Exhibit 4.1
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LONG BEACH SECURITIES CORP.,
Depositor
LONG BEACH MORTGAGE COMPANY,
Master Servicer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 2001
--------------------------------------------
Long Beach Mortgage Loan Trust 2001-1
Asset-Backed Certificates, Series 2001-1
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms..................................................4
Section 1.02. Accounting....................................................44
Section 1.03. Allocation of Certain Interest Shortfalls.....................44
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans..................................46
Section 2.02. Acceptance of REMIC 1 by the Trustee..........................48
Section 2.03. Cure, Repurchase or Substitution of Mortgage Loans by the
Seller; Remedies for Breaches by Depositor or Master Servicer;
Remedies for Breaches Relating to Prepayment Charges..........49
Section 2.04. Representations, Warranties and Covenants of the Master
Servicer......................................................52
Section 2.05. Representations and Warranties of the Depositor...............54
Section 2.06. Issuance of Certificates......................................56
Section 2.07. Conveyance of REMIC Regular Interests and Acceptance of
REMIC 1 by the Trustee; Issuance of Certificates..............56
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Master Servicer.....................58
Section 3.02. Sub-Servicing Agreements Between the Master Servicer and
Sub-Servicers.................................................59
Section 3.03. Successor Sub-Servicers.......................................61
Section 3.04. Liability of the Master Servicer..............................61
Section 3.05. No Contractual Relationship Between Sub-Servicers and
the Trustee or Certificateholders.............................62
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee.......................................................62
Section 3.07. Collection of Certain Mortgage Loan Payments..................62
Section 3.08. Sub-Servicing Accounts........................................63
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts............................................63
Section 3.10. Collection Account and Distribution Account...................64
Section 3.11. Withdrawals from the Collection Account and Distribution
Account.......................................................67
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Section 3.12. Investment of Funds in the Collection Account and the
Distribution Account..........................................68
Section 3.13. [Reserved]....................................................70
Section 3.14. Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage.........................................70
Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements.....71
Section 3.16. Realization Upon Defaulted Mortgage Loans.....................72
Section 3.17. Trustee to Cooperate; Release of Mortgage Files...............74
Section 3.18. Servicing Compensation........................................75
Section 3.19. Reports to the Trustee; Collection Account Statements.........76
Section 3.20. Statement as to Compliance....................................76
Section 3.21. Independent Public Accountants' Servicing Report..............77
Section 3.22. Access to Certain Documentation...............................77
Section 3.23. Title, Management and Disposition of REO Property.............77
Section 3.24. Obligations of the Master Servicer in Respect of Prepayment
Interest Shortfalls...........................................81
Section 3.25. Obligations of the Master Servicer in Respect of Mortgage
Rates and Monthly Payments....................................81
Section 3.26. Reserve Fund..................................................81
Section 3.27. Advance Facility..............................................83
Section 3.28. PMI Policy; Claims Under the PMI Policy.......................83
ARTICLE IV
FLOW OF FUNDS
Section 4.01. Distributions.................................................85
Section 4.02. Preference Claims.............................................90
Section 4.03. Statements....................................................91
Section 4.04. Remittance Reports; Advances..................................94
Section 4.05. Distributions on the REMIC Regular Interests..................96
Section 4.06. Allocation of Realized Losses.................................98
Section 4.07. Compliance with Withholding Requirements......................99
Section 4.08. Commission Reporting.........................................100
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.............................................101
Section 5.02. Registration of Transfer and Exchange of Certificates........103
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates............107
Section 5.04. Persons Deemed Owners........................................107
ARTICLE VI
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THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Master Servicer and the Depositor...........108
Section 6.02. Merger or Consolidation of the Depositor or the Master
Servicer.....................................................108
Section 6.03. Limitation on Liability of the Depositor, the Master
Servicer and Others..........................................108
Section 6.04. Limitation on Resignation of Master Servicer.................109
Section 6.05. Rights of the Depositor in Respect of the Master Servicer....110
ARTICLE VII
DEFAULT
Section 7.01. Master Servicer Events of Default............................112
Section 7.02. Trustee to Act; Appointment of Successor.....................114
Section 7.03. Notification to Certificateholders...........................116
Section 7.04. Waiver of Master Servicer Events of Default..................116
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee............................................117
Section 8.02. Certain Matters Affecting the Trustee........................118
Section 8.03. Trustee not Liable for Certificates or Mortgage Loans........119
Section 8.04. Trustee May Own Certificates.................................119
Section 8.05. Trustee's Fees and Expenses..................................120
Section 8.06. Eligibility Requirements for Trustee.........................121
Section 8.07. Resignation or Removal of Trustee............................121
Section 8.08. Successor Trustee............................................122
Section 8.09. Merger or Consolidation of Trustee...........................122
Section 8.10. Appointment of Co-Trustee or Separate Trustee................123
Section 8.11. Appointment of Custodians....................................124
Section 8.12. Appointment of Office or Agency..............................124
Section 8.13. Representations and Warranties of the Trustee................124
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase or Liquidation of All
Mortgage Loans...............................................126
Section 9.02. Additional Termination Requirements..........................128
ARTICLE X
REMIC PROVISIONS
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Section 10.01. REMIC Administration.........................................129
Section 10.02. Prohibited Transactions and Activities.......................132
Section 10.03. Trustee, Master Servicer and Depositor Indemnification.......132
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment....................................................133
Section 11.02. Recordation of Agreement; Counterparts.......................134
Section 11.03. Limitation on Rights of Certificateholders...................134
Section 11.04. Governing Law; Jurisdiction..................................135
Section 11.05. Notices......................................................135
Section 11.06. Severability of Provisions...................................136
Section 11.07. Notice to the Rating Agencies and the NIMs Insurer...........136
Section 11.08. Article and Section References...............................137
Section 11.09. NIMs Insurer's Rights........................................137
Section 11.10. Grant of Security Interest...................................137
Section 11.11. No Petition..................................................138
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EXHIBITS:
Exhibit A-1 Form of Class A-1 Certificates
Exhibit A-2 Form of Class A-2 Certificates
Exhibit A-3 Form of Class S Certificates
Exhibit A-4 Form of Class M-1 Certificates
Exhibit A-5 Form of Class M-2 Certificates
Exhibit A-6 Form of Class M-3 Certificates
Exhibit A-7 Form of Class C Certificates
Exhibit A-8 Form of Class P Certificates
Exhibit A-9 Form of Class R Certificates
Exhibit B [Reserved]
Exhibit C Form of Mortgage Loan Purchase Agreement
Exhibit D Mortgage Loan Schedule
Exhibit E-1 Request for Release
Exhibit E-2 Request for Release for Mortgage Loans paid in full
Exhibit F-1 Form of Trustee's Initial Certification
Exhibit F-2 Form of Trustee's Final Certification
Exhibit G [Reserved]
Exhibit H Form of Lost Note Affidavit
Exhibit I Form of ERISA Representation
Exhibit J Form of Investment Letter
Exhibit K Form of Class R Certificate Transfer Affidavit
Exhibit L Form of Transferor Certificate
Schedule I Prepayment Charge Schedule
Schedule II PMI Mortgage Loans
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This Pooling and Servicing Agreement is dated as of March 1, 2001 (the
"Agreement"), among LONG BEACH SECURITIES CORP., as depositor (the "Depositor"),
LONG BEACH MORTGAGE COMPANY, as master servicer (the "Master Servicer"), and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates (collectively, the
"Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of eight classes of
certificates, designated as (i) the Class A-1 Certificates, (ii) the Class A-2
Certificates, (iii) the Class S Certificates, (iv) the Class M-1 Certificates,
(v) the Class M-2 Certificates, (vi) the Class M- 3 Certificates, (vii) the
Class P Certificates, (viii) the Class C Certificates and (ix) the Class R
Certificates.
REMIC 1
-------
As provided herein, the Trustee will make an election to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (exclusive of the Reserve Fund) as a
real estate mortgage investment conduit (a "REMIC") for federal income tax
purposes, and such segregated pool of assets will be designated as "REMIC 1."
The Class R-1 Interest will represent the sole class of "residual interests" in
REMIC 1 for purposes of the REMIC Provisions (as defined herein) under federal
income tax law. The following table irrevocably sets forth the designation, the
Uncertificated REMIC 1 Pass-Through Rate, the initial Uncertificated Principal
Balance, and solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC 1
Regular Interests. None of the REMIC 1 Regular Interests will be certificated.
Designation Uncertificated REMIC 1 Initial Uncertificated Assumed Final
Pass-Through Rate Principal Balance Maturity Date (1)
----------- ---------------------- ---------------------- -----------------
LT1A Variable(2) $652,919,788.78 April 2031
LT1B Variable(2) $72,546,600.00 April 2031
LT1P Variable(2) $100.00 April 2031
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(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC 1 Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC 1
Pass-Through Rate" herein.
REMIC 2
-------
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the REMIC 1 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 2". The Class R-2 Interest represents the sole class of
"residual interests" in REMIC 2 for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, the Uncertificated REMIC
2 Pass-Through Rate, the initial Uncertificated Principal Balance, and solely
for purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each of the REMIC 2 Regular Interests. None
of the REMIC 2 Regular Interests will be certificated.
Uncertificated REMIC 2 Initial Uncertificated Assumed Final
Designation Pass-Through Rate Principal Balance Maturity Date (1)
----------- ---------------------- ---------------------- -----------------
LT2A Variable(2) $710,957,061.00 April 2031
LT2B Variable(2) $ 4,845,420.00 April 2031
LT2C Variable(2) $ 1,484,260.00 April 2031
LT2D Variable(2) $ 308,330.00 April 2031
LT2E Variable(2) $ 308,300.00 April 2031
LT2F Variable(2) $ 163,230.00 April 2031
LT2G Variable(2) $ 7,339,757.78 April 2031
LT2SA Variable(3) N/A(6) April 2031
LT2SB Variable(4) N/A(6) April 2031
LT2SC Variable(5) N/A(6) April 2031
LT2P Variable(2) $ 100.00 April 2031
-------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC 2 Regular Interest.
(2) Calculated in accordance with the definition of "Uncertificated REMIC 2
Pass-Through Rate" herein.
(3) 1.50% per annum for the first 36 Distribution Dates and 0.00% per annum
thereafter.
(4) 1.00% per annum for the first 24 Distribution Dates and 0.00% per annum
thereafter.
(5) 1.00% per annum for the first 12 Distribution Dates and 0.00% per annum
thereafter.
(6) REMIC 2 Regular Interest LT2SA, REMIC 2 Regular Interest LT2SB and REMIC 2
Regular Interest LT2SC will not have Uncertificated Principal Balances, but
will accrue interest on their respective Uncertificated Notional Amounts
outstanding from time to time which in each case shall equal the
Uncertificated Principal Balance of REMIC 1 Regular Interest LT1B.
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REMIC 3
As provided herein, the Trustee shall make an election to treat the
segregated pool of assets consisting of the REMIC 2 Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC 3." The Class R-3 Interest represents the sole class of
"residual interests" in REMIC 3 for purposes of the REMIC Provisions.
The following table sets forth (or describes) the Class designation,
Pass-Through Rate and Original Class Certificate Principal Balance for each
Class of Certificates that represents one or more of the "regular interests" in
REMIC 3 created hereunder:
Original Class
Certificate Principal Pass-Through Assumed Final
Class Designation Balance Rate Maturity Date(1)
Class A-1.......... $484,542,000.00 Variable(2) April 2031
Class A-2.......... $148,426,000.00 Variable(2) April 2031
Class M-1.......... $ 30,833,000.00 Variable(2) April 2031
Class M-2.......... $ 30,833,000.00 Variable(2) April 2031
Class M-3.......... $ 16,323,000.00 Variable(2) April 2031
Class S............ N/A(3) N/A(3) April 2031
Class C............ $ 14,509,388.78(4) Variable(2) April 2031
Class P............ $100.00 N/A(5) April 2031
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date in the month following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each Class of Certificates that
represents one or more of the "regular interests" in REMIC 3.
(2) Calculated in accordance with the definition of "Pass-Through Rate" herein.
(3) The Class S Certificates will receive all amounts distributed to REMIC 2
Regular Interest LT2SA, REMIC 2 Regular Interest LT3SB and REMIC 2 Regular
Interest LT2SC.
(4) The Class C Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class C Certificates
outstanding from time to time which shall equal the aggregate of the
Uncertificated Principal Balances of the REMIC 2 Regular Interests. The
Class C Certificates will not accrue interest on their Class Certificate
Principal Balance.
(5) The Class P Certificates will not accrue interest.
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ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations in respect of interest on the Class A Certificates and the
Mezzanine Certificates shall be made on the basis of the actual number of days
elapsed on the basis of a 360-day year and all other calculations of interest
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months. The Class P Certificates and the Class R Certificates are
not entitled to distributions in respect of interest and, accordingly, will not
accrue interest.
"1933 Act": The Securities Act of 1933, as amended.
"Account": Either of the Collection Account and Distribution Account.
"Accrual Period": With respect to the Class S Certificates and the Class C
Certificates and each Distribution Date, the calendar month prior to the month
of such Distribution Date. With respect to the Class A Certificates and the
Mezzanine Certificates and each Distribution Date, the period commencing on the
preceding Distribution Date (or in the case of the first such Accrual Period,
commencing on the Closing Date) and ending on the day preceding the current
Distribution Date.
"Adjustable Rate Mortgage Loan": A Mortgage Loan which provides for an
adjustable Mortgage Rate payable with respect thereto.
"Adjusted Net Maximum Mortgage Rate": With respect to any Mortgage Loan (or
the related REO Property), as of any date of determination, a per annum rate of
interest equal to the Maximum Mortgage Rate for such Mortgage Loan (if such
Mortgage Loan is an Adjustable Rate Mortgage Loan) or the Mortgage Rate for such
Mortgage Loan (if such Mortgage Loan is a Fixed Rate Mortgage Loan), in either
such case as of the first day of the month preceding the month in which the
Distribution Date occurs, minus the sum of (i) the Servicing Fee Rate and (ii)
the PMI Insurer Fee Rate, if applicable.
"Adjusted Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property), as of any date of determination, a per annum rate of
interest equal to the Mortgage Rate for such Mortgage Loan as of the first day
of the month preceding the month in which the Distribution Date occurs, minus
the sum of (i) the Servicing Fee Rate and (ii) the PMI Insurer Fee Rate, if
applicable.
"Adjustment Date": With respect to each Adjustable Rate Mortgage Loan, each
adjustment date, on which the Mortgage Rate of such Mortgage Loan changes
pursuant to the related Mortgage
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Note. The first Adjustment Date following the Cut-off Date as to each Adjustable
Rate Mortgage Loan is set forth in the Mortgage Loan Schedule.
"Advance": As to any Mortgage Loan or REO Property, any advance made by the
Master Servicer in respect of any Distribution Date pursuant to Section 4.04.
"Advancing Person": As defined in Section 3.27 hereof.
"Adverse REMIC Event": As defined in Section 10.01(f) hereof.
"Affiliate": With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
"Allocated Realized Loss Amount": With respect to any Distribution Date and
the Class A-2 Certificates or any Class of Mezzanine Certificates, the sum of
(i) any Realized Losses allocated to such Class of Certificates on any
Distribution Date and (ii) the amount of any Allocated Realized Loss Amount for
such Class of Certificates remaining unpaid from the previous Distribution Date.
"Assignment": An assignment of Mortgage, notice of transfer or equivalent
instrument, in recordable form (excepting therefrom, if applicable, the mortgage
recordation information which has not been required pursuant to Section 2.01
hereof or returned by the applicable recorder's office), which is sufficient
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect or record the sale of the Mortgage.
"Available Funds": With respect to any Distribution Date, an amount equal
to the excess of (i) the sum of (a) the aggregate of the Monthly Payments on the
Mortgage Loans received on or prior to the related Determination Date, (b)
Liquidation Proceeds, Insurance Proceeds, Principal Prepayments and other
unscheduled recoveries of principal and interest in respect of the Mortgage
Loans during the related Prepayment Period, (c) the aggregate of any amounts
received in respect of an REO Property acquired in respect of a Mortgage Loan
withdrawn from any REO Account and deposited in the Collection Account for such
Distribution Date, (d) the aggregate of any amounts deposited in the Collection
Account by the Master Servicer in respect of related Prepayment Interest
Shortfalls on the Mortgage Loans for such Distribution Date, (e) the aggregate
of any Advances made by the Master Servicer for such Distribution Date with
respect to the Mortgage Loans, (f) the aggregate of any related advances made by
the Trustee for such Distribution Date with respect to the Mortgage Loans
pursuant to Section 7.02(b) and (g) the amount of any Prepayment Charges
collected by the Master Servicer on the Mortgage Loans in connection with the
full or partial prepayment of any of the Mortgage Loans and any Master Servicer
Prepayment Charge Payment Amount over (ii) the sum of (a) amounts reimbursable
or payable to the Depositor, the Master Servicer, the Trustee, the Seller, the
NIMs Insurer or any Sub-Servicer pursuant to Section 3.11 or
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Section 3.12 in respect of the Mortgage Loans or otherwise payable in respect of
Extraordinary Trust Fund Expenses, (b) amounts deposited in the Collection
Account or the Distribution Account pursuant to clauses (i)(a) through (g)
above, as the case may be, in error, (c) the amount of any Prepayment Charges
collected by the Master Servicer in connection with the full or partial
prepayment of any of the Mortgage Loans and any Master Servicer Prepayment
Charge Payment Amount, (d) Stayed Funds, (e) the PMI Insurer Fee payable from
the Distribution Account, (f) any indemnification payments or expense
reimbursements made by the Trust Fund pursuant to Section 8.05 and (h) amounts
reimbursable to the Trustee for an advance made pursuant to Section 7.02(b)
which advance the Trustee has determined to be nonrecoverable from the Stayed
Funds in respect of which it was made.
"Balloon Mortgage Loan": A Mortgage Loan that provides for a Balloon
Payment.
"Balloon Payment": With respect to any Balloon Mortgage Loan, the payment
of the unamortized principal balance of a Mortgage Loan in a single payment at
the maturity of such Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a Realized Loss
resulting from a Deficient Valuation or Debt Service Reduction.
"Basic Principal Distribution Amount": With respect to any Distribution
Date, the excess of (i) the Principal Remittance Amount for such Distribution
Date over (ii) the Overcollateralization Release Amount, if any, for such
Distribution Date.
"Book-Entry Certificates": Any of the Certificates that shall be registered
in the name of the Depository or its nominee, the ownership of which is
reflected on the books of the Depository or on the books of a Person maintaining
an account with the Depository (directly, as a "Depository Participant", or
indirectly, as an indirect participant in accordance with the rules of the
Depository and as described in Section 5.02 hereof). On the Closing Date, the
Class A Certificates, the Class S Certificates and the Mezzanine Certificates
shall be Book-Entry Certificates.
"Book-Entry Custodian": The custodian appointed pursuant to Section 5.01.
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking or savings institutions in the State of Delaware, the State of New York,
the State of Maryland, the State of California, the State of Minnesota, the
Commonwealth of Pennsylvania or in the city in which the Corporate Trust Office
of the Trustee is located, are authorized or obligated by law or executive order
to be closed.
"Certificate": Any Regular Certificate or Class R Certificate.
"Certificateholder" or "Holder": The Person in whose name a Certificate is
registered in the Certificate Register, except that a Disqualified Organization
or a Non-United States Person shall not
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be a Holder of a Residual Certificate for any purposes hereof and, solely for
the purposes of giving any consent pursuant to this Agreement, any Certificate
registered in the name of the Depositor or the Master Servicer or any Affiliate
thereof shall be deemed not to be outstanding and the Voting Rights to which it
is entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 11.01. The Trustee and the
NIMs Insurer may conclusively rely upon a certificate of the Depositor or the
Master Servicer in determining whether a Certificate is held by an Affiliate
thereof. All references herein to "Holders" or "Certificateholders" shall
reflect the rights of Certificate Owners as they may indirectly exercise such
rights through the Depository and participating members thereof, except as
otherwise specified herein; provided, however, that the Trustee and the NIMs
Insurer shall be required to recognize as a "Holder" or "Certificateholder" only
the Person in whose name a Certificate is registered in the Certificate
Register.
"Certificate Margin": With respect to the Class A-1 Certificates on each
Distribution Date (A) on or prior to the Optional Termination Date, 0.22% per
annum and (B) after the Optional Termination Date, 0.44% per annum. With respect
to the Class A-2 Certificates on each Distribution Date (A) on or prior to the
Optional Termination Date, 0.30% per annum and (B) after the Optional
Termination Date, 0.60% per annum. With respect to the Class M-1 Certificates on
each Distribution Date (A) on or prior to the Optional Termination Date, 0.60%
per annum and (B) after the Optional Termination Date, 0.90% per annum. With
respect to the Class M-2 Certificates on each Distribution Date (A) on or prior
to the Optional Termination Date, 1.00% per annum and (B) after the Optional
Termination Date, 1.50% per annum. With respect to the Class M-3 Certificates on
each Distribution Date (A) on or prior to the Optional Termination Date, 2.05%
per annum and (B) after the Optional Termination Date, 3.075% per annum.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Class of Regular
Certificates (other than the Class S Certificates and the Class C Certificates)
immediately prior to any Distribution Date, will be equal to the Initial
Certificate Principal Balance thereof reduced by the sum of all amounts actually
distributed in respect of principal of such Class and, in the case of a
Mezzanine Certificate, Realized Losses allocated thereto on all prior
Distribution Dates. With respect to the Class C Certificates as of any date of
determination, an amount equal to the excess, if any, of (A) the then aggregate
Uncertificated Principal Balances of the REMIC 1 Regular Interests over (B) the
then aggregate Certificate Principal Balances of the Class A Certificates, the
Mezzanine Certificates and the Class P Certificates then outstanding. The Class
S Certificates will not have a Certificate Principal Balance.
"Certificate Register": The register maintained and registrar appointed
pursuant to Section 5.02 hereof.
"Class": Collectively, Certificates which have the same priority of payment
and bear the same class designation and the form of which is identical except
for variation in the Percentage Interest evidenced thereby.
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"Class A Certificate": Any Class A-1 Certificate or Class A-2 Certificate.
"Class A-1 Certificate": Any one of the Class A-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-1, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.
"Class A-2 Certificate": Any one of the Class A-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-2, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.
"Class A Principal Allocation Percentage": For any Distribution Date, the
percentage equivalent of a fraction, determined as follows: (i) in the case of
the Class A-1 Certificates, the numerator of which is (x) the portion of the
Principal Remittance Amount for such Distribution Date that is attributable to
principal received or advanced on the Group I Mortgage Loans, and the
denominator of which is (y) the Principal Remittance Amount for such
Distribution Date, and (ii) in the case of the Class A-2 Certificates, the
numerator of which is (x) the portion of the Principal Remittance Amount for
such Distribution Date that is attributable to principal received or advanced on
the Group II Mortgage Loans, and the denominator of which is (y) the Principal
Remittance Amount for such Distribution Date.
"Class A Principal Distribution Amount": With respect to any Distribution
Date, the excess of (x) the aggregate Certificate Principal Balance of the Class
A Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 74.50% and (ii) the aggregate Stated Principal Balance
of the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor.
"Class C Certificate": Any one of the Class C Certificates as designated on
the face thereof substantially in the form annexed hereto as Exhibit A-7,
executed, authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein and therein and evidencing a Regular Interest
in REMIC 3.
"Class M-1 Certificate": Any one of the Class M-1 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-4, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.
"Class M-1 Principal Distribution Amount": With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such
8
Distribution Date) and (ii) the Certificate Principal Balance of the Class M-1
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 83.00% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor.
"Class M-2 Certificate": Any one of the Class M-2 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-5, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.
"Class M-2 Principal Distribution Amount": With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date) and (iii) the Certificate Principal Balance of the Class M-2
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 91.50% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled
collections of principal received during the related Prepayment Period) minus
the Overcollateralization Floor.
"Class M-3 Certificate": Any one of the Class M-3 Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-6, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein and evidencing a
Regular Interest in REMIC 3.
"Class M-3 Principal Distribution Amount": With respect to any Distribution
Date, the excess of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date) and (iv) the Certificate
Principal Balance of the Class M-3 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 96.00% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or
9
advanced, and unscheduled collections of principal received during the related
Prepayment Period) and (B) the aggregate Stated Principal Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received
during the related Prepayment Period) minus the Overcollateralization Floor.
"Class P Certificate": Any one of the Class P Certificates as designated on
the face thereof substantially in the form annexed hereto as Exhibit A-8,
executed, authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein and therein and evidencing a Regular Interest
in REMIC 3.
"Class R Certificate": Any one of the Class R Certificates as designated on
the face thereof substantially in the form annexed hereto as Exhibit A-9,
executed, authenticated and delivered by the Trustee, evidencing the ownership
of the Class R-1 Interest, the Class R-2 Interest and the Class R-3 Interest.
"Class R-1 Interest": The uncertificated Residual Interest in REMIC 1.
"Class R-2 Interest": The uncertificated Residual Interest in REMIC 2.
"Class R-3 Interest": The uncertificated Residual Interest in REMIC 3.
"Class S Certificate": Any one of the Class S Certificates as designated on
the face thereof substantially in the form annexed hereto as Exhibit A-3,
executed, authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein and therein and evidencing a Regular Interest
in REMIC 3.
"Close of Business": As used herein, with respect to any Business Day, 5:00
p.m. (New York time).
"Closing Date": March 15, 2001.
"Code": The Internal Revenue Code of 1986.
"Collection Account": The account or accounts created and maintained by the
Master Servicer pursuant to Section 3.10(a), which shall be entitled "Bankers
Trust Company of California, N.A., as Trustee, in trust for registered Holders
of Long Beach Mortgage Loan Trust 2001-1, Asset- Backed Certificates, Series
2001-1," which must be an Eligible Account.
"Commission": The Securities and Exchange Commission.
"Compensating Interest": As defined in Section 3.24.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as the Trustee may
designate from time to time by notice to the Certificateholders, the Depositor
and the Master Servicer.
"Corresponding Certificates": With respect to REMIC 2 Regular Interest
LT2B, REMIC 2 Regular Interest LT2C, REMIC 2 Regular Interest LT2D, REMIC 2
Regular Interest LT2E, REMIC 2 Regular Interest LT2G and REMIC 2 Regular
Interest LT2P, the Class A-1 Certificates, the Class A-2 Certificates, Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates and Class P
Certificates, respectively.
"Credit Enhancement Percentage": For any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the sum of the aggregate
Certificate Principal Balances of the Mezzanine Certificates and the Class C
Certificates, and the denominator of which is the aggregate Stated Principal
Balance of the Mortgage Loans, calculated prior to taking into account payments
of principal on the Mortgage Loans due on the related Due Date or received
during the related Prepayment Period and distribution of the Principal
Distribution Amount to the Holders of the Certificates then entitled to
distributions of principal on such Distribution Date.
"Cumulative Loss Percentage": With respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses incurred from the Cut-off Date to the last day of the
preceding calendar month and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date.
"Custodial Agreement": An agreement that may be entered into or an
agreement assigned to the Trustee with respect to the Mortgage Loans.
"Custodian": A custodian, which shall not be the Depositor, the Master
Servicer, the Seller or any affiliate of any of them, appointed pursuant to a
Custodial Agreement.
"Cut-off Date": With respect to each Mortgage Loan, March 1, 2001.
"Cut-off Date Aggregate Principal Balance": The aggregate of the Cut-off
Date Principal Balances of the Mortgage Loans.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-off Date of such Mortgage Loan
(or as of the applicable date of substitution with respect to a Qualified
Substitute Mortgage Loan), after giving effect to scheduled payments due on or
before the Cut-off Date, whether or not received.
"Debt Service Reduction": With respect to any Mortgage Loan, a reduction in
the scheduled Monthly Payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
resulting from a Deficient Valuation.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the Bankruptcy Code.
11
"Definitive Certificates": As defined in Section 5.01(b) hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by one
or more Qualified Substitute Mortgage Loans.
"Delinquency Percentage": For any Distribution Date, the percentage
obtained by dividing (x) the aggregate Principal Balance of Mortgage Loans
Delinquent 60 days or more by (y) the aggregate Principal Balance of the
Mortgage Loans, in each case, as of the last day of the previous calendar month.
"Delinquent": With respect to any Mortgage Loan and related Monthly
Payment, the Monthly Payment due on a Due Date which is not made by the Close of
Business on the next scheduled Due Date for such Mortgage Loan. For example, a
Mortgage Loan is 60 or more days Delinquent if the Monthly Payment due on a Due
Date is not made by the Close of Business on the second scheduled Due Date after
such Due Date.
"Depositor": Long Beach Securities Corp., a Delaware corporation, or any
successor in interest.
"Depository": The initial Depository shall be The Depository Trust Company,
whose nominee is Cede & Co., or any other organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
"Depository Participant": A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date, the 15th day
of the calendar month in which such Distribution Date occurs or, if such 15th
day is not a Business Day, the Business Day immediately preceding such 15th day.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the REMIC other than through an
Independent Contractor; provided, however, that the Trustee (or the Master
Servicer on behalf of the Trustee) shall not be considered to Directly Operate
an REO Property solely because the Trustee (or the Master Servicer on behalf of
the Trustee) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under Section
860E of the Code, which as of the Closing Date is any of: (i) the United States,
any state or political subdivision
12
thereof, any foreign government, any international organization, or any agency
or instrumentality of any of the foregoing, (ii) any organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code unless such organization is subject to the tax
imposed by Section 511 of the Code, (iii) any organization described in Section
1381(a)(2)(C) of the Code, (iv) an "electing large partnership" within the
meaning of Section 775 of the Code or (v) any other Person so designated by the
Trustee based upon an Opinion of Counsel provided by nationally recognized
counsel to the Trustee that the holding of an ownership interest in a Class R
Certificate by such Person may cause the Trust Fund or any Person having an
ownership interest in any Class of Certificates (other than such Person) to
incur liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the transfer of an ownership interest in the Class
R Certificate to such Person. A corporation will not be treated as an
instrumentality of the United States or of any state or political subdivision
thereof, if all of its activities are subject to tax and, a majority of its
board of directors is not selected by a governmental unit. The term "United
States", "state" and "international organizations" shall have the meanings set
forth in Section 7701 of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Distribution Account, Bankers Trust Company of California, N.A., in trust for
the registered Certificateholders of Long Beach Mortgage Loan Trust 2001-1,
Asset-Backed Certificates, Series 2001-1" and which must be an Eligible Account.
"Distribution Date": The 21st day of any calendar month, or if such 21st
day is not a Business Day, the Business Day immediately following such 21st day,
commencing in April 2001.
"Due Date": With respect to each Distribution Date, the first day of the
calendar month in which such Distribution Date occurs, which is generally the
day of the month on which the Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the period commencing
on the second day of the month preceding the month in which such Distribution
Date occurs and ending on the first day of the month in which such Distribution
Date occurs.
"Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated P-1 by ▇▇▇▇▇'▇, F-1 by Fitch or A-1+ by S&P (or comparable ratings if
▇▇▇▇▇'▇, Fitch and S&P are not the Rating Agencies) at the time any amounts are
held on deposit therein, (ii) an account or accounts the deposits in which are
fully insured by the FDIC (to the limits established by such corporation), the
uninsured deposits in which account are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating
Agency, the Certificateholders will have a claim with respect to the funds in
such account or a perfected first priority security interest against such
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, (iii) a trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution, national banking association or trust company
13
acting in its fiduciary capacity or (iv) an account otherwise acceptable to each
Rating Agency without reduction or withdrawal of their then current ratings of
the Certificates as evidenced by a letter from each Rating Agency to the
Trustee. Eligible Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"Excess Overcollateralized Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date, the
excess, if any, of (i) the Overcollateralized Amount for such Distribution Date,
assuming that 100% of the Principal Remittance Amount is applied as a principal
payment on such Distribution Date over (ii) the Overcollateralization Target
Amount for such Distribution Date.
"Extraordinary Trust Fund Expense": Any amounts reimbursable to the
Trustee, or any director, officer, employee or agent of the Trustee, from the
Trust Fund pursuant to Section 8.05, any amounts payable from the Distribution
Account in respect of taxes pursuant to Section 10.01(g)(iii), any amounts
payable from the Distribution Account in respect of any REMIC pursuant to
Section 10.01(c) or (g), any amounts payable from the Trust Fund as a trustee
fee for any successor trustee and any amounts payable by the Trustee for the
recording of the assignments of mortgage pursuant to Section 2.01.
"Extra Principal Distribution Amount": With respect to any Distribution
Date, the lesser of (x) the Monthly Interest Distributable Amount payable on the
Class C Certificates on such Distribution Date as reduced by Realized Losses
allocated thereto with respect to such Distribution Date pursuant to Section
4.08 and (y) the Overcollateralization Deficiency Amount for such Distribution
Date.
"▇▇▇▇▇▇ Mae": Federal National Mortgage Association or any successor
thereto.
"FDIC": Federal Deposit Insurance Corporation or any successor thereto.
"Final Recovery Determination": With respect to any defaulted Mortgage Loan
or any REO Property (other than a Mortgage Loan or REO Property purchased by the
Seller or the Master Servicer pursuant to or as contemplated by Section 2.03 or
10.01), a determination made by the Master Servicer that all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which the Master Servicer,
in its reasonable good faith judgment, expects to be finally recoverable in
respect thereof have been so recovered. The Master Servicer shall maintain
records, prepared by a Servicing Officer, of each Final Recovery Determination
made thereby.
"Fitch": Fitch, Inc., or its successor in interest.
"Fixed Rate Mortgage Loan": A Mortgage Loan which provides for a fixed
Mortgage Rate payable with respect thereto.
"Formula Rate": For any Distribution Date and the Class A Certificates and
the Mezzanine Certificates, the lesser of (i) LIBOR plus the related Certificate
Margin and (ii) the Maximum Cap Rate.
14
"▇▇▇▇▇▇▇ Mac": The Federal Home Loan Mortgage Corporation, or any successor
thereto.
"Group I Class S Monthly Interest Distributable Amount": Solely for
purposes of calculating the allocation of the Interest Remittance Amount
pursuant to Section 4.01(a) on any Distribution Date, the Monthly Interest
Distributable Amount for the Class S Certificates for such Distribution Date
will be deemed divided into the Group I Class S Monthly Interest Distributable
Amount and the Group II Class S Monthly Interest Distributable Amount, where the
Group I Class S Monthly Interest Distributable Amount is equal to the Monthly
Interest Distributable Amount for the Class S Certificates multiplied by a
fraction, the numerator of which is (x) the Certificate Principal Balance of the
Class A-1 Certificates immediately prior to such Distribution Date and the
denominator of which is (y) the aggregate Certificate Principal Balance of the
Class A Certificates immediately prior to such Distribution Date.
"Group I Class S Unpaid Interest Shortfall Amount": Solely for purposes of
calculating the allocation of the Interest Remittance Amount pursuant to Section
4.01(a) on any Distribution Date, the Unpaid Interest Shortfall Amount, if any,
for the Class S Certificates for such Distribution Date will be deemed divided
into the Group I Class S Unpaid Interest Shortfall Amount and the Group II Class
S Unpaid Interest Shortfall Amount, where the Group I Class S Unpaid Interest
Shortfall Amount is equal to the Unpaid Interest Shortfall Amount for the Class
S Certificates multiplied by a fraction, the numerator of which is (x) the
Certificate Principal Balance of the Class A-1 Certificates immediately prior to
such Distribution Date and the denominator of which is (y) the aggregate
Certificate Principal Balance of the Class A Certificates immediately prior to
such Distribution Date.
"Group I Mortgage Loans": Those Mortgage Loans with original principal
balances (as such principal balances are shown on the Mortgage Loan Schedule)
that conform to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac limits for mortgage loans for
purchase by ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac.
"Group I Class S Monthly Interest Distributable Amount": Solely for
purposes of calculating the allocation of the Interest Remittance Amount
pursuant to Section 4.01(a) on any Distribution Date, the Monthly Interest
Distributable Amount for the Class S Certificates for such Distribution Date
will be deemed divided into the Group I Class S Monthly Interest Distributable
Amount and the Group II Class S Monthly Interest Distributable Amount, where the
Group II Class S Monthly Interest Distributable Amount is equal to the Monthly
Interest Distributable Amount for the Class S Certificates multiplied by a
fraction, the numerator of which is (x) the Certificate Principal Balance of the
Class A-2 Certificates immediately prior to such Distribution Date and the
denominator of which is (y) the aggregate Certificate Principal Balance of the
Class A Certificates immediately prior to such Distribution Date.
"Group I Class S Unpaid Interest Shortfall Amount": Solely for purposes of
calculating the allocation of the Interest Remittance Amount pursuant to Section
4.01(a) on any Distribution Date, the Unpaid Interest Shortfall Amount, if any,
for the Class S Certificates for such Distribution Date will be deemed divided
into the Group I Class S Unpaid Interest Shortfall Amount and the Group II Class
S Unpaid Interest Shortfall Amount, where the Group II Class S Unpaid Interest
Shortfall Amount is equal to the Unpaid Interest Shortfall Amount for the Class
S Certificates multiplied by a fraction, the numerator of which is (x) the
Certificate Principal Balance of the Class A-2
15
Certificates immediately prior to such Distribution Date and the denominator of
which is (y) the aggregate Certificate Principal Balance of the Class A
Certificates immediately prior to such Distribution Date.
"Group II Mortgage Loans": Those Mortgage Loans with original principal
balances (as such principal balances are shown on the Mortgage Loan Schedule)
that do not conform to ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac limits for mortgage loans for
purchase by ▇▇▇▇▇▇ Mae and ▇▇▇▇▇▇▇ Mac.
"Gross Margin": With respect to each Adjustable Rate Mortgage Loan, the
fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
"Indenture": The indenture, if any, entered into following the Closing
Date, among Long Beach NIM Trust 2001-1 as issuer, Bankers Trust Company of
California, N.A., as indenture trustee, and First Union National Bank as
co-indenture trustee, relating to the NIM Notes to be issued thereunder.
"Independent": When used with respect to any specified Person, any such
Person who (a) is in fact independent of the Depositor, the Master Servicer and
their respective Affiliates, (b) does not have any direct financial interest in
or any material indirect financial interest in the Depositor or the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor
or the Master Servicer or any Affiliate thereof as an officer, employee,
promoter, underwriter, trustee, trust administrator, partner, director or Person
performing similar functions; provided, however, that a Person shall not fail to
be Independent of the Depositor or the Master Servicer or any Affiliate thereof
merely because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Depositor or the Master Servicer or any Affiliate
thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the Master
Servicer) that would be an "independent contractor" with respect to any of the
REMICs created hereunder within the meaning of Section 856(d)(3) of the Code if
such REMIC were a real estate investment trust (except that the ownership tests
set forth in that section shall be considered to be met by any Person that owns,
directly or indirectly, 35% or more of any Class of Certificates), so long as
each such REMIC does not receive or derive any income from such Person and
provided that the relationship between such Person and such REMIC is at arm's
length, all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or
(ii) any other Person (including the Master Servicer) if the Trustee has
received an Opinion of Counsel to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code (determined
without regard to the exception applicable for purposes of Section 860D(a) of
the Code), or cause any income realized in respect of such REO Property to fail
to qualify as Rents from Real Property.
"Index": With respect to each Adjustable Rate Mortgage Loan and with
respect to each related Adjustment Date, the index as specified in the related
Mortgage Note.
16
"Initial Certificate Principal Balance": With respect to any Regular
Certificate (other than any Class S Certificate), the amount designated "Initial
Certificate Principal Balance" on the face thereof.
"Initial Notional Amount": With respect to any Class S Certificate or Class
C Certificate, the amount designated "Initial Notional Amount" on the face
thereof.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or other
insurance policy covering a Mortgage Loan (including any related PMI Policy), to
the extent such proceeds are not to be applied to the restoration of the related
Mortgaged Property or released to the Mortgagor in accordance with the
procedures that the Master Servicer would follow in servicing mortgage loans
held for its own account, subject to the terms and conditions of the related
Mortgage Note and Mortgage.
"Interest Determination Date": With respect to the Class A Certificates and
the Mezzanine Certificates and each Accrual Period, the second LIBOR Business
Day preceding the commencement of such Accrual Period.
"Interest Remittance Amount": With respect to any Distribution Date, that
portion of the Available Funds for such Distribution Date attributable to
interest received or advanced on the Mortgage Loans or to Compensating Interest
paid by the Master Servicer.
"Late Collections": With respect to any Mortgage Loan, all amounts received
subsequent to the Determination Date immediately following any related Due
Period, whether as late payments of Monthly Payments or as Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent late payments or collections
of principal and/or interest due (without regard to any acceleration of payments
under the related Mortgage and Mortgage Note) but delinquent on a contractual
basis for such Due Period and not previously recovered.
"LIBOR": With respect to each Accrual Period, the rate determined by the
Trustee on the related Interest Determination Date on the basis of the London
interbank offered rate for one-month United States dollar deposits, as such rate
appears on the Telerate Page 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date. If such rate does not appear on Telerate Page 3750,
the rate for such Interest Determination Date will be determined on the basis of
the offered rates of the Reference Banks for one-month United States dollar
deposits, as of 11:00 a.m. (London time) on such Interest Determination Date.
The Trustee will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. On such Interest Determination Date,
LIBOR for the related Accrual Period will be established by the Trustee as
follows:
(i) If on such Interest Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the related Accrual Period shall
be the arithmetic mean of such offered quotations (rounded upwards if
necessary to the nearest whole multiple of 0.0625%); and
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Accrual Period
shall be the higher
17
of (i) LIBOR as determined on the previous Interest Determination Date and
(ii) the Reserve Interest Rate.
"LIBOR Business Day": Any day on which banks in London, England and The
City of New York are open and conducting transactions in foreign currency and
exchange.
"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 Prepayment
Period, that all Liquidation Proceeds which it expects to recover with respect
to the liquidation of the Mortgage Loan or disposition of the related REO
Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 9.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property or (ii) such REO Property is
removed from the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.23 or Section 9.01.
"Liquidation Proceeds": The amount (other than amounts received in respect
of the rental of any REO Property prior to REO Disposition) received by the
Master Servicer in connection with (i) the taking of all or a part of a
Mortgaged Property by exercise of the power of eminent domain or condemnation,
(ii) the liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise or (iii) the repurchase, substitution or sale of a
Mortgage Loan or an REO Property pursuant to or as contemplated by Section 2.03,
Section 3.23 or Section 9.01.
"Loan-to-Value Ratio": As of any date and as to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the (x) Principal
Balance of the Mortgage Loan (if such Mortgage Loan is secured by a first lien
on the related Mortgaged Property) or the sum of the Principal Balance of the
Mortgage Loan and any other mortgage loan secured by a senior lien on the
related Mortgaged Property (if such Mortgage Loan is secured by a junior lien on
the related Mortgaged Property) and the denominator of which is (y) the Value of
the related Mortgaged Property.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which the
original Mortgage Note has been permanently lost or destroyed and has not been
replaced, an affidavit from the Seller certifying that the original Mortgage
Note has been lost or destroyed (together with a copy of the related Mortgage
Note and indemnifying the Trust against any loss, cost or liability resulting
from the failure to deliver the original Mortgage Note) in the form of Exhibit H
hereto.
"Marker Rate": With respect to the Class C Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the Uncertificated REMIC 2 Pass-Through Rates for REMIC 2 Regular Interest
LT2B, REMIC 2 Regular Interest LT2C, REMIC 2 Regular Interest LT2D, REMIC 2
Regular Interest LT2E, REMIC 2 Regular Interest LT2F and REMIC 2 Regular
Interest LT2G, with the rate on REMIC 2 Regular Interest LT2B subject to a cap
18
equal to the lesser of (i) (a) the product of LIBOR plus the Certificate Margin
of the Class A-1 Certificates and (b) a fraction, the numerator of which is the
actual number of days elapsed in the Accrual Period and the denominator of which
is 30, and (ii) the Maximum Cap Rate for the purpose of this calculation, with
the rate on REMIC 2 Regular Interest LT2C subject to a cap equal to the lesser
of (i) (a) the product of LIBOR plus the Certificate Margin of the Class A-2
Certificates and (b) a fraction, the numerator of which is the actual number of
days elapsed in the Accrual Period and the denominator of which is 30, and (ii)
the Maximum Cap Rate for the purpose of this calculation with the rate on REMIC
2 Regular Interest LT2D subject to a cap equal to the lesser of (i) (a) the
product of LIBOR plus the Certificate Margin of the Class M-1 Certificates and
(b) a fraction, the numerator of which is the actual number of days elapsed in
the Accrual Period and the denominator of which is 30, and (ii) the Maximum Cap
Rate for the purpose of this calculation, with the rate on REMIC 2 Regular
Interest LT2E subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class M-2 Certificates and (ii) the Maximum Cap Rate
for the purpose of this calculation, with the rate on REMIC 2 Regular Interest
LT2F subject to a cap equal to the lesser of (i) (a) the product of LIBOR plus
the Certificate Margin of the Class M-3 Certificates and (b) a fraction, the
numerator of which is the actual number of days elapsed in the Accrual Period
and the denominator of which is 30, and (ii) the Maximum Cap Rate for the
purpose of this calculation and with the rate on REMIC 2 Regular Interest LT2G
subject to a cap of zero for the purpose of this calculation.
"Master Servicer": Long Beach Mortgage Company, a Delaware corporation, or
any successor servicer appointed as herein provided, in its capacity as Master
Servicer hereunder.
"Master Servicer Event of Default": One or more of the events described in
Section 7.01.
"Master Servicer Prepayment Charge Payment Amount": The amounts (i) payable
by the Master Servicer in respect of any Prepayment Charges waived other than in
accordance with the standard set forth Section 2.03(c) or (ii) collected from
the Master Servicer in its capacity as Seller in respect of a remedy for the
breach the representation and warranty made by the Master Servicer in its
capacity as Seller set forth in Section 2.04(a)(vii).
"Master Servicer Remittance Date": With respect to any Distribution Date,
3:00 p.m. New York time on the Business Day prior to the Distribution Date.
"Master Servicer Termination Test": With respect to any Distribution Date,
the Master Servicer Termination Test will be failed with respect to the Master
Servicer if the Cumulative Loss Percentage exceeds 5.00%.
"Maximum Cap Rate": For any Distribution Date and the Class A Certificates
and the Mezzanine Certificates, a per annum rate equal to the product of (i) the
excess, if any, of (A) the weighted average of the Adjusted Net Maximum Mortgage
Rates of the Mortgage Loans, weighted on the basis of the Stated Principal
Balances thereof as of the Due Date preceding the month of such Distribution
Date, over (B) the percentage equivalent of a fraction, the numerator of which
is (x) twelve times the Monthly Interest Distributable Amount for the Class S
Certificates for such Distribution Date and the denominator of which is (y) the
aggregate Stated Principal Balance of the Mortgage Loans as of the Due Date
preceding the month of such Distribution Date, and (ii) a
19
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Accrual Period.
"Maximum LT2G Uncertificated Accrued Interest Deferral Amount": With
respect to any Distribution Date, the excess of (a) accrued interest at the
Uncertificated REMIC 2 Pass-Through Rate applicable to REMIC 2 Regular Interest
LT2G for such Distribution Date on a balance equal to the Uncertificated
Principal Balance of REMIC 2 Regular Interest LT2G minus the REMIC 2
Overcollateralized Amount, in each case for such Distribution Date, over (b)
Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2B with the rate
on REMIC 2 Regular Interest LT2B subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class A-1 Certificates and (ii) the
Maximum Cap Rate for the purpose of this calculation, Uncertificated Accrued
Interest on REMIC 2 Regular Interest LT2C with the rate on REMIC 2 Regular
Interest LT2B subject to a cap equal to the lesser of (i) LIBOR plus the
Certificate Margin of the Class A-2 Certificates and (ii) the Maximum Cap Rate
for the purpose of this calculation, Uncertificated Accrued Interest on REMIC 2
Regular Interest LT2D with the rate on REMIC 2 Regular Interest LT2C subject to
a cap equal to the lesser of (i) LIBOR plus the Certificate Margin of the Class
M-1 Certificates and (ii) the Maximum Cap Rate for the purpose of this
calculation, Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2E
with the rate on REMIC 2 Regular Interest LT2D subject to a cap equal to the
lesser of (i) LIBOR plus the Certificate Margin of the Class M-2 Certificates
and (ii) the Maximum Cap Rate for the purpose of this calculation and
Uncertificated Accrued Interest on REMIC 2 Regular Interest LT2F with the rate
on REMIC 2 Regular Interest LT2E subject to a cap equal to the lesser of (i)
LIBOR plus the Certificate Margin of the Class M-3 Certificates and (ii) the
Maximum Cap Rate for the purpose of this calculation for such Distribution Date.
"Maximum Mortgage Rate": With respect to each Mortgage Loan, the percentage
set forth in the related Mortgage Note as the maximum Mortgage Rate thereunder.
"Mezzanine Certificate": Any Class M-1 Certificate, Class M-2 Certificate
or Class M-3 Certificate.
"Minimum Mortgage Rate": With respect to each Mortgage Loan, the percentage
set forth in the related Mortgage Note as the minimum Mortgage Rate thereunder.
"Monthly Interest Distributable Amount": With respect to the Class A
Certificates, Mezzanine Certificates, the Class S Certificates and the Class C
Certificates and any Distribution Date, the amount of interest accrued during
the related Accrual Period at the related Pass-Through Rate on the Certificate
Principal Balance (or Notional Amount in the case of the Class S Certificates
and the Class C Certificates) of such Class immediately prior to such
Distribution Date, in each case, reduced by any Net Prepayment Interest
Shortfalls and Relief Act Interest Shortfalls (allocated to such Certificate
based on its respective entitlements to interest irrespective of any Net
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls for such
Distribution Date). Notwithstanding the foregoing, for federal income tax
purposes and under the REMIC Provisions, (i) the Monthly Interest Distributable
Amount for the Class S Certificates and any Distribution Date will be deemed to
be the Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2SA,
Uncertificated
20
Accrued Interest for REMIC 2 Regular Interest LT2SB and Uncertificated Accrued
Interest for REMIC 2 Regular Interest LT2SC for such Distribution Date.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled monthly
payment of principal and interest on such Mortgage Loan which is payable by the
related Mortgagor from time to time under the related Mortgage Note, determined:
(a) after giving effect to (i) any Deficient Valuation and/or Debt Service
Reduction with respect to such Mortgage Loan and (ii) any reduction in the
amount of interest collectible from the related Mortgagor pursuant to the Relief
Act; (b) without giving effect to any extension granted or agreed to by the
Master Servicer pursuant to Sections 3.01 and 3.07; and (c) on the assumption
that all other amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien or second lien on, or first priority security interest or second
priority security interest in, a Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the Trustee
and delivered to the Trustee pursuant to Section 2.01 or Section 2.03(d) as from
time to time held as a part of the Trust Fund, the Mortgage Loans so held being
identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the Master
Servicer, in its capacity as Seller, and the Depositor, regarding the transfer
of the Mortgage Loans by the Seller to or at the direction of the Depositor,
substantially in the form attached hereto as Exhibit C.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in REMIC 1 on such date, attached hereto as Exhibit D. The Mortgage
Loan Schedule shall be prepared by the Seller and shall set forth the following
information as of the Cut-off Date with respect to each Mortgage Loan, as
applicable:
(i) the Mortgagor's name and the Master Servicer's Mortgage Loan
identifying number;
(ii) the street address of the Mortgaged Property including the state and
zip code;
(iii) a code indicating whether the Mortgaged Property is owner-occupied;
(iv) the type of Residential Dwelling constituting the Mortgaged
Property;
(v) the original months to maturity;
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(vi) the Loan-to-Value Ratio at origination;
(vii) the Mortgage Rate in effect immediately following the Cut-off Date;
(viii) the date on which the first Monthly Payment was due on the Mortgage
Loan;
(ix) the stated maturity date;
(x) the amount of the Monthly Payment due on the first Due Date after
the Cut- off Date;
(xi) the last Due Date on which a Monthly Payment was actually applied to
the unpaid Stated Principal Balance;
(xii) the original principal amount of the Mortgage Loan;
(xiii) the Stated Principal Balance of the Mortgage Loan as of the Close of
Business on the Cut-off Date;
(xiv) whether such Mortgage Loan is a Fixed Rate Mortgage Loan or an
Adjustable Rate Mortgage Loan, and with respect to each Adjustable
Rate Mortgage Loan: (a) the Gross Margin, (b) the Maximum Mortgage
Rate, (c) the Minimum Mortgage Rate, (d) the Periodic Rate Cap for
the first Adjustment Date and each subsequent Adjustment Date and
(e) the next Adjustment Date immediately following the Cut-off Date;
(xv) a code indicating the purpose of the Mortgage Loan (i.e., purchase
financing, rate/term refinancing, cash-out refinancing);
(xvi) the Mortgage Rate at origination;
(xvii) a code indicating the documentation program;
(xviii) the risk grade;
(xix) the Value of the Mortgaged Property;
(xx) the sale price of the Mortgaged Property, if applicable;
(xxi) whether such Mortgage Loan is covered under the PMI Policy;
(xxii) whether such Mortgage Loan is secured by a first lien or a second
lien on the related Mortgaged Property;
(xxiii) whether such Mortgage Loan is a Balloon Mortgage Loan.
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The Mortgage Loan Schedule shall set forth the following information, with
respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1) the
number of Mortgage Loans; (2) the Cut-off Date Principal Balance of the Mortgage
Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans and (4) the
weighted average maturity of the Mortgage Loans. The Mortgage Loan Schedule
shall be amended from time to time by the Master Servicer in accordance with the
provisions of this Agreement. With respect to any Qualified Substitute Mortgage
Loan, Cut-off Date shall refer to the related Cut-off Date for such Mortgage
Loan, determined in accordance with the definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on Exhibit D from
time to time, and any REO Properties acquired in respect thereof.
"Mortgage Rate": With respect to each Fixed Rate Mortgage Loan, the annual
rate set forth in the related Mortgage Note. With respect to each Adjustable
Rate Mortgage Loan, the annual rate at which interest accrues on such Mortgage
Loan from time to time in accordance with the provisions of the related Mortgage
Note, which rate (A) as of any date of determination until the first Adjustment
Date following the Cut-off Date shall be the rate set forth in the Mortgage Loan
Schedule as the Mortgage Rate in effect immediately following the Cut-off Date
and (B) as of any date of determination thereafter shall be the rate as adjusted
on the most recent Adjustment Date, to equal the sum, rounded to the next
highest or nearest 0.125% (as provided in the Mortgage Note), of the Index,
determined as set forth in the related Mortgage Note, plus the related Gross
Margin subject to the limitations set forth in the related Mortgage Note. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a Mortgage Loan,
including any REO Property, consisting of a fee simple estate in a parcel of
real property improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage Loan or
any other disposition of related Mortgaged Property (including REO Property),
the related Liquidation Proceeds net of Advances, Servicing Advances, Servicing
Fees and any other accrued and unpaid Servicing Fees received and retained in
connection with the liquidation of such Mortgage Loan or Mortgaged Property in
accordance with the terms of this Agreement.
"Net Monthly Excess Cashflow": With respect to each Distribution Date, the
sum of (a) any Overcollateralization Release Amount for such Distribution Date
and (b) the excess of (x) Available Funds for such Distribution Date over (y)
the sum for such Distribution Date of (A) the Monthly Interest Distributable
Amounts for the Class A Certificates, the Class S Certificates and the
23
Mezzanine Certificates, (B) the Unpaid Interest Shortfall Amounts for the Class
A Certificates and the Class S Certificates and (C) the Principal Remittance
Amount.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the related REO
Property), as of any date of determination, a per annum rate of interest equal
to the then applicable Mortgage Rate for such Mortgage Loan minus the Servicing
Fee Rate.
"Net Prepayment Interest Shortfall": With respect to any Distribution Date,
the excess, if any, of any Prepayment Interest Shortfalls for such date over the
related Compensating Interest.
"Net WAC Rate": For any Distribution Date and the Class A Certificates and
the Mezzanine Certificates, a per annum rate equal to the product of (i) the
excess, if any, of (A) the weighted average of the Adjusted Net Mortgage Rates
of the Mortgage Loans, weighted on the basis of the Stated Principal Balances
thereof as of the Due Date preceding the month of such Distribution Date, over
(B) the percentage equivalent of a fraction, the numerator of which is (x)
twelve times the Monthly Interest Distributable Amount for the Class S
Certificates for such Distribution Date and the denominator of which is (y) the
aggregate Stated Principal Balance of the Mortgage Loans as of the Due Date
preceding the month of such Distribution Date, and (ii) a fraction, the
numerator of which is 30 and the denominator of which is the actual number of
days elapsed in the related Accrual Period.
"Net WAC Rate Carryover Amount": With respect to the Class A Certificates
and the Mezzanine Certificates and any Distribution Date for which the
Pass-Through Rate for such Class for such Distribution Date is the Net WAC Rate,
the sum of (A) the positive excess of (i) the amount of interest that would have
been payable to such Class of Certificates on such Distribution Date if the
Pass-Through Rate for such class for such Distribution Date were calculated at
the related Formula Rate over (ii) the amount of interest payable on such Class
of Certificates at the Net WAC Rate for such Distribution Date and (B) the
related Net WAC Rate Carryover Amount for the previous Distribution Date not
previously paid together with interest thereon at a rate equal to the related
Formula Rate for such Class of Certificates for the most recently ended Accrual
Period.
"New Lease": Any lease of REO Property entered into on behalf of the Trust,
including any lease renewed or extended on behalf of the Trust if the Trust has
the right to renegotiate the terms of such lease.
"NIM Notes": The notes to be issued pursuant to the Indenture.
"NIMs Insurer": Radian Insurance Inc. or any successor thereto that shall
be the insurer of under an insurance policy insuring certain payments on NIM
Notes, if any, issued by Long Beach NIM Trust 2001-1, the principal assets of
such trust consisting of Percentage Interests of the Class C Certificates and
the Class P Certificates; provided, however, upon the occurrence and continuance
of an Insurer Default or an Insurer Insolvency Event (each as defined in the
Indenture), the NIMs Insurer shall be Financial Security Assurance Inc.
"Nonrecoverable Advance": Any Advance or Servicing Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Master Servicer, will not or, in the
case of a proposed Advance, would not be
24
ultimately recoverable from related late payments, Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.
"Notional Amount": Immediately prior to any Distribution Date, with respect
to the Class S Certificates, an amount equal to the Uncertificated Principal
Balance of REMIC 1 Regular Interest LT1B. Immediately prior to any Distribution
Date, with respect to the Class C Certificates, the aggregate of the
Uncertificated Principal Balances of the REMIC 2 Regular Interests.
"Officers' Certificate": A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President or a vice president (however
denominated), and by the Treasurer, the Secretary, or one of the assistant
treasurers or assistant secretaries of the Master Servicer, the Seller or the
Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Master Servicer,
reasonably acceptable to the Trustee, if such opinion is delivered to the
Trustee, except that any opinion of counsel relating to (a) the qualification of
any Trust REMIC as a REMIC or (b) compliance with the REMIC Provisions must be
an opinion of Independent counsel.
"Optional Termination Date": The first Distribution Date on which the
Terminator may elect to terminate the Trust Fund pursuant to Section 9.01.
"Original Class Certificate Principal Balance": With respect to the Class A
Certificates, the Mezzanine Certificates, the Class C Certificates and the Class
P Certificates, the corresponding amounts set forth opposite such Class above in
the Preliminary Statement.
"Original Mortgage Loan": Any of the Mortgage Loans included in the Trust
Fund as of the Closing Date. The aggregate scheduled principal balance of the
Original Mortgage Loans as of the Closing Date is equal to $725,466,488,78.
"Original Notional Amount": With respect to the Class S Certificates,
$72,546,600.00. With respect to the Class C Certificates, $14,509,388.78.
"Overcollateralization Deficiency Amount": With respect to any Distribution
Date, the amount, if any, by which the Overcollateralization Target Amount
exceeds the Overcollateralized Amount on such Distribution Date (after giving
effect to distributions in respect of the Basic Principal Distribution Amount on
such Distribution Date).
"Overcollateralization Floor": $3,627,332.
"Overcollateralization Release Amount": With respect to any Distribution
Date, the lesser of (x) the aggregate Principal Remittance Amount for such
Distribution Date and (y) the Excess Overcollateralized Amount.
"Overcollateralization Target Amount": With respect to any Distribution
Date (i) prior to the Stepdown Date, $14,509,329,78, (ii) on or after the
Stepdown Date provided a Trigger Event is not
25
in effect, the greater of (x) 4.00% of the aggregate Stated Principal Balance of
the Mortgage Loans on the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (y) the Overcollateralization
Floor, and (iii) on or after the Stepdown Date if a Trigger Event is in effect,
the Overcollateralization Target Amount for the immediately preceding
Distribution Date. Notwithstanding the foregoing, the Overcollateralization
Target Amount shall never exceed the initial Overcollateralization Target
Amount.
"Overcollateralized Amount": For any Distribution Date, the amount, if any,
by which (i) the aggregate Stated Principal Balance of the Mortgage Loans on the
last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced,
and unscheduled collections of principal received during the related Prepayment
Period) exceeds (ii) the sum of the aggregate Certificate Principal Balances of
the Class A Certificates, the Mezzanine Certificates and the Class P
Certificates as of such Distribution Date after giving effect to distributions
to be made on such Distribution Date.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"Pass-Through Rate":
With respect to the Class A Certificates and the Mezzanine Certificates and
any Distribution Date, the lesser of (x) the related Formula Rate for such
Distribution Date and (y) the Net WAC Rate for such Distribution Date.
With respect to the Class S Certificates and any Distribution Date, a per
annum rate equal to 3.50% for the Distribution Date in April 2001 through the
Distribution Date in March 2002, 2.50% for the Distribution Date in April 2002
through the Distribution Date in March 2003, 1.50% for the Distribution Date in
April 2003 through the Distribution Date in March 2004 and 0.00% thereafter;
provided, however, for federal income tax purposes and under the REMIC
Provisions, (A) the Class S Certificates will not have a Pass-Through Rate, (B)
the Monthly Interest Distributable Amount for the Class S Certificates and any
Distribution Date will be deemed to be the Uncertificated Accrued Interest for
REMIC 2 Regular Interest LT2SA, the Uncertificated Accrued Interest for REMIC 2
Regular Interest LT2SB and the Uncertificated Accrued Interest for REMIC 2
Regular Interest LT2SC for such Distribution Date and (C) the sum of the Monthly
Interest Distributable Amount and the Unpaid Interest Shortfall Amount for the
Class S Certificates and any Distribution Date will be deemed to be 100% of the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2SA, the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2SB and the
Uncertificated Accrued Interest for REMIC 2 Regular Interest LT2SC for such
Distribution Date.
With respect to the Class C Certificates and any Distribution Date, a per
annum rate equal to the percentage equivalent of a fraction, the numerator of
which is the sum of the amounts calculated pursuant to clauses (A) through (H)
below, and the denominator of which is the aggregate
26
of the Uncertificated Principal Balances of REMIC 2 Regular Interest LT2A, REMIC
2 Regular Interest LT2B, REMIC 2 Regular Interest LT2C, REMIC 2 Regular Interest
LT2D, REMIC 2 Regular Interest LT2E, REMIC 2 Regular Interest LT2F, REMIC 2
Regular Interest LT2G and REMIC 2 Regular Interest LT2P. For purposes of
calculating the Pass-Through Rate for the Class C Certificates, the numerator is
equal to the sum of the following components:
(A) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest LT2A minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2A;
(B) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest LT2B minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2B;
(C) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest LT2C minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2C;
(D) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest LT2D minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2D;
(E) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest LT2E minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2E;
(F) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest LT2F minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2F;
(G) the Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular
Interest LT2G minus the Marker Rate, applied to an amount equal to the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2G; and
(H) 100% of the interest on REMIC 2 Regular Interest LT2P.
"Percentage Interest": With respect to any Certificate (other than a Class
R Certificate), a fraction, expressed as a percentage, the numerator of which is
the Initial Certificate Principal Balance or Initial Notional Amount represented
by such Certificate and the denominator of which is the Original Class
Certificate Principal Balance or Original Class Notional Amount of the related
Class. With respect to a Class R Certificate, the portion of the Class evidenced
thereby, expressed as a percentage, as stated on the face of such Certificate;
provided, however, that the sum of all such percentages for each such Class
totals 100%.
"Periodic Rate Cap": With respect to each Adjustable Rate Mortgage Loan and
any Adjustment Date therefor, the fixed percentage set forth in the related
Mortgage Note, which is the
27
maximum amount by which the Mortgage Rate for such Mortgage Loan may increase or
decrease (without regard to the Maximum Mortgage Rate or the Minimum Mortgage
Rate) on such Adjustment Date from the Mortgage Rate in effect immediately prior
to such Adjustment Date.
"Permitted Investments": Any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, regardless of
whether issued or managed by the Depositor, the Master Servicer, the NIMs
Insurer, the Trustee or any of their respective Affiliates or for which an
Affiliate of the NIMs Insurer or the Trustee serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agents acting in
their commercial capacities) incorporated under the laws of the United
States of America or any state thereof and subject to supervision and
examination by federal and/or state authorities, so long as, at the time of
such investment or contractual commitment providing for such investment,
such depository institution or trust company (or, if the only Rating Agency
is S&P, in the case of the principal depository institution in a depository
institution holding company, debt obligations of the depository institution
holding company) or its ultimate parent has a short-term uninsured debt
rating in one of the two highest available ratings of Fitch and the highest
available rating category of ▇▇▇▇▇'▇ and S&P and provided that each such
investment has an original maturity of no more than 365 days; and provided
further that, if the only Rating Agency is S&P and if the depository or
trust company is a principal subsidiary of a bank holding company and the
debt obligations of such subsidiary are not separately rated, the
applicable rating shall be that of the bank holding company; and, provided
further that, if the original maturity of such short- term obligations of a
domestic branch of a foreign depository institution or trust company shall
exceed 30 days, the short-term rating of such institution shall be A-1+ in
the case of S&P if S&P is the Rating Agency; and (B) any other demand or
time deposit or deposit which is fully insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (i) above and entered into with
a depository institution or trust company (acting as principal) rated F-1+
or higher by Fitch, rated A-1+ or higher by S&P and rated A2 or higher by
▇▇▇▇▇'▇;
(iv) securities bearing interest or sold at a discount that are issued
by any corporation incorporated under the laws of the United States of
America or any State thereof and that are rated by a Rating Agency in its
highest long-term unsecured rating category at the time of such investment
or contractual commitment providing for such investment;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30
28
days after the date of acquisition thereof) that is rated by a Rating
Agency in its highest short-term unsecured debt rating available at the
time of such investment;
(vi) units of money market funds that have been rated "AAA" by Fitch
(if rated by Fitch), "AAAm" or "AAAm-G" by S&P and "Aaa" by ▇▇▇▇▇'▇; and
(vii) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation, security or
investment, as may be acceptable to the Rating Agencies in writing as a
permitted investment of funds backing securities having ratings equivalent
to its highest initial rating of the Class A Certificates;
provided, that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any transferee of a Residual Certificate other than
a Disqualified Organization or a non-U.S. Person.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": Any employee benefit plan or certain other retirement plans and
arrangements, including individual retirement accounts and annuities, ▇▇▇▇▇
plans and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA and Section 4975 of the Code.
"PMI Insurer": Mortgage Guaranty Insurance Corporation, a monoline private
insurance company organized and created under the laws of the State of
Wisconsin, or its successors in interest.
"PMI Insurer Fee": The amount payable to the PMI Insurer on each
Distribution Date, which amount shall equal one twelfth of the product of (i)
the PMI Insurer Fee Rate, multiplied by (ii) the aggregate Stated Principal
Balance of the PMI Mortgage Loans and any related REO Properties as of the first
day of the related Due Period.
"PMI Insurer Fee Rate": 1.19% per annum.
"PMI Mortgage Loans": The list of Mortgage Loans insured by the PMI Insurer
attached hereto as Schedule 1.
"PMI Policy": The Primary Mortgage Insurance Policy No. 04-690-4-3536 with
respect to the PMI Mortgage Loans and all endorsements thereto dated the Closing
Date, issued by the PMI Insurer.
29
"Prepayment Assumption": The pricing prepayment assumption as described in
the Prospectus Supplement.
"Prepayment Charge": With respect to any Mortgage Loan, the charges or
premiums, if any, due in connection with a full or partial prepayment of such
Mortgage Loan in accordance with the terms thereof (other than any Master
Servicer Prepayment Charge Payment Amount).
"Prepayment Charge Schedule": As of the Cut-off Date, a list attached
hereto as Schedule I (including the Prepayment Charge Summary attached thereto),
setting forth the following information with respect to each Prepayment Charge:
(i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination of the related Mortgage Loan;
(iv) the date on which the first monthly payment was due on the related
Mortgage Loan;
(v) the term of the related Prepayment Charge; and
(vi) the principal balance of the related Mortgage Loan as of the Cut-off
Date.
The Prepayment Charge Schedule shall be amended from time to time by the
Master Servicer in accordance with the provisions of this Agreement.
"Prepayment Interest Shortfall": With respect to any Distribution Date, for
each Mortgage Loan that was during the related Prepayment Period the subject of
a Principal Prepayment in full or in part that was applied by the Master
Servicer to reduce the outstanding principal balance of such loan on a date
preceding the Due Date in the succeeding Prepayment Period, an amount equal to
interest at the applicable Net Mortgage Rate on the amount of such Principal
Prepayment for the number of days commencing on the date on which the prepayment
is applied and ending on the last day of the related Prepayment Period. The
obligations of the Master Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date, the calendar
month preceding the calendar month in which such Distribution Date occurs.
"Principal Balance": As to any Mortgage Loan other than a Liquidated
Mortgage Loan, and any day, the related Cut-off Date Principal Balance, MINUS
all collections credited against the Cut-off Date Principal Balance of any such
Mortgage Loan. For purposes of this definition, a Liquidated Mortgage Loan shall
be deemed to have a Principal Balance equal to the Principal Balance of the
related Mortgage Loan as of the final recovery of related Liquidation Proceeds
and a Principal Balance of zero thereafter. As to any REO Property and any day,
the Principal Balance of the related Mortgage Loan shall equal the Principal
Balance of the related Mortgage Loan immediately prior
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to such Mortgage Loan becoming REO Property minus any REO Principal Amortization
received with respect thereto on or prior to such day.
"Principal Distribution Amount": With respect to the Class A Certificates
and Mezzanine Certificates and any Distribution Date, the Basic Principal
Distribution Amount plus the Extra Principal Distribution Amount.
"Principal Prepayment": Any payment of principal made by the Mortgagor on a
Mortgage Loan which is received in advance of its scheduled Due Date and which
is not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to the
month of prepayment.
"Principal Remittance Amount": With respect to any Distribution Date, the
sum of (i) each scheduled payment of principal collected or advanced on the
Mortgage Loans by the Master Servicer that was due during the related Due
Period, (ii) the principal portion of all partial and full principal prepayments
of the Mortgage Loans applied by the Master Servicer during the related
Prepayment Period, (iii) the principal portion of all related Net Liquidation
Proceeds and Insurance Proceeds received during such Prepayment Period, (iv)
that portion of the Purchase Price, representing principal of any purchased or
repurchased Mortgage Loan, deposited to the Collection Account during such
Prepayment Period, (v) the principal portion of any related Substitution
Adjustments deposited in the Collection Account during such Prepayment Period
and (vi) on the Distribution Date on which the Trust Fund is to be terminated
pursuant to Section 9.01, that portion of the Termination Price received in
respect of principal.
"Prospectus Supplement": That certain Prospectus Supplement dated March 14,
2001 relating to the public offering of the Class A Certificates, the Class S
Certificates and the Mezzanine Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO Property to be
purchased pursuant to or as contemplated by Section 2.03, Section 3.16(c) or
Section 9.01, and as confirmed by an Officers' Certificate from the Master
Servicer to the Trustee, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof as of the date of purchase (or such other price as
provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last paid by
the Mortgagor or by an advance by the Master Servicer, which payment or advance
had as of the date of purchase been distributed pursuant to Section 4.01,
through the end of the calendar month in which the purchase is to be effected
and (y) an REO Property, the sum of (1) accrued interest on such Stated
Principal Balance at the applicable Net Mortgage Rate in effect from time to
time from the Due Date as to which interest was last paid by the Mortgagor or by
an advance by the Master Servicer through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, plus (2) REO Imputed Interest for such REO Property for each calendar
month commencing with the calendar month in which such REO Property was acquired
and ending with the calendar month in which such purchase is to be effected, net
of the total of all net rental income, Insurance Proceeds, Liquidation Proceeds
and P&I Advances that as of the date of purchase had been distributed in respect
of REO Imputed Interest pursuant to Section 4.01, (iii) any unreimbursed
Servicing Advances, Advances and Nonrecoverable
31
Advances and any unpaid Servicing Fees allocable to such Mortgage Loan or REO
Property, (iv) any amounts previously withdrawn from the Collection Account in
respect of such Mortgage Loan or REO Property pursuant to Section 3.11(a)(ix)
and Section 3.16(b), and (v) in the case of a Mortgage Loan required to be
purchased pursuant to Section 2.03, enforcement expenses reasonably incurred or
to be incurred by the NIMs Insurer, the Master Servicer or the Trustee in
respect of the breach or defect giving rise to the purchase obligation.
Notwithstanding the foregoing, if in excess of $10,881,997.33 in aggregate
principal balance of Mortgage Loans have previously been repurchased (exclusive
of any Mortgage Loans purchased by the Master Servicer pursuant to Section
3.16(c)) or substituted for, then in addition to those requirements set forth
above, the Purchase Price shall include the amount of any related Prepayment
Charge (other than with respect to a Purchase Price paid in connection with
Section 9.01).
"Qualified Insurer": Any insurance company acceptable to ▇▇▇▇▇▇ ▇▇▇.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement or the Mortgage
Loan Purchase Agreement which must, on the date of such substitution, (i) have
an outstanding principal balance (or in the case of a substitution of more than
one mortgage loan for a Deleted Mortgage Loan, an aggregate principal balance),
after application of all scheduled payments of principal and interest due during
or prior to the month of substitution, not in excess of the outstanding
principal balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) if the Qualified Substitute Mortgage
Loan is an Adjustable Rate Mortgage Loan, have a Maximum Mortgage Rate not less
than the Maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) if the
Qualified Substitute Mortgage Loan is an Adjustable Rate Mortgage Loan, have a
Minimum Mortgage Rate not less than the Minimum Mortgage Rate of the Deleted
Mortgage Loan, (v) if the Qualified Substitute Mortgage Loan is an Adjustable
Rate Mortgage Loan, have a Gross Margin equal to or greater than the Gross
Margin of the Deleted Mortgage Loan, (vi) if the Qualified Substitute Mortgage
Loan is an Adjustable Rate Mortgage Loan, have a next Adjustment Date not more
than two months later than the next Adjustment Date on the Deleted Mortgage
Loan, (vii) have a remaining term to maturity not greater than (and not more
than one year less than) that of the Deleted Mortgage Loan, (viii) be current as
of the date of substitution, (ix) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date, (x) have a risk grading determined by the Seller
at least equal to the risk grading assigned on the Deleted Mortgage Loan, (xi)
have been underwritten or reunderwritten by the Seller in accordance with the
same or, as determined by the Seller, more favorable, underwriting criteria and
guidelines as the Deleted Mortgage Loan, (xii) be covered by the PMI Policy if
the Deleted Mortgage Loan was covered by the PMI Policy and (xiii) conform to
each representation and warranty set forth in Section 3.01 of the Mortgage Loan
Purchase Agreement applicable to the Deleted Mortgage Loan. In the event that
one or more mortgage loans are substituted for one or more Deleted Mortgage
Loans, the amounts described in clause (i) hereof shall be determined on the
basis of aggregate principal balances, the Mortgage Rates described in clauses
(ii) through (vi) hereof shall be satisfied for each such mortgage loan, the
risk gradings described in clause (x) hereof shall be satisfied as to each such
mortgage loan, the terms described in clause (vii) hereof shall be determined on
the basis of weighted average
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remaining term to maturity (provided that no such mortgage loan may have a
remaining term to maturity longer than the Deleted Mortgage Loan), the
Loan-to-Value Ratios described in clause (ix) hereof shall be satisfied as to
each such mortgage loan and, except to the extent otherwise provided in this
sentence, the representations and warranties described in clause (xii) hereof
must be satisfied as to each Qualified Substitute Mortgage Loan or in the
aggregate, as the case may be.
Notwithstanding the foregoing, if in excess of $10,881,997.33 in aggregate
principal balance of Mortgage Loans have previously been repurchased (exclusive
of any Mortgage Loans purchased by the Master Servicer pursuant to Section
3.16(c)) or substituted for, then in addition to clauses (i) through (xiii)
above, each Qualified Substitute Mortgage Loan shall also have a Prepayment
Charge provision at least as favorable to the Holders of the Class P
Certificates as the Prepayment Charge provisions in the Deleted Mortgage Loan.
"Rating Agency or Rating Agencies": Fitch, ▇▇▇▇▇'▇ and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and Master Servicer.
"Realized Loss": With respect to any Liquidated Mortgage Loan, the amount
of loss realized equal to the portion of the Principal Balance remaining unpaid
after application of all Net Liquidation Proceeds and Insurance Proceeds in
respect of such Mortgage Loan.
"Record Date": With respect to (i) the Class S Certificates, the Class P
Certificates, the Class C Certificates, the Class R Certificates and any
Definitive Certificates, the Close of Business on the last Business Day of the
calendar month preceding the month in which the related Distribution Date occurs
and (ii) with respect to the Class A Certificates and the Mezzanine
Certificates, the Close of Business on the Business Day immediately preceding
the related Distribution Date; provided, however, that following the date on
which Definitive Certificates for a Class A Certificate or a Mezzanine
Certificate are available pursuant to Section 5.02, the Record Date for such
Certificates shall be the last Business Day of the calendar month preceding the
month in which the related Distribution Date occurs.
"Reference Banks": Those banks (i) with an established place of business in
London, England, (ii) not controlling, under the control of or under common
control with the Depositor, the Seller or the Master Servicer or any affiliate
thereof and (iii) which have been designated as such by the Trustee; provided,
however, that if fewer than two of such banks provide a LIBOR rate, then any
leading banks selected by the Trustee which are engaged in transactions in
United States dollar deposits in the international Eurocurrency market.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which were not
used to purchase the related Mortgaged Property.
"Regular Certificate": Any of the Class A Certificates, Class S
Certificates, Mezzanine Certificates, Class C Certificates or Class P
Certificates.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
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"Relief Act Interest Shortfall": With respect to any Distribution Date, for
any Mortgage Loan with respect to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the application of the Relief Act, the amount by which (i) interest
collectible on such Mortgage Loan during such Due Period is less than (ii) one
month's interest on the Principal Balance of such Mortgage Loan at the Mortgage
Rate for such Mortgage Loan before giving effect to the application of the
Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC 1": The segregated pool of assets subject hereto, constituting the
primary trust created hereby and to be administered hereunder, with respect to
which a REMIC election is to be made consisting of: (i) such Mortgage Loans as
from time to time are subject to this Agreement, together with the Mortgage
Files relating thereto, and together with all collections thereon and proceeds
thereof, (ii) any REO Property, together with all collections thereon and
proceeds thereof, (iii) the Trustee's rights with respect to the Mortgage Loans
under all insurance policies, including the PMI Policy, required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby) and (v) the Collection Account, the
Distribution Account (subject to the last sentence of this definition) and any
REO Account and such assets that are deposited therein from time to time and any
investments thereof, together with any and all income, proceeds and payments
with respect thereto. Notwithstanding the foregoing, however, a REMIC election
will not be made with respect to the Reserve Fund.
"REMIC 1 Regular Interest LT1A": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1A shall accrue interest
at the related Uncertificated REMIC 1 Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1B": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1B shall accrue interest
at the related Uncertificated REMIC 1 Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 1 Regular Interest LT1P": One of the separate non-certificated
beneficial ownership interests in REMIC 1 issued hereunder and designated as a
Regular Interest in REMIC 1. REMIC 1 Regular Interest LT1P shall accrue interest
at the related Uncertificated REMIC 1 Pass-Through Rate in effect from time to
time, and shall be entitled to any Prepayment Charges relating to the Mortgage
Loans collected by the Master Servicer and to a distribution of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance as set forth in the Preliminary
Statement hereto.
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"REMIC 1 Regular Interests": REMIC 1 Regular Interest LT1A, REMIC 1 Regular
Interest LT1B and REMIC 1 Regular Interest LT1P.
"REMIC 2": The segregated pool of assets consisting of all of the REMIC 1
Regular Interests conveyed in trust to the Trustee, for the benefit of REMIC 3,
as holder of the REMIC 2 Regular Interests, and the Class R Certificateholders,
as holders of the Class R-2 Interest, pursuant to Article II hereunder, and all
amounts deposited therein, with respect to which a separate REMIC election is to
be made.
"REMIC 2 Interest Loss Allocation Amount": With respect to any Distribution
Date, an amount equal to (a) the product of (i) the aggregate Principal Balance
of the Mortgage Loans and related REO Properties then outstanding and (ii) the
Uncertificated REMIC 2 Pass-Through Rate for REMIC 2 Regular Interest LT2A minus
the Marker Rate, divided by (b) 12.
"REMIC 2 Overcollateralization Target Amount": 1% of the
Overcollateralization Target Amount.
"REMIC 2 Overcollateralized Amount": With respect to any date of
determination, (i) 1% of the aggregate Uncertificated Principal Balances of the
REMIC 2 Regular Interests minus (ii) the aggregate of the Uncertificated
Principal Balances of REMIC 2 Regular Interest LT2B, REMIC 2 Regular Interest
LT2C, REMIC 2 Regular Interest LT2D, REMIC 2 Regular Interest LT2E and REMIC 2
Regular Interest LT2F, in each case as of such date of determination.
"REMIC 2 Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Principal Balance of the Mortgage Loans and related REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Principal Balances of REMIC 2 Regular Interest
LT2B, REMIC 2 Regular Interest LT2C, REMIC 2 Regular Interest LT2D, REMIC 2
Regular Interest LT2E and REMIC 2 Regular Interest LT2F and the denominator of
which is the aggregate of the Uncertificated Principal Balances of REMIC 2
Regular Interest LT2B, REMIC 2 Regular Interest LT2C, REMIC 2 Regular Interest
LT2D, REMIC 2 Regular Interest LT2E, REMIC 2 Regular Interest LT2F and REMIC 2
Regular Interest LT2G.
"REMIC 2 Regular Interest LT2A": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2A shall accrue interest
at the related Uncertificated REMIC 2 Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 2 Regular Interest LT2B": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2B shall accrue interest
at the related Uncertificated REMIC 2 Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
35
"REMIC 2 Regular Interest LT2C": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2C shall accrue interest
at the related Uncertificated REMIC 2 Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 2 Regular Interest LT2D": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2D shall accrue interest
at the related Uncertificated REMIC 2 Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 2 Regular Interest LT2E": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2E shall accrue interest
at the related Uncertificated REMIC 2 Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 2 Regular Interest LT2F": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2F shall accrue interest
at the related Uncertificated REMIC 2 Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 2 Regular Interest LT2G": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2G shall accrue interest
at the related Uncertificated REMIC 2 Pass-Through Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto.
"REMIC 2 Regular Interest LT2P": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2P shall accrue interest
at the related Uncertificated REMIC 2 Pass-Through Rate in effect from time to
time, and shall be entitled to any amounts distributed to REMIC 1 Regular
Interest LT1P.
"REMIC 2 Regular Interest LT2SA": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2SA shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate on its
Uncertificated Notional Amount outstanding from time to time.
36
"REMIC 2 Regular Interest LT2SB": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2SB shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate on its
Uncertificated Notional Amount outstanding from time to time.
"REMIC 2 Regular Interest LT2SC": One of the separate non-certificated
beneficial ownership interests in REMIC 2 issued hereunder and designated as a
Regular Interest in REMIC 2. REMIC 2 Regular Interest LT2SC shall accrue
interest at the related Uncertificated REMIC 2 Pass-Through Rate on its
Uncertificated Notional Amount outstanding from time to time.
"REMIC 2 Regular Interests": REMIC 2 Regular Interest LT2A, REMIC 2 Regular
Interest LT2B, REMIC 2 Regular Interest LT2C, REMIC 2 Regular Interest LT2D,
REMIC 2 Regular Interest LT2E, REMIC 2 Regular Interest LT2F, REMIC 2 Regular
Interest LT2G, REMIC 2 Regular Interest LT2SA, REMIC 2 Regular Interest LT2SB,
REMIC 2 Regular Interest LT2SC and REMIC 2 Regular Interest LT2P.
"REMIC 3": The segregated pool of assets consisting of all of the REMIC 2
Regular Interests conveyed in trust to the Trustee, for the benefit of the
Holders of the Regular Certificates, pursuant to Article II hereunder, and all
amounts deposited therein, with respect to which a separate REMIC election is to
be made.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
"REMIC Regular Interests": The REMIC 1 Regular Interests and the REMIC 2
Regular Interests.
"Remittance Report": A report prepared by the Master Servicer and delivered
to the Trustee pursuant to Section 4.04.
"Rents from Real Property": With respect to any REO Property, gross income
of the character described in Section 856(d) of the Code.
"REO Account": The account or accounts maintained by the Master Servicer in
respect of an REO Property pursuant to Section 3.23.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Mortgage Rate on the Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan if appropriate) as of the Close of Business on the
Distribution Date in such calendar month.
37
"REO Principal Amortization": With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts received
in respect of such REO Property during such calendar month, whether in the form
of rental income, sale proceeds (including, without limitation, that portion of
the Termination Price paid in connection with a purchase of all of the Mortgage
Loans and REO Properties pursuant to Section 9.01 that is allocable to such REO
Property) or otherwise, net of any portion of such amounts (i) payable pursuant
to Section 3.23 in respect of the proper operation, management and maintenance
of such REO Property or (ii) payable or reimbursable to the Master Servicer
pursuant to Section 3.23 for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances and Advances in respect of
such REO Property or the related Mortgage Loan, over (b) the REO Imputed
Interest in respect of such REO Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Master Servicer on
behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.23.
"Request for Release": A release signed by a Servicing Officer, in the form
of Exhibit E-1 or E-2 attached hereto.
"Reserve Fund": The reserve fund established and maintained pursuant to
Section 3.26.
"Reserve Interest Rate": With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be either (i) the arithmetic
mean (rounded upwards if necessary to the nearest whole multiple of 0.0625%) of
the one-month United States dollar lending rates which banks in The City of New
York selected by the Trustee are quoting on the relevant Interest Determination
Date to the principal London offices of leading banks in the London interbank
market or (ii) in the event that the Trustee can determine no such arithmetic
mean, in the case of any Interest Determination Date after the initial Interest
Determination Date, the lowest one-month United States dollar lending rate which
such New York banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a detached one-family
dwelling, (ii) a detached two- to four-family dwelling, (iii) a one-family
dwelling unit in a ▇▇▇▇▇▇ ▇▇▇ eligible condominium project, (iv) a manufactured
home, or (v) a detached one-family dwelling in a planned unit development, none
of which is a co-operative or mobile home.
"Residual Certificates": The Class R Certificates.
"Residual Interest": The sole class of "residual interests" in a REMIC
within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee, the Chairman
or Vice Chairman of the Board of Directors or Trustees, the Chairman or Vice
Chairman of the Executive or Standing Committee of the Board of Directors or
Trustees, the President, any vice president, any assistant vice president, the
Secretary, any assistant secretary, the Treasurer, any assistant treasurer, the
Cashier, any assistant cashier, any trust officer or assistant trust officer,
the Controller and any assistant controller or any other officer of the Trustee
customarily performing functions similar to
38
those performed by any of the above designated officers and, with respect to a
particular matter, to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"S&P": Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or
its successor in interest.
"Seller": Long Beach Mortgage Company, a Delaware corporation, or its
successor in interest, in its capacity as seller under the Mortgage Loan
Purchase Agreement.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and expenses)
incurred by the Master Servicer in the performance of its servicing obligations
in connection with a default, delinquencies or other unanticipated event or
where reimbursement is otherwise permitted in accordance with any of the terms
of this Agreement, including, but not limited to, the cost of (i) the
preservation, restoration, inspection and protection of the Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Sections 3.01, 3.09, 3.16, and 3.23.
"Servicing Fee": With respect to each Mortgage Loan and for any calendar
month, an amount equal to one month's interest (or in the event of any payment
of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. A
portion of such Servicing Fee may be retained by any Sub-Servicer as its
servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose name
and specimen signature appear on a list of servicing officers furnished by the
Master Servicer to the Trustee and the Depositor on the Closing Date, as such
list may from time to time be amended.
"Startup Day": As defined in Section 10.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a) as of
any date of determination up to but not including the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, the Cut-off Date Principal Balance, as shown in the
Mortgage Loan Schedule, minus the sum of (i) the principal portion of each
Monthly Payment due on a Due Date subsequent to the Cut-off Date, to the extent
received from the Mortgagor or advanced by the Master Servicer and distributed
pursuant to Section 4.01 on or before such date of determination, (ii) all
Principal Prepayments received after the Cut-off Date, to the extent distributed
pursuant to Section 4.01 on or before such date of determination, (iii)
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all Liquidation Proceeds and Insurance Proceeds to the extent distributed
pursuant to Section 4.01 on or before such date of determination, and (iv) any
Realized Loss incurred with respect thereto as a result of a Deficient Valuation
made during or prior to the Due Period for the most recent Distribution Date
coinciding with or preceding such date of determination; and (b) as of any date
of determination coinciding with or subsequent to the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, zero. With respect to any REO Property: (a) as of any date
of determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of the Trust Fund, minus the aggregate amount of REO
Principal Amortization in respect of such REO Property for all previously ended
calendar months, to the extent distributed pursuant to Section 4.01 on or before
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Stayed Funds": If the Master Servicer is the subject of a proceeding under
the federal Bankruptcy Code and the making of a Remittance (as defined in
Section 7.02(b)) is prohibited by Section 362 of the federal Bankruptcy Code,
funds that are in the custody of the Master Servicer, a trustee in bankruptcy or
a federal bankruptcy court and should have been the subject of such Remittance
absent such prohibition.
"Stepdown Date": The Distribution Date in April 2004.
"Sub-Servicer": Any Person with which the Master Servicer has entered into
a Sub-Servicing Agreement and which meets the qualifications of a Sub-Servicer
pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a Sub-Servicer which
meets the requirements set forth in Section 3.08 and is otherwise acceptable to
the applicable Master Servicer.
"Sub-Servicing Agreement": The written contract between the Master Servicer
and a Sub- Servicer relating to servicing and administration of certain Mortgage
Loans as provided in Section 3.02.
"Substitution Shortfall Amount": As defined in Section 2.03(d) hereof.
"Tax Returns": The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
the REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed by the Trustee on behalf of each REMIC, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
40
"Telerate Page 3750": The display designated as page "3750" on the Dow
▇▇▇▇▇ Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Price": As defined in Section 10.01(a) hereof.
"Terminator": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge, hypothecation,
or other form of assignment of any Ownership Interest in a Certificate.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
"Trigger Event": A Trigger Event has occurred with respect to a
Distribution Date if the Delinquency Percentage exceeds 65% of the Credit
Enhancement Percentage.
"Trust": Long Beach Mortgage Loan Trust 2001-1, the trust created
hereunder.
"Trust Fund": All of the assets of the Trust, which is the trust created
hereunder consisting of REMIC 1, REMIC 2 and REMIC 3 and the Reserve Fund.
"Trust REMIC": Any of REMIC 1, REMIC 2 and/or REMIC 3.
"Trustee": Bankers Trust Company of California, N.A., a national banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.
"Uncertificated Accrued Interest": With respect to each REMIC Regular
Interest on each Distribution Date, an amount equal to one month's interest at
the related Uncertificated Pass- Through Rate on the Uncertificated Principal
Balance or Uncertificated Notional Amount of such REMIC Regular Interest. In
each case, Uncertificated Accrued Interest will be reduced by any Net Prepayment
Interest Shortfalls and Relief Act Interest Shortfalls allocated to such REMIC
Regular Interests pursuant to Section 1.03.
"Uncertificated Notional Amount":
(a) With respect to REMIC 2 Regular Interest LT2SA and any date of
determination, the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1B for such Distribution Date;
(b) With respect to REMIC 2 Regular Interest LT2SB and any date of
determination, the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1B for such Distribution Date; and
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(c) With respect to REMIC 2 Regular Interest LT2SC and any date of
determination, the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1B for such Distribution Date.
"Uncertificated Pass-Through Rate": The Uncertificated REMIC 1 Pass-Through
Rate or the Uncertificated REMIC 2 Pass-Through Rate.
"Uncertificated Principal Balance": With respect to each REMIC Regular
Interest (other than REMIC 2 Regular Interest LT2SA, REMIC 2 Regular Interest
LT2SB and REMIC 2 Regular Interest LT2SC) the amount of such REMIC Regular
Interest outstanding as of any date of determination. As of the Closing Date,
the Uncertificated Principal Balance of each REMIC Regular Interest (other than
REMIC 2 Regular Interest LT2SA, REMIC 2 Regular Interest LT2SB and REMIC 2
Regular Interest LT2SC) shall equal the amount set forth in the Preliminary
Statement hereto as its initial Uncertificated Principal Balance. On each
Distribution Date, the Uncertificated Principal Balance of each REMIC Regular
Interest shall be reduced by all distributions of principal made on such REMIC
Regular Interest on such Distribution Date pursuant to Section 4.08 and, if and
to the extent necessary and appropriate, shall be further reduced on such
Distribution Date by Realized Losses as provided in Section 4.08, and the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2F shall be
increased by interest deferrals as provided in Section 4.08. The Uncertificated
Principal Balance of each REMIC Regular Interest that has an Uncertificated
Principal Balance shall never be less than zero. REMIC 2 Regular Interest LT2SA,
REMIC 2 Regular Interest LT2SB and REMIC 2 Regular Interest LT2SC will not have
Uncertificated Principal Balances.
"Uncertificated REMIC 1 Pass-Through Rate": For any Distribution Date, a
per annum rate equal to the weighted average of the Adjusted Net Mortgage Rates
of the Mortgage Loans, weighted on the basis of the Stated Principal Balances
thereof as of the Due Date preceding the month of such Distribution Date.
"Uncertificated REMIC 2 Pass-Through Rate":
(a) With respect to REMIC 2 Regular Interest LT2A, REMIC 2 Regular
Interest LT2B, REMIC 2 Regular Interest LT2C, REMIC 2 Regular Interest LT2D,
REMIC 2 Regular Interest LT2E, REMIC 2 Regular Interest LT2F, REMIC 2 Regular
Interest LT2G and REMIC 2 Regular Interest LT2P and any Distribution Date, a per
annum rate equal to the weighted average of (x) the Uncertificated REMIC 1
Pass-Through Rate with respect to REMIC 1 Regular Interest LT1A and REMIC 1
Regular Interest LT1P for such Distribution Date and (y) the excess, if any, of
(i) the Uncertificated REMIC 1 Pass-Through Rate with respect to REMIC 1 Regular
Interest LT1B for such Distribution Date over (ii) 3.50% per annum (in the case
of the Distribution Date in April 2001 through the Distribution Date in March
2002), 2.50% per annum (in the case of the Distribution Date in April 2002
through the Distribution Date in March 2003), 1.50% per annum (in the case of
the Distribution Date in April 2003 through the Distribution Date in March 2004)
or 0.00% per annum (in the case of any Distribution Date thereafter) weighted on
the basis of the Uncertificated Principal Balance of REMIC 1 Regular Interest
LT1A, REMIC 1 Regular Interest LT1P and REMIC 1 Regular Interest LT1B,
respectively, multiplied by a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related Accrual
Period;
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(b) With respect to REMIC 2 Regular Interest LT2SA and any
Distribution Date from the Distribution Date in April 2001 through the
Distribution Date in March 2004, 1.50% per annum; with respect to REMIC 2
Regular Interest LT2SA and any Distribution Date thereafter, 0.00% per annum;
(c) With respect to REMIC 2 Regular Interest LT2SB and any
Distribution Date from the Distribution Date in April 2001 through the
Distribution Date in March 2003, 1.00% per annum; with respect to REMIC 2
Regular Interest LT2SB and any Distribution Date thereafter, 0.00% per annum;
and
(d) With respect to REMIC 2 Regular Interest LT2SC and any
Distribution Date from the Distribution Date in April 2001 through the
Distribution Date in March 2002, 1.00% per annum; with respect to REMIC 2
Regular Interest LT2SC and any Distribution Date thereafter, 0.00% per annum.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such that
the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.14.
"United States Person" or "U.S. Person": A citizen or resident of the
United States, a corporation, partnership (or other entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in, or under the laws of, the United States, any state
thereof, or the District of Columbia (except in the case of a partnership, to
the extent provided in Treasury regulations) provided that, for purposes solely
of the restrictions on the transfer of Class R Certificates, no partnership or
other entity treated as a partnership for United States federal income tax
purposes shall be treated as a United States Person unless all persons that own
an interest in such partnership either directly or through any entity that is
not a corporation for United States federal income tax purposes are required by
the applicable operative agreement to be United States Persons, or an estate the
income of which from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States, or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have authority to control all substantial decisions of the trust. The
term "United States" shall have the meaning set forth in Section 7701 of the
Code or successor provisions.
"Unpaid Interest Shortfall Amount": With respect to the Class A
Certificates, the Class S Certificates and the Mezzanine Certificates and (i)
the first Distribution Date, zero, and (ii) any Distribution Date after the
first Distribution Date, the amount, if any, by which (a) the sum of (1) the
Monthly Interest Distributable Amount for such Class for the immediately
preceding Distribution Date and (2) the outstanding Unpaid Interest Shortfall
Amount, if any, for such Class for such preceding Distribution Date exceeds (b)
the aggregate amount distributed on such Class in respect of interest pursuant
to clause (a) of this definition on such preceding Distribution Date, plus
interest on the amount of interest due but not paid on the Certificates of such
Class on such preceding Distribution Date, to the extent permitted by law, at
the Pass-Through Rate for such Class for the related Accrual Period.
43
"Value": With respect to any Mortgaged Property, the lesser of (i) the
value thereof as determined by an appraisal made for the originator of the
Mortgage Loan at the time of origination of the Mortgage Loan by an appraiser
who met the minimum requirements of ▇▇▇▇▇▇ ▇▇▇, and (ii) the purchase price paid
for the related Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan, provided, however, in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the value determined
by an appraisal made for the originator of such Refinanced Mortgage Loan at the
time of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of ▇▇▇▇▇▇ Mae.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates shall have
97% of the Voting Rights (allocated among the Holders of the Class A
Certificates, the Mezzanine Certificates and the Class C Certificates in
proportion to the then outstanding Certificate Principal Balances of their
respective Certificates), the Class S Certificates shall have 1% of the Voting
Rights, the Class P Certificates shall have 1% of the Voting Rights and the
Class R Certificates shall have 1% of the Voting Rights. The Voting Rights
allocated to any Class of Certificates (other than the Class P Certificates and
the Class R Certificates) shall be allocated among all Holders of each such
Class in proportion to the outstanding Certificate Principal Balance or Notional
Amount of such Certificates and the Voting Rights allocated to the Class P
Certificates and the Class R Certificates shall be allocated among all Holders
of each such Class in proportion to such Holders' respective Percentage
Interest; provided, however that when none of the Regular Certificates are
outstanding, 100% of the Voting Rights shall be allocated among Holders of the
Class R Certificates in accordance with such Holders' respective Percentage
Interests in the Certificates of such Class.
Section 1.02. Accounting.
Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account such definition or calculation and any
related definitions or calculations shall be determined without duplication of
such functions.
Section 1.03. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of the Monthly Interest
Distributable Amount for the Class A Certificates, the Class S Certificates, the
Mezzanine Certificates and the Class C Certificates for any Distribution Date,
(1) the aggregate amount of any Net Prepayment Interest Shortfalls and any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, among the Class C Certificates on a
PRO RATA basis based on, and to the extent of, one month's interest at the then
applicable Pass-Through Rate on the Notional Amount of each such Certificate
and, thereafter, among the Class A Certificates, the Class S Certificates and
the Mezzanine Certificates on a PRO RATA basis based on, and to the extent of,
interest for the related Accrual Period at the then applicable respective
Pass-Through Rate on the respective Certificate Principal Balance or Notional
Amount of each such Certificate and (2) the aggregate amount of any Realized
Losses and Net WAC Rate Carryover Amounts incurred for any Distribution Date
shall be allocated among the Class C Certificates on a PRO RATA basis based on,
and to the extent of, interest
44
for the related Accrual Period at the then applicable Pass-Through Rate on the
Notional Amount of each such Certificate.
For purposes of calculating the amount of Uncertificated Accrued Interest
for the Uncertificated REMIC 1 Regular Interests for any Distribution Date, the
aggregate amount of any Net Prepayment Interest Shortfalls and any Relief Act
Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first to REMIC 1 Regular Interest LT1A and
then to REMIC 1 Regular Interest LT1B, in each case to the extent of interest
for the related Accrual Period at the then applicable respective Uncertificated
REMIC 1 Pass-Through Rate on the respective Uncertificated Principal Balance of
each such Uncertificated REMIC 1 Regular Interest.
For purposes of calculating the amount of Uncertificated Accrued Interest
for the Uncertificated REMIC 2 Regular Interests for any Distribution Date, the
aggregate amount of any Net Prepayment Interest Shortfalls and any Relief Act
Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to Uncertificated Accrued Interest
payable to REMIC 2 Regular Interest LT2A and REMIC 2 Regular Interest LT2G up to
an aggregate amount equal to the REMIC 2 Interest Loss Allocation Amount, 98%
and 2%, respectively, and thereafter among REMIC 2 Regular Interest LT2A, REMIC
2 Regular Interest LT2B, REMIC 2 Regular Interest LT2C, REMIC 2 Regular Interest
LT2D, REMIC 2 Regular Interest LT2E, REMIC 2 Regular Interest LT2F, REMIC 2
Regular Interest LT2G, REMIC 2 Regular Interest LT2SA, REMIC 2 Regular Interest
LT2SB and REMIC 2 Regular Interest LT2SC PRO RATA based on, and to the extent
of, interest for the related Accrual Period at the then applicable respective
Uncertificated REMIC 2 Pass-Through Rate on the respective Uncertificated
Principal Balance or Uncertificated Notional Amount of each such Uncertificated
REMIC 2 Regular Interest.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey to the Trustee without
recourse for the benefit of the Certificateholders all the right, title and
interest of the Depositor, including any security interest therein for the
benefit of the Depositor, in and to the Original Mortgage Loans identified on
the Mortgage Loan Schedule, the rights of the Depositor under the Mortgage Loan
Purchase Agreement (other than the Depositor's rights under Section 17 thereof),
and all other assets included or to be included in REMIC 1. Such assignment
includes all interest and principal received by the Depositor or the Master
Servicer on or with respect to the Original Mortgage Loans (other than payments
of principal and interest due on such Mortgage Loans on or before the Cut-off
Date). The Depositor herewith delivers to the Trustee an executed copy of the
Mortgage Loan Purchase Agreement and the PMI Policy.
If the assignment and transfer of the Original Mortgage Loans and the other
property specified in Section 2.01 from the Depositor to the Trustee pursuant to
this Agreement is held or deemed not to be a sale or is held or deemed to be a
pledge of security for a loan, the Depositor intends that the rights and
obligations of the parties shall be established pursuant to the terms of this
Agreement and that, in such event, (i) the Depositor shall be deemed to have
granted and does hereby grant to the Trustee as of the Closing Date a perfected,
first priority security interest in the entire right, title and interest of the
Depositor in and to the Original Mortgage Loans and all other property conveyed
to the Trust Fund pursuant to this Section 2.01 and all proceeds thereof and
(ii) this Agreement shall constitute a security agreement under applicable law.
In connection with such transfer and assignment, the Depositor does hereby
deliver to, and deposit with, the Trustee the following documents or instruments
with respect to each Original Mortgage Loan so transferred and assigned (each, a
"Mortgage File"):
(a) the original Mortgage Note, endorsed in blank or in the following
form: "Pay to the order of Bankers Trust Company of California, N.A., as
Trustee under the applicable agreement, without recourse," with all prior
and intervening endorsements showing a complete chain of endorsement from
the originator to the Person so endorsing to the Trustee or (in the case of
not more than 1.00% of the Mortgage Loans, by aggregate principal balance
as of the Cut-off Date) a copy of such original Mortgage Note with an
accompanying Lost Note Affidavit executed by the Seller;
(b) the original Mortgage with evidence of recording thereon, and a
copy, certified by the appropriate recording office, of the recorded power
of attorney, if the Mortgage was executed pursuant to a power of attorney,
with evidence of recording thereon;
(c) an original Assignment in blank;
46
(d) the original recorded Assignment or Assignments showing a complete
chain of assignment from the originator to the Person assigning the
Mortgage to the Trustee or in blank;
(e) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(f) the original lender's title insurance policy, together with all
endorsements or riders issued with or subsequent to the issuance of such
policy, insuring the priority of the Mortgage as a first lien on the
Mortgaged Property represented therein as a fee interest vested in the
Mortgagor, or in the event such original title policy is unavailable, a
written commitment or uniform binder or preliminary report of title issued
by the title insurance or escrow company.
The Master Servicer, in its capacity as Seller, shall promptly (and in no
event later than thirty (30) Business Days, subject to extension upon a mutual
agreement between the Master Servicer and the Trustee), following the later of
the Closing Date and the date of receipt by the Master Servicer of the recording
information for a Mortgage submit or cause to be submitted for recording, at no
expense to the Trust Fund, the Trustee or the Depositor, in the appropriate
public office for real property records, each Assignment referred to in Sections
2.01(c) and (d) above and shall execute each original Assignment referred to in
clause (c) above in the following form: "Bankers Trust Company of California,
N.A., as Trustee under the applicable agreement, without recourse." In the event
that any such Assignment is lost or returned unrecorded because of a defect
therein, the Master Servicer, in its capacity as Seller, shall promptly prepare
or cause to be prepared a substitute Assignment or cure or cause to be cured
such defect, as the case may be, and thereafter cause each such Assignment to be
duly recorded. Notwithstanding the foregoing, however, for administrative
convenience and facilitation of servicing and to reduce closing costs, the
Assignments shall not be required to be completed and submitted for recording
with respect to any Mortgage Loan if the Trustee, the NIMs Insurer and each
Rating Agency has received an opinion of counsel, reasonably satisfactory to the
Trustee, the NIMs Insurer and each Rating Agency, to the effect that the
recordation of such Assignments in any specific jurisdiction is not necessary to
protect the Trust's interest in the related Mortgage Note; provided further,
however, notwithstanding the delivery of any opinion of counsel, each Assignment
shall be submitted for recording by the Master Servicer, in its capacity as
Seller, in the manner described above, at no expense to the Trust Fund or the
Trustee, upon the earliest to occur of: (i) reasonable direction by Holders of
Certificates entitled to at least 25% of the Voting Rights, (ii) the occurrence
of a Master Servicer Event of Default, (iii) the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Seller, (iv) the occurrence of a
servicing transfer as described in Section 7.02 hereof and (iv) if the Seller is
not the Master Servicer and with respect to any one Assignment, the occurrence
of a bankruptcy, insolvency or foreclosure relating to the Mortgagor under the
related Mortgage. Notwithstanding the foregoing, if the Master Servicer is
unable to pay the cost of recording the Assignments, such expense will be paid
by the Trustee and shall be reimbursable to the Trustee as an Extraordinary
Trust Fund Expense.
If any of the documents referred to in Sections 2.01(b), (c) or (d) above
has as of the Closing Date been submitted for recording but either (x) has not
been returned from the applicable public recording office or (y) has been lost
or such public recording office has retained the original of such
47
document, the obligations of the Depositor to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Trustee of a copy of each such
document certified by the Seller in the case of (x) above or the applicable
public recording office in the case of (y) above to be a true and complete copy
of the original that was submitted for recording and (2) if such copy is
certified by the Seller, delivery to the Trustee promptly upon receipt thereof,
and in any event no later than one year after the Closing Date, of either the
original or a copy of such document certified by the applicable public recording
office to be a true and complete copy of the original. If the original lender's
title insurance policy was not delivered pursuant to Section 2.01(f) above, the
Depositor shall deliver or cause to be delivered to the Trustee promptly after
receipt thereof, and in any event within 120 days after the Closing Date, the
original lender's title insurance policy. The Depositor shall deliver or cause
to be delivered to the Trustee promptly upon receipt thereof any other original
documents constituting a part of a Mortgage File received with respect to any
Mortgage Loan, including, but not limited to, any original documents evidencing
an assumption or modification of any Mortgage Loan.
All original documents relating to the Mortgage Loans that are not
delivered to the Trustee are and shall be held by or on behalf of the Seller,
the Depositor or the Master Servicer, as the case may be, in trust for the
benefit of the Trustee on behalf of the Certificateholders. In the event that
any such original document is required pursuant to the terms of this Section to
be a part of a Mortgage File, such document shall be delivered promptly to the
Trustee. Any such original document delivered to or held by the Depositor that
is not required pursuant to the terms of this Section to be a part of a Mortgage
File, shall be delivered promptly to the Master Servicer.
Section 2.02. Acceptance of REMIC 1 by the Trustee.
Subject to the provisions of Section 2.01 and subject to any exceptions
noted on the exception report described in the next paragraph below, the Trustee
acknowledges receipt of the documents referred to in Section 2.01 (other than
such documents described in Section 2.01(e)) above and all other assets included
in the definition of "REMIC 1" under clauses (i), (iii), (iv) and (v) (to the
extent of amounts deposited into the Distribution Account) and declares that it
holds and will hold such documents and the other documents delivered to it
constituting the Mortgage File, and that it holds or will hold all such assets
and such other assets included in the definition of "REMIC 1" in trust for the
exclusive use and benefit of all present and future Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders, to review
each Mortgage File on or before the Closing Date and to certify to the NIMs
Insurer, the Depositor and the Master Servicer in substantially the form
attached hereto as Exhibit F-1 that, as to each Original Mortgage Loan listed in
the Mortgage Loan Schedule (other than any Original Mortgage Loan paid in full
or any Original Mortgage Loan specifically identified in the exception report
annexed thereto as not being covered by such certification), (i) all documents
constituting part of such Mortgage File (other than such documents described in
Section 2.01(e)) required to be delivered to it pursuant to this Agreement are
in its possession, (ii) such documents have been reviewed by the Trustee and are
not mutilated, torn or defaced unless initialed by the related borrower and
relate to such Original Mortgage Loan and (iii) based on the Trustee's
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (i), (ii), (ix), (xii) (xiv)
(to the extent of the Periodic Rate Cap for the first Adjustment Date and
subsequent
48
Adjustment Dates) and (xvi) of the definition of "Mortgage Loan Schedule"
accurately reflects information set forth in the Mortgage File. It is herein
acknowledged that, in conducting such review, the Trustee was under no duty or
obligation (i) to inspect, review or examine any such documents, instruments,
certificates or other papers to determine whether they are genuine, enforceable,
or appropriate for the represented purpose (including with respect to Section
2.01(f), whether such title insurance policy insures the priority of the
Mortgage as a first lien) or whether they have actually been recorded or that
they are other than what they purport to be on their face or (ii) to determine
whether any Mortgage File should include any of the documents specified in
clause (e) of Section 2.01.
Prior to the first anniversary date of this Agreement, the Trustee shall
deliver to the Depositor, the Master Servicer and the NIM Insurer a final
certification in the form annexed hereto as Exhibit F-2 evidencing the
completeness of the Mortgage Files, with any applicable exceptions noted
thereon.
If in the process of reviewing the Mortgage Files and making or preparing,
as the case may be, the certifications referred to above, the Trustee finds any
document or documents constituting a part of a Mortgage File to be missing or
defective in any material respect, at the conclusion of its review the Trustee
shall so notify the Depositor, the Seller, the NIMs Insurer and the Master
Servicer. In addition, upon the discovery by the Depositor, the Master Servicer
or the Trustee of a breach of any of the representations and warranties made by
the Seller in the Mortgage Loan Purchase Agreement in respect of any Mortgage
Loan which materially and adversely affects the value of such Original Mortgage
Loan or the interests of the related Certificateholders in such Original
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties.
Section 2.03. Cure, Repurchase or Substitution of Mortgage Loans by
the Seller; Remedies for Breaches by Depositor or
Master Servicer; Remedies for Breaches Relating to
Prepayment Charges.
(a) Upon discovery or receipt of notice of any materially defective
document in, or that a document is missing from, the Mortgage File or of the
breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially and adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders (in the case of any such representation or
warranty made to the knowledge or the best of knowledge of the Seller, as to
which the Seller has no knowledge, without regard to the Seller's lack of
knowledge with respect to the substance of such representation or warranty being
inaccurate at the time it was made), the Trustee shall promptly notify the
Depositor, the Seller, the NIMs Insurer and the Master Servicer of such defect,
missing document or breach and request that the Seller deliver such missing
document or cure such defect or breach within 90 days from the date the Seller
was notified of such missing document, defect or breach, and if the Seller does
not deliver such missing document or cure such defect or breach in all material
respects during such period, the Master Servicer (or, in accordance with Section
3.02(b), the Trustee) shall enforce the obligations of the Seller under the
Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from REMIC 1
at the Purchase Price within 90 days after the date on which the Seller was
notified (subject to Section 2.03(e)) of such missing document, defect or
breach, if and to the extent that the
49
Seller is obligated to do so under the Mortgage Loan Purchase Agreement. The
Purchase Price for the repurchased Mortgage Loan shall be deposited in the
Collection Account, and the Trustee, upon receipt of written certification from
the Master Servicer of such deposit, shall release to the Seller the related
Mortgage File, and the Trustee shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Seller shall
furnish to it and as shall be necessary to vest in the Seller any Mortgage Loan
released pursuant hereto, and the Trustee shall not have any further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, if so provided in the Mortgage Loan
Purchase Agreement, the Seller may cause such Mortgage Loan to be removed from
REMIC 1 (in which case it shall become a Deleted Mortgage Loan) and substitute
one or more Qualified Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.03(d). It is understood and agreed that the
obligation of the Seller to cure or to repurchase (or to substitute for) any
Mortgage Loan as to which a document is missing, a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such omission, defect or
breach available to the Certificateholders or the Trustee on behalf of the
Certificateholders.
(b) Within 90 days of the earlier of discovery by the Depositor or receipt
of notice by the Depositor of the breach of any representation or warranty of
the Depositor set forth in Section 2.05 with respect to any Mortgage Loan, which
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Depositor shall cure such breach in all
material respects.
(c) As promptly as practicable (and no later than 90 days) after the
earlier of discovery by the Master Servicer or receipt of notice by the Master
Servicer of the breach of any representation, warranty or covenant of the Master
Servicer set forth in Section 2.04 which materially and adversely affects the
value of any Mortgage Loan or the interests of the Certificateholders in any
Mortgage Loan, the Master Servicer shall cure such breach in all material
respects.
Within 90 days of the earlier of discovery by the Master Servicer or
receipt of notice by the Master Servicer of the breach of any representation,
warranty or covenant of the Master Servicer set forth in Section 2.04(a)(vii) or
(viii) which materially and adversely affects the interests of the Holders of
the Class P Certificates to any Prepayment Charge, the Master Servicer shall
cure such breach in all material respects. If the representation made by the
Master Servicer in Section 2.04(a)(vii) is breached, the Master Servicer shall
pay into the Collection Account the amount of the scheduled Prepayment Charge,
less any amount previously collected and deposited by, or paid by, the Master
Servicer into the Collection Account; and if the covenant made by the Master
Servicer in its capacity as Seller in Section 2.04(a)(viii) is breached, the
Master Servicer in its capacity as Seller shall pay into the Collection Account
the amount of the waived Prepayment Charge.
(d) Any substitution of Qualified Substitute Mortgage Loans for Deleted
Mortgage Loans made pursuant to Section 2.03(a) shall be effected prior to the
date which is two years after the Startup Date for REMIC 1.
As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected
by the Seller delivering to the Trustee, for such Qualified Substitute Mortgage
Loan or Loans, the Mortgage Note, the Mortgage, the
50
Assignment to the Trustee, and such other documents and agreements, with all
necessary endorsements thereon, as are required by Section 2.01, together with
an Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Shortfall
Amount (as described below), if any, in connection with such substitution. The
Trustee shall acknowledge receipt for such Qualified Substitute Mortgage Loan or
Loans and, within ten Business Days thereafter, review such documents as
specified in Section 2.02 and deliver to the Depositor, the Master Servicer and
the NIMs Insurer, with respect to such Qualified Substitute Mortgage Loan or
Loans, a certification substantially in the form attached hereto as Exhibit F-1,
with any applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Depositor, the Seller, the NIMs
Insurer and the Master Servicer a certification substantially in the form of
Exhibit F-2 hereto with respect to such Qualified Substitute Mortgage Loan or
Loans, with any applicable exceptions noted thereon. Monthly Payments due with
respect to Qualified Substitute Mortgage Loans in the month of substitution are
not part of REMIC 1 and will be retained by the Seller. For the month of
substitution, distributions to Certificateholders will reflect the Monthly
Payment due on such Deleted Mortgage Loan on or before the Due Date in the month
of substitution, and the Seller shall thereafter be entitled to retain all
amounts subsequently received in respect of such Deleted Mortgage Loan. The
Trustee shall give or cause to be given written notice to the NIMs Insurer and
the Certificateholders that such substitution has taken place, and the Master
Servicer shall amend or cause to be amended the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the
NIMs Insurer and the Trustee. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall constitute part of the Mortgage Pool and shall be
subject in all respects to the terms of this Agreement and the Mortgage Loan
Purchase Agreement, including all applicable representations and warranties
thereof included in the Mortgage Loan Purchase Agreement as of the date of
substitution.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (the "Substitution Shortfall Amount"), if
any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans
exceeds the aggregate of, as to each such Qualified Substitute Mortgage Loan,
the Stated Principal Balance thereof as of the date of substitution, together
with one month's interest on such Stated Principal Balance at the applicable Net
Mortgage Rate, plus all outstanding Advances and Servicing Advances. On the date
of such substitution, the Seller will deliver or cause to be delivered to the
Master Servicer for deposit in the Collection Account an amount equal to the
Substitution Shortfall Amount, if any, and the Trustee, upon receipt of the
related Qualified Substitute Mortgage Loan or Loans and certification by the
Master Servicer of such deposit, shall release to the Depositor or the Seller,
as the case may be, the related Mortgage File or Files and the Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as the Depositor or the Seller, as the case may be, shall
deliver to it and as shall be necessary to vest therein any Deleted Mortgage
Loan released pursuant hereto.
In addition, the Master Servicer in its capacity as Seller shall obtain at
its own expense and deliver to the NIMs Insurer and the Trustee an Opinion of
Counsel to the effect that such substitution will not cause (a) any federal tax
to be imposed on any of REMIC 1, created hereunder, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(1)
51
of the Code or on "contributions after the startup date" under Section
860G(d)(1) of the Code, or (b) any Trust REMIC hereunder to fail to qualify as a
REMIC at any time that any Certificate is outstanding.
(e) Upon discovery by the Depositor, the Seller, the Master Servicer or the
Trustee that any Mortgage Loan does not constitute a "qualified mortgage" within
the meaning of Section 860G(a)(3) of the Code, the party discovering such fact
shall within two Business Days give written notice thereof to the other parties.
In connection therewith, the Master Servicer in its capacity as Seller shall
repurchase or, subject to the limitations set forth in Section 2.03(d),
substitute one or more Qualified Substitute Mortgage Loans for the affected
Mortgage Loan within 90 days of the earlier of discovery or receipt of such
notice with respect to such affected Mortgage Loan. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a).
The Trustee shall reconvey to the Seller the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty.
Section 2.04. Representations, Warranties and Covenants of the Master
Servicer.
(a) The Master Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of the Trustee and the Certificateholders, and to the
Depositor, that as of the Closing Date or as of such date specifically provided
herein:
(i) The Master Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
is duly authorized and qualified to transact any and all business contemplated
by this Agreement and has all licenses necessary to carry on its business as now
being conducted and is licensed, qualified and in good standing in the states
where the Mortgaged Properties are located if the laws of such state require
licensing or qualification in order to conduct business of the type conducted by
the Master Servicer or to ensure the enforceability or validity of each Mortgage
Loan and, in any event, is in compliance with the doing business laws of any
such State, to the extent necessary to ensure its ability to enforce each
Mortgage Loan and to service the Mortgage Loans in accordance with the terms of
this Agreement;
(ii) The Master Servicer has the full power and authority to service
each Mortgage Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by this Agreement and has duly
authorized by all necessary action on the part of the Master Servicer the
execution, delivery and performance of this Agreement; and this Agreement,
assuming the due authorization, execution and delivery thereof by the Depositor
and the Trustee, constitutes a legal, valid and binding obligation of the Master
Servicer, enforceable against the Master Servicer in accordance with its terms,
except to the extent that (a) the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought;
(iii) The execution and delivery of this Agreement by the Master
Servicer, the servicing of the Mortgage Loans by the Master Servicer hereunder,
the consummation by the Master
52
Servicer of any other of the transactions herein contemplated, and the
fulfillment of or compliance with the terms hereof are in the ordinary course of
business of the Master Servicer and will not (A) result in a breach of any term
or provision of the charter or by-laws of the Master Servicer or (B) conflict
with, result in a breach, violation or acceleration of, or result in a default
under, the terms of any other material agreement or instrument to which the
Master Servicer is a party or by which it may be bound, or any statute, order or
regulation applicable to the Master Servicer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the Master
Servicer; and the Master Servicer is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to the Master Servicer's knowledge, would
in the future materially and adversely affect, (x) the ability of the Master
Servicer to perform its obligations under this Agreement or (y) the business,
operations, financial condition, properties or assets of the Master Servicer
taken as a whole;
(iv) The Master Servicer is an approved seller/servicer for ▇▇▇▇▇▇ ▇▇▇
or ▇▇▇▇▇▇▇ Mac in good standing and is a HUD approved mortgagee pursuant to
Section 203 and Section 211 of the National Housing Act;
(v) No litigation is pending against the Master Servicer that would
materially and adversely affect the execution, delivery or enforceability of
this Agreement or the ability of the Master Servicer to service the Mortgage
Loans or to perform any of its other obligations hereunder in accordance with
the terms hereof;
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Master Servicer of, or compliance by the Master Servicer
with, this Agreement or the consummation by the Master Servicer of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained prior to
the Closing Date;
(vii) The information set forth in the Prepayment Charge Schedule is
complete, true and correct in all material respects at the date or dates
respecting which such information is furnished and each Prepayment Charge is
permissible and enforceable in accordance with its terms under applicable law
upon the Mortgagor's full and voluntary principal prepayment (except to the
extent that: (1) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally; (2) the collectability thereof may be limited due
to acceleration in connection with a foreclosure or other involuntary
prepayment; or (3) subsequent changes in applicable law may limit or prohibit
enforceability thereof); provided that the representation, warranty and covenant
contained in this clause (vii) is made by the Master Servicer only in its
capacity as Seller; and
(viii) The Master Servicer will not waive any Prepayment Charge or
part of a Prepayment Charge unless such waiver is related to a default or a
reasonably foreseeable default and would maximize recovery of total proceeds
taking into account the value of such Prepayment Charge and related Mortgage
Loan and doing so is standard and customary in servicing mortgage loans
53
similar to the Mortgage Loans (including any waiver of a Prepayment Charge in
connection with a refinancing of a Mortgage Loan that is related to a default or
a reasonably foreseeable default).
(b) It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor and the Certificateholders. Upon discovery by any of the Depositor,
the Master Servicer or the Trustee of a breach of any of the foregoing
representations, warranties and covenants which materially and adversely affects
the value of any Mortgage Loan, Prepayment Charge or the interests therein of
the Certificateholders, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the other of such parties. The obligation of the Master Servicer
set forth in Section 2.03(c) to cure breaches (or, in the case of (a)(vii) or
(a)(viii) above, to pay a Master Servicer Prepayment Charge Payment Amount)
shall constitute the sole remedy against the Master Servicer available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders respecting a breach of the representations, warranties and
covenants contained in this Section 2.04. The preceding sentence shall not,
however, limit any remedies available to the Certificateholders, the Depositor
or the Trustee on behalf of the Certificateholders, (i) pursuant to the Mortgage
Loan Purchase Agreement signed by the Master Servicer in its capacity as Seller,
respecting a breach of the representations, warranties and covenants of the
Master Servicer in its capacity as Seller contained in the Mortgage Loan
Purchase Agreement or (ii) pursuant to Section 7.01 hereof.
Section 2.05. Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee, for
the benefit of the Trustee and the Certificateholders, and to the Master
Servicer, that as of the Closing Date or as of such date specifically provided
herein:
(i) Each of this agreement and the Mortgage Loan Purchase 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 an except as such enforceability may be limited by
general principles of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the Depositor to
the Trustee on behalf of the Trust of each Mortgage Loan, the Depositor had good
and marketable title to each Mortgage Loan (insofar as such title was conveyed
to it by the Seller) subject to no prior lien, claim, participation interest,
mortgage, security interest, pledge, charge or other encumbrance or other
interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all right,
title interest in the Mortgage Loans to the Trustee on behalf of the Trust;
(iv) The Depositor is solvent and will not be made insolvent by the
transfer of the Mortgage Loans. The Depositor has not transferred the Mortgage
Loans to the Trustee with any intent to hinder, delay or defraud any of its
creditors;
54
(v) The Depositor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of Delaware, with full
corporate power and authority to own its assets and conduct its business as
presently being conducted;
(vi) The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Depositor is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial condition,
earnings, affairs or business of the Depositor or which might materially and
adversely affect the properties or assets, taken as a whole, of the Depositor;
(vii) The execution, delivery and performance of this Agreement and
the Mortgage Loan Purchase Agreement by the Depositor, and the consummation of
the transactions contemplated hereby and thereby, do not and will not result in
a material breach or violation of any of the terms or provisions of, or, to the
knowledge of the Depositor, constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Depositor is a party or by which the Depositor is bound or to which any of the
property or assets of the Depositor is subject, nor will such actions result in
any violation of the provisions of the articles of incorporation or by-laws of
the Depositor or, to the best of the Depositor's knowledge without independent
investigation, any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Depositor or any of its
properties or assets (except for such conflicts, breaches, violations and
defaults as would not have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement or the Mortgage Loan
Purchase Agreement);
(viii) To the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body of the United States or any other jurisdiction is required for the issuance
of the Certificates, or the consummation by the Depositor of the other
transactions contemplated by this Agreement or the Mortgage Loan Purchase
Agreement, except such consents, approvals, authorizations, registrations or
qualifications as (a) may be required under State securities or blue sky laws,
(b) have been previously obtained or (c) the failure of which to obtain would
not have a material adverse effect on the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement or the
Mortgage Loan Purchase Agreement; and
(ix) There are no actions, proceedings or investigations pending
before or, to the Depositor's knowledge, threatened by any court, administrative
agency or other tribunal to which the Depositor is a party or of which any of
its properties is the subject: (a) which if determined adversely to the
Depositor would have a material adverse effect on the business, results of
operations or financial condition of the Depositor; (b) asserting the invalidity
of this Agreement, the Mortgage Loan Purchase Agreement or the Certificates; (c)
seeking to prevent the issuance of the Certificates or the consummation by the
Depositor of any of the transactions contemplated by this Agreement or the
Mortgage Loan Purchase Agreement, as the case may be; or (d) which might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement or the
Mortgage Loan Purchase Agreement.
55
Section 2.06. Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans and the
delivery to it of the Mortgage Files, subject to the provisions of Sections 2.01
and 2.02, together with the assignment to it of all other assets included in the
Trust Fund, receipt of which is hereby acknowledged. Concurrently with such
assignment and delivery and in exchange therefor, the Trustee, pursuant to the
written request of the Depositor executed by an officer of the Depositor, has
executed, authenticated and delivered to or upon the written order of the
Depositor, the Certificates in authorized denominations. The interests evidenced
by the Certificates constitute the entire beneficial ownership interest in the
Trust Fund.
Section 2.07. Conveyance of REMIC Regular Interests and Acceptance of REMIC
1 by the Trustee; Issuance of Certificates.
(a) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC 1 Regular Interests for the benefit of the holders of the REMIC
2 Regular Interests and the Class R-1 Interest. The Trustee acknowledges receipt
of the REMIC 1 Regular Interests (which are uncertificated) and declares that it
holds and will hold the same in trust for the exclusive use and benefit of the
holders of the REMIC 2 Regular Interests and the Class R-1 Interest. The
interests evidenced by the Class R-2 Interest, together with the REMIC 2 Regular
Interests, constitute the entire beneficial ownership interest in REMIC 2.
(b) The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey in trust to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC 2 Regular Interests for the benefit of the holders of the
Certificates. The Trustee acknowledges receipt of the REMIC 2 Regular Interests
(which are uncertificated) and declares that it holds and will hold the same in
trust for the exclusive use and benefit of the holders of the Certificates. The
interests evidenced by the Class R-3 Interest, together with the Regular
Certificates, constitute the entire beneficial ownership interest in REMIC 3.
(c) In exchange for the REMIC 2 Regular Interests and, concurrently with
the assignment to the Trustee thereof, pursuant to the written request of the
Depositor executed by an officer of the Depositor, the Trustee has executed,
authenticated and delivered to or upon the order of the Depositor, the Regular
Certificates in authorized denominations evidencing (together with the Class R-3
Interest) the entire beneficial ownership interest in REMIC 3.
(d) Concurrently with (i) the assignment and delivery to the Trustee of
REMIC 1 (including the Residual Interest therein represented by the Class R-1
Interest) and the acceptance by the Trustee thereof, pursuant to Section 2.01,
Section 2.02 and Section 2.07(a), (ii) the assignment and delivery to the
Trustee of REMIC 2 (including the Residual Interest therein represented by the
Class R-2 Interest) and the acceptance by the Trustee thereof, pursuant to
Section 2.07(b), and the assignment and delivery to the Trustee of REMIC 3
(including the Residual Interest therein represented by the Class R-3 Interest)
and the acceptance by the Trustee thereof, pursuant to Section 2.09(c), the
Trustee, pursuant to the written request of the Depositor executed by an officer
of the
56
Depositor, has executed, authenticated and delivered to or upon the order of the
Depositor, the Class R Certificates in authorized denominations evidencing the
Class R-1 Interest, the Class R-2 Interest and the Class R-3 Interest.
57
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
Section 3.01. Master Servicer to Act as Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans on
behalf of the Trustee and in the best interests of and for the benefit of the
Certificateholders (as determined by the Master Servicer in its reasonable
judgment) in accordance with the terms of this Agreement and the respective
Mortgage Loans and, to the extent consistent with such terms, in the same manner
in which it services and administers similar mortgage loans for its own
portfolio, giving due consideration to customary and usual standards of practice
of mortgage lenders and loan servicers administering similar mortgage loans but
without regard to:
(i) any relationship that the Master Servicer, any Sub-Servicer or
any Affiliate of the Master Servicer or any Sub-Servicer may have with
the related Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the Master
Servicer or any Affiliate of the Master Servicer;
(iii) the Master Servicer's obligation to make Advances or Servicing
Advances; or
(iv) the Master Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder or with respect to any
particular transaction.
To the extent consistent with the foregoing, the Master Servicer shall seek
to maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Master
Servicer shall have full power and authority, acting alone or through
Sub-Servicers as provided in Section 3.02, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Master Servicer in its own name or in the name of a Sub-Servicer is hereby
authorized and empowered by the Trustee when the Master Servicer believes it
appropriate in its best judgment in accordance with the servicing standards set
forth above, to execute and deliver, on behalf of the Certificateholders and the
Trustee, and upon notice to the Trustee, 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 the Mortgaged
Properties and to institute foreclosure proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the ownership of such properties, and to hold or
cause to be held title to such properties, on behalf of the Trustee and
Certificateholders. The Master Servicer shall service and administer the
Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Master Servicer shall also comply in the performance of this Agreement with
all reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.17, the Trustee shall execute, at the
written
58
request of the Master Servicer, and furnish to the Master Servicer and any
Sub-Servicer such documents as are necessary or appropriate to enable the Master
Servicer or any Sub-Servicer to carry out their servicing and administrative
duties hereunder, and the Trustee hereby grants to the Master Servicer a power
of attorney to carry out such duties including a power of attorney to take title
to Mortgaged Properties after foreclosure on behalf of the Trustee and the
Certificateholders. The Trustee shall execute a separate power of attorney in
favor of the Master Servicer for the purposes described herein to the extent
necessary or desirable to enable the Master Servicer to perform its duties
hereunder. The Trustee shall not be liable for the actions of the Master
Servicer or any Sub- Servicers under such powers of attorney.
Subject to Section 3.09 hereof, in accordance with the standards of the
preceding paragraph, the Master Servicer shall advance or cause to be advanced
funds as necessary for the purpose of effecting the timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from related collections from the
Mortgagors pursuant to Section 3.09, and further as provided in Section 3.11.
Any cost incurred by the Master Servicer or by Sub-Servicers in effecting the
timely payment of taxes and assessments on a Mortgaged Property shall not, for
the purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, the Master
Servicer may not make any future advances with respect to a Mortgage Loan
(except as provided in Section 4.04) and the Master Servicer shall not (i)
permit any modification with respect to any Mortgage Loan that would change the
Mortgage Rate, reduce or increase the principal balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07, the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) or (ii) permit any modification,
waiver or amendment of any term of any Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or final, temporary or proposed Treasury regulations promulgated thereunder)
and (B) cause any Trust REMIC to fail to qualify as a REMIC under the Code or
the imposition of any tax on "prohibited transactions" or "contributions after
the startup date" under the REMIC Provisions.
The Master Servicer may delegate its responsibilities under this Agreement;
provided, however, that no such delegation shall release the Master Servicer
from the responsibilities or liabilities arising under this Agreement.
Section 3.02. Sub-Servicing Agreements Between the Master Servicer and
Sub-Servicers.
(a) The Master Servicer may enter into Sub-Servicing Agreements (provided
(i) that such agreements would not result in a withdrawal or a downgrading by
any Rating Agency of the ratings on any Class of Certificates or the NIM Notes,
as evidenced by a letter to that effect delivered by each Rating Agency to the
Depositor and the NIMs Insurer and (ii) that, except in the case of any
Sub-Servicing Agreements the Master Servicer may enter into with Washington
Mutual, Inc. or any affiliate thereof, the NIMs Insurer shall have consented to
such Sub-Servicing Agreement, which consent shall not be unreasonably withheld)
with Sub-Servicers, for the servicing and administration
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of the Mortgage Loans. The Trustee is hereby authorized to acknowledge, at the
request of the Master Servicer, any Sub-Servicing Agreement that meets the
requirements applicable to Sub- Servicing Agreements set forth in this Agreement
and that is otherwise permitted under this Agreement.
Each Sub-Servicer shall be (i) authorized to transact business in the state
or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub- Servicing
Agreement, (ii) an institution approved as a mortgage loan originator by the
Federal Housing Administration or an institution the deposit accounts in which
are insured by the FDIC and (iii) a ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae approved mortgage
servicer. Each Sub-Servicing Agreement must impose on the Sub-Servicer
requirements conforming to the provisions set forth in Section 3.08. The Master
Servicer will examine each Sub-Servicing Agreement and will be familiar with the
terms thereof. The terms of any Sub-Servicing Agreement will not be inconsistent
with any of the provisions of this Agreement. The Master Servicer and the
Sub-Servicers may enter into and make amendments to the Sub-Servicing Agreements
or enter into different forms of Sub-Servicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Certificateholders, without the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. Any variation without the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights from the provisions set forth in
Section 3.08 relating to insurance or priority requirements of Sub-Servicing
Accounts, or credits and charges to the Sub- Servicing Accounts or the timing
and amount of remittances by the Sub-Servicers to the Master Servicer, are
conclusively deemed to be inconsistent with this Agreement and therefore
prohibited. The Master Servicer shall deliver to the NIMs Insurer and the
Trustee copies of all Sub-Servicing Agreements, and any amendments or
modifications thereof, promptly upon the Master Servicer's execution and
delivery of such instruments.
(b) As part of its servicing activities hereunder, the Master Servicer
(except as otherwise provided in the last sentence of this paragraph), for the
benefit of the Trustee and the Certificateholders, shall enforce the obligations
of each Sub-Servicer under the related Sub-Servicing Agreement and, subject to
the last sentence of this paragraph, of the Seller under the Mortgage Loan
Purchase Agreement, including, without limitation, any obligation to make
advances in respect of delinquent payments as required by a Sub-Servicing
Agreement, or to purchase or otherwise remedy as contemplated herein a Mortgage
Loan on account of missing or defective documentation or on account of a breach
of a representation, warranty or covenant, as described in Section 2.03(a). Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub- Servicing Agreements, and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement, to
the extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loans or (ii) from a specific recovery of costs, expenses or
attorneys' fees against the party against whom such enforcement is directed.
Enforcement of the Mortgage Loan Purchase Agreement against the Seller shall be
effected by the
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Master Servicer to the extent it is not the Seller, and otherwise by the
Trustee, in accordance with the foregoing provisions of this paragraph.
(c) If any transfer by the Master Servicer of its mortgage loan servicing
portfolio and mortgage loan servicing operations (other than with respect to
certain delinquent mortgage loans) to Washington Mutual Bank, FA shall have
occurred, then at all times from and after the time of such transfer, for so
long as the Master Servicer is Long Beach Mortgage Company, the Master Servicer
shall maintain in place a Sub-Servicing Agreement meeting the requirements set
forth herein (including, without limitation, the requirements set forth in
Section 3.02(a) above) with a Sub- Servicer that meets the eligibility
requirements set forth in Section 3.02(b) above with respect to the Mortgage
Loans (other than certain Delinquent Mortgage Loans).
Section 3.03. Successor Sub-Servicers.
The Master Servicer, with the written consent of the NIMs Insurer and
subject to Section 3.02(c), shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer, subject to Section 3.02(c), shall be
assumed simultaneously by the Master Servicer without any act or deed on the
part of such Sub-Servicer or the Master Servicer, and the Master Servicer either
shall, subject to Section 3.02(c), service directly the related Mortgage Loans
or shall enter into a Sub-Servicing Agreement with a successor Sub- Servicer
which qualifies under Section 3.02.
Any Sub-Servicing Agreement shall include the provision that such agreement
may be immediately terminated by the Trustee (if the Trustee is acting as Master
Servicer) without fee, in accordance with the terms of this Agreement, in the
event that the Master Servicer (or the Trustee, if then acting as Master
Servicer) shall, for any reason, no longer be the Master Servicer (including
termination due to a Master Servicer Event of Default).
Section 3.04. Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer and
a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Master Servicer shall remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of
the Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Sub-Servicing
Agreements or arrangements or by virtue of indemnification from the Sub-Servicer
and to the same extent and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the Mortgage Loans. The Master
Servicer shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Master Servicer by such Sub-Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
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Section 3.05. No Contractual Relationship Between Sub-Servicers and the
Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any transactions
or services relating to the Mortgage Loans involving a Sub-Servicer in its
capacity as such shall be deemed to be between the Sub-Servicer and the Master
Servicer alone, and the Trustee, the NIMs Insurer and the Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Sub-Servicer except as
set forth in Section 3.06. The Master Servicer shall be solely liable for all
fees owed by it to any Sub-Servicer, irrespective of whether the Master
Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees.
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee.
In the event the Master Servicer shall for any reason no longer be the
master servicer (including by reason of the occurrence of a Master Servicer
Event of Default), the Trustee or its designee shall thereupon assume all of the
rights and obligations of the Master Servicer under each Sub-Servicing Agreement
that the Master Servicer may have entered into, unless the Trustee elects to
terminate any Sub-Servicing Agreement in accordance with its terms as provided
in Section 3.03. Upon such assumption, the Trustee, its designee or the
successor servicer for the Trustee appointed pursuant to Section 7.02 shall be
deemed, subject to Section 3.03, to have assumed all of the Master Servicer's
interest therein and to have replaced the Master Servicer as a party to each
Sub-Servicing Agreement to the same extent as if each Sub-Servicing Agreement
had been assigned to the assuming party, except that (i) the Master Servicer
shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement that arose before it ceased to be the Master Servicer
and (ii) none of the Trustee, its designee or any successor Master Servicer
shall be deemed to have assumed any liability or obligation of the Master
Servicer that arose before it ceased to be the Master Servicer.
The Master Servicer at its expense shall, upon request of the Trustee,
deliver to the assuming party all documents and records relating to each
Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by or on behalf of it, and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments.
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 and the terms
and provisions of any applicable insurance policies, follow such collection
procedures as it would follow with respect to mortgage loans comparable to the
Mortgage Loans and held for its own account. Consistent with the foregoing, the
Master Servicer may in its discretion (i) waive any late payment charge or, if
applicable, any penalty interest, or (ii) extend the due dates for the Monthly
Payments due on a Mortgage Note for a period of not greater than 180 days;
provided that any extension pursuant to this clause (ii) shall not affect the
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amortization schedule of any Mortgage Loan for purposes of any computation
hereunder, except as provided below. In the event of any such arrangement
pursuant to clause (ii) above, the Master Servicer shall make timely advances on
such Mortgage Loan during such extension pursuant to Section 4.04 and in
accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements, subject to Section 4.04(d)
pursuant to which the Master Servicer shall not be required to make any such
advances that are Nonrecoverable Advances. Notwithstanding the foregoing, in the
event that any Mortgage Loan is in default or, in the judgment of the Master
Servicer, such default is reasonably foreseeable, the Master Servicer,
consistent with the standards set forth in Section 3.01, may also waive, modify
or vary any term of such Mortgage Loan (including modifications that would
change the Mortgage Rate, forgive the payment of principal or interest or extend
the final maturity date of such Mortgage Loan), accept payment from the related
Mortgagor of an amount less than the Stated Principal Balance in final
satisfaction of such Mortgage Loan (such payment, a "Short Pay-off") or consent
to the postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor; provided that the NIMs Insurer's prior written
consent shall be required for any modification, waiver or amendment if the
aggregate number of outstanding Mortgage Loans which have been modified, waived
or amended exceeds 5% of the number of Mortgage Loans as of the Cut-off Date.
Section 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan pursuant
to a Sub- Servicing Agreement, the Sub-Servicer shall be required to establish
and maintain one or more accounts (collectively, the "Sub-Servicing Account").
The Sub-Servicing Account shall be an Eligible Account. The Sub-Servicer shall
be required to deposit in the clearing account (which account must be an
Eligible Account) in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Sub-Servicer's
receipt thereof, all proceeds of Mortgage Loans received by the Sub-Servicer
less its servicing compensation to the extent permitted by the Sub-Servicing
Agreement, and shall thereafter deposit such amounts in the Sub-Servicing
Account, in no event more than two Business Days after the deposit of such funds
into the clearing account. The Sub-Servicer shall thereafter be required to
deposit such proceeds in the Collection Account or remit such proceeds to the
Master Servicer for deposit in the Collection Account not later than two
Business Days after the deposit of such amounts in the Sub-Servicing Account.
For purposes of this Agreement, the Master Servicer shall be deemed to have
received payments on the Mortgage Loans when the Sub-Servicer receives such
payments.
Section 3.09. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts.
The Master Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts (the "Servicing Accounts").
Servicing Accounts shall be Eligible Accounts. The Master Servicer shall deposit
in the clearing account (which account must be an Eligible Account) in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Master Servicer's receipt thereof, all
collections from the Mortgagors (or related advances from Sub-Servicers) for the
payment of taxes, assessments, hazard insurance premiums
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and comparable items for the account of the Mortgagors ("Escrow Payments")
collected on account of the Mortgage Loans and shall thereafter deposit such
Escrow Payments in the Servicing Accounts, in no event more than two Business
Days after the deposit of such funds in the clearing account, for the purpose of
effecting the payment of any such items as required under the terms of this
Agreement. Withdrawals of amounts from a Servicing Account may be made only to
(i) effect payment of taxes, assessments, hazard insurance premiums, and
comparable items; (ii) reimburse the Master Servicer (or a Sub-Servicer to the
extent provided in the related Sub-Servicing Agreement) out of related
collections for any advances made pursuant to Section 3.01 (with respect to
taxes and assessments) and Section 3.14 (with respect to hazard insurance);
(iii) refund to Mortgagors any sums as may be determined to be overages; (iv)
pay interest, if required and as described below, to Mortgagors on balances in
the Servicing Account; (v) clear and terminate the Servicing Account upon the
termination of the Master Servicer's obligations and responsibilities in respect
of the Mortgage Loans under this Agreement in accordance with Article IX or (vi)
recover amounts deposited in error. As part of its servicing duties, the Master
Servicer or Sub-Servicers shall pay to the Mortgagors interest on funds in
Servicing Accounts, to the extent required by law and, to the extent that
interest earned on funds in the Servicing Accounts is insufficient, to pay such
interest from its or their own funds, without any reimbursement therefor. To the
extent that a Mortgage does not provide for Escrow Payments, the Master Servicer
shall determine whether any such payments are made by the Mortgagor in a manner
and at a time that avoids the loss of the Mortgaged Property due to a tax sale
or the foreclosure of a tax lien. The Master Servicer assumes full
responsibility for the payment of all such bills within such time and shall
effect payments of all such bills irrespective of the Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make advances from its own funds to effect such payments; provided,
however, that such advances shall constitute Servicing Advances.
Section 3.10. Collection Account and Distribution Account.
(a) On behalf of the Trust Fund, the Master Servicer shall establish and
maintain, or cause to be established and maintained, one or more accounts (such
account or accounts, the "Collection Account"), held in trust for the benefit of
the Trustee and the Certificateholders. On behalf of the Trust Fund, the Master
Servicer shall deposit or cause to be deposited in the clearing account (which
account must be an Eligible Account) in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Master Servicer's receipt thereof, and shall thereafter deposit in the
Collection Account, in no event more than two Business Days after the deposit of
such funds into the clearing account, as and when received or as otherwise
required hereunder, the following payments and collections received or made by
it subsequent to the Cut-off Date (other than in respect of principal or
interest on the related Mortgage Loans due on or before the Cut-off Date), or
payments (other than Principal Prepayments) received by it on or prior to the
Cut-off Date but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related Servicing
Fee) on each Mortgage Loan;
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(iii) all Insurance Proceeds and Liquidation Proceeds (other than
proceeds collected in respect of any particular REO Property and
amounts paid by the Master Servicer in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 9.01);
(iv) any amounts required to be deposited pursuant to Section 3.12 in
connection with any losses realized on Permitted Investments with
respect to funds held in the Collection Account;
(v) any amounts required to be deposited by the Master Servicer
pursuant to the second paragraph of Section 3.14(a) in respect of any
blanket policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with Section 2.03 or Section 9.01;
(vii) all Substitution Shortfall Amounts;
(viii) all Prepayment Charges collected by the Master Servicer; and
(ix) without duplication, all payments of claims received by the
Master Servicer under the PMI Policy.
For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the date
of substitution.
The foregoing requirements for deposit in the Collection Accounts shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of late payment charges, NSF fees,
reconveyance fees, assumption fees and other similar fees and charges (other
than Prepayment Charges) need not be deposited by the Master Servicer in the
Collection Account and shall, upon collection, belong to the Master Servicer as
additional compensation for its servicing activities. In the event the Master
Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and maintain
one or more accounts (such account or accounts, the "Distribution Account"),
held in trust for the benefit of the Trustee and the Certificateholders. On
behalf of the Trust Fund, the Master Servicer shall deliver to the Trustee in
immediately available funds for deposit in the Distribution Account on or before
3:00 p.m. New York time on the Master Servicer Remittance Date, (i) that portion
of the Available Funds (calculated without regard to the references in the
definition thereof to amounts that may be withdrawn from the Distribution
Account) for the related Distribution Date then on deposit in the Collection
Account, the amount of all Prepayment Charges on the Prepayment Charge Schedule
collected by the Master Servicer in connection with the voluntary Principal
Prepayment in full of any of the Mortgage Loans and any Master Servicer
Prepayment Charge Payment Amounts then on deposit in the Collection Account and
the amount of any funds reimbursable to an Advancing Person pursuant to Section
3.27 and (ii) on each Business Day as of the commencement of which the
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balance on deposit in the Collection Account exceeds $75,000 following any
withdrawals pursuant to the next succeeding sentence, the amount of such excess,
but only if the Collection Account constitutes an Eligible Account solely
pursuant to clause (ii) of the definition of "Eligible Account." If the balance
on deposit in the Collection Account exceeds $75,000 as of the commencement of
business on any Business Day and the Collection Account constitutes an Eligible
Account solely pursuant to clause (ii) of the definition of "Eligible Account,"
the Master Servicer shall, on or before 3:00 p.m. New York time on such Business
Day, withdraw from the Collection Account any and all amounts payable or
reimbursable to the Depositor, the Master Servicer, the Trustee, the Seller or
any Sub-Servicer pursuant to Section 3.11 and shall pay such amounts to the
Persons entitled thereto.
(c) Funds in the Collection Account and the Distribution Account may be
invested in Permitted Investments in accordance with the provisions set forth in
Section 3.12. The Master Servicer shall give notice to the NIMs Insurer, the
Trustee and the Depositor of the location of the Collection Account maintained
by it when established and prior to any change thereof. The Trustee shall give
notice to the NIMs Insurer, the Master Servicer and the Depositor of the
location of the Distribution Account when established and prior to any change
thereof.
(d) Funds held in the Collection Account at any time may be delivered by
the Master Servicer to the Trustee for deposit in an account (which may be the
Distribution Account and must satisfy the standards for the Distribution Account
as set forth in the definition thereof) and for all purposes of this Agreement
shall be deemed to be a part of the Collection Account; provided, however, that
the Trustee shall have the sole authority to withdraw any funds held pursuant to
this subsection (d). In the event the Master Servicer shall deliver to the
Trustee for deposit in the Distribution Account any amount not required to be
deposited therein, it may at any time request that the Trustee withdraw, and the
Trustee shall withdraw, such amount from the Distribution Account and remit to
the Master Servicer any such amount, any provision herein to the contrary
notwithstanding. In addition, the Master Servicer shall deliver to the Trustee
from time to time for deposit, and the Trustee shall so deposit, in the
Distribution Account:
(i) any Advances, as required pursuant to Section 4.04, unless
delivered directly to the Trustee by an Advancing Person;
(ii) any amounts required to be deposited pursuant to Section 3.23(d)
or (f) in connection with any REO Property;
(iii) any amounts to be paid by the Master Servicer in connection with
a purchase of Mortgage Loans and REO Properties pursuant to Section
9.01;
(iv) any amounts required to be deposited pursuant to Section 3.24 in
connection with any Prepayment Interest Shortfalls; and
(v) any Stayed Funds, as soon as permitted by the federal bankruptcy
court having jurisdiction in such matters.
(e) Promptly upon receipt of any Stayed Funds, whether from the Master
Servicer, a trustee in bankruptcy, federal bankruptcy court or other source, the
Trustee shall deposit such funds
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in the Distribution Account, subject to withdrawal thereof pursuant to Section
7.02(b) or as otherwise permitted hereunder.
Section 3.11. Withdrawals from the Collection Account and Distribution
Account.
(a) The Master Servicer shall, from time to time, make withdrawals from the
Collection Account, for any of the following purposes or as described in Section
4.04, without priority:
(i) to remit to the Trustee for deposit in the Distribution Account
the amounts required to be so remitted pursuant to Section 3.10(b) or
permitted to be so remitted pursuant to the first sentence of Section
3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Master Servicer for
Advances, but only to the extent of amounts received which represent
Late Collections (net of the related Servicing Fees) of Monthly
Payments on Mortgage Loans with respect to which such Advances were
made in accordance with the provisions of Section 4.04;
(iii) subject to Section 3.16(d), to pay the Master Servicer or any
Sub-Servicer (a) any unpaid Servicing Fees or (b) any unreimbursed
Servicing Advances with respect to each Mortgage Loan, but only to the
extent of any Late Collections, Liquidation Proceeds, Insurance
Proceeds or other amounts as may be collected by the Master Servicer
from a Mortgagor, or otherwise received with respect to such Mortgage
Loan;
(iv) to pay to the Master Servicer as servicing compensation (in
addition to the Servicing Fee) on the Master Servicer Remittance Date
any interest or investment income earned on funds deposited in the
Collection Account;
(v) to pay to the Master Servicer or the Seller, as the case may be,
with respect to each Mortgage Loan that has previously been purchased
or replaced pursuant to Section 2.03 or Section 3.16(c) all amounts
received thereon subsequent to the date of purchase or substitution,
as the case may be;
(vi) to reimburse the Master Servicer for any Advance or Servicing
Advance previously made which the Master Servicer has determined to be
a Nonrecoverable Advance in accordance with the provisions of Section
4.04;
(vii) to reimburse the Master Servicer or the Depositor for expenses
incurred by or reimbursable to the Master Servicer or the Depositor,
as the case may be, pursuant to Section 6.03;
(viii) to reimburse the NIMs Insurer, the Master Servicer or the
Trustee, as the case may be, for enforcement expenses reasonably
incurred in respect of the breach or defect giving rise to the
purchase obligation under Section 2.03 of this Agreement that were
included in the Purchase Price of the Mortgage Loan, including any
expenses arising out of the enforcement of the purchase obligation;
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(ix) to pay, or to reimburse the Master Servicer for advances in
respect of, expenses incurred in connection with any Mortgage Loan
pursuant to Section 3.16(b); and
(x) to clear and terminate the Collection Account pursuant to
Section 9.01.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (v), (vi), (viii) and (ix) above. The
Master Servicer shall provide written notification to the NIMs Insurer and the
Trustee, on or prior to the next succeeding Master Servicer Remittance Date,
upon making any withdrawals from the Collection Account pursuant to subclause
(vii) above.
(b) The Trustee shall, from time to time, make withdrawals from the
Distribution Account, for any of the following purposes, without priority:
(i) to make distributions to Certificateholders in accordance with
Section 4.01;
(ii) to pay to itself amounts to which it is entitled pursuant to
Section 8.05 or to pay any other Extraordinary Trust Fund Expenses;
(iii) to pay to itself any interest income earned on funds deposited
in the Distribution Account pursuant to Section 3.12(c);
(iv) to reimburse itself pursuant to Section 7.02 or pursuant to
Section 7.01 to the extent such amounts in Section 7.01 were not
reimbursed by the Master Servicer;
(v) to pay any amounts in respect of taxes pursuant to Section
10.01(g)(iv);
(vi) to remit to the Master Servicer any amount deposited in the
Distribution Account by the Master Servicer but not required to be
deposited therein in accordance with Section 3.10(d);
(vii) to pay to an Advancing Person reimbursements for Advances and/or
Servicing Advances pursuant to Section 3.27;
(viii) to clear and terminate the Distribution Account pursuant to
Section 9.01; and
(ix) to pay the PMI Insurer the PMI Insurer Fee based on information
received from the Master Servicer.
Section 3.12. Investment of Funds in the Collection Account and the
Distribution Account.
(a) The Master Servicer may direct any depository institution maintaining
the Collection Account and any REO Account (for purposes of this Section 3.12,
an "Investment Account"), and the Trustee, in its individual capacity, may
direct any depository institution maintaining the
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Distribution Account (for purposes of this Section 3.12, also an "Investment
Account"), to invest the funds in such Investment Account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee is the
obligor thereon and (ii) no later than the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement, if the Trustee is
the obligor thereon. All such Permitted Investments shall be held to maturity,
unless payable on demand. Any investment of funds in an Investment Account shall
be made in the name of the Trustee (in its capacity as such), or in the name of
a nominee of the Trustee. The Trustee shall be entitled to sole possession
(except with respect to investment direction of funds held in the Collection
Account and any REO Account and any income and gain realized thereon) over each
such investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, together
with any document of transfer necessary to transfer title to such investment to
the Trustee or its nominee. In the event amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the Trustee shall:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an amount
equal to the lesser of (1) all amounts then payable thereunder
and (2) the amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly upon actual
notice by a Responsible Officer of the Trustee that such
Permitted Investment would not constitute a Permitted Investment
in respect of funds thereafter on deposit in the Investment
Account.
(b) All income and gain realized from the investment of funds deposited in
the Collection Account and any REO Account held by or on behalf of the Master
Servicer shall be for the benefit of the Master Servicer and shall be subject to
its withdrawal in accordance with Section 3.11 or Section 3.23, as applicable.
The Master Servicer shall deposit in the Collection Account or any REO Account,
as applicable, the amount of any loss of principal incurred in respect of any
such Permitted Investment made with funds in such accounts immediately upon
realization of such loss.
(c) All income and gain realized from the investment of funds deposited in
the Distribution Account held by or on behalf of the Trustee shall be for the
benefit of the Trustee and shall be subject to its withdrawal at any time. The
Trustee shall deposit in the Distribution Account, the amount of any loss of
principal incurred in respect of any such Permitted Investment made with funds
in such accounts immediately upon realization of such loss.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may, and subject to Section 8.01 and Section 8.02(v),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates shall, take such action
as may be appropriate
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to enforce such payment or performance, including the institution and
prosecution of appropriate proceedings.
Section 3.13. [Reserved].
Section 3.14. Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each Mortgage Loan
fire insurance with extended coverage on the related Mortgaged Property in an
amount which is at least equal to the least of (i) the then current principal
balance of such Mortgage Loan, (ii) the amount necessary to fully compensate for
any damage or loss to the improvements that are a part of such property on a
replacement cost basis and (iii) the maximum insurable value of the improvements
which are a part of such Mortgaged Property, in each case in an amount not less
than such amount as is necessary to avoid the application of any coinsurance
clause contained in the related hazard insurance policy. The Master Servicer
shall also cause to be maintained fire insurance with extended coverage on each
REO Property in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements which are a part of such property
and (ii) the outstanding principal balance of the related Mortgage Loan at the
time it became an REO Property, plus accrued interest at the Mortgage Rate and
related Servicing Advances. The Master Servicer will comply in the performance
of this Agreement with all reasonable rules and requirements of each insurer
under any such hazard policies. Any amounts to be collected by the Master
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or amounts
to be released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing loans held for its own account,
subject to the terms and conditions of the related Mortgage and Mortgage Note)
shall be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.11, if received in respect of a Mortgage Loan, or in the REO Account,
subject to withdrawal pursuant to Section 3.23, if received in respect of an REO
Property. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance is
to be required of any Mortgagor 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 Mortgaged Property or REO Property is at any time
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards and flood insurance has been
made available, the Master Servicer will cause to be maintained a flood
insurance policy in respect thereof. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid principal balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance available for the related
Mortgaged Property under the national flood insurance program (assuming that the
area in which such Mortgaged Property is located is participating in such
program).
In the event that the Master Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of A:X or better in Best's
Key Rating Guide (or such other rating that is comparable to such rating)
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences
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of this Section 3.14, it being understood and agreed that such policy may
contain a deductible clause, in which case the Master Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of this
Section 3.14, and there shall have been one or more losses which would have been
covered by such policy, deposit to the Collection Account from its own funds the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to prepare and present, on behalf of
itself, the Trustee and Certificateholders, claims under any such blanket policy
in a timely fashion in accordance with the terms of such policy.
(b) The Master Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac if it were the purchaser of
the Mortgage Loans, unless the Master Servicer has obtained a waiver of such
requirements from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. The Master Servicer shall also
maintain a fidelity bond in the form and amount that would meet the requirements
of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, unless the Master Servicer has obtained a waiver
of such requirements from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. The Master Servicer shall
provide the Trustee and the NIMs Insurer (upon such party's reasonable request)
with copies of any such insurance policies and fidelity bond. The Master
Servicer shall be deemed to have complied with this provision if an Affiliate of
the Master Servicer has such errors and omissions and fidelity bond coverage
and, by the terms of such insurance policy or fidelity bond, the coverage
afforded thereunder extends to the Master Servicer. Any such errors and
omissions policy and fidelity bond shall by its terms not be cancelable without
thirty days' prior written notice to the Trustee. The Master Servicer shall also
cause each Sub-Servicer to maintain a policy of insurance covering errors and
omissions and a fidelity bond meeting such requirements.
Section 3.15. Enforcement of Due-On-Sale Clauses; Assumption Agreements.
The Master Servicer shall, to the extent it has knowledge of any conveyance
or prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that the
Master Servicer shall not be required to take such action if in its sole
business judgment the Master Servicer believes it is not in the best interests
of the Trust Fund and shall not exercise any such rights if prohibited by law
from doing so. If the Master Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, or if any of the other
conditions set forth in the proviso to the preceding sentence apply, the Master
Servicer will enter into an assumption and modification agreement from or with
the person to whom such property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. The Master Servicer may also enter into a substitution of
liability agreement with such person, pursuant to which the original Mortgagor
is released from liability and such person is substituted as the Mortgagor and
becomes liable under the Mortgage Note, provided that no such substitution shall
be effective unless such person satisfies the underwriting criteria of the
Master Servicer and has a credit
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risk rating at least equal to that of the original Mortgagor. In connection with
any assumption, modification or substitution, the Master Servicer shall apply
such underwriting standards and follow such practices and procedures as shall be
normal and usual in its general mortgage servicing activities and as it applies
to other mortgage loans owned solely by it. The Master Servicer shall not take
or enter into any assumption and modification agreement, however, unless (to the
extent practicable under the circumstances) it shall have received confirmation,
in writing, of the continued effectiveness of any applicable hazard insurance
policy, or a new policy meeting the requirements of this Section is obtained.
Any fee collected by the Master Servicer in respect of any assumption or
substitution of liability agreement will be retained by the Master Servicer as
additional servicing compensation. In connection with any such assumption, no
material term of the Mortgage Note (including but not limited to the related
Mortgage Rate and the amount of the Monthly Payment) may be amended or modified,
except as otherwise required pursuant to the terms thereof. The Master Servicer
shall notify the NIMs Insurer, the Trustee that any such substitution,
modification or assumption agreement has been completed by forwarding to the
Trustee (with a copy to the NIMs Insurer), the executed original of such
substitution or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Master Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.15, the term
"assumption" is deemed to also include a sale of the Mortgaged Property subject
to the Mortgage that is not accompanied by an assumption or substitution of
liability agreement.
Section 3.16. Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01, to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans (including selling any such Mortgage Loan rather than converting the
ownership of the related properties if such sale would maximize the timely and
complete recovery of principal and interest on the related Mortgage Note in
accordance with the servicing standard set forth in Section 3.01) as come into
and continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments pursuant to Section 3.07. The Master
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that such costs and expenses will
constitute and be recoverable as Servicing Advances by the Master Servicer as
contemplated in Section 3.11 and Section 3.23. The foregoing is subject to the
provision that, in any case in which Mortgaged Property shall have suffered
damage from an Uninsured Cause, the Master Servicer shall not be required to
expend its own funds toward the restoration of such property unless it shall
determine in its sole and absolute discretion that such restoration will
increase the proceeds of liquidation of the related Mortgage Loan after
reimbursement to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or any
other provision of this Agreement, with respect to any Mortgage Loan as to which
the Master Servicer has received
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actual notice of, or has actual knowledge of, the presence of any toxic or
hazardous substance on the related Mortgaged Property, the Master Servicer shall
not, on behalf of the Trustee, either (i) obtain title to such Mortgaged
Property as a result of or in lieu of foreclosure or otherwise or (ii) otherwise
acquire possession of, or take any other action with respect to, such Mortgaged
Property, if, as a result of any such action, the Trustee, the Trust Fund or the
Certificateholders would be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Master Servicer has also previously
determined, based on its reasonable judgment and a report prepared by a Person
who regularly conducts environmental audits using customary industry standards,
that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Fund to take such actions as are necessary to
bring the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based
materials for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any federal, state or
local law or regulation, or that if any such materials are present for
which such action could be required, that it would be in the best
economic interest of the Trust Fund to take such actions with respect
to the affected Mortgaged Property.
Notwithstanding the foregoing, if such environmental audit reveals, or if
the Master Servicer has knowledge or notice, that such Mortgaged Property
contains such wastes or substances or is within one mile of the site of such
wastes or substances, the Master Servicer shall not foreclose or accept a deed
in lieu of foreclosure without the prior written consent of the NIMs Insurer.
The cost of the environmental audit report contemplated by this Section
3.16 shall be advanced by the Master Servicer, subject to the Master Servicer's
right to be reimbursed therefor from the Collection Account as provided in
Section 3.11(a)(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans. It is understood
by the parties hereto that any such advance will constitute a Servicing Advance.
If the Master Servicer determines, as described above, that it is in the
best economic interest of the Trust Fund to take such actions as are necessary
to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection
73
Account as provided in Section 3.11(a)(ix), such right of reimbursement being
prior to the rights of Certificateholders to receive any amount in the
Collection Account received in respect of the affected Mortgage Loan or other
Mortgage Loans. It is understood by the parties hereto that any such advance
will constitute a Servicing Advance.
(c) The Master Servicer may at its option purchase from REMIC 1 any
Mortgage Loan or related REO Property that is 90 days or more delinquent, which
the Master Servicer determines in good faith will otherwise become subject to
foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee prior to purchase), at a price equal to the Purchase
Price; provided, however, that the Master Servicer shall purchase any such
Mortgage Loans or related REO Properties on the basis of delinquency, purchasing
the most delinquent Mortgage Loans or related REO Properties first. The Purchase
Price for any Mortgage Loan or related REO Property purchased hereunder shall be
deposited in the Collection Account, and the Trustee, upon receipt of written
certification from the Master Servicer of such deposit, shall release or cause
to be released to the Master Servicer the related Mortgage File and the Trustee
shall execute and theTrustee shall deliver such instruments of transfer or
assignment, in each case without recourse, as the Master Servicer shall furnish
and as shall be necessary to vest in the Master Servicer title to any Mortgage
Loan or related REO Property released pursuant hereto.
(d) Proceeds received (other than any Prepayment Charges received) in
connection with any Final Recovery Determination, as well as any recovery
resulting from a partial collection of Insurance Proceeds or Liquidation
Proceeds, in respect of any Mortgage Loan, will be applied in the following
order of priority: FIRST, to reimburse the Master Servicer or any Sub-Servicer
for any related unreimbursed Servicing Advances and Advances, pursuant to
Section 3.11(a)(ii) or (a)(iii); SECOND, to accrued and unpaid interest on the
Mortgage Loan, to the date of the Final Recovery Determination, or to the Due
Date prior to the Distribution Date on which such amounts are to be distributed
if not in connection with a Final Recovery Determination; and THIRD, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than the full amount of accrued and unpaid
interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Master Servicer as follows: FIRST, to unpaid Servicing Fees;
and SECOND, to the balance of the interest then due and owing. The portion of
the recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Master Servicer or any Sub-Servicer pursuant to Section 3.11(a)(iii).
Section 3.17. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Master Servicer will immediately notify
the Trustee by a certification in the form of Exhibit E-2 (which certification
shall include a statement to the effect that all amounts received or to be
received in connection with such payment which are required to be deposited in
the Collection Account pursuant to Section 3.10 have been or will be so
deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File. Upon receipt of such certification and request, the Trustee shall
promptly release the related Mortgage File to the Master Servicer. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account.
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(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any
insurance policy relating to the Mortgage Loans, the Trustee shall, upon request
of the Master Servicer and delivery to the Trustee of a Request for Release in
the form of Exhibit E-l, release the related Mortgage File to the Master
Servicer, and the Trustee shall, at the direction of the Master Servicer,
execute such documents as shall be necessary to the prosecution of any such
proceedings and the Master Servicer shall retain such Mortgage File in trust for
the benefit of the Certificateholders. Such Request for Release shall obligate
the Master Servicer to return each and every document previously requested from
the Mortgage File to the Trustee when the need therefor by the Master Servicer
no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or the Mortgage File or such document has been delivered to
an attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Master Servicer has delivered to the Trustee a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a certificate of a Servicing Officer stating that such
Mortgage Loan was liquidated and that all amounts received or to be received in
connection with such liquidation that are required to be deposited into the
Collection Account have been so deposited, or that such Mortgage Loan has become
an REO Property, a copy of the Request for Release shall be released by the
Trustee to the Master Servicer or its designee.
(c) Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Master Servicer any court pleadings, requests for
trustee's sale or other documents reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity, or shall exercise and deliver to the Master Servicer a power of attorney
sufficient to authorize the Master Servicer to execute such documents on its
behalf, provided that the Trustee shall be obligated to execute the documents
identified above if necessary to enable the Master Servicer to perform its
duties hereunder. Each such certification shall include a request that such
pleadings or documents be executed by the Trustee and a statement as to the
reason such documents or pleadings are required.
Section 3.18. Servicing Compensation.
As compensation for the activities of the Master Servicer hereunder, the
Master Servicer shall be entitled to the Servicing Fee with respect to each
Mortgage Loan payable solely from payments of interest in respect of such
Mortgage Loan, subject to Section 3.24. In addition, the Master Servicer shall
be entitled to recover unpaid Servicing Fees out of Late Collections, Insurance
Proceeds or Liquidation Proceeds to the extent permitted by Section 3.11(a)(iii)
and out of amounts derived from the operation and sale of an REO Property to the
extent permitted by Section 3.23. The right to receive the Servicing Fee may not
be transferred in whole or in part except in connection with the transfer of all
of the Master Servicer's responsibilities and obligations under this Agreement;
provided, however, that the Master Servicer may pay from the Servicing Fee any
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amounts due to a Sub-Servicer pursuant to a Sub-Servicing Agreement entered into
under Section 3.02.
Additional servicing compensation in the form of assumption or modification
fees, late payment charges, NSF fees, reconveyance fees and other similar fees
and charges (other than Prepayment Charges) shall be retained by the Master
Servicer (subject to Section 3.24) only to the extent such fees or charges are
received by the Master Servicer. The Master Servicer shall also be entitled
pursuant to Section 3.11(a)(iv) to withdraw from the Collection Account, and
pursuant to Section 3.23(b) to withdraw from any REO Account, as additional
servicing compensation, interest or other income earned on deposits therein,
subject to Section 3.12. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including premiums for the insurance required by Section 3.14, to the extent
such premiums are not paid by the related Mortgagors or by a Sub-Servicer, it
being understood however, that payment of such premiums by the Master Servicer
shall constitute Servicing Advances and servicing compensation of each
Sub-Servicer, and to the extent provided herein and in Section 8.05, the fees
and expenses of the Trustee) and shall not be entitled to reimbursement therefor
except as specifically provided herein.
Section 3.19. Reports to the Trustee; Collection Account Statements.
Not later than fifteen days after each Distribution Date, the Master
Servicer shall forward to the NIMs Insurer, the Trustee and the Depositor a
statement prepared by the Master Servicer setting forth the status of the
Collection Account as of the close of business on such Distribution Date and
showing, for the period covered by such statement, the aggregate amount of
deposits into and withdrawals from the Collection Account of each category of
deposit specified in Section 3.10(a) and each category of withdrawal specified
in Section 3.11. Such statement may be in the form of the then current ▇▇▇▇▇▇
▇▇▇ Monthly Accounting Report for its Guaranteed Mortgage Pass-Through Program
with appropriate additions and changes, and shall also include information as to
the aggregate of the outstanding principal balances of all of the Mortgage Loans
as of the last day of the calendar month immediately preceding such Distribution
Date. Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Master Servicer to the
Trustee.
Section 3.20. Statement as to Compliance.
The Master Servicer shall deliver to the NIMs Insurer, the Trustee, the
Depositor and each Rating Agency on or before April 15 of each calendar year
commencing in 2002, an Officers' Certificate stating, as to each signatory
thereof, that (i) a review of the activities of the Master Servicer during the
preceding year and of performance under this Agreement has been made under such
officers' supervision and (ii) to the best of such officers' knowledge, based on
such review, the Master Servicer has fulfilled all of its obligations under this
Agreement throughout such 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. Copies of any such statement shall be
provided by the Trustee to any Certificateholder and to any Person identified to
the Trustee as a prospective
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transferee of a Certificate, upon the request and at the expense of the
requesting party, provided that such statement is delivered by the Master
Servicer to the Trustee.
Section 3.21. Independent Public Accountants' Servicing Report.
Not later than April 15 of each calendar year commencing in 2002, the
Master Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Master Servicer a
report stating that (i) it has obtained a letter of representation regarding
certain matters from the management of the Master Servicer which includes an
assertion that the Master Servicer has complied with certain minimum residential
mortgage loan servicing standards, identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association of
America, with respect to the servicing of residential mortgage loans during the
most recently completed fiscal year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of residential mortgage loans by
Sub-Servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Sub-Servicers. Immediately upon receipt of such report, the Master
Servicer shall furnish a copy of such report to the NIMs Insurer, the Trustee
and each Rating Agency. Copies of such statement shall be provided by the
Trustee to any Certificateholder upon request at the Master Servicer's expense,
provided that such statement is delivered by the Master Servicer to the Trustee.
In the event such firm of independent certified public accountants requires the
Trustee to agree to the procedures performed by such firm, the Master Servicer
shall direct the Trustee in writing to so agree; it being understood and agreed
that the Trustee will deliver such letter of agreement in conclusive reliance
upon the direction of the Master Servicer, and the Trustee has not made any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures.
Section 3.22. Access to Certain Documentation.
The Master Servicer shall provide to the Office of Thrift Supervision, the
FDIC, and any other federal or state banking or insurance regulatory authority
that may exercise authority over any Certificateholder, access to the
documentation regarding the Mortgage Loans serviced by the Master Servicer under
this Agreement, as may be required by applicable laws and regulations. Such
access shall be afforded without charge, but only upon reasonable request and
during normal business hours at the offices of the Master Servicer designated by
it. In addition, access to the documentation regarding the Mortgage Loans
serviced by the Master Servicer under this Agreement will be provided to any
Certificateholder, the NIMs Insurer, the Trustee and to any Person identified to
the Master Servicer as a prospective transferee of a Certificate, upon
reasonable request during normal business hours at the offices of the Master
Servicer designated by it at the expense of the Person requesting such access.
Section 3.23. Title, Management and Disposition of REO Property.
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(a) The deed or certificate of sale of any REO Property shall be taken in
the name of the Trustee, or its nominee, in trust for the benefit of the
Certificateholders. The Master Servicer, on behalf of REMIC 1 (and on behalf of
the Trustee for the benefit of the Certificateholders), shall either sell any
REO Property before the close of the third taxable year after the year REMIC 1
acquires ownership of such REO Property for purposes of Section 860G(a)(8) of
the Code or request from the Internal Revenue Service, no later than 60 days
before the day on which the three-year grace period would otherwise expire, an
extension of the three-year grace period, unless the Master Servicer shall have
delivered to the NIMs Insurer, the Trustee and the Depositor an Opinion of
Counsel, addressed to the NIMs Insurer, the Trustee and the Depositor, to the
effect that the holding by REMIC 1 of such REO Property subsequent to three
years after its acquisition will not result in the imposition on any Trust REMIC
of taxes on "prohibited transactions" thereof, as defined in Section 860F of the
Code, or cause any Trust REMIC to fail to qualify as a REMIC under Federal law
at any time that any Certificates are outstanding. The Master Servicer shall
manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by any Trust REMIC of any "income from non-permitted
assets" within the meaning of Section 860F(a)(2)(B) of the Code, or any "net
income from foreclosure property" which is subject to taxation under the REMIC
Provisions.
(b) The Master Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets and shall establish and maintain, or cause
to be established and maintained, with respect to REO Properties an account held
in trust for the Trustee for the benefit of the Certificateholders (the "REO
Account"), which shall be an Eligible Account. The Master Servicer may allow the
Collection Account to serve as the REO Account, subject to separate ledgers for
each REO Property. The Master Servicer may retain or withdraw any interest
income paid on funds deposited in the REO Account.
(c) The Master Servicer shall have full power and authority, subject only
to the specific requirements and prohibitions of this Agreement, to do any and
all things in connection with any REO Property as are consistent with the manner
in which the Master Servicer manages and operates similar property owned by the
Master Servicer or any of its Affiliates, all on such terms and for such period
as the Master Servicer deems to be in the best interests of Certificateholders.
In connection therewith, the Master Servicer shall deposit, or cause to be
deposited in the clearing account (which account must be an Eligible Account) in
which it customarily deposits payments and collections on mortgage loans in
connection with its mortgage loan servicing activities on a daily basis, and in
no event more than one Business Day after the Master Servicer's receipt thereof,
and shall thereafter deposit in the REO Account, in no event more than two
Business Days after the deposit of such funds into the clearing account, all
revenues received by it with respect to an REO Property and shall withdraw
therefrom funds necessary for the proper operation, management and maintenance
of such REO Property including, without limitation:
(i) all insurance premiums due and payable in respect of such REO
Property;
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(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO Property.
To the extent that amounts on deposit in the REO Account with respect to an
REO Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Master Servicer shall advance
from its own funds as Servicing Advances such amount as is necessary for such
purposes if, but only if, the Master Servicer would make such advances if the
Master Servicer owned the REO Property and if such Servicing Advance would not
constitute a Nonrecoverable Advance.
Notwithstanding the foregoing, neither the Master Servicer nor the Trustee
shall:
(i) authorize the Trust Fund to enter into, renew or extend any New
Lease with respect to any REO Property, if the New Lease by its terms
will give rise to any income that does not constitute Rents from Real
Property;
(ii) authorize any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real
Property;
(iii) authorize any construction on any REO Property, other than the
completion of a building or other improvement thereon, and then only
if more than ten percent of the construction of such building or other
improvement was completed before default on the related Mortgage Loan
became imminent, all within the meaning of Section 856(e)(4)(B) of the
Code; or
(iv) authorize any Person to Directly Operate any REO Property on any
date more than 90 days after its date of acquisition by the Trust
Fund;
unless, in any such case, the Master Servicer has obtained an Opinion of Counsel
(the cost of which shall constitute a Servicing Advance), provided to the NIMs
Insurer and the Trustee, to the effect that such action will not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by REMIC 1, in which
case the Master Servicer may take such actions as are specified in such Opinion
of Counsel.
The Master Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including those listed above, and remit all related revenues
(net of such costs and expenses) to the Master Servicer as
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soon as practicable, but in no event later than thirty days following
the receipt thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c) relating to any
such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Master Servicer of any of
its duties and obligations to the Trustee on behalf of the
Certificateholders with respect to the operation and management of any
such REO Property; and
(iv) the Master Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and
obligations in connection with the operation and management of such
REO Property.
The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees; provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the Master
Servicer, such amounts shall be reimbursable as Servicing Advances made by the
Master Servicer.
(d) In addition to the withdrawals permitted under Section 3.23(c), the
Master Servicer may from time to time make withdrawals from the REO Account for
any REO Property: (i) to pay itself or any Sub-Servicer unpaid Servicing Fees in
respect of the related Mortgage Loan; and (ii) to reimburse itself or any
Sub-Servicer for unreimbursed Servicing Advances and Advances made in respect of
such REO Property or the related Mortgage Loan. On the Master Servicer
Remittance Date, the Master Servicer shall withdraw from each REO Account
maintained by it and deposit into the Distribution Account in accordance with
Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a), each REO
Disposition shall be carried out by the Master Servicer at such price and upon
such terms and conditions as the Master Servicer shall deem necessary or
advisable, as shall be normal and usual in its general servicing activities for
similar properties.
(f) The proceeds from the REO Disposition, net of any amount required by
law to be remitted to the Mortgagor under the related Mortgage Loan and net of
any payment or reimbursement to the Master Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Master Servicer Remittance Date in the month
following the receipt thereof for distribution on the related Distribution Date
in accordance with Section 4.01. Any REO Disposition shall be for cash only
(unless changes in the REMIC Provisions made subsequent to the Startup Day allow
a sale for other consideration).
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(g) The Master Servicer shall file information returns with respect to the
receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
Section 3.24. Obligations of the Master Servicer in Respect of Prepayment
Interest Shortfalls.
The Master Servicer shall deliver to the Trustee for deposit into the
Distribution Account on or before 3:00 p.m. New York time on the Master Servicer
Remittance Date from its own funds an amount ("Compensating Interest") equal to
the lesser of (i) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting solely from Principal Prepayments during the
related Prepayment Period and (ii) the amount of its aggregate Servicing Fee for
the most recently ended calendar month.
Section 3.25. Obligations of the Master Servicer in Respect of Mortgage
Rates and Monthly Payments.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Monthly Payments or Stated Principal Balances that were made by
the Master Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Master Servicer, upon discovery or receipt
of notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor and
any successor master servicer in respect of any such liability. Such indemnities
shall survive the termination or discharge of this Agreement. Notwithstanding
the foregoing, this Section 3.25 shall not limit the ability of the Master
Servicer to seek recovery of any such amounts from the related Mortgagor under
the terms of the related Mortgage Note, as permitted by law.
Section 3.26. Reserve Fund.
No later than the Closing Date, the Trustee, on behalf of the
Certificateholders, shall establish and maintain with itself a separate,
segregated trust account titled, "Reserve Fund, Bankers Trust Company of
California, N.A., in trust for registered Holders of Long Beach Mortgage Loan
Trust 2001-1, Asset-Backed Certificates, Series ▇▇▇▇-▇." ▇▇ the Closing Date,
the Depositor shall deposit, or cause to be deposited, into the Reserve Fund
$1,000.
On each Distribution Date as to which there is a Net WAC Rate Carryover
Amount payable to the Class A Certificates or the Mezzanine Certificates, the
Trustee has been directed by the Class C Certificateholders to, and therefore
will, deposit into the Reserve Fund the amounts described in Section
4.01(d)(ix), rather than distributing such amounts to the Class C
Certificateholders. On each such Distribution Date, the Trustee shall hold all
such amounts for the benefit of the Holders of the Class A Certificates and the
Mezzanine Certificates, and will distribute such amounts to the Holders
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of the Class A Certificates and the Mezzanine Certificates in the amounts and
priorities set forth in Section 4.01(d). If no Net WAC Rate Carryover Amounts
are payable on a Distribution Date, the Trustee shall deposit into the Reserve
Fund on behalf of the Class C Certificateholders, from amounts otherwise
distributable to the Class C Certificateholders, an amount such that when added
to other amounts already on deposit in the Reserve Fund, the aggregate amount on
deposit therein is equal to $1,000.
For federal and state income tax purposes, the Class C Certificateholders
shall be deemed to be the owners of the Reserve Fund and all amounts deposited
into the Reserve Fund (other than the initial deposit therein of $1,000) shall
be treated as amounts distributed by REMIC 3 to the Holders of the Class C
Certificates. Upon the termination of the Trust, or the payment in full of the
Class A Certificates and the Mezzanine Certificates, all amounts remaining on
deposit in the Reserve Fund will be released by the Trustee and distributed to
the Class C Certificateholders or their designees. The Reserve Fund will be part
of the Trust but not part of any REMIC and any payments to the Holders of the
Class A Certificates or the Mezzanine Certificates of Net WAC Rate Carryover
Amounts will not be payments with respect to a "regular interest" in a REMIC
within the meaning of Code Section 860(G)(a)(1).
By accepting a Class C Certificate, each Class C Certificateholder shall be
deemed to have directed the Trustee, and the Trustee shall pursuant to such
direction, deposit into the Reserve Fund the amounts described above on each
Distribution Date as to which there is any Net WAC Rate Carryover Amount rather
than distributing such amounts to the Class C Certificateholders. By accepting a
Class C Certificate, each Class C Certificateholder further agrees that such
direction is given for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by such acceptance.
At the direction of the Holders of a majority in Percentage Interest in the
Class C Certificates, the Trustee shall direct any depository institution
maintaining the Reserve Fund to invest the funds in such account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately
preceding the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if a Person other than the Trustee or an
Affiliate manages or advises such investment, and (ii) no later than the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trustee or an Affiliate manages or advises such investment. If
no investment direction of the Holders of a majority in Percentage Interest in
the Class C Certificates with respect to the Reserve Fund is received by the
Trustee, the Trustee shall invest the funds in such account in Permitted
Investments managed by the Trustee or an Affiliate of the kind described in
clause (vi) of the definition of Permitted Investments. Notwithstanding the
foregoing, any funds in the Reserve Fund shall be invested in Bankers Trust's
Institutional Cash Management Fund 1679 for so long as such investment complies
with clause (vi) of the definition of Permitted Investments. All income and gain
earned upon such investment shall be deposited into the Reserve Fund.
For federal tax return and information reporting, the right of the Holders
of the Class A Certificates and the Holders of the Mezzanine Certificates to
receive payments from the Reserve Fund in respect of any Net Wac Rate Carryover
Amount shall be assigned a value of zero.
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Section 3.27. Advance Facility.
(a) The Trustee and the Trust Fund, at the direction of the Master Servicer
and with the consent of the NIMs Insurer, is hereby authorized to enter into a
facility with any Person which provides that such Person (an "Advancing Person")
may make all or a portion of the Advances and/or Servicing Advances to the Trust
Fund under this Agreement, although no such facility shall reduce or otherwise
affect the Master Servicer's obligation to fund such Advances and/or Servicing
Advances. To the extent that an Advancing Person makes all or a portion of any
Advance or any Servicing Advance and provides the Trustee with notice
acknowledged by the Master Servicer that such Advancing Person is entitled to
reimbursement, such Advancing Person shall be entitled to receive reimbursement
pursuant to this Agreement for such amount to the extent provided in Section
3.27(b). Such notice from the Advancing Person shall specify the amount of the
reimbursement and shall specify which Section of this Agreement permits the
applicable Advance or Servicing Advance to be reimbursed. The Trustee shall be
entitled to rely without independent investigation on the Advancing Person's
statement with respect to the amount of any reimbursement pursuant to this
Section 3.27 and with respect to the Advancing Person's statement with respect
to the Section of this Agreement that permits the applicable Advance or
Servicing Advance to be reimbursed. An Advancing Person whose obligations are
limited to the making of Advances and/or Servicing Advances shall not be
required to meet the qualifications of a Master Servicer or a Sub-Servicer
pursuant to Section 6.06 hereof and will not be deemed to be a Sub-Servicer
under this Agreement. If the terms of a facility proposed to be entered into
with an Advancing Person by the Trust Fund would not materially and adversely
affect the interests of any Certificateholder, then the NIMs Insurer shall not
withhold its consent to the Trust Fund's entering into such facility.
(b) If an advancing facility is entered into, then the Master Servicer
shall not be permitted to reimburse itself under any Section specified or for
any amount specified by the Advancing Person in the notice described under
Section 3.27(a) above and acknowledged by the Master Servicer prior to the
remittance to the Trust Fund, but instead the Master Servicer shall include such
amounts in the applicable remittance to the Trustee made pursuant to Section
3.10(a). The Trustee is hereby authorized to pay to the Advancing Person
reimbursements for Advances and Servicing Advances from the Distribution Account
to the same extent the Master Servicer would have been permitted to reimburse
itself for such Advances and/or Servicing Advances in accordance with the
specified Sections had the Master Servicer itself made such Advance or Servicing
Advance. The Trustee is hereby authorized to pay directly to the Advancing
Person such portion of the Servicing Fee as the parties to any advancing
facility may agree.
(c) All Advances and Servicing Advances made pursuant to the terms of this
Agreement shall be deemed made and shall be reimbursed on a "first in-first out"
(FIFO) basis.
Section 3.28. PMI Policy; Claims Under the PMI Policy.
Notwithstanding anything to the contrary elsewhere in this Article III, the
Master Servicer shall not agree to any modification or assumption of a PMI
Mortgage Loan or take any other action with respect to a PMI Mortgage Loan that
could result in denial of coverage under the PMI Policy. The Master Servicer
shall notify the PMI Insurer that the Trustee, on behalf of the
Certificateholders, is the insured, as that term is defined in the PMI Policy,
of each PMI Mortgage Loan. The Master
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Servicer shall, on behalf of the Trustee, prepare and file on a timely basis
with the PMI Insurer, with a copy to the Trustee, all claims which may be made
under the PMI Policy with respect to the PMI Mortgage Loans. The Master Servicer
shall take all actions required under the PMI Policy as a condition to the
payment of any such claim. Any amount received from the PMI Insurer with respect
to any such PMI Mortgage Loan shall be deposited by the Master Servicer, no
later than two Business Days following receipt thereof, into the Collection
Account.
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ARTICLE IV
FLOW OF FUNDS
Section 4.01. Distributions.
(a) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account that portion of the Available Funds for such Distribution
Date consisting of the Interest Remittance Amount for such Distribution Date,
and make the following disbursements and transfers in the order of priority
described below, in each case to the extent of the Interest Remittance Amount
(or, in the case of clause (i) and clause (ii), to the extent of the applicable
specified portion of the Interest Remittance Amount) remaining for such
Distribution Date:
(i) the portion of the Interest Remittance Amount attributable to the
Group I Mortgage Loans will be distributed in the following priority:
(A) FIRST, CONCURRENTLY, to pay the Class S Certificates the
Group I Class S Monthly Interest Distributable Amount and any
Group I Class S Unpaid Interest Shortfall Amount and to pay the
Class A-1 Certificates the Monthly Interest Distributable Amount
and any Unpaid Interest Shortfall Amount for the Class A-1
Certificates, allocated between the Class A-1 Certificates and
the Class S Certificates on a PRO RATA basis based on entitlement
pursuant to this clause (A); and
(B) SECOND, CONCURRENTLY, to pay the Class S Certificates the
Group II Class S Monthly Interest Distributable Amount and any
Group II Class S Unpaid Interest Shortfall Amount and to pay the
Class A-2 Certificates the Monthly Interest Distributable Amount
and any Unpaid Interest Shortfall Amount for the Class A-2
Certificates, in each case to the extent not paid pursuant to
Section 4.01(a)(ii)(A) below, allocated between the Class A-2
Certificates and the Class S Certificates on a PRO RATA basis
based on entitlement pursuant to this clause (B);
(ii) the portion of the Interest Remittance Amount attributable to the
Group I Mortgage Loans will be distributed:
(A) FIRST, CONCURRENTLY, to pay the Class S Certificates the
Group II Class S Monthly Interest Distributable Amount and any
Group II Class S Unpaid Interest Shortfall Amount and to pay the
Class A-2 Certificates the Monthly Interest Distributable Amount
and any Unpaid Interest Shortfall Amount for the Class A-2
Certificates, allocated between the Class A-2 Certificates and
the Class S Certificates on a PRO RATA basis based on entitlement
pursuant to this clause (A); and
(B) SECOND, CONCURRENTLY, to pay the Class S Certificates the
Group I Class S Monthly Interest Distributable Amount and any
Group I Class S Unpaid
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Interest Shortfall Amount and to pay the Class A-1 Certificates
the Monthly Interest Distributable Amount and any Unpaid Interest
Shortfall Amount for the Class A-1 Certificates, in each case to
the extent not paid pursuant to Section 4.01(a)(i)(A) above,
allocated between the Class A-1 Certificates and the Class S
Certificates on a PRO RATA basis based on entitlement pursuant to
this clause (B); and
(iii) the portion of the Interest Remittance Amount remaining
undistributed following the distributions pursuant to clauses (i) and (ii)
above will be distributed:
FIRST, to the Holders of the Class M-1 Certificates, the related
Monthly Interest Distributable Amount for such Class for such
Distribution Date;
SECOND, to the Holders of the Class M-2 Certificates, the related
Monthly Interest Distributable Amount for such Class for such
Distribution Date; and
THIRD, to the Holders of the Class M-3 Certificates, the related
Monthly Interest Distributable Amount for such Class for such
Distribution Date.
(b) On each Distribution Date (a) prior to the Stepdown Date or (b) on
which a Trigger Event is in effect, the Holders of the Class A Certificates and
Mezzanine Certificates shall be entitled to receive distributions in respect of
principal to the extent of the Principal Distribution Amount in the following
amounts and order of priority:
(i) FIRST, to the Holders of the Class A Certificates, allocated
between the Classes of Class A Certificates as set forth in Section
4.01(e), until the Certificate Principal Balances thereof have been reduced
to zero;
(ii) SECOND, to the Holders of the Class M-1 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
(iii) THIRD, to the Holders of the Class M-2 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; and
(iv) FOURTH, to the Holders of the Class M-3 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero.
(c) On each Distribution Date (a) on or after the Stepdown Date and (b) on
which a Trigger Event is not in effect, the Holders of the Class A Certificates
and Mezzanine Certificates shall be entitled to receive distributions in respect
of principal to the extent of the Principal Distribution Amount in the following
amounts and order of priority:
(i) FIRST, to the Holders of the Class A Certificates, the Class A
Principal Distribution Amount, allocated between the Classes of Class A
Certificates as set forth in Section 4.01(e), until the Certificate
Principal Balances thereof have been reduced to zero;
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(ii) SECOND, to the Holders of the Class M-1 Certificates, the Class
M-1 Principal Distribution Amount, until the Certificate Principal Balance
of such Class has been reduced to zero;
(iii) THIRD, to the Holders of the Class M-2 Certificates, the Class
M-2 Principal Distribution Amount, until the Certificate Principal Balance
of such Class has been reduced to zero; and
(ii) FOURTH, to the Holders of the Class M-3 Certificates, the Class
M-3 Principal Distribution Amount, until the Certificate Principal Balance
of such Class has been reduced to zero.
(d) On each Distribution Date, any Net Monthly Excess Cashflow shall be
paid in the following order or priority, in each case to the extent of the Net
Monthly Excess Cashflow remaining undistributed:
(i) to the Holders of the Class or Classes of Certificates then
entitled to receive distributions in respect of principal, in an amount
equal to any Extra Principal Distribution Amount, payable to such Holders
as part of the Principal Distribution Amount pursuant to Section 4.01(b) or
Section 4.01(c) above;
(ii) to the Holders of the Class A-2 Certificates, in an amount equal
to the Unpaid Interest Shortfall Amount, if any, for such Class for such
Distribution Date;
(iii) to the Holders of the Class M-1 Certificates, in an amount equal
to the Unpaid Interest Shortfall Amount, if any, for such Class for such
Distribution Date;
(iv) to the Holders of the Class M-1 Certificates, in an amount equal
to the Allocated Realized Loss Amount, if any, for such Class for such
Distribution Date;
(v) to the Holders of the Class M-2 Certificates, in an amount equal
to the Unpaid Interest Shortfall Amount, if any, for such Class for such
Distribution Date;
(vi) to the Holders of the Class M-2 Certificates, in an amount equal
to the Allocated Realized Loss Amount, if any, for such Class for such
Distribution Date;
(vii) to the Holders of the Class M-3 Certificates, in an amount equal
to the Unpaid Interest Shortfall Amount, if any, for such Class for such
Distribution Date;
(viii) to the Holders of the Class M-3 Certificates, in an amount
equal to the Allocated Realized Loss Amount, if any, for such Class for
such Distribution Date;
(ix) to the Reserve Fund, the amount of any Net WAC Rate Carryover
Amounts with respect to the Class A Certificates and Mezzanine Certificates
for such Distribution Date (or, if no Net WAC Rate Carryover Amounts are
payable on such Distribution Date,
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to the Reserve Fund, an amount such that when added to other amounts
already on deposit in the Reserve Fund, the aggregate amount on deposit
therein is equal to $1,000);
(x) to the Holders of the Class C Certificates, the Monthly Interest
Distributable Amount for such Class and any Overcollateralization Release
Amount for such Distribution Date (net of such portion of amounts payable
pursuant to this clause (ix) that were paid pursuant to clause (viii)
above;
(xi) if such Distribution Date follows the Prepayment Period during
which occurs the latest date on which a Prepayment Charge may be required
to be paid in respect of any Mortgage Loans, to the Holders of the Class P
Certificates, in reduction of the Certificate Principal Balance thereof,
until the Certificate Principal Balance thereof is reduced to zero; and
(xii) any remaining amounts to the Holders of the Residual
Certificates (in respect of the appropriate Class R Interest).
On each Distribution Date, after making the distributions of the Available
Funds as provided above, the Trustee shall withdraw from the Reserve Fund the
amount on deposit therein and shall distribute such amounts to the Holders of
the Class A Certificates and the Mezzanine Certificates in the following order
and priority, in each case to the extent of amounts remaining in the Reserve
Fund and in each case to the extent of the Net WAC Carryforward Amount for such
Class or Classes for such Distribution Date: first, to the Class A Certificates,
on a PRO RATA basis based on the Net WAC Rate Carryforward Amount for each Class
of Class A Certificates for such Distribution Date; second, to the Class M-1
Certificates; third, to the Class M-2 Certificates; and fourth, to the Class M-3
Certificates. Any remaining amount shall be re-deposited into the Reserve Fund
(to the extent of the required amount of $1,000).
On each Distribution Date, all amounts representing Prepayment Charges in
respect of the Mortgage Loans received during the related Prepayment Period and
any Master Servicer Prepayment Charge Amounts paid by or collected by the Master
Servicer during the related Prepayment Period will be withdrawn from the
Distribution Account and distributed by the Trustee to the Holders of the Class
P Certificates and shall not be available for distribution to the Holders of any
other Class of Certificates. The payment of the foregoing amounts to the Holders
of the Class P Certificates shall not reduce the Certificate Principal Balances
thereof.
Without limiting the provisions of Section 9.01(b), by acceptance of the
Residual Certificates, the Holders of the Residual Certificates agree, for so
long as (i) the NIM Notes are outstanding or any amounts are reimbursable or
payable to the NIMs Insurer in accordance with the terms of the Indenture and
(ii) a Note Insurer Default (as defined in the Indenture) shall not have
occurred and be continuing, in connection with any amount distributable to the
Holders of the Residual Certificates pursuant to clause (xii) above, to assign
and transfer any such amounts, and to the extent received to pay any such
amounts, to the Holders of the Class C Certificates.
(e) All principal distributions to the Holders of the Class A Certificates
on any Distribution Date will be allocated between the Class A-1 Certificates
and the Class A-2 Certificates
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on a PRO RATA basis based on the Class A Principal Allocation Percentage for
each such Class for such Distribution Date; provided, however, that if the
Certificate Principal Balance of either Class of Class A Certificates is reduced
to zero, then the remaining amount of principal distributions distributable to
the Holders of the Class A Certificates on such Distribution Date, and the
amount of principal distributions distributable to the Holders of the Class A
Certificates on all subsequent Distribution Dates, will be distributed to the
holders of the Class of Class A Certificates remaining outstanding, until the
Certificate Principal Balance of such Class of Class A Certificates remaining
outstanding has been reduced to zero.
(f) All distributions made with respect to each Class of Certificates on
each Distribution Date shall be allocated PRO RATA among the outstanding
Certificates in such Class based on their respective Percentage Interests.
Payments in respect of each Class of Certificates on each Distribution Date will
be made to the Holders of the respective Class of record on the related Record
Date (except as otherwise provided in Section 4.01(e) or Section 9.01 respecting
the final distribution on such Class), based on the aggregate Percentage
Interest represented by their respective Certificates, and shall be made by wire
transfer of immediately available funds to the account of any such Holder at a
bank or other entity having appropriate facilities therefor, if such Holder
shall have so notified the Trustee in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and is the
registered owner of Certificates having an initial aggregate Certificate
Principal Balance or Notional Amount that is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the initial Certificate Principal Balance or
Notional Amount of such Class of Certificates, or otherwise by check mailed by
first class mail to the address of such Holder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office of the Trustee or such other location specified in the
notice to Certificateholders of such final distribution.
Each distribution with respect to a Book-Entry Certificate shall be paid to
the Depository, which shall credit the amount of such distribution to the
accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Certificates. None of the Trustee, the Depositor, the Master Servicer or the
Seller shall have any responsibility therefor except as otherwise provided by
applicable law.
(g) The rights of the Certificateholders to receive distributions in
respect of the Certificates, and all interests of the Certificateholders in such
distributions, shall be as set forth in this Agreement. None of the Holders of
any Class of Certificates, the Trustee or the Master Servicer shall in any way
be responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.
(h) Except as otherwise provided in Section 9.01, whenever the Trustee
expects that the final distribution with respect to any Class of Certificates
will be made on the next Distribution Date,
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the Trustee shall, no later than three (3) days before the related Distribution
Date, mail to the NIMs Insurer and each Holder on such date of such Class of
Certificates a notice to the effect that:
(i) the Trustee expects that the final distribution with respect to
such Class of Certificates will be made on such Distribution Date but only
upon presentation and surrender of such Certificates at the office of the
Trustee therein specified, and
(ii) no interest shall accrue on such Certificates from and after the
end of the related Accrual Period.
Any funds not distributed to any Holder or Holders of Certificates of such
Class on such Distribution Date because of the failure of such Holder or Holders
to tender their Certificates shall, on such date, be set aside and held in trust
by the Trustee and credited to the account of the appropriate non-tendering
Holder or Holders. If any Certificates as to which notice has been given
pursuant to this Section 4.01(h) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non- tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee shall, directly or through an agent, mail a final
notice to the remaining non-tendering Certificateholders concerning surrender of
their Certificates but shall continue to hold any remaining funds for the
benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust fund. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to Greenwich Capital Markets, Inc. all such
amounts, and all rights of non-tendering Certificateholders in or to such
amounts shall thereupon cease. No interest shall accrue or be payable to any
Certificateholder on any amount held in trust by the Trustee as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 4.01(h).
(i) Notwithstanding anything to the contrary herein, (i) in no event shall
the Certificate Principal Balance of a Class A Certificate or a Mezzanine
Certificate be reduced more than once in respect of any particular amount both
(a) allocated to such Certificate in respect of Realized Losses pursuant to
Section 4.06 and (b) distributed to the Holder of such Certificate in reduction
of the Certificate Principal Balance thereof pursuant to this Section 4.01 from
Net Monthly Excess Cashflow, (ii) in no event shall the Uncertificated Principal
Balance of a REMIC 2 Regular Interest be reduced more than once in respect of
any particular amount both (a) allocated to such REMIC 2 Regular Interest in
respect of Realized Losses pursuant to Section 4.06 and (b) distributed on such
REMIC 2 Regular Interest in reduction of the Uncertificated Principal Balance
thereof pursuant to this Section 4.05 and (iii) in no event shall the
Uncertificated Principal Balance of a REMIC 1 Regular Interest be reduced more
than once in respect of any particular amount both (a) allocated to such REMIC 1
Regular Interest in respect of Realized Losses pursuant to Section 4.06 and (b)
distributed on such REMIC 1 Regular Interest in reduction of the Uncertificated
Principal Balance thereof pursuant to this Section 4.05.
Section 4.02. Preference Claims.
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The Trustee shall promptly notify the NIMs Insurer 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 Class C Certificates or
Class P Certificates. Each Holder of the Class C Certificates or the Class P
Certificates, by its purchase of such Certificates, the Master Servicer and the
Trustee hereby agree that the NIMs Insurer 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 NIMs Insurer
shall be subrogated to the rights of the Master Servicer, the Trustee and each
Holder of the Class C Certificates and Class P Certificates 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; provided, however, that the NIMs
Insurer will not have any rights with respect to any Preference Claim set forth
in this paragraph unless the Trustee, as indenture trustee with respect to the
NIM Notes or the holder of any NIM Notes has been required to relinquish a
distribution made on the Class C Certificates, the Class P Certificates or the
NIM Notes, as applicable, and the NIMs Insurer made a payment in respect of such
relinquished amount.
Section 4.03. Statements.
(a) On each Distribution Date, based, as applicable, on information
provided to it by the Master Servicer, the Trustee shall prepare and make
available to each Holder of the Regular Certificates, the Master Servicer, the
NIMs Insurer and the Rating Agencies, a statement as to the distributions made
on such Distribution Date:
(i) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Regular Certificates (other than the Class S
Certificates), separately identified, allocable to principal and the amount
of the distribution made to the Holders of the Class P Certificates
allocable to Prepayment Charges and Master Servicer Prepayment Charge
Payment Amounts;
(ii) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Regular Certificates (other than the Class P
Certificates) allocable to interest, separately identified;
(iii) the Overcollateralized Amount, the Overcollateralization Release
Amount, the Overcollateralization Deficiency Amount and the
Overcollateralization Target Amount as of such Distribution Date and the
Excess Overcollateralized Amount for the Mortgage Pool for such
Distribution Date;
(iv) the aggregate amount of servicing compensation received by the
Master Servicer with respect to the related Due Period and such other
customary information as the Trustee deems necessary or desirable, or which
a Certificateholder reasonably requests, to enable Certificateholders to
prepare their tax returns;
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(v) the aggregate amount of Advances for the related Due Period;
(vi) the aggregate Stated Principal Balance of the Mortgage Loans at
the Close of Business at the end of the related Due Period;
(vii) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage Rate of the
Mortgage Loans as of the related Determination Date;
(viii) the number and aggregate unpaid principal balance of Mortgage
Loans (a) delinquent 30-59 days, (b) delinquent 60-89 days, (c) delinquent
90 or more days in each case, as of the last day of the preceding calendar
month, (d) as to which foreclosure proceedings have been commenced and (e)
with respect to which the related Mortgagor has filed for protection under
applicable bankruptcy laws, with respect to whom bankruptcy proceedings are
pending or with respect to whom bankruptcy protection is in force;
(ix) with respect to any Mortgage Loan that became an REO Property
during the preceding Prepayment Period, the unpaid principal balance and
the Principal Balance of such Mortgage Loan as of the date it became an REO
Property;
(x) the total number and cumulative principal balance of all REO
Properties as of the Close of Business of the last day of the preceding
Prepayment Period;
(xi) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xii) the aggregate amount of Realized Losses incurred during the
related Prepayment Period and the cumulative amount of Realized Losses;
(xiii) the aggregate amount of Extraordinary Trust Fund expenses
withdrawn from the Collection Account or the Distribution Account for such
Distribution Date;
(xiv) the Certificate Principal Balance of the Class A Certificates,
the Mezzanine Certificates and the Class C Certificates, after giving
effect to the distributions made on such Distribution Date, and the
Notional Amount of the Class S Certificates and the Class C Certificates,
after giving effect to the distributions made on such Distribution Date;
(xv) the Monthly Interest Distributable Amount in respect of the Class
A Certificates, the Class S Certificates, the Mezzanine Certificates and
the Class C Certificates for such Distribution Date and the Unpaid Interest
Shortfall Amount, if any, with respect to the Class A Certificates, the
Class S Certificates and the Mezzanine Certificates for such Distribution
Date;
(xvi) the aggregate amount of any Prepayment Interest Shortfalls for
such Distribution Date, to the extent not covered by payments by the Master
Servicer pursuant to
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Section 3.24, and the aggregate amount of any Relief Act Interest
Shortfalls for such Distribution Date;
(xvii) the Credit Enhancement Percentage for such Distribution Date;
(xviii) the Net WAC Rate Carryover Amount for the Class A Certificates
and the Mezzanine Certificates, if any, for such Distribution Date and the
amount remaining unpaid after reimbursements therefor on such Distribution
Date;
(xix) [reserved];
(xx) when the Stepdown Date or a Trigger Event has occurred;
(xxi) the Available Funds;
(xxii) the respective Pass-Through Rates applicable to the Class A
Certificates, the Class S Certificates, the Mezzanine Certificates and the
Class C Certificates for such Distribution Date and the Pass-Through Rate
applicable to the Class A Certificates and the Mezzanine Certificates for
the immediately succeeding Distribution Date;
(xxiii) (A) the amount of payments received related to claims under
the PMI Policy during the related Prepayment Period (and the number of
Mortgage Loans to which such payments related) and (B) the cumulative
amount of payments received related to claims under the PMI Policy since
the Closing Date (and the number of Mortgage Loans to which such payments
related); and
(xxiv) (A) the dollar amount of claims made under the PMI Policy that
were denied during the Prepayment Period (and the number of Mortgage Loans
to which such denials related) and (B) the dollar amount of the cumulative
claims made under the PMI Policy that were denied since the Closing Date
(and the number of Mortgage Loans to which such denials related).
The Trustee will make such statement (and, at its option, any additional
files containing the same information in an alternative format) available each
month to Certificateholders, the Master Servicer, the NIMs Insurer and the
Rating Agencies via the Trustee's internet website. The Trustee's internet
website shall initially be located at
"http:\\▇▇▇-▇▇▇▇.▇▇▇.▇▇▇▇▇▇▇▇-▇▇▇▇.▇▇▇/▇▇▇▇. Assistance in using the website can
be obtained by calling the Trustee's customer service desk at ▇- ▇▇▇-▇▇▇-▇▇▇▇.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trustee shall have the right to change the
way such statements are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Trustee shall
provide timely and adequate notification to all above parties regarding any such
changes.
In the case of information furnished pursuant to subclauses (i) through
(iii) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Closing Date.
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(b) Within a reasonable period of time after the end of each calendar year,
the Trustee shall, upon written request, furnish to each Person who at any time
during the calendar year was a Certificateholder of a Regular Certificate, if
requested in writing by such Person, such information as is reasonably necessary
to provide to such Person a statement containing the information set forth in
subclauses (i) through (iii) above, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be prepared and furnished
by the Trustee to Certificateholders pursuant to any requirements of the Code as
are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders and the NIMs Insurer a copy of the reports forwarded to the
Regular Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar year,
the Trustee shall deliver to each Person who at any time during the calendar
year was a Class R Certificateholder, if requested in writing by such Person,
such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished to Certificateholders by
the Trustee pursuant to any requirements of the Code as from time to time in
force.
On each Distribution Date the Trustee shall provide Bloomberg Financial
Markets, L.P. ("Bloomberg") CUSIP level factors for each Class of Certificates
as of such Distribution Date, using a format and media mutually acceptable to
the Trustee and Bloomberg.
Section 4.04. Remittance Reports; Advances.
(a) Within two Business Days after the Determination Date, but in no event
later than such date which would allow the Trustee to submit a claim to the NIMs
Insurer under the Indenture, the Master Servicer shall deliver to the NIMs
Insurer and the Trustee by telecopy or electronic mail (or by such other means
as the Master Servicer and the Trustee, or the Master Servicer and the NIMs
Insurer, as the case may be, may agree from time to time) a Remittance Report
with respect to the related Distribution Date. Not later than the Master
Servicer Remittance Date (or, in the case of certain information, as agreed
between the Trustee and the Master Servicer, not later than five Business Days
after the beginning of every calendar month), the Master Servicer shall deliver
or cause to be delivered to the Trustee in addition to the information provided
on the Remittance Report, such other information reasonably available to it with
respect to the Mortgage Loans as the Trustee may reasonably require to perform
the calculations necessary to make the distributions contemplated by Section
4.01 and to prepare the statements to Certificateholders contemplated by Section
4.03. The Trustee shall not be responsible to recompute, recalculate or verify
any information provided to it by the Master Servicer.
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(b) The amount of Advances to be made by the Master Servicer for any
Distribution Date shall equal, subject to Section 4.04(d), the sum of (i) the
aggregate amount of Monthly Payments (with each interest portion thereof net of
the related Servicing Fee), due on the related Due Date in respect of the
Mortgage Loans (other than with respect to any Balloon Loan with a delinquent
Balloon Payment as described in clause (iii) below), which Monthly Payments were
delinquent as of the close of business on the related Determination Date, plus
(ii) with respect to each REO Property (other than with respect to any REO
Property relating to a Balloon Loan with a delinquent Balloon Payment as
described in clause (iv) below), which REO Property was acquired during or prior
to the related Prepayment Period and as to which such REO Property an REO
Disposition did not occur during the related Prepayment Period, an amount equal
to the excess, if any, of the Monthly Payments (with each interest portion
thereof net of the related Servicing Fee) that would have been due on the
related Due Date in respect of the related Mortgage Loans, over the net income
from such REO Property transferred to the Distribution Account pursuant to
Section 3.23 for distribution on such Distribution Date, plus (iii) with respect
to each Balloon Loan with a delinquent Balloon Payment, an amount equal to the
assumed monthly principal and interest payment (with each interest portion
thereof net of the related Servicing Fee) that would have been due on the
related Due Date based on the original principal amortization schedule for such
Balloon Loan assuming such Mortgage Loan was not a Balloon Loan, plus (iv) with
respect to each REO Property relating to a Balloon Loan with a delinquent
Balloon Payment, which REO Property was acquired during or prior to the related
Prepayment Period and as to which REO Property an REO Disposition did not occur
during the related Prepayment Period, an amount equal to the excess, if any, of
the assumed monthly principal and interest payment (with each interest portion
thereof net of the related Servicing Fee) that would have been due on the
related Due Date based on the original principal amortization schedule for the
related Balloon Loan assuming such Mortgage Loan was not a Balloon Loan, over
the net income from such REO Property transferred to the Distribution Account
pursuant to Section 3.23 for distribution on such Distribution Date.
On or before 3:00 p.m. New York time on the Master Servicer Remittance
Date, the Master Servicer shall remit in immediately available funds to the
Trustee for deposit in the Distribution Account an amount equal to the aggregate
amount of Advances, if any, to be made in respect of the Mortgage Loans and REO
Properties for the related Distribution Date either (i) from its own funds or
(ii) from the Collection Account, to the extent of funds held therein for future
distribution (in which case, it will cause to be made an appropriate entry in
the records of Collection Account that amounts held for future distribution have
been, as permitted by this Section 4.04, used by the Master Servicer in
discharge of any such Advance) or (iii) in the form of any combination of (i)
and (ii) aggregating the total amount of Advances to be made by the Master
Servicer with respect to the Mortgage Loans and REO Properties. Any amounts held
for future distribution and so used shall be appropriately reflected in the
Master Servicer's records and replaced by the Master Servicer by deposit in the
Collection Account on or before any future Master Servicer Remittance Date to
the extent that the Available Funds for the related Distribution Date
(determined without regard to Advances to be made on the Master Servicer
Remittance Date) shall be less than the total amount that would be distributed
to the Classes of Certificateholders pursuant to Section 4.01 on such
Distribution Date if such amounts held for future distributions had not been so
used to make Advances. The Trustee will provide notice to the NIMs Insurer and
the Master Servicer by telecopy by the close of business on any Master Servicer
Remittance Date in the event that the amount
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remitted by the Master Servicer to the Trustee on such date is less than the
Advances required to be made by the Master Servicer for the related Distribution
Date.
(c) The obligation of the Master Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan, shall continue until the
Mortgage Loan is paid in full or until the recovery of all Liquidation Proceeds
thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Master Servicer
if such Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance or Servicing Advance, if
made, would constitute a Nonrecoverable Advance, shall be evidenced by an
Officers' Certificate of the Master Servicer delivered to the NIMs Insurer, the
Depositor and the Trustee.
Section 4.05. Distributions on the REMIC Regular Interests.
(a) On each Distribution Date, the Trustee shall cause the Available Funds,
in the following order of priority, to be distributed by REMIC 1 to REMIC 2 on
account of the REMIC 1 Regular Interests or withdrawn from the Distribution
Account and distributed to the Holders of the Class R Certificates (in respect
of the Class R-1 Interest), as the case may be:
(1) FIRST, to the Holders of REMIC 1 Regular Interest LT1B, in an
amount equal to (A) the Uncertificated Accrued Interest for such
Distribution Date, plus (B) any amounts in respect thereof remaining unpaid
from previous Distribution Dates and second, to Holders of REMIC 1 Regular
Interest LT1A and REMIC 1 Regular Interest LT1P in an amount equal to (A)
the Uncertificated Accrued Interest for such Distribution Date, plus (B)
any amounts in respect thereof remaining unpaid from previous Distribution
Dates; and
(2) SECOND, to the Holders of REMIC 1 Regular Interests, in an amount
equal to the remainder of the Available Funds for such Distribution Date
after the distributions made pursuant to clause (1) above, allocated as
follows:
(A) to the Holders of REMIC 1 Regular Interest LT1P, on the
Distribution Date immediately following the expiration of the latest
Prepayment Charge as identified on the Prepayment Charge Schedule or
any Distribution Date thereafter until $100 has been distributed
pursuant to this clause;
(B) to the Holders of REMIC 1 Regular Interest LT1A, until
the Uncertificated Principal Balance of REMIC 1 Regular Interest LT1A
is reduced to zero;
(C) to the Holders of REMIC 1 Regular Interest LT1B, until
the Uncertificated Principal Balance of REMIC 1 Regular Interest LT1B
is reduced to zero; then
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(D) any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-1 Interest).
On each Distribution Date, all amounts representing Prepayment Charges in
respect of the Mortgage Loans received during the related Prepayment Period and
any Master Servicer Prepayment Charge Amounts paid by or collected by the Master
Servicer during the related Prepayment Period will be distributed by REMIC 1 to
the Holders of REMIC 1 Regular Interest LT1P. The payment of the foregoing
amounts to the Holders of REMIC 1 Regular Interest LT1P shall not reduce the
Uncertificated Principal Balance thereof.
(b) On each Distribution Date, the Trustee shall cause in the following
order of priority, the following amounts to be distributed by REMIC 2 to REMIC 3
on account of the REMIC 2 Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates (in respect
of the Class R-2 Interest), as the case may be:
(i) FIRST, to the extent of Available Funds, to the Holders of REMIC 2
Regular Interest LT2SA, REMIC 2 Regular Interest LT2SB and REMIC 2 Regular
Interest LT2SC, PRO RATA, in an amount equal to (A) the Uncertificated
Accrued Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates, and then
to Holders of REMIC 2 Regular Interest LT2A, REMIC 2 Regular Interest LT2B,
REMIC 2 Regular Interest LT2C, REMIC 2 Regular Interest LT2D, REMIC 2
Regular Interest LT2E, REMIC 2 Regular Interest LT2F, REMIC 2 Regular
Interest LT2G and REMIC 2 Regular Interest LT2P, PRO RATA, in an amount
equal to (A) the Uncertificated Accrued Interest for such Distribution
Date, plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates; provided, however, that amounts payable as
Uncertificated Accrued Interest in respect of REMIC 2 Regular Interest LT2G
shall be reduced, when the REMIC 2 Overcollateralized Amount is less than
the REMIC 2 Target Overcollateralized Amount, by the lesser of (x) the
amount of such difference and (y) the Maximum LT2F Uncertificated Accrued
Interest Deferral Amount;
(ii) SECOND, to the Holders of REMIC 2 Regular Interests, in an amount
equal to the remainder of the Available Funds for such Distribution Date
after the distributions made pursuant to clause (i) above, allocated as
follows:
(A) to the Holders of REMIC 2 Regular Interest LT2A, 98.00% of
such remainder, until the Uncertificated Principal Balance of such
Uncertificated REMIC 2 Regular Interest is reduced to zero;
(B) to the Holders of REMIC 2 Regular Interest LT2B, REMIC 2
Regular Interest LT2C, REMIC 2 Regular Interest LT2D, REMIC 2 Regular
Interest LT2E and REMIC 2 Regular Interest LT2F, 1.00% of such
remainder, in the same proportion as principal payments are allocated
to the Corresponding Certificates, until the Uncertificated Principal
Balances of such REMIC 2 Regular Interests are reduced to zero;
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(C) to the Holders of REMIC 2 Regular Interest LT2G, 1.00% of
such remainder, until the Uncertificated Principal Balance of such
REMIC 2 Regular Interest is reduced to zero;
(D) to the Holders of REMIC 2 Regular Interest LT2P, on the
Distribution Date immediately following the expiration of the latest
Prepayment Charge as identified on the Prepayment Charge Schedule or
any Distribution Date thereafter until $100 has been distributed
pursuant to this clause; then
(E) any remaining amount to the Holders of the Class R
Certificates (in respect of the Class R-2 Interest); and
(iii) third, to REMIC 2 Regular Interest LT2P, 100% of the amount of
Prepayment Charges and Master Servicer Prepayment Charge Payment Amounts
paid in respect of REMIC I Regular Interest LT1P;
provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to an Overcollateralization Release Amount shall be allocated to
Holders of REMIC 2 Regular Interest LT2A and REMIC 2 Regular Interest LT2G,
respectively.
Section 4.06. Allocation of Realized Losses.
(a) Prior to each Determination Date, the Master Servicer shall determine
as to each Mortgage Loan and REO Property: (i) the total amount of Realized
Losses, if any, incurred in connection with any Final Recovery Determinations
made during the related Prepayment Period; (ii) whether and the extent to which
such Realized Losses constituted Bankruptcy Losses; and (iii) the respective
portions of such Realized Losses allocable to interest and allocable to
principal. Prior to each Determination Date, the Master Servicer shall also
determine as to each Mortgage Loan: (i) the total amount of Realized Losses, if
any, incurred in connection with any Deficient Valuations made during the
related Prepayment Period; and (ii) the total amount of Realized Losses, if any,
incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period. The information described in the two
preceding sentences that is to be supplied by the Master Servicer shall be
evidenced by an Officers' Certificate delivered to the NIMs Insurer and the
Trustee by the Master Servicer prior to the Determination Date immediately
following the end of (i) in the case of Bankruptcy Losses allocable to interest,
the Due Period during which any such Realized Loss was incurred, and (ii) in the
case of all other Realized Losses, the Prepayment Period during which any such
Realized Loss was incurred.
(b) All Realized Losses on the Mortgage Loans allocated to any Regular
Certificate shall be allocated by the Trustee on each Distribution Date as
follows: first, to Net Monthly Excess Cashflow; second, to the Class C
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; third, to the Class M-3 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; fourth, to the Class M-2 Certificates,
until the Certificate Principal Balance thereof has been reduced to zero; fifth,
to the Class M-1 Certificates, until the Certificate Principal Balance thereof
has been reduced to zero; and sixth, to the Class A-2 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero. All Realized
Losses to be allocated
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to the Certificate Principal Balances of all Classes on any Distribution Date
shall be so allocated after the actual distributions to be made on such date as
provided above. All references above to the Certificate Principal Balance of any
Class of Certificates shall be to the Certificate Principal Balance of such
Class immediately prior to the relevant Distribution Date, before reduction
thereof by any Realized Losses, in each case to be allocated to such Class of
Certificates, on such Distribution Date.
Any allocation of Realized Losses to a Class A-2 Certificate or a Mezzanine
Certificate on any Distribution Date shall be made by reducing the Certificate
Principal Balance thereof by the amount so allocated; any allocation of Realized
Losses to a Class C Certificate shall be made by reducing the amount otherwise
payable in respect thereof pursuant to Section 4.01(d)(x). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A-1 Certificates, the Class S Certificates or the Class P Certificates.
(c) All Realized Losses on the Mortgage Loans shall be allocated by the
Trustee on each Distribution Date to REMIC 1 Regular Interest LT1A until the
Uncertificated Principal Balance has been reduced to zero and then to REMIC 1
Regular Interest LT1B until the Uncertificated Principal Balance has been
reduced to zero.
(d) All Realized Losses on the REMIC 1 Regular Interest LT1A and REMIC 1
Regular Interest LT1B shall be deemed to have been allocated in the specified
percentages, as follows: first, to Uncertificated Accrued Interest payable to
the REMIC 2 Regular Interest LT2A and REMIC 2 Regular Interest LT2G up to an
aggregate amount equal to the REMIC 2 Interest Loss Allocation Amount, 98% and
2%, respectively; second, to the Uncertificated Principal Balances of REMIC 2
Regular Interest LT2A and REMIC 2 Regular Interest LT2G up to an aggregate
amount equal to the REMIC 2 Principal Loss Allocation Amount, 98% and 2%,
respectively; third, to the Uncertificated Principal Balances of REMIC 2 Regular
Interest LT2A, REMIC 2 Regular Interest LT2F and REMIC 2 Regular Interest LT2G,
98%, 1% and 1%, respectively, until the Uncertificated Principal Balance of
REMIC 2 Regular Interest LT2F has been reduced to zero; fourth, to the
Uncertificated Principal Balances of REMIC 2 Regular Interest LT2A, REMIC 2
Regular Interest LT2E and REMIC 2 Regular Interest LT2G, 98%, 1% and 1%,
respectively, until the Uncertificated Principal Balance of REMIC 2 Regular
Interest LT2E has been reduced to zero; fifth, to the Uncertificated Principal
Balances of REMIC 2 Regular Interest LT2A, REMIC 2 Regular Interest LT2D and
REMIC 2 Regular Interest LT2G, 98%, 1% and 1%, respectively, until the
Uncertificated Principal Balance of REMIC 2 Regular Interest LT2D has been
reduced to zero; and sixth, to the Uncertificated Principal Balances of REMIC 2
Regular Interest LT2A, REMIC 2 Regular Interest LT2C and REMIC 2 Regular
Interest LT2G, 98%, 1% and 1%, respectively, until the Uncertificated Principal
Balance of REMIC 2 Regular Interest LT2C has been reduced to zero.
Section 4.07. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee shall
comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any
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Certificateholder pursuant to federal withholding requirements, the Trustee
shall indicate the amount withheld to such Certificateholders.
Section 4.08. Commission Reporting.
Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards, file with the Commission via the Electronic
Data Gathering Analysis and Retrieval system, a Form 8-K with a copy of the
statement to Certificateholders for such Distribution Date as an exhibit
thereto. Prior to January 30, 2002, the Trustee shall in accordance with
industry standards file a Form 15 Suspension Notification with respect to the
Trust Fund, if applicable. Prior to March 30, 2002, the Trustee shall file a
Form 10-K, in substance conforming to industry standards, with respect to the
Trust Fund. The Depositor hereby grants to the Trustee a limited power of
attorney to execute and file each such document on behalf of the Depositor. Such
power of attorney shall continue until the earlier of (i) receipt by the Trustee
from the Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Trustee shall have no
responsibility to file any items other than those specified in this Section.
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ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
(a) The Certificates in the aggregate will represent the entire beneficial
ownership interest in the Mortgage Loans and all other assets included in REMIC
1. At the Closing Date, the aggregate Certificate Principal Balance of the
Certificates (other than the Class S Certificates) will equal the aggregate
Stated Principal Balance of the Mortgage Loans.
The Certificates will be substantially in the forms annexed hereto as
Exhibits A-1 through A-8. The Certificates of each Class will be issuable in
registered form only, in denominations of authorized Percentage Interests as
described in the definition thereof. Each Certificate will share ratably in all
rights of the related Class.
Upon original issue, the Certificates shall be executed by the Trustee and
authenticated and delivered by the Trustee, to or upon the order of the
Depositor. The Certificates shall be executed and attested by manual or
facsimile signature on behalf of the Trustee by an authorized signatory.
Certificates bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in the form provided herein executed by the Trustee by manual signature, and
such certificate of authentication 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.
(b) The Class A Certificates, the Class S Certificates and the Mezzanine
Certificates shall initially be issued as one or more Certificates held by the
Book-Entry Custodian or, if appointed to hold such Certificates as provided
below, the Depository and registered in the name of the Depository or its
nominee and, except as provided below, registration of such Certificates may not
be transferred by the Trustee except to another Depository that agrees to hold
such Certificates for the respective Certificate Owners with Ownership Interests
therein. The Certificate Owners shall hold their respective Ownership Interests
in and to such Certificates through the book-entry facilities of the Depository
and, except as provided below, shall not be entitled to definitive, fully
registered Certificates ("Definitive Certificates") in respect of such Ownership
Interests. All transfers by Certificate Owners of their respective Ownership
Interests in the Book-Entry Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Trustee is hereby
initially appointed as the Book-Entry Custodian and hereby agrees to act as such
in accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act
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as such. The Book-Entry Custodian may, and if it is no longer qualified to act
as such, the Book- Entry Custodian shall, appoint, by a written instrument
delivered to the Depositor, the Master Servicer, and if the Trustee is not the
Book-Entry Custodian, the Trustee and any other transfer agent (including the
Depository or any successor Depository) to act as Book-Entry Custodian under
such conditions as the predecessor Book-Entry Custodian and the Depository or
any successor Depository may prescribe, provided that the predecessor Book-Entry
Custodian shall not be relieved of any of its duties or responsibilities by
reason of any such appointment of other than the Depository. If the Trustee
resigns or is removed in accordance with the terms hereof, successor trustee or,
if it so elects, the Depository shall immediately succeed to its predecessor's
duties as Book-Entry Custodian. The Depositor shall have the right to inspect,
and to obtain copies of, any Certificates held as Book-Entry Certificates by the
Book-Entry Custodian.
The Trustee, the Master Servicer, the NIMs Insurer and the Depositor may
for all purposes (including the making of payments due on the Book-Entry
Certificates) deal with the Depository as the authorized representative of the
Certificate Owners with respect to the Book-Entry Certificates for the purposes
of the exercise by Certificateholders of the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates with respect
to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trustee may establish a reasonable
record date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the Depository
is no longer willing or able to properly discharge its responsibilities as
Depository, and (B) the Depositor is unable to locate a qualified successor,
(ii) the Depositor at its option advises the Trustee in writing that it elects
to terminate the book-entry system through the Depository or (iii) after the
occurrence of a Master Servicer Event of Default, Certificate Owners
representing in the aggregate not less than 51% of the Ownership Interests of
the Book-Entry Certificates advise the Trustee through the Depository, in
writing, that the continuation of a book-entry system through the Depository is
no longer in the best interests of the Certificate Owners, the Trustee shall
notify all Certificate Owners, through the Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Book-Entry Custodian or the Depository, as applicable,
accompanied by registration instructions from the Depository for registration of
transfer, the Trustee shall issue the Definitive Certificates. Such Definitive
Certificates will be issued in minimum denominations of $50,000, except that any
beneficial ownership that was represented by a Book-Entry Certificate in an
amount less than $50,000 immediately prior to the issuance of a Definitive
Certificate shall be issued in a minimum denomination equal to the amount
represented by such Book-Entry Certificate. None of the Depositor, the Master
Servicer or the Trustee shall be liable for any delay in the 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
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performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates, and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or agencies to
be appointed by the Trustee in accordance with the provisions of Section 8.12 a
Certificate Register for the Certificates in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Certificates and of transfers and exchanges of Certificates as herein
provided.
(b) No transfer, sale, pledge or other disposition of any Class C
Certificate, Class P Certificate or Class R Certificate shall be made unless
such disposition is exempt from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and any applicable state securities
laws or is made in accordance with the 1933 Act and laws. In the event of any
such transfer (other than in connection with the initial transfer of any Class C
Certificate, Class P Certificate or Class R Certificates by the Depositor to the
Seller or the transfer of any Class C Certificate, Class P Certificate or Class
R Certificates by the Seller to an affiliate of the Seller or to a trust, the
depositor of which is an affiliate of the Seller) (i) unless such transfer is
made in reliance upon Rule 144A (as evidenced by the investment letter delivered
to the Trustee, in substantially the form attached hereto as Exhibit J) under
the 1933 Act, the Trustee and the Depositor shall require a written Opinion of
Counsel (which may be in-house counsel) acceptable to and in form and substance
reasonably satisfactory to the Trustee and the Depositor that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from the 1933 Act or is being made pursuant to the 1933 Act,
which Opinion of Counsel shall not be an expense of the Trustee or the Depositor
or (ii) the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached hereto as Exhibit L) and the
transferee to execute an investment letter (in substantially the form attached
hereto as Exhibit J) acceptable to and in form and substance reasonably
satisfactory to the Depositor and the Trustee certifying to the Depositor and
the Trustee the facts surrounding such transfer, which investment letter shall
not be an expense of the Trustee or the Depositor. The Holder of a Class C
Certificate, Class P Certificate or Class R Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor
and the Trust Fund 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) Each Transferee of a Mezzanine Certificate will be deemed to have
represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets, (b) it has acquired and is holding such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 90-59 , 55
Fed. Reg. 36724 (September 6, 1990), as amended by PTE 2000-58, 65 Fed. Reg.
67765 (November 13, 2000) (the "Exemption"), and that it understands that there
are certain conditions to the availability of the Exemption including that such
Certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by a Rating Agency or (c) the following conditions are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company general account" (as defined in U.S.
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Department of Labor Prohibited Transaction Class Exemption ("PTCE") 95-60, and
(iii) the conditions set forth in Sections I and III of PTCE 95-60 have been
satisfied.
No transfer of a Class C Certificate, Class P Certificate or Class R
Certificate or any interest therein shall be made to any Plan subject to ERISA
or Section 4975 of the Code, any Person acting, directly or indirectly, on
behalf of any such Plan or any Person acquiring such Certificates with "Plan
Assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") unless the Depositor,
the Trustee and the Master Servicer are provided with an Opinion of Counsel
which establishes to the satisfaction of the Depositor, the Trustee and the
Master Servicer that the purchase of such Certificates is permissible under
applicable law, will not constitute or result in any prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor, the
Master Servicer, the Trustee or the Trust Fund to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement, which Opinion of Counsel
shall not be an expense of the Depositor, the Master Servicer, the Trustee or
the Trust Fund. Neither an Opinion of Counsel nor any certification will be
required in connection with the initial transfer of any Class C Certificate,
Class P Certificate or Class R Certificates by the Depositor to the Seller or
the transfer of any Class C Certificate, Class P Certificate or Class R
Certificates by the Seller to an affiliate of the Seller or to a trust, the
depositor of which is an affiliate of the Seller (in which case, the Depositor,
the Seller and any such affiliate shall have deemed to have represented that the
applicable transferee is not a Plan or a Person investing Plan Assets) and the
Trustee shall be entitled to conclusively rely upon a representation (which,
upon the request of the Trustee, shall be a written representation) from the
Depositor of the status of each transferee the Seller or such an affiliate. Each
transferee of a Class C Certificate, Class P Certificate or Class R Certificate
shall sign a letter substantially in the form of Exhibit I to demonstrate its
compliance with this Section 5.02(c) (other than in connection with the initial
transfer of any Class C Certificate, Class P Certificate or Class R Certificates
by the Depositor to the Seller or the transfer of any Class C Certificate, Class
P Certificate or Class R Certificates by the Seller to an affiliate of the
Seller or to a trust, the depositor of which is an affiliate of the Seller).
If any Class C Certificate, Class P Certificate or Class R Certificate or
any interest therein is acquired or held in violation of the provisions of the
preceding paragraph, the next preceding permitted beneficial owner will be
treated as the beneficial owner of that Certificate retroactive to the date of
transfer to the purported beneficial owner. Any purported beneficial owner whose
acquisition or holding of any such Certificate or interest therein was effected
in violation of the provisions of the preceding paragraph shall indemnify and
hold harmless the Depositor, the Master Servicer, the Trustee and the Trust Fund
from and against any and all liabilities, claims, costs or expenses incurred by
those parties as a result of that acquisition or holding .
(d) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Class R Certificate are expressly subject to the following
provisions:
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(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a PRO RATA undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and substance
satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit K hereto from the proposed
transferee to the effect that such transferee is a Permitted
Transferee and that it is not acquiring its Ownership Interest in the
Class R Certificate that is the subject of the proposed transfer as a
nominee, trustee or agent for any Person who is not a Permitted
Transferee; and
B. a covenant of the proposed transferee to the effect that the
proposed transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Class R Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section shall
be absolutely null and void and shall vest no rights in the purported
transferee. If any purported transferee shall, in violation of the
provisions of this Section, become a Holder of a Class R Certificate, then
the prior Holder of such Class R Certificate that is a Permitted Transferee
shall, upon discovery that the registration of transfer of such Class R
Certificate was not in fact permitted by this Section, be restored to all
rights as Holder thereof retroactive to the date of registration of
transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
Certificate that is in fact not permitted by this Section or for making any
distributions due on such Class R Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions of
this Agreement so long as the Trustee received the documents specified in
clause (iii). The Trustee shall be entitled to recover from any Holder of a
Class R Certificate that was in fact not a Permitted Transferee at the time
such distributions were made all distributions made on such Class R
Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the prior Holder of such Class
R Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee shall have the right but not
the obligation, without notice to the Holder of such Class R Certificate or
any other Person having an Ownership Interest therein, to notify the
Depositor to arrange for the sale of such Class R Certificate. The proceeds
of such sale, net of commissions (which may include commissions payable to
the Depositor or its affiliates in connection with such sale), expenses and
taxes due, if any, will be remitted by the Trustee
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to the previous Holder of such Class R Certificate that is a Permitted
Transferee, except that in the event that the Trustee determines that the
Holder of such Class R Certificate may be liable for any amount due under
this Section or any other provisions of this Agreement, the Trustee may
withhold a corresponding amount from such remittance as security for such
claim. The terms and conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Trustee and it shall not be liable
to any Person having an Ownership Interest in a Class R Certificate as a
result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee upon receipt of reasonable
compensation will provide to the Internal Revenue Service, and to the
persons specified in Sections 860E(e)(3) and (6) of the Code, information
needed to compute the tax imposed under Section 860E(e)(5) of the Code on
transfers of residual interests to disqualified organizations.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Trustee, in form and substance satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
Transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the NIM Notes or the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause any REMIC created
hereunder to fail to qualify as a REMIC.
(e) Subject to the preceding subsections, upon surrender for registration
of transfer of any Certificate at any office or agency of the Trustee designated
from time to time for such purpose pursuant to Section 8.12, the Trustee shall
execute and authenticate and deliver, in the name of the designated Transferee
or Transferees, one or more new Certificates of the same Class of a like
aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may be exchanged
for other Certificates of the same Class with authorized denominations and a
like aggregate Percentage Interest, upon surrender of such Certificate to be
exchanged at any office or agency of the Trustee maintained for such purpose
pursuant to Section 8.12. Whenever any Certificates are so surrendered for
exchange the Trustee shall execute, authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(g) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange shall
be canceled by the Trustee and disposed of pursuant to its standard procedures.
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Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee or the
Trustee 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
(in the case of a Class C Certificate or Class P Certificate) the NIMs Insurer
such security or indemnity as may be required by them to save each of them, and
the Trust Fund, harmless, then, in the absence of notice to the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Percentage Interest. Upon the issuance of any new Certificate under
this Section, the Trustee 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) in
connection therewith. Any duplicate Certificate issued pursuant to this Section,
shall constitute complete and indefeasible evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners.
The Master Servicer, the Depositor, the Trustee, the NIMs Insurer and any
agent of the Master Servicer, the Depositor, the Trustee or the NIMs Insurer may
treat the Person, including a Depository, in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 4.01 and for all other purposes whatsoever,
and none of the Master Servicer, the Depositor, the Trustee, the NIMs Insurer
nor any agent of any of them shall be affected by notice to the contrary.
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ARTICLE VI
THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Master Servicer and the Depositor.
The Depositor and the Master Servicer each shall be liable in accordance
herewith only to the extent of the obligations specifically imposed by this
Agreement and undertaken hereunder by the Depositor and the Master Servicer
herein.
Section 6.02. Merger or Consolidation of the Depositor or the Master
Servicer.
Subject to the following paragraph, the Depositor will keep in full effect
its existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation. Subject to the following paragraph, the
Master Servicer will keep in full effect its existence, rights and franchises as
a corporation under the laws of the jurisdiction of its incorporation and its
qualification as an approved conventional seller/servicer for ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac in good standing. The Depositor and the Master Servicer each will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Certificates or
any of the Mortgage Loans and to perform its respective duties under this
Agreement.
The Depositor or the Master Servicer may be merged or consolidated with or
into any Person, or transfer all or substantially all of its assets to any
Person, in which case any Person resulting from any merger or consolidation to
which the Depositor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac; and provided further that the Rating Agencies'
ratings of the NIM Notes, the Class A Certificates and the Mezzanine
Certificates in effect immediately prior to such merger or consolidation will
not be qualified, reduced or withdrawn as a result thereof (as evidenced by a
letter to such effect from the Rating Agencies to the Trustee).
Section 6.03. Limitation on Liability of the Depositor, the Master Servicer
and Others.
None of the Depositor, the Master Servicer or any of the directors,
officers, employees or agents of the Depositor or the Master Servicer shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific liability imposed on the Master Servicer
pursuant hereto, or against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
The Depositor, the Master Servicer and any director,
108
officer, employee or agent of the Depositor or the Master Servicer may rely in
good faith on any document of any kind which, PRIMA FACIE, is properly executed
and submitted by any Person respecting any matters arising hereunder. The
Depositor, the Master Servicer and any director, officer, employee or agent of
the Depositor or the Master Servicer shall be indemnified and held harmless by
the Trust Fund against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense relating to any specific Mortgage Loan or
Mortgage Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) or any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under this Agreement and,
in its opinion, does not involve it in any expense or liability; provided,
however, that each of the Depositor and the Master Servicer may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, unless the
Depositor or the Master Servicer acts without the consent of Holders of
Certificates entitled to at least 51% of the Voting Rights (which consent shall
not be necessary in the case of litigation or other legal action by either to
enforce their respective rights or defend themselves hereunder), the legal
expenses and costs of such action and any liability resulting therefrom (except
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder) shall be expenses, costs
and liabilities of the Trust Fund, and the Depositor and the Master Servicer
shall be entitled to be reimbursed therefor from the Collection Account as and
to the extent provided in Section 3.11, any such right of reimbursement being
prior to the rights of the Certificateholders to receive any amount in the
Collection Account.
The Master Servicer (except the Trustee to the extent it has succeeded the
Master Servicer as required hereunder) indemnifies and holds the Trustee, the
Depositor and the Trust Fund harmless against any and all claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Depositor or the Trust Fund may sustain in any way related to the failure of the
Master Servicer to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement. The Master Servicer shall
immediately notify the Trustee and the Depositor and the NIMs Insurer if a claim
is made that may result in such claims, losses, penalties, fines, forfeitures,
legal fees or related costs, judgments, or any other costs, fees and expenses,
and the Master Servicer shall assume (with the consent of the Trustee) the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Master Servicer, the
Trustee, the Depositor and/or the Trust Fund in respect of such claim. The
provisions of this paragraph shall survive the termination of this Agreement and
the payment of the outstanding Certificates.
Section 6.04. Limitation on Resignation of Master Servicer.
The Master Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon determination that its duties hereunder are no
longer permissible under applicable
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law or (ii) with the written consent of the Trustee and the NIMs Insurer and
written confirmation from each Rating Agency (which confirmation shall be
furnished to the Depositor and the Trustee) that such resignation will not cause
such Rating Agency to reduce the then current rating of the NIM Notes, the Class
A Certificates or the Mezzanine Certificates. Any such determination pursuant to
clause (i) of the preceding sentence permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Counsel to such effect obtained at
the expense of the Master Servicer and delivered to the Trustee. No resignation
of the Master Servicer shall become effective until the Trustee or a successor
servicer reasonably acceptable to the NIMs Insurer shall have assumed the Master
Servicer's responsibilities, duties, liabilities (other than those liabilities
arising prior to the appointment of such successor) and obligations under this
Agreement.
Except as expressly provided herein, the Master Servicer shall not assign
or transfer any of its rights, benefits or privileges hereunder to any other
Person, nor delegate to or subcontract with, nor authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Master Servicer hereunder. The foregoing prohibition on assignment shall not
prohibit the Master Servicer from designating a Sub-Servicer as payee of any
indemnification amount payable to the Master Servicer hereunder; provided,
however, that as provided in Section 3.06 hereof, no Sub-Servicer shall be a
third-party beneficiary hereunder and the parties hereto shall not be required
to recognize any Sub-Servicer as an indemnitee under this Agreement. If,
pursuant to any provision hereof, the duties of the Master Servicer are
transferred to a successor master servicer, the entire amount of the Servicing
Fee and other compensation payable to the Master Servicer pursuant hereto shall
thereafter be payable to such successor master servicer.
Section 6.05. Rights of the Depositor in Respect of the Master Servicer.
The Master Servicer shall afford (and any Sub-Servicing Agreement shall
provide that each Sub-Servicer shall afford) the Depositor, the NIMs Insurer and
the Trustee, upon reasonable notice, during normal business hours, access to all
records maintained by the Master Servicer (and any such Sub-Servicer) in respect
of the Master Servicer's rights and obligations hereunder and access to officers
of the Master Servicer (and those of any such Sub-Servicer) responsible for such
obligations. Upon request, the Master Servicer shall furnish to the Depositor,
the NIMs Insurer and the Trustee its (and any such Sub-Servicer's) most recent
financial statements and such other information relating to the Master
Servicer's capacity to perform its obligations under this Agreement that it
possesses. To the extent such information is not otherwise available to the
public, the Depositor, the NIMs Insurer and the Trustee shall not disseminate
any information obtained pursuant to the preceding two sentences without the
Master Servicer's (or any such Sub-Servicer's) written consent, except as
required pursuant to this Agreement or to the extent that it is necessary to do
so (i) in working with legal counsel, auditors, taxing authorities or other
governmental agencies, rating agencies or reinsurers or (ii) pursuant to any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Depositor, the NIMs
Insurer, the Trustee or the Trust Fund, and in either case, the Depositor or the
Trustee, as the case may be, shall use, and the NIMs Insurer shall be deemed to
have agreed with the parties hereto to use, its best efforts to assure the
confidentiality of any such disseminated non-public information. The Depositor
may, but is not obligated to, enforce the obligations of the Master Servicer
under this Agreement and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer under this
Agreement or exercise the rights of the Master Servicer
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under this Agreement; provided that the Master Servicer shall not be relieved of
any of its obligations under this Agreement by virtue of such performance by the
Depositor or its designee. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Master Servicer and is not
obligated to supervise the performance of the Master Servicer under this
Agreement or otherwise.
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ARTICLE VII
DEFAULT
Section 7.01. Master Servicer Events of Default.
"Master Servicer Event of Default," wherever used herein, means any one of
the following events:
(i) any failure by the Master Servicer to remit to the Trustee for
distribution to the Certificateholders any payment (other than an Advance
required to be made from its own funds on any Master Servicer Remittance
Date pursuant to Section 4.04) required to be made under the terms of the
Certificates and this Agreement which continues unremedied for a period of
one Business Day after the date upon which written notice of such failure,
requiring the same to be remedied, shall have been given to the Master
Servicer by the Depositor, the Trustee (in which case notice shall be
provided by telecopy), or to the Master Servicer, the Depositor and the
Trustee by the NIMs Insurer or the Holders of Certificates entitled to at
least 25% of the Voting Rights; or
(ii) any failure on the part of the Master Servicer duly to observe or
perform in any material respect any of the covenants or agreements on the
part of the Master Servicer contained in this Agreement (or, if the Master
Servicer is the Seller, the failure of the Seller to repurchase a Mortgage
Loan as to which a breach has been established that requires a repurchase
pursuant to the terms of the Mortgage Loan Purchase Agreement) which
continues unremedied for a period of 45 days (30 days in the case of any
failure to maintain a Sub-Servicing Agreement with an eligible Sub-Servicer
to the extent required in accordance with Section 3.02(c)) after the
earlier of (i) the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Master Servicer by
the Depositor or the Trustee, or to the Master Servicer, the Depositor and
the Trustee by the NIMs Insurer or the Holders of Certificates entitled to
at least 25% of the Voting Rights and (ii) actual knowledge of such failure
by a Servicing Officer of the Master Servicer; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any
present or future federal or state bankruptcy, insolvency or similar law or
the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceeding, or for the winding-up or liquidation of its affairs,
shall have been entered against the Master Servicer and if such proceeding
is being contested by the Master Servicer in good faith, such decree or
order shall have remained in force undischarged or unstayed for a period of
60 days or results in the entry of an order for relief or any such
adjudication or appointment; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or
relating to it or of or relating to all or substantially all of its
property; or
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(v) the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) any failure by the Master Servicer of the Master Servicer
Termination Test; or
(vii) any failure of the Master Servicer to make any Advance on any
Master Servicer Remittance Date required to be made from its own funds
pursuant to Section 4.04 which continues unremedied until 3:00 p.m. New
York time on the Business Day immediately following the Master Servicer
Remittance Date.
If a Master Servicer Event of Default described in clauses (i) through (vi)
of this Section shall occur, then, and in each and every such case, so long as
such Master Servicer Event of Default shall not have been remedied, the
Depositor or the Trustee may, and at the written direction of the NIMs Insurer
or the Holders of Certificates entitled to at least 51% of Voting Rights, the
Trustee shall, by notice in writing to the NIMs Insurer and the Master Servicer
(and to the Depositor if given by the Trustee or to the Trustee if given by the
Depositor), terminate all of the rights and obligations of the Master Servicer
in its capacity as Master Servicer under this Agreement, to the extent permitted
by law, and in and to the Mortgage Loans and the proceeds thereof. If a Master
Servicer Event of Default described in clause (vii) hereof shall occur, the
Trustee shall, by notice in writing to the NIMs Insurer, the Master Servicer and
the Depositor, terminate all of the rights and obligations of the Master
Servicer in its capacity as Master Servicer under this Agreement and in and to
the Mortgage Loans and the proceeds thereof. On or after the receipt by the
Master Servicer of such written notice, all authority and power of the Master
Servicer under this Agreement, whether with respect to the Certificates (other
than as a Holder of any Certificate) or the Mortgage Loans or otherwise, shall
pass to and be vested in the Trustee pursuant to and under this Section and,
without limitation, the Trustee is hereby authorized and empowered, as
attorney-in-fact or otherwise, to execute and deliver on behalf of and at the
expense of the Master Servicer, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. The Master Servicer agrees, at its sole cost and expense, promptly
(and in any event no later than ten Business Days subsequent to such notice) to
provide the Trustee with all documents and records requested by it to enable it
to assume the Master Servicer's functions under this Agreement, and to cooperate
with the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights under this Agreement, including, without limitation,
the transfer within one Business Day to the Trustee for administration by it of
all cash amounts which at the time shall be or should have been credited by the
Master Servicer to the Collection Account held by or on behalf of the Master
Servicer, or any REO Account or Servicing Account held by or on behalf of the
Master Servicer or thereafter be received with respect to the Mortgage Loans or
any REO Property (provided, however, that the Master Servicer shall continue to
be entitled to receive all amounts accrued or owing to it under this Agreement
on or prior to the date of such termination, whether in respect of Advances or
otherwise, and shall continue to be entitled to the benefits of Section 6.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section
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7.01, the Trustee shall not be deemed to have knowledge of a Master Servicer
Event of Default unless a Responsible Officer of the Trustee assigned to and
working in the Trustee's Corporate Trust Office has actual knowledge thereof or
unless written notice of any event which is in fact such a Master Servicer Event
of Default is received by the Trustee and such notice references the
Certificates, any of the Trust REMICs or this Agreement.
The Trustee shall be entitled to be reimbursed by the Master Servicer (or
by the Trust Fund if the Master Servicer is unable to fulfill its obligations
hereunder) for all costs associated with the transfer of servicing from the
predecessor master servicer, including without limitation, any costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Mortgage Loans properly and
effectively.
Section 7.02. Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to the Master
Servicer in its capacity as Master 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 and arising thereafter
shall be assumed by the Trustee (except for any representations or warranties of
the Master Servicer under this Agreement, the responsibilities, duties and
liabilities contained in Section 2.03(c) and its obligation to deposit amounts
in respect of losses pursuant to Section 3.12) by the terms and provisions
hereof including, without limitation, the Master Servicer's obligations to make
Advances pursuant to Section 4.04; provided, however, that if the Trustee is
prohibited by law or regulation from obligating itself to make advances
regarding delinquent Mortgage Loans, then the Trustee shall not be obligated to
make Advances pursuant to Section 4.04; and provided further, that any failure
to perform such duties or responsibilities caused by the Master Servicer's
failure to provide information required by Section 7.01 shall not be considered
a default by the Trustee as successor to the Master Servicer hereunder;
provided, however, it is understood and acknowledged by the parties that there
will be a period of transition (not to exceed 90 days) before the servicing
transfer is fully effected. As compensation therefor, the Trustee shall be
entitled to the Servicing Fee and all funds relating to the Mortgage Loans to
which the Master Servicer would have been entitled if it had continued to act
hereunder (other than amounts which were due or would become due to the Master
Servicer prior to its termination or resignation). Notwithstanding anything
herein to the contrary, in no event shall the Trustee be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any successor Servicer to act as
successor Servicer under this Agreement and the transactions set forth or
provided for herein. Notwithstanding the above and subject to the next
paragraph, the Trustee may, if it shall be unwilling to so act, or shall, if it
is unable to so act or if it is prohibited by law from making advances regarding
delinquent Mortgage Loans, or if the Holders of Certificates entitled to at
least 51% of the Voting Rights so request in writing to the Trustee promptly
appoint or petition a court of competent jurisdiction to appoint, an established
Mortgage Loan servicing institution acceptable to each Rating Agency, having a
net worth of not less than $15,000,000 and reasonably acceptable to the NIMs
Insurer as the successor to the Master Servicer under this Agreement in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer under this Agreement.
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No appointment of a successor to the Master Servicer under this Agreement
shall be effective until the assumption by the successor of all of the Master
Servicer's responsibilities, duties and liabilities hereunder. In connection
with such appointment and assumption described herein, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Master Servicer as such
hereunder. The Depositor, the Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Pending appointment of a successor to the Master Servicer under this
Agreement, the Trustee shall act in such capacity as hereinabove provided.
Upon removal or resignation of the Master Servicer, the Trustee, with the
cooperation of the Depositor, (x) shall solicit bids for a successor Master
Servicer as described below and (y) pending the appointment of a successor
Master Servicer as a result of soliciting such bids, shall serve as Master
Servicer of the Mortgage Loans serviced by such predecessor Master Servicer. The
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above (including the Trustee or any affiliate thereof).
Such public announcement shall specify that the successor Master Servicer shall
be entitled to the servicing compensation agreed upon between the Trustee, the
successor Master Servicer and the Depositor; provided, however, that no such fee
shall exceed the Servicing Fee. Within thirty days after any such public
announcement, the Trustee with the cooperation of the Depositor, shall negotiate
in good faith and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to the qualified party submitting the
highest satisfactory bid as to the price they will pay to obtain such servicing.
The Trustee, upon receipt of the purchase price shall pay such purchase price to
the Master Servicer being so removed, after deducting from any sum received by
the Trustee from the successor to the Master Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
reasonably incurred hereunder. After such deductions, the remainder of such sum
shall be paid by the Trustee to the Master Servicer at the time of such sale.
(b) If the Master Servicer fails to remit to the Trustee for distribution
to the Certificateholders any payment required to be made under the terms of
this Agreement (for purposes of this Section 7.02(b), a "Remittance") because
the Master Servicer is the subject of a proceeding under the Bankruptcy Code and
the making of such Remittance is prohibited by Section 362 of the Bankruptcy
Code, the Trustee shall upon written notice of such prohibition, regardless of
whether it has received a notice of termination under Section 7.01, shall be
treated as though it had succeeded to the Master Servicer and shall advance the
amount of such Remittance by depositing such amount in the Distribution Account
on the related Distribution Date. The Trustee shall be obligated to make such
advance only if (i) such advance, in the good faith judgment of the Trustee can
reasonably be expected to be ultimately recoverable from Stayed Funds and (ii)
the Trustee is not prohibited by law from making such advance or obligating
itself to do so. Upon remittance of the Stayed Funds to the Trustee or the
deposit thereof in the Distribution Account by the Master Servicer, a trustee in
bankruptcy or a federal bankruptcy court, the Trustee may recover the amount so
advanced, without interest, by withdrawing such amount from the Distribution
Account; however, nothing in this Agreement shall be deemed to affect the
Trustee's rights to recover from the Master Servicer's own funds interest on the
amount of any such advance. If the Trustee at any time makes an advance under
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this Subsection which it later determines in its good faith judgment will not be
ultimately recoverable from the Stayed Funds with respect to which such advance
was made, the Trustee shall be entitled to reimburse itself for such advance,
without interest, by withdrawing from the Distribution Account, out of amounts
on deposit therein, an amount equal to the portion of such advance attributable
to the Stayed Funds.
Section 7.03. Notification to Certificateholders.
(a) Upon any termination of the Master Servicer pursuant to Section 7.01
above or any appointment of a successor to the Master Servicer pursuant to
Section 7.02 above, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to the NIMs Insurer.
(b) Not later than the later of 60 days after the occurrence of any event,
which constitutes or which, with notice or lapse of time or both, would
constitute a Master Servicer Event of Default or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Holders of Certificates and to the NIMs
Insurer notice of each such occurrence, unless such default or Master Servicer
Event of Default shall have been cured or waived.
Section 7.04. Waiver of Master Servicer Events of Default.
The Holders representing at least 66% of the Voting Rights evidenced by all
Classes of Certificates affected by any default or Master Servicer Event of
Default hereunder may, with the consent of the NIMs Insurer, waive such default
or Master Servicer Event of Default; provided, however, that a default or Master
Servicer Event of Default under clause (i) or (vii) of Section 7.01 may be
waived only by all of the Holders of the Regular Certificates and the NIMs
Insurer (as evidenced by the written consent of the NIMs Insurer). Upon any such
waiver of a default or Master Servicer Event of Default, such default or Master
Servicer Event of Default shall cease to exist and shall be deemed to have been
remedied for every purpose hereunder. No such waiver shall extend to any
subsequent or other default or Master Servicer Event of Default or impair any
right consequent thereon except to the extent expressly so waived.
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ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Master Servicer Event of Default
and after the curing of all Master Servicer Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Master Servicer Event of
Default, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
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. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(i) Prior to the occurrence of a Master Servicer Event of Default, and
after the curing of all such Master Servicer Events of Default which may
have occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee that conform 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 or Responsible
Officers of the Trustee unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the NIMs Insurer or the Holders of
Certificates entitled to at least 25% of the Voting Rights 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.
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Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely conclusively upon and shall be
fully protected in acting or refraining from acting upon any resolution,
Officers' 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
and the manner of obtaining consents and evidencing the authorization of
the execution thereof shall be subject to such reasonable regulations as
the Trustee may prescribe;
(ii) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) The Trustee shall not be under any obligation to exercise any of
the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the NIMs Insurer or the
Certificateholders, pursuant to the provisions of this Agreement, unless
the NIMs Insurer or such Certificateholders shall have offered to the
Trustee security or indemnity satisfactory to it against the costs,
expenses and liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of a Master Servicer Event of Default (which has not
been cured or waived), 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 person would exercise or use under the circumstances
in the conduct of such person's own affairs;
(iv) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) Prior to the occurrence of a Master Servicer Event of Default
hereunder and after the curing of all Master Servicer Events of Default
which may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless requested
in writing to do so by the NIMs Insurer or the Holders of Certificates
entitled to at least 25% of the Voting Rights; 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 NIMs Insurer or such Certificateholders, the Trustee may
require reasonable indemnity against such expense, or liability from the
NIMs Insurer or such Certificateholders as a condition to taking any such
action;
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(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents
custodians, nominees or attorneys and shall not be responsible for any
willful misconduct or negligence of such agents, custodians, nominees or
attorneys (as long as such agents, custodians, nominees or attorneys are
appointed with due and proper care);
(vii) The Trustee shall not be personally liable for any loss
resulting from the investment of funds held in the Collection Account at
the direction of the Master Servicer pursuant to Section 3.12; and
(viii) Except as otherwise expressly provided herein, none of the
provisions of this Agreement shall require the Trustee to expend or risk
its own funds or otherwise to incur any liability, financial or otherwise,
in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers (not including expenses, disbursements and
advances incurred or made by the Trustee, including the compensation and
the expenses and disbursements of its agents and counsel, in the ordinary
course of the Trustee performance in accordance with the provisions of this
Agreement) if it shall have reasonable grounds for believing that repayment
of such funds or indemnity satisfactory to it against such risk or
liability is not assured to it.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
Section 8.03. Trustee not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
signature of the Trustee, the execution and authentication of the Trustee on the
Certificates, the acknowledgments of the Trustee contained in Article II and the
representations and warranties of the Trustee in Section 8.13) shall be taken as
the statements of the Depositor, and the Trustee shall not assume any
responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth in Section 8.13) or of the Certificates (other than
execution 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 the 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,
other than any funds held by or on behalf of the Trustee in accordance with
Section 3.10.
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee and may transact banking and/or trust business with the Seller, the
Depositor, the Master Servicer or their Affiliates.
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Section 8.05. Trustee's Fees and Expenses.
(a) The Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself one day's interest earnings (net of losses)
on amounts on deposit in the Distribution Account. In addition, to such interest
earnings, the compensation to be paid to the Trustee in respect of its
obligations under this Agreement will be the amounts paid by the Seller pursuant
to a letter agreement between the Trustee and the Seller.
The Trustee, and any director, officer, employee or agent of the Trustee,
shall be indemnified by REMIC 1 and held harmless against any loss, liability or
expense (not including expenses, disbursements and advances incurred or made by
the Trustee, including the compensation and the expenses and disbursements of
its agents and counsel, in the ordinary course of the Trustee's performance in
accordance with the provisions of this Agreement) incurred by the Trustee
arising out of or in connection with the acceptance or administration of its
obligations and duties under this Agreement, other than any loss, liability or
expense (i) resulting from the Master Servicer's actions or omissions in
connection with this Agreement and the Mortgage Loans, (ii) that constitutes a
specific liability of the Trustee pursuant to Section 10.01(c) or (iii) any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder or as a result of a breach of the
Trustee's obligations under Article X hereof. Any amounts payable to the Trustee
or any director, officer, employee or agent of the Trustee, in respect of the
indemnification provided by this paragraph (a), or pursuant to any other right
of reimbursement from the Trust Fund that the Trustee, or any director, officer,
employee or agent of the Trustee, may have hereunder in its capacity as such,
may be withdrawn by the Trustee from the Distribution Account at any time. Such
indemnity shall survive the termination of this Agreement and the resignation of
the Trustee.
As a limitation on the foregoing with respect to certain expenses of the
Trustee, the Trustee shall receive from REMIC 1 amounts with respect to
indemnification for counsel fees and expenses (collectively, "Legal Fees") in
connection with any third-party litigation or other claims alleging violations
of laws or regulations relating to consumer lending and/or servicing of the
Trust Fund (collectively, "Third Party Claims") in an amount not greater than
$25,000 per month, and $600,000 in the aggregate (with amounts in excess of
$25,000 for any month carried-forward to subsequent months, until the $600,000
aggregate maximum is reached). The Trustee shall not have any obligation to
incur additional expenses for which reimbursement is limited pursuant to this
paragraph in excess of the aggregate limit set forth above unless it has
received reasonable security or indemnity for such additional expenses. The
Certificateholders shall hold the Trustee harmless for any consequences to such
Certificateholders resulting from any failure of the Trustee to incur any such
additional expenses in excess of the aforementioned aggregate limit.
(b) Without limiting the Master Servicer's indemnification obligations
under Section 6.03, the Master Servicer agrees to indemnify the Trustee from,
and hold it harmless against, any loss, liability or expense resulting from a
breach of the Master Servicer's obligations and duties under this Agreement.
Such indemnity shall survive the termination or discharge of this Agreement and
the resignation or removal of the Trustee. Any payment under this Section
8.05(b) made by the Master Servicer to the Trustee shall be from the Master
Servicer's own funds, without reimbursement from the Trust Fund therefor.
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(c) The Trustee shall pay any annual rating agency fees of the Rating
Agencies for ongoing surveillance from its own funds without right of
reimbursement.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or an association
(other than the Depositor, the Seller, the Master Servicer or any Affiliate of
the foregoing) organized and doing business under the laws of any state or the
United States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authority. If such
corporation or association publishes reports of conditions at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section the combined capital and
surplus of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of conditions so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 8.07.
Section 8.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trust hereby
created by giving written notice thereof to the NIMs Insurer, the Depositor, the
Master Servicer and the Certificateholders. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the resigning
Trustee and to the successor trustee acceptable to the NIMs Insurer. A copy of
such instrument shall be delivered to the Certificateholders, the Trustee and
the Master Servicer by the Depositor. 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 8.06 and shall fail to resign after written request
therefor by the Depositor or the NIMs Insurer, or if at any time the Trustee
shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor or the NIMs Insurer may remove the Trustee and the Depositor may
appoint a successor trustee acceptable to the NIMs Insurer by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Certificateholders and the Master Servicer by the Depositor.
The Holders of Certificates entitled to at least 51% of the Voting Rights,
with the consent of the NIMs Insurer, may at any time remove the Trustee and
appoint a successor trustee by written instrument or instruments, in triplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Depositor, one complete set
to the Trustee so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders and the
Master Servicer by the Depositor.
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The NIMs Insurer, upon the failure of the Trustee to perform its
obligations hereunder, may remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by the NIMs Insurer,
one complete set of which instruments shall be delivered to the Depositor, one
complete set to the Trustee so removed and one complete set to the successor so
appointed. A copy of such instrument shall be delivered to the
Certificateholders and the Master Servicer by the Depositor.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee as provided
in Section 8.08.
Section 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor, 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 the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Mortgage Files
and related documents and statements, as well as all moneys, held by it
hereunder (other than any Mortgage Files at the time held by a Custodian, which
Custodian shall become the agent of any successor trustee hereunder), and the
Depositor and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
No successor trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 8.06 and the appointment of such successor
trustee shall not result in a downgrading of the NIM Notes or any Class of
Certificates by either Rating Agency, as evidenced by a letter from each Rating
Agency.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Depositor.
Section 8.09. Merger or Consolidation of Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation or association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or association succeeding to the business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or association shall be eligible under the provisions of Section
8.06, 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.
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Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of REMIC
1 or property securing the same may at the time be located, the Master Servicer
and the Trustee, acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
and the NIMs Insurer to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of REMIC
1, and to vest in such Person or Persons, in such capacity, such title to REMIC
1, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Master Servicer
and the Trustee may consider necessary or desirable. If the Master Servicer
shall not have joined in such appointment or the NIMs Insurer shall not have
approved such appointment within 15 days after the receipt by it of a request so
to do, or in case a Master Servicer Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice to
Holders of Certificates of the appointment of co- trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof. If such appointment is
at the request of the Master Servicer then any expense of the Trustee shall be
deemed a Servicing Advance for all purpose of this Agreement, otherwise it will
be an expense of the Trustee and will be payable out of the Trustee's funds.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 8.10 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, except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed by the Trustee (whether as Trustee hereunder or as
successor to the 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 REMIC I or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trust 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.
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,
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rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee.
Section 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Depositor and the Master Servicer,
appoint one or more Custodians to hold all or a portion of the Mortgage Files as
agent for the Trustee, by entering into a Custodial Agreement. The Trustee shall
initially serve as the Custodian and this Agreement shall serve as the Custodial
Agreement. The appointment of any Custodian may at any time be terminated and a
substitute Custodian appointed therefor upon the reasonable request of the
Master Servicer to the Trustee and the NIMs Insurer, the consent to which shall
not be unreasonably withheld. The Trustee shall pay any and all fees and
expenses of any Custodian in accordance with each Custodial Agreement. Subject
to Article VIII hereof, the Trustee agrees to comply with the terms of each
Custodial Agreement and to enforce the terms and provisions thereof against the
Custodian for the benefit of the Certificateholders having an interest in any
Mortgage File held by such Custodian. Each Custodian shall be a depository
institution or trust company subject to supervision by federal or state
authority, shall have combined capital and surplus of at least $10,000,000 and
shall be qualified to do business in the jurisdiction in which it holds any
Mortgage File. Each Custodial Agreement may be amended only as provided in
Section 11.01. In no event shall the appointment of any Custodian pursuant to a
Custodial Agreement diminish the obligations of the Trustee hereunder.
Section 8.12. Appointment of Office or Agency.
The Trustee will appoint an office or agency in the City of New York
where the Certificates may be surrendered for registration of transfer or
exchange, and presented for final distribution, and where notices and demands to
or upon the Trustee in respect of the Certificates and this Agreement may be
served. As of the Closing Date, the Trustee designates its offices located at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ for such purpose.
Section 8.13. Representations and Warranties of the Trustee.
The Trustee hereby represents and warrants to the Master Servicer and
the Depositor , as of the Closing Date, that:
(i) it is a national banking association duly organized, validly
existing and in good standing under the laws of the United States.
(ii) the execution and delivery of this Agreement, and the performance
and compliance with the terms of this Agreement, will not violate the
Trustee's charter or bylaws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under,
or result in the breach of, any material agreement or other instrument to
which it is a party or which is applicable to it or any of its assets.
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(iii) it has the full power and authority to enter into and consummate
all transactions contemplated by this Agreement, has duly authorized the
execution, delivery and performance of this Agreement, and has duly
executed and delivered this Agreement.
(iv) this Agreement, assuming due authorization, execution and
delivery by the Master Servicer and the Depositor, constitutes a valid,
legal and binding obligation of the Trustee, enforceable against the
Trustee in accordance with the terms hereof, subject to (A) applicable
bankruptcy, insolvency, receivership, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights generally, and (B)
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
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ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase or Liquidation of All Mortgage
Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Trustee (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to provide for and the
Trustee to make payments in respect of the REMIC 1 Regular Interests or the
Classes of Certificates as hereinafter set forth) shall terminate upon payment
to the Certificateholders and the deposit of all amounts held by or on behalf of
the Trustee and required hereunder to be so paid or deposited on the
Distribution Date coinciding with or following the earlier to occur of (i) the
purchase by the Terminator (as defined below) of all Mortgage Loans and each REO
Property remaining in REMIC 1 and (ii) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan or REO Property
remaining in REMIC 1; provided, however, that in no event shall the trust
created hereby continue beyond the expiration of 21 years from the death of the
last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of
the United States to the Court of St. ▇▇▇▇▇, living on the date hereof. The
purchase by the Terminator of all Mortgage Loans and each REO Property remaining
in REMIC 1 shall be at a price (the "Termination Price") equal to the greater of
(A) the aggregate Purchase Price of all the Mortgage Loans included in REMIC 1,
plus the appraised value of each REO Property, if any, included in REMIC 1, such
appraisal to be conducted by an appraiser mutually agreed upon by the Terminator
and the Trustee in their reasonable discretion and (B) the aggregate fair market
value of all of the assets of REMIC 1 (as determined by the Terminator and the
Trustee, as of the close of business on the third Business Day next preceding
the date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Section 9.01) plus
any additional amounts necessary to pay all interest accrued on, as well as
amounts necessary to pay in full the principal balance of, the NIM Notes and any
amounts necessary to reimburse the NIMs Insurer for all amounts paid under the
NIMs Policy and any other amounts reimbursable or otherwise payable to the NIMs
Insurer, in each case, with interest thereon at the applicable rate set forth in
the Indenture and to the extent not previously reimbursed or paid.
(b) The Master Servicer shall have the right and, if the Master Servicer
does not exercise such right, the NIMs Insurer shall have the right (the party
exercising such right, the "Terminator") to purchase all of the Mortgage Loans
and each REO Property in both Loan Groups remaining in REMIC 1 pursuant to
clause (i) of the preceding paragraph no later than the Determination Date in
the month immediately preceding the Distribution Date on which the Certificates
will be retired; provided, however, that the Terminator may elect to purchase
all of the Mortgage Loans and each REO Property remaining in REMIC 1 pursuant to
clause (i) above only if the aggregate Stated Principal Balance of the Mortgage
Loans and each REO Property remaining in the Trust Fund at the time of such
election is equal to or less than 10% of the aggregate Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date. By acceptance of the Residual
Certificates, the Holders of the Residual Certificates agree, in connection with
any termination hereunder, to assign and transfer any amounts in excess of par,
and to the extent received in respect of such termination, to pay any such
amounts to the Holders of the Class C Certificates.
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(c) Notice of the liquidation of the REMIC 1 Regular Interests shall be
given promptly by the Trustee by letter to Certificateholders mailed (a) in the
event such notice is given in connection with the purchase of the Mortgage Loans
and each REO Property by the Terminator, not earlier than the 15th day and not
later than the 25th day of the month next preceding the month of the final
distribution on the Certificates or (b) otherwise during the month of such final
distribution on or before the Determination Date in such month, in each case
specifying (i) the Distribution Date upon which the Trust Fund will terminate
and final payment in respect of the REMIC 1 Regular Interests and the
Certificates will be made upon presentation and surrender of the related
Certificates at the office of the Trustee therein designated, (ii) the amount of
any such final payment, (iii) that no interest shall accrue in respect of the
REMIC 1 Regular Interests or the Certificates from and after the Accrual Period
relating to the final Distribution Date therefor and (iv) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Trustee designated in such notice for purposes of such surrender. In the
event such notice is given in connection with the purchase of all of the
Mortgage Loans and each REO Property remaining in REMIC 1 by the Terminator, the
Terminator shall deliver to the Trustee for deposit in the Distribution Account
not later than the last Business Day of the month next preceding the month of
the final distribution on the Certificates an amount in immediately available
funds equal to the above-described purchase price. The Trustee shall remit to
the Master Servicer from such funds deposited in the Distribution Account (i)
any amounts which the Master Servicer would be permitted to withdraw and retain
from the Collection Account pursuant to Section 3.11 and (ii) any other amounts
otherwise payable by the Trustee to the Master Servicer from amounts on deposit
in the Distribution Account pursuant to the terms of this Agreement, in each
case prior to making any final distributions pursuant to Section 9.01(d) below.
Upon certification to the Trustee by a Servicing Officer of the making of such
final deposit, the Trustee shall promptly release or cause to be released to the
Terminator the Mortgage Files for the remaining Mortgage Loans, and the Trustee
shall execute all assignments, endorsements and other instruments necessary to
effectuate such transfer.
(d) Upon presentation of the Certificates by the Certificateholders on the
final Distribution Date, the Trustee shall distribute to each Certificateholder
so presenting and surrendering its Certificates the amount otherwise
distributable on such Distribution Date in accordance with Section 4.01 in
respect of the Certificates so presented and surrendered. Any funds not
distributed to any Holder or Holders of Certificates being retired on such
Distribution Date because of the failure of such Holder or Holders to tender
their Certificates shall, on such date, be set aside and held in trust by the
Trustee and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 9.01 shall not have been surrendered for cancellation within six months
after the time specified in such notice, the Trustee shall mail a second notice
to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall, directly or through an agent, mail a final notice to remaining related
non-tendering Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the trust funds.
If within one year after the final notice any such Certificates shall not have
been surrendered for cancellation, the Trustee shall pay to Greenwich Capital
Markets, Inc. all such amounts, and all rights of non-tendering
Certificateholders in or to
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such amounts shall thereupon cease. No interest shall accrue or be payable to
any Certificateholder on any amount held in trust by the Trustee as a result of
such Certificateholder's failure to surrender its Certificate(s) for final
payment thereof in accordance with this Section 9.01.
Immediately following the deposit of funds in trust hereunder in respect of
the Certificates, the Trust Fund shall terminate.
Section 9.02. Additional Termination Requirements.
(a) In the event that the Terminator purchases all the Mortgage Loans and
each REO Property or the final payment on or other liquidation of the last
Mortgage Loan or REO Property remaining in REMIC 1 pursuant to Section 9.01, the
Trust Fund shall be terminated in accordance with the following additional
requirements:
(i) The Trustee shall specify the first day in the 90-day liquidation
period in a statement attached to each Trust REMIC's final Tax Return
pursuant to Treasury regulation Section 1.860F-1 and shall satisfy all
requirements of a qualified liquidation under Section 860F of the Code and
any regulations thereunder, as evidenced by an Opinion of Counsel obtained
at the expense of the Terminator;
(ii) During such 90-day liquidation period, and at or prior to the
time of making of the final payment on the Certificates, the Trustee shall
sell all of the assets of REMIC 1 to the Terminator for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Residual Certificates all
cash on hand in the Trust Fund (other than cash retained to meet claims),
and the Trust Fund shall terminate at that time.
(b) At the expense of the Terminator, the Trustee shall prepare or cause to
be prepared the documentation required in connection with the adoption of a plan
of liquidation of each Trust REMIC pursuant to this Section 9.02.
(c) By their acceptance of Certificates, the Holders thereof hereby agree
to authorize the Trustee to specify the 90-day liquidation period for each Trust
REMIC, which authorization shall be binding upon all successor
Certificateholders.
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ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
(a) The Trustee shall elect to treat each Trust REMIC as a REMIC under the
Code and, if necessary, under applicable state law. Each such election will be
made on Form 1066 or other appropriate federal tax or information return
(including Form 8811) or any appropriate state return for the taxable year
ending on the last day of the calendar year in which the Certificates are issued
copies of which forms and returns shall promptly be furnished by the Trustee to
the NIMs Insurer. For the purposes of the REMIC election in respect of REMIC 1,
the REMIC 1 Regular Interests shall be designated as the Regular Interests in
REMIC 1 and the Class R-1 Interest shall be designated as the Residual Interest
in REMIC 1. For the purposes of the REMIC election in respect of REMIC 2, the
REMIC 2 Regular Interests shall be designated as the Regular Interest in REMIC 2
and the Class R-2 Interest shall be designated as the Residual Interests in
REMIC 2. For the purposes of the REMIC election in respect of REMIC 3, the
Regular Certificates shall be designated as the Regular Interests in REMIC 3 and
the Class R-3 Interest shall be designated as the Residual Interest in REMIC 3.
The Trustee shall not permit the creation of any "interests" in REMIC 1, REMIC 2
or REMIC 3 (within the meaning of Section 860G of the Code) other than the REMIC
1 Regular Interests, the REMIC 2 Regular Interests and the interests represented
by the Certificates.
(b) The Closing Date is hereby designated as the "Startup Day" of each
Trust REMIC within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay out of funds on deposit in the Distribution
Account, any and all expenses relating to any tax audit of the Trust Fund
(including, but not limited to, any professional fees or any administrative or
judicial proceedings with respect to any Trust REMIC that involve the Internal
Revenue Service or state tax authorities) unless such expenses, professional
fees or any administrative or judicial proceedings are incurred by reason of the
Trustee's willful misfeasance, bad faith or negligence. The Trustee, as agent
for all each Trust REMIC's tax matters person, shall (i) act on behalf of the
Trust Fund in relation to any tax matter or controversy involving any Trust
REMIC and (ii) represent the Trust Fund in any administrative or judicial
proceeding relating to an examination or audit by any governmental taxing
authority with respect thereto and will be entitled to reimbursement from the
Trust Fund for any expenses incurred by the Trustee in connection therewith
unless such administrative or judicial proceeding relating to an examination or
audit by any governmental taxing authority is incurred by reason of the
Trustee's willful misfeasance, bad faith or negligence. The holder of the
largest Percentage Interest of the Class R Certificates shall be designated, in
the manner provided under Treasury regulations section 1.860F- 4(d) and Treasury
regulations section 301.6231(a)(7)-1, as the tax matters person of each related
Trust REMIC created hereunder. By their acceptance thereof, the holder of the
largest Percentage Interest of the Residual Certificates hereby agrees to
irrevocably appoint the Trustee or an Affiliate as its agent to perform all of
the duties of the tax matters person for the Trust Fund.
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(d) The Trustee shall prepare, sign and file in a timely manner all of the
Tax Returns in respect of each REMIC created hereunder, copies of which Tax
Returns it shall promptly furnish to the NIMs Insurer. The expenses of preparing
and filing such returns shall be borne by the Trustee without any right of
reimbursement therefor. The Master Servicer shall provide on a timely basis to
the Trustee or its designee such information with respect to the assets of the
Trust Fund as is in its possession and reasonably required by the Trustee to
enable it to perform its obligations under this Article.
(e) The Trustee shall perform on behalf of each Trust REMIC all reporting
and other tax compliance duties that are the responsibility of such REMIC under
the Code, the REMIC Provisions or other compliance guidance issued by the
Internal Revenue Service or any state or local taxing authority. Among its other
duties, as required by the Code, the REMIC Provisions or other such compliance
guidance, the Trustee shall provide (i) to any Transferor of a Residual
Certificate such information as is necessary for the application of any tax
relating to the transfer of a Residual Certificate to any Person who is not a
Permitted Transferee, (ii) to the Certificateholders such information or reports
as are required by the Code or the REMIC Provisions including reports relating
to interest, original issue discount and market discount or premium (using the
Prepayment Assumption as required) and (iii) to the Internal Revenue Service the
name, title, address and telephone number of the person who will serve as the
representative of each Trust REMIC. The Master Servicer shall provide on a
timely basis to the Trustee such information with respect to the assets of the
Trust Fund, including, without limitation, the Mortgage Loans, as is in its
possession and reasonably required by the Trustee to enable it to perform its
obligations under this subsection. In addition, the Depositor shall provide or
cause to be provided to the Trustee, within ten (10) days after the Closing
Date, all information or data that the Trustee reasonably determines to be
relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates. The Depositor shall also
provide such information or data to the NIMs Insurer.
(f) The Trustee shall take such action and shall cause each Trust REMIC
created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the
Master Servicer shall assist the Trustee, to the extent reasonably requested by
the Trustee to do specific actions in order to assist in the maintenance of such
status). The Trustee shall not take any action, cause the Trust Fund to take any
action or fail to take (or fail to cause to be taken) any action that, under the
REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger
the status of any Trust REMIC as a REMIC or (ii) result in the imposition of a
tax upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee and the NIMs Insurer have
received an Opinion of Counsel, addressed to the Trustee and the NIMs Insurer
(at the expense of the party seeking to take such action but in no event at the
expense of the Trustee) to the effect that the contemplated action will not,
with respect to any Trust REMIC, endanger such status or result in the
imposition of such a tax, nor shall the Master Servicer take or fail to take any
action (whether or not authorized hereunder) as to which the Trustee has advised
it in writing that it has received an Opinion of Counsel to the effect that an
Adverse REMIC Event could occur with respect to such action; provided that the
Master Servicer may
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conclusively rely on such Opinion of Counsel and shall incur no liability for
its action or failure to act in accordance with such Opinion of Counsel. The
Trustee shall deliver to the NIMs Insurer a copy of any such advice or opinion.
In addition, prior to taking any action with respect to any Trust REMIC or the
respective assets of each, or causing any Trust REMIC to take any action, which
is not contemplated under the terms of this Agreement, the Master Servicer will
consult with the Trustee or its designee, in writing, with respect to whether
such action could cause an Adverse REMIC Event to occur with respect to a Trust
REMIC, and the Master Servicer shall not take any such action or cause any Trust
REMIC to take any such action as to which the Trustee has advised it in writing
that an Adverse REMIC Event could occur; provided that the Master Servicer may
conclusively rely on such writing and shall incur no liability for its action or
failure to act in accordance with such writing. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement, but in no
event shall such cost be an expense of the Trustee. At all times as may be
required by the Code, the Trustee will ensure that substantially all of the
assets of both REMIC 1 will consist of "qualified mortgages" as defined in
Section 860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited transactions" of
any Trust REMIC created hereunder as defined in Section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of such REMIC as defined in
Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trustee pursuant to Section 10.03 hereof,
if such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article X, (ii) to the Master Servicer pursuant to
Section 10.03 hereof, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under Article III or this Article X,
or otherwise (iii) against amounts on deposit in the Distribution Account and
shall be paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing April 15, 2002,
the Trustee shall deliver to the Master Servicer, the NIMs Insurer and each
Rating Agency a Certificate from a Responsible Officer of the Trustee stating
the Trustee's compliance with this Article X.
(i) The Trustee shall, for federal income tax purposes, maintain books and
records with respect to each Trust REMIC on a calendar year and on an accrual
basis.
(j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to any Trust REMIC other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the Trust Fund will not cause any Trust REMIC to
fail to qualify as a REMIC at any time that any Certificates are outstanding or
subject any Trust REMIC to any tax under the REMIC Provisions or other
applicable provisions of federal, state and local law or ordinances.
(k) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which any Trust REMIC will receive a fee or other compensation
for services nor permit any Trust REMIC
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to receive any income from assets other than "qualified mortgages" as defined in
Section 860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code.
Section 10.02. Prohibited Transactions and Activities.
None of the Depositor, the Master Servicer or the Trustee shall sell,
dispose of or substitute for any of the Mortgage Loans (except in connection
with (i) the foreclosure of a Mortgage Loan, including but not limited to, the
acquisition or sale of a Mortgaged Property acquired by deed in lieu of
foreclosure, (ii) the bankruptcy of REMIC 1, (iii) the termination of REMIC 1
pursuant to Article IX of this Agreement, (iv) a substitution pursuant to
Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), nor acquire any assets for any Trust REMIC
(other than REO Property acquired in respect of a defaulted Mortgage Loan), nor
sell or dispose of any investments in the Collection Account or the Distribution
Account for gain, nor accept any contributions to any Trust REMIC after the
Closing Date (other than a Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03), unless it and the NIMs Insurer have received an
Opinion of Counsel, addressed to the Trustee and the NIMs Insurer (at the
expense of the party seeking to cause such sale, disposition, substitution,
acquisition or contribution but in no event at the expense of the Trustee) that
such sale, disposition, substitution, acquisition or contribution will not (a)
affect adversely the status of any Trust REMIC as a REMIC or (b) cause any Trust
REMIC to be subject to a tax on "prohibited transactions" or "contributions"
pursuant to the REMIC Provisions.
Section 10.03. Trustee, Master Servicer and Depositor Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the Depositor and the
Master Servicer for any taxes and costs including, without limitation, any
reasonable attorneys fees imposed on or incurred by the Trust Fund, the
Depositor or the Master Servicer as a result of a breach of the Trustee's
covenants set forth in this Article X.
(b) The Master Servicer agrees to indemnify the Trust Fund, the Depositor
and the Trustee for any taxes and costs including, without limitation, any
reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor or the Trustee as a result of a breach of the Master Servicer's
covenants set forth in Article III or this Article X.
(c) The Depositor agrees to indemnify the Trust Fund, the Master Servicer
and the Trustee for any taxes and costs including, without limitation, any
reasonable attorneys' fees imposed on or incurred by the Trust Fund, the Master
Servicer or the Trustee as a result of a breach of the Depositor's covenants set
forth in this Article X.
132
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
This Agreement or any Custodial Agreement may be amended from time to time
by the Depositor, the Master Servicer, the Trustee and, if applicable, the
Custodian, with consent of the NIMs Insurer, and without the consent of any of
the Certificateholders, (i) to cure any ambiguity or defect, (ii) to correct,
modify or supplement any provisions herein (including to give effect to the
expectations of Certificateholders), or in any Custodial Agreement, or (iii) to
make any other provisions with respect to matters or questions arising under
this Agreement or in any Custodial Agreement which shall not be inconsistent
with the provisions of this Agreement or such Custodial Agreement, provided that
such action shall not, as evidenced by an Opinion of Counsel delivered to the
Trustee, adversely affect in any material respect the interests of any
Certificateholder. No amendment shall be deemed to adversely affect in any
material respect the interests of any Certificateholder who shall have consented
thereto, and no Opinion of Counsel shall be required to address the effect of
any such amendment on any such consenting Certificateholder.
This Agreement or any Custodial Agreement may also be amended from time to
time by the Depositor, the Master Servicer, the Trustee and, if applicable, the
Custodian, with the consent of the NIMs Insurer, and with the consent of the
Holders of Certificates entitled to at least 66% of the Voting Rights, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or any Custodial Agreement or of modifying
in any manner the rights of the Holders of Certificates; provided, however, that
no such amendment shall (i) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner, other than as described in
(i), without the consent of the Holders of Certificates of such Class evidencing
at least 66% of the Voting Rights allocated to such Class, or (iii) modify the
consents required by the immediately preceding clauses (i) and (ii) without the
consent of the Holders of all Certificates then outstanding. Notwithstanding any
other provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Depositor or the Master Servicer or any Affiliate thereof shall be entitled
to Voting Rights with respect to matters affecting such Certificates.
Notwithstanding any contrary provision of this Agreement, the Trustee shall
be entitled to receive an Opinion of Counsel to the effect that such amendment
will not result in the imposition of any tax on any Trust REMIC pursuant to the
REMIC Provisions or cause any Trust REMIC to fail to qualify as a REMIC at any
time that any Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment to each Certificateholder and the NIMs Insurer.
133
It shall not be necessary for the consent of Certificateholders under this
Section 11.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
The cost of any Opinion of Counsel to be delivered pursuant to this Section
11.01 shall be borne by the Person seeking the related amendment, but in no
event shall such Opinion of Counsel be an expense of the Trustee.
The Trustee may, but shall not be obligated to enter into any amendment
pursuant to this Section that affects its rights, duties and immunities under
this Agreement or otherwise.
Section 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Trust, but only upon direction of
Certificateholders accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall together constitute but one and the
same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i) operate to
terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as expressly provided for herein, no Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default
134
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 11.03 each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04. Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
Section 11.05. Notices.
All directions, demands and notices hereunder shall be in writing and shall
be deemed to have been duly given if personally delivered at or mailed by first
class mail, postage prepaid, by facsimile or by express delivery service, to (a)
in the case of the Master Servicer, Long Beach Mortgage Company, ▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel
(telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇), or such other address or telecopy number as
may hereafter be furnished to the Depositor and the Trustee in writing by the
Master Servicer, (b) in the case of the Trustee, Bankers Trust Company of
California, N.A., ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Securities Administration Services (telecopy number (▇▇▇) ▇▇▇-▇▇▇▇,
or such other address or telecopy number as may hereafter be furnished to the
Depositor and the Master Servicer in writing by the Trustee, (c) in the case of
the Depositor, Long Beach Securities Corp., ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel (telecopy number:
(▇▇▇) ▇▇▇-▇▇▇▇), or such other address or telecopy number as may be furnished to
the Master Servicer and the Trustee in writing by the Depositor and (d) in the
case of the NIMs Insurer, Radian Insurance Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel (telecopy number:
(▇▇▇) ▇▇▇-▇▇▇▇). Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Notice of any
Master Servicer default shall be given by telecopy and by certified mail. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have duly been given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder shall also be mailed to the appropriate party in the manner
set forth above.
135
Section 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.07. Notice to the Rating Agencies and the NIMs Insurer.
The Trustee shall use its best efforts promptly to provide notice to the
Rating Agencies and the NIMs Insurer with respect to each of the following of
which it has actual knowledge:
1. Any amendment to this Agreement;
2. The occurrence of any Master Servicer Event of Default that has not
been cured or waived;
3. The resignation or termination of the Master Servicer or the
Trustee;
4. The repurchase or substitution of Mortgage Loans pursuant to or as
contemplated by Section 2.03;
5. The final payment to the Holders of any Class of Certificates;
6. Any change in the location of the Collection Account or the
Distribution Account;
7. The Trustee, were it to succeed as Master Servicer, is unable to
make advances regarding delinquent Mortgage Loans; and
8. The filing of any claim under the Master Servicer's blanket bond
and errors and omissions insurance policy required by Section 3.14 or
the cancellation or material modification of coverage under any such
instrument.
In addition, the Trustee shall promptly make available to each Rating Agency
copies of each Statement to Certificateholders described in Section 4.03 hereof
and the Master Servicer shall promptly furnish to each Rating Agency copies of
the following:
1. each annual statement as to compliance described in Section 3.20
hereof;
2. each annual independent public accountants' servicing report
described in Section 3.21 hereof.
136
Any such notice pursuant to this Section 11.07 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to ▇▇▇▇▇'▇
Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: MBS
Monitoring/Long Beach Mortgage Loan Trust 2001-1; Fitch, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Standard & Poor's Ratings Services, Inc., ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and the NIMs Insurer at the addressed
provided in Section 11.05.
In addition, each party hereto agrees that it will furnish or make
available to the NIMs Insurer a copy of any opinions, notices, reports,
schedules, certificates, statements, rating confirmation letters or other
information that are furnished hereunder to the Trustee or the
Certificateholders.
Section 11.08. Article and Section References.
All article and section references used in this Agreement, unless otherwise
provided, are to articles and sections in this Agreement.
Section 11.09. NIMs Insurer's Rights.
The NIMs Insurer shall be deemed a third-party beneficiary of this
Agreement, and shall be entitled to enforce such rights, in each case, as if it
were a party hereto. Notwithstanding anything to the contrary anywhere in this
Agreement, all rights of the NIMs Insurer hereunder (i) shall not be operable
whenever an Insurer Default or an Insurer Insolvency Event and a Backup Insurer
Default (as defined in the Indenture) shall have occurred and be continuing and
(ii) except in the case of any right to indemnification hereunder shall
permanently cease to be operable upon the later to occur of (A) the payment in
full of the NIM Notes as provided in the Indenture and (B) the payment in full
to the NIMs Insurer of any amounts owed to the NIMs Insurer as provided in the
Indenture.
Section 11.10. Grant of Security Interest.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans by the Depositor to the Trustee be, and be construed as, a sale
of the Mortgage Loans by the Depositor and not a pledge of the Mortgage Loans by
the Depositor to secure a debt or other obligation of the Depositor. However, in
the event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Depositor, then, (a) it is the
express intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Depositor to the Trustee to secure a debt or other
obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be
a security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York; (2) the
conveyance provided for in Section 2.01 hereof shall be deemed to be a grant by
the Depositor to the Trustee of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holders of the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Collection Account and the Distribution Account, whether in the form of
cash, instruments, securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under this Agreement,
137
including the obligation to provide to the Certificateholders the benefits of
this Agreement relating to the Mortgage Loans and the Trust Fund; and (4)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Trustee for the purpose
of perfecting such security interest under applicable law. Accordingly, the
Depositor hereby grants to the Trustee a security interest in the Mortgage Loans
and all other property described in clause (2) of the preceding sentence, for
the purpose of securing to the Trustee the performance by the Depositor of the
obliga tions described in clause (3) of the preceding sentence. Notwithstanding
the foregoing, the parties hereto intend the conveyance pursuant to Section 2.01
to be a true, absolute and unconditional sale of the Mortgage Loans and assets
constituting the Trust Fund by the Depositor to the Trustee.
Section 11.11. No Petition.
The Depositor, Master Servicer and the Trustee, by entering into this
Agreement and each Certificateholder, by accepting a Certificate, hereby
covenant and agree that they will not at any time institute against the Trust
Fund, or join in any institution against the Trust Fund of, any bankruptcy
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations with respect to the Certificates or this
Agreement.
138
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized, all as of the day and year first above written.
LONG BEACH SECURITIES CORP.,
as Depositor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
LONG BEACH MORTGAGE COMPANY,
as Master Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
BANKERS TRUST COMPANY OF
CALIFORNIA,
N.A.,
as Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Associate
139
STATE OF )
) ss.:
COUNTY OF )
On the ___th day of March, 2001 before me, a notary public in and for said
State, personally appeared _______________ known to me to be a ______________ of
Long Beach Securities Corp., a Delaware corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
__________________________________
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the ___th day of March, 2001 before me, a notary public in and for said
State, personally appeared _______________ known to me to be a _______________
of Long Beach Mortgage Company, a corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
__________________________________
Notary Public
STATE OF )
) ss.:
COUNTY OF )
On the ___th day of March, 2001 before me, a notary public in and for said
State, personally appeared _______________, known to me to be a
____________________ of Bankers Trust Company of California, N.A., a national
banking association that executed the within instrument, and also known to me to
be the person who executed it on behalf of said association, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
__________________________________
Notary Public
CLASS A[__] CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, the
later of (i) the date of origination of
such Mortgage Loan or (ii) March 1, 2001
First Distribution Date : April 23, 2001
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $[__]
Original Class Certificate
Principal Balance of this Class : $[__]
Percentage Interest : 100.00%
Pass-Through Rate : [__]
CUSIP : [__]
Class : A[__]
Assumed Maturity Date : [____________]
▇-▇-▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇-▇
Asset-Backed Certificates,
Series 2001-1
Class A[__]
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class A[__]
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A[__]
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A[__] Certificate (obtained by dividing the
Denomination of this Class A[__] Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of March 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class A[__] Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class A[__] Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class A[__]
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class A[__] Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-1-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: March __, 2001
LONG BEACH MORTGAGE LOAN TRUST 2001-1
By: BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
not in its individual capacity, but
solely as Trustee
By ________________________________________
This is one of the Class A[__] Certificates
referenced in the within-mentioned Agreement
By ________________________________________
Authorized Signatory of
Bankers Trust Company of California, N.A.,
as Trustee
A-1-3
[Reverse of Class A[__] Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2001-1
Asset-Backed Certificates,
Series 2001-1
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-1, Asset-Backed Certificates,
Series 2001-1 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
21st day of each month or, if such 21st day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
A-1-4
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the sum of the
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer may purchase, in whole, from the Trust the Mortgage Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [____________].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-1-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_________________
______________________________________
Signature by or on behalf of assignor
A-1-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
for the account of ____________________________________________________________,
account number ___________________, or, if mailed by check, to ________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by __________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
A-1-7
CLASS S CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, the
later of (i) the date of origination of
such Mortgage Loan or (ii) March 1, 2001
First Distribution Date : April 23, 2001
Initial Certificate Notional
Amount of this Certificate
("Denomination") : $[__]
Original Class Certificate
Notional Amount of this Class : $[__]
Percentage Interest : 100.00%
Pass-Through Rate : [__]
CUSIP : [__]
Class : S
Assumed Maturity Date : [____________]
▇-▇-▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇-▇
Asset-Backed Certificates,
Series 2001-1
Class S
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class S
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class S
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class S Certificate (obtained by dividing the
Denomination of this Class S Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of March 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Company, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class S Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class S Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class S
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class S Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-2-2
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: March __, 2001
LONG BEACH MORTGAGE LOAN TRUST 2001-1
By: BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
not in its individual capacity, but
solely as Trustee
By ________________________________________
This is one of the Class S Certificates
referenced in the within-mentioned Agreement
By ________________________________________
Authorized Signatory of
Bankers Trust Company of California, N.A.,
as Trustee
A-2-3
[Reverse of Class S Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2001-1
Asset-Backed Certificates,
Series 2001-1
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-1, Asset-Backed Certificates,
Series 2001-1 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
21st day of each month or, if such 21st day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
A-2-4
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the sum of the
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer may purchase, in whole, from the Trust the Mortgage Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [____________].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-2-5
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_________________
______________________________________
Signature by or on behalf of assignor
A-2-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
for the account of ____________________________________________________________,
account number ___________________, or, if mailed by check, to ________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by __________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
A-2-7
CLASS M-1 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES AND THE CLASS S CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
A-3-1
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, the
later of (i) the date of origination of
such Mortgage Loan or (ii) March 1, 2001
First Distribution Date : April 23, 2001
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $[__]
Original Class Certificate
Principal Balance of this Class : $[__]
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [__]
Class : M-1
Assumed Maturity Date : [____________]
▇-▇-▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇-▇
Asset-Backed Certificates,
Series 2001-1
Class M-1
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class M-1
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class M-1 Certificate (obtained by dividing the
Denomination of this Class M-1 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of March 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-1 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-1 Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound.
No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(d) of the Agreement.
Reference is hereby made to the further provisions of this Class M-1
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class M-1 Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-3-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: March __, 2001
LONG BEACH MORTGAGE LOAN TRUST 2001-1
By: BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
not in its individual capacity, but
solely as Trustee
By ________________________________________
This is one of the Class M-1 Certificates
referenced in the within-mentioned Agreement
By ________________________________________
Authorized Signatory of
Bankers Trust Company of California, N.A.,
as Trustee
A-3-4
[Reverse of Class M-1 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2001-1
Asset-Backed Certificates,
Series 2001-1
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-1, Asset-Backed Certificates,
Series 2001-1 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
21st day of each month or, if such 21st day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer and the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
A-3-5
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the sum of the
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer may purchase, in whole, from the Trust the Mortgage Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [____________].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-3-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:_________________
______________________________________
Signature by or on behalf of assignor
A-3-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
for the account of ____________________________________________________________,
account number ___________________, or, if mailed by check, to ________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by __________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
A-3-8
CLASS M-2 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S CERTIFICATES AND THE CLASS M-1 CERTIFICATES TO THE
EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
A-4-1
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, the
later of (i) the date of origination of
such Mortgage Loan or (ii) March 1, 2001
First Distribution Date : April 23, 2001
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $[__]
Original Class Certificate
Principal Balance of this Class : $[__]
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [__]
Class : M-2
Assumed Maturity Date : [____________]
▇-▇-▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇-▇
Asset-Backed Certificates,
Series 2001-1
Class M-2
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class M-2
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class M-2 Certificate (obtained by dividing the
Denomination of this Class M-2 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of March 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-2 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-2 Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound.
No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(d) of the Agreement.
Reference is hereby made to the further provisions of this Class M-2
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class M-2 Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-4-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: March __, 2001
LONG BEACH MORTGAGE LOAN TRUST 2001-1
By: BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
not in its individual capacity, but
solely as Trustee
By ________________________________________
This is one of the Class M-2 Certificates
referenced in the within-mentioned Agreement
By ________________________________________
Authorized Signatory of
Bankers Trust Company of California, N.A.,
as Trustee
A-4-4
[Reverse of Class M-2 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2001-1
Asset-Backed Certificates,
Series 2001-1
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-1, Asset-Backed Certificates,
Series 2001-1 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
21st day of each month or, if such 21st day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor and the Master Servicer and of Holders of the requisite
percentage of the Percentage Interests of each Class of Certificates affected by
such amendment, as specified in the Agreement. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
A-4-5
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the sum of the
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer may purchase, in whole, from the Trust the Mortgage Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [____________].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-4-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated: ___________________
______________________________________
Signature by or on behalf of assignor
A-4-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
for the account of ____________________________________________________________,
account number ___________________, or, if mailed by check, to ________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by __________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
A-4-8
CLASS M-3 CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS S CERTIFICATES, THE CLASS M-1 CERTIFICATES AND THE CLASS
M-2 CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
A-5-1
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, the
later of (i) the date of origination of
such Mortgage Loan or (ii) March 1, 2001
First Distribution Date : April 23, 2001
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $[__]
Original Class Certificate
Principal Balance of this Class : $[__]
Percentage Interest : 100.00%
Pass-Through Rate : Variable
CUSIP : [__]
Class : M-3
Assumed Maturity Date : [____________]
▇-▇-▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇-▇
Asset-Backed Certificates,
Series 2001-1
Class M-3
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class M-3
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class M-3
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class M-3 Certificate (obtained by dividing the
Denomination of this Class M-3 Certificate by the Original Class Certificate
Principal Balance) in certain monthly distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of March 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class M-3 Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class M-3 Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound.
No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(d) of the Agreement.
Reference is hereby made to the further provisions of this Class M-3
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class M-3 Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-5-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: March __, 2001
LONG BEACH MORTGAGE LOAN TRUST 2001-1
By: BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
not in its individual capacity, but
solely as Trustee
By ________________________________________
This is one of the Class M-3 Certificates
referenced in the within-mentioned Agreement
By ________________________________________
Authorized Signatory of
Bankers Trust Company of California,
N.A., as Trustee
A-5-4
[Reverse of Class M-3 Certificate]
LONG BEACH MORTGAGE LOAN TRUST 2001-1
Asset-Backed Certificates,
Series 2001-1
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-1, Asset-Backed Certificates,
Series 2001-1 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
21st day of each month or, if such 21st day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
A-5-5
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the sum of the
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer may purchase, in whole, from the Trust the Mortgage Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [____________].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-5-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:___________________
______________________________________
Signature by or on behalf of assignor
A-5-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
for the account of ____________________________________________________________,
account number ___________________, or, if mailed by check, to ________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by __________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
A-5-8
CLASS C CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS M-1
CERTIFICATES, THE CLASS M-2 CERTIFICATES AND THE CLASS M-3 CERTIFICATES TO THE
EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
A-6-1
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, the
later of (i) the date of origination of
such Mortgage Loan or (ii) March 1, 2001
First Distribution Date : April 23, 2001
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $[__]
Original Class Certificate
Principal Balance of this Class : $[__]
Initial Notional Amount of this
Certificate ("Denomination")
: $[--]
Original Notional Amount of
this Class : $[__]
Percentage Interest : 100.00%
Class : C
A-6-2
Long Beach Mortgage Loan Trust 2001-1
Asset-Backed Certificates,
Series 2001-1
Class C
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class C
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class C
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Long Beach Mortgage Securities Corp. is the registered
owner of the Percentage Interest evidenced by this Class C Certificate (obtained
by dividing the Denomination of this Class C Certificate by the Original Class
Certificate Principal Balance) in certain distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of March 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class C Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class C Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.
A-6-3
No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(d) of the Agreement.
Reference is hereby made to the further provisions of this Class C
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class C Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-6-4
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: March __, 2001
LONG BEACH MORTGAGE LOAN TRUST 2001-1
By: BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
not in its individual capacity, but
solely as Trustee
By ________________________________________
This is one of the Class C Certificates
referenced in the within-mentioned Agreement
By ________________________________________
Authorized Signatory of
Bankers Trust Company of California,
as Trustee
A-6-5
[Reverse of Class C Certificate]
Long Beach Mortgage Loan Trust 2001-1
Asset-Backed Certificates,
Series 2001-1
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-1, Asset-Backed Certificates,
Series 2001-1 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
21st day of each month or, if such 21st day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
A-6-6
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 Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the sum of the
aggregate Principal Balance of the Mortgage Loans as of the Cut-off Date, the
Master Servicer may purchase, in whole, from the Trust the Mortgage Loans at a
purchase price determined as provided in the Agreement. In the event that no
such optional termination occurs, the obligations and responsibilities created
by the Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the
Regular Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [___________].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-6-7
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_______________________________________________________
________________________________________________________________________________
Dated:___________________
______________________________________
Signature by or on behalf of assignor
A-6-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
for the account of ____________________________________________________________,
account number ___________________, or, if mailed by check, to ________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by __________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
A-6-9
CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
A-7-1
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, the
later of (i) the date of origination of
such Mortgage Loan or (ii) March 1, 2001
First Distribution Date : April 23, 2001
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $100.00
Original Class Certificate
Principal Balance of this Class : $100.00
Percentage Interest : 100.00%
Class : P
A-7-2
Long Beach Mortgage Loan Trust 2001-1
Asset-Backed Certificates,
Series 2001-1
Class P
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting of first lien and second lien, fixed rate and
adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Class P
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class P
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Master Servicer or the Trustee referred to
below or any of their respective affiliates.
This certifies that Long Beach Mortgage Securities Corp. is the registered
owner of the Percentage Interest evidenced by this Class P Certificate (obtained
by dividing the Denomination of this Class P Certificate by the Original Class
Certificate Principal Balance) in certain distributions with respect to a Trust
consisting primarily of the Mortgage Loans deposited by Long Beach Securities
Corp. (the "Depositor"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of March 1, 2001 (the "Agreement") among the
Depositor, Long Beach Mortgage Corporation, as master servicer (the "Master
Servicer") and Bankers Trust Company of California, N.A. as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class P Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class P Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
This Certificate does not have a pass-through rate and will be entitled to
distributions only to the extent set forth in the Agreement.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability
A-7-3
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(d) of the Agreement.
Reference is hereby made to the further provisions of this Class P
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class P Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-7-4
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: March __, 2001
LONG BEACH MORTGAGE LOAN TRUST 2001-1
By: BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
not in its individual capacity, but
solely as Trustee
By ________________________________________
This is one of the Class P Certificates
referenced in the within-mentioned Agreement
By ________________________________________
Authorized Signatory of
Bankers Trust Company of California, N.A.,
as Trustee
A-7-5
[Reverse of Class P Certificate]
Long Beach Mortgage Loan Trust 2001-1
Asset-Backed Certificates,
Series 2001-1
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-1, Asset-Backed Certificates,
Series 2001-1 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
21st day of each month or, if such 21st day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
A-7-6
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 Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the sum of the
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer may purchase, in whole, from the Trust the Mortgage Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [____________].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-7-7
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_______________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including
Dated:___________________
______________________________________
Signature by or on behalf of assignor
A-7-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
for the account of ____________________________________________________________,
account number ___________________, or, if mailed by check, to ________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by __________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
A-7-9
CLASS R CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT (EACH A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), SHALL BE MADE EXCEPT IN COMPLIANCE WITH THE
PROCEDURES DESCRIBED HEREIN.
Certificate No. : 1
Cut-off Date : With respect to any Mortgage Loan, the
later of (i) the date of origination of
such Mortgage Loan or (ii) March 1, 2001
First Distribution Date : April 23, 2001
Percentage Interest : 100.00%
Class R
▇-▇-▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇-▇
Asset-Backed Certificates,
Series 2001-1
Class R
evidencing the Percentage Interest in the distributions allocable to
the Certificates of the above-referenced Class with respect to the
Trust consisting primarily of a pool of first lien and second lien,
fixed rate and adjustable rate mortgage loans (the "Mortgage Loans")
LONG BEACH SECURITIES CORP., as Depositor
This Certificate does not evidence an obligation of, or an interest in, and
is not guaranteed by the Depositor, the Master Servicer or the Trustee referred
to below or any of their respective affiliates.
This certifies that Long Beach Mortgage Securities Corp. is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in a Trust consisting primarily of the Mortgage Loans
deposited by Long Beach Securities Corp. (the "Depositor"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of March 1, 2001
(the "Agreement") among the Depositor, Long Beach Mortgage Corporation, as
master servicer (the "Master Servicer") and Bankers Trust Company of California,
N.A. as trustee (the "Trustee"). 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 does not have a principal balance or pass-through rate and
will be entitled to distributions only to the extent set forth in the Agreement.
In addition, any distribution of the proceeds of any remaining assets of the
Trust will be made only upon presentment and surrender of this Certificate at
the Corporate Trust Office or the office or agency maintained by the Trustee in
Santa Ana, California.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the Act
and any applicable state securities laws or is exempt from the registration
requirements under said Act and such laws. In the event that a transfer is to be
made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring to
effect such transfer and such Certificateholder's prospective transferee shall
each certify to the Trustee and the Depositor in writing the facts surrounding
the transfer. In the event that such a transfer is not to be made pursuant to
Rule 144A of the Act, there shall be delivered to the Trustee and the Depositor
of an Opinion of Counsel that such transfer may be made pursuant to an exemption
from the Act, which Opinion of Counsel shall not be obtained at the expense of
the Trustee, the Master Servicer or the Depositor; or there shall be delivered
to the Trustee and the Depositor a transferor certificate by the transferor and
an investment letter shall be executed by the transferee. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Depositor against any liability
A-8-2
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws.
No transfer of this Certificate to a Plan subject to ERISA or Section 4975
of the Code, any Person acting, directly or indirectly, on behalf of any such
Plan or any person using Plan Assets to acquire this Certificate shall be made
except in accordance with Section 5.02(d) of the Agreement.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee. Pursuant to the Agreement, The Trustee will
provide the Internal Revenue Service and any pertinent persons with the
information needed to compute the tax imposed under the applicable tax laws on
transfers of residual interests to disqualified organizations, if any person
other than a Permitted Transferee acquires an Ownership Interest on a Class R
Certificate in violation of the restrictions mentioned above.
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.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
officer of the Trustee.
A-8-3
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: March __, 2001
LONG BEACH MORTGAGE LOAN TRUST 2001-1
By: BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
not in its individual capacity, but
solely as Trustee
By ________________________________________
This is one of the Class R Certificates
referenced in the within-mentioned Agreement
By ________________________________________
Authorized Signatory of
Bankers Trust Company of California, N.A.,
as Trustee
A-8-4
[Reverse of Class R Certificate]
Long Beach Mortgage Loan Trust 2001-1
Asset-Backed Certificates,
Series 2001-1
This Certificate is one of a duly authorized issue of Certificates
designated as Long Beach Mortgage Loan Trust 2001-1, Asset-Backed Certificates,
Series 2001-1 (herein collectively called the "Certificates"), and representing
a beneficial ownership interest in the Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
21st day of each month or, if such 21st day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or by wire transfer or otherwise, as set forth in the
Agreement. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders of
such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Master Servicer, the Trustee and of Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange therefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
A-8-5
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer, the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the date at which the remaining
Principal Balance of the Mortgage Loans is less than 10% of the sum of the
Principal Balance of the Mortgage Loans as of the Cut-off Date, the Master
Servicer may purchase, in whole, from the Trust the Mortgage Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon notice to the Trustee upon the earliest of (i) the
Distribution Date on which the Certificate Principal Balances of the Regular
Certificates have been reduced to zero, (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust, (iii) the Distribution Date
in [____________].
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-8-6
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including
postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_______________________________________________________
________________________________________________________________________________
Dated:___________________
______________________________________
Signature by or on behalf of assignor
A-8-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
for the account of ____________________________________________________________,
account number ___________________, or, if mailed by check, to ________________
_______________________________________________________________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________.
This information is provided by __________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
A-8-8
EXHIBIT B
[RESERVED]
B-1
EXHIBIT C
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
C-1
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Mortgage Loan Purchase Agreement (the "Agreement"), dated
March 14, 2001, between Long Beach Securities Corp., a Delaware corporation (the
"Purchaser") and Long Beach Mortgage Company, a Delaware corporation (the
"Seller").
PRELIMINARY STATEMENT
---------------------
The Seller intends to sell the Mortgage Loans (as hereinafter defined)
to the Purchaser on the terms and subject to the conditions set forth in this
Agreement. The Purchaser intends to deposit the Mortgage Loans into a mortgage
pool constituting the trust fund. The trust fund will be evidenced by fixed rate
and adjustable rate asset backed certificates designated as Long Beach Mortgage
Loan Trust, Series 2001-1 (the "Certificates"). The Certificates will consist of
nine classes of certificates. The Certificates will be issued pursuant to a
Pooling and Servicing Agreement, dated as of March 1, 2001 (the "Pooling and
Servicing Agreement"), among the Purchaser as depositor, Bankers Trust Company
of California N.A. as trustee and the Seller as master servicer (in such
capacity, the "Master Servicer"). Capitalized terms used but not defined herein
shall have the meanings set forth in the Pooling and Servicing Agreement.
The parties hereto agree as follows:
SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell, and the
Purchaser agrees to purchase, on or before March 15, 2001 (the "Closing Date"),
certain fixed-rate and adjustable-rate conventional residential mortgage loans
(the "Mortgage Loans"), having an aggregate principal balance as of the close of
business on March 1, 2001 (the "Cut-off Date") of approximately $725,466,488.78,
after giving effect to all payments due on the Mortgage Loans on or before the
Cut-off Date, whether or not received.
SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the Seller have
agreed upon which of the mortgage loans owned by the Seller are to be purchased
by the Purchaser pursuant to this Agreement on the Closing Date and the Seller
will prepare or cause to be prepared on or prior to the Closing Date a final
schedule (the "Closing Schedule") that together shall describe such Mortgage
Loans and set forth all of the Mortgage Loans to be purchased under this
Agreement. The Closing Schedule will conform to the requirements set forth in
this Agreement and to the definition of "Mortgage Loan Schedule" under the
Pooling and Servicing Agreement. The Closing Schedule shall be used as the
Mortgage Loan Schedule under the Pooling and Servicing Agreement.
SECTION 3. CONSIDERATION.
In consideration for the Mortgage Loans to be purchased hereunder, the
Purchaser shall on the Closing Date, as described in Section 8, (i) pay to or
upon the order of the Seller in immediately available funds an amount (the
"Purchase Price") equal to the net sale proceeds of the Class A-1 Certificates,
the Class A-2 Certificates, the Class S Certificates and the Mezzanine
Certificates and (ii) will have delivered to Long Beach Asset Holdings Corp.
upon the order of the
Seller the Class C Certificates, the Class P Certificates and the Class R
Certificates (the "Long Beach Certificates").
The Purchaser or any assignee, transferee or designee of the Purchaser
shall be entitled to all scheduled payments of principal due after the Cut-off
Date, all other payments of principal due and collected after the Cut-off Date,
and all payments of interest on the Mortgage Loans allocable to the period after
the Cut-off Date. All scheduled payments of principal and interest due on or
before the Cut-off Date and collected after the Cut-off Date shall belong to the
Seller.
Pursuant to the Pooling and Servicing Agreement, the Purchaser will
transfer, assign, set over and otherwise convey to the Trustee without recourse
for the benefit of the Certificateholders, all the right, title and interest of
the Purchaser in and to the Mortgage Loans (other than Sections 17 and 18
hereof), together with its rights under this Agreement.
SECTION 4. TRANSFER OF THE MORTGAGE LOANS.
(a) POSSESSION OF MORTGAGE FILES. The Seller does hereby sell,
transfer, assign, set over and convey to the Purchaser, without recourse but
subject to the terms of this Agreement, all of its right, title and interest in,
to and under the Mortgage Loans. The contents of each Mortgage File not
delivered to the Purchaser or to any assignee, transferee or designee of the
Purchaser on or prior to the Closing Date are and shall be held in trust by the
Seller for the benefit of the Purchaser or any assignee, transferee or designee
of the Purchaser and immediately transferred to the Trustee. Upon the sale of
the Mortgage Loans the ownership of each Mortgage Note, the related Mortgage and
the other contents of the related Mortgage File is vested in the Purchaser and
the ownership of all records and documents with respect to the related Mortgage
Loan prepared by or that come into the possession of the Seller on or after the
Closing Date shall immediately vest in the Purchaser and shall be delivered
immediately to the Purchaser or as otherwise directed by the Purchaser.
(b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. The Seller will, on or prior
to the Closing Date, deliver or cause to be delivered to the Purchaser or any
assignee, transferee or designee of the Purchaser each of the following
documents for each Mortgage Loan:
(i) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of Bankers Trust Company of California
N.A. as Trustee under the applicable agreement, without recourse," with all
prior and intervening endorsements, showing a complete chain of endorsement
from the originator to the Person so endorsing to the Trustee or (in the
case of not more than 1.00% of the Mortgage Loans, by aggregate principal
balance as of the Cut-off Date) a copy of such original Mortgage Note with
an accompanying Lost Note Affidavit executed by the Seller;
(ii) the original Mortgage with evidence of recording thereon,
and a copy, certified by the appropriate recording office, of the recorded
power of attorney, if the Mortgage was executed pursuant to a power of
attorney, with evidence of recording thereon;
(iii) an original Assignment executed in blank;
2
(iv) the original recorded Assignment or Assignments showing a
complete chain of assignment from the originator to the Person assigning
the Mortgage to the Trustee or in blank;
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy, together with
all endorsements or riders issued with or subsequent to the issuance of
such policy, insuring the priority of the Mortgage as a first lien or
second lien on the Mortgaged Property represented therein as a fee interest
vested in the Mortgagor, or in the event such original title policy is
unavailable, a written commitment or uniform binder or preliminary report
of the title issued by the title insurance or escrow company.
The Seller shall promptly (and in no event later than thirty (30)
Business Days, subject to extension upon a mutual agreement between the Seller
and the Purchaser), following the later of the Closing Date and the date of
receipt by the Seller of recording information for a Mortgage submit or cause to
be submitted for recording, at no expense to the Purchaser, in the appropriate
public office for real property records, each Assignment referred to in (iii)
and (iv) above and shall execute each original Assignment referred to in clause
(iii) above in the following form: "Bankers Trust Company of California, N.A.,
as Trustee under the applicable agreement, without recourse." In the event that
any such Assignment is lost or returned unrecorded because of a defect therein,
the Seller shall promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case may be, and
thereafter cause each such Assignment to be duly recorded. Notwithstanding the
foregoing, however, for administrative convenience and facilitation of servicing
and to reduce closing costs, the Assignments shall not be required to be
completed and submitted for recording with respect to any Mortgage Loan if the
Trustee, the NIMs Insurer and each Rating Agency has received an opinion of
counsel, reasonably satisfactory to the Trustee, the NIMs Insurer and each
Rating Agency, to the effect that the recordation of such Assignments in any
specific jurisdiction is not necessary to protect the Trust's interest in the
related Mortgage Note; provided further, however, notwithstanding the delivery
of any opinion of counsel, each Assignment shall be submitted for recording by
the Seller, in the manner described above, at no expense to the Trust Fund or
the Trustee, upon the earliest to occur of: (i) reasonable direction by Holders
of Certificates entitled to at least 25% of the Voting Rights, (ii) the
occurrence of a Master Servicer Event of Default, (iii) the occurrence of a
bankruptcy, insolvency or foreclosure relating to the Seller, (iv) the
occurrence of a servicing transfer as described in Section 7.02 of the Pooling
and Servicing Agreement and (v) if the Seller is not the Master Servicer and
with respect to any one Assignment, the occurrence of a bankruptcy, insolvency
or foreclosure relating to the Mortgagor under the related Mortgage.
If any document referred to in Section 4(b)(ii), Section 4(b)(iii) or
Section 4(b)(iv) above has as of the Closing Date been submitted for recording
but either (x) has not been returned from the applicable public recording office
or (y) has been lost or such public recording office has retained the original
of such document, the obligations of the Seller to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Purchaser of a copy of each
such document certified by the Seller in the case of (x) above or the applicable
public recording office in the case
3
of (y) above to be a true and complete copy of the original that was submitted
for recording and (2) if such copy is certified by the Seller, delivery to the
Purchaser upon receipt thereof, and in any event no later than one year after
the Closing Date, of either the original or a copy of such document certified by
the applicable public recording office to be a true and complete copy of the
original. If the original lender's title insurance policy was not delivered
pursuant to Section 4(b)(vi) above, the Seller shall deliver or cause to be
delivered to the Purchaser or any assignee, transferee or designee of the
Purchaser promptly after receipt thereof, and in any event within 120 days after
the Closing Date, the original lender's title insurance policy. The Seller shall
deliver or cause to be delivered to the Purchaser or any assignee, transferee or
designee of the Purchaser promptly upon receipt thereof any other original
documents constituting a part of a Mortgage File received with respect to any
Mortgage Loan, including, but not limited to, any original documents evidencing
an assumption or modification of any Mortgage Loan.
Each original document relating to a Mortgage Loan which is not
delivered to the Purchaser or its assignee, transferee or designee, if held by
the Seller, shall be so held for the benefit of the Purchaser or its assignee,
transferee or designee.
(c) ACCEPTANCE OF MORTGAGE LOANS. The documents delivered pursuant to
Section 4(b) hereof shall be reviewed by the Purchaser or any assignee,
transferee or designee of the Purchaser at any time before, on and after the
Closing Date (and with respect to each document permitted to be delivered after
the Closing Date within seven days of its delivery) to ascertain that all
required documents have been executed and received and that such documents
relate to the Mortgage Loans identified on the Mortgage Loan Schedule.
(d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser has the right to
assign its interest under this Agreement (other than Sections 17 and 18 hereof),
in whole or in part, to the Trustee, as may be required to effect the purposes
of the Pooling and Servicing Agreement, without the consent of the Seller, and
the Trustee shall succeed to the rights and obligations hereunder of the
Purchaser. Any expense reasonably incurred by or on behalf of the Purchaser, the
Trustee or the NIM Insurer in connection with enforcing any obligations of the
Seller under this Agreement will be promptly reimbursed by the Seller.
(e) EXAMINATION OF MORTGAGE FILES. Prior to the Closing Date, the
Seller shall either (i) deliver in escrow to the Purchaser or to any assignee,
transferee or designee of the Purchaser, for examination, the Mortgage File
pertaining to each Mortgage Loan, or (ii) make such Mortgage Files available to
the Purchaser or to any assignee, transferee or designee of the Purchaser for
examination. Such examination may be made by the Purchaser or the Trustee, and
their respective designees, upon reasonable notice to the Seller during normal
business hours at any time before or after the Closing Date. If any such person
makes such examination prior to the Closing Date and identifies any Mortgage
Loans that do not conform to the requirements of the Purchaser as described in
this Agreement, such Mortgage Loans shall be deleted from the Closing Schedule.
The Purchaser may, at its option and without notice to the Seller, purchase all
or part of the Mortgage Loans without conducting any partial or complete
examination. The fact that the Purchaser or any person has conducted or has
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect the rights of the Purchaser or any assignee, transferee or
designee of the
4
Purchaser to demand repurchase or other relief as provided herein or under the
Pooling and Servicing Agreement.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER.
The Seller hereby represents and warrants to the Purchaser, as of the
date hereof and as of the Closing Date, and covenants, that:
(i) The Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
authorized and qualified to transact any and all business contemplated by
this Agreement to be conducted by the Seller in any state in which a
Mortgaged Property is located or is otherwise not required under applicable
law to effect such qualification and, in any event, is in compliance with
the doing business laws of any such State, to the extent necessary to
ensure its ability to enforce each Mortgage Loan and to service the
Mortgage Loans in accordance with the terms of the Pooling and Servicing
Agreement;
(ii) The Seller had the full corporate power and authority to
originate, hold and sell each Mortgage Loan and has the full corporate
power and authority to service each Mortgage Loan, and to execute, deliver
and perform, and to enter into and consummate the transactions contemplated
by this Agreement and has duly authorized by all necessary corporate action
on the part of the Seller the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due authorization, execution
and delivery thereof by the Purchaser, constitutes a legal, valid and
binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except to the extent that (a) the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium, receivership
and other similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought;
(iii) The execution and delivery of this Agreement by the Seller,
the servicing of the Mortgage Loans by the Seller under the Pooling and
Servicing Agreement, the consummation of any other of the transactions
herein contemplated, and the fulfillment of or compliance with the terms
hereof are in the ordinary course of business of the Seller and will not
(A) result in a breach of any term or provision of the charter or by-laws
of the Seller or (B) conflict with, result in a breach, violation or
acceleration of, or result in a default under, the terms of any other
material agreement, instrument or indenture to which the Seller is a party
or by which it may be bound, or any statute, order or regulation applicable
to the Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Seller or any of its
property, will result in the creation or imposition of any lien, charge or
encumbrance which would have a material adverse effect upon the Mortgage
Loans or any documents or instruments evidencing or securing the Mortgage
Loans; and the Seller is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument, or subject to
or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body
5
having jurisdiction over it, which materially and adversely affects or, to
the Seller's knowledge, would in the future result in the creation or
imposition of any lien, charge or encumbrance which would have a material
adverse effect upon the Mortgage Loans or any documents or instruments
evidencing or securing the Mortgage Loans or materially and adversely
affect (x) the ability of the Seller to perform its obligations under this
Agreement or the Pooling and Servicing Agreement or (y) the business,
operations, financial condition, properties or assets of the Seller taken
as a whole;
(iv) No consent, approval, authorization, or order of, any court
or governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this
Agreement or the consummation of the transactions contemplated hereby, or
if any such consent, approval, authorization or order is required, the
Seller has obtained the same;
(v) The Seller is an approved seller/servicer for ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac in good standing and is a HUD approved mortgagee pursuant to
Section 203 and Section 211 of the National Housing Act;
(vi) No litigation or proceeding is pending or, to the best
knowledge of the Seller, threatened, against the Seller that would
materially and adversely affect the execution, delivery or enforceability
of this Agreement or the Pooling and Servicing Agreement or the issuance of
the Certificates or the ability of the Seller to service the Mortgage Loans
or to perform any of its other obligations hereunder in accordance with the
terms hereof and the terms of the Pooling and Servicing Agreement or, that
would result in a material adverse change in the financial or operating
conditions of the Seller;
(vii) No certificate of an officer, statement or other
information furnished in writing or report delivered by the Seller to the
Purchaser, any affiliate of the Purchaser or the Trustee for use in
connection with the purchase of the Mortgage Loans and the transactions
contemplated hereunder and under the Pooling and Servicing Agreement will
contain any untrue statement of a material fact, or omit a material fact
necessary to make the information, certificate, statement or report not
misleading in any material respect;
(viii) The Seller has not dealt with any broker, investment
banker, agent or other person, except for the Purchaser or any of its
affiliates, that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans;
(ix) Each Mortgage Note, each Mortgage, each Assignment and any
other document required to be delivered by or on behalf of the Seller under
this Agreement or the Pooling and Servicing Agreement to the Purchaser or
any assignee, transferee or designee of the Purchaser for each Mortgage
Loan has been or will be, in accordance with Section 4(b) hereof, delivered
to the Purchaser or any such assignee, transferee or designee. With respect
to each Mortgage Loan, the Seller is in possession of a complete Mortgage
File in compliance with the Pooling and Servicing Agreement, except for
such documents that have been delivered (1) to the Purchaser or any
assignee, transferee or designee of the Purchaser or (2) for recording to
the appropriate public recording office and have not yet been returned;
6
(x) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller pursuant to this Agreement are not subject
to the bulk transfer or any similar statutory provisions in effect in any
relevant jurisdiction, except any as may have been complied with;
(xi) The Seller (A) is a solvent entity and is paying its debts
as they become due, (B) after giving effect to the transfer of the Mortgage
Loans, will be a solvent entity and will have sufficient resources to pay
its debts as they become due and (C) did not sell the Mortgage Loans to the
Purchaser with the intent to hinder, delay or defraud any of its creditors;
(xii) The form of endorsement of each Mortgage Note satisfied the
requirement, if any, of endorsement in order to transfer all right, title
and interest of the party so endorsing, as noteholder or assignee thereof,
in and to that Mortgage Note; and each Assignment to be delivered hereunder
is in recordable form and is sufficient to effect the assignment of and to
transfer to the assignee thereunder the benefits of the assignor, as
mortgagee or assignee thereof, under each Mortgage to which that Assignment
relates;
(xiii) The transfer of the Mortgage Loans to the Purchaser at the
Closing Date will be treated by the Seller for financial accounting and
reporting purposes as a sale of assets; and
(xiv) Immediately prior to the sale of the Mortgage Loans to the
Purchaser as herein contemplated, the Seller had good title to, and was the
sole owner of, the Mortgage Loans, and such sale validly transfers the
Mortgage Loans to the Purchaser free and clear of any pledge, lien,
encumbrance or security interest.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE SELLER RELATING TO
THE INDIVIDUAL MORTGAGE LOANS.
The Seller hereby represents and warrants to the Purchaser, that as of
the Closing Date:
(i) The information set forth on the Mortgage Loan Schedule with
respect to each Mortgage Loan is complete, true and correct in all material
respects;
(ii) The Mortgage Loan is in compliance with the characteristics
of the Mortgage Loans as set forth on Exhibit 1;
(iii) As of February 28, 2001, approximately 0.14% of the Group I
Mortgage Loans and approximately 0.18% of the Group II Mortgage Loans (in each
case by aggregate principal balance as of the Cut-off Date) had not made the
monthly payment due thereon in January 2001 and none of the Mortgage Loans will
have been contractually delinquent for more than 30 days more than once during
the preceding twelve months and, except as provided above, no Mortgage Loan will
ever have experienced a delinquency of 60 or more days since the origination
thereof;
7
(iv) Each Mortgage is a valid and enforceable first lien or
second lien on the Mortgaged Property, including all improvements thereon,
subject only to (a) the lien of non- delinquent current real property taxes and
assessments, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording of such
Mortgage, such exceptions appearing of record being acceptable to mortgage
lending institutions generally or specifically reflected in the appraisal made
in connection with the origination of the related Mortgage Loan and which do not
materially interfere with the benefits of the security intended to be provided
by such Mortgage and (c) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by such Mortgage;
(v) Immediately prior to the assignment of the Mortgage Loans to
the Purchaser, the Seller had good title to, and was the sole legal and
beneficial owner of, each Mortgage Loan free and clear of any pledge, lien,
encumbrance or security interest and has full right and authority, subject to no
interest or participation of, or agreement with, any other party to sell and
assign the same;
(vi) To the best of the Seller's knowledge, there is no
delinquent tax or assessment lien against any Mortgaged Property;
(vii) There is no valid offset, defense or counterclaim to any
Mortgage Note or Mortgage, including the obligation of the Mortgagor to pay the
unpaid principal of or interest on such Mortgage Note, nor will the operation of
any of the terms of the Mortgage Note and the Mortgage, or the exercise of any
right thereunder, render the Mortgage Note or the Mortgage unenforceable, in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto;
(viii) To the best of the Seller's knowledge, there are no
mechanics' liens or claims for work, labor or material affecting any Mortgaged
Property which are or may be a lien prior to, or equal with, the lien of the
related Mortgage, except those which are insured against by the title insurance
policy referred to in (xii) below;
(ix) To the best of the Seller's knowledge, each Mortgaged
Property is free of material damage and is at least in average repair;
(x) Each Mortgage Loan at origination complied in all material
respects with applicable local, state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement procedures,
truth-in-lending and disclosure laws, and consummation of the transactions
contemplated hereby will not involve the violation of any such laws;
(xi) Neither the Seller nor any prior holder of any Mortgage has
modified the Mortgage in any material respect (except that a Mortgage Loan may
have been modified by a written instrument which has been recorded, if
necessary, to protect the interests of the Seller and the Purchaser and which
has been delivered to the Custodian as part of the Mortgage File, and the
8
terms of which are reflected in the Mortgage Loan Schedule); satisfied, canceled
or subordinated such Mortgage in whole or in part; released the related
Mortgaged Property in whole or in part from the lien of such Mortgage; or
executed any instrument of release, cancellation, modification or satisfaction
with respect thereto;
(xii) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable, and,
with respect to each Adjustable Rate Mortgage Loan, an adjustable rate mortgage
endorsement in an amount at least equal to the balance of the Mortgage Loan as
of the Cut-off Date, or a commitment (binder) to issue the same was effective on
the date of the origination of each Mortgage Loan, each such policy is valid and
remains in full force and effect, the transfer of the related Mortgage Loan to
the Purchaser and Trustee will not affect the validity or enforceability of such
policy and each such policy was issued by a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is located and
acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac and in a form acceptable to ▇▇▇▇▇▇ Mae
or ▇▇▇▇▇▇▇ Mac, which policy insures the Seller and successor owners of
indebtedness secured by the insured Mortgage, as to the first priority lien of
the Mortgage; to the best of the Seller's knowledge, no claims have been made
under such mortgage title insurance policy and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything which
would impair the coverage of such mortgage title insurance policy;
(xiii) Each Mortgage Loan was originated by the Seller (or, if
generated on behalf of the Seller by a Person other than the Seller, is subject
to the same standards and procedures used by the Seller in originating mortgage
loans directly) or by a savings and loan association, savings bank, commercial
bank, credit union, insurance company or similar institution which is supervised
and examined by a federal or state authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of
the National Housing Act;
(xiv) With respect to each Adjustable Rate Mortgage Loan on each
Adjustment Date, the Mortgage Rate will be adjusted to equal the Index plus the
Gross Margin, rounded to the nearest 0.125%, subject to the Periodic Rate Cap,
the Maximum Mortgage Rate and the Minimum Mortgage Rate. Except for Balloon
Mortgage Loans, the related Mortgage Note is payable on the first day of each
month in self-amortizing monthly installments of principal and interest, with
interest payable in arrears, and requires a Monthly Payment which is sufficient
to fully amortize the outstanding principal balance of the Mortgage Loan over
its remaining term and to pay interest at the applicable Mortgage Rate. No
Mortgage Loan is subject to negative amortization. All rate adjustments have
been performed in accordance with the terms of the related Mortgage Note or
subsequent modifications, if any;
(xv) To the best of the Seller's knowledge, all of the
improvements which were included for the purpose of determining the Value of the
Mortgaged Property lie wholly within the boundaries and building restriction
lines of such property, and no improvements on adjoining properties encroach
upon the Mortgaged Property;
(xvi) All inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy, have been made or
9
obtained from the appropriate authorities and to the best of the Seller's
knowledge, the Mortgaged Property is lawfully occupied under applicable law;
(xvii) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located;
(xviii) The Mortgage Note and the related Mortgage are genuine,
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms and with applicable laws. To the best
of the Seller's knowledge, all parties to the Mortgage Note and the Mortgage had
legal capacity to execute the Mortgage Note and the Mortgage and each Mortgage
Note and Mortgage have been duly and properly executed by such parties;
(xix) The proceeds of each Mortgage Loan have been fully
disbursed, there is no requirement for future advances thereunder and any and
all requirements as to completion of any on-site or off-site improvements and as
to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, closing or recording the Mortgage
Loans were paid;
(xx) The related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
(xxi) With respect to each Mortgage constituting a deed of trust,
a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the Purchaser to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(xxii) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary arrangements
for repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under the
Mortgage or the related Mortgage Note;
(xxiii) The origination, underwriting and collection practices
used by the Seller with respect to each Mortgage Loan have been in all respects
legal, proper, prudent and customary in the mortgage servicing business. Each
Mortgage Loan is currently being serviced by the Seller and has been serviced by
the Seller since the date of origination of each Mortgage Loan;
(xxiv) There is no pledged account or other security other than
real estate securing the Mortgagor's obligations;
10
(xxv) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature;
(xxvi) Approximately 68.06% of the Mortgage Loans in Loan Group I
and approximately 75.56% of the Mortgage Loans in Loan Group II, by Cut-off Date
Aggregate Principal Balance, provide for primary mortgage insurance;
(xxvii) The improvements upon each Mortgaged Property are covered
by a valid and existing hazard insurance policy with a generally acceptable
carrier that provides for fire extended coverage and coverage of such other
hazards as are customarily covered by hazard insurance policies with extended
coverage in the area where the Mortgaged Property is located representing
coverage not less than the lesser of the outstanding principal balance of the
related Mortgage Loan or the minimum amount required to compensate for damage or
loss on a replacement cost basis. All individual insurance policies and flood
policies referred to in this clause (xxvii) and in clause (xxviii) below contain
a standard mortgagee clause naming the Seller or the original mortgagee, and its
successors in interest, as mortgagee, and the Seller has received no notice that
any premiums due and payable thereon have not been paid; the Mortgage obligates
the Mortgagor thereunder to maintain all such insurance, including flood
insurance, at the Mortgagor's cost and expense, and upon the Mortgagor's failure
to do so, authorizes the holder of the Mortgage to obtain and maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement therefor
from the Mortgagor;
(xxviii) If the Mortgaged Property is in an area identified in
the Federal Register by the Federal Emergency Management Agency as subject to
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance Administration is
in effect with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (A) the
original outstanding principal balance of the Mortgage Loan, (B) the minimum
amount required to compensate for damage or loss on a replacement cost basis or
(C) the maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973;
(xxix) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Mortgage Note; and the
Seller has not waived any default, breach, violation or event of acceleration;
(xxx) Each Mortgaged Property is improved by a one- to
four-family residential dwelling, including condominium units and dwelling units
in planned unit developments, which, to the best of the Seller's knowledge, does
not include cooperatives and does not constitute property other than real
property under state law;
(xxxi) There is no obligation on the part of the Seller or any
other party under the terms of the Mortgage or related Mortgage Note to make
payments in addition to those made by the Mortgagor;
(xxxii) Any future advances made prior to the Cut-off Date have
been consolidated with the outstanding principal amount secured by the Mortgage,
and the secured
11
principal amount, as consolidated, bears a single interest rate and single
repayment term reflected on the related Mortgage Loan Schedule. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan;
(xxxiii) Each Mortgage Loan was underwritten in accordance with
the Seller's underwriting guidelines as described in the Prospectus Supplement
as applicable to its credit grade;
(xxxiv) The Mortgage File contains an appraisal which was
performed by an appraiser who satisfied, and which was conducted in accordance
with, all of the applicable requirements of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended;
(xxxv) None of the Mortgage Loans is a graduated payment Mortgage
Loan, nor is any Mortgage Loan subject to a temporary buydown or similar
arrangement;
(xxxvi) Except with respect to approximately 0.99% of the
Mortgage Loans, by Cut-off Date Aggregate Principal Balance, no loan junior in
lien priority to such Mortgage Loan and secured by the related Mortgaged
Property was originated by the Seller at the time of origination of such
Mortgage Loan;
(xxxvii) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder;
(xxxviii) To the best of the Seller's knowledge no error,
omission, misrepresentation, negligence, fraud or similar occurrence with
respect to a Mortgage Loan has taken place on the part of any person, including,
without limitation, the Mortgagor, any appraiser, any builder or developer, or
any other party involved in the origination of the Mortgage Loan or in the
application of any insurance in relation to such Mortgage Loan;
(xxxix) Each Mortgage Loan constitutes a "qualified mortgage"
within the meaning of Section 860(G)(a)(3) of the Code;
(xl) The information set forth in the Prepayment Charge Schedule
is complete, true and correct in all material respects at the date or dates
respecting with such information is furnished and each Prepayment Charge is
permissible and enforceable in accordance with its terms upon the Mortgagor's
full and voluntary Principal Prepayment (except to the extent that: (1) the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally; (2)
the collectability thereof may be limited due to acceleration in connection with
a foreclosure or other involuntary prepayment; or (3) subsequent changes in
applicable law may limit or prohibit enforceability thereof) under applicable
law. No Mortgage Loan will impose a prepayment premium for a term in excess of
five years;
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(xli) The Loan-to-Value Ratio for each Mortgage Loan was no
greater than 100% at the time of origination;
(xlii) The first date on which each Mortgagor must make a payment
on the related Mortgage Note is no later than 60 days from the date of this
Agreement;
(xliii) With respect to any Mortgage Loan, the related Mortgagor
shall not fail to make the first Monthly Payment due under such Mortgage Loan by
the second succeeding Due Date after the Due Date on which such Monthly Payment
was due (a "First Payment Default");
(xliv) [Reserved];
(xlv) The Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required under the
Mortgage Loans;
(xlvi) There is no proceeding pending, or to best of the Seller's
knowledge threatened, for the total or partial condemnation of the Mortgaged
Property or the taking by eminent domain of any Mortgaged Property;
(xlvii) None of the Mortgage Loans is subject to the Home
Ownership and Equity Protection Act of 1994 or any comparable state law and any
breach of this representation will be deemed to materially and adversely affect
the value of the related loan;
(xlviii) No proceeds from any Mortgage Loans were used to finance
single- premium credit insurance policies.
(xlviv) The Seller did not select the Mortgage Loans with the
intent to adversely affect the interests of the Purchaser; and
(l) The Seller has not received any notice that any Mortgagor has
field for any bankruptcy or similar legal protection.
SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION AND FOR
BREACH OF REPRESENTATION AND WARRANTY.
(a) The representations and warranties contained in Section 5 (ix),
(xii) and (xiv) and Section 6 shall not be impaired by any review and
examination of loan files or other documents evidencing or relating to the
Mortgage Loans or any failure on the part of the Seller or the Purchaser to
review or examine such documents and shall inure to the benefit of any assignee,
transferee or designee of the Purchaser, including the Trustee for the benefit
of holders of asset-backed certificates evidencing an interest in all or a
portion of the Mortgage Loans. With respect to the representations and
warranties contained herein which are made to the knowledge or the best of
knowledge of the Seller, or as to which the Seller has no knowledge, if it is
discovered that the substance of any such representation and warranty was
inaccurate as of the date such representation and warranty was made or deemed to
be made, and such inaccuracy materially and adversely affects the value of the
related
13
Mortgage Loan or the interest therein of the Purchaser or the Purchaser's
assignee, transferee or designee, then notwithstanding the lack of knowledge by
the Seller with respect to the substance of such representation and warranty
being inaccurate at the time the representation and warranty was made, the
Seller shall take such action described in the following paragraph in respect of
such Mortgage Loan.
Upon discovery by the Seller, the Purchaser or any assignee,
transferee or designee of the Purchaser of any materially defective document in,
or that any material document was not transferred by the Seller (as listed on
the Trustee's initial certification), as part of, any Mortgage File or of a
breach of any of the representations and warranties contained in Section 5 or
Section 6 that materially and adversely affects the value of any Mortgage Loan
or the interest of the Purchaser or the Purchaser's assignee, transferee or
designee, the party discovering the breach shall give prompt written notice to
the others. Within ninety (90) days of its discovery or its receipt of notice of
any such missing documentation which was not transferred to the Purchaser as
described above or materially defective documentation or any such breach of a
representation and warranty, the Seller promptly shall deliver such missing
document or cure such defect or breach in all material respects, or in the event
the Seller cannot deliver such missing document or such defect or breach cannot
be cured, the Seller shall, within 90 days of its discovery or receipt of
notice, either (i) repurchase the affected Mortgage Loan at a price equal to the
Purchase Price or (ii) pursuant to the provisions of the Pooling and Servicing
Agreement, cause the removal of such Mortgage Loan from the Trust Fund and
substitute one or more Qualified Substitute Mortgage Loans; provided, however,
that in the case of a breach of the representation and warranty concerning the
Mortgage Loan Schedule contained in Section 6(i), if such breach relates to any
field on the Mortgage Loan Schedule which identifies any Prepayment Charge, then
in lieu of purchasing such Mortgage Loan from the Trust Fund at the Purchase
Price, the Seller shall pay the amount of the incorrectly identified Prepayment
Charge (net of any amount previously collected by or paid to the Trust Fund in
respect of such Prepayment Charge), and the Seller shall have no obligation to
repurchase or substitute for such Mortgage Loan. The Seller shall amend the
Closing Schedule to reflect the withdrawal of such Mortgage Loan from the terms
of this Agreement and the Pooling and Servicing Agreement and the addition, if
any, of a Qualified Substitute Mortgage Loan. The Seller shall deliver to the
Purchaser such amended Closing Schedule and shall deliver such other documents
as are required by this Agreement or the Pooling and Servicing Agreement within
five (5) days of any such amendment. Any repurchase pursuant to this Section
7(a) shall be accomplished by deposit in the Collection Account of the amount of
the Purchase Price in accordance with Section 2.03 of the Pooling and Servicing
Agreement. Any repurchase or substitution required by this Section shall be made
in a manner consistent with Section 2.03 of the Pooling and Servicing Agreement
and any remedy by the Seller for a breach of a representation or warranty that
materially and adversely affects the value of any Prepayment Charge shall be
made in a manner consistent with Section 2.03(c) of the Pooling and Servicing
Agreement.
(b) It is understood and agreed that the obligations of the Seller set
forth in this Section 7 to cure, repurchase or substitute for a defective
Mortgage Loan constitute the sole remedies of the Purchaser against the Seller
respecting a missing or defective document or a breach of the representations
and warranties contained in Section 5 or Section 6.
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SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The closing of the
purchase and sale of the Mortgage Loans shall be held at the New York City
office of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ at 10:00 am New York City time on the Closing
Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller under this
Agreement shall be true and correct in all material respects as of the date as
of which they are made and no event shall have occurred which, with notice or
the passage of time, would constitute a default under this Agreement;
(b) The Purchaser shall have received, or the attorneys of the
Purchaser shall have received in escrow (to be released from escrow at the time
of closing), all Closing Documents as specified in Section 9 of this Agreement,
in such forms as are agreed upon and acceptable to the Purchaser, duly executed
by all signatories other than the Purchaser as required pursuant to the
respective terms thereof;
(c) The Seller shall have delivered or caused to be delivered and
released to the Purchaser or to its designee, all documents (including without
limitation, the Mortgage Loans) required to be so delivered by the Purchaser
pursuant to Section 2.01 of the Pooling and Servicing Agreement; and
(d) All other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall deliver or
cause to be delivered to the Seller on the Closing Date, against delivery and
release by the Seller to the Trustee of all documents required pursuant to the
Pooling and Servicing Agreement, the consideration for the Mortgage Loans as
specified in Section 3 of this Agreement, by delivery to the Seller of the
Purchase Price in immediately available funds and delivery of the Long Beach
Certificates to Long Beach Asset Holdings Corp.
SECTION 9. CLOSING DOCUMENTS. Without limiting the generality of
Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:
(a) An Officers' Certificate of the Seller, dated the Closing Date,
upon which the Purchaser and Greenwich Capital markets, Inc. as representative
of the several underwriters (the "Representative") and Radian Insurance Inc.
(the "NIMs Insurer") may rely and attached thereto copies of the certificate of
incorporation, by-laws and certificate of good standing of the Seller under the
laws of the State of Delaware;
(b) An Officers' Certificate of the Seller, dated the Closing Date,
upon which the Purchaser and the Representative and the NIMs Insurer may rely,
with respect to certain facts regarding the sale of the Mortgage Loans by the
Seller to the Purchaser;
15
(c) An Opinion of Counsel of the Seller (which may be in-house counsel
of the Seller), dated the Closing Date and addressed to the Purchaser, the
Representative and the NIMs Insurer;
(d) Such opinions of counsel as the Rating Agencies, the
Representative, the Trustee or the NIMs Insurer may request in connection with
the sale of the Mortgage Loans by the Seller to the Purchaser or the Seller's
execution and delivery of, or performance under, this Agreement;
(e) A letter from Deloitte & Touche L.L.P., certified public
accountants, dated the date hereof and to the effect that they have performed
certain specified procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature set forth in the
Purchaser's Prospectus Supplement, dated March 14, 2001, under the captions
"Summary of Terms--Mortgage Loans," "Risk Factors," "The Mortgage Pool," and
"Long Beach Mortgage Company," agrees with the records of the Seller;
(f) The Seller shall deliver to the Purchaser for inclusion in the
Prospectus Supplement under the caption "Long Beach Mortgage Company" or for
inclusion in other offering materials, such publicly available information
regarding the Seller, its financial condition and its mortgage loan delinquency,
foreclosure and loss experience, underwriting standards, lending activities and
loan sales, production, and servicing and collection practices, and any similar
nonpublic, unaudited financial information and a computer tape with respect to
the pool information, as the Representative may request;
(g) Letters from at least two nationally recognized statistical rating
agencies rating the Offered Certificates; and
(h) Such further information, certificates, opinions and documents as
the Purchaser or the Representative may reasonably request.
SECTION 10. COSTS. The Seller shall pay (or shall reimburse the
Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Mortgage Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording Assignments, the fees and expenses of the Seller's in-house
accountants and in-house attorneys, the costs and expenses incurred in
connection with determining the Seller's loan loss, foreclosure and delinquency
experience, the costs and expenses incurred in connection with obtaining the
documents referred to in Sections 9(d) and 9(e), the cost of an opinion of
counsel regarding the true sale of the mortgage loans, the costs and expenses of
printing (or otherwise reproducing) and delivering this Agreement, the Pooling
and Servicing Agreement, the Certificates, the prospectus, prospectus
supplement, any blue sky filings and private placement memorandum relating to
the Certificates and other related documents, the initial fees, costs and
expenses of the Trustee, the fees and expenses of the Purchaser's counsel in
connection with the preparation of all documents relating to the securitization
of the Mortgage Loans, the filing fee charged by the Securities and Exchange
Commission for registration of the Certificates, the cost of any opinions of
outside special counsel that may be required for the Seller, the cost of
obtaining the documents
16
referred to in Section 9(e) hereof and the fees charged by any rating agency to
rate the Certificates. All other costs and expenses in connection with the
transactions contemplated hereunder shall be borne by the party incurring such
expense.
SECTION 11. SERVICING. The Seller has represented to the Purchaser
that the Mortgage Loans are being serviced in accordance with the terms of the
Pooling and Servicing Agreement, and it is understood and agreed by and between
the Seller and the Purchaser that any interim servicing arrangements with the
Seller will be superseded by the servicing arrangements set forth in the Pooling
and Servicing Agreement.
SECTION 12. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The sale
and delivery on the Closing Date of the Mortgage Loans described on the Mortgage
Loan Schedule in accordance with the terms and conditions of this Agreement is
mandatory. It is specifically understood and agreed that each Mortgage Loan is
unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate the Purchaser for the losses and damages
incurred by the Purchaser in the event of the Seller's failure to deliver the
Mortgage Loans on or before the Closing Date. The Seller hereby grants to the
Purchaser a lien on and a continuing security interest in the Seller's interest
in each Mortgage Loan and each document and instrument evidencing each such
Mortgage Loan to secure the performance by the Seller of its obligation
hereunder, and the Seller agrees that it holds such Mortgage Loans in custody
for the Purchaser, subject to (i) the Purchaser's right, prior to the Closing
Date, to reject any Mortgage Loan to the extent permitted by this Agreement and
(ii) the Purchaser's obligation to deliver or cause to be delivered the
consideration for the Mortgage Loans pursuant to Section 8 hereof. Any Mortgage
Loans rejected by the Purchaser shall concurrently therewith be automatically
released from the security interest created hereby. The Seller agrees that, upon
acceptance of the Mortgage Loans by the Purchaser or its designee and delivery
of payment to the Seller, that its security interest in the Mortgage Loans shall
be released. All rights and remedies of the Purchaser under this Agreement are
distinct from, and cumulative with, any other rights or remedies under this
Agreement or afforded by law or equity and all such rights and remedies may be
exercised concurrently, independently or successively.
Notwithstanding the foregoing, if on the Closing Date, each of the
conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the re-delivery of the Mortgage Loans, if delivery to
the Purchaser has occurred and the security interest created by this Section 12
shall be deemed to have been released.
SECTION 13. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
telex or telegraph and confirmed by a similar mailed writing, if to the
Purchaser, addressed to the Purchaser at ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, or such other address as
may hereafter be furnished to the Seller in writing by the Purchaser; if to the
Seller, addressed to the Seller at ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, or to such other address as the
Seller may designate in writing to the Purchaser.
17
SECTION 14. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement which is prohibited or which is
held to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement which
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 15. AGREEMENT OF PARTIES. The Seller and the Purchaser each
agree to execute and deliver such instruments (including UCC financing
statements and continuation statements) and take such actions as either of the
others may, from time to time, reasonably request in order to effectuate the
purpose and to carry out the terms of this Agreement and the Pooling and
Servicing Agreement.
SECTION 16. SURVIVAL. The Seller agrees that the representations,
warranties and agreements made by it herein and in any certificate or other
instrument delivered pursuant hereto shall be deemed to be relied upon by the
Purchaser and its successors and assigns, notwithstanding any investigation
heretofore or hereafter made by the Purchaser or on its behalf, and that the
representations, warranties and agreements made by the Seller herein or in any
such certificate or other instrument shall survive the delivery of and payment
for the Mortgage Loans and shall continue in full force and effect,
notwithstanding any restrictive or qualified endorsement on the Mortgage Notes
and notwithstanding subsequent termination of this Agreement, the Pooling and
Servicing Agreement or the Trust Fund.
SECTION 17. INDEMNIFICATION. (a) The Seller will indemnify and hold
harmless each of (i) the Purchaser and (ii) each person, if any, who controls
the Purchaser within the meaning of Section 15 of the Securities Act of 1933, as
amended (the "1933 Act") or the Securities Exchange Act of 1934, as amended (the
"1934 Act") ((i) and (ii) together, the "Indemnified Party") against any and all
losses, claims, expenses, damages or liabilities, to which the Indemnified Party
may become subject, under the 1933 Act or otherwise, and will reimburse each
Indemnified Party for any legal or other expenses incurred by the Indemnified
Party in connection with investigating or defending any such loss, claim,
expenses, damage, liability or action insofar as such losses, claims, expenses,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus Supplement dated March 14, 2001 (the "Prospectus
Supplement"), as amended or supplemented, relating to the public offering of the
Class A-1 Certificates, the Class A-2 Certificates, the Class S Certificates and
the Mezzanine Certificates, representing interests in the Mortgage Loans, or in
any other offering document (the "Private Placement Memorandum") relating to the
offering by the Purchaser or an affiliate thereof, of the Class C, Class P and
Class R Certificates, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with (i) information furnished in
18
writing to the Purchaser or any of its affiliates by the Seller specifically for
use therein, which shall include, with respect to the Prospectus Supplement, the
information set forth under the captions "Summary of Terms--Mortgage Loans,"
"Risk Factors" (but only to the extent that the information under "Risk Factors"
has been furnished by the Seller), "The Mortgage Pool" and "Long Beach Mortgage
Company" and, with respect to any Private Placement Memorandum, any information
of a comparable nature, (ii) the data files containing information with respect
to the Mortgage Loans as transmitted by modem to the Purchaser by the Seller or
any of its affiliates (as such transmitted information may have been amended in
writing by the Seller or any of its affiliates and received by the Purchaser
subsequent to transmission) specifically for use therein, which shall include,
with respect to the Prospectus Supplement, the information set forth under the
captions "Summary of Terms--Mortgage Loans," "Risk Factors" (but only to the
extent that the information under "Risk Factors" has been furnished by the
Seller) and "The Mortgage Pool" and, with respect to any Private Placement
Memorandum, any information of a comparable nature or (iii) any representation,
warranty or covenant made by the Seller or any affiliate of the Seller in this
Agreement and the Pooling and Servicing Agreement, on which the Indemnified
Party has relied ((i) through (iii) collectively "Seller Information"), provided
however, that to the extent that any such losses, claims, expenses, damages or
liabilities to which the Indemnified Party may become subject arise out of or
are based upon both (1) statements, omissions, representations, warranties or
covenants of the Seller described above and (2) any other factual basis, the
Seller shall indemnify and hold harmless the Indemnified Party only to the
extent that the losses, claims expenses, damages or liabilities of the person or
persons asserting the claim are determined to arise from or be based only upon
matters set forth in clause (1) above. The Seller's liability under this Section
17 shall be in addition to any other liability the Seller may otherwise have.
(b) The Purchaser agrees to indemnify and hold harmless the Seller,
its officers and its directors, and each person who controls the Seller within
the meaning of either the 1933 Act against any and all losses, claims, damages
or liabilities, joint or several, to which they may become subject under the
1933 Act, or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus Supplement, the Prospectus or Private Placement Memorandum, or in any
revision or amendment thereof or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any untrue
statement or omission or alleged untrue statement or omission made therein in
reliance upon and in conformity with the Seller's Information and will reimburse
the Seller and any controlling person for any legal or other expenses reasonably
incurred by such Seller and any controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
The Purchaser's liability under this Section 17 shall be in addition to any
other liability the Purchaser may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either Section 17(a) or 17(b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably
19
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
reasonable fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the reasonable fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel,
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them or (iii) the indemnifying party has
failed to assume the defense of such action and employ counsel reasonably
satisfactory to the indemnified party. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm for all such indemnified parties. Such firm shall be
designated in writing by the Purchaser, in the case of parties indemnified
pursuant to clause 17(a) and by the Seller, in the case of parties indemnified
pursuant to clause 17(b). The indemnifying party may, at its option, at any time
upon written notice to the indemnified party, assume the defense of any
proceeding and may designate counsel satisfactory to the indemnified party in
connection therewith provided that the counsel so designated would have no
actual or potential conflict of interest in connection with such representation.
Unless it shall assume the defense of any proceeding, the indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. If the indemnifying party assumes the defense of any
proceeding, it shall be entitled to settle such proceeding with the prior
written consent of the indemnified party or, if (i) such settlement does not
include a statement as to, or on admission of fault, culpability or failure to
act by or on behalf of the indemnified party and (ii) such settlement provides
for an unconditional release of the indemnified party in connection with all
matters relating to the proceeding which have been asserted against the
indemnified party in such proceeding by the other parties to such settlement,
without the prior written consent of the indemnified party.
(d) If the indemnification provided for in this Section 17 is
unavailable to an indemnified party under Section 17(a) or 17(b) hereof or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities, in
such proportion as is appropriate to reflect the relative fault of the
indemnified and indemnifying parties in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
indemnified and indemnifying parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such parties and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 17 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Seller on grounds of policy
20
or otherwise, the Seller on the one hand and the Purchaser on the other hand
shall contribute to the aggregate losses, claims, damages and liabilities
(including legal and other expenses reasonably incurred in connection with
investigating or defending same) (collectively, "Losses") to which the Seller on
the one hand and the Purchaser on the other hand may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Seller on the one hand and the Purchaser on the other hand from the sale of the
Mortgage Loans; provided, however, that in no case shall the Purchaser be
responsible for any amount in excess of 0.225% of the aggregate initial
principal balance of the Mortgage Loans. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Seller on the
one hand and the Purchaser on the other hand shall contribute in such proportion
as is appropriate to reflect not only such relative benefits but also the
relative fault of the Seller on the one hand and the Purchaser on the other hand
in connection with the statements or omissions that resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Seller shall be deemed to be equal to the total net proceeds from the sale
(before deducting expenses) plus the value of all Certificates retained by the
Seller or one of its affiliates and benefits received by the Purchaser shall be
deemed to be equal to 0.225% of the aggregate initial principal balance of the
Mortgage Loans. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to the information provided by the
Seller on the one hand or the Purchaser on the other hand. The Seller and the
Purchaser agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation that does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this subsection (e) the Representative shall
not be required to contribute any amount in excess of the amount by which the
total price at which the related Offered Certificates underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Representative has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 17, each person, if any, who controls the Purchaser within the meaning
of the Securities Act or the 1934 Act and each director, officer, employee and
agent of the Purchaser shall have the same rights to contribution as the
Purchaser, and each person, if any, who controls the Seller within the meaning
of either the Securities Act or the 1934 Act and each director of the Seller
shall have the same rights to contribution as the Seller, subject in each case
to the applicable terms and conditions of this paragraph 17(e).
(f) The indemnity and contribution agreements contained in this
Section 17 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by the Purchaser
or any person controlling the Purchaser or by or on behalf of the Seller and
their respective directors or officers or any person controlling the Seller, and
(iii) acceptance of and payment for any of the Certificates.
SECTION 18. [RESERVED].
SECTION 19. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW PROVISIONS)
AND DECISIONS OF THE STATE OF NEW YORK.
21
THE PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.
SECTION 20. MISCELLANEOUS. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Seller to the Purchaser as provided in Section 4
hereof be, and be construed as, a sale of the Mortgage Loans by the Seller to
the Purchaser and not as a pledge of the Mortgage Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. However, in the
event that, notwithstanding the aforementioned intent of the parties, the
Mortgage Loans are held to be property of the Seller, then, (a) it is the
express intent of the parties that such conveyance be deemed a pledge of the
Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller and (b) (1) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code; (2) the conveyance provided for in Section 4 hereof
shall be deemed to be a grant by the Seller to the Purchaser of a security
interest in all of the Seller's right, title and interest in and to the Mortgage
Loans and all amounts payable to the holders of the Mortgage Loans in accordance
with the terms thereof and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the Collection Account whether
in the form of cash, instruments, securities or other property; (3) the
possession by the Purchaser or its agent of Mortgage Notes, the related
Mortgages and such other items of property that constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the New York Uniform Commercial Code; and (4) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Purchaser for the purpose of perfecting
such security interest under applicable law. Any assignment of the interest of
the Purchaser pursuant to Section 4(d) hereof shall also be deemed to be an
assignment of any security interest created hereby. The Seller and the Purchaser
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement and the Pooling and
Servicing Agreement.
SECTION 21. THIRD PARTY BENEFICIARY. Each of the Trustee and the NIMs
Insurer, shall be a third party beneficiary hereof (except with respect to
Section 17) and shall be entitled to
22
enforce the provisions hereof as if a party hereto, except the provisions of
Section 17 hereof. This provision shall not limit waiver, enforcement and
consent powers that Radian Insurance Inc. has except as specifically agreed in a
separate letter agreement between such parties or as otherwise agreed between
Radian Insurance Inc. and the parties may perform in accordance with such
powers. The Representative, on behalf of the underwriters, shall be a third
party beneficiary hereof solely with respect to Section 17 and shall be entitled
to enforce the provisions of Section 17 as if it were a party hereto.
23
IN WITNESS WHEREOF, the Purchaser and the Seller have caused their
names to be signed by their respective officers thereunto duly authorized as of
the date first above written.
LONG BEACH SECURITIES CORP.
By: /S/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
LONG BEACH MORTGAGE COMPANY
By: /S/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
EXHIBIT 1
Pool Characteristics of the Mortgage Loans as delivered on the Closing
Date:
All percentages set forth herein are based upon Cut-off Date Aggregate
Principal Balance.
(1) No Mortgage Loans in Loan Group I or Loan Group II had a Loan-to-Value
Ratio at origination in excess of approximately 100.00% and 90.00%,
respectively;
(2) No more than approximately 0.58% and 1.27% of the Mortgage Loans in
Loan Group I and Loan Group II, respectively, are related to Mortgaged
Properties located in any one zip code area;
(3) Each Mortgaged Property in Loan Group I and Loan Group II,
respectively, is located in one of the states listed in the chart entitled
"Geographic Distribution of the Mortgaged Properties relating to the Group I
Mortgage Loans" and "Geographic Distribution of the Mortgaged Properties
relating to the Group II Mortgage Loans," respectively, in the Prospectus
Supplement;
(4) No more than approximately 4.36% and 3.50% of the Mortgage Loans in
Loan Group I and Loan Group II, respectively, are secured by condominium units
and all condominium Mortgage Loans have been originated on a form acceptable to
▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac with such riders as have been acceptable to ▇▇▇▇▇▇ Mae
or ▇▇▇▇▇▇▇ Mac, as the case may be;
(5) No more than approximately 5.81% and 3.02% of the Mortgage Loans in
Loan Group I and Loan Group II, respectively, are secured by two- to four-family
dwellings. No more than approximately 0.21% and 0.48% of the Mortgage Loans in
Loan Group I and Loan Group II, respectively, are secured by Town Houses. No
more than approximately 9.02% and 0.00% of the Mortgage Loans in Loan Group I
and Loan Group II, respectively, are secured by Manufactured Housing. No more
than approximately 6.44% and 15.23% of the Mortgage Loans in Loan Group I and
Loan Group II, respectively, are secured by dwelling units in PUDs;
(6) No Mortgage Loan in Loan Group I and Loan Group II had a principal
balance in excess of approximately $510,034 and $986,283, respectively, at
origination;
(7) Each Mortgage Loan in Loan Group I and Loan Group II has a first Due
Date on or after October 1999 and January 2000, respectively, and each Group I
and Group II Mortgage Loan has a next Adjustment Date no later than February
2006 and February 2004, respectively;
(8) On the basis of representations made by the Mortgagors in their loan
applications, no more than approximately 6.67% and 2.71% of the Mortgage Loans
in Loan Group I and Loan Group II, respectively, are secured by investor
properties and at least approximately 92.79% and 95.13% of the Mortgage Loans in
Loan Group I and Loan Group II, respectively, are owner-occupied Mortgaged
Properties;
(9) The Mortgage Rates borne by the Mortgage Loans in Loan Group I and Loan
Group II as of the Cut-off Date ranged from approximately 7.750% and 7.760% per
annum, respectively,
1-1
to approximately 15.050% and 13.350% per annum respectively, and the weighted
average Mortgage Rate as of the Cut-off Date was approximately 10.962% and
9.965% per annum respectively;
(10) Approximately 15.44% and 12.94% of the Mortgage Loans in Loan Group I
and Loan Group II, respectively, were rate/term refinancings, approximately
43.01% and 53.21% of the Mortgage Loans in Loan Group I and Loan Group II,
respectively, were cash out refinancings and approximately 41.47% and 33.85% of
the Mortgage Loans in Loan Group I and Loan Group II, respectively, were made to
purchase the related Mortgaged Properties;
(11) As of the Cut-off Date, the Gross Margins for the Adjustable Rate
Mortgage Loans range from approximately 4.000% to 7.750% and the weighted
average Gross Margin for the Adjustable Rate Mortgage Loans as of the Cut-off
Date was approximately 6.066%;
(12) No less than approximately 80.92% and 70.46% of the Mortgage Loans in
Loan Group I and Loan Group II, respectively, were originated by the Seller
under the Seller's "Full Documentation" mortgage loan program, no more than
approximately 3.29% and 7.80% of the Mortgage Loans in Loan Group I and Loan
Group II, respectively, were originated by the Seller under the Seller's
"Limited Documentation" mortgage loan program and no more than approximately
15.78% and 21.73% of the Mortgage Loans in Loan Group I and Loan Group II,
respectively, were originated by the Seller under the Seller's "Stated Income
Documentation" mortgage loan program; and
(13) With respect to the Seller's underwriting risk categories,
approximately 50.10%, 19.74%, 17.93%, 9.80% and 2.43% of the Mortgage Loans in
Loan Group I constitute "A-" Risk Mortgage Loans, "B" Risk Mortgage Loans, "B-"
Risk Mortgage Loans, "C" Risk Mortgage Loans and "D" Risk Mortgage Loans,
respectively and approximately 75.24%, 16.19%, 4.32%, 4.26% and 0.00% of the
Mortgage Loans in Loan Group II constitute "A-" Risk Mortgage Loans, "B" Risk
Mortgage Loans, "B-" Risk Mortgage Loans, "C" Risk Mortgage Loans and "D" Risk
Mortgage Loans, respectively.
1-2
EXHIBIT D
MORTGAGE LOAN SCHEDULE
[FILED BY PAPER]
D-1
EXHIBIT E-1
REQUEST FOR RELEASE
(for Trustee/Custodian)
Loan Information
Name of Mortgagor: ________________________
Master Servicer
Loan No.: ________________________
TRUSTEE/CUSTODIAN
Name: ________________________
Address: ________________________
Trustee/Custodian
Mortgage File No.: ________________________
DEPOSITOR
Name: LONG BEACH SECURITIES CORP.
Address: ________________________
Certificates: Long Beach Mortgage Certificates, Series 2001-1.
E-1
The undersigned Master Servicer hereby acknowledges that it has
received from _______________________, as Trustee for the Holders of Long Beach
Mortgage Asset-Backed Certificates, Series 2001-1, the documents referred to
below (the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement, dated as of March 1, 2001, among the Trustee, the Depositor
and the Master Servicer (the "Pooling and Servicing Agreement").
(a) Promissory Note dated _______________, 20__, in the original principal sum
of $__________, made by ___________________, payable to, or endorsed to the
order of, the Trustee.
(b) Mortgage recorded on _____________________ as instrument no. _____________
in the County Recorder's Office of the County of _________________, State of
____________ in book/reel/docket _________________ of official records at
page/image _____________.
(c) Deed of Trust recorded on ________________ as instrument no. _____________
in the County Recorder's Office of the County of _________________, State of
____________________ in book/reel/docket _________________ of official records
at page/image __________.
(d) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________________ as instrument no. _________ in the County Recorder's Office
of the County of _______________, State of _______________________ in
book/reel/docket ____________ of official records at page/image ____________.
(e) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
(f) _____________________________________________
(g) _____________________________________________
(h) _____________________________________________
(i) _____________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of the Documents
in trust for the benefit of the Trustee, solely for the purposes provided in the
Agreement.
(2) The Master Servicer shall not cause or permit the Documents to become
subject to, or encumbered by, any claim, liens, security interest, charges,
writs of attachment or other impositions nor shall the Master Servicer assert or
seek to assert any claims or rights of setoff to or against the Documents or any
proceeds thereof.
E-2
(3) The Master Servicer shall return each and every Document previously
requested from the Mortgage File to the Trustee when the need therefor no longer
exists, unless the Home Equity Loan relating to the Documents has been
liquidated and the proceeds thereof have been remitted to the Collection Account
and except as expressly provided in the Agreement.
(4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Master Servicer shall at
all times be ear-marked for the account of the Trustee, and the Master Servicer
shall keep the Documents and any proceeds separate and distinct from all other
property in the Master Servicer's possession, custody or control.
Dated:
LONG BEACH MORTGAGE COMPANY
By:________________________
Name:
Title:
E-3
EXHIBIT E-2
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICERS' CERTIFICATE AND TRUST RECEIPT
MORTGAGE LOAN PASS-THROUGH CERTIFICATES
SERIES 2001-1
____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH
BENEATH HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE HOME EQUITY LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN
MADE.
LOAN NUMBER: _____________________ BORROWER'S NAME:________________________
COUNTY: __________________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLEC-TION ACCOUNT PURSUANT TO
SECTION [3.10] OF THE POOLING AND SERVIC-ING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
DATED:________________________
____________________________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
E-4
EXHIBIT F-1
FORM OF TRUSTEE'S INITIAL CERTIFICATION
[Date]
Long Beach Securities Corp. Long Beach Mortgage Company
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Radian Insurance Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement, dated as of March 1, 2001
among Long Beach Securities Corp., Long Beach Mortgage Company
and Bankers Trust Company of California, N.A., Mortgage Loan
Asset-Backed Certificates Series 2001-1
--------------------------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.02 of the Pooling and Servicing Agreement the
undersigned as Trustee hereby acknowledges receipt of each Mortgage File and
certifies that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in the exception report annexed hereto as not being covered by this
certification), (i) all documents constituting part of such Mortgage File (other
than such documents described in Section 2.01(e) of the Pooling Agreement)
required to be delivered to it pursuant to the Pooling and Servicing Agreement
are in its possession, (ii) such documents have been reviewed by it and are not
mutilated, torn or defaced unless initialed by the related borrower and relate
to such Mortgage Loan and (iii) based on its examination and only as to the
foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i), (ii), (ix), (xii), (xiv) (to the extent of the
Periodic Rate Cap and the maximum first Adjustment Date Mortgage Rate
adjustment) and (xvi) of the definition of "Mortgage Loan Schedule" of the
Pooling Agreement accurately reflects information set forth in the Mortgage
File.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
due authorization, recordability or genuineness of any of the documents
contained in the Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortage Loan.
F-1
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
By:__________________________
Name:
Title:
F-2
EXHIBIT F-2
FORM OF TRUSTEE FINAL CERTIFICATION
[Date]
Long Beach Securities Corp. Long Beach Mortgage Company
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Radian Insurance Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement, dated as of March 1, 2001 among
Long Beach Securities Corp., Long Beach Mortgage Company, First
Union National Bank and Bankers Trust Company of California, N.A.,
Mortgage Loan Asset-Backed Certificates Series 2001-1
------------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto), it or a Custodian on its
behalf has received:
(a) the original Mortgage Note, endorsed in blank or in the following
form: "Pay to the order of Banders Trust Company of California, N.A., as
Trustee under the applicable agreement, without recourse," with all prior
and intervening endorsements showing a complete chain of endorsement from
the originator to the Person so endorsing to the Trustee or a copy of such
original Mortgage Note with an accompanying Lost Note Affidavit executed by
the Seller;
(b) the original Mortgage with evidence of recording thereon, and a
copy, certified by the appropriate recording office, of the recorded power
of attorney, if the Mortgage was executed pursuant to a power of attorney,
with evidence of recording thereon;
(c) an original Assignment in blank;
(d) the original recorded Assignment or Assignments showing a complete
chain of assignment from the originator to the Person assigning the
Mortgage to the Trustee or in blank;
F-3
(e) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(f) the original lender's title insurance policy, together with all
endorsements or riders issued with or subsequent to the issuance of such
policy, insuring the priority of the Mortgage as a first lien or second
lien on the Mortgaged Property represented therein as a fee interest vested
in the Mortgagor, or in the event such original title policy is
unavailable, a written commitment or uniform binder or preliminary report
of title issued by the title insurance or escrow company.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
By:__________________________
Name:
Title:
F-4
EXHIBIT G
[Reserved]
G-1
EXHIBIT H
FORM OF LOST NOTE AFFIDAVIT
---------------------------
Personally appeared before me the undersigned authority to administer
oaths, ____________________ who first being duly sworn deposes and says:
Deponent is ____________________ of ____________________, successor by merger to
____________________ ("Seller") and who has personal knowledge of the facts set
out in this affidavit.
On ____________________, ____________________ did execute and deliver a
promissory note in the principal amount of $____________________ .
That said note has been misplaced or lost through causes unknown and is
presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.
Seller executes this Affidavit for the purpose of inducing Bankers Trust
Company of California, N.A., as Trustee on behalf of Long Beach Mortgage Loan
Trust 2001-1, Asset- Backed Certificates Series 2001-1, to accept the transfer
of the above described loan from Seller.
Seller agrees to indemnify Bankers Trust Company of California, N.A., Long
Beach Securities Corp. and Long Beach Mortgage Corporation harmless for any
losses incurred by such parties resulting from the above described promissory
note has been lost or misplaced.
By: ____________________
____________________
STATE OF )
) SS:
COUNTY OF )
On this ______ day of ______________, 20_, before me, a Notary Public, in
and for said County and State, appeared , who acknowledged the extension of the
foregoing and who, having been duly sworn, states that any representations
therein contained are true.
Witness my hand and Notarial Seal this _________ day of 20__.
_________________________
_________________________
My commission expires ____________________.
H-1
EXHIBIT I
FORM OF ERISA REPRESENTATION
Long Beach Securities Corp.
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Bankers Trust Company of California, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Long Beach Mortgage Loan Trust 2001-1,
Asset-Backed Certificates, Series 2001-1
----------------------------------------
Ladies and Gentlemen:
___________________ (the "Transferee") intends to acquire from
__________________ (the "Transferor") $____________ Initial Certificate
Principal Balance of Long Beach Mortgage Loan Trust 2001-1, Asset-Backed
Certificates, Series 2001-1, [Class C, Class P, Class R] (the "Certificates"),
issued pursuant to a Pooling and Servicing Agreement dated as of March 1, 2001
(the "Agreement") among the Depositor, Long Beach Mortgage Corporation, as
master servicer (the "Master Servicer") and Bankers Trust Company of California,
N.A. as trustee (the "Trustee"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned thereto in the Pooling and Servicing
Agreement. The Transferee hereby certifies, represents and warrants to, and
covenants with the Depositor, the Trustee and the Master Servicer that the
following statements in either (1) or (2) are accurate:
_____ (1) The Certificates (i) are not being acquired by, and will not be
transferred to, any employee benefit plan within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or other retirement arrangement, including individual retirement
accounts and annuities, ▇▇▇▇▇ plans and bank collective investment funds
and insurance company general or separate accounts in which such plans,
accounts or arrangements are invested, that is subject to Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986 (the "Code")
(any of the foregoing, a "Plan"), (ii) are not being acquired with "plan
assets" of a Plan within the meaning of the Department of Labor ("DOL")
regulation, 29 C.F.R. ss. 2510.3-101, and (iii) will not be transferred to
any entity that is deemed to be investing in plan assets within the meaning
of the DOL regulation at 29 C.F.R. ss. 2510.3-101; or
_____ (2) The Transferee will provide an Opinion of Counsel to the
Depositor, the Trustee, the Trustee and the Master Servicer which
establishes to the satisfaction of the Depositor, the Trustee and the
Master Servicer that the purchase of such Certificates is permissible under
applicable law, will not constitute or result in any prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the Depositor,
the Master Servicer, the Trustee, the Trustee or the Trust Fund to any
obligation or
I-1
liability (including obligations or liabilities under ERISA or Section 4975
of the Code) in addition to those undertaken in this Agreement.
IN WITNESS WHEREOF, the Transferee executed this certificate.
___________________________
[Transferee]
By:________________________
Name:
Title:
I-2
EXHIBIT J
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Long Beach Securities Corp.
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Bankers Trust Company of California, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Long Beach Mortgage Loan Trust 2001-1,
Asset-Backed Certificates Series 2001-1
---------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act, and
have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with clause
(g) below), (f) we have not offered or sold any Certificates to, or solicited
offers to buy any Certificates from, any person, or otherwise approached or
negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has
J-1
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.
Very truly yours,
[NAME OF TRANSFEREE]
By:______________________________
Authorized Officer
J-2
FORM OF RULE 144A INVESTMENT LETTER
[DATE]
Long Beach Securities Corp.
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Bankers Trust Company of California, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Long Beach Mortgage Loan Trust 2001-1,
Asset-Backed Certificates Series 2001-1
---------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) we are not an employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, or a plan that is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended, nor
are we acting on behalf of any such plan, (d) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (e) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificates for our own account or for resale
pursuant to Rule 144A and further, understand that such Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to
J-3
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.
Very truly yours,
[NAME OF TRANSFEREE]
By:___________________________
Authorized Officer
J-4
ANNEX 1 TO EXHIBIT J
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
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.
______ SAVINGS AND LOAN. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised and
examined by a State or Federal authority having supervision over any
such institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial statements,
a copy of which is attached hereto.
______ BROKER-DEALER. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
------------------------
1 Buyer must own and/or invest on a discretionary basis at least $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.
J-5
______ INSURANCE COMPANY. The Buyer is an insurance company whose
primary and predominant business activity is the writing of insurance
or the reinsuring of risks underwritten by insurance companies and
which is subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the District of
Columbia.
______ STATE OR LOCAL PLAN. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
______ ERISA PLAN. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
______ INVESTMENT ADVISOR. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
______ SMALL BUSINESS INVESTMENT COMPANY. Buyer is a small business
investment company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of
1958.
______ BUSINESS DEVELOPMENT COMPANY. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisors
Act of 1940.
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) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit (v)
loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
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 Certificates
are relying and will
J-6
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 this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
______________________________
Print Name of Buyer
By:___________________________
Name:
Title:
Date:_________________________
J-7
ANNEX 2 TO EXHIBIT J
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyers Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
_____ The Buyer owned $_________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
_____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $___________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
J-8
(vi) securities owned but subject to a repurchase agreement and (vii) 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 Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
______________________________
Print Name of Buyer or Adviser
By:___________________________
Name:
Tide:
IF AN ADVISER:
______________________________
Print Name of Buyer
Date:_________________________
J-9
EXHIBIT K
AFFIDAVIT OF TRANSFER OF R CERTIFICATES
PURSUANT TO SECTION 5.02(d)
LONG BEACH MORTGAGE LOAN TRUST 2001-1,
ASSET-BACKED CERTIFICATES, SERIES 2001-1
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of , the proposed Transferee of an
Ownership Interest in Class R Certificates (the "Certificate") issued pursuant
to the Pooling and Servicing Agreement, (the "Agreement"), relating to the
above-referenced Certificates, among Long Beach Securities Corp., as Depositor,
Long Beach Mortgage Corporation, as Master Servicer (the "Master Servicer") and
Bankers Trust Company of California, N.A. as trustee (the "Trustee").
Capitalized terms used, but not defined herein shall have the meanings ascribed
to such terms in the Agreement. The Transferee has authorized the undersigned to
make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof and will be, as of the date of
the Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Certificate either (i) for its own account or (ii) as nominee,
trustee or agent for another Person and has attached hereto an affidavit from
such Person in substantially the same form as this affidavit. The Transferee has
no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) to
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.
4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass- through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership,
K-1
trust or estate, and certain cooperatives and, except as may be provided in
Treasury Regulations, persons holding interests in pass-through entities as a
nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 5.02(d) of the
Agreement and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 5.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any Person to
whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit K to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is _____________.
9. The Transferee is a United States Person as defined in the Agreement.
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan that is subject to ERISA
or a plan that is subject to Section 4975 of the Code, nor is it acting on
behalf of such a plan.
K-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ___ day of __________, ___.
[NAME OF TRANSFEREE]
By:______________________________
Name:
Title:
[Corporate Seal]
ATTEST:
_________________________
[Assistant] Secretary
Personally appeared before me the above-named _____________________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the ______________________________ of the Transferee, and acknowledged
that he executed the same as his free act and deed and the free act and deed of
the Transferee.
Subscribed and sworn before me this __ day of _______, ___.
______________________________
NOTARY PUBLIC
My Commission expires the ____ day
of ____, ___.
K-3
EXHIBIT L
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Long Beach Securities Corp.
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Long Beach Mortgage Loan Trust 2001-1,
Asset-Backed Certificates Series 2001-1
---------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we certify
that (a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of a Class [ ] Certificate, we have no knowledge the
Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class [ ] Certificate is to impede the assessment or collection
of tax.
Very truly yours,
TRANSFEROR
By:______________________________
Name:
Title:
L-1
SCHEDULE I
PREPAYMENT PREMIUM SCHEDULE
[AVAILABLE UPON REQUEST]
Schedule-I-1
SCHEDULE II
PMI MORTGAGE LOANS
[AVAILABLE UPON REQUEST]
Schedule-II-2