or substitution agreement, if any, relating to
the Mortgage Loan; and
(viii) any security agreement, chattel mortgage or
equivalent instrument executed in connection with the Mortgage;
provided, however, that as to any Mortgage Loan, if (a) as evidenced by an
Opinion of Counsel delivered to and in form and substance satisfactory to the
Trustee and the Credit Enhancer, (x) an optical image or other representation of
the related documents specified in clauses (i) through (viii) above are
enforceable in the relevant jurisdictions to the same extent as the original of
such document and (y) such optical image or other representation does not impair
the ability of an owner of such Mortgage Loan to transfer its interest in such
Mortgage Loan, and (b) the retention of such documents in such format will not
result in a reduction in the then current rating of the Investor Certificates,
without regard to the Policy, such optical image or other representation may be
held by the Master Servicer, as custodian for the Trustee or assignee in lieu of
the physical documents specified above.
The Seller hereby confirms to the Trustee that it has caused the
portions of the Electronic Ledgers relating to the Mortgage Loans to be clearly
and unambiguously marked, and has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been transferred
to the Trust at the direction of the Depositor. The Master Servicer hereby
confirms to the Trustee that it has clearly and unambiguously made appropriate
entries in its general accounting records indicating that such Mortgage Loans
constitute part of the Trust and are serviced by it on behalf of the Trust in
accordance with the terms hereof.
The parties hereto intend that the transaction set forth herein be a
sale by the Depositor to the Trust of all the Depositor's right, title and
interest in and to the Mortgage Loans and other property described above. In the
event the transaction set forth herein is deemed not to be a sale, the Depositor
hereby grants to the Trust a security interest in all of the Depositor's right,
title and interest in, to and under the Mortgage Loans whether now existing or
hereafter created, all
24
monies due or to become due on the Mortgage Loans and all proceeds of any
thereof; and this Agreement shall constitute a security agreement under
applicable law.
Except as hereinafter provided, the Master Servicer shall be entitled to
maintain possession of all of the foregoing documents and instruments and shall
not be required to deliver any of them to the Trustee. In the event, however,
that possession of any of such documents or instruments is required by any
Person (including the Trustee) acting as successor servicer pursuant to Section
7.04 or 8.02 in order to carry out the duties of Master Servicer hereunder, then
such successor shall be entitled to request delivery, at the expense of the
Master Servicer, of such documents or instruments by the Master Servicer and to
retain such documents or instruments for servicing purposes; provided that the
Trustee or such servicers shall maintain such documents at such offices as may
be required by any regulatory body having jurisdiction over such Mortgage Loans.
The Master Servicer's right to maintain possession of the documents
enumerated above shall continue so long as the long term unsecured debt of
[Countrywide Home Loans, Inc.] is assigned ratings of at least "BBB-" by
__________________ and "Baa2" by _______________. At such time as the condition
specified in the preceding sentence is not satisfied, as promptly as practicable
but in no event more than 90 days in the case of clause (i) below and 60 days in
the case of clause (ii) below following the occurrence of such event (a
"Delivery Event"), the Master Servicer shall, at its expense, (i) either (x)
record an assignment of Mortgage in favor of the Trustee (which may be a blanket
assignment if permitted by applicable law) in the appropriate real property or
other records or (y) deliver to the Trustee the assignment of such Mortgage in
favor of the Trustee in form for recordation, together with an Opinion of
Counsel addressed to the Trustee and the Credit Enhancer to the effect that
recording is not required to protect the Trustee's right, title and interest in
and to the related Mortgage Loan or, in case a court should recharacterize the
sale of the Mortgage Loans as a financing, to perfect a first priority security
interest in favor of the Trustee in the related Mortgage Loan, which Opinion of
Counsel also shall be reasonably acceptable to each of the Rating Agencies (as
evidenced in writing) and the Credit Enhancer, and (ii) unless an Opinion of
Counsel, reasonably acceptable to the Trustee, the Rating Agencies (as evidenced
in writing) and the Credit Enhancer, is delivered to the Trustee and the Credit
Enhancer to the effect that delivery of the Mortgage Files is not necessary to
protect the Trustee's right, title and interest in the related Mortgage Loans;
provided that the lack of delivery will not result in a reduction in the then
current rating of the Investor Certificates, without regard to the Policy,
deliver the related Mortgage Files to the Trustee or to a custodian located in
the State of California appointed by the Trustee and acceptable to the Rating
Agencies and the Credit
25
Enhancer to be held by the Custodian on behalf of the Trustee in trust, upon the
terms herein set forth, for the use and benefit of all present and future
Certificateholders and the Custodian on behalf of the Trustee shall retain
possession thereof except to the extent the Master Servicer requires any
Mortgage Files for normal servicing as contemplated by Section 3.07. The Trustee
is hereby appointed as the attorney-in-fact of the Master Servicer with the
power to prepare, execute and record Assignments of Mortgages in the event that
the Master Servicer fails to do so on a timely basis as provided in this
paragraph.
Within 90 days following delivery, if any, of the Mortgage Files to the
Trustee pursuant to the preceding paragraph, the Trustee shall review each such
Mortgage File to ascertain that all required documents set forth in this Section
2.01 have been executed and received, and that such documents relate to the
Mortgage Loans identified on the Mortgage Loan Schedule and in so doing the
Trustee may rely on the purported due execution and genuineness of any signature
thereon. If within such 90-day period the Trustee finds any document
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the Mortgage Loans identified in said Mortgage Loan Schedule
or, if in the course of its review, the Trustee determines that such Mortgage
File is otherwise defective in any material respect, the Trustee shall promptly
upon the conclusion of its review notify the Seller and the Credit Enhancer, and
the Seller shall have a period of 90 days after such notice within which to
correct or cure any such defect.
The Trustee shall have no responsibility for reviewing any Mortgage File
except as expressly provided in this Section 2.01. In reviewing any Mortgage
File pursuant to this Section, the Trustee shall have no 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, if
applicable, to determine if the Trustee is the assignee or endorsee), whether
any document has been recorded in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction, whether any Person executing any document is authorized
to do so or whether any signature thereon is genuine, 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.
Section 2.02. Acceptance by Trustee; Retransfer of Mortgage Loans. (a)
The Trustee hereby acknowledges its receipt of the Policy and the Mortgage
Loans, and declares that the Trustee holds and will hold such instrument, and to
the extent that any documents are delivered to it pursuant to Section 2.01, will
hold such documents, and all amounts received by it thereunder and hereunder, in
trust, upon the terms herein set forth, for the use
26
and benefit of all present and future Certificateholders and the Credit
Enhancer. If the time to cure any defect in respect of any Mortgage Loan of
which the Trustee has notified the Seller and the Depositor following the review
pursuant to Section 2.01 has expired or if at any time any loss is suffered by
the Trustee on behalf of the Certificateholders or the Credit Enhancer, in
respect of any Mortgage Loan as a result of (i) a defect in any document
constituting a part of its Mortgage File or (ii) an Assignment of Mortgage to
the Trustee not having been recorded as required by Section 2.01, then on the
next succeeding Business Day upon the deposit to the Collection Account of the
Transfer Deposit Amount, if any, and upon satisfaction of the applicable
conditions described herein, all right, title and interest of the Trust in and
to such Mortgage Loan shall be deemed to be retransferred, reassigned and
otherwise reconveyed, without recourse, representation or warranty, to the
Seller on such Business Day and the Asset Balance of such Mortgage Loan shall be
deducted from the Pool Balance; provided, however, that interest accrued on the
Asset Balance of such Mortgage Loan to the end of the related Collection Period
shall be the property of the Trust. The Trustee shall determine if the reduction
of such Asset Balance from the Pool Balance in accordance with the preceding
sentence would cause the Transferor Principal Balance to be less than the
Minimum Transferor Interest ("Transfer Deficiency"), in which event the Trustee
shall deliver written notice of such deficiency to the Seller, and within five
Business Days after the Business Day of such retransfer the Seller shall either
(i) substitute an Eligible Substitute Mortgage Loan or (ii) deposit into the
Collection Account an amount (the "Transfer Deposit Amount") in immediately
available funds equal to the Transfer Deficiency or a combination of both (i)
and (ii) above. Such reduction or substitution and the actual payment of any
Transfer Deposit Amount, if any, shall be deemed to be payment in full for such
Mortgage Loan. Upon receipt of any Eligible Substitute Mortgage Loan or of
written notification signed by a Servicing Officer to the effect that the
Transfer Deposit Amount in respect of a Defective Mortgage Loan has been
deposited into the Collection Account or, if the Transferor Principal Balance is
not reduced below the Minimum Transferor Interest as a result of the deemed
retransfer of a Defective Mortgage Loan, then as promptly as practicable
following such deemed transfer, the Trustee shall execute such documents and
instruments of transfer presented by the Seller, in each case without recourse,
representation or warranty, and take such other actions as shall reasonably be
requested by the Seller to effect such transfer by the Trust of such Defective
Mortgage Loan pursuant to this Section. It is understood and agreed that the
obligation of the Seller to accept a transfer of a Defective Mortgage Loan and
to either convey an Eligible Substitute Mortgage Loan or to make a deposit of
any related Transfer Deposit Amount into the Collection Account shall constitute
the sole remedy respecting such defect available to Certificateholders, the
Trustee and the Credit Enhancer against the Seller.
27
The Master Servicer, promptly following the transfer of a Defective
Mortgage Loan from or to the Trust pursuant to this Section, shall amend the
Mortgage Loan Schedule and make appropriate entries in its general account
records to reflect such transfer. The Master Servicer shall, following such
retransfer, appropriately ▇▇▇▇ its records to indicate that it is no longer
servicing such Mortgage Loan on behalf of the Trust. The Seller, promptly
following such transfer, shall appropriately ▇▇▇▇ its Electronic Ledger and make
appropriate entries in its general account records to reflect such transfer.
Notwithstanding any other provision of this Section, a retransfer of a
Defective Mortgage Loan to the Seller pursuant to this Section that would cause
the Transferor Principal Balance to be less than the Minimum Transferor Interest
shall not occur if either the Seller fails to convey an Eligible Substitute
Mortgage Loan or to deposit into the Collection Account any related Transfer
Deposit Amount required by this Section with respect to the transfer of such
Defective Mortgage Loan.
(b) As to any Eligible Substitute Mortgage Loan or Loans, the Seller
shall, if a Delivery Event has occurred, deliver to the Trustee with respect to
such Eligible Substitute Mortgage Loan or Loans such documents and agreements as
are required to be held by the Trustee in accordance with Section 2.01. For any
Collection Period during which the Seller substitutes one or more Eligible
Substitute Mortgage Loans, the Master Servicer shall determine the Transfer
Deposit Amount which amount shall be deposited by the Seller in the Collection
Account at the time of substitution. All amounts received in respect of the
Eligible Substitute Mortgage Loan or Loans during the Collection Period in which
the circumstances giving rise to such substitution occur shall not be a part of
the Trust Fund and shall not be deposited by the Master Servicer in the
Collection Account. All amounts received by the Master Servicer during the
Collection Period in which the circumstances giving rise to such substitution
occur in respect of any Defective Mortgage Loan so removed by the Trust Fund
shall be deposited by the Master Servicer in the Collection Account. 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 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 2.04. The procedures applied by the Seller in selecting each
Eligible Substitute Mortgage Loan shall not be materially adverse to the
interests of the Trustee, the Certificateholders and the Credit Enhancer.
Section 2.03. Representations and Warranties Regarding the
Master Servicer. The Master Servicer represents and warrants to
the Trustee and the Credit Enhancer that as of the Closing Date:
28
(i) The Master Servicer is a [New York] corporation, validly
existing and in good standing under the laws of the State of [New York],
and has the corporate power to own its assets and to transact the
business in which it is currently engaged. The Master Servicer is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business
transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer;
(ii) The Master Servicer has the power and authority to make,
execute, deliver and perform this Agreement and all of the transactions
contemplated under the 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 the Master Servicer
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies;
(iii) The Master 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 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 the Master Servicer will not violate any provision of any
existing law or regulation or any order or decree of any court
applicable to the Master Servicer or any provision of the Certificate of
Incorporation or Bylaws of the Master Servicer, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which
the Master Servicer is a party or by which the Master Servicer may be
bound; and
(v) No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Master Servicer threatened, against the Master Servicer
or any of its properties or with respect to this Agreement or the
Certificates which in the opinion of the Master Servicer has a
29
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement.
The representations and warranties set forth in this Section shall survive the
sale and assignment of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representations and warranties which materially and adversely
affects the interests of the Certificateholders or the Credit Enhancer, the
person discovering such breach shall give prompt written notice to the other
parties and to the Credit Enhancer. Within 90 days of its discovery or its
receipt of notice of breach, or, with the prior written consent of a Responsible
Officer of the Trustee, such longer period specified in such consent, the Master
Servicer shall cure such breach in all material respects.
Section 2.04. Representations and Warranties of the Seller Regarding the
Mortgage Loans; Retransfer of Certain Mortgage Loans. (a) The Seller hereby
represents and warrants to the Trustee and the Credit Enhancer that as of the
Cut-off Date, unless otherwise specifically set forth herein:
(i) As of the Closing Date, this Agreement constitutes a legal,
valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement
of creditors' rights generally and by the availability of equitable
remedies;
(ii) As of the Closing Date with respect to the Mortgage Loans
and as of the applicable Transfer Date with respect to any Eligible
Substitute Mortgage Loan, either (A) the Purchase Agreement constitutes
a valid transfer and assignment to the Depositor of all right, title and
interest of the Seller in and to the Cut-off Date Asset Balances with
respect to the applicable Mortgage Loans, all monies due or to become
due with respect thereto (excluding payments in respect of accrued
interest due prior to the Cut-off Date or due in the month of
_________), and all proceeds of such Cut-off Date Asset Balances with
respect to the Mortgage Loans and such funds as are from time to time
deposited in the Collection Account (excluding any investment earnings
thereon) and all other property specified in the definition of "Asset"
as being part of the corpus of the Trust conveyed to the Trust by the
Seller, and upon payment for the Additional Balances, will constitute a
valid transfer and assignment to the Trustee of all right, title and
interest of the Seller in and to the Additional Balances, all monies due
or to become due with respect thereto, and all proceeds of such
Additional Balances and all other property specified in the definition
of "Asset" relating to the Additional Balances or (B) the Purchase
Agreement or this Agreement, as
30
appropriate, constitutes a grant of a security interest (as defined in
the UCC as in effect in California) in such property to the Trustee on
behalf of the Trust. If this Agreement constitutes the grant of a
security interest to the Trust in such property, and if the Trustee
obtains and maintains possession of the Mortgage File for each Mortgage
Loan, the Trust shall have a first priority perfected security interest
in such property, subject to the effect of Section 9-306 of the UCC with
respect to collections on the Mortgage Loans that are deposited in the
Collection Account in accordance with the next to last paragraph of
Section 3.02(b); provided, however, that nothing in this clause (ii)
shall be construed to obligate the Master Servicer to deliver any
Mortgage Files other than as set forth in Section 2.01 hereof;
(iii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan and as of the date any Additional Balance is created, the
information set forth in the Mortgage Loan Schedule for such Mortgage
Loans is true and correct in all material respects;
(iv) The applicable Cut-off Date Asset Balance has not been
assigned or pledged, and the Seller is the sole owner and holder of such
Cut-off Date Asset Balance free and clear of any and all liens, claims,
encumbrances, participation interests, equities, pledges, charges or
security interests of any nature, and has full right and authority,
under all governmental and regulatory bodies having jurisdiction over
the ownership of the applicable Mortgage Loan, to sell, assign or
transfer the same pursuant to the Purchase Agreement;
(v) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, the related Mortgage Note and the Mortgage with respect
to each Mortgage Loan have not been assigned or pledged, and the Seller
is the sole owner and holder of the Mortgage Loan free and clear of any
and all liens, claims, encumbrances, participation interests, equities,
pledges, charges or security interests of any nature, and has full right
and authority, under all governmental and regulatory bodies having
jurisdiction over the ownership of the applicable Mortgage Loans, to
sell and assign the same pursuant to the Purchase Agreement;
(vi) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, the related Mortgage is a valid and subsisting first or
second lien, as set forth on the Mortgage Loan Schedule with respect to
each related Mortgage Loan, on the property therein described, and as of
31
the applicable Cut-off Date the related Mortgaged Property is free and
clear of all encumbrances and liens having priority over the first or
second lien, as applicable, of such Mortgage except for liens for (i)
real estate taxes and special assessments not yet delinquent; (ii) any
first mortgage loan secured by such Mortgaged Property and specified on
the Mortgage Loan Schedule; (iii) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording that are acceptable to mortgage
lending institutions generally; and (iv) other matters to which like
properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage;
(vii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, there is no valid offset, defense or counterclaim of any
obligor under any Credit Line Agreement or Mortgage;
(viii) To the best knowledge of the Seller, as of the Closing
Date with respect to the Mortgage Loans and the applicable Transfer Date
with respect to any Eligible Substitute Mortgage Loan, there is no
delinquent recording or other tax or fee or assessment lien against any
related Mortgaged Property;
(ix) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, there is no proceeding pending or, to the best knowledge
of the Seller, threatened for the total or partial condemnation of the
related Mortgaged Property, and such property is free of material
damage;
(x) To the best knowledge of the Seller, as of the Closing Date
with respect to the Mortgage Loans and the applicable Transfer Date with
respect to any Eligible Substitute Mortgage Loan, there are no
mechanics' or similar liens or claims which have been filed for work,
labor or material affecting the related Mortgaged Property which are, or
may be, liens prior or equal to the lien of the related Mortgage, except
liens which are fully insured against by the title insurance policy
referred to in clause (xiv);
(xi) No Minimum Monthly Payment is more than 89 days delinquent
(measured on a contractual basis); and with respect to the Mortgage
Loans no more than _____% (by Cut-off Date Pool Balance) were 30-59 days
delinquent (measured on a contractual basis) and no more than _____% (by
Cut-off Date Pool Balance) were 60-89 days delinquent (measured on a
contractual basis);
32
(xii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, for each Mortgage Loan, the related Mortgage File
contains each of the documents and instruments specified to be included
therein;
(xiii) The related Mortgage Note and the related Mortgage at
origination complied in all material respects with applicable state and
federal laws, including, without limitation, usury, truth-in-lending,
real estate settlement procedures, consumer credit protection, equal
credit opportunity or disclosure laws applicable to the Mortgage Loan;
(xiv) Either a lender's title insurance policy or binder was
issued on the date of origination of the Mortgage Loan and each such
policy is valid and remains in full force and effect, or a title search
or guaranty of title customary in the relevant jurisdiction was obtained
with respect to a Mortgage Loan as to which no title insurance policy or
binder was issued;
(xv) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, none of the Mortgaged Properties is a mobile home or a
manufactured housing unit that is not considered or classified as part
of the real estate under the laws of the jurisdiction in which it is
located;
(xvi) As of the Cut-off Date for the Mortgage Loans no more than
_____% of such Mortgage Loans, by aggregate principal balance, are
secured by Mortgaged Properties located in one United States postal zip
code;
(xvii) The Combined Loan-to-Value Ratio for each Mortgage Loan
was not in excess of 100%;
(xviii) No selection procedure reasonably believed by the Seller
to be adverse to the interests of the Certificateholders or the Credit
Enhancer was utilized in selecting the Mortgage Loans;
(xix) The Seller has not transferred the Mortgage
Loans to the Trust with any intent to hinder, delay or
defraud any of its creditors;
(xx) The Minimum Monthly Payment with respect to any Mortgage
Loan is not less than the interest accrued at the applicable Loan Rate
on the average daily Asset Balance during the interest period relating
to the date on which such Minimum Monthly Payment is due;
33
(xxi) Within 90 days of the Closing Date with respect to the
Mortgage Loans and, to the extent not already included in such filing
with respect to the Mortgage Loans, the applicable Transfer Date with
respect to any Eligible Substitute Mortgage Loan, the Seller will file
UCC-1 financing statements with respect to the Mortgage Loans;
(xxii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, each Credit Line Agreement and each Mortgage Loan is an
enforceable obligation of the related Mortgagor, except as the
enforceability thereof may be limited by the bankruptcy, insolvency or
similar laws affecting creditors' rights generally;
(xxiii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, the Seller has not received a notice of default of any
senior mortgage loan related to a Mortgaged Property that has not been
cured by a party other than the Master Servicer;
(xxiv) The definition of Prime Rate in each Credit Line Agreement
relating to a Mortgage Loan does not differ materially from the
definition in the form of Credit Line Agreement in Exhibit F;
(xxv) The weighted average remaining term to maturity of the
Mortgage Loans on a contractual basis as of the Cut-off Date for the
Mortgage Loans is approximately ___ months. On each date that the Loan
Rates have been adjusted, interest rate adjustments on the Mortgage
Loans were made in compliance with the related Mortgage and Mortgage
Note and applicable law. Over the term of each Mortgage Loan, the Loan
Rate may not exceed the related Loan Rate Cap, if any. The Loan Rate
Caps range between ____% and ____%. The Margins range between ____% and
____% and the weighted average Margin is approximately ____% as of the
Cut-off Date for the Mortgage Loans. The Loan Rates on such Mortgage
Loans range between ____% and _____% and the weighted average Loan Rate
is approximately _____%.
(xxvi) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, each Mortgaged Property consists of a single parcel of
real property with a one-to-four unit single family residence erected
thereon, or an individual condominium unit, planned unit development
unit or townhouse;
(xxvii) No more than _____% (by Cut-off Date Pool Balance) of the
Mortgage Loans are secured by real property improved by individual
condominium units, planned develop-
34
ment units, townhouses or two-to-four family residences erected thereon,
and at least _____% (by Cut-off Date Pool Balance) of the Mortgage Loans
are secured by real property with a detached one-family residence
erected thereon;
(xxviii) The Credit Limits on the Mortgage Loans range between
$________ and $__________ with an average of $_________. As of the
Cut-off Date for the Mortgage Loans, no Mortgage Loan had a principal
balance in excess of approximately $__________ and the average principal
balance of the Mortgage Loans is equal to approximately $_________; and
(xxix) Approximately ____% and _____% of the Mortgage Loans, by
aggregate principal balance as of the Cut-off Date for the Mortgage
Loans, are first and second liens, respectively.
With respect to the representations and warranties set forth in this
Section 2.04 that are made to the best of the Seller's knowledge or as to which
the Seller has no knowledge, if it is discovered by the Seller, the Depositor,
the Master Servicer or a Responsible Officer of the Trustee that the substance
of such representation and warranty is inaccurate and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan then,
notwithstanding the Seller's lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
or warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the respective Mortgage
Files to the Trustee pursuant to Section 2.01 and the termination of the rights
and obligations of the Master Servicer pursuant to Section 7.04 or 8.02. Upon
discovery by the Seller, the Depositor, the Master Servicer, the Credit Enhancer
or a Responsible Officer of the Trustee of a breach of any of the foregoing
representations and warranties (other than the representation and warranty set
forth in Section 2.04(a)(iv) above), without regard to any limitation set forth
therein concerning the knowledge of the Seller as to the facts stated therein,
which materially and adversely affects the interests of the Trust or the
Investor Certificateholders or the Credit Enhancer in the related Mortgage Loan,
the party discovering such breach shall give prompt written notice to the other
parties and the Credit Enhancer. Within 90 days of its discovery or its receipt
of notice of such breach, the Seller shall use all reasonable efforts to cure
such breach in all material respects or shall, not later than the Business Day
next preceding the Distribution Date in the month following the Collection
Period in which any such cure period expired (or such later date that is
acceptable to the Trustee and the Credit Enhancer as evidenced by
35
their written consents), either (a) accept a transfer of such Mortgage Loan from
the Trust or (b) substitute an Eligible Substitute Mortgage Loan in the same
manner and subject to the same conditions as set forth in Section 2.02;
provided, however, that the cure for any breach of a representation and warranty
relating to the characteristics of the Mortgage Loans in the aggregate shall be
a repurchase of or substitution for only the Mortgage Loans necessary to cause
such characteristics to be in compliance with the related representation and
warranty. Upon accepting such transfer and making any required deposit into the
Collection Account or substitution of an Eligible Substitute Mortgage Loan, as
the case may be, the Seller shall be entitled to receive an instrument of
assignment or transfer from the Trustee to the same extent as set forth in
Section 2.02 with respect to the transfer of Mortgage Loans under that Section.
It is understood and agreed that the obligation of the Seller to accept
a transfer of a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required deposit in the Collection Account or to
substitute an Eligible Substitute Mortgage Loan, as the case may be, shall
constitute the sole remedy against the Seller respecting such breach available
to Investor Certificateholders, the Trustee on behalf of Investor
Certificateholders and the Credit Enhancer; provided, however, that the Seller
shall defend and indemnify the Trustee, the Credit Enhancer and the Investor
Certificateholders against all reasonable costs and expenses, and all losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and the amount of any settlement entered into with the consent of the
Seller (such consent not to be unreasonably withheld), which may be asserted
against or incurred by any of them as a result of any third-party action arising
out of any breach of any such representation and warranty. Notwithstanding the
foregoing, with regard to any breach of the representation and warranty set
forth in Section 2.04(a)(iv), the sale and assignment of the affected Mortgage
Loans to the Trust shall be deemed void and the Seller shall pay to the Trust
the sum of (i) the amount of the related Asset Balances, plus unpaid accrued
interest on each such Asset Balance at the applicable Loan Rate to the date of
payment and (ii) the amount of any loss suffered by Certificateholders or the
Credit Enhancer with respect to the affected Mortgage Loans.
Section 2.05. Covenants of the Depositor. The Depositor
hereby covenants that:
(a) Security Interests. Except for the transfer hereunder, the Depositor
will not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any Mortgage Loan, whether now
existing or hereafter created, or any interest therein; the Depositor will
notify the Trustee of the existence of any Lien on any Mortgage Loan immediately
upon discovery thereof; and the Depositor will defend the
36
right, title and interest of the Trust in, to and under the Mortgage Loans,
whether now existing or hereafter created, against all claims of third parties
claiming through or under the Depositor; provided, however, that nothing in this
Section 2.05(a) shall prevent or be deemed to prohibit the Depositor from
suffering to exist upon any of the Mortgage Loans any Liens for municipal or
other local taxes and other governmental charges if such taxes or governmental
charges shall not at the time be due and payable or if the Depositor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.
(b) Negative Pledge. The Depositor hereby agrees not to transfer,
assign, exchange, pledge, finance, hypothecate, grant a security interest in or
otherwise convey the Transferor Certificates except in accordance with Sections
6.05 and 7.02.
(c) Additional Indebtedness. So long as the Investor Certificates are
outstanding the Depositor will not incur any debt other than debt that (i) is
non-recourse to the assets of the Depositor other than the Mortgage Loans
specifically pledged as security for such debt, or (ii) is subordinated in right
of payment to the rights of the Investor Certificateholders or (iii) is assigned
a rating by each of the Rating Agencies that is the same as the then current
rating of the Investor Certificates.
(d) Downgrading. The Depositor will not engage in any
activity which would result in a downgrading of the Investor
Certificates.
(e) Amendment to Certificate of Incorporation. The Depositor will not
amend its Certificate of Incorporation without prior written notice to the
Rating Agencies and the Credit Enhancer.
(f) Principal Place of Business. The Depositor's principal place of
business is in California and it will not change its principal place of business
without prior written notice to the Rating Agencies.
Section 2.06. Retransfers of Mortgage Loans at Election of Transferor.
Subject to the conditions set forth below, the Transferor may, but shall not be
obligated to, require the retransfer of Mortgage Loans from the Trust to the
Seller as of the close of business on a Distribution Date (the "Transfer Date").
On the fifth Business Day (the "Transfer Notice Date") prior to the Transfer
Date designated in such notice, the Transferor shall give the Trustee and the
Master Servicer a notice of the proposed retransfer that contains a list of the
Mortgage Loans to be retransferred. Such retransfers of Mortgage Loans shall be
permitted upon satisfaction of the following conditions:
37
(i) No Rapid Amortization Event has occurred;
(ii) On the Transfer Notice Date the Transferor Principal
Balance (after giving effect to the removal from the Trust of the
Mortgage Loans proposed to be retransferred) is at least equal to the
Minimum Transferor Interest;
(iii) The transfer of any Mortgage Loans on any Transfer Date
during the Managed Amortization Period shall not, in the reasonable
belief of the Transferor, cause a Rapid Amortization Event to occur or
an event which with notice or lapse of time or both would constitute a
Rapid Amortization Event;
(iv) On or before the Transfer Date, the Transferor shall
have delivered to the Trustee a revised Mortgage Loan Schedule,
reflecting the proposed transfer and the Transfer Date, and the Master
Servicer shall have marked the Electronic Ledger to show that the
Mortgages Loans transferred to the Transferor are no longer owned by the
Trust;
(v) The Transferor shall represent and warrant that no
selection procedures reasonably believed by the Transferor to be adverse
to the interests of the Investor Certificateholders or the Credit
Enhancer were utilized in selecting the Mortgage Loans to be removed
from the Trust;
(vi) In connection with first retransfer of Mortgage Loans
pursuant to this Section, each Rating Agency shall have received on or
prior to the related Transfer Notice Date notice of such proposed
retransfer of Mortgage Loans and, prior to the Transfer Date, shall have
notified the Trustee 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 regard to the Policy;
(vii) The Transferor shall have delivered to the Trustee and
the Credit Enhancer an Officer's Certificate certifying that the items
set forth in subparagraphs (i) through (vi), 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.
Upon receiving the requisite information from the Transferor, the Master
Servicer shall perform in a timely manner those acts required of it, as
specified above. Upon satisfaction of the above conditions, on the Transfer Date
the Trustee shall deliver, or cause to be delivered, to the Transferor the
Mortgage File for each Mortgage Loan being so transferred, and the Trustee shall
38
execute and deliver to the Transferor such other documents prepared by the
Transferor as shall be reasonably necessary to transfer such Mortgage Loans to
the Transferor. Any such transfer of the Trust's right, title and interest in
and to Mortgage Loans shall be without recourse, representation or warranty by
or of the Trustee or the Trust to the Transferor.
Section 2.07. Execution and Authentication of Certificates. The Trustee,
on behalf of the Trust, has caused to be executed, authenticated and delivered
to or upon the order of the Depositor, in exchange for the Trust, concurrently
with the sale, assignment and conveyance to the Trustee of the Trust, Investor
Certificates in authorized denominations and the Transferor Certificates,
together evidencing the ownership of the entire Trust.
Section 2.08. Tax Treatment. It is the intention of the Depositor, the
Transferor and the Investor Certificateholders that the Investor Certificates
will be indebtedness of the Transferor for federal, state and local income and
franchise tax purposes and for purposes of any other tax imposed on or measured
by income. The Transferor, the Depositor, the Trustee and each Investor
Certificateholder (or 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) agrees to
treat the Investor Certificates (or beneficial interest therein), for purposes
of federal, state and local income or franchise taxes and any other tax imposed
on or measured by income, as indebtedness of the Transferor secured by the
assets of the Trust and to report the transactions contemplated by this
Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Investor 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 of the Investor Certificates 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. The Trustee will
prepare and file all tax reports required hereunder.
Section 2.09. Representations and Warranties of the Depositor. The
Depositor represents and warrants to the Trustee on behalf of the
Certificateholders and the Credit Enhancer as follows:
(i) This Agreement constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be
39
limited by general principles of equity (whether considered
in a proceeding at law or in equity);
(ii) Immediately prior to the sale and assignment by the
Depositor to the Trustee of each Mortgage Loan, the Depositor was the
sole beneficial owner of each Mortgage Loan (insofar as such title was
conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or
other encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred
all right, title and interest in the Mortgage Loans to
the Trustee; and
(iv) The Depositor has not transferred the Mortgage Loans
to the Trustee with any intent to hinder, delay or defraud any of
its creditors.
40
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. The Master Servicer. (a) The Master Servicer shall service
and administer the Mortgage Loans in a manner consistent with the terms of this
Agreement and with general industry practice and shall have full power and
authority, acting alone or through a subservicer, to do any and all things in
connection with such servicing and administration which it may deem necessary or
desirable, it being understood, however, that the Master Servicer shall at all
times remain responsible to the Trustee, the Certificateholders and the Credit
Enhancer for the performance of its duties and obligations hereunder in
accordance with the terms hereof. Any amounts received by any subservicer in
respect of a Mortgage Loan shall be deemed to have been received by the Master
Servicer whether or not actually received by it. Without limiting the generality
of the foregoing, the Master 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, upon the written request
of a Servicing Officer, furnish the Master Servicer with any powers of attorney
and other documents necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder. The Master Servicer
in such capacity may also consent to the placing of a lien senior to that of any
Mortgage on the related Mortgaged Property, provided that
(x) 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 the outstanding
principal amount of the mortgage loan secured by such subsequent
senior lien is no greater than the outstanding principal amount
of the senior mortgage loan secured by the Mortgaged Property as
of the date the related Mortgage Loan was originated; or
(y) the Mortgage relating to such Mortgage Loan was in a
second lien position as of the Cut-off Date and the new senior
lien secures a mortgage loan that refinances an existing first
mortgage loan and the outstanding principal amount of the
replacement first mortgage loan immediately following such
refinancing is not greater than the outstanding principal amount
of
41
such existing first mortgage loan at the date of
origination of such Mortgage Loan;
provided, further, that such senior lien does not secure a note that provides
for negative amortization. Notwithstanding the foregoing, the Master Servicer
can consent to the placing of liens senior to that of a Mortgage on the related
Mortgaged Property which have a principal balance in excess of the principal
balance of the senior lien it replaces on Mortgage Loans having in the aggregate
Asset Balances not in excess of ___% of the Cut-off Date Pool Balance; provided,
however, that, with respect to Mortgage Loans which as of the Cut-off Date had
combined Loan-to-Value Ratios in excess of ___%, the aggregate Asset Balance of
such Mortgage Loans with respect to which the senior lien may be so modified
shall not exceed _____% of the Cut-off Date Pool Balance (such ___% and _____%
herein referred to as the "Increased Senior Lien Limitation"). Any such increase
to the principal balance of the senior lien shall not exceed the greater of
$_______ and _____% of the principal balance of the senior lien prior to such
increase.
The Master Servicer may also, without prior approval from the Rating
Agencies or the Credit Enhancer, increase the Credit Limits on Mortgage Loans
provided that (i) new appraisals are obtained and the Combined Loan-to-Value
Ratios of the Mortgage Loans after giving effect to such increase are less than
or equal to the Combined Loan-to-Value Ratios or the Mortgage Loans as of the
Cut-off Date and (ii) such increases are consistent with the Master Servicer's
underwriting policies. In addition, the Master Servicer may increase the Credit
Limits on Mortgage Loans having aggregate balances of up to ____% of the
aggregate Cut-off Date Pool Balance, without obtaining new appraisals provided
that (i) the increase in the Credit Limit does not cause the Combined
Loan-to-Value Ratios of the Mortgage Loans to exceed _____% and (ii) the
increase is consistent with the Master Servicer's underwriting policies.
Furthermore, the Master Servicer may, without prior approval from the
Rating Agencies and the Credit Enhancer solicit Mortgagors for a reduction in
Loan Rates; provided that the Master Servicer can only reduce such Loan Rates on
up to ____% of the Mortgage Loans by Cut-off Date Pool Balance. Any such
solicitations shall not result in a reduction in the weighted average Gross
Margin of the Mortgage Loans in the pool by more than ____ basis points taking
into account any such prior reductions.
In addition, the Master Servicer may agree to changes in the terms of a
Mortgage Loan at the request of the Mortgagor provided that such changes (i) do
not materially and adversely affect the interests of Certificateholders or the
Credit Enhancer and (ii) are consistent with prudent and customary business
practice as
42
evidenced by a certificate signed by a Servicing Officer delivered to the
Trustee and the Credit Enhancer.
In addition to the foregoing, the Master Servicer may solicit Mortgagors
to change any other terms of the related Mortgage Loans, provided that such
changes (i) do not materially and adversely affect the interest of
Certificateholders or the Credit Enhancer and (ii) are consistent with prudent
and customary business practice as evidenced by a certificate signed by a
Servicing Officer delivered to the Trustee and the Credit Enhancer. Nothing
herein shall limit the right of the Master Servicer to solicit Mortgagors with
respect to new loans (including mortgage loans) that are not Mortgage Loans.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as servicer under this Agreement) to the Trustee 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) In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer in its
sole discretion may, to the extent permitted by applicable law, terminate the
existing subservicer arrangements with any subservicer or assume the terminated
Master Servicer's rights under such subservicing arrangements which termination
or assumption will not violate the terms of such arrangements.
Section 3.02. Collection of Certain Mortgage Loan Payments. (a) The
Master 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 the foregoing, and
without limiting the generality of the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or any assumption fees or other
fees which may be collected in the ordinary course of servicing such Mortgage
Loan and (ii) arrange with a Mortgagor a schedule for the payment of interest
due and unpaid; provided that such arrangement is consistent with the Master
Servicer's policies with respect to the mortgage loans it owns or services;
provided, further, that notwithstanding such arrangement such Mortgage Loans
will be included in the information regarding delinquent Mortgage Loans set
forth in the Servicing Certificate and monthly statement to Certificateholders
pursuant to Section 5.03.
(b) The Master Servicer shall establish and maintain a trust account
(the "Collection Account") titled "___________________________, as Trustee, in
trust for the registered holders of Revolving Home Equity Loan Asset Backed
43
Certificates, Series 199__-__ and _____________________." The Collection Account
shall be an Eligible Account. The Master Servicer shall on the Closing Date
deposit any amounts representing payments on, and any collections in respect of,
the Mortgage Loans received after the Cut-off Date and prior to the Closing Date
(exclusive of payments in respect of accrued interest due on or prior to the
Cut-off Date or due in the month of _________), and thereafter the Master
Servicer, or the Seller, as the case may be, shall deposit within two Business
Days following receipt thereof the following payments and collections received
or made by it (without duplication):
(i) all collections on and in respect of the Mortgage
Loans;
(ii) the amounts, if any, deposited to the Collection
Account pursuant to Section 4.05;
(iii) Net Liquidation Proceeds net of any related
Foreclosure Profit;
(iv) Insurance Proceeds (including, for this purpose, any
amount required to be credited by the Master Servicer pursuant to the
last sentence of Section 3.04 and excluding the portion thereof, if any,
that has been 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 Master Servicer); and
(v) any amounts required to be deposited therein
pursuant to Section 10.01;
provided, however, that with respect to each Collection Period, the Master
Servicer shall be permitted to retain from payments in respect of interest on
the Mortgage Loans, the Servicing Fee for such Collection Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Master Servicer need not deposit in the Collection Account amounts representing
Foreclosure Profits, fees (including annual fees) or late charge penalties
payable by Mortgagors, or amounts received by the Master Servicer for the
accounts of Mortgagors for application towards the payment of taxes, insurance
premiums, assessments, excess pay off amounts and similar items. The Master
Servicer shall remit all Foreclosure Profits to the Seller.
The Trustee shall hold amounts deposited in the Collection Account as
trustee for the Certificateholders and for the Credit Enhancer. In addition, the
Master Servicer shall notify the Trustee and the Credit Enhancer in writing on
each Determination Date of the amount of payments and collections in the
Collection Account allocable to Interest Collections and Principal
44
Collections for the related Distribution Date. Following such notification, the
Master Servicer shall be entitled to withdraw from the Collection Account and
retain any amounts that constitute income and gain realized from the investment
of such payments and collections.
All income and gain realized from any investment in Eligible Investments
of funds in the Collection Account shall be for the benefit of the Master
Servicer and shall be subject to its withdrawal from time to time. The amount of
any losses incurred in respect of the principal amount of any such investments
shall be deposited in the Collection Account by the Master Servicer out of its
own funds immediately as realized.
Section 3.03. Withdrawals from the Collection Account. From time to
time, withdrawals may be made from the Collection Account by the Master Servicer
for the following purposes:
(i) To the Master Servicer as payment for its
Servicing Fee pursuant to Section 3.08;
(ii) To pay to the Master Servicer amounts on deposit in the
Collection Account that are not to be included in the distributions and
payments pursuant to Section 5.01 to the extent provided by the second
to the last and the last paragraph of Section 3.02(b);
(iii) To make or to permit the Paying Agent to make
distributions and payments pursuant to Section 5.01; and
(iv) Prior to the Collection Period preceding the Rapid Amortization
Commencement Date, to pay to the Seller, the amount of any Additional
Balances as and when created during the related Collection Period,
provided, that the aggregate amount so paid to the Seller in respect of
Additional Balances at any time during any Collection Period shall not
exceed the amount of Principal Collections theretofore received for such
Collection Period minus the amount determined pursuant to clause (x) of
the definition of "Alternative Principal Payment".
If the Master Servicer deposits in the Collection Account any amount not
required to be deposited therein or any amount in respect of payments by
Mortgagors made by checks subsequently returned for insufficient funds or other
reason for non-payment it may at any time withdraw such amount from the
Collection Account, and any such amounts shall not be included in the amounts to
be deposited in the Collection Account pursuant to Section 3.02(b), any
provision herein to the contrary notwithstanding.
Section 3.04. Maintenance of Hazard Insurance; Property
Protection Expenses. The Master Servicer shall cause to be main-
45
tained for each Mortgage Loan hazard insurance naming the Master Servicer or the
related subservicer 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
combined principal balance owing on such Mortgage Loan and any mortgage loan
senior to such Mortgage Loan from time to time. The Master Servicer shall also
maintain on property acquired upon foreclosure, or by deed in lieu of
foreclosure, 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 combined
principal balance owing on such Mortgage Loan and any mortgage loan senior to
such Mortgage Loan at the time of such foreclosure or deed in lieu of
foreclosure plus accrued interest and the good-faith estimate of the Master
Servicer of related Liquidation Expenses to be incurred in connection therewith.
Amounts collected by the Master Servicer under any such policies shall be
deposited in the Collection Account to the extent called for by Section 3.02. In
cases in which any Mortgaged Property is located in a federally designated flood
area, the hazard insurance to be maintained for the related Mortgage Loan shall
include flood insurance. All such flood insurance shall be in such amounts as
are required under applicable guidelines of the Federal Flood Emergency Act. The
Master 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 Master Servicer shall obtain and maintain a blanket
policy consistent with prudent industry standards insuring against hazard losses
on all of the Mortgage Loans in an aggregate amount prudent under industry
standards, it shall conclusively be deemed to have satisfied its obligations as
set forth in the first sentence of this Section 3.04 and there shall have been a
loss which would have been covered by such policy, deposit in the Collection
Account, as the case may be, the amount not otherwise payable under the blanket
policy because of such deductible clause.
Section 3.05. Assumption and Modification Agreements. In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Master Servicer shall exercise its right to accelerate the maturity of such
Mortgage Loan consistent with the then current practice of the Master Servicer
and without regard to the inclusion of such Mortgage Loan in the Trust. If it
elects not to enforce its right to accelerate or if it is prevented from doing
so by applicable law, the Master Servicer (so long as such action conforms with
the underwriting standards generally acceptable in the industry at the time for
new origination) is authorized to take or enter into an assumption
46
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 Credit Line Agreement and, to the extent permitted by
applicable law, the Mortgagor remains liable thereon. The Master Servicer shall
notify the Trustee that any assumption and modification agreement has been
completed by delivering to the Trustee an Officer's Certificate certifying that
such agreement is in compliance with this Section 3.05 and by forwarding to the
applicable Custodian, as agent for the Trustee, the original 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. No change in the terms of the related Credit Line Agreement may be
made by the Master Servicer in connection with any such assumption to the extent
that such change would not be permitted to be made in respect of the original
Credit Line Agreement pursuant to the fourth paragraph of Section 3.01(a). Any
fee collected by the Master Servicer for entering into any such agreement will
be retained by the Master Servicer as additional servicing compensation.
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans. The Master Servicer shall 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
Master Servicer based upon the practices and procedures referred to in the
following sentence, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02; provided that if the Master
Servicer has actual knowledge or reasonably believes that any Mortgaged Property
is affected by hazardous or toxic wastes or substances and that the acquisition
of such Mortgaged Property would not be commercially reasonable, then the Master
Servicer will not cause the Trust to acquire title to such Mortgaged Property in
a foreclosure or similar proceeding. In connection with such foreclosure or
other conversion, the Master 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) and procedures as it shall deem necessary or
advisable and as shall be normal and usual in its general mortgage servicing
activities. The foregoing is subject to the proviso that the Master 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 property unless it shall determine that such expenditure will
increase Net Liquidation Proceeds.
In the event that title to any Mortgaged Property is
acquired in foreclosure or by deed in lieu of foreclosure, the
47
deed or certificate of sale shall be issued to the Trustee, or to
its nominee on behalf of Certificateholders.
The Master Servicer, in its sole discretion, shall have the right to
purchase for its own account from the Trust any Mortgage Loan which is 91 days
or more delinquent at a price equal to the purchase price described below. The
price for any Mortgage Loan purchased hereunder (which shall be calculated in
the same manner set forth in Section 2.02) shall be deposited in the Collection
Account and the Trustee, upon receipt of a certificate from the Master Servicer
in the form of Exhibit L hereto, shall release or cause to be released to the
Master Servicer the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the Master Servicer, in each
case without recourse, as shall be necessary to vest in the purchaser of such
Mortgage Loan any Mortgage Loan released pursuant hereto and the Master Servicer
shall succeed to all the Trustee's right, title and interest in and to such
Mortgage Loan and all security and documents related thereto. Such assignment
shall be an assignment outright and not for security. The Master Servicer shall
thereupon own such Mortgage Loan, and all security and documents, free of any
further obligation to the Trustee, the Credit Enhancer or the Certificateholders
with respect thereto.
Section 3.07. Trustee to Cooperate. On or before each Distribution Date,
the Master Servicer will notify the Trustee of the payment in full of the Asset
Balance of any Mortgage Loan during the preceding Collection Period, which
notification shall be by a certification (which certification shall include a
statement to the effect that all amounts received in connection with such
payment which are required to be deposited in the Collection Account pursuant to
Section 3.02 have been so deposited or credited) of a Servicing Officer. Upon
any such payment in full, the Master Servicer is authorized to execute, pursuant
to the authorization contained in Section 3.01, if the assignments of Mortgage
have been recorded as required hereunder, an instrument of satisfaction
regarding the related Mortgage, which instrument of satisfaction shall be
recorded by the Master Servicer if required by applicable law and be delivered
to the Person entitled thereto. It is understood and agreed that no expenses
incurred in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Collection Account. If the Trustee is
holding the Mortgage Files, from time to time and as appropriate for the
servicing or foreclosure of any Mortgage Loan, or in connection with the payment
in full of the Asset Balance of any Mortgage Loan, the Trustee shall, upon
request of the Master Servicer and delivery to the Trustee of a Request for
Release substantially in the form attached hereto as Exhibit J signed by a
Servicing Officer, release the related Mortgage File to the Master Servicer and
the Trustee shall execute such documents, in the forms provided by the Master
Servicer, as shall be necessary to the prosecution of any such proceedings or
the taking of other
48
servicing actions. Such trust receipt shall obligate the Master Servicer to
return the Mortgage File to the Trustee when the need therefor by the Master
Servicer no longer unless the Mortgage Loan shall be liquidated, in which case,
upon receipt of a certificate of a Servicing Officer similar to that hereinabove
specified, the trust receipt shall be released by the Trustee or such Custodian
to the Master Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the assignments of
Mortgage in accordance with the provisions hereof, the Trustee shall, if so
requested in writing by the Master Servicer, execute an appropriate assignment
in the form provided to the Trustee by the Master Servicer to assign such
Mortgage Loan for the purpose of collection to the Master Servicer or to the
related subservicer (any such assignment shall unambiguously indicate that the
assignment is for the purpose of collection only), and, upon such assignment,
the Master Servicer will thereupon bring all required actions in its own name
and otherwise enforce the terms of the Mortgage Loan and deposit the Net
Liquidation Proceeds, exclusive of Foreclosure Profits, received with respect
thereto in the Collection Account. In the event that all delinquent payments due
under any such Mortgage Loan are paid by the Mortgagor and any other defaults
are cured, then the Master Servicer shall promptly reassign such Mortgage Loan
to the Trustee and return the related Mortgage File to the place where it was
being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Master Servicer. The Master Servicer shall be entitled to receive the Servicing
Fee pursuant to Section 3.03 as compensation for its services in connection with
servicing the Mortgage Loans. Moreover, additional servicing compensation in the
form of late payment charges or other receipts not required to be deposited in
the Collection Account (other than Foreclosure Profits) shall be retained by the
Master Servicer. The Master Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment of
all other fees and expenses not expressly stated hereunder to be for the account
of the Certificateholders) and shall not be entitled to reimbursement therefor
except as specifically provided herein. Liquidation Expenses are reimbursable to
the Master Servicer solely from related Liquidation Proceeds.
Section 3.09. Annual Statement as to Compliance. (a) The Master Servicer
will deliver to the Trustee, the Credit Enhancer and the Rating Agencies, on or
before _______ of each year, beginning _____________, 19___, an Officer's
Certificate stating that (i) a review of the activities of the Master Servicer
during the preceding fiscal year (or such shorter period as is applicable in the
case of the first report) and of its performance under this Agreement has been
made under such officer's supervision and (ii) to the best of such officer's
49
knowledge, based on such review, the Master Servicer has fulfilled all of its
material obligations under this Agreement throughout such fiscal year, 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.
(b) The Master Servicer shall deliver to the Trustee, the Credit
Enhancer and each of the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event which with the
giving of notice or the lapse of time or both, would become an Event of
Servicing Termination.
Section 3.10. Annual Servicing Report. On or before _________ of each
year, beginning ____________, 19___, the Master Servicer, at its expense, shall
cause a firm of nationally recognized independent public accountants (who may
also render other services to the Master Servicer) to furnish a report to the
Trustee, the Credit Enhancer and each Rating Agency to the effect that such firm
has examined certain documents and records relating to the servicing of mortgage
loans during the most recent fiscal year then ended under pooling and servicing
agreements (substantially similar to this Agreement, including this Agreement)
that such examination, was conducted substantially in compliance with the audit
guide for audits of non-supervised mortgagees approved by the Department of
Housing and Urban Development for use by independent public accountants (to the
extent that the procedures in such audit guide are applicable to the servicing
obligations set forth in such agreements) and that such examination 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. Annual Opinion of Counsel. On or before _________ of each
year, beginning _____________, 19___, each of the Transferor and the Depositor,
at its expense, shall deliver to the Trustee and the Credit Enhancer the
applicable Opinion of Counsel specified in Exhibit E hereto.
Section 3.12. Access to Certain Documentation and Information Regarding
the Mortgage Loans. (a) The Master Servicer shall provide to the Trustee, the
Credit Enhancer, any Investor Certificateholders that are federally insured
savings and loan associations, the Office of Thrift Supervision, successor to
the Federal Home Loan Bank Board, the FDIC and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office of
Thrift Supervision and the FDIC (acting as operator of the SAIF or the BIF),
such access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Master
50
Servicer. Nothing in this Section 3.12 shall derogate from the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors and the failure of the Master Servicer to
provide access as provided in this Section 3.12 as a result of such obligation
shall not constitute a breach of this Section 3.12.
(b) The Master Servicer shall supply information in such form as the
Trustee shall reasonably request to the Trustee and the Paying Agent, on or
before the start of 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 claim under
the Policy.
Section 3.13. Maintenance of Certain Servicing Insurance Policies. The
Master 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 master servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and bond together shall 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.
Section 3.14. Reports to the Securities and Exchange Commission. The
Trustee 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 and
regulations of the Securities and Exchange Commission thereunder. Upon the
request of the Trustee, each of the Seller, the Master Servicer, the Depositor
and the Transferor shall cooperate with the Trustee in the preparation of any
such report and shall provide to the Trustee in a timely manner all such
information or documentation as the Trustee may reasonably request in connection
with the performance of its duties and obligations under this Section.
Section 3.15. Tax Returns. In accordance with Section 2.08 hereof, the
Trustee shall prepare and file any Federal, State or local income and franchise
tax return for the Trust as well as any other applicable return and apply for a
taxpayer identification number on behalf of the Trust. The Transferor shall
treat the Mortgage Loans as its property for all Federal, State or local tax
purposes and shall report all income earned thereon (including amounts payable
as fees to the Master Servicer) as its income for 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, State or local
tax returns, the Trustee shall prepare and file or shall cause to
51
be prepared and filed any tax returns required to be filed by the Trust; the
Trustee shall promptly sign such returns and deliver such returns after
signature to the Master Servicer and such returns shall be filed by the Master
Servicer. The Trustee shall also prepare or shall cause to be prepared all tax
information required by law to be distributed to Investor Certificateholders. In
no event shall the Trustee or the Master Servicer be liable for any liabilities,
costs or expenses of the Trust, the Investor Certificateholders, the Transferor
Certificateholders or the Certificate Owners arising under any tax law,
including without limitation Federal, state or local income and franchise 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).
Section 3.16. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Master Servicer shall prepare and deliver all federal and state information
reports when and as required by all applicable state and federal income tax
laws. In particular, with respect to the requirement under Section 6050J of the
Code to the effect that the Master Servicer shall make reports of foreclosures
and abandonments of any mortgaged property for each year beginning in 1997, the
Master Servicer shall file reports relating to each instance occurring during
the previous calendar year in which the Master Servicer (i) on behalf of the
Trustee acquires an interest in any Mortgaged Property through foreclosure or
other comparable conversion in full or partial satisfaction of a Mortgage Loan,
or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Master Servicer shall be in form and substance
sufficient to meet the reporting requirements imposed by Section 6050J.
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ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate. Not later than each Determination
Date, the Master Servicer shall deliver (a) to the Trustee, the Statement to
Certificateholders required to be prepared pursuant to Section 5.03 and (b) to
the Trustee, the Seller, the Depositor, the Paying Agent, the Credit Enhancer
and each Rating Agency a Servicing Certificate (in written form or the form of
computer readable media or such other form as may be agreed to by the Trustee
and the Master Servicer), together with an Officer's Certificate to the effect
that such Servicing Certificate is true and correct in all material respects,
stating the related Collection Period, Distribution Date, the series number of
the Certificates, the date of this Agreement, and:
(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) Interest Collections
and (b) Principal Collections for such Collection Period;
(iii) the Investor Floating Allocation Percentage and
the Investor Fixed Allocation Percentage for such Collection Period;
(iv) the Investor Interest Collections and Investor
Principal Collections for such Collection Period;
(v) the Transferor Interest Collections and
Transferor Principal Collections for such Collection Period;
(vi) Investor Certificate Interest and the Investor
Certificate Rate for the related Interest Period;
(vii) the amount, if any, of such Investor Certificate
Interest that is not payable on account of insufficient
Investor Interest Collections;
(viii) the portion of the Unpaid Investor Certificate Interest
Shortfall, if any, the amount of interest on such shortfall at the
Certificate Rate applicable from time to time (separately stated) to be
distributed on such Distribution Date;
(ix) the Unpaid Investor Certificate Interest Short-
fall, if any, to remain after the distribution on such
Distribution Date;
53
(x) the Accelerated Principal Distribution Amount
and the portion thereof that will be distributed pursuant to
Section 5.01(a)(vii);
(xi) the Scheduled Principal Collections Distribution
Amount, separately stating the components thereof;
(xii) the amount of any Transfer Deposit Amount paid
by the Seller or the Depositor pursuant to Section 2.02 or
2.04;
(xiii) any accrued and unpaid Servicing Fees for
previous Collection Periods and the Servicing Fee for such
Collection Period;
(xiv) the Investor Loss Amount for such Collection
Period;
(xv) 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 5.01(a)(v);
(xvi) the aggregate Asset Balance of the Mortgage
Loans as of the end of the preceding Collection Period and
as of the end of the second preceding Collection Period;
(xvii) the Pool Balance as of the end of the preceding
Collection Period and as of the end of the second preceding
Collection Period;
(xviii) the Invested Amount as of the end of the
preceding Collection Period;
(xix) the Investor Certificate Principal Balance and Pool
Factor after giving effect to the distribution on such Distribution Date
and to any reduction on account of the Investor Loss Amount;
(xx) the Transferor Principal Balance after giving
effect to the distribution on such Distribution Date;
(xxi) the aggregate amount of Additional Balances
created during the previous Collection Period;
(xxii) the number and aggregate Asset Balances of Mortgage
Loans (x) as to which the Minimum Monthly Payment is delinquent for
30-59 days, 60-89 days and 90 or more days, respectively and (y) that
have become REO, in each case as of the end of the preceding Collection
Period;
54
(xxiii) whether a Rapid Amortization Event has occurred since
the prior Determination Date, specifying each such Rapid Amortization
Event if one has occurred; and
(xxiv) whether an Event of Servicing Termination has occurred
since the prior Determination Date, specifying each such Event of
Servicing Termination if one has occurred;
(xxv) the amount to be distributed to the Credit
Enhancer pursuant to Section 5.01(a)(vi) and Section
5.01(a)(viii)(ii), stated separately;
(xxvi) the amount to be distributed to the Spread
Account pursuant to Section 5.01(a)(viii)(i);
(xxvii) the Guaranteed Principal Distribution Amount for
such Distribution Date;
(xxviii) the Credit Enhancement Draw Amount, if any, for
such Distribution Date;
(xxix) the amount to be distributed to the Transferor
pursuant to Section 5.01(a)(x);
(xxx) the amount to be paid to the Master Servicer
pursuant to Section 5.01(a)(ix);
(xxxi) the Maximum Rate for the related Collection
Period and the Weighted Average Net Loan Rate;
(xxxii) the total amount of funds on deposit in the
Spread Account and the applicable Spread Account Maximum;
(xxxiii) the expected amount of any optional advances pursuant to
Section 4.05 hereof by the Master Servicer included in the distribution
on such Distribution Date and the aggregate expected amount of optional
advances pursuant to Section 4.05 hereof by the Master Servicer
outstanding as of the close of business on such Distribution Date;
(xxxiv) the Overcollateralization Amount after giving
effect to the distribution to be made on such Distribution;
and
(xxxv) the number and principal balances of any Mortgage
Loans retransferred to the Transferor pursuant to Section 2.06.
The Trustee shall conclusively rely upon the information contained in a
Servicing Certificate for purposes of making distributions pursuant to Section
5.01, shall have no duty to inquire into such information and shall have no
liability in so relying. The format and content of the Servicing Certificate may
be modi-
55
fied by the mutual agreement of the Master Servicer, the Trustee and the Credit
Enhancer. The Master Servicer shall give notice of any such change to the Rating
Agencies.
Section 4.02. Claims upon the Policy; Policy Payments
Account.
(a) If, by the close of business on the third Business Day prior to a
Distribution Date, the sum of the funds then on deposit in the Collection
Account for the related Collection Period which are payable to the Investor
Certificateholders pursuant to Sections 5.01(a), (b) and (g) (after giving
effect to the distribution of the Trustee Fee and the Premium), the amounts on
deposit in the Spread Account and the amount, if any, deposited into the
Collection Account pursuant to Section 4.05 are insufficient to pay the
Guaranteed Distribution on such Distribution Date, then the Trustee shall give
notice to the Credit Enhancer by telephone or telecopy of the amount equal to
the Credit Enhancement Draw Amount. Such notice of such sum shall be confirmed
in writing in the form set forth as Exhibit A to the Endorsement of the Policy,
to the Credit Enhancer and the Fiscal Agent, if any, at or before 10:00 a.m.,
New York City time, on the second Business Day prior to such Distribution Date.
Following receipt by the Credit Enhancer of such notice in such form, the Credit
Enhancer or the Fiscal Agent will pay any amount payable under the Policy on the
later to occur of (i) 12:00 noon, New York City time, on the Business Day
following such receipt and (ii) 12:00 noon, New York City time, on the
Distribution Date to which such deficiency relates, as provided in the
Endorsement to the Policy.
(b) The Trustee shall establish a separate special purpose trust
account, which account shall be an Eligible Account, for the benefit of Holders
of the Investor Certificates and the Credit Enhancer referred to herein as the
"Policy Payments Account" over which the Trustee shall have exclusive control
and sole right of withdrawal. The Trustee shall deposit any amount paid under
the Policy in the Policy Payments Account and distribute such amount only for
purposes of payment to Holders of the Investor Certificates of the Guaranteed
Distribution for which a claim was made and such amount may not be applied to
satisfy any costs, expenses or liabilities of the Master Servicer, the Trustee
or the Trust Fund. Amounts paid under the Policy shall be transferred to the
Collection Account in accordance with the next succeeding paragraph and
disbursed by the Trustee to Holders of Investor Certificates in accordance with
Section 5.01. It shall not be necessary for such payments to be made by checks
or wire transfers separate from the checks or wire transfers used to pay the
Guaranteed Distribution with other funds available to make such payment.
However, the amount of any payment of principal of or interest on the Investor
Certificates to be paid from funds transferred from the Policy Payments Account
shall be noted as provided in paragraph (c) below in the
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Certificate Register and in the statement to be furnished to Holders of the
Investor Certificates pursuant to Section 5.03. Funds held in the Policy
Payments Account shall not be invested.
On any Distribution Date with respect to which a claim has been made
under the Policy, the amount of any funds received by the Trustee as a result of
any claim under the Policy, to the extent required to make the Guaranteed
Distribution on such Distribution Date, shall be withdrawn from the Policy
Payments Account and deposited in the Collection Account and applied by the
Trustee, together with the other funds to be withdrawn from the Collection
Account pursuant to Section 5.01 directly to the payment in full of the
Guaranteed Distribution due on the Investor Certificates. Any funds received by
the Trustee shall be used solely for payment to the Holders of Investor
Certificates and may not be applied to satisfy any costs, expenses or
liabilities of the Master Servicer, the Trustee or the Trust. Any funds
remaining in the Policy Payments Account on the first Business Day following a
Distribution Date shall be remitted to the Credit Enhancer, pursuant to the
instructions of the Credit Enhancer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Investor Certificate from
moneys received under the Policy. The Credit Enhancer shall have the right to
inspect such records at reasonable times during normal business hours upon one
Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Credit Enhancer and Fiscal
Agent of any proceeding or the institution of any action, of which a Responsible
Officer of the Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any distribution made with respect to the
Investor Certificates. Each Investor Certificateholder, by its purchase of
Investor Certificates, the Master Servicer and the Trustee hereby agree that,
the Credit Enhancer (so long as no Credit Enhancer Default exists) may at any
time during the continuation of any proceeding relating to a Preference Claim
direct all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to such
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, the Credit Enhancer shall be subrogated to the rights of the Master
Servicer, the Trustee and each Investor Certificateholder in the conduct of any
such Preference Claim, including, without limitation, all rights of any party to
an adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
57
Section 4.03. Spread Account. (a) The Trustee shall establish and
maintain a separate trust account (the "Spread Account") titled
"________________________, as Trustee, in trust for the registered holders of
Revolving Home Equity Loan Asset Backed Certificates, Series 199__-__ and
_____________________." The Spread Account shall be an Eligible Account. Amounts
on deposit in the Spread Account will, at the direction of the Transferor, be
invested in either Eligible Investments maturing no later than the day before
the next Distribution Date or in the commercial paper (maturing no later than
the day before the next Distribution Date) of [Countrywide Home Loans, Inc.], or
any of its Affiliates, provided that such commercial paper's short-term rating
is no lower than ___ and ____ and the long-term unsecured debt of [Countrywide
Home Loans, Inc.] is rated at least ____ by _______________, or such lower
rating as is agreed to by the Rating Agencies as evidenced by a letter from each
such Rating Agency.
All income and gain realized from any investment of funds in the Spread
Account shall be for the benefit of the Transferor and shall be subject to its
withdrawal from time to time. The amount of any losses incurred in respect of
the principal amount of any such investments shall be deposited in the Spread
Account by the Transferor out of its own funds immediately as realized.
(b) On each Determination Date the Trustee shall determine (i) the
extent to which Investor Interest Collections and the amounts, if any, deposited
into the Collection Account pursuant to Section 4.05 applied in the order
specified in Section 5.01(a) are insufficient to make distributions as provided
in clauses (iii) and (iv) of Section 5.01(a) and (ii) the Guaranteed Principal
Distribution Amount for the related Distribution Date. On each Distribution Date
the Trustee shall withdraw from the Spread Account and deposit into the
Collection Account the lesser of the amount on deposit in the Spread Account and
an amount equal to the sum of the amounts, if any, determined in clauses (i) and
(ii) of the preceding sentence.
(c) Following the termination of the Trust pursuant to Section 10.01 or
11.02 hereof, the Trustee shall withdraw all amounts then on deposit in the
Spread Account and distribute such amounts first to any amounts due and owing to
the Credit Enhancer and then to the Transferor. If on any Distribution Date the
amount on deposit in the Spread Account exceeds the Spread Account Maximum, the
Trustee shall withdraw such excess and distribute it to the Transferor.
Section 4.04. Effect of Payments by the Credit Enhancer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on any of the Investor Certificates which is made with
moneys received pursuant to the terms of the Policy shall not be considered
payment of such Investor Certificates from the Trust and shall not result
58
in the payment of or the provision for the payment of the principal of or
interest on such Investor Certificates within the meaning of Section 5.01. The
Depositor, the Master Servicer and the Trustee acknowledge, and each Holder by
its acceptance of an Investor Certificate agrees, that without the need for any
further action on the part of the Credit Enhancer, the Depositor, the Master
Servicer, the Trustee or the Certificate Registrar (a) to the extent the Credit
Enhancer makes payments, directly or indirectly, on account of principal of or
interest on any Investor Certificates to the Holders of such Certificates, the
Credit Enhancer will be fully subrogated to the rights of such Holders to
receive such principal and interest from the Trust and (b) the Credit Enhancer
shall be paid such principal and interest but only from the sources and in the
manner provided herein for the payment of such principal and interest.
The Trustee and the Master Servicer shall cooperate in all respects with
any reasonable request by the Credit Enhancer for action to preserve or enforce
the Credit Enhancer's rights or interests under this Agreement without limiting
the rights or affecting the interests of the Holders as otherwise set forth
herein.
Section 4.05. Optional Advances of the Master Servicer. The Master
Servicer, in its sole discretion, may advance the interest component of any
delinquent Minimum Monthly Payment (or any portion thereof) by depositing such
amount into the Collection Account on or prior to the Determination Date.
59
ARTICLE V
Payments and Statements to
Certificateholders; Rights of Certificateholders
Section 5.01. Distributions.
(a) Distributions of Investor Interest Collections and Investment
Proceeds. Subject to Section 11.02(b), on each Distribution Date, the Trustee or
the Paying Agent, as the case may be, shall distribute out of the Collection
Account to the extent of Investor Interest Collections collected during the
related Collection Period and the amounts transferred from the Spread Account as
determined pursuant to Section 4.03(b) and the amount, if any, deposited into
the Collection Account pursuant to Section 4.05, the following amounts and in
the following order of priority to the following Persons (based on the
information set forth in the Servicing Certificate):
(i) the Trustee Fee for such Distribution Date to
the Trustee;
(ii) the premium pursuant to the Insurance Agreement
to the Credit Enhancer;
(iii) the Investor Certificate Interest for such Distribution
Date to the Investor Certificateholders and 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 Investor Loss Amount for such Collection
Period to the Investor Certificateholders as principal in
reduction of the Investor Certificate Principal Balance;
(v) 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 (v);
(vi) to reimburse the Credit Enhancer for previously
unreimbursed Credit Enhancement Draw Amounts together with interest
thereon at the applicable rate set forth in the Insurance Agreement;
(vii) the Accelerated Principal Distribution Amount,
if any, to the Investor Certificateholders;
60
(viii) (i) to the Trustee to deposit to the Spread Account up
to the Spread Account Maximum and (ii) to the Credit Enhancer for any
amounts owed to the Credit Enhancer pursuant to the Insurance Agreement;
(ix) any amount required to be paid to the Master
Servicer pursuant to Section 7.03 which has not been previously paid to
the Master Servicer; and
(x) any remaining amount to the Transferor.
(b) Distribution of Principal Collections. Subject to Section 11.02(b)
and except on the Distribution Date in __________ 20___, on each Distribution
Date, the Trustee shall distribute out of the Collection Account to the Investor
Certificateholders the Principal Collections (including amounts transferred
thereto from the Spread Account pursuant to Section 4.03(b) in respect of the
amount determined pursuant to Section 4.03(b)(ii) up to the Scheduled Principal
Collections Distribution Amount but not in excess of the Investor Certificate
Principal Balance. On the Distribution Date in ____________ 20___, the Trustee
shall distribute to Investor Certificateholders Principal Collections up to the
Investor Certificate Principal Balance.
(c) Reserved.
(d) Distribution of the Credit Enhancement Draw Amount: With respect to
any Distribution Date, to the extent that Investor Interest Collections and
amounts transferred from the Spread Account on the related Distribution Date in
respect of the amount determined pursuant to Section 4.03(b)(i) and any amounts,
if any, deposited to the Collection Account pursuant to Section 4.05 applied in
the order specified in Section 5.01(a) are insufficient to make distributions as
provided in clause (iii) of Section 5.01(a) above, the Trustee will make such
payments (the "Deficiency Amount") from the amount drawn under the Policy for
such Distribution Date pursuant to Section 4.02. For any Distribution Date as to
which there is a Guaranteed Principal Distribution Amount, the Trustee shall
distribute the Guaranteed Principal Distribution Amount to Certificateholders
from the amount drawn under the Policy for such Distribution Date pursuant to
Section 4.02.
The aggregate amount of principal distributed to the Investor
Certificateholders under this Agreement shall not exceed the Original Investor
Certificate Principal Balance.
(e) 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 10.01 respecting the
final distribution) by check or money order mailed to such Investor Certifi-
61
cateholder 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.
(f) 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 Depositor, the Credit Enhancer or the Master Servicer shall have any
responsibility therefor except as otherwise provided by applicable law.
(g) Distributions to Holders of Transferor Certificates. On each
Distribution Date, the Trustee shall, based upon the information set forth in
the Servicing Certificate for such Distribution Date, distribute to the
Transferor (i) the Transferor Interest Collections for the related Collection
Period and (ii) the portion, if any, of Transferor Principal Collections for the
related Collection Period in excess of Additional Balances created during such
Collection Period; provided that collections allocable to the Transferor
Certificates will be distributed to the Transferor only to the extent that such
distribution will not reduce the amount of the Transferor Principal Balance as
of the related Distribution Date below the Minimum Transferor Interest. Amounts
not distributed to the Transferor because of such limitations will be retained
in the Collection Account until the Transferor Principal Balance exceeds the
Minimum Transferor Interest, at which time such excess shall be released to the
Transferor. If any such amounts are still retained in the Collection Account
upon the commencement of the Rapid Amortization Period, such amounts will be
paid to the Investor Certificateholders as a reduction of the Investor
Certificate Principal Balance.
62
Section 5.02. Calculation of the Investor Certificate Rate. On the
[second LIBOR Business Day immediately preceding each Distribution Date, the
Trustee shall determine LIBOR] for the Interest Period commencing on such
Distribution Date and inform the Master Servicer (at the facsimile number given
to the Trustee in writing) of such rates. On each Determination Date, the
Trustee shall determine the applicable Investor Certificate Rate for the related
Distribution Date.
Section 5.03. Statements to Certificateholders. Concurrently with each
distribution to Investor Certificateholders, the Trustee shall forward to each
Investor Certificateholder, the Master Servicer and each Rating Agency a
statement prepared by the Master Servicer pursuant to Section 4.01 with respect
to such distribution setting forth:
(i) the Investor Floating Allocation Percentage for
the preceding Collection Period;
(ii) the Investor Certificate Distribution Amount;
(iii) the amount of Investor Certificate Interest in
such distribution and the related Investor Certificate Rate;
(iv) the amount, if any, of any Unpaid Investor
Certificate Interest Shortfall in such distribution;
(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 in such
distribution, separately stating the components thereof;
(vii) the amount, if any, of the reimbursement of
previous Investor Loss Reduction Amounts in such distribution;
(viii) the amount, if any, of the aggregate of
unreimbursed Investor Loss Reduction Amounts after giving effect to such
distribution;
(ix) the Servicing Fee for such Distribution Date;
(x) the Invested Amount, the Investor Certificate
Principal Balance and the Pool Factor, each after giving effect to such
distribution;
(xi) the Pool Balance as of the end of the preceding
Collection Period and the aggregate of the Asset Balances of the
Mortgage Loans at the close of business on the last day of the related
Collection Period;
63
(xii) the Credit Enhancement Draw Amount, if any;
(xiii) the number and aggregate Asset Balances of Mortgage
Loans as to which the Minimum Monthly Payment is delinquent for 30-59
days, 60-89 days and 90 or more days, respectively, as of the end of the
preceding Collection Period;
(xiv) the book value (within the meaning of 12 C.F.R.
ss. 571.13 or comparable provision) of any real estate
acquired through foreclosure or grant of a deed in lieu of
foreclosure;
(xv) the amount of any optional advances pursuant to Section
4.05 hereof by the Master Services included in the distribution on such
Distribution Date and the aggregate amount of optional advances pursuant
to Section 4.05 hereof by the Master Services outstanding as of the
close of business on such Distribution Date;
(xvi) the Investor Certificate Rate applicable to the
distribution on the following Distribution Date;
(xvii) the number and principal balances of any Mortgage
Loans retransferred to the Transferor pursuant to (a) Section 2.04 and
(b) Section 2.06.
In the case of information furnished pursuant to clauses (ii), (iii) in
respect of Investor Certificate Interest, (iv) and (viii) above, the amounts
shall be expressed as a dollar amount per Investor Certificate with a $1,000
denomination.
Within 60 days after the end of each calendar year, the Master 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 Master Servicer shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Master Servicer or a Paying Agent 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 Transferor, or as may be otherwise required by Section 3.15) Internal
Revenue Service Form 1099 (or any successor form) and any other tax forms
required to be filed or furnished to Certificateholders 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.
Section 5.04. Rights of Certificateholders. The Investor
Certificates shall represent fractional undivided interests in
the Trust, including the benefits of the Collection Account and
64
the right to receive Investor Interest Collections, Principal Collections and
other amounts at the times and in the amounts specified in this Agreement; the
Transferor Certificates shall represent the remaining interest in the Trust.
65
ARTICLE VI
The Certificates
Section 6.01. The Certificates. The Investor Certificates and Transferor
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 Depositor concurrently with
the sale and assignment 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,
except that one Investor Certificate may be in a different denomination of less
than $1,000 so that the sum of the denominations of all outstanding Investor
Certificates shall equal the Original Investor Certificate Principal Balance.
The sum of the denominations of all outstanding Investor Certificates shall
equal the Original Investor Certificate Principal Balance. The Transferor
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 Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Transferor Certificates or did not hold such offices at the date of such
Transferor 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 6.02(c), the Investor Certificates
shall be Book-Entry Certificates. The Transferor Certificates shall not be
Book-Entry Certificates.
Section 6.02. Registration of Transfer and Exchange of Investor
Certificates; Appointment of Registrar. (a) The Certificate Registrar 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 Certificate
Registrar shall provide for the registration of Investor Certificates and of
transfers and exchanges of Investor Certificates as
66
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Investor Certificates and transfers and exchanges of
Investor Certificates as herein provided.
Upon surrender for registration of transfer of any Investor Certificate
at any office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, the Trustee on behalf of the Trust 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 in authorized denominations and
the same aggregate Percentage Interests, upon surrender of the Investor
Certificates to be exchanged at any such office or agency. Whenever any Investor
Certificates are so surrendered for exchange, the Trustee shall execute and
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 duly executed by, the Holder thereof or
his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the BookEntry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of the Investor Certificates
may not be transferred by the Trustee except to another Depository; (ii) the
Depository shall maintain book-entry records with respect to the Certificate
Owners and with respect to ownership and transfers of such Investor
Certificates; (iii) ownership and transfers of registration of the 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 Agreement, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (vi) the Trustee may rely and shall
be fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners.
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All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement the terms of this Agreement
shall control.
(c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository, and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of an Event of Servicing
Termination, the Depository, at the direction of Certificate Owners representing
Percentage Interests aggregating not less than 51% advises the Trustee in
writing that the continuation of a book-entry system through the Depository to
the exclusion of definitive, fully registered Investor Certificates (the
"Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners. Upon surrender to the Certificate Registrar
of the Investor Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall execute and
authenticate the Definitive Certificates. Neither the Depositor nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates, all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates, and the Trustee, the Certificate
Registrar, the Master Servicer and the Depositor shall recognize the Holders of
the Definitive Certificates as Certificateholders hereunder.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
All Investor Certificates surrendered for registration of transfer or
exchange shall be cancelled by the Certificate Registrar and disposed of
pursuant to its standard procedures.
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Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (ii) there is delivered to the Trustee,
the Depositor and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee or the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 6.03, the Trustee or
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section 6.03, shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Master Servicer, the Depositor,
the Trustee, the Certificate Registrar, any Paying Agent and any agent of the
Master Servicer, the Depositor, the Trustee, any Paying Agent or the Certificate
Registrar may treat the Person, including a Depository, in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.01 and for all other purposes
whatsoever, and none of the Master Servicer, the Depositor, the Trustee, the
Certificate Registrar, any Paying Agent or any agent of any of them shall be
affected by notice to the contrary.
Section 6.05. Restrictions on Transfer of Transferor Certificates. (a)
The Transferor Certificates shall be assigned, transferred, exchanged, pledged,
financed, hypothecated or otherwise conveyed (collectively, for purposes of this
Section 6.05 and any other Section referring to the Transferor Certificates,
"transferred" or a "transfer") only in accordance with this Section 6.05.
(b) No transfer of a Transferor 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. Except for the initial issuance of the
Transferor Certificate to the Transferor, the Trustee shall require (i) 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
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letter shall not be an expense of the Trustee or (ii) if the investment letter
is not delivered, a written Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee and the Depositor that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from said Act or is being made pursuant to said Act, which
Opinion of Counsel shall not be an expense of the Trustee or the Depositor. The
Holder of a Transferor Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Transferor 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 Transferor Certificates and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent: (i)
the Person that acquires a Transferor 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 Transferor hereunder and (C) as part of its acquisition of
a Transferor Certificate, acquire all rights of the Transferor or any transferee
under this Section 6.05(c) to amounts payable to such Transferor or such
transferee under Sections 5.01(a)(x) and 5.01(g); (ii) the Holder of the
Transferor Certificates shall deliver to the Trustee an Officer's Certificate
stating that such transfer and such supplemental agreement comply with this
Section 6.05(c) and that all conditions precedent provided by this subsection
6.05(c) have been complied with and an Opinion of Counsel stating that all
conditions precedent provided by this subsection 6.05(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 Holder of the Transferor
Certificates 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, will not be reduced or withdrawn without regard to the Policy;
(iv) the transferee of the Transferor Certificates 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 Trust,
being treated as a taxable mortgage pool as defined in Section 7701(i) of the
Code; (v) all filings and other actions necessary to continue the perfection of
the interest of the Trust
70
in the Mortgage Loans and the other property conveyed hereunder shall have been
taken or made and (vi) the transferee shall have assumed the obligations of the
Transferor pursuant to Section 7.07 hereof. Notwithstanding the foregoing, the
requirement set forth in subclause (i)(A) of this Section 6.05(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), shall not be reduced or withdrawn. Notwithstanding
the foregoing, the requirements set forth in this paragraph (c) shall not apply
to the initial issuance of the Transferor Certificates to the Transferor.
(d) Except for the initial issuance of the Transferor Certificate to the
Transferor, no transfer of a Transferor Certificate shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA, nor a Person acting on
behalf of any such plan, which representation letter shall not be an expense of
the Trustee, (ii) if the purchaser is an insurance company, a representation
that the purchaser is an insurance company which is purchasing such Certificates
with funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, or (iii) in the case of any Transferor Certificate presented
for registration in the name of an employee benefit plan subject to ERISA, and
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan, an Opinion of Counsel to the effect
that the purchase or holding of such Certificate will not result in the assets
of the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those undertaken in this Agreement, which Opinion
of Counsel shall not be an expense of the Trustee or the Depositor.
Section 6.06. Appointment of Paying Agent. (a) The Paying Agent shall
make distributions to Investor Certificateholders from the Collection Account
pursuant to Section 5.01 and shall report the amounts of such distributions to
the Trustee. The duties of the Paying Agent may include the obligation (i) to
withdraw funds from the Collection Account pursuant to Section 3.03 and for the
purpose of making the distributions referred to above and (ii) to distribute
statements and provide information to Certificateholders as required hereunder.
The Paying Agent hereunder shall at all times be a corporation duly incorporated
and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to
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exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Depositor.
(b) The Trustee shall cause the Paying Agent (if other than the Trustee)
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, if any,
held by it for payment to the Investor Certificateholders in trust for the
benefit of the Investor Certificateholders entitled thereto until such sums
shall be paid to such Certificateholders and shall agree that it shall comply
with all requirements of the Code regarding the withholding of payments in
respect of Federal income taxes due from Certificate Owners and otherwise comply
with the provisions of this Agreement applicable to it.
Section 6.07. Acceptance of Obligations. The Transferor, by its
acceptance of the Transferor Certificates, agrees to be bound by and to perform
all the duties of the Transferor set forth in this Agreement.
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ARTICLE VII
The Master Servicer, the Seller and the Depositor
Section 7.01. Liability of the Seller, the Master Servicer and the
Depositor. The Seller and the Master Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Seller or Master Servicer, as the case may be, herein. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Depositor.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer or the Depositor. Any corporation into which
the Master Servicer or the Depositor may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Master Servicer or the Depositor shall be a party, or any corporation succeeding
to the business of the Master Servicer or the Depositor, shall be the successor
of the Master Servicer or the Depositor, as the case may be, hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding.
Section 7.03. Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of the directors or officers or employees or
agents of the Master Servicer shall be under any liability to the Trust or the
Certificateholders for any action taken or for refraining from the taking of any
action by the Master Servicer in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Master Servicer or any such Person against any liability which would otherwise
be imposed by reason of willful misfeasance, bad faith or gross negligence in
the performance of duties of the Master Servicer or by reason of reckless
disregard of obligations and duties of the Master Servicer hereunder. The Master
Servicer and any director or officer or employee or agent of the Master Servicer
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder. The Master
Servicer and any director or officer or employee or agent of the Master Servicer
shall be indemnified by the Trust and held harmless against any loss, liability
or expense incurred in connection with any legal action relating to this
Agreement or the Certificates, other than any loss, liability or expense related
to any specific Mortgage Loan or Mortgage Loans (except as any such loss,
liability or expense shall be otherwise reimbursable pursuant to this Agreement)
and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of its reckless
73
disregard of obligations and duties hereunder. The Master Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to duties to service the Mortgage Loans in accordance with this
Agreement, and which in its opinion may involve it in any expense or liability;
provided, however, that the Master Servicer may in its sole discretion 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 Master Servicer shall only
be entitled to be reimbursed therefor pursuant to Section 5.01(a)(ix). The
Master Servicer's right to indemnity or reimbursement pursuant to this Section
7.03 shall survive any resignation or termination of the Master Servicer
pursuant to Section 7.04 or 8.01 with respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination (or arising from
events that occurred prior to such resignation or termination).
Section 7.04. Master Servicer Not to Resign. Subject to the provisions
of Section 7.02, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Agreement or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor servicer to the
Trustee in writing and such proposed successor servicer is reasonably acceptable
to the Trustee; (b) each Rating Agency shall have delivered a letter to the
Trustee prior to the appointment of the successor servicer stating that the
proposed appointment of such successor servicer as Master Servicer hereunder
will not result in the reduction or withdrawal of the then current rating of the
Investor Certificates without regard to the Policy; and (c) such proposed
successor servicer is reasonably acceptable to the Credit Enhancer, as evidenced
by a letter to the Trustee; provided, however, that no such resignation by the
Master Servicer shall become effective until the Trustee or successor servicer
designated by the Master Servicer as provided above shall have assumed the
Master Servicer's responsibilities and obligations hereunder or the Trustee
shall have designated a successor servicer in accordance with Section 8.02. Any
such resignation shall not relieve the Master Servicer of responsibility for any
of the obligations specified in Sections 8.01 and 8.02 as obligations that
survive the resignation or termination of the Master Servicer. Any such
determination permitting the
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resignation of the Master Servicer pursuant to clause (i) above shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee and
the Credit Enhancer. The Master Servicer shall have no claim (whether by
subrogation or otherwise) or other action against any Certificateholder or the
Credit Enhancer for any amounts paid by the Master Servicer pursuant to any
provision of this Agreement.
Section 7.05. Delegation of Duties. In the ordinary course of business,
the Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, or any subservicer referred to in
Section 3.01, who agrees to conduct such duties in accordance with standards
comparable to those with which the Master Servicer complies pursuant to Section
3.01. Such delegation shall not relieve the Master Servicer of its liabilities
and responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 7.04.
Section 7.06. Indemnification of the Trust by the Master Servicer. The
Master Servicer shall indemnify and hold harmless the Trust and the Trustee from
and against any loss, liability, expense, damage or injury suffered or sustained
by reason of the Master Servicer's activities or omissions in servicing or
administering the Mortgage Loans that are not in accordance with this Agreement,
including, but not limited to, any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim. Any such
indemnification shall not be payable from the assets of the Trust. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof. The provisions of this Section
7.06 shall survive termination of this Agreement.
Section 7.07. Indemnification of the Trust by the Transferor.
Notwithstanding anything to the contrary contained herein, the Transferor (i)
agrees to be liable directly to the injured party for the entire amount of any
losses, claims, damages, liabilities and expenses of the Trust (other than those
attributable to an Investor Certificateholder in the capacity as an investor in
the Investor Certificates as a result of defaults on the Mortgage Loans) to the
extent that the Transferor would be liable if the Trust were a partnership under
the Delaware Revised Uniform Limited Partnership Act in which the Transferor was
a general partner and (ii) shall indemnify and hold harmless the Trust and the
Trustee from and against any loss, liability, expense, damage, claim or injury
(other than those attributable to an Investor Certificateholder in the capacity
as an investor in the Investor Certificates as a result of defaults on the
Mortgage Loans) arising out of or based on this Agreement by reason of any acts,
omissions, or alleged acts or omissions arising out of activities of the Trust
or the Trustee, or the
75
actions of the Master Servicer including, but not limited to, amounts payable to
the Master Servicer pursuant to Section 7.03, any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim;
provided that the Transferor shall not indemnify the Trustee (but shall
indemnify any other injured party) if such loss, liability, expense, damage or
injury is due to the Trustee's willful malfeasance, bad faith or gross
negligence or by reason of the Trustee's reckless disregard of its obligations
hereunder. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof.
Section 7.08. Limitation on Liability of the Transferor. None of the
directors or officers or employees or agents of the Transferor shall be under
any liability to the Trust, the Trustee or the Certificateholders, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement and
the issuance of the Certificates; provided, however, that this provision shall
not protect any such Person against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of the duties hereunder. Except as provided in Section 7.07, the
Transferor shall not be under any liability to the Trust, the Trustee or the
Certificateholders for any action taken or for refraining from the taking of any
action in its capacity as Transferor pursuant to this Agreement whether arising
from express or implied duties under this Agreement; provided, however, that
this provision shall not protect the Transferor against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties hereunder. The Transferor and any director or
officer or employee or agent of the Transferor 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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ARTICLE VIII
Servicing Termination
Section 8.01. Events of Servicing Termination. If any one
of the following events ("Events of Servicing Termination") shall
occur and be continuing:
(i) Any failure by the Master Servicer to deposit in the
Collection Account any deposit required to be made under the terms of
this Agreement which continues unremedied for a period of five Business
Days after the date upon which written notice of such failure shall have
been given to the Master Servicer by the Trustee or to the Master
Servicer and the Trustee by the Credit Enhancer or Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than
25%; or
(ii) Failure on the part of the Master Servicer duly to
observe or perform in any material respect any other covenants or
agreements of the Master Servicer set forth in the Certificates or in
this Agreement, which failure continues unremedied for a period of 60
days after the date on which written notice of such failure, requiring
the same to be remedied, and stating that such notice is a "Notice of
Default" hereunder, shall have been given to the Master Servicer by the
Trustee or to the Master Servicer and the Trustee by the Credit Enhancer
or the Holders of Investor Certificates evidencing Percentage Interests
aggregating not less than 25%; or
(iii) The entry against the Master Servicer of a decree or
order by a court or agency or supervisory authority having jurisdiction
in the premises for the appointment of a trustee, conservator, receiver
or liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days; or
(iv) The consent by the Master Servicer to the appointment of
a trustee, conservator, receiver or liquidator in any insolvency,
conservatorship, receivership, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the
Master Servicer or of or relating to substantially all of its property;
or the Master Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment
for the benefit
77
of its creditors, or voluntarily suspend payment of its
obligations;
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Master Servicer, with respect to
an Event of Servicing Termination specified in (i) - (iv), above, either the
Trustee, the Credit Enhancer or the Holders of Investor Certificates evidencing
Percentage Interests aggregating not less than 51%, by notice then given in
writing to the Master Servicer (and to the Trustee if given by the Credit
Enhancer or the Holders of Investor Certificates) may terminate all of the
rights and obligations of the Master Servicer as servicer under this Agreement.
Any such notice to the Master Servicer shall also be given to each Rating Agency
and the Credit Enhancer. On or after the receipt by the Master Servicer of such
written notice, all authority and power of the Master Servicer under this
Agreement, whether with respect to the Certificates or the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee pursuant to and under this
Section 8.01; and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents, or otherwise. The
Master Servicer agrees to cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the Master Servicer hereunder,
including, without limitation, the transfer to the Trustee for the
administration by it of all cash amounts that shall at the time be held by the
Master Servicer and to be deposited by it in the Collection Account, or that
have been deposited by the Master Servicer in the Collection Account or
thereafter received by the Master Servicer with respect to the Mortgage Loans.
All reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Mortgage Files to the successor Master Servicer
and amending this Agreement to reflect such succession as Master Servicer
pursuant to this Section 8.01 shall be paid by the predecessor Master Servicer
(or if the predecessor Master Servicer is the Trustee, the initial Master
Servicer) upon presentation of reasonable documentation of such costs and
expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 8.01(i) for a period of ten Business Days or under Section
8.01(ii) for a period of 60 Business Days, shall not constitute an Event of
Servicing Termination if such delay or failure could not be prevented by the
exercise of reasonable diligence by the Master Servicer and such delay or
failure was caused by an act of God or the public enemy, acts of declared or
undeclared war, public disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes,
78
earthquakes, floods or similar causes. The preceding sentence shall not relieve
the Master Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Agreement
and the Master Servicer shall provide the Trustee, the Transferor, the Credit
Enhancer and the Investor Certificateholders with an Officers' Certificate
giving prompt notice of such failure or delay by it, together with a description
of its efforts to so perform its obligations. The Master Servicer shall
immediately notify the Trustee in writing of any Events of Servicing
Termination.
Section 8.02. Trustee to Act; Appointment of Successor. (a) On and after
the time the Master Servicer receives a notice of termination pursuant to
Section 8.01 or 7.04, the Trustee shall be the successor in all respects to the
Master 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 Master
Servicer by the terms and provisions hereof. Notwithstanding the above, if the
Trustee becomes the Master Servicer hereunder, it shall have no responsibility
or obligation (i) of repurchase or substitution with respect to any Mortgage
Loan, (ii) with respect to any representation or warranty of the Master
Servicer, and (iii) for any act or omission of either a predecessor or successor
Master Servicer other than the Trustee. As compensation therefor, the Trustee
shall be entitled to such compensation as the Master Servicer would have been
entitled to hereunder if no such notice of termination had been given. In
addition, the Trustee will be entitled to compensation with respect to its
expenses in connection with conversion of certain information, documents and
record keeping, as provided in Section 7.04(b). Notwithstanding the above, (i)
if the Trustee is unwilling to act as successor Master Servicer, or (ii) if the
Trustee is legally unable so to act, the Trustee may (in the situation described
in clause (i)) or shall (in the situation described in clause (ii)) appoint or
petition a court of competent jurisdiction to appoint, any established housing
and home finance institution, bank or other mortgage loan or home equity loan
servicer having a net worth of not less than $______________ as the successor to
the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder;
provided that any such successor Master Servicer shall be acceptable to the
Credit Enhancer, as evidenced by the Credit Enhancer's prior written consent,
which consent shall not be unreasonably withheld; and provided further that the
appointment of any such successor Master Servicer will not result in the
qualification, reduction or withdrawal of the ratings assigned to the
Certificates by the Rating Agencies without regard to the Policy. Pending
appointment of a successor to the Master 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,
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the successor shall be entitled to receive compensation out of payments on
Mortgage Loans in an amount equal to the compensation which the Master Servicer
would otherwise have received pursuant to Section 3.08 (or such lesser
compensation as the Trustee and such successor shall agree). 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, including the Trustee, to the Master Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of Certificateholders
and the Credit Enhancer and (ii) maintain in force a policy or policies of
insurance covering errors and omissions in the performance of its obligations as
Master Servicer hereunder and a fidelity bond in respect of its officers,
employees and agents to the same extent as the Master Servicer is so required
pursuant to Section 3.12. The appointment of a successor Master Servicer shall
not affect any liability of the predecessor Master Servicer which may have
arisen under this Agreement prior to its termination as Master Servicer
(including, without limitation, any deductible under an insurance policy
pursuant to Section 3.04), nor shall any successor Master Servicer be liable for
any acts or omissions of the predecessor Master Servicer or for any breach by
such Master Servicer of any of their representations or warranties contained
herein.
Section 8.03. Notification to Certificateholders. Upon any termination
or appointment of a successor to the Master Servicer pursuant to this Article
VIII or Section 7.04, the Trustee shall give prompt written notice thereof to
the Certificateholders at their respective addresses appearing in the
Certificate Register, the Credit Enhancer and each Rating Agency.
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ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence of
an Event of Servicing Termination and after the curing or waiver of all Events
of Servicing Termination 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 Servicing Termination has occurred (which has not been cured or
waived) of which a Responsible Officer has knowledge, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs; provided,
however, that if the Trustee is acting as Master Servicer it shall use the same
degree of care and skill as is required of the Master Servicer under this
Agreement.
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.
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 Servicing
Termination of which a Responsible Officer of the Trustee has knowledge,
and after the curing or waiver of all such Events of Servicing
Termination which may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee and, in the absence of bad faith on the
part of the Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
or investigating the facts related thereto;
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(iii) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good faith
in accordance with the consent or direction of the Credit Enhancer or in
accordance with the direction of the Holders of Investor Certificates
evidencing Percentage Interests aggregating not less than 51% relating
to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Master Servicer to comply with the obligations of the
Master Servicer referred to in clauses (i) and (ii) of Section 8.01 or
of the occurrence of a Rapid Amortization Event unless a Responsible
Officer of the Trustee at the Corporate Trust Office obtains actual
knowledge of such failure or the Trustee receives written notice of such
failure from the Master Servicer, the Credit Enhancer or the Holders of
Investor Certificates evidencing Percentage Interests aggregating not
less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. 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 Master 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 Master Servicer in accordance with
the terms of this Agreement and in no event shall it be required to perform or
accept responsibility for the obligations of the Depositor, the Seller or the
Transferor.
Section 9.02. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 9.01:
(i) the Trustee may request and rely upon, and shall be
protected in acting or refraining from acting upon, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(ii) the Trustee may consult with counsel and any written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in
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respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(iii) the Trustee shall 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 or the
Credit Enhancer, pursuant to the provisions of this Agreement, unless
such Certificateholders or the Credit Enhancer shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of the
Trustee to perform any discretionary act enumerated in this Agreement
shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or wilful misconduct in the
performance of any such act; nothing contained herein shall, however,
relieve the Trustee of the obligations, upon the occurrence of an Event
of Servicing Termination (which has not been cured or waived) of which a
Responsible Officer has knowledge, 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, unless it is
acting as Master Servicer;
(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 Servicing
Termination and after the curing or waiver of all Events of Servicing
Termination which may have occurred, the Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or documents,
unless requested in writing to do so by Holders of Investor Certificates
evidencing Percentage Interests aggregating not less than 51%; 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 Master Servicer or, if paid by the Trustee, shall be
reimbursed by the Master Servicer upon demand. Nothing in this
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clause (v) shall derogate from the obligation of the Master Servicer to
observe any applicable law prohibiting disclosure of information
regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions
hereunder of the Master Servicer until such time as the Trustee may be
required to act as Master Servicer pursuant to Section 8.02; and
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through an Affiliate, agents or attorneys or a custodian.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the authentication
of the Trustee on the Certificates) shall be taken as the statements of the
Depositor, and the Trustee assumes no responsibility for the correctness of the
same. 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 Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or the Master Servicer in respect of the Mortgage Loans or deposited
in or withdrawn from the Collection Account by the Master Servicer. The Trustee
shall at no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 8.02); the validity of the assignment of
any Mortgage Loan to the Trustee or of any intervening assignment; the
completeness of any Mortgage Loan; the performance or enforcement of any
Mortgage Loan (other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 8.02); the compliance by the Depositor, the Seller
or the Master Servicer with any warranty or representation made under this
Agreement or in any related document or the accuracy of any such warranty or
representation prior to the Trustee's receipt of notice or other discovery of
any non-compliance therewith or any breach thereof; any investment of monies by
or at the direction of the Master Servicer or any loss resulting therefrom, it
being understood that the Trustee shall remain responsible for any
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Trust property that it may hold in its individual capacity; the acts or
omissions of any of the Depositor, the Master Servicer (other than if the
Trustee shall assume the duties of the Master Servicer pursuant to Section
8.02), any subservicer or any Mortgagor; any action of the Master Servicer
(other than if the Trustee shall assume the duties of the Master Servicer
pursuant to Section 8.02), or any subservicer taken in the name of the Trustee;
the failure of the Master Servicer or any subservicer to act or perform any
duties required of it as agent of the Trustee hereunder; or any action by the
Trustee taken at the instruction of the Master Servicer (other than if the
Trustee shall assume the duties of the Master Servicer pursuant to Section
8.02); provided, however, that the foregoing shall not relieve the Trustee of
its obligation to perform its duties under this Agreement. The Trustee shall
have no responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the perfection of
any security interest or lien granted to it hereunder (unless the Trustee shall
have become the successor Master Servicer) or to prepare or file any Securities
and Exchange Commission filing for the Trust or to record this Agreement.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee and may transact
any banking and trust business with the Seller, the Master Servicer, the Credit
Enhancer or the Depositor.
Section 9.05. Master Servicer to Pay Trustee's Fees and Expenses; Master
Servicer to Indemnify. The Master Servicer covenants and agrees to 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
Master Servicer will pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all Persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith or which is the
responsibility of Certificateholders hereunder. The Master Servicer covenants
and agrees to indemnify the Trustee from, and hold it harmless against, any and
all losses, liabilities, damages, claims or expenses other than those resulting
from the negligence or bad faith of the Trustee. This section shall survive
termination of this Agreement or the resignation or removal of any Trustee
hereunder.
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Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation duly incor- porated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $____________, subject to supervision or
examination by federal or state authority. 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 9.06, 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. The principal office of the Trustee (other
than the initial Trustee) shall be in a state with respect to which an Opinion
of Counsel has been delivered to such Trustee at the time such Trustee is
appointed Trustee to the effect that the Trust will not be a taxable entity
under the laws of such state. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Transferor, the Depositor, the Master Servicer, the Credit
Enhancer and each Rating Agency. Upon receiving such notice of resignation, the
Transferor shall promptly appoint a successor Trustee (approved in writing by
the Credit Enhancer, so long as such approval is not unreasonably withheld) by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee (who shall deliver a copy to the Master
Servicer) and one copy to the successor Trustee; provided, however, that any
such successor Trustee shall be subject to the prior written approval of the
Transferor. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Transferor or the Credit Enhancer, 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, or if a
tax is imposed or threatened with respect to the Trust Fund by any state in
which the Trustee or the Trust Fund is located (which tax cannot be vacated by
the appointment of a co-Trustee or separate trustee pursuant to
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Section 9.10), then the Transferor or the Credit Enhancer may remove the
Trustee. If the Transferor or the Credit Enhancer removes the Trustee under the
authority of the immediately preceding sentence, the Transferor shall promptly
appoint a successor Trustee (approved in writing by the Credit Enhancer, which
approval shall not be unreasonably withheld) by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee.
The Holders of Investor Certificates evidencing Percentage Interests
aggregating over ____% of all Investor Certificates may at any time remove the
Trustee by written instrument or instruments delivered to the Master Servicer,
the Transferor and the Trustee; the Transferor shall thereupon use its best
efforts to appoint a successor trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 9.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 9.08.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the
Transferor, the Depositor, the Master Servicer, the Credit Enhancer 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 Transferor, the Depositor, the Master Servicer and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, the successor Trustee shall mail notice of the succession of
such Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency. If the Master
Servicer fails to mail such notice within 30 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
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Section 9.09. Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all
of the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be eligible under the provisions of Section 9.06,
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.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Mortgaged Property may at the time be located, the
Transferor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments necessary to appoint one or more Persons approved by
the Credit Enhancer to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section 9.10, such powers, duties,
obligations, rights and trusts as the Transferor and the Trustee may consider
necessary or desirable. Any such co-trustee or separate trustee shall be subject
to the written approval of the Master Servicer. If the Transferor shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case an Event of Servicing Termination shall have occurred
and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 9.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 9.08. The Master Servicer shall be
responsible for the fees of any co-trustee or separate trustee appointed
hereunder.
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
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Master Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Trust 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 Master Servicer and the Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee or
co-trustee except that following the occurrence of an Event of Servicing
Termination, the Trustee acting alone may accept the resignation or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article 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 Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Transferor and the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 9.11. Limitation of Liability. The Certificates are executed by
the Trustee, not in its individual capacity but solely as Trustee of the Trust,
in the exercise of the powers and authority conferred and vested in it by the
Trust Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
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Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit or the Certificateholders in respect of which such
judgment has been recovered.
Section 9.13. Suits for Enforcement. In case an Event of Servicing
Termination or other default by the Master Servicer, the Transferor, the
Depositor or the Seller hereunder shall occur and be continuing, the Trustee, in
its discretion, may proceed to protect and enforce its rights and the rights of
the Investor Certificateholders under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee and the Certificateholders.
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ARTICLE X
Termination
Section 10.01. Termination. (a) The respective obligations and
responsibilities of the Seller, the Master Servicer, the Depositor, the
Transferor 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 Master Servicer to send certain
notices as hereinafter set forth) shall terminate upon the last action required
to be taken 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
Credit Enhancer and (B) the earliest of (i) the transfer, under the conditions
specified in Section 10.01(b), to the Transferor 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 (w) the Investor Certificate Principal Balance, (x) accrued and unpaid
Investor Certificate Interest through the day preceding the final Distribution
Date, and (y) interest accrued on any Unpaid Investor Certificate Interest
Shortfall, to the extent legally permissible, (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 10.02) or the disposition of all property acquired upon foreclosure or
deed in lieu of foreclosure of any Mortgage Loan (iv) the Distribution Date in
____________ 20___; provided, however, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the date of the last
survivor descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United
States to the Court of St. ▇▇▇▇▇, living on the date hereof. Upon termination in
accordance with clause (i) or (ii) of this Section 10.01, the Trustee shall
execute such documents and instruments of transfer presented by the Transferor,
in each case without recourse, representation or warranty, and take such other
actions as the Transferor may reasonably request to effect the transfer of the
Mortgage Loans to the Transferor.
(b) The Transferor shall have the right to exercise the option to effect
the transfer to the Transferor of each Mortgage Loan pursuant to Section
10.01(a) above on any Distribution Date on or after the Distribution Date
immediately prior to which the Investor Certificate Principal Balance is less
than _____ percent (____%) of the Original Investor Certificate Principal
Balance and all amounts due and owing to the Credit Enhancer for unpaid premiums
and unreimbursed draws on the Policy, together with
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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 Transferor,
if the Transferor is exercising its right to transfer of the Mortgage Loans,
given not later than the first day of the month preceding the month of such
final distribution) to the Credit Enhancer and to the Master Servicer by letter
to Investor Certificateholders mailed not earlier than the 15th day and not
later than the 25th day of the month next preceding the month of such final
distribution specifying (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 Transferor to the Trustee as described in the
preceding sentence, the Transferor shall deposit in the Collection Account on or
before the Distribution Date for such final distribution in immediately
available funds an amount which, when added to the funds on deposit in the
Collection Account that are payable to the Investor Certificateholders, will be
equal to the retransfer amount for the Mortgage Loans computed as above
provided.
(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 such final distribution, in proportion to the
Percentage Interests of their respective Investor Certificates and to the extent
that funds are available for such purpose, an amount equal to (i) if such final
distribution is not being made pursuant to the transfer to the Transferor
pursuant to Section 10.01(a)(i), the amount required to be distributed to
Investor Certificateholders pursuant to Section 5.01 for such Distribution Date
and (ii) if such final distribution is being made pursuant to such retransfer,
the amount specified in Section 10.01(a)(i). The distribution on such final
Distribution Date pursuant to a retransfer pursuant to Section 10.01(a)(i) 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 shall,
based upon the information set forth in the Servicing Certificate for such
Distribution Date, withdraw from the Collection Account and remit to the Credit
Enhancer the lesser of (x) the amount avail-
92
able 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 Credit Enhancer for unpaid
premiums and unreimbursed draws on the 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 Collection Account not distributed in final distribution to
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
Transferor (if the Transferor has exercised its right to transfer 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.
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ARTICLE XI
Rapid Amortization Events
Section 11.01. 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 any payment or
deposit required by the terms of this Agreement, on or before the date
occurring three Business Days after the date such payment or deposit is
required to be made herein, or (ii) duly to observe or perform in any
material respect the covenants of the Seller set forth in Section
2.04(a) or (iii) duly to observe or perform in any 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 Credit Enhancer and which, in
the case of clause (iii), continues unremedied and continues to affect
materially and adversely 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 Holders
of Investor Certificates evidencing Percentage Interests aggregating not
less than 51%;
(b) any representation or warranty made by the Seller or the
Depositor in this Agreement shall prove to have been incorrect in any
material respect when made, as a result of which the interests of the
Investor Certificateholders or the Credit Enhancer 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 Credit Enhancer 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 or the
Depositor, as the case may be, by the Trustee, or to the Seller, the
Depositor and the Trustee by either the Credit Enhancer or the Holders
of Investor Certificates evidencing Percentage Interests aggregating not
less than 51%; provided, however, that a Rapid Amortization Event
pursuant to this subparagraph (b) shall not be deemed to have occurred
hereunder if the Transferor has accepted retransfer of the related
Mortgage Loan or Mortgage Loans 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 Transferor or the Depositor shall voluntarily
go into liquidation, consent to the appointment of a con-
94
servator 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 Transferor or the Depositor, or of or
relating to all or substantially all of such Person's property, or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall have been
entered against the Transferor or the Depositor and such decree or order
shall have remained in force undischarged or unstayed for a period of 30
days; or the Transferor or the Depositor shall admit in writing its
inability to pay its debts generally as they become due, file a petition
to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations; or
(d) the Trust shall become subject to registration as
an "investment company" under the Investment Company Act of
1940, as amended;
then, in the case of any event described in subparagraph (a) or (b) after the
applicable grace period, if any, set forth in such subparagraphs, either the
Trustee, the Credit Enhancer or the Holders of Investor Certificates evidencing
Percentage Interests aggregating more than 51%, by notice given in writing to
the Transferor, the Depositor and the Master Servicer (and to the Trustee if
given by either the Credit Enhancer or the Investor Certificateholders) may
declare that an early amortization event (a "Rapid Amortization Event") has
occurred as of the date of such notice, and in the case of any event described
in subparagraph (c) or (d), a Rapid Amortization Event shall occur without any
notice or other action on the part of the Trustee, the Credit Enhancer or the
Investor Certificateholders, immediately upon the occurrence of such event.
Section 11.02. Additional Rights Upon the Occurrence of Certain Events.
(a) If the Transferor voluntarily goes into liquidation or consents 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 Transferor or of or relating to all or
substantially all 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 or receiver or 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
95
have been entered against the Transferor and such decree shall have remained in
force undischarged or unstayed for a period of 30 days; or the Transferor 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 (such voluntary liquidation, appointment,
entering of such decree, admission, filing, making, suspension or violation or
other event described above, an "Insolvency Event"), the Transferor shall on the
day of such appointment, voluntary liquidation, entering of such decree,
admission, filing, making, suspension or inability, as the case may be (the
"Appointment Day"), promptly give notice to the Trustee, the Master Servicer and
the Credit Enhancer of such Insolvency Event. Within 15 days of the receipt by
the Trustee of the Transferor's notice of an Insolvency Event, the Trustee shall
(i) publish a notice in Authorized Newspapers that an Insolvency Event has
occurred and that the Trustee intends to direct the Master Servicer to sell,
dispose of or otherwise liquidate the Mortgage Loans in a commercially
reasonable manner and (ii) send written notice to the Investor
Certificateholders describing the provisions of this Section 11.02, which notice
shall inform Investor Certificateholders that unless more than _____% of all
Investor Certificateholders advise the Trustee in writing that they wish the
Trustee to instruct the Master Servicer not to sell, dispose of or otherwise
liquidate the Mortgage Loans within 90 days from the day notice pursuant to
clause (i) above is first published (the "Publication Date"), the Trustee shall
instruct the Master Servicer to proceed to sell, dispose of, or otherwise
liquidate the Mortgage Loans in a commercially reasonable manner and on
commercially reasonable terms, which shall include the solicitation of
competitive bids, and shall proceed to consummate the sale, liquidation or
disposition of the Mortgage Loans as provided above with the highest bidder for
the Mortgage Loans. The Transferor shall be permitted to bid for the Mortgage
Loans. The Trustee may obtain a prior determination from such conservator or
receiver that the terms and manner of any proposed sale, disposition or
liquidation are commercially reasonable. The provisions of Sections 11.01 and
11.02 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Mortgage Loans pursuant to Section 11.02(a) above shall be treated as
collections on the Mortgage Loans received during the Rapid Amortization Period;
provided, however, that such proceeds will, based on amounts specified in
writing by the Master Servicer to the Trustee, first be paid to the Credit
Enhancer to reimburse the Credit Enhancer for previously unreimbursed Credit
Enhancement Draw Amounts and other amounts owing under the Insurance Agreement;
and provided, further, that the Certificateholders' Fixed Allocation Percentage
of such remaining proceeds shall be paid to Investor Certificateholders in the
following amounts and order of priority:
96
(i) all accrued and unpaid interest on the Investor
Certificate Principal Balance through the Interest Period immediately
preceding the Distribution Date on which such proceeds are distributed
to the Investor Certificateholders; and
(ii) an amount of principal up to the Investor
Certificate Principal Balance.
The Policy shall cover any shortfall in the event such proceeds are insufficient
to make the distributions to Investor Certificateholders pursuant to Section
11.02(b). On the day following the Distribution Date on which such proceeds are
distributed to the Investor Certificateholders, the Trust shall terminate.
97
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment. This Agreement may be amended from time to
time by the Seller, the Master Servicer, the Depositor and the Trustee, in each
case without the consent of any of the Certificateholders, but only with the
consent of the Credit Enhancer (which consent shall not be unreasonably
withheld), (i) to cure any ambiguity, (ii) to correct any defective provisions
or to correct or supplement any provisions herein that may be inconsistent with
any other provisions herein, (iii) to add to the duties of the Transferor or the
Master Servicer, (iv) to add any other provisions with respect to matters or
questions arising under this Agreement or the Policy, as the case may be, which
shall not be inconsistent with the provisions of this Agreement, (v) to add or
amend any provisions of this Agreement as required by any Rating Agency or any
other nationally recognized statistical rating organization in order to maintain
or improve any rating of the Investor Certificates (it being understood that,
after obtaining the ratings in effect on the Closing Date, neither the Trustee,
the Seller, the Depositor nor the Master Servicer is obligated to obtain,
maintain or improve any such rating), (vi) to add or amend any provisions of
this Agreement to correct or cure any defective provision or ambiguity as a
result of a transfer of the Transferor Certificates pursuant to Section 6.05,
(vii) to comply with any requirement imposed by the Code or (viii) to increase
the Increased Senior Lien Limitation; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, materially and adversely affect the
interests of any Certificateholder or the Credit Enhancer; and provided,
further, that the amendment shall not be deemed to adversely affect in any
material respect the interests of the Certificateholders and no opinion referred
to in the preceding proviso shall be required to be delivered if the Person
requesting the amendment obtains a letter from each Rating Agency stating that
the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Investor Certificates without regard to
the Policy. Notwithstanding the foregoing, any amendment pursuant to clause
(viii) above shall be permissible only upon receipt of a letter from each Rating
Agency stating that the amendment would not result in the downgrading or
withdrawal of the respective ratings then assigned to the Investor
Certificateholders without regard to the Policy.
This Agreement also may be amended from time to time by the Master
Servicer, the Seller, the Depositor and the Trustee, and the Master Servicer and
the Credit Enhancer, may from time to time consent to the amendment of the
Policy with the consent of the Holders of the Investor Certificates evidencing
Percentage Interests aggregating not less than 51%, and in the case of an
98
amendment to this Agreement, with the consent of the Credit Enhancer for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Certificateholders; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments on the
Certificates or distributions or payments under the Policy which are required to
be made on any Certificate without the consent of the Holder of such Certificate
or (ii) reduce the aforesaid percentage required to consent to any such
amendment, without the consent of the Holders of all Certificates then
outstanding or (iii) adversely effect in any material respect the interests of
the Credit Enhancer.
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 in the Trust being taxable at the
entity level; or (iii) result in the Trust being classified as a taxable
mortgage pool (as defined in Section 7701(i) of the Code).
Following the execution and delivery of any such amendment hereto or to
the Policy to which the Credit Enhancer was required to consent, either the
Transferor, if the Transferor requested the amendment, or the Master Servicer,
if the Master Servicer requested the amendment, shall reimburse the Credit
Enhancer for the reasonable out-of-pocket costs and expenses incurred by the
Credit Enhancer in connection with such amendment.
Prior to the execution of any such amendment, the party hereto
requesting any such amendment shall furnish written notification of the
substance of such amendment to each Rating Agency. In addition, 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 such amendment to
the Credit Enhancer.
It shall not be necessary for the consent of Investor Certificateholders
under this Section 12.01 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 Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
In executing any amendment permitted by this Section 12.01, the Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that such amendment is authorized or permitted hereby
and that all
99
conditions precedent to the execution and delivery of such amendment have been
satisfied. 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.
Section 12.02. 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
Trustee, but only upon direction of Investor Certificateholders accompanied by
an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of Investor Certificateholders. The Investor
Certificateholders requesting such recordation shall bear all costs and expenses
of such recordation. The Trustee shall have no obligation to ascertain whether
such recordation so affects the interests of the 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 12.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Investor Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Investor Certificateholder'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 of them.
No Certificateholder shall have any right to vote (except as provided in
Sections 8.01, 9.01, 9.02, 11.01 and 12.01) or in any manner otherwise control
the operation and management of the Trust, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any 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 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
100
of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Investor Certificates evidencing Percentage Interests aggregating not
less than 51% shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 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 12.03, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
By accepting its Investor Certificate, each Investor Certificateholder
agrees that unless a Credit Enhancer Default exists, the Credit Enhancer shall
have the right to exercise all rights of the Investor Certificateholders under
this Agreement without any further consent of the Investor Certificateholders.
Section 12.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 12.05. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) in the case of the Depositor, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ____________________, (b) in the case of the Master Servicer,
[Countrywide Home Loans, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ____________________], (c) in the case of the Trustee, at the
Corporate Trust Office, (d) in the case of the Credit Enhancer,
_________________________________, Attention: ____________________ (telecopy
number ____________________), (e) in the case of [each Rating Agency],
___________________________________________________, and (f) in the case of
____________________, __________________________, or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party. [In each
101
case in which a notice or other communication to the Credit Enhancer refers to
an Event of Servicing Termination or a claim under the Policy or with respect to
which failure on the part of the Credit Enhancer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the ______________ and the
_____________________ and shall be marked to indicate "URGENT MATERIAL
ENCLOSED."] 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. Any
notice or other document required to be delivered or mailed by the Trustee to
any Rating Agency shall be given on a best efforts basis and only as a matter of
courtesy and accommodation and the Trustee shall have no liability for failure
to deliver such notice or document to any Rating Agency.
Section 12.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 12.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.05, 7.02 and 7.04, this
Agreement may not be assigned by the Depositor or the Master Servicer without
the prior written consent of the Credit Enhancer and Holders of the Investor
Certificates evidencing Percentage Interests aggregating not less than
-----%.
Section 12.08. Certificates Nonassessable and Fully Paid. The parties
agree that the Investor 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 the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 2.08 or
6.02 are and shall be deemed fully paid.
Section 12.09. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Certificate Owners, the Credit Enhancer and their respective successors and
permitted assigns. Except as otherwise provided in this Agreement, no other
Person will have any right or obligation hereunder.
102
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. Insurance Agreement. The Trustee is authorized and
directed to execute and deliver the Insurance Agreement and to perform the
obligations of the Trustee thereunder.
103
IN WITNESS WHEREOF, the Depositor, the Seller, the Master
Servicer and the Trustee have caused this Agreement to be duly executed by their
respective officers all as of the day and year first above written.
CWABS, INC.,
as Depositor
By:
_____________________________________
Name:
Title:
[COUNTRYWIDE HOME LOANS, INC.],
as Seller and Master Servicer
By:
_____________________________________
Name:
Title:
[_______________________________],
as Trustee
By:
_____________________________________
Name:
Title:
104
State of )
) ss.:
County of )
On the __th day of __________, 199_ before me, a notary public in
and for the State of ________, personally appeared _____________________, known
to me who, being by me duly sworn, did depose and say that he resides at
_________________, ____________, ________ _____; that he is the ______________
of _____________________________, a [New York] corporation, one of the parties
that executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that he signed his name thereto by like order.
_______________________________
Notary Public
[Notarial Seal]
State of )
) ss.:
County of )
On the __th day of __________, 199_ before me, a notary public in
and for the State of ________, personally appeared _____________________, known
to me who, being by me duly sworn, did depose and say that he resides at
_________________, ____________, ________ _____; that he is the ______________
of _____________________________, a national banking association, one of the
parties that executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that he signed his name thereto by like order.
_______________________________
Notary Public
[Notarial Seal]
State of )
) ss.:
County of )
On the __th day of ______________, 199_ before me, a notary
public in and for the State of ________, personally appeared _________________,
known to me who, being by me duly sworn, did depose and say that he resides at
_______________, _______________ _____; that he is the _____________ of ________
____, a _____________ banking corporation, one of the parties that executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
_______________________________
Notary Public
[Notarial Seal]
EXHIBIT A
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Original Investor
Certificate Principal Balance
of this Investor
Certificate : $____________
Certificate Rate: : Variable
Initial Aggregate Investor
Certificate Principal Balance
of all Investor Certificates $_____________
CUSIP No. : ______________
Date of Pooling
and Servicing
Agreement : __________, 199__
Certificate No.:
Cut-Off Date : __________, 199__
First Distribution
Date: : __________, 199__
REVOLVING HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
SERIES 199_-__
INVESTOR CERTIFICATE
evidencing a percentage interest in the distributions allocable to the
Investor Certificates evidencing an undivided interest in a Trust
consisting primarily of a pool of adjustable rate home equity revolving
credit line mortgage loans sold by
CWABS, INC.
This Certificate does not represent an obligation of or interest in CWABS,
Inc. (the "Depositor"), Countrywide Home Loans, Inc. or the Trustee referred to
below or any of their affiliates. Neither this Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Original
Investor Certificate Principal Balance of this Certificate by the aggregate
Original Investor Certificate Principal Balance of all Investor Certificates) in
certain monthly distributions with respect to a Trust consisting primarily of a
pool of mortgage loans (the "Mortgage Loans"), transferred by the Depositor to
the Trustee and serviced by Countrywide Home Loans, Inc. (in such capacity, the
"Master Servicer", including any successor Master Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") among the Depositor, the
Master Servicer, Countrywide Home Loans, Inc., as seller (in such capacity, the
"Seller"), and [ ], as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
This Certificate is one of the Investor Certificates from a duly
authorized issue of Certificates designated as Revolving Home Equity Loan Asset
Backed Certificates, Series 199__-__, representing, to the extent specified in
the Agreement, an undivided interest in: (i) the Mortgage Loans and the proceeds
thereof (excluding payments on the Mortgage Loans in respect of
A-2
interest due on or prior to the Cut-Off Date or due during the month of
______________ with respect to the first Collection Period), (ii) property that
secured a Mortgage Loan and that has been acquired by foreclosure or deed in
lieu of foreclosure, (iii) an irrevocable and unconditional limited financial
guarantee insurance policy (the "Policy"), (iv) the interest of the Depositor in
certain hazard insurance policies in respect of the Mortgage Loans, (v) an
assignment of the Depositor's rights under the purchase agreement dated as of
_________, 199__ between the Seller, and the Depositor, as purchaser
(collectively, the "Trust Assets") and (vi) certain other property described in
the Agreement.
Distributions on this Certificate will be made by the Trustee, or by the
Paying Agent, if any, appointed pursuant to the Agreement, by check mailed to
the Person entitled thereto as such name and address shall appear on the
Certificate Register or, upon written request by such Person delivered to the
Paying Agent at least five business days prior to the related Record Date, by
wire transfer (but only if such Person owns of record one or more Investor
Certificates having principal denominations aggregating at least $1,000,000),
or by such other means of payment as such Person and the Paying Agent shall
agree. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee or the Paying Agent, if one has
been appointed, of the pendency of such distribution, and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose.
Pursuant to the terms of the Agreement, a distribution will be
made on the ___th day of each month or if such day is not a Business Day, then
on the next succeeding Business Day (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on ________________________
(the "Record Date"), in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Investor Certificates on such Distribution Date under the terms of
the Agreement. Notwithstanding the foregoing, if Definitive Certificates have
become available pursuant to the Agreement, the Record Date shall be the last
day of the calendar month preceding the month of such Distribution Date.
The Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans, all as more
specifically set forth in the Agreement. The Certificateholder, by its
acceptance of this Certificate, agrees that it will look solely to the funds on
deposit in the
A-3
Collection Account for payment hereunder, and that the Trustee in its individual
capacity is not personally liable to the Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly provided
in the Agreement, subject to any liability under the Agreement.
As provided in the Agreement, withdrawals from the Collection
Account may be made from time to time for purposes other than distributions to
the Investor Certificateholders and, subject to certain conditions in the
Agreement, Mortgage Loans may, at the election of the Trustee, be removed from
the Trust and transferred to the Transferor (as defined in the Agreement).
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
It is the intention of the Transferor, the Depositor and the
Investor Certificateholders that the Investor Certificates will be indebtedness
for federal, state and local income and franchise tax purposes and for purposes
of any other tax imposed on or measured by income. The Depositor, the Trustee
and the Holder of this Certificate for Certificate Owner) by acceptance of this
Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest herein) agrees to treat
the Investor Certificates (or beneficial interest therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness secured by the Trust Assets and to report
the transactions contemplated by the Agreement on all applicable tax returns in
a manner consistent with such treatment. Each Holder of this Certificate agrees
that it will cause any Certificate Owner acquiring an interest in this
Certificate through it to comply with the 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.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Master Servicer, the Depositor and the Trustee, and the rights of
the Certificateholders under the Agreement, at any time by the Seller, the
Master Servicer, the Depositor and the Trustee with the consent (i) of the
Holders of Investor Certificates evidencing Percentage Interests aggregating not
less than 51% and (ii) of the Credit Enhancer. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder
A-4
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Investor Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Certificate
Registrar for such purpose, accompanied by a written instrument of transfer in
form satisfactory to the Master Servicer, the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations, if applicable, and evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of a like tenor in authorized denominations
(in the case of the Investor Certificates) And evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee or the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee, the Seller, the Master Servicer, the Depositor, the Credit
Enhancer and the Certificate Registrar and any agent of the foregoing may treat
the Person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Trustee, the Seller, the Master Servicer, the
Depositor, the Credit Enhancer, the Certificate Registrar nor any such agent
shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (i) payment in
full of all amounts owing to the Credit Enhancer and (ii) the earliest of (a)
the transfer, under the conditions specified in the Agreement, to the
A-5
Transferor (as defined in the Agreement) of all property acquired in respect of
any Mortgage Loan remaining in the Trust, (b) the day following the Distribution
Date on which distributions reduce the Investor Certificate Principal Balance to
zero, (c) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust or (d) the Distribution Date in ________________. The
Transferor may effect an early retirement of the Certificates by paying the
retransfer price and accepting retransfer of the Trust Assets pursuant to the
terms of the Agreement on any Distribution Date after the Investor Certificate
Principal Balance is less than or equal to 10% of the Original Investor
Certificate Principal Balance; provided, however, that in no event shall the
Trust continue beyond the expiration of 21 years from the death of certain
person named in the Agreement. Upon retirement of the Certificates in accordance
with Section 10.01 of the Agreement, the Trustee shall execute such documents
and instruments of transfer presented by the Transferor and take such other
actions as the Transferor may reasonably request to effect the retransfer of the
Mortgage Loans to the Transferor.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee, by manual or facsimile signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
A-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
[ ],
not in its individual capacity
but solely as Trustee on behalf
of the Trustee
By:
................................
Certificate of Authentication:
This is one of the Investor Certificates referenced in the within-mentioned
Agreement.
By:
................................
Authorized Officer
A-7
EXHIBIT B
[FORM OF TRANSFEROR CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.05 OR OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE
TRANSFERRED UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A
REPRESENTATION LETTER TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, THAT IF SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT THE TRANSFEREE IS
AN INSURANCE COMPANY WHICH IS PURCHASING THIS CERTIFICATE WITH FUNDS CONTAINED
IN AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION
V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT
THE PURCHASE AND HOLDING OF THIS CERTIFICATE ARE COVERED UNDER PTCE 95-60 OR A
PLAN SUBJECT TO SECTION 4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 6.05(d) OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
B-1
Date of Pooling and Servicing
Agreement: : ___________, 199__
Cut-off Date : ___________, 199__
Percentage Interest : 100%
Certificate No. : ___________, 199__
First Distribution Date : ___________, 199__
REVOLVING HOME MORTGAGE LOAN ASSET BACKED CERTIFICATES,
SERIES 199_-_
TRANSFEROR CERTIFICATE
evidencing a percentage interest in the distributions allocable
to the Transferor Certificates evidencing an undivided interest
in a Trust consisting primarily of a pool of adjustable rate home
equity revolving credit line mortgage loans sold by
CWABS, INC.
This Certificate does not represent an obligation of or interest in
CWABS, Inc. (the "Depositor"), Countrywide Home Loans, Inc. or the Trustee
referred to below or any of their affiliates. Neither this Certificate nor
the underlying Assets are guaranteed or insured by any governmental agency
or instrumentality.
This certifies that ____________________________________________________
is the registered owner of the Percentage Interest
evidenced by this Certificate in the entire interest not allocated to the
Investor Certificates in certain monthly distributions with respect to a Trust
consisting primarily of a pool of mortgage loans (the "Mortgage Loans"),
transferred by the Depositor and serviced by Countrywide Home Loans, Inc. (in
such capacity, the "Master Servicer", including any successor Master Servicer
under the Agreement referred to below). The Trust was created pursuant to a
Pooling and Servicing Agreement dated as specified above (the "Agreement") among
the Depositor, the Master Servicer, as seller and as servicer (the "Seller" or
the "Master Servicer," as appropriate), and [ ], as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to
B-2
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
This Certificate is one of the Transferor Certificates from a duly
authorized issue of Certificates designated as Revolving Home Mortgage Loan
Asset Backed Certificates, Series 199_-_, and representing, to the extent
specified in the Agreement, an undivided ownership interest in: (i) the Mortgage
Loans and the proceeds thereof, (ii) such other assets as shall from time to
time be deposited in the Collection Account in accordance with the Agreement,
(iii) property that secured a Mortgage Loan and that has become REO, (iv) the
interest of the Depositor in certain hazard insurance policies in respect of the
Mortgage Loans, and (v) an assignment of the Depositor's rights under the
mortgage loan purchase agreement dated as of __________, 199__ between the
Seller, and the Depositor, as purchaser (collectively, the "Trust Assets").
The certificates are limited in right of payment to certain payments on
and collections in respect of the Trust Assets, all as more specifically set
forth in the Agreement. The Certificateholder, by its acceptance of this
Certificate, agrees that it will look solely to the funds available in
accordance with the terms of the Agreement for payment hereunder and that the
Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Master Servicer, the Depositor and the Trustee, and the rights of
the Certificateholders under the Agreement, at any time by the Seller, the
Master Servicer, the Depositor and the Trustee with the consent (i) of the
Holders of Investor Certificates evidencing Percentage Interests aggregating not
less than 51% and (ii) of the Credit Enhancer. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment
B-3
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Investor Certificates.
No transfer of this Transferor 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. There shall be delivered to the Trustee
either (i) 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, or
(ii) if such letter is not delivered, an Opinion of Counsel acceptable to and in
form and substance satisfactory to the Trustee and the Depositor that such
transfer is exempt (describing the applicable exemption and the basis therefor)
from or is being made pursuant to the registration requirements of the
Securities Act of 1933, as amended, which Opinion of Counsel shall not be an
expense of the Trustee. The Holder hereof desiring to effect such Transfer
shall, and does hereby agree to, indemnify the Transferor 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.
As provided in the Agreement and subject to certain limitations set
forth therein, and subject to the restrictions set forth on the first page
hereof, neither this Certificate nor any legal or beneficial interest herein may
be, directly or indirectly, purchased, transferred, sold, pledged, assigned or
otherwise disposed of, and any proposed transferee hereof shall not become the
registered Holder hereof, without the satisfaction of the conditions set forth
in Section 6.05 of the Agreement.
No service charge will be made for any such registration of Transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Trustee, the Master Servicer, the Depositor, the Credit Enhancer and
the Certificate Registrar and any agent of the foregoing may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Trustee, the Master Servicer, the Depositor, the Credit
Enhancer, the Certificate Registrar nor any such agent hall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (i) payment in
full of all amounts
B-4
owing to the Credit Enhancer and (ii) the earliest of (a) the transfer, under
the conditions specified in the Agreement, to the Transferor (as defined in the
Agreement) of all property acquired in respect of any Mortgage Loan remaining in
the Trust, (b) the day following the Distribution Date on which distributions
reduce the Investor Certificate Principal Balance to zero, (c) the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or (d) the
Distribution Date in ________________. The Transferor may effect an early
retirement of the Certificates by paying the retransfer price and accepting
retransfer of the Trust Assets pursuant to the terms of the Agreement on any
Distribution Date after the Investor Certificate Principal Balance is less than
or equal to 10% of the Original Investor Certificate Principal Balance;
provided, however, that in no event shall the Trust continue beyond the
expiration of 21 years from the death of certain person named in the Agreement.
Upon retirement of the Certificates in accordance with Section 10.01 of the
Agreement, the Trustee shall execute such documents and instruments of transfer
presented by the Transferor and take such other actions as the Transferor may
reasonably request to effect the retransfer of the Mortgage Loans to the
Transferor.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee, by manual or facsimile signature this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
B-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
[ ],
not in its individual capacity
but solely as Trustee
on behalf of the Trust
..............................
Authorized Officer
Certificate of Authentication:
This is one of the Transferor
Certificates referenced in the
within-mentioned Agreement.
By:
...........................
Authorized Officer
B-6
EXHIBIT C
MORTGAGE LOAN SCHEDULE
[Delivered to Trustee Only]
C-1
EXHIBIT D
ANNUAL OPINION OF COUNSEL
The opinions set forth below, which are to be delivered pursuant to
Section 3.11 of the Pooling and Servicing Agreement, may be subject to certain
qualifications, assumptions, limitations and exceptions taken or made in the
opinion of counsel to the Depositor or the Transferor, as appropriate, with
respect to similar matters delivered on the Closing Date.
With respect to the Depositor: Insofar as the Mortgage Loans are
"general intangibles" and if the Pooling and Servicing Agreement is considered a
security instrument, no filings or other actions are necessary to perfect or
continue the perfected status of the security or other interest of the Trust in
the Mortgage Loans transferred by the Pooling and Servicing Agreement, and the
proceeds thereof, against any other Person.
With respect to the Transferor: Insofar as the Mortgage Loans are
"general intangibles" and if the Purchase Agreement is considered a security
instrument, no filings or other actions are necessary to perfect or continue the
perfected status of the security or other interest of the Depositor in the
Mortgage Loans transferred pursuant to the Purchase Agreement, and the proceeds
thereof, against any other Person.
D-1
EXHIBIT E
FORM OF CREDIT LINE AGREEMENT
E-1
EXHIBIT F
FORM OF LETTER OF REPRESENTATIONS
F-1
EXHIBIT G
FORM OF INVESTMENT LETTER [NON-RULE 144A]
FOR TRANSFEROR CERTIFICATES
Date:
CWABS, Inc.
as Depositor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ________________
[ ]
as Trustee
Re: CWABS, Inc.;
Countrywide Home Equity Loan Trust 199__-__,
Revolving Home Equity Loan Asset Backed Certificates,
Series 199__-__, Transferor Certificates
Ladies and Gentlemen:
In connection with our acquisition of Transferor Certificates in the
Denomination of _________________, we certify that (a) we understand that the
Transferor Certificates are not being registered under the Securities Act of
1933, as amended (the "Act"), or any state securities laws and are being
transferred to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we are an "accredited investor,"
as defined in Regulation D under the Act, and have such knowledge and experience
in financial and business matters that we are capable of evaluating the merits
and risks of investments in the Transferor Certificates, (c) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Transferor Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Transferor Certificates, (d) we,are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, nor a plan subject to Section 4975 of the Internal Revenue Code of
1986, nor are we acting on behalf of any such employee benefit plan, (e) we are
acquiring the Transferor Certificates for investment for our own account and not
with a view to any distribution of such Certificates (but without prejudice to
our right at all times to sell or otherwise dispose of the Transferor
Certificates in accordance with clause (g)
G-1
below), (f) we have not offered or sold any Transferor Certificates to, or
solicited offers to buy any Transferor Certificates from, any person, or
otherwise approached or negotiated with any person with respect thereto, or
taken any other action which would result in a violation of Section 5 of the
Act, and (g) we will not sell, transfer or otherwise dispose of any Transferor
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this Transferor
Certificate that such sale, transfer or other disposition)may be made pursuant
to an exemption from the Act, (2) the purchaser or transferee of such Transferor
Certificate has executed and delivered to you a certificate to substantially the
same effect as this certificate, and (3) the purchaser or transferee has
otherwise complied with any conditions for transfer set forth in the Pooling and
Servicing Agreement dated as of ______________, 199__ (the "Agreement"), among
CWABS, Inc. as Depositor, Countrywide Home Loans, Inc., as Master Servicer, and
[ ], as Trustee. All capitalized terms used herein but not defined herein shall
have the meanings assigned to them in the Agreement.
Very truly yours,
_____________________________
Name of Transferee
By:__________________________
Name:
Title:
G-2
FORM OF INVESTMENT LETTER RULE 144A LETTER
FOR TRANSFEROR CERTIFICATES
Date:
CWABS, Inc.
as Depositor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ________________
[ ]
as Trustee
___________________________________
___________________________________
Re: CWABS, Inc.;
Countrywide Home Equity Loan Trust 199__-__,
Revolving Home Equity Loan Asset Backed Certificates,
Series 199__-__, Transferor Certificates
Ladies and Gentlemen:
In connection with our proposed purchase of the Transferor Certificates,
we certify that (a) we understand that the Transferor Certificates are not being
registered under the Securities Act of 1933, as amended (the "Act"), or any
state securities laws and are being transferred to us in a transaction that is
exempt from the registration requirements of the Act and any such laws, (b) we
have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Transferor
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Transferor
Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Transferor Certificates, (d) we
are not an employee benefit plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended, nor a plan subject to Section 4975 of
the Internal Revenue Code of 1986, nor are we acting on behalf of any such
employee benefit plan, (e) we have not, nor has anyone acting on our behalf
offered, transferred, pledged, sold or otherwise disposed of the Transferor
Certificates, any interest in the Transferor Certificates or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Transferor Certificates, any interest in the Transferor
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Transferor Certificates, any interest in the
Transferor Certificates or any other similar security with, any person in
G-3
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, that would constitute a
distribution of the Transferor Certificates under the Securities Act or that
would render the disposition of the Transferor Certificates a violation of
Section 5 of the Securities Act or require registration pursuant thereto, nor
will act, nor has authorized or will authorize any person to act, in such manner
with respect to the Transferor Certificates and (f) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. We are aware that the sale to us is being
made in reliance on Rule 144A. We are acquiring the Transferor Certificates for
our own account or for resale pursuant to Rule 144A and further, understand that
such Transferor Certificates may be resold, pledged or transferred only (i) to a
person reasonably believed to be a qualified institutional buyer that purchases
for its own account or for the account of a qualified institutional buyer to
whom notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (ii) pursuant to another exemption from registration
under the Securities Act. All capitalized terms used herein but not defined
herein shall have the meanings assigned to them in the Pooling and Servicing
Agreement dated as of _____________, 199__ among CWABS, Inc. as Depositor,
Countrywide Home Loans, Inc., as Seller Master Servicer, and [ ], as Trustee.
____________________________________
Name of Buyer
By: ________________________________
Name:
Title:
G-4
ANNEX 1 TO EXHIBIT G
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Transferor Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $_________(1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and
(ii) the Buyer satisfies the criteria in the category marked below.
Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986 as amended.
Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
(1) Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
G-5
Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision
over any such institutions or is a foreign savings and loan
association or equivalent institution and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto.
Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency
or instrumentality of the State or its political subdivisions for
the benefit of its employees.
ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act
of 1974.
Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
Small Business Investment Company. The Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
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Business Development Company. The Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940.
Trust Fund. The Buyer is a trust fund whose trustee is a bank or
trust company and whose participants are exclusively State or
Local Plans or ERISA Plans as defined above, and no participant
of the Buyer is an individual retirement account or an H.R. 10
(▇▇▇▇▇) plan.
3. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) bank deposit notes and certificates of deposit, (iv) loan participations,
(v) repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Transferor
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which
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this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Transferor
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Buyer is a bank or savings and loan
is provided above, the Buyer agrees that it will furnish to such parties updated
annual financial statements promptly after they become available.
_____________________________
Name of Buyer
By:__________________________
Name:
Title:
Date: _______________________
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ANNEX 2 TO EXHIBIT G
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees that are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Transferor Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a qualified
institutional buyer as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyers Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family Of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information With respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
The Buyer owned $_________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer s most
recent fiscal year (such amount being calculated in accordance
With Rule 144A).
The Buyer is part of a Family of Investment Companies which owned
in the aggregate $_______ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
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3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) bank deposit notes and certificates of deposit,
(iii) loan participations, (iv) repurchase agreements, (v) securities owned but
subject to a repurchase agreement and (vi) currency, interest rate and commodity
swaps.
5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Transferor Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Transferor Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
_____________________________
Name of Buyer
By: _________________________
Name:
Title:
IF AN ADVISER:
_____________________________
Name of Adviser
Date: _______________________
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EXHIBIT H
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
[ ],
as Trustee
______________________________
______________________________
Attention:
Re: CWABS, Inc. Revolving Home Equity Loan
Asset Backed Certificates, Series 199__-__
Gentlemen:
In connection with the administration of the Mortgage Loans held by you
as Trustee under the Pooling and Servicing Agreement dated as of ______________,
199__, among CWABS, Inc. as Depositor, Countrywide Home Loans, Inc., as Seller
and Master Servicer, and you, as Trustee (the "Agreement"), we hereby request a
release of the Mortgage File held by you as Trustee with respect to the
following described Mortgage Loan for the reason indicated below.
Loan No.:
Reason for requesting file:
7. Mortgage Loan paid in full. (The Master Servicer hereby certifies
that all amounts received in connection with the payment in full
of the Mortgage Loan which are required to be deposited in the
Collection Account pursuant to Section 3.02 of the Agreement have
been so deposited).
8. Retransfer of Mortgage Loan. (The Master Servicer hereby
certifies that the Transfer Deposit Amount has been deposited
in the Collection Account pursuant to the Agreement).
9. The Mortgage Loan is being foreclosed.
10. The Home Equity Loan is being re-financed by another depository
institution. (The Master Servicer hereby certifies that all
amounts
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received in connection with the payment in full of the
Mortgage Loan which are required to be deposited in the
Collection Account pursuant to Section 3.02 of the Agreement have
been so deposited).
11. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
promptly be returned to the Trustee when the need therefor by the Master
Servicer no longer exists unless the Mortgage Loan has been liquidated.
Capitalized terms used herein shall have the meanings ascribed to them
in the Agreement.
COUNTRYWIDE HOME LOANS, INC.
By: ________________________
Name:
Title: Servicing Officer
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