ACE SECURITIES CORP.
Depositor
OCWEN FEDERAL BANK FSB
Servicer
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
Master Servicer and Securities Administrator
BANK ONE, NATIONAL ASSOCIATION
Trustee
--------------------------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 2003
--------------------------------------------------------------
ACE Securities Corp. Home Equity Loan Trust, Series 2003-TC1
Asset Backed Pass-Through Certificates
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms............................................. -3-
Accepted Master Servicing Practices....................... -3-
Accepted Servicing Practices.............................. -3-
Account................................................... -3-
Accrued Certificate Interest.............................. -3-
Adjustable Rate Mortgage Loan............................. -3-
Adjustment Date........................................... -4-
Administration Fees....................................... -4-
Administration Fee Rate................................... -4-
Advance Facility.......................................... -4-
Affiliate................................................. -4-
Aggregate Loss Severity Percentage........................ -4-
Agreement................................................. -4-
Amounts Held for Future Distribution...................... -4-
Assignment................................................ -4-
Available Distribution Amount............................. -4-
Balloon Mortgage Loan..................................... -5-
Balloon Payment........................................... -5-
Bankruptcy Code........................................... -5-
Book-Entry Certificate.................................... -5-
Book-Entry Custodian...................................... -5-
Business Day.............................................. -5-
Cap Contracts............................................. -5-
Cash-Out Refinancing...................................... -6-
Certificate............................................... -6-
Certificate Factor........................................ -6-
Certificate Margin........................................ -6-
Certificateholder" or "Holder............................. -7-
Certificate Owner......................................... -7-
Certificate Principal Balance............................. -7-
Certificate Register...................................... -7-
Class..................................................... -7-
Class A Certificate....................................... -7-
Class A Principal Distribution Amount..................... -8-
Class A-1 Allocation Percentage........................... -8-
Class A-1 Certificate..................................... -8-
Class A-1 Principal Distribution Amount................... -8-
Class A-2 Allocation Percentage........................... -8-
Class A-2 Certificate..................................... -8-
Class A-2 Principal Distribution Amount................... -8-
Class CE Certificate...................................... -9-
-ii-
Class M Certificates..................................... -9-
Class M-1 Certificate.................................... -9-
Class M-1 Principal Distribution Amount.................. -9-
Class M-2 Certificate.................................... -9-
Class M-2 Principal Distribution Amount.................. -9-
Class M-3 Certificate.................................... -10-
Class M-3 Principal Distribution Amount.................. -10-
Class M-4 Certificate.................................... -10-
Class M-4 Principal Distribution Amount.................. -10-
Class P Certificate...................................... -11-
Class R Certificates..................................... -11-
Class R-I Interest....................................... -11-
Class R-II Interest...................................... -11-
Closing Date............................................. -11-
Code..................................................... -11-
Commission............................................... -11-
Corporate Trust Office................................... -11-
Corresponding Certificate................................ -11-
Credit Enhancement Percentage............................ -11-
Credit Risk Management Agreement......................... -12-
Credit Risk Management Fee............................... -12-
Credit Risk Management Fee Rate.......................... -12-
Credit Risk Manager...................................... -12-
Custodial Agreement...................................... -12-
Custodian................................................ -12-
Cut-off Date............................................. -12-
Debt Service Reduction................................... -12-
Deficient Valuation...................................... -12-
Definitive Certificates.................................. -12-
Deleted Mortgage Loan.................................... -12-
Delinquency Percentage................................... -12-
Depositor................................................ -13-
Depository............................................... -13-
Depository Institution................................... -13-
Depository Participant................................... -13-
Determination Date....................................... -13-
Directly Operate......................................... -13-
Disqualified Organization................................ -13-
Distribution Account..................................... -14-
Distribution Date........................................ -14-
Due Date................................................. -14-
Due Period............................................... -14-
Eligible Account......................................... -14-
ERISA.................................................... -14-
Estate in Real Property.................................. -14-
Excess Liquidation Proceeds.............................. -14-
-iii-
Expense Adjusted Mortgage Rate........................... -15-
Extraordinary Trust Fund Expense......................... -15-
Extra Principal Distribution Amount...................... -15-
▇▇▇▇▇▇ Mae............................................... -15-
FDIC..................................................... -15-
Final Recovery Determination............................. -15-
Fitch.................................................... -15-
▇▇▇▇▇▇▇ Mac.............................................. -15-
Gross Margin............................................. -15-
Group I Interest Remittance Amount....................... -15-
Group I Mortgage Loans................................... -16-
Group I Principal Distribution Amount.................... -16-
Group I Principal Remittance Amount...................... -16-
Group II Interest Remittance Amount..................... -16-
Group II Mortgage Loans.................................. -16-
Group II Principal Distribution Amount................... -16-
Group II Principal Remittance Amount..................... -17-
Independent.............................................. -17-
Independent Contractor................................... -17-
Index.................................................... -17-
Insurance Proceeds....................................... -17-
Interest Accrual Period.................................. -18-
Interest Carry Forward Amount............................ -18-
Interest Determination Date.............................. -18-
Interest Distribution Amount............................. -18-
Interest Remittance Amount............................... -18-
Late Collections......................................... -18-
Liquidation Event........................................ -18-
Liquidation Proceeds..................................... -19-
Loan-to-Value Ratio...................................... -▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Day...................................... -19-
Loss Severity Percentage................................. -19-
Marker Rate.............................................. -19-
Master Servicer.......................................... -19-
Master Servicer Event of Default......................... -20-
Master Servicer Fee Rate................................. -20-
Master Servicing Fee..................................... -20-
Maximum I-LTZZ Uncertificated Interest Deferral Amount... -20-
Maximum Mortgage Rate.................................... -20-
MERS..................................................... -20-
MERS(R)System............................................ -20-
Mezzanine Certificate.................................... -20-
MGIC..................................................... -21-
MGIC Fee................................................. -21-
MGIC Fee Rate............................................ -21-
MGIC PMI Mortgage Loans.................................. -21-
-iv-
MGIC PMI Policy.......................................... -21-
MIN...................................................... -21-
Minimum Mortgage Rate.................................... -21-
MOM Loan................................................. -21-
Monthly Payment.......................................... -21-
▇▇▇▇▇'▇.................................................. -21-
Mortgage................................................. -21-
Mortgage File............................................ -21-
Mortgage Loan............................................ -22-
Mortgage Loan Documents.................................. -22-
Mortgage Loan Purchase Agreement......................... -22-
Mortgage Loan Schedule................................... -22-
Mortgage Note............................................ -24-
Mortgage Rate............................................ -24-
Mortgaged Property....................................... -25-
Mortgagor................................................ -25-
Net Monthly Excess Cashflow.............................. -25-
Net Mortgage Rate........................................ -25-
Net WAC Pass-Through Rate................................ -25-
Net WAC Rate Carryover Amount............................ -26-
New Lease................................................ -▇▇-
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advance............................... -▇▇-
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇......................... -▇▇-
▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇ Person................................. -26-
Notional Amount.......................................... -26-
Offered Certificates..................................... -26-
Officer's Certificate.................................... -26-
One-Month LIBOR.......................................... -27-
One-Month LIBOR Pass-Through Rate........................ -27-
Opinion of Counsel....................................... -28-
Optional Termination Date................................ -28-
Originators.............................................. -28-
Overcollateralization Amount............................. -28-
Overcollateralization Increase Amount.................... -28-
Overcollateralization Reduction Amount................... -28-
Ownership Interest....................................... -28-
P&I Advance.............................................. -28-
Pass-Through Rate........................................ -29-
Percentage Interest...................................... -30-
Periodic Rate Cap........................................ -30-
Permitted Investments.................................... -30-
Permitted Transferee..................................... -31-
Person................................................... -31-
Plan..................................................... -31-
Prepayment Assumption.................................... -31-
Prepayment Charge........................................ -32-
-v-
Prepayment Charge Schedule............................... -32-
Prepayment Interest Shortfall............................ -32-
Prepayment Period........................................ -33-
Principal Prepayment..................................... -33-
Principal Distribution Amount............................ -▇▇-
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Amount.............................. -33-
Purchase Price........................................... -33-
Qualified Substitute Mortgage Loan....................... -34-
Rate/Term Refinancing.................................... -34-
Rating Agency or Rating Agencies......................... -34-
Realized Loss............................................ -35-
Record Date.............................................. -36-
Reference Banks.......................................... -36-
Refinanced Mortgage Loan................................. -36-
Regular Certificate...................................... -36-
Regular Interest......................................... -36-
Relief Act............................................... -36-
Relief Act Interest Shortfall............................ -36-
REMIC.................................................... -36-
REMIC I.................................................. -36-
REMIC I Interest Loss Allocation Amount.................. -37-
REMIC I Overcollateralization Amount..................... -37-
REMIC I Principal Loss Allocation Amount................. -37-
REMIC I Regular Interest................................. -37-
REMIC I Regular Interest I-LTAA.......................... -38-
REMIC I Regular Interest I-LTA........................... -38-
REMIC I Regular Interest I-LTA2.......................... -38-
REMIC I Regular Interest I-LTM1.......................... -38-
REMIC I Regular Interest I-LTM2.......................... -38-
REMIC I Regular Interest I-LTM3.......................... -38-
REMIC I Regular Interest I-LTM4.......................... -38-
REMIC I Regular Interest I-LTP........................... -39-
REMIC I Regular Interest I-LTXX.......................... -39-
REMIC I Regular Interest I-LTZZ.......................... -39-
REMIC I Regular Interest I-LT1A.......................... -39-
REMIC I Regular Interest I-LT1B.......................... -39-
REMIC I Regular Interest I-LT2A.......................... -39-
REMIC I Regular Interest I-LT2B.......................... -40-
REMIC I Required Overcollateralization Amount............ -40-
REMIC II................................................. -40-
REMIC II Certificate..................................... -40-
REMIC II Certificateholder............................... -40-
REMIC Provisions......................................... -40-
Rents from Real Property................................. -41-
REO Account.............................................. -41-
REO Disposition.......................................... -41-
-vi-
REO Imputed Interest..................................... -41-
REO Principal Amortization............................... -41-
REO Property............................................. -41-
Required Overcollateralization Amount.................... -41-
Reserve Fund............................................. -41-
Reserve Interest Rate.................................... -41-
Residential Dwelling..................................... -42-
Residual Certificate..................................... -42-
Residual Interest........................................ -42-
Responsible Officer...................................... -42-
S&P...................................................... -42-
Scheduled Principal Balance.............................. -42-
Securities Administrator................................. -43-
Seller................................................... -43-
Senior Interest Distribution Amount...................... -43-
Servicer................................................. -43-
Servicer Event of Default................................ -43-
Servicer Prepayment Charge Payment Amount................ -43-
Servicer Remittance Date................................. -43-
Servicer Report.......................................... -43-
Servicing Advances....................................... -43-
Servicing Fee............................................ -44-
Servicing Fee Rate....................................... -44-
Servicing Officer........................................ -44-
Single Certificate....................................... -44-
Startup Day.............................................. -44-
Stated Principal Balance................................. -44-
Stepdown Date............................................ -45-
Sub-Servicer............................................. -45-
Sub-Servicing Agreement.................................. -45-
Substitution Shortfall Amount............................ -45-
Tax Returns.............................................. -45-
Telerate Page 3750....................................... -45-
Termination Price........................................ -46-
Terminator............................................... -46-
Transfer................................................. -46-
Transferee............................................... -46-
Transferor............................................... -46-
Trigger Event............................................ -46-
Trust.................................................... -46-
Trust REMIC.............................................. -46-
Trustee.................................................. -46-
Trust Fund............................................... -46-
Uncertificated Balance................................... -46-
Uncertificated Interest.................................. -▇▇-
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.......................................... -▇▇-
-▇▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇ Person..................................... -47-
Value.................................................... -47-
Voting Rights............................................ -48-
▇▇▇▇▇ Fargo.............................................. -48-
SECTION 1.02. Allocation of Certain Interest Shortfalls................ -48-
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
SECTION 2.01. Conveyance of the Mortgage Loans......................... -50-
SECTION 2.02. Acceptance of REMIC I by Trustee......................... -50-
SECTION 2.03. Repurchase or Substitution of Mortgage Loans............. -51-
SECTION 2.04. Representations and Warranties of the Master Servicer.... -53-
SECTION 2.05. Representations, Warranties and Covenants
of the Servicer.......................................... -55-
SECTION 2.06. Issuance of the REMIC I Regular Interests
and the Class R-I Interest............................... -57-
SECTION 2.07. Conveyance of the REMIC I Regular Interests;
Acceptance of REMIC I by the Trustee..................... -57-
SECTION 2.08. Issuance of Class R Certificates......................... -57-
SECTION 2.09. Establishment of the Trust............................... -57-
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS; ACCOUNTS
SECTION 3.01. Servicer to Act as Servicer.............................. -59-
SECTION 3.02. Sub-Servicing Agreements Between Servicer
and Sub-Servicers........................................ -61-
SECTION 3.03. Successor Sub-Servicers.................................. -61-
SECTION 3.04. No Contractual Relationship Between Sub-Servicer,
Trustee or the Certificateholders........................ -62-
SECTION 3.05. Assumption or Termination of Sub-Servicing
Agreement by Successor Servicer.......................... -62-
SECTION 3.06. Collection of Certain Mortgage Loan Payments............. -62-
SECTION 3.07. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts....................................... -63-
SECTION 3.08. Collection Account and Distribution Account.............. -64-
SECTION 3.09. Withdrawals from the Collection Account
and Distribution Account................................. -66-
SECTION 3.10. Investment of Funds in the Investment Accounts........... -68-
SECTION 3.11. Maintenance of Hazard Insurance, Errors and Omissions
and Fidelity Coverage.................................... -69-
SECTION 3.12. Enforcement of Due-on-Sale Clauses;
Assumption Agreements.................................... -71-
SECTION 3.13. Realization Upon Defaulted Mortgage Loans................ -72-
-viii-
SECTION 3.14. Trustee to Cooperate; Release of Mortgage Files.......... -74-
SECTION 3.15. Servicing Compensation................................... -75-
SECTION 3.16. Reports to the Trustee; Collection Account Statements.... -75-
SECTION 3.17. Statement as to Compliance............................... -76-
SECTION 3.18. Independent Public Accountants' Servicing Report......... -76-
SECTION 3.19 Annual Certification..................................... -76-
SECTION 3.20. Access to Certain Documentation.......................... -77-
SECTION 3.21. Title, Management and Disposition of REO Property........ -77-
SECTION 3.22. Obligations of the Servicer in Respect of Prepayment
Interest Shortfalls; Relief Act Interest Shortfalls...... -80-
SECTION 3.23. Obligations of the Servicer in Respect of Mortgage Rates
and Monthly Payments..................................... -80-
SECTION 3.24. Reserve Fund............................................. -81-
SECTION 3.25. Advance Facility......................................... -82-
SECTION 3.26. Servicer Indemnification................................. -84-
ARTICLE IV
ADMINISTRATION AND MASTER SERVICING
OF THE MORTGAGE LOANS BY THE MASTER SERVICER
SECTION 4.01. Master Servicer.......................................... -85-
SECTION 4.02. REMIC-Related Covenants.................................. -86-
SECTION 4.03. Monitoring of Servicer................................... -86-
SECTION 4.04. Fidelity Bond............................................ -87-
SECTION 4.05. Power to Act; Procedures................................. -87-
SECTION 4.06. Due-on-Sale Clauses; Assumption Agreements............... -88-
SECTION 4.07. Reserved................................................. -88-
SECTION 4.08. Documents, Records and Funds in Possession of
Master Servicer To Be Held for Trustee................... -88-
SECTION 4.09. Standard Hazard Insurance and Flood Insurance Policies... -89-
SECTION 4.10. Presentment of Claims and Collection of Proceeds......... -89-
SECTION 4.11. Maintenance of the Primary Mortgage Insurance Policies... -89-
SECTION 4.12. Trustee to Retain Possession of Certain Insurance
Policies and Documents................................... -90-
SECTION 4.13. Realization Upon Defaulted Mortgage Loans................ -90-
SECTION 4.14. Compensation for the Master Servicer..................... -90-
SECTION 4.15. REO Property............................................. -90-
SECTION 4.16. Annual Officer's Certificate as to Compliance............ -91-
SECTION 4.17. Annual Independent Accountant's Servicing Report......... -92-
SECTION 4.18. UCC...................................................... -92-
SECTION 4.19. Obligation of the Master Servicer in Respect of
Prepayment Interest Shortfalls........................... -92-
SECTION 4.20. Collection Account....................................... -92-
SECTION 4.21. Prepayment Penalty Verification.......................... -93-
-ix-
ARTICLE V
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 5.01. Distributions............................................ -94-
SECTION 5.02. Statements to Certificateholders........................ -104-
SECTION 5.04. Allocation of Realized Losses........................... -109-
SECTION 5.05. Compliance with Withholding Requirements................ -111-
SECTION 5.06. Reports Filed with Securities and Exchange Commission... -111-
ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates........................................ -113-
SECTION 6.02. Registration of Transfer and Exchange of Certificates... -115-
SECTION 6.03. Mutilated, Destroyed, Lost or Stolen Certificates....... -119-
SECTION 6.04. Persons Deemed Owners................................... -120-
SECTION 6.05. Certain Available Information........................... -120-
ARTICLE VII
THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER
SECTION 7.01. Liability of the Depositor, the Servicer and
the Master Servicer..................................... -121-
SECTION 7.02. Merger or Consolidation of the Depositor, the Servicer
or the Master Servicer.................................. -121-
SECTION 7.03. Limitation on Liability of the Depositor, the Servicer,
the Master Servicer and Others.......................... -121-
SECTION 7.04. Limitation on Resignation of the Servicer............... -122-
SECTION 7.05. Limitation on Resignation of the Master Servicer........ -123-
SECTION 7.06. Assignment of Master Servicing.......................... -123-
SECTION 7.08. Duties of the Credit Risk Manager....................... -125-
SECTION 7.09. Limitation Upon Liability of the Credit Risk Manager.... -125-
SECTION 7.10. Removal of the Credit Risk Manager...................... -125-
ARTICLE VIII
DEFAULT
SECTION 8.01. Servicer Events of Default.............................. -126-
SECTION 8.03. Notification to Certificateholders...................... -131-
SECTION 8.04. Waiver of Servicer Events of Default.................... -132-
-x-
ARTICLE IX
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
SECTION 9.01. Duties of Trustee and Securities Administrator.......... -133-
SECTION 9.02. Certain Matters Affecting Trustee and
Securities Administrator................................ -134-
SECTION 9.03. Trustee and Securities Administrator not Liable
for Certificates or Mortgage Loans...................... -136-
SECTION 9.04. Trustee and Securities Administrator
May Own Certificates.................................... -136-
SECTION 9.05. Fees and Expenses of Trustee and
Securities Administrator................................ -137-
SECTION 9.06. Eligibility Requirements for Trustee and
Securities Administrator................................ -137-
SECTION 9.07. Resignation and Removal of Trustee and
Securities Administrator................................ -138-
SECTION 9.08. Successor Trustee or Securities Administrator........... -139-
SECTION 9.09. Merger or Consolidation of Trustee or
Securities Administrator................................ -139-
SECTION 9.10. Appointment of Co-Trustee or Separate Trustee........... -140-
SECTION 9.11. Appointment of Office or Agency......................... -141-
SECTION 9.12. Representations and Warranties.......................... -141-
ARTICLE X
TERMINATION
▇▇▇▇▇▇▇ ▇▇.▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ or Liquidation
of All Mortgage Loans.................................. -142-
SECTION 10.02. Additional Termination Requirements.................... -144-
ARTICLE XI
REMIC PROVISIONS
SECTION 11.01. REMIC Administration................................... -145-
SECTION 11.02. Prohibited Transactions and Activities................. -147-
SECTION 11.03. Indemnification........................................ -148-
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Amendment.............................................. -149-
SECTION 12.02. Recordation of Agreement; Counterparts................. -150-
SECTION 12.03. Limitation on Rights of Certificateholders............. -150-
SECTION 12.04. Governing Law.......................................... -151-
SECTION 12.05. Notices................................................ -151-
SECTION 12.06. Severability of Provisions............................. -152-
-xi-
SECTION 12.07. Notice to Rating Agencies.............................. -152-
SECTION 12.08. Article and Section References......................... -153-
SECTION 12.09. Grant of Security Interest............................. -153-
SECTION 12.10. Survival of Indemnification............................ -154-
-xii-
EXHIBITS
Exhibit A-1 Form of Class A Certificate
Exhibit A-2 Form of Class M Certificate
Exhibit A-3 Form of Class CE Certificate
Exhibit A-4 Form of Class P Certificate
Exhibit A-5 Form of Class R Certificate
Exhibit B-1 Form of Transferor Representation Letter and Form of Transferee
Representation Letter in Connection with Transfer of the Class
P Certificates, Class CE Certificates and Residual Certificates
Pursuant to Rule 144A Under the 1933 Act
Exhibit B-2 Form of Transferor Representation Letter and Form of Transferee
Representation Letter in Connection with Transfer of the Class
P Certificates, Class CE Certificates and Residual Certificates
Pursuant to Rule 501 (a) Under the 1933 Act
Exhibit B-3 Form of Transfer Affidavit and Agreement and Form of Transferor
Affidavit in Connection with Transfer of Residual Certificates
Exhibit C Form of Servicer Certification
Schedule 1 Mortgage Loan Schedule
Schedule 2 Prepayment Charge Schedule
Schedule 3 MGIC PMI Mortgage Loans
-xiii-
This Pooling and Servicing Agreement, is dated and effective as of
July 1, 2003, among ACE SECURITIES CORP. as Depositor, OCWEN FEDERAL BANK FSB as
Servicer, ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION as Master Servicer
and Securities Administrator and BANK ONE, NATIONAL ASSOCIATION as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates to be
issued hereunder in multiple classes, which in the aggregate will evidence the
entire beneficial ownership interest of the Trust Fund created hereunder. The
Trust Fund will consist of a segregated pool of assets comprised of the Mortgage
Loans and certain other related assets subject to this Agreement.
REMIC I
-------
As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the Mortgage Loans and certain other related assets
subject to this Agreement (other than the Reserve Fund) as a REMIC for federal
income tax purposes, and such segregated pool of assets will be designated as
"REMIC I". The Class R-I Interest will be the sole class of "residual interests"
in REMIC I for purposes of the REMIC Provisions (as defined herein). The
following table irrevocably sets forth the designation, the REMIC I Remittance
Rate, the initial Uncertificated 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 I Regular Interests (as defined herein). None of the
REMIC I Regular Interests will be certificated.
REMIC I Initial Latest Possible
Designation Remittance Rate Uncertificated Balance Maturity Date(1)
------------- ------------------- -------------------------- -------------------
I-LTAA Variable(2) $ 145,282,620.32 June 25, 2033
I-LTA1 Variable(2) $ 1,046,560.00 June 25, 2033
I-LTA2 Variable(2) $ 295,085.00 June 25, 2033
I-LTM1 Variable(2) $ 59,330.00 June 25, 2033
I-LTM2 Variable(2) $ 48,180.00 June 25, 2033
I-LTM3 Variable(2) $ 14,825.00 June 25, 2033
I-LTM4 Variable(2) $ 11,115.00 June 25, 2033
I-LTZZ Variable(2) $ 1,489,886.44 June 25, ▇▇▇▇
▇-▇▇▇ Variable(2) $ 100.00 June 25, 2033
I-LT1A Variable(2) $ 2,197.14 June 25, 2033
I-LT1B Variable(2) $ 23,128.34 June 25, 2033
I-LT2A Variable(2) $ 619.48 June 25, 2033
I-LT2B Variable(2) $ 6,521.18 June 25, 2033
I-LTXX Variable(2) $ 148,215,105.61 June 25, 2033
---------------------------
-1-
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately 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 I
Regular Interest.
(2) Calculated in accordance with the definition of "REMIC I Remittance Rate"
herein.
REMIC II
--------
As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the REMIC I Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II." The Class R-II Interest will evidence the sole class
of "residual interests" in REMIC II for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, the Pass-Through Rate,
the initial aggregate Certificate Principal Balance and, solely for purposes of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible
maturity date" for the indicated Classes of Certificates.
Initial Aggregate
Pass-Through Certificate Principal Latest Possible
Designation Rate Balance Maturity Date (1)
------------- ------------------- -------------------------- -------------------
Class A-1 Variable(2) $ 209,312,000 June 25, 2033
Class A-2 Variable(2) $ 59,017,000 June 25, 2033
Class M-1 Variable(2) $ 11,860,000 June 25, 2033
Class M-2 Variable(2) $ 9,636,000 June 25, 2033
Class M-3 Variable(2) $ 2,965,000 June 25, 2033
Class M-4 Variable(2) $ 2,223,000 June 25, 2033
Class P N/A(3) $ 100.00 June 25, 2033
Class CE N/A(4) $1,482,143.52 June 25, 2033
-------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately 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.
(2) Calculated in accordance with the definition of "Pass-Through Rate"
herein.
(3) The Class P Certificates will not accrue interest.
(4) The Class CE Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class CE Certificates
outstanding from time to time which shall equal the Uncertificated
Balance of the REMIC I Regular Interests. The Class CE Certificates will
not accrue interest on their Certificate Principal Balance.
As of the Cut-off Date, the Group I Mortgage Loans had an
aggregate Scheduled Principal Balance equal to $231,283,449.42 and the Group II
Mortgage Loans had an aggregate Scheduled Principal Balance equal to
$65,211,794.10.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Master Servicer, the Securities Administrator and
the Trustee agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without limitation, in
the Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Unless otherwise specified, all calculations described herein shall be made on
the basis of a 360-day year consisting of twelve 30-day months.
"Accepted Master Servicing Practices": With respect to any
Mortgage Loan, as applicable, either (x) those customary mortgage master
servicing practices of prudent mortgage servicing institutions that master
service mortgage loans of the same type and quality as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located, to the extent
applicable to the Master Servicer (except in its capacity as successor to the
Servicer), or (y) as provided in Section 3.01 hereof, but in no event below the
standard set forth in clause (x).
"Accepted Servicing Practices": As defined in Section 3.01.
"Account": The Collection Account and the Distribution Account as
the context may require.
"Accrued Certificate Interest": With respect to any Class A
Certificate, Mezzanine Certificate or Class CE Certificate and each Distribution
Date, interest accrued during the related Interest Accrual Period at the
Pass-Through Rate for such Certificate for such Distribution Date on the
Certificate Principal Balance, in the case of the Class A Certificates and the
Mezzanine Certificates, or on the Notional Amount in the case of the Class CE
Certificates, of such Certificate immediately prior to such Distribution Date.
The Class P Certificates are not entitled to distributions in respect of
interest and, accordingly, will not accrue interest. All distributions of
interest on the Class A Certificates and the Mezzanine Certificates will be
calculated on the basis of a 360-day year and the actual number of days in the
applicable Interest Accrual Period. All distributions of interest on the Class
CE Certificates will be based on a 360-day year consisting of twelve 30-day
months. Accrued Certificate Interest with respect to each Distribution Date, as
to any Class A Certificate, Mezzanine Certificate or Class CE Certificate shall
be reduced by an amount equal to the portion allocable to such Certificate
pursuant to Section 1.02 hereof, if any, of the sum of (a) the aggregate
Prepayment Interest Shortfall, if any, for such Distribution Date to the extent
not covered by payments pursuant to Section 3.22 or Section 4.19 and (b) the
aggregate amount of any Relief Act Interest Shortfall, if any, for such
Distribution Date. In addition, Accrued Certificate Interest with respect to
each Distribution Date, as to any Class CE Certificate, shall be reduced by an
amount equal to the portion allocable to such Class CE Certificate of Realized
Losses, if any, pursuant to Section 1.02 and Section 5.04 hereof.
"Adjustable Rate Mortgage Loan": Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage Rate that is
subject to adjustment.
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"Adjustment Date": With respect to each Adjustable Rate Mortgage
Loan, the first day of the month in which the Mortgage Rate of an Adjustable
Rate Mortgage Loan changes pursuant to the related Mortgage 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.
"Administration Fees": The sum of (i) the Servicing Fee, (ii) the
Master Servicing Fee, (iii) the MGIC Fee and (iv) the Credit Risk Management
Fee.
"Administration Fee Rate": The sum of (i) the Servicing Fee Rate,
(ii) the Master Servicing Fee Rate, (iii) the MGIC Fee Rate and (iv) the Credit
Risk Management Fee Rate.
"Advance Facility": As defined in Section 3.25(a).
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Loss Severity 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 on any Mortgage Loans
from the Cut-off Date to the last day of the preceding calendar month and the
denominator of which is the aggregate principal balance of such Mortgage Loans
immediately prior to the liquidation of such Mortgage Loans.
"Agreement": This Pooling and Servicing Agreement, including all
exhibits and schedules hereto and all amendments hereof and supplements hereto.
"Amounts Held for Future Distribution": As to any Distribution
Date, the aggregate amount held in the Collection Account at the close of
business on the immediately preceding Determination Date on account of (i) all
Monthly Payments or portions thereof received in respect of the Mortgage Loans
due after the related Due Period and (ii) Principal Prepayments and Liquidation
Proceeds received in respect of such Mortgage Loans after the last day of the
related Prepayment Period.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.
"Available Distribution Amount": With respect to any Distribution
Date, an amount equal to (1) the sum of (a) the aggregate of the amounts on
deposit in the Collection Account and Distribution Account as of the close of
business on the related Servicer Remittance Date, (b) the
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aggregate of any amounts deposited in the Distribution Account by the Servicer
or the Master Servicer in respect of Prepayment Interest Shortfalls for such
Distribution Date pursuant to Section 3.22 or Section 4.19, (c) the aggregate of
any P&I Advances for such Distribution Date made by the Servicer pursuant to
Section 5.03 and (d) the aggregate of any P&I Advances made by a successor
Servicer (including the Trustee or the Master Servicer) for such Distribution
Date pursuant to Section 8.02, reduced (to not less than zero) by (2) the
portion of the amount described in clause (1)(a) above that represents (i)
Amounts Held for Future Distribution, (ii) Principal Prepayments on the Mortgage
Loans received after the related Prepayment Period (together with any interest
payments received with such Principal Prepayments to the extent they represent
the payment of interest accrued on the Mortgage Loans during a period subsequent
to the related Prepayment Period), (iii) Liquidation Proceeds and Insurance
Proceeds received in respect of the Mortgage Loans after the related Prepayment
Period, (iv) amounts reimbursable or payable to the Depositor, the Servicer, the
Trustee, the Master Servicer, the Securities Administrator or the Custodian
pursuant to Section 3.09 or 9.05 or otherwise payable in respect of
Extraordinary Trust Fund Expenses, (v) the Credit Risk Management Fee and the
MGIC Fee, (vi) amounts deposited in the Collection Account or the Distribution
Account in error, (vii) the amount of any Prepayment Charges collected by the
Servicer and any Servicer Prepayment Charge Payment Amounts paid by the Servicer
in connection with the Principal Prepayment of any of the Mortgage Loans and
(viii) amounts reimbursable to a successor Servicer (including the Trustee or
the Master Servicer) pursuant to Section 8.02.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the
payment of the unamortized principal balance of such Mortgage Loan in a single
payment at the maturity of such Mortgage Loan that is substantially greater than
the preceding monthly payment.
"Balloon Payment": A payment of the unamortized principal balance
of a Mortgage Loan in a single payment at the maturity of such Mortgage Loan
that is substantially greater than the preceding Monthly Payment.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of
the United States Code), as amended.
"Book-Entry Certificates": The Offered Certificates for so long as
the Certificates of such Class shall be registered in the name of the Depository
or its nominee.
"Book-Entry Custodian": The custodian appointed pursuant to
Section 6.01.
"Business Day": Any day other than a Saturday, a Sunday or a day
on which banking or savings and loan institutions in the States of New York,
Florida, Maryland, Minnesota, New Jersey 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.
"Cap Contracts": Shall mean (i) the Cap Contract between the
Trustee and the counterparty named thereunder, for the benefit of the Holders of
the Class A-1 Certificates and (ii) the Cap Contract between the Trustee and the
counterparty thereunder, for the benefit of the Class A-2 Certificates.
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"Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds of
which are more than a nominal amount in excess of the principal balance of any
existing first mortgage plus any subordinate mortgage on the related Mortgaged
Property and related closing costs.
"Certificate": Any one of the Depositor's Asset Backed
Pass-Through Certificates, Series 2003-TC1, Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-1,
Class M-2, Class M-3, Class M-4, Class P, Class CE and Class R issued under this
Agreement.
"Certificate Factor": With respect to any Class of Certificates
(other than the Residual Certificates) as of any Distribution Date, a fraction,
expressed as a decimal carried to six places, the numerator of which is the
aggregate Certificate Principal Balance (or Notional Amount, in the case of the
Class CE Certificates) of such Class of Certificates on such Distribution Date
(after giving effect to any distributions of principal and allocations of
Realized Losses resulting in reduction of the Certificate Principal Balance (or
Notional Amount, in the case of the Class CE Certificates) of such Class of
Certificates to be made on such Distribution Date), and the denominator of which
is the initial aggregate Certificate Principal Balance (or Notional Amount, in
the case of the Class CE Certificates) of such Class of Certificates as of the
Closing Date.
"Certificate Margin": With respect to the Class A-1 Certificates
and, for purposes of the definition of "Marker Rate", REMIC II Regular Interest
I-LTA1, 0.31% in the case of each Distribution Date through and including the
Optional Termination Date and 0.62% in the case of each Distribution Date
thereafter.
With respect to the Class A-2 Certificates and, for purposes of
the definition of "Marker Rate", REMIC II Regular Interest I-LTA2, 0.39% in the
case of each Distribution Date through and including the Optional Termination
Date and 0.78% in the case of each Distribution Date thereafter.
With respect to the Class M-1 Certificates and, for purposes of
the definition of "Marker Rate", REMIC II Regular Interest I-LTM1, 0.75% in the
case of each Distribution Date through and including the Optional Termination
Date and 1.125% in the case of each Distribution Date thereafter.
With respect to the Class M-2 Certificates and, for purposes of
the definition of "Marker Rate", REMIC II Regular Interest I-LTM2, 1.95% in the
case of each Distribution Date through and including the Optional Termination
Date and 2.925% in the case of each Distribution Date thereafter.
With respect to the Class M-3 Certificates and, for purposes of
the definition of "Marker Rate", REMIC II Regular Interest I-LTM3, 2.60% in the
case of each Distribution Date through and including the Optional Termination
Date and 3.90% in the case of each Distribution Date thereafter.
With respect to the Class M-4 Certificates and, for purposes of
the definition of "Marker Rate", REMIC II Regular Interest I-LTM4, 3.75% in the
case of each Distribution Date
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through and including the Optional Termination Date and 5.625% in the case of
each Distribution Date thereafter.
"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 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 or beneficially owned by the Depositor, the Seller, the Servicer, the
Master Servicer, the Securities Administrator, the Trustee 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 12.01. The Trustee may
conclusively rely upon a certificate of the Depositor, the Seller, the Master
Servicer, the Securities Administrator or the 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 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 Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to each Class A
Certificate, Mezzanine Certificate or Class P Certificate as of any date of
determination, the Certificate Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination, minus all
distributions allocable to principal made thereon and Realized Losses allocated
thereto, if any, on such immediately prior Distribution Date (or, in the case of
any date of determination up to and including the first Distribution Date, the
initial Certificate Principal Balance of such Certificate, as stated on the face
thereof). With respect to each Class CE Certificate as of any date of
determination, an amount equal to the Percentage Interest evidenced by such
Certificate times the excess, if any, of (A) the then aggregate Uncertificated
Balances of the REMIC I 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 aggregate
initial Certificate Principal Balance of each Class of Regular Certificates is
set forth in the Preliminary Statement hereto.
"Certificate Register": The register maintained pursuant to
Section 6.02.
"Class": Collectively, all of the Certificates bearing the same
class designation.
"Class A Certificate": Any Class A-1 Certificate or Class A-2
Certificate.
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"Class A Principal Distribution Amount": The Class A Principal
Distribution Amount is an amount equal to the sum of the Class A-1 Principal
Distribution Amount and the Class A-2 Principal Distribution Amount.
"Class A-1 Allocation Percentage": With respect to any
Distribution Date is the percentage equivalent of a fraction, the numerator of
which is (x) the Group I Principal Remittance Amount for such Distribution Date
and the denominator of which is (y) the Principal Remittance Amount for such
Distribution Date.
"Class A-1 Certificate": Any one of the Class A-1 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-1 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.
"Class A-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the Certificate Principal Balance of the Class
A-1 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 81.00% and (ii) the aggregate Stated Principal Balance
of the Group I 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 Group I 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 $1,156,417.
"Class A-2 Allocation Percentage": With respect to any
Distribution Date is the percentage equivalent of a fraction, the numerator of
which is (x) the Group II Principal Remittance Amount for such Distribution Date
and the denominator of which is (y) the Principal Remittance Amount for such
Distribution Date.
"Class A-2 Certificate": Any one of the Class A-2 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-1 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.
"Class A-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the Certificate Principal Balance of the Class
A-2 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 81.00% and (ii) the aggregate Stated Principal Balance
of the Group II 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 Group II 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 $326,059.
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"Class CE Certificate": Any one of the Class CE Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-3 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.
"Class M Certificates": The Class M-1, Class M-2, Class M-3 and
Class M-4 Certificates.
"Class M-1 Certificate": Any one of the Class M-1 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-2 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.
"Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the 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) 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)
89.00% 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 $1,482,476.
"Class M-2 Certificate": Any one of the Class M-2 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-2 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.
"Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the 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) 95.50% 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
$1,482,476.
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"Class M-3 Certificate": Any one of the Class M-3 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-2 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.
"Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the 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) 97.50% 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 $1,482,476.
"Class M-4 Certificate": Any one of the Class M-4 Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-2 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.
"Class M-4 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the 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), (iv) the Certificate Principal
Balance of the Class M-3 Certificates (after taking into account the payment of
the Class M-3 Principal Distribution Amount on such Distribution Date) and (v)
the Certificate Principal Balance of the Class M-4 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
99.00% 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 $1,482,476.
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"Class P Certificate": Any one of the Class P Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-4 and evidencing a Regular Interest in REMIC II for
purposes of the REMIC Provisions.
"Class R Certificates": Any one of the Class R Certificates
executed, authenticated and delivered by the Trustee, substantially in the form
annexed hereto as Exhibit A-5, and evidencing the Class R-I Interest and the
Class R-II Interest.
"Class R-I Interest": The uncertificated residual interest in
REMIC I.
"Class R-II Interest": The uncertificated residual interest in
REMIC II.
"Closing Date": July 15, 2003.
"Code": The Internal Revenue Code of 1986 as amended from time to
time.
"Collection Account": The account or accounts created and
maintained, or caused to be created and maintained, by the Servicer pursuant to
Section 3.08(a), which shall be entitled "Ocwen Federal Bank FSB, as Servicer
for Bank One, National Association, as Trustee, in trust for the registered
holders of ACE Securities Corp., Home Equity Loan Trust, Series 2003-TC1, Asset
Backed Pass-Through Certificates." The Collection Account must be an Eligible
Account.
"Commission": The Securities and Exchange Commission.
"Corporate Trust Office": The principal corporate trust office of
the Trustee which office at the date of the execution of this instrument is
located at 1 Bank One Plaza, Mail Stop IL1- 0126, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Global Corporate Trust Services, ACE Securities Corp., 2003-TC1, or
at such other address as the Trustee may designate from time to time by notice
to the Certificateholders, the Depositor, the Master Servicer, the Securities
Administrator and the Servicer.
"Corresponding Certificate": With respect to REMIC I Regular
Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC
I Regular Interest I-LTM4 and REMIC I Regular Interest I-LTP, the Class A-1
Certificates, Class A-2 Certificates, Class M-1 Certificates, Class M-2
Certificates, Class M-3 Certificates, Class M-4 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 CE Certificates, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans, calculated after taking into account
distributions of principal on the Mortgage Loans and distribution of the
Principal Distribution Amount to the Certificates then entitled to distributions
of principal on such Distribution Date.
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"Credit Risk Management Agreement": The agreement between the
Credit Risk Manager and the Servicer, regarding the loss mitigation and advisory
services to be provided by the Credit Risk Manager.
"Credit Risk Management Fee": The amount payable to the Credit
Risk Manager on each Distribution Date as compensation for all services rendered
by it in the exercise and performance of any and all powers and duties of the
Credit Risk Manager under the Credit Risk Management Agreement, which amount
shall equal one twelfth of the product of (i) the Credit Risk Management Fee
Rate multiplied by (ii) the Stated Principal Balance of the Mortgage Loans and
any related REO Properties as of the first day of the related Due Period.
"Credit Risk Management Fee Rate": 0.015% per annum.
"Credit Risk Manager": The Murrayhill Company, a Colorado
corporation, and its successors and assigns.
"Custodial Agreement": Shall mean the Custodial Agreement dated as
of July 1, 2003, among the Trustee, the Custodian and the Servicer as such
agreement may be amended or supplemented from time to time, or any other
custodial agreement entered into after the date hereof with respect to any
Mortgage Loan subject to this Agreement.
"Custodian": Shall mean ▇▇▇▇▇ Fargo or any other custodian
appointed under any custodial agreement entered into after the date of this
Agreement.
"Cut-off Date": With respect to each Mortgage Loan, July 1, 2003.
With respect to all Qualified Substitute Mortgage Loans, their respective dates
of substitution. References herein to the "Cut-off Date," when used with respect
to more than one Mortgage Loan, shall be to the respective Cut-off Dates for
such Mortgage Loans.
"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.
"Definitive Certificates": As defined in Section 6.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": As of the last day of the related Due
Period, the percentage equivalent of a fraction, the numerator of which is the
aggregate Stated Principal Balance
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of all Mortgage Loans that, as of the last day of the previous calendar month,
are 60 or more days delinquent, are in foreclosure, have been converted to REO
Properties or have been discharged by reason of bankruptcy, and the denominator
of which is the aggregate Stated Principal Balance of the Mortgage Loans and REO
Properties as of the last day of the previous calendar month.
"Depositor": ACE Securities Corp., a Delaware corporation, or its
successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. 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 and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee, that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations (or,
in the case of a depository institution that is the principal subsidiary of a
holding company, such holding company has unsecured commercial paper or other
short-term unsecured debt obligations) that are rated at least A-1 by S&P and
P-1 by ▇▇▇▇▇'▇ (or, if such Rating Agencies are no longer rating the Offered
Certificates, comparable ratings by any other nationally recognized statistical
rating agency then rating the Offered Certificates).
"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 each Distribution Date,
shall mean the 15th day of the calendar month on 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 REMIC I other than
through an Independent Contractor; provided, however, that the Servicer, on
behalf of the Trustee, shall not be considered to Directly Operate an REO
Property solely because the Servicer 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": Any of the following: (i) the United
States, any State or political subdivision thereof, any possession of the United
States, or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for ▇▇▇▇▇▇▇ Mac, a majority of its board of directors is not
selected by such
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governmental unit), (ii) any foreign government, any international organization,
or any agency or instrumentality of any of the foregoing, (iii) any organization
(other than certain farmers' cooperatives described in Section 521 of the Code)
which is exempt from the tax imposed by Chapter 1 of the Code (including the tax
imposed by Section 511 of the Code on unrelated business taxable income), (iv)
rural electric and telephone cooperatives described in Section 1381(a)(2)(C) of
the Code, (v) an "electing large partnership" and (vi) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the holding of
an Ownership Interest in a Residual Certificate by such Person may cause any
Trust REMIC or any Person having an Ownership Interest in any Class of
Certificates (other than such Person) to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the Transfer
of an Ownership Interest in a Residual Certificate to such Person. The terms
"United States," "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.08(b) in the name of the Trustee
for the benefit of the Certificateholders and designated "Bank One, National
Association, in trust for registered holders of ACE Securities Corp. Home Equity
Loan Trust, Series 2003-TC1". Funds in the Distribution Account shall be held in
trust for the Certificateholders for the uses and purposes set forth in this
Agreement. The Distribution Account must be an Eligible Account.
"Distribution Date": The 25th day of any month, or if such 25th
day is not a Business Day, the Business Day immediately following such 25th day,
commencing in August 2003.
"Due Date": With respect to each Distribution Date, the day of the
month on which the Monthly Payment is due on a Mortgage Loan during the related
Due Period, exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month in
which such Distribution Date occurs.
"Eligible Account": Any of (i) an account or accounts maintained
with a Depository Institution, (ii) an account or accounts the deposits in which
are fully insured by the FDIC or (iii) a trust account or accounts maintained
with the corporate trust department of a federal depository institution or state
chartered depository institution subject to regulations regarding fiduciary
funds on deposit similar to Title 12 of the Code of Federal Regulation Section
9.10(b), which, in either case, has corporate trust powers, acting in its
fiduciary capacity. Eligible Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Estate in Real Property": A fee simple estate in a parcel of
land.
"Excess Liquidation Proceeds": To the extent that such amount is
not required by law to be paid to the related mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a liquidated Mortgage Loan exceed the
sum of (i) the outstanding principal balance of such
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Mortgage Loan and accrued but unpaid interest at the related Net Mortgage Rate
through the last day of the month in which the related Liquidation Event occurs,
plus (ii) related liquidation expenses or other amounts to which the Servicer is
entitled to be reimbursed from Liquidation Proceeds with respect to such
liquidated Mortgage Loan pursuant to Section 3.09.
"Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan or REO Property, the then applicable Mortgage Rate thereon minus the
Administration Fee Rate.
"Extraordinary Trust Fund Expense": Any amounts payable or
reimbursable to the Trustee, the Master Servicer, the Securities Administrator,
the Custodian or any director, officer, employee or agent of any such Person
from the Trust Fund pursuant to the terms of this Agreement and any amounts
payable from the Distribution Account in respect of taxes pursuant to Section
11.01(g)(v).
"Extra Principal Distribution Amount": With respect to any
Distribution Date, the lesser of (i) the Net Monthly Excess Cashflow for such
Distribution Date and (ii) the Overcollateralization Increase Amount for such
Distribution Date.
"▇▇▇▇▇▇ ▇▇▇": ▇▇▇▇▇▇ ▇▇▇, formerly known as the 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 Originator, the Seller or the Terminator pursuant to or as
contemplated by Section 2.03, 3.13(c) or Section 10.01), a determination made by
the Servicer that all Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries which the Servicer, in its reasonable good faith
judgment, expects to be finally recoverable in respect thereof have been so
recovered, which determination shall be evidenced by a certificate of a
Servicing Officer delivered to the Master Servicer and maintained in its
records.
"Fitch": Fitch Ratings or any successor in interest.
"▇▇▇▇▇▇▇ Mac": ▇▇▇▇▇▇▇ Mac, formerly known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.
"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 Adjustable Rate
Mortgage Loan.
"Group I Interest Remittance Amount": With respect to any
Distribution Date is that portion of the Available Distribution Amount for such
Distribution Date that represents interest received or advanced on the Group I
Mortgage Loans (after taking into account amounts payable or
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reimbursable to the Trustee, the Custodian, the Securities Administrator, the
Master Servicer or the Servicer pursuant to this Agreement or the Custodial
Agreement).
"Group I Mortgage Loans": Those Mortgage Loans identified on the
Mortgage Loan Schedule as Group I Mortgage Loans.
"Group I Principal Distribution Amount": With respect to any
Distribution Date will be the sum of (i) the principal portion of all Monthly
Payments on the Group I Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related Determination Date; (ii) the
principal portion of all proceeds received in respect of the repurchase of a
Group I Mortgage Loan or, in the case of a substitution, certain amounts
representing a principal adjustment, during the related Prepayment Period
pursuant to or as contemplated by Section 2.03, Section 3.13(c) and Section
10.01; (iii) the principal portion of all other unscheduled collections,
including Insurance Proceeds, Liquidation Proceeds and all Principal Prepayments
in full and in part, received during the related Prepayment Period, to the
extent applied as recoveries of principal on the Group I Mortgage Loans, net in
each case of payments or reimbursements to the Trustee, the Custodian, the
Master Servicer, the Securities Administrator and the Servicer and (iv) the
Class A-1 Allocation Percentage of the amount of any Overcollateralization
Increase Amount for such Distribution Date MINUS (v) the Class A-1 Allocation
Percentage of the amount of any Overcollateralization Reduction Amount for such
Distribution Date.
"Group I Principal Remittance Amount": With respect to any
Distribution Date will be the sum of the amounts described in clauses (i)
through (iii) of the definition of Group I Principal Distribution Amount.
"Group II Interest Remittance Amount": With respect to any
Distribution Date is that portion of the Available Distribution Amount for such
Distribution Date that represents interest received or advanced on the Group II
Mortgage Loans (after taking into account amounts payable or reimbursable to the
Trustee, the Custodian, the Securities Administrator, the Master Servicer or the
Servicer pursuant to this Agreement or the Custodial Agreement).
"Group II Mortgage Loans": Those Mortgage Loans identified on the
Mortgage Loan Schedule as Group II Mortgage Loans.
"Group II Principal Distribution Amount": With respect to any
Distribution Date will be the sum of (i) the principal portion of all Monthly
Payments on the Group II Mortgage Loans due during the related Due Period,
whether or not received on or prior to the related Determination Date; (ii) the
principal portion of all proceeds received in respect of the repurchase of a
Group II Mortgage Loan or, in the case of a substitution, certain amounts
representing a principal adjustment, during the related Prepayment Period
pursuant to or as contemplated by Section 2.03, Section 3.13(c) and Section
10.01; (iii) the principal portion of all other unscheduled collections,
including Insurance Proceeds, Liquidation Proceeds and all Principal Prepayments
in full and in part, received during the related Prepayment Period, to the
extent applied as recoveries of principal on the Group II Mortgage Loans, net in
each case of payments or reimbursements to the Trustee, the Custodian, the
Master Servicer, the Securities Administrator and the Servicer and (iv) the
Class A-2 Allocation Percentage of the amount of any Overcollateralization
Increase Amount for such Distribution Date MINUS (v)
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the Class A-2 Allocation Percentage of the amount of any Overcollateralization
Reduction Amount for such Distribution Date.
"Group II Principal Remittance Amount": With respect to any
Distribution Date will be the sum of the amounts described in clauses (i)
through (iii) of the definition of Group II Principal Distribution Amount.
"Independent": When used with respect to any specified Person, any
such Person who (a) is in fact independent of the Depositor, the Master
Servicer, the Securities Administrator, the Servicer, the Seller, the Originator
and their respective Affiliates, (b) does not have any direct financial interest
in or any material indirect financial interest in the Depositor, the Master
Servicer, the Securities Administrator, the Servicer, the Seller, the Originator
or any Affiliate thereof, and (c) is not connected with the Depositor, the
Master Servicer, the Securities Administrator, the Servicer, the Seller, the
Originator or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Depositor, the Master Servicer, the Securities Administrator, the Servicer, the
Seller, the Originator 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, the Master Servicer, the Securities Administrator, the Servicer, the
Seller, the Originator or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the
Servicer) that would be an "independent contractor" with respect to REMIC I
within the meaning of Section 856(d)(3) of the Code if REMIC I 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 REMIC I does
not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I 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 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
each related Adjustment Date, the average of the interbank offered rates for
six-month United States dollar deposits in the London market as published in THE
WALL STREET JOURNAL and as most recently available either (a) as of the first
Business Day 45 days prior to such Adjustment Date or (b) as of the first
Business Day of the month preceding the month of such Adjustment Date, as
specified in the related Mortgage Note.
"Insurance Proceeds": Proceeds of any title policy, hazard policy
or other insurance policy covering a Mortgage Loan, to the extent such proceeds
are not to be applied to the restoration
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of the related Mortgaged Property or released to the Mortgagor in accordance
with Accepted Servicing Practices, subject to the terms and conditions of the
related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution Date
and the Class A Certificates and the Mezzanine Certificates, the period
commencing on the Distribution Date of the month immediately preceding the month
in which such Distribution Date occurs (or, in the case of the first
Distribution Date, commencing on the Closing Date) and ending on the day
preceding such Distribution Date. With respect to any Distribution Date and the
Class CE Certificates and the REMIC I Regular Interests, the one-month period
ending on the last day of the calendar month immediately preceding the month in
which such Distribution Date occurs.
"Interest Carry Forward Amount": With respect to any Distribution
Date and the Class A Certificates and the Mezzanine Certificates, the sum of (i)
the amount, if any, by which (a) the Interest Distribution Amount for such Class
of Certificates as of the immediately preceding Distribution Date exceeded (b)
the actual amount distributed on such Class of Certificates in respect of
interest on such immediately preceding Distribution Date and (ii) the amount of
any Interest Carry Forward Amount for such Class of Certificates remaining
unpaid from the previous Distribution Date, plus accrued interest on such sum
calculated at the related Pass-Through Rate for the most recently ended Interest
Accrual Period.
"Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates, REMIC I Regular Interest I-LTA1, REMIC
I Regular Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4 and any Interest Accrual Period therefor, the second London Business Day
preceding the commencement of such Interest Accrual Period.
"Interest Distribution Amount": With respect to any Distribution
Date and any Class A Certificates, any Mezzanine Certificates and any Class CE
Certificates, the aggregate Accrued Certificate Interest on the Certificates of
such Class for such Distribution Date.
"Interest Remittance Amount": With respect to any Distribution
Date, the sum of the Group I Interest Remittance Amount and the Group II
Interest Remittance Amount.
"Late Collections": With respect to any Mortgage Loan and any Due
Period, all amounts received subsequent to the Determination Date immediately
following such Due Period with respect to such Mortgage Loan, 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 for such Due Period and not
previously 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 REMIC I by reason of its being purchased, sold or replaced pursuant
to or as contemplated by Section 2.03, Section 3.13(c) or Section 10.01. With
respect to any REO Property, either of the following events: (i) a Final
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Recovery Determination is made as to such REO Property or (ii) such REO Property
is removed from REMIC I by reason of its being purchased pursuant to Section
10.01.
"Liquidation Proceeds": The amount (other than Insurance Proceeds
or amounts received in respect of the rental of any REO Property prior to REO
Disposition) received by the 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 through 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 3.13(c), Section 3.21 or Section 10.01.
"Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date and the denominator of which
is the Value of the related Mortgaged Property.
"London Business Day": Any day on which banks in the Cities of
London and New York are open and conducting transactions in United States
dollars.
"Loss Severity Percentage": With respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the amount of
Realized Losses incurred on a Mortgage Loan and the denominator of which is the
principal balance of such Mortgage Loan immediately prior to the liquidation of
such Mortgage Loan.
"Marker Rate": With respect to the Class CE Certificates and any
Distribution Date, a per annum rate equal to two (2) times the weighted average
of the REMIC I Remittance Rate for each of REMIC I Regular Interest I-LTA1,
REMIC I Regular Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC Regular Interest
I-LTM4 and REMIC I Regular Interest I-LTZZ, with the rate on each such REMIC I
Regular Interest (other than REMIC I Regular Interest I-LTZZ) subject to a cap
equal to the lesser of (i) the related One-Month LIBOR Pass-Through Rate and
(ii) the Net WAC Pass-Through Rate for the purpose of this calculation for such
Distribution Date and with the rate on REMIC I Regular Interest I-LTZZ subject
to a cap of zero for the purpose of this calculation; provided however, each
such cap shall be multiplied by a fraction the numerator of which is the actual
number of days in the related Interest Accrual Period and the denominator of
which is 30.
"Master Servicer": As of the Closing Date, ▇▇▇▇▇ Fargo Bank
Minnesota, National Association and thereafter, its respective successors in
interest who meet the qualifications of this Agreement. The Master Servicer and
the Securities Administrator shall at all times be the same Person.
"Master Servicer Certification": A written certification covering
servicing of the Mortgage Loans by the Servicer and signed by an officer of the
Master Servicer that complies with (i) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and
15d-14, as in effect from time to time; provided that if, after the Closing Date
(a) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
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Act of 2002 is amended, (b) the Statement referred to in clause (ii) is modified
or superceded by any subsequent statement, rule or regulation of the Securities
and Exchange Commission or any statement of a division thereof, or (c) any
future releases, rules and regulations are published by the Securities and
Exchange Commission from time to time pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002, which in any such case affects the form or substance of the required
certification and results in the required certification being, in the reasonable
judgment of the Master Servicer, materially more onerous than the form of the
required certification as of the Closing Date, the Master Servicer Certification
shall be as agreed to by the Master Servicer, the Depositor and the Seller
following a negotiation in good faith to determine how to comply with any such
new requirements.
"Master Servicer Event of Default": One or more of the events
described in Section 8.01(b).
"Master Servicer Fee Rate": 0.025% per annum.
"Master Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one twelfth of the product of the Master
Servicer Fee Rate multiplied by the Scheduled Principal Balance of the Mortgage
Loans as of the Due Date in the preceding calendar month.
"Maximum I-LTZZ Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest I-LTZZ for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest I-LTZZ minus the REMIC I Overcollateralization Amount, in each
case for such Distribution Date, over (ii) Uncertificated Interest on REMIC I
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest
I-LTM3 and REMIC I Regular Interest I-LTM4 for such Distribution Date, with the
rate on each such REMIC I Regular Interest subject to a cap equal to the lesser
of (i) the related One-Month LIBOR Pass-Through Rate and (ii) the Net WAC
Pass-Through Rate for the purpose of this calculation for such Distribution
Date; provided however, each such cap shall be multiplied by a fraction the
numerator of which is the actual number of days in the related Interest Accrual
Period and the denominator of which is 30.
"Maximum Mortgage Rate": With respect to each Adjustable Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
maximum Mortgage Rate thereunder.
"MERS": Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or
any successor thereto.
"MERS(R) System": The system of recording transfers of mortgages
electronically maintained by MERS.
"Mezzanine Certificate": Any Class M-1, Class M-2, Class M-3 or
Class M-4 Certificate.
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"MGIC": Mortgage Guaranty Insurance Corporation, a monoline
private insurance company organized and created under the laws of the State of
Wisconsin, or its successor in interest.
"MGIC Fee": With respect to each MGIC PMI Mortgage Loan and each
Distribution Date, an amount equal to one twelfth of the product of the MGIC Fee
Rate multiplied by the Scheduled Principal Balance of such MGIC PMI Mortgage
Loan as of the Due Date in the preceding calendar month.
"MGIC Fee Rate": With respect to each MGIC PMI Mortgage Loan, the
per annum percentage set forth on the Mortgage Loan Schedule.
"MGIC PMI Mortgage Loans": Each Mortgage Loan insured by MGIC and
identified on Schedule 3 attached hereto.
"MGIC PMI Policy": The Master Primary Mortgage Insurance Policy
(No. 12-670-4- 3297) with respect to the MGIC PMI Mortgage Loans and all
endorsements thereto dated the Closing Date, issued by MGIC.
"MIN": The Mortgage Identification Number for Mortgage Loans
registered with MERS on the MERS(R) System.
"Minimum Mortgage Rate": With respect to each Adjustable Rate
Mortgage Loan, the percentage set forth in the related Mortgage Note as the
minimum Mortgage Rate thereunder.
"MOM Loan": With respect to any Mortgage Loan, MERS acting as the
mortgagee of such Mortgage Loan, solely as nominee for the originator of such
Mortgage Loan and its successors and assigns, at the origination thereof.
"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 or similar state laws; (b) without giving effect to any extension
granted or agreed to by the Servicer pursuant to Section 3.01; 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 any successor
interest.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on, or first priority security interest in, a Mortgaged
Property securing a Mortgage Note.
"Mortgage File": The Mortgage Loan Documents pertaining to a
particular Mortgage Loan.
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"Mortgage Loan": Each mortgage loan transferred and assigned to
the Trustee and the Mortgage Loan Documents for which have been delivered to the
Custodian pursuant to Section 2.01 of this Agreement and pursuant to the
Custodial Agreement, as held from time to time as a part of the Trust Fund, the
Mortgage Loans so held being identified in the Mortgage Loan Schedule.
"Mortgage Loan Documents": The documents evidencing or relating to
each Mortgage Loan delivered to the Custodian under the Custodial Agreement on
behalf of the Trustee.
"Mortgage Loan Purchase Agreement": Shall mean the Mortgage Loan
Purchase Agreement dated as of July 15, 2003, between the Depositor and the
Seller.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, separately identifying the Group I
Mortgage Loans and the Group II Mortgage Loans, attached hereto as Schedule 1.
The Depositor shall deliver or cause the delivery of the initial Mortgage Loan
Schedule to the Servicer, the Master Servicer, the Custodian and the Trustee on
the Closing Date. The Mortgage Loan Schedule shall set forth the following
information with respect to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the Mortgagor's first and last name;
(iii) the street address of the Mortgaged Property including
the state and zip code;
(iv) a code indicating whether the Mortgaged Property is
owner-occupied;
(v) the type of Residential Dwelling constituting the
Mortgaged Property;
(vi) the original months to maturity;
(vii) the original date of the Mortgage Loan and the remaining
months to maturity from the Cut-off Date, based on the original amortization
schedule;
(viii) the Loan-to-Value Ratio at origination;
(ix) the Mortgage Rate in effect immediately following the
Cut-off Date;
(x) the date on which the first Monthly Payment was due on
the Mortgage Loan;
(xi) the stated maturity date;
(xii) the amount of the Monthly Payment at origination;
(xiii) the amount of the Monthly Payment as of the Cut-off Date;
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(xiv) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;
(xv) the original principal amount of the Mortgage Loan;
(xvi) the Stated Principal Balance of the Mortgage Loan as of
the close of business on the Cut-off Date;
(xvii) with respect to each Adjustable Rate Mortgage Loan, the
first Adjustment Date;
(xviii) with respect to each Adjustable Rate Mortgage Loan, the
Gross Margin;
(xix) a code indicating the purpose of the loan (i.e., purchase
financing, rate/term refinancing, cash-out refinancing);
(xx) with respect to each Adjustable Rate Mortgage Loan, the
Maximum Mortgage Rate under the terms of the Mortgage Note;
(xxi) with respect to each Adjustable Rate Mortgage Loan, the
Minimum Mortgage Rate under the terms of the Mortgage Note;
(xxii) the Mortgage Rate at origination;
(xxiii) with respect to each Adjustable Rate Mortgage Loan, the
Periodic Rate Cap;
(xxiv) with respect to each Adjustable Rate Mortgage Loan, the
first Adjustment Date immediately following the Cut-off Date;
(xxv) with respect to each Adjustable Rate Mortgage Loan, the
Index;
(xxvi) the date on which the first Monthly Payment was due on
the Mortgage Loan and, if such date is not consistent with the Due Date
currently in effect, such Due Date;
(xxvii) a code indicating whether the Mortgage Loan is an
Adjustable Rate Mortgage Loan or a fixed rate Mortgage Loan;
(xxviii) a code indicating the documentation style (i.e., full,
stated or limited);
(xxix) a code indicating if the Mortgage Loan is subject to a
primary insurance policy or lender paid mortgage insurance policy and the name
of the insurer;
(xxx) the Appraised Value of the Mortgaged Property;
(xxxi) the sale price of the Mortgaged Property, if applicable;
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(xxxii) a code indicating whether the Mortgage Loan is subject to
a Prepayment Charge, the term of such Prepayment Charge and the amount of such
Prepayment Charge;
(xxxiii) the product type (e.g., 2/28, 15 year fixed, 30 year
fixed, 15/30 balloon, etc.);
(xxxiv) the Mortgagor's debt to income ratio;
(xxxv) the Servicer;
(xxxvi) whether such Mortgage Loan is a MGIC PMI Mortgage Loan;
and
(xxxvii) the MGIC Fee Rate with respect to each MGIC PMI Mortgage
Loan.
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 current 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 Depositor in
accordance with the provisions of this Agreement. With respect to any Qualified
Substitute Mortgage Loan, the 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
the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Rate": With respect to each 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 with
respect to each Adjustable Rate Mortgage Loan (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 equal to the sum, rounded to the nearest 0.125% as provided in
the Mortgage Note, of the Index, as most recently available as of a date prior
to the Adjustment Date as set forth in the related Mortgage Note, plus the
related Gross Margin; provided that the Mortgage Rate on such Adjustable Rate
Mortgage Loan on any Adjustment Date shall never be more than the lesser of (i)
the sum of the Mortgage Rate in effect immediately prior to the Adjustment Date
plus the related Periodic Rate Cap, if any, and (ii) the related Maximum
Mortgage Rate, and shall never be less than the greater of (i) the Mortgage Rate
in effect immediately prior to the Adjustment Date less the Periodic Rate Cap,
if any, and (ii) the related Minimum Mortgage Rate. 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.
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"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property
improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to any Distribution
Date, the sum of (i) any Overcollateralization Reduction Amount for such
Distribution Date and (ii) the excess of (x) the Available Distribution Amount
for such Distribution Date over (y) the sum for such Distribution Date of (A)
the aggregate Senior Interest Distribution Amounts payable to the holders of the
Class A Certificates, (B) the aggregate Interest Distribution Amounts payable to
the holders of the Mezzanine 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 Administration Fee Rate.
"Net WAC Pass-Through Rate": With respect to the Class A-1
Certificates and any Distribution Date, a rate per annum equal to the product of
(x) the weighted average of the Expense Adjusted Mortgage Rates on the then
outstanding Group I Mortgage Loans, weighted based on their Stated Principal
Balances as of the first day of the calendar month preceding the month in which
the Distribution Date occurs and (y) a fraction, the numerator of which is 30
and the denominator of which is the actual number of days elapsed in the related
Interest Accrual Period. For federal income tax purposes, the economic
equivalent of such rate shall be expressed as the weighted average of the REMIC
I Remittance Rate on REMIC I Regular Interest I-LT1B, weighted on the basis of
the Uncertificated Balance of such REMIC I Regular Interest.
With respect to the Class A-2 Certificates and any Distribution
Date, a rate per annum equal to the product of (x) the weighted average of the
Expense Adjusted Mortgage Rates on the then outstanding Group II Mortgage Loans,
weighted based on their Stated Principal Balances as of the first day of the
calendar month preceding the month in which the Distribution Date occurs and (y)
a fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Interest Accrual Period. For
federal income tax purposes, the economic equivalent of such rate shall be
expressed as the weighted average of the REMIC I Remittance Rate on REMIC I
Regular Interest I-LT2B, weighted on the basis of the Uncertificated Balance of
such REMIC I Regular Interest.
With respect to the Mezzanine Certificates and any Distribution
Date, a rate per annum equal to the product of (x) the weighted average of the
Expense Adjusted Mortgage Rates on the then outstanding Mortgage Loans, weighted
based on their Stated Principal Balances as of the first day of the calendar
month preceding the month in which the Distribution Date occurs and (y) a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Interest Accrual Period. For
federal income tax purposes, the economic equivalent of such rate shall be
expressed as the weighted average of the REMIC I Remittance Rates on (a) REMIC I
Regular Interest I-LT1A, subject to a cap and a floor equal to the weighted
average of the Expense Adjusted Net Mortgage Rates of the Group I Mortgage Loans
and (b) REMIC I
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Regular Interest I-LT2A, subject to a cap and a floor equal to the weighted
average of the Expense Adjusted Net Mortgage Rates of the Group II Mortgage
Loans, weighted on the basis of the Uncertificated Balance of each such REMIC I
Regular Interest.
"Net WAC Rate Carryover Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date on which
the Pass-Through Rate is limited to the applicable Net WAC Pass-Through Rate, an
amount equal to the sum of (i) the excess of (x) the amount of interest the
Class A Certificates or any Class of Mezzanine Certificates would have been
entitled to receive on such Distribution Date if the applicable Net WAC
Pass-Through Rate would not have been applicable to such Certificates on such
Distribution Date over (y) the amount of interest paid on such Distribution Date
at the applicable Net WAC Pass-Through Rate plus (ii) the related Net WAC Rate
Carryover Amount for the previous Distribution Date not previously distributed
together with interest thereon at a rate equal to the Pass-Through Rate for such
class of Certificates for the most recently ended Interest Accrual Period.
"New Lease": Any lease of REO Property entered into on behalf of
REMIC I, including any lease renewed or extended on behalf of REMIC I, if REMIC
I has the right to renegotiate the terms of such lease.
"Nonrecoverable P&I Advance": Any P&I 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 Servicer or a successor Servicer (including
the Trustee or the Master Servicer) will not or, in the case of a proposed P&I
Advance, would not be ultimately recoverable from related Late Collections,
Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property
as provided herein.
"Nonrecoverable Servicing Advance": Any 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 Servicer, will not or,
in the case of a proposed Servicing Advance, would not be ultimately recoverable
from related Late Collections, Insurance Proceeds or Liquidation Proceeds on
such Mortgage Loan or REO Property as provided herein.
"Non-United States Person": Any Person other than a United States
Person.
"Notional Amount": With respect to the Class CE Certificates and
any Distribution Date, the Uncertificated Balance of the REMIC I Regular
Interests for such Distribution Date.
"Offered Certificates" shall mean the Class A Certificates and the
Mezzanine Certificates, collectively.
"Officer's Certificate": A certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), or by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Servicer, the Seller or the
Depositor, as applicable.
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"One-Month LIBOR": With respect to the Class A Certificates, the
Mezzanine Certificates, REMIC I Regular Interest I-LTA1, REMIC I Regular
Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I Regular Interest I-LTM4 and
any Interest Accrual Period therefor, the rate determined by the Securities
Administrator on the related Interest Determination Date on the basis of the
offered rate for one-month U.S. dollar deposits, as such rate appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on such Interest Determination
Date; provided that if such rate does not appear on Telerate Page 3750, the rate
for such date will be determined on the basis of the offered rates of the
Reference Banks for one-month U.S. dollar deposits, as of 11:00 a.m. (London
time) on such Interest Determination Date. In such event, the Securities
Administrator will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If on such Interest Determination
Date, two or more Reference Banks provide such offered quotations, One-Month
LIBOR for the related Interest Accrual Period shall be the arithmetic mean of
such offered quotations (rounded upwards if necessary to the nearest whole
multiple of 1/16). If on such Interest Determination Date, fewer than two
Reference Banks provide such offered quotations, One-Month LIBOR for the related
Interest Accrual Period shall be the higher of (i) LIBOR as determined on the
previous Interest Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, if, under the priorities described above, LIBOR
for an Interest Determination Date would be based on LIBOR for the previous
Interest Determination Date for the third consecutive Interest Determination
Date, the Securities Administrator shall select an alternative comparable index
(over which the Securities Administrator has no control), used for determining
one-month Eurodollar lending rates that is calculated and published (or
otherwise made available) by an independent party. The establishment of
One-Month LIBOR by the Securities Administrator and the Securities
Administrator's subsequent calculation of the One-Month LIBOR Pass-Through Rates
for the relevant Interest Accrual Period, shall, in the absence of manifest
error, be final and binding.
"One-Month LIBOR Pass-Through Rate": With respect to the Class A-1
Certificates and, for purposes of the definition of "Marker Rate", REMIC I
Regular Interest I-LTA1, a per annum rate equal to One-Month LIBOR plus the
related Certificate Margin.
With respect to the Class A-2 Certificates and, for purposes of
the definition of "Marker Rate", REMIC I Regular Interest I-LTA2, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-1 Certificates and, for purposes of
the definition of "Marker Rate", REMIC I Regular Interest I-LTM1, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-2 Certificates and, for purposes of
the definition of "Marker Rate", REMIC I Regular Interest I-LTM2, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
With respect to the Class M-3 Certificates and, for purposes of
the definition of "Marker Rate", REMIC I Regular Interest I-LTM3, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
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With respect to the Class M-4 Certificates and, for purposes of
the definition of "Marker Rate", REMIC I Regular Interest I-LTM4, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor, the Servicer, the
Securities Administrator or the Master Servicer, acceptable to the Trustee,
except that any opinion of counsel relating to (a) the qualification of any
REMIC as a REMIC or (b) compliance with the REMIC Provisions must be an opinion
of Independent counsel.
"Optional Termination Date": Shall mean the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
"Originators": Town & Country Credit Corporation, a Delaware
corporation, and Ameriquest Mortgage Company, a Delaware corporation.
"Overcollateralization Amount": With respect to any Distribution
Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the
Mortgage Loans and REO Properties immediately following such Distribution Date
over (b) 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 taking into account the payment of the Principal
Remittance Amount on such Distribution Date).
"Overcollateralization Increase Amount": With respect to the Class
A Certificates and the Mezzanine Certificates and any Distribution Date is any
amount of Net Monthly Excess Cashflow actually applied as an accelerated payment
of principal to the extent the Required Overcollateralization Amount exceeds the
Overcollateralization Amount.
"Overcollateralization Reduction Amount": With respect to any
Distribution Date, is the lesser of (i) the amount by which the
Overcollateralization Amount exceeds the Required Overcollateralization Amount
and (ii) the Principal Remittance Amount; provided however that on any
Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Reduction Amount shall equal zero.
"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.
"P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the Servicer in respect of any Determination Date pursuant to
Section 5.03, an advancing person pursuant to Section 3.25 or in respect of any
Distribution Date by a successor Servicer (including the Trustee or the Master
Servicer) pursuant to Section 8.02 (which advances shall not include interest
shortfalls due to bankruptcy proceedings or application of the Relief Act or
similar state or local laws.)
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"Pass-Through Rate": With respect to the Class A Certificates and
the Mezzanine Certificates and any Distribution Date, a rate per annum equal to
the lesser of (i) the related One-Month LIBOR Pass-Through Rate for such
Distribution Date and (ii) the related Net WAC Pass-Through Rate for such
Distribution Date.
With respect to the Class CE Certificates and any Distribution
Date, a rate per annum equal to the percentage equivalent of a fraction, the
numerator of which is the sum of the amounts calculated pursuant to clauses (i)
through (ix) below, and the denominator of which is the aggregate Uncertificated
Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTA1,
REMIC I Regular Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular
Interest I-LTM4 and REMIC I Regular Interest I-LTZZ. For purposes of calculating
the Pass-Through Rate for the Class CE Certificates, the numerator is equal to
the sum of the following components:
(i) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTAA minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC II Regular Interest I-LTAA;
(ii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTA1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA1;
(iii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTA2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTA2;
(iv) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTM1 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM1;
(v) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTM2 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM2;
(vi) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTM3 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM3;
(vii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTM4 minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTM4;
(viii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTZZ minus the Marker Rate, applied to an amount equal to the
Uncertificated Balance of REMIC I Regular Interest I-LTZZ; and
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(ix) 100% of the interest on REMIC I Regular Interest I-LTP.
"Percentage Interest": With respect to any Class of Certificates
(other than the Residual Certificates), the undivided percentage ownership in
such Class evidenced by such Certificate, expressed as a percentage, the
numerator of which is the initial Certificate Principal Balance represented by
such Certificate and the denominator of which is the aggregate initial
Certificate Principal Balance or Notional Amount of all of the Certificates of
such Class. The Class A Certificates and the Mezzanine Certificates are issuable
only in minimum Percentage Interests corresponding to minimum initial
Certificate Principal Balances of $25,000 and integral multiples of $1.00 in
excess thereof. The Class P Certificates are issuable only in Percentage
Interests corresponding to initial Certificate Principal Balances of $20 and
integral multiples thereof. The Class CE Certificates are issuable only in
minimum Percentage Interests corresponding to minimum initial Certificate
Principal Balances of $10,000 and integral multiples of $1.00 in excess thereof;
provided, however, that a single Certificate of each such Class of Certificates
may be issued having a Percentage Interest corresponding to the remainder of the
aggregate initial Certificate Principal Balance of such Class or to an otherwise
authorized denomination for such Class plus such remainder. With respect to any
Residual Certificate, the undivided percentage ownership in such Class evidenced
by such Certificate, as set forth on the face of such Certificate. The Residual
Certificates are issuable in Percentage Interests of 20% and integral multiples
of 5% in excess thereof.
"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 maximum amount by which the Mortgage Rate
for such Adjustable Rate 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 by the Depositor, the Servicer, the Master
Servicer, the Trustee or any of their respective Affiliates:
(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) demand and time deposits in, certificates of deposit of, or
bankers' acceptances issued by, any Depository Institution;
(iii) repurchase obligations with respect to any security
described in clause (i) above entered into with a Depository Institution
(acting as principal);
(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 each Rating
Agency that rates such securities in its highest long-term
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unsecured rating categories 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 days after the date of
acquisition thereof) that is rated by each Rating Agency that rates such
securities 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), and "AAAm" or "AAAm-G" by S&P or "Aaa" by
Moody's including any such money market fund managed or advised by the
Master Servicer, the Trustee or any of their Affiliates; 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 as a
permitted investment of funds backing securities having ratings
equivalent to its highest initial rating of the Class A Certificates;
provided, however, 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 Non-United States Person.
"Person": Any individual, limited liability company, corporation,
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 or Section 4975 of the Code.
"Prepayment Assumption": A prepayment rate for the Adjustable Rate
Mortgage Loans of 28% CPR and a prepayment rate of 100% PPC for the fixed rate
Mortgage Loans. The Prepayment Assumption is used solely for determining the
accrual of original issue discount on the Certificates for federal income tax
purposes. A CPR (or Constant Prepayment Rate) represents an annualized constant
assumed rate of prepayment each month of a pool of mortgage loans relative to
its outstanding principal balance for the life of such pool. A 100% PPC
represents (i) a per annum prepayment rate of 4% of the then outstanding
principal balance of the fixed rate Mortgage Loans in the first month of the
life of such Mortgage Loans, (ii) an additional 19%/11 per annum in each month
thereafter through the eleventh month and (iii) a constant prepayment rate of
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23% per annum beginning in the twelfth month and in each month thereafter during
the life of the fixed rate Mortgage Loans.
"Prepayment Charge": With respect to any Principal Prepayment, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note (other than any Servicer Prepayment Charge Payment Amount).
"Prepayment Charge Schedule": As of any date, the list of Mortgage
Loans providing for a Prepayment Charge included in the Trust Fund on such date,
attached hereto as Schedule 2 (including the prepayment charge summary attached
thereto). The Depositor shall deliver or cause the delivery of the Prepayment
Charge Schedule to the Servicer, the Master Servicer and the Trustee on the
Closing Date. The Prepayment Charge Schedule shall set 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 date on which the first Monthly Payment was due on the
related Mortgage Loan;
(iv) the term of the related Prepayment Charge;
(v) the original Stated Principal Balance of the related
Mortgage Loan; and
(vi) the Stated Principal Balance of the related Mortgage Loan
as of the Cut-off Date.
"Prepayment Interest Excess": With respect to any Distribution
Date, for each Mortgage Loan that was the subject of a Principal Prepayment in
full or in part during the portion of the related Prepayment Period occurring
between the first day of the calendar month in which such Distribution Date
occurs and the Determination Date of the calendar month in which such
Distribution Date occurs, an amount equal to interest (to the extent received)
at the applicable Net Mortgage Rate on the amount of such Principal Prepayment
for the number of days commencing on the first day of the calendar month in
which such Distribution Date occurs and ending on the last date through which
interest is collected from the related Mortgagor. The Servicer may withdraw such
Prepayment Interest Excess from the Collection Account in accordance with
Section 3.09(a)(x).
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for each such Mortgage Loan that was the subject of a Principal Prepayment
in full or in part during the portion of the related Prepayment Period occurring
between the first day of the related Prepayment Period and the last day of the
calendar month preceding the month in which such Distribution Date occurs that
was applied by the Servicer to reduce the outstanding principal balance of such
Mortgage Loan on a date preceding the Due Date in the succeeding Prepayment
Period, an amount equal to
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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 calendar month preceding such
Distribution Date. The obligations of the Servicer and the Master Servicer in
respect of any Prepayment Interest Shortfall are set forth in Section 3.22 and
Section 4.19, respectively.
"Prepayment Period": With respect to any Distribution Date, the
period commencing on the 16th day of the month prior to the month in which the
related Distribution Date occurs and ending on the 15th day of the month in
which such Distribution Date occurs.
"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 Distribution Amount": With respect to any Distribution
Date is the sum of the Group I Principal Distribution Amount and the Group II
Principal Distribution Amount.
"Principal Remittance Amount": With respect to any Distribution
Date is the sum of the Group I Principal Remittance Amount and the Group II
Principal Remittance Amount.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.13(c) or Section 10.01, and as confirmed by a certification of a Servicing
Officer 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 10.01), (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 covered
by a payment by the Mortgagor or a P&I Advance by the Servicer, which payment or
P&I Advance had as of the date of purchase been distributed pursuant to Section
5.01, 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 covered by a payment by the
Mortgagor or a P&I Advance by the 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 as or to
cover REO Imputed Interest pursuant to Section 5.01, (iii) any unreimbursed
Servicing Advances and P&I Advances (including Nonrecoverable P&I Advances and
Nonrecoverable Servicing Advances) and any unpaid Servicing Fees allocable to
such Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from
the Collection Account pursuant to Section 3.09(a)(ix) and Section 3.13(b) and
(v) in the case of a Mortgage Loan required to be purchased pursuant to Section
2.03, expenses reasonably incurred or to be incurred by the Servicer or the
Trustee in respect of the breach or defect giving rise to the purchase
obligation and
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any costs and expenses incurred by the Trust Fund and the Trustee in connection
with any violation by any such Mortgage Loan of any predatory or abusive lending
law.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted
for a Deleted Mortgage Loan pursuant to the terms of this Agreement which must,
on the date of such substitution, (i) have an outstanding 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 Scheduled 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) have a Maximum Mortgage Rate not less than the
Maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) have a Minimum Mortgage
Rate not less than the Minimum Mortgage Rate of the Deleted Mortgage Loan, (v)
have a Gross Margin equal to the Gross Margin of the Deleted Mortgage Loan, (vi)
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) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (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) be secured by a first lien priority on the
related Mortgaged Property, (xi) have a credit grade at least equal to the
credit grading assigned on the Deleted Mortgage Loan, (xii) be a "qualified
mortgage" as defined in the REMIC Provisions and (xiii) conform to each
representation and warranty set forth in Section 6 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 clause (ii) hereof
shall be determined on the basis of weighted average Mortgage Rates, the terms
described in clause (vii) hereof shall be determined on the basis of weighted
average remaining term to maturity, the Loan-to-Value Ratios described in clause
(ix) hereof shall be satisfied as to each such mortgage loan, the credit grades
described in clause (x) 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.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the proceeds
of which are not more than a nominal amount in excess of the existing first
mortgage loan and any subordinate mortgage loan on the related Mortgaged
Property and related closing costs, and were used exclusively (except for such
nominal amount) to satisfy the then existing first mortgage loan and any
subordinate mortgage loan of the Mortgagor on the related Mortgaged Property and
to pay related closing costs.
"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 the Servicer.
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"Realized Loss": With respect to each Mortgage Loan as to which a
Final Recovery Determination has been made, an amount (not less than zero), as
reported by the Servicer to the Master Servicer equal to (i) the unpaid
principal balance of such Mortgage Loan as of the commencement of the calendar
month in which the Final Recovery Determination was made, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
through the end of the calendar month in which such Final Recovery Determination
was made, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on such Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of such Mortgage Loan as of the close of business on the
Distribution Date during such calendar month, plus (iii) any amounts previously
withdrawn from the Collection Account in respect of such Mortgage Loan pursuant
to Section 3.09(a)(ix) and Section 3.13(b), minus (iv) the proceeds, if any,
received in respect of such Mortgage Loan during the calendar month in which
such Final Recovery Determination was made, net of amounts that are payable
therefrom to the Servicer with respect to such Mortgage Loan pursuant to Section
3.09(a)(iii).
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) 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 Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Section 3.09(a)(ix) and Section 3.13(b), minus
(v) the aggregate of all P&I Advances and Servicing Advances (in the case of
Servicing Advances, without duplication of amounts netted out of the rental
income, Insurance Proceeds and Liquidation Proceeds described in clause (vi)
below) made by the Servicer in respect of such REO Property or the related
Mortgage Loan for which the Servicer has been or, in connection with such Final
Recovery Determination, will be reimbursed pursuant to Section 3.21 out of
rental income, Insurance Proceeds and Liquidation Proceeds received in respect
of such REO Property, minus (vi) the total of all net rental income, Insurance
Proceeds and Liquidation Proceeds received in respect of such REO Property that
has been, or in connection with such Final Recovery Determination, will be
transferred to the Distribution Account pursuant to Section 3.21.
With respect to each Mortgage Loan which has become the subject of
a Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation.
With respect to each Mortgage Loan which has become the subject of
a Debt Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment
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attributable to a reduction in the Mortgage Rate imposed by a court of competent
jurisdiction. Each such Realized Loss shall be deemed to have been incurred on
the Due Date for each affected Monthly Payment.
"Record Date": With respect to each Distribution Date and the
Class A Certificates and the Mezzanine Certificates, the Business Day
immediately preceding such Distribution Date for so long as such Certificates
are Book-Entry Certificates. With respect to each Distribution Date and any
other Class of Certificates, including any Definitive Certificates, the last day
of the calendar month immediately preceding the month in which such Distribution
Date occurs.
"Reference Banks": ▇▇▇▇▇▇▇'▇ Bank PLC, The Tokyo Mitsubishi Bank
and National Westminster Bank PLC and their successors in interest; provided,
however, that if any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Securities Administrator
which are engaged in transactions in Eurodollar deposits in the International
Eurocurrency market (i) with an established place of business in London, (ii)
not controlling, under the control of or under common control with the Depositor
or any Affiliate thereof and (iii) which have been designated as such by the
Securities Administrator.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which
were not used to purchase the related Mortgaged Property.
"Regular Certificate": Any Class A Certificate, Mezzanine
Certificate, Class CE Certificate or Class P Certificate.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, or similar state or local laws.
"Relief Act Interest Shortfall": With respect to any Distribution
Date and any Mortgage Loan, any reduction in the amount of interest collectible
on such Mortgage Loan for the most recently ended Due Period as a result of the
application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC I": 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 and Prepayment Charges 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 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); (v) the Collection Account (other than any
amounts representing any
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Servicer Prepayment Charge Payment Amount), the Distribution Account 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, REMIC I
specifically excludes (i) all payments and other collections of principal
and interest due on the Mortgage Loans on or before the Cut-off Date and all
Prepayment Charges payable in connection with Principal Prepayments made before
the Cut-off Date, (ii) the Reserve Fund and any amounts on deposit therein from
time to time and any proceeds thereof and (iii) the Cap Contracts.
"REMIC I Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LTAA minus the Marker Rate, divided by (b) 12.
"REMIC I Marker Allocation Percentage": 0.50% of any amount
payable or loss attributable from the Mortgage Loans, which shall be allocated
to REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTA1, REMIC I
Regular Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4, REMIC I Regular Interest I-LTZZ and REMIC I Regular Interest I-LTP.
"REMIC I Overcollateralization Amount": With respect to any date
of determination, (i) 0.50% of the aggregate Uncertificated Balances of the
REMIC I Regular Interests minus (ii) the aggregate of the Uncertificated
Balances of REMIC I Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2,
REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I
Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4 and REMIC Regular
Interest I-LTP, in each case as of such date of determination.
"REMIC I Principal Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) 0.50% of the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Balances of REMIC I Regular Interest I-LTA1,
REMIC I Regular Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I
Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular
Interest I-LTM4 and the denominator of which is the aggregate of the
Uncertificated Balances of REMIC I Regular Interest I-LTA1, REMIC I Regular
Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest
I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4 and
REMIC I Regular Interest I-LTZZ.
"REMIC I Regular Interest": Any of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
"regular interest" in REMIC I. Each REMIC I Regular Interest shall accrue
interest at the related REMIC I Remittance 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
Balance as set forth in the Preliminary Statement hereto. The designations for
the respective REMIC I Regular Interests are set forth in the Preliminary
Statement hereto.
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"REMIC I Regular Interest I-LTAA": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTAA
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTA1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA1
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTA2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTA2
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM1
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM2
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM3": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM3
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTM4": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTM4
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject
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to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTP": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTP
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTXX": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTXX
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LTZZ": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTZZ
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT1A": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1A
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT1B": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1B
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT2A": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2A
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
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"REMIC I Regular Interest I-LT2B": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2B
shall accrue interest at the related REMIC I Remittance 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 Balance as set forth in the Preliminary Statement hereto.
"REMIC I Remittance Rate": With respect to REMIC I Regular
Interest I-LTAA, REMIC I Regular Interest I-LTA1, REMIC I Regular Interest
I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC
I Regular Interest I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular
Interest I-LTZZ, REMIC I Regular Interest I-LTP, REMIC I Regular Interest
I-LT1A, REMIC I Regular Interest I-LT2A and REMIC I Regular Interest I-LTXX, the
weighted average of the Expense Adjusted Net Mortgage Rates of the Mortgage
Loans. With respect to REMIC I Regular Interest I-LT1B, the weighted average of
the Expense Adjusted Net Mortgage Rates of the Group I Mortgage Loans. With
respect to REMIC I Regular Interest I-LT2B, the weighted average of the Expense
Adjusted Net Mortgage Rates of the Group II Mortgage Loans.
"REMIC I Sub WAC Allocation Percentage": 0.50% of any amount
payable or loss attributable from the Mortgage Loans, which shall be allocated
to REMIC I Regular Interest I-LT1A, REMIC I Regular Interest I-LT1B, REMIC I
Regular Interest I-LT2A, REMIC I Regular Interest I-LT2B and REMIC I Regular
Interest I-LTXX.
"REMIC I Subordinated Balance Ratio": The ratio among the
Uncertificated Balances of each REMIC I Regular Interest ending with the
designation "A,", equal to the ratio among, with respect to each such REMIC I
Regular Interest, the excess of (x) the aggregate Stated Principal Balance of
the Group I Mortgage Loans or Group II Mortgage Loans, as applicable over (y)
the current Certificate Principal Balance of related Class A Certificates.
"REMIC I Required Overcollateralization Amount": 1% of the
Required Overcollateralization Amount.
"REMIC II": The segregated pool of assets consisting of all of the
REMIC I Regular Interests conveyed in trust to the Trustee, for the benefit of
the REMIC II Certificateholders pursuant to Section 2.09, and all amounts
deposited therein, with respect to which a separate REMIC election is to be
made.
"REMIC II Certificate": Any Regular Certificate or Class R
Certificate.
"REMIC II Certificateholder": The Holder of any REMIC II
Certificate.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and proposed, temporary
and final regulations and published rulings, notices and announcements
promulgated thereunder, as the foregoing may be in effect from time to time.
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"Remittance Report": A report by the Securities Administrator
pursuant to Section 5.03(f).
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."
"REO Account": The account or accounts maintained, or caused to be
maintained, by the Servicer in respect of an REO Property pursuant to Section
3.21.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of REMIC I.
"REO Imputed Interest": As to any REO Property, for any calendar
month during which such REO Property was at any time part of REMIC I, one
month's interest at the applicable Net Mortgage Rate on the Stated 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.
"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 10.01 that is
allocable to such REO Property) or otherwise, net of any portion of such amounts
(i) payable in respect of the proper operation, management and maintenance of
such REO Property or (ii) payable or reimbursable to the Servicer pursuant to
Section 3.21(d) for unpaid Servicing Fees in respect of the related Mortgage
Loan and unreimbursed Servicing Advances and P&I 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 Servicer on
behalf of REMIC I through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.21.
"Required Overcollateralization Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, $1,482,144, (ii) on or after
the Stepdown Date provided a Trigger Event is not in effect, the greater of (x)
1.00% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of the related Due Period and (y) $1,482,476, and (iii) on or after the
Stepdown Date and a Trigger Event is in effect, the Required
Overcollateralization Amount for the immediately preceding Distribution Date.
"Reserve Fund": A fund created pursuant to Section 3.24 which
shall be an asset of the Trust Fund but which shall not be an asset of any Trust
REMIC.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Securities Administrator
determines to be either (i) the arithmetic mean (rounded
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upwards if necessary to the nearest whole multiple of 1/16%) of the one-month
U.S. dollar lending rates which New York City banks selected by the Securities
Administrator, after consultation with the Depositor, 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 Securities
Administrator can determine no such arithmetic mean, the lowest one-month U.S.
dollar lending rate which New York City banks selected by the Securities
Administrator are quoting on such Interest Determination Date to leading
European banks.
"Residential Dwelling": Any one of the following: (i) an attached,
detached or semi-detached one-family dwelling, (ii) an attached, detached or
semi-detached two- to four-family dwelling, (iii) a one-family dwelling unit in
a ▇▇▇▇▇▇ ▇▇▇ eligible condominium project, or (iv) an attached, detached or
semi-detached one-family dwelling in a planned unit development, none of which
is a co-operative, mobile or manufactured home (as defined in ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Code, Section 5402(6)).
"Residual Certificate": Any one of 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 (however denominated), the
Chairman or Vice Chairman of any Committee of the Board of Directors, the
President, the Chairman of any Committee on trust matters, 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 those performed by any of the above designated officers and in each
case having direct responsibility for the administration of this Agreement 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 and Poor's, a division of the ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.
"Scheduled Principal Balance": With respect to any Mortgage Loan:
(a) as of the Cut-off Date, the outstanding principal balance of such Mortgage
Loan as of such date, net of the principal portion of all unpaid Monthly
Payments, if any, due on or before such date; (b) as of any Due Date subsequent
to the Cut-off Date up to and including the Due Date in the calendar month in
which a Liquidation Event occurs with respect to such Mortgage Loan, the
Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date, minus
the sum of (i) the principal portion of each Monthly Payment due on or before
such Due Date but subsequent to the Cut-off Date, whether or not received, (ii)
all Principal Prepayments received before such Due Date but after the Cut-off
Date, (iii) the principal portion of all Liquidation Proceeds and Insurance
Proceeds received before such Due Date but after the Cut-off Date, net of any
portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such
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Due Date, but only to the extent such Realized Loss represents a reduction in
the portion of principal of such Mortgage Loan not yet due (without regard to
any acceleration of payments under the related Mortgage and Mortgage Note) as of
the date of such Deficient Valuation; and (c) as of any Due Date subsequent to
the occurrence of a Liquidation Event with respect to such Mortgage Loan, zero.
With respect to any REO Property: (a) as of any Due Date subsequent to the date
of its acquisition on behalf of the Trust Fund up to and including the Due Date
in the calendar month in which a Liquidation Event occurs with respect to such
REO Property, an amount (not less than zero) equal to the Scheduled Principal
Balance of the related Mortgage Loan as of the Due Date in the calendar month in
which such REO Property was acquired, minus the aggregate amount of REO
Principal Amortization, if any, in respect of such REO Property for all
previously ended calendar months; and (b) as of any Due Date subsequent to the
occurrence of a Liquidation Event with respect to such REO Property, zero.
"Securities Administrator": As of the Closing Date, ▇▇▇▇▇ Fargo
Bank Minnesota, National Association and thereafter, its respective successors
in interest that meet the qualifications of this Agreement. The Securities
Administrator and the Master Servicer shall at all times be the same Person.
"Seller": Deutsche Bank AG New York Branch or its successor in
interest, in its capacity as seller under the Mortgage Loan Purchase Agreement.
"Senior Interest Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (i) the Interest Distribution
Amount for such Distribution Date for the Class A Certificates and (ii) the
Interest Carry Forward Amount, if any, for such Distribution Date for the Class
A Certificates.
"Servicer": Ocwen Federal Bank FSB or any successor servicer
appointed as herein provided, in its capacity as Servicer hereunder.
"Servicer Event of Default": One or more of the events described
in Section 8.01(a).
"Servicer Prepayment Charge Payment Amount": The amounts payable
by the Servicer in respect of any waived Prepayment Charges pursuant to Section
3.01.
"Servicer Remittance Date": With respect to any Distribution Date,
by 12:00 p.m. New York time on the Business Day preceding the related
Distribution Date.
"Servicer Report": A report in form and substance acceptable to
the Master Servicer and Securities Administrator on an electronic data file or
tape prepared by the Servicer pursuant to Section 5.03(a) with such additions,
deletions and modifications as agreed to by the Master Servicer, the Securities
Administrator and the Servicer.
"Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Servicer in connection with a default, delinquency or
other unanticipated event by the Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial
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proceedings, including but not limited to foreclosures, in respect of a
particular Mortgage Loan, including any expenses incurred in relation to any
such proceedings that result from the Mortgage Loan being registered on the
MERS(R) System, (iii) the management (including reasonable fees in connection
therewith) and liquidation of any REO Property and (iv) the performance of its
obligations under Section 3.01, Section 3.07, Section 3.11, Section 3.13 and
Section 3.21. Servicing Advances also include any reasonable "out-of-pocket"
cost and expenses (including legal fees) incurred by the Servicer in connection
with executing and recording instruments of satisfaction, deeds of reconveyance
or Assignments to the extent not recovered from the Mortgagor or otherwise
payable under this Agreement. The Servicer shall not be required to make any
Nonrecoverable Servicing Advances.
"Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one twelfth of the product of the Servicing
Fee Rate multiplied by the Scheduled Principal Balance of the Mortgage Loans as
of the Due Date in the preceding calendar month. The Servicing Fee is payable
solely from collections of interest on the Mortgage Loans.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing or master servicing of
Mortgage Loans, whose name and specimen signature appear on a list of Servicing
Officers furnished by the Servicer to the Trustee, the Master Servicer, the
Securities Administrator and the Depositor on the Closing Date, as such list may
from time to time be amended.
"Single Certificate": With respect to any Class of Certificates
(other than the Residual Certificates), a hypothetical Certificate of such Class
evidencing a Percentage Interest for such Class corresponding to an initial
Certificate Principal Balance of $1,000. With respect to the Residual
Certificates, a hypothetical Certificate of such Class evidencing a 100%
Percentage Interest in such Class.
"Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section 11.01(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 Scheduled Principal Balance of such Mortgage Loan
as of the Cut-off Date, 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 Servicer or a successor Servicer (including the Trustee or the Master
Servicer) and distributed pursuant to Section 5.01 on or before such date of
determination, (ii) all Principal Prepayments received after the Cut-off Date,
to the extent distributed pursuant to Section 5.01 on or before such date of
determination, (iii) all Liquidation Proceeds and Insurance Proceeds applied by
the Servicer as recoveries of principal in accordance with the provisions of
Section 3.13, to the extent distributed pursuant to Section 5.01 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
Prepayment Period for the most recent
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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 REMIC I, minus the
sum of (i) if such REO Property was acquired before the Distribution Date in any
calendar month, the principal portion of the Monthly Payment due on the Due Date
in the calendar month of acquisition, to the extent advanced by the Servicer or
a successor Servicer (including the Trustee or the Master Servicer) and
distributed pursuant to Section 5.01 on or before such date of determination,
and (ii) the aggregate 0amount 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.
"Stepdown Date": The earlier to occur of (i) the later to occur of
(a) the Distribution Date occurring in August 2006 and (b) the first
Distribution Date on which the Credit Enhancement Percentage (calculated for
this purpose only after taking into account distributions of principal on the
Mortgage Loans but prior to any distribution of the Principal Distribution
Amount to the Certificates then entitled to distributions of principal on such
Distribution Date) is equal to or greater than 19.00% and (ii) the first
Distribution Date on which the aggregate Certificate Principal Balance of the
Class A Certificates has been reduced to zero.
"Sub-Servicer": Any Person with which the Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
"Sub-Servicing Agreement": The written contract between the
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.
"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 REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust REMICs under the REMIC Provisions, 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.
"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).
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"Termination Price": As defined in Section 10.01.
"Terminator": As defined in Section 10.01.
"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 either (x) the Delinquency Percentage exceeds 16.50% or (y)
the aggregate amount of Realized Losses incurred since the Cut-off Date through
the last day of the related Due Period divided by the aggregate principal
balance of the Mortgage Loans as of the Cut-off exceeds the applicable
percentages set forth below with respect to such Distribution Date:
DISTRIBUTION DATE PERCENTAGE
August 2006 to July 2007 1.60%, plus 1/12 of 0.50% for each
month after August 2006
August 2007 to July 2008 2.10%, plus 1/12 of 0.30% for each
month after August 2007
August 2008 to July 2009 2.40%, plus 1/12 of 0.25% for each
month after August 2008
August 2009 and thereafter 2.65%
"Trust": ACE Securities Corp., Home Equity Loan Trust, Series
2003-TC1, the trust created hereunder.
"Trust REMIC": REMIC I or REMIC II.
"Trustee": Bank One, National Association, a national banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.
"Trust Fund": Collectively, all of the assets of REMIC I, REMIC II
and the Reserve Fund and any amounts on deposit therein and any proceeds
thereof, the Prepayment Charges and the Cap Contracts.
"Uncertificated Balance": The amount of the Uncertificated REMIC
Regular Interests outstanding as of any date of determination. As of the Closing
Date, the Uncertificated Balance of each Uncertificated REMIC Regular Interest
shall equal the amount set forth in the Preliminary Statement hereto as its
initial uncertificated balance. On each Distribution Date, the Uncertificated
Balance of the Uncertificated REMIC Regular Interest shall be reduced by all
distributions of principal made on such Uncertificated REMIC Regular Interest on
such Distribution Date pursuant
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to Section 5.01 and, if and to the extent necessary and appropriate, shall be
further reduced on such Distribution Date by Realized Losses as provided in
Section 5.04 and the Uncertificated Balance of REMIC I Regular Interest I-LTZZ
shall be increased by interest deferrals as provided in Section 5.01(a)(1)(B).
The Uncertificated Balance of each Uncertificated REMIC Regular Interest shall
never be less than zero.
"Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance or Uncertificated
Notional Amount, as applicable, thereof immediately prior to such Distribution
Date. Uncertificated Interest in respect of the REMIC I Regular Interests shall
accrue on the basis of a 360-day year consisting of twelve 30-day months.
Uncertificated Interest with respect to each Distribution Date, as to any REMIC
I Regular Interest, shall be reduced by an amount equal to the sum of (a) the
aggregate Prepayment Interest Shortfall, if any, for such Distribution Date to
the extent not covered by payments pursuant to Section 3.22 or Section 4.19 and
(b) the aggregate amount of any Relief Act Interest Shortfall, if any allocated,
in each case, to such REMIC I Regular Interest or REMIC I Regular Interest
pursuant to Section 1.02. In addition, Uncertificated Interest with respect to
each Distribution Date, as to any Uncertificated REMIC Regular Interest, shall
be reduced by Realized Losses, if any, allocated to such Uncertificated REMIC
Regular Interest pursuant to Section 1.02 and Section 5.04.
"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
3.11.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof
(except, in the case of a partnership, to the extent provided in regulations)
provided that, for purposes solely of the restrictions on the transfer of any
Class R Certificate, 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 to be United States Persons, or an
estate whose income is subject to United States federal income tax regardless of
its source, 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 the authority to control all substantial decisions of the
trust. To the extent prescribed in regulations by the Secretary of the Treasury,
which have not yet been issued, a trust which was in existence on August 20,
1996 (other than a trust treated as owned by the grantor under subpart E of part
I of subchapter J of chapter I of the Code), and which was treated as a United
States person on August 20, 1996 may elect to continue to be treated as a United
States person notwithstanding the previous sentence. The term "United States"
shall have the meaning set forth in Section 7701 of the Code.
"Value": With respect to any Mortgaged Property, the lesser of (i)
the lesser of (a) 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
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▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ Mac and (b) the value thereof as determined by a review
appraisal conducted by the originator of the Mortgage Loan in accordance with
such originator's underwriting guidelines, and (ii) the purchase price paid for
the related Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan; provided, however, (A) in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the lesser of (1) the
value determined by an appraisal made for the originator of the Mortgage Loan 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 and
▇▇▇▇▇▇▇ Mac and (2) the value thereof as determined by a review appraisal
conducted by the originator of the Mortgage Loan in accordance with such
originator's underwriting guidelines, and (B) in the case of a Mortgage Loan
originated in connection with a "lease-option purchase," such value of the
Mortgaged Property is based on the lower of the value determined by an appraisal
made for the originator of such Mortgage Loan at the time of origination or the
sale price of such Mortgaged Property if the "lease option purchase price" was
set less than 12 months prior to origination, and is based on the value
determined by an appraisal made for the originator of such Mortgage Loan at the
time of origination if the "lease option purchase price" was set 12 months or
more prior to origination.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any such Certificate. With respect to any
date of determination, 98% of all Voting Rights will be allocated among the
holders of the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated among the holders of the Class P Certificates and 1% of all Voting
Rights will be allocated among the holders of the Class R Certificates. The
Voting Rights allocated to each Class of Certificate shall be allocated among
Holders of each such Class in accordance with their respective Percentage
Interests as of the most recent Record Date.
"▇▇▇▇▇ Fargo": ▇▇▇▇▇ Fargo Bank Minnesota, National Association or
any successor thereto.
SECTION 1.02. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Class A
Certificates, the Mezzanine Certificates and the Class CE Certificates for any
Distribution Date, (1) the aggregate amount of any Prepayment Interest
Shortfalls (to the extent not covered by payments by the Servicer pursuant to
Section 3.22 or the Master Servicer pursuant to Section 4.19 and any Relief Act
Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to the Class CE Certificates based
on, and to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the Notional Amount thereof and, thereafter, among the
Class M-4 Certificates, the Class M-3 Certificates, the Class M-2 Certificates,
the Class M-1 Certificates and the Class A Certificates, in that order, in each
case on a PRO RATA basis based on, and to the extent of, one month's interest at
the then applicable respective Pass-Through Rate on the respective Certificate
Principal Balance of each such Certificate and (2) the aggregate amount of any
Realized Losses allocated to the Mezzanine Certificates and Net WAC Rate
Carryover Amounts paid to the Class A Certificates and the Mezzanine
Certificates incurred for any Distribution Date shall be allocated to the Class
CE
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Certificates on a PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Notional Amount thereof.
For purposes of calculating the amount of Uncertificated Interest
for the REMIC I Regular Interests for any Distribution Date:
(A) The REMIC I Marker Allocation Percentage of the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the Servicer pursuant to Section 3.22 or the Master Servicer
pursuant to Section 4.19) and the REMIC I Marker Allocation Percentage of any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to Uncertificated Interest payable
to REMIC I Regular Interest I-LTAA and REMIC II Regular Interest I-LTZZ up to an
aggregate amount equal to the REMIC I Interest Loss Allocation Amount, 98% and
2%, respectively, and thereafter among REMIC I Regular Interest I-LTA1, REMIC I
Regular Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC I Regular Interest
I-LTM4 and REMIC I Regular Interest I-LTZZ PRO RATA based on, and to the extent
of, one month's interest at the then applicable respective REMIC II Remittance
Rate on the respective Uncertificated Balance of each such REMIC I Regular
Interest; and
(B) The REMIC I Sub WAC Allocation Percentage of the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the Servicer pursuant to Section 3.22 or the Master Servicer
pursuant to Section 4.19) and the REMIC I Sub WAC Allocation Percentage of any
Relief Act Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to Uncertificated Interest payable
to REMIC I Regular Interest I-LT1A, REMIC I Regular Interest I-LT1B, REMIC I
Regular Interest I-LT2A, REMIC I Regular Interest I-LT2B, and REMIC I Regular
Interest I-LTXX, pro rata based on, and to the extent of, one month's interest
at the then applicable respective REMIC I Remittance Rate on the respective
Uncertificated Balance of each such REMIC I Regular Interest.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of the Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, on behalf of the Trust, 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 Mortgage Loans identified on the Mortgage Loan Schedule, the rights of
the Depositor under the Mortgage Loan Purchase Agreement (including, without
limitation the right to enforce the obligations of the other parties thereto
thereunder), and all other assets included or to be included in REMIC I. Such
assignment includes all interest and principal received by the Depositor or the
Servicer on or with respect to the 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 and the Servicer an
executed copy of the Mortgage Loan Purchase Agreement and the MGIC PMI Policy.
In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with the Custodian pursuant to the Custodial
Agreement the documents with respect to each Mortgage Loan as described under
Section 2 of the Custodial Agreement (the "Mortgage Loan Documents"). In
connection with such delivery and as further described in the Custodial
Agreement, the Custodian will be required to review such Mortgage Loan Documents
and deliver to the Trustee, the Depositor, the Servicer and the Seller
certifications (in the forms attached to the Custodial Agreement) with respect
to such review with exceptions noted thereon. In addition, under the Custodial
Agreement the Depositor will be required to cure certain defects with respect to
the Mortgage Loan Documents for the related Mortgage Loans after the delivery
thereof by the Depositor to the Custodian as more particularly set forth
therein.
Notwithstanding anything to the contrary contained herein, the
parties hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Mortgage Files, including,
but not limited to certain insurance policies and documents contemplated by
Section 4.12, and preparation and delivery of the certifications shall be
performed by the Custodian pursuant to the terms and conditions of the Custodial
Agreement.
The Depositor shall deliver or cause the Originator to deliver to
the Servicer copies of all trailing documents required to be included in the
Mortgage File at the same time the originals or certified copies thereof are
delivered to the Trustee or Custodian, such documents including the mortgagee
policy of title insurance and any Mortgage Loan Documents upon return from the
recording office. The Servicer shall not be responsible for any custodian fees
or other costs incurring in obtaining such documents and the Depositor shall
cause the Servicer to be reimbursed for any such costs the Servicer may incur in
connection with performing its obligations under this Agreement.
SECTION 2.02. Acceptance of REMIC I by Trustee.
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The Trustee acknowledges receipt, subject to the provisions of
Section 2.01 hereof and Section 2 of the Custodial Agreement, of the Mortgage
Loan Documents and all other assets included in the definition of "REMIC I"
under clauses (i), (iii), (iv) and (v) (to the extent of amounts deposited into
the Distribution Account) and declares that it holds (or the Custodian on its
behalf holds) and will hold such documents and the other documents delivered to
it constituting a Mortgage Loan Document, and that it holds (or the Custodian on
its behalf holds) or will hold all such assets and such other assets included in
the definition of "REMIC I" in trust for the exclusive use and benefit of all
present and future Certificateholders.
SECTION 2.03. Repurchase or Substitution of Mortgage Loans.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
a breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that materially
and adversely affects the value of such Mortgage Loan or the interest therein of
the Certificateholders, the Trustee shall promptly notify the Seller and the
Servicer of such defect, missing document or breach and request that the Seller
deliver such missing document, cure such defect or breach within 60 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 Trustee shall enforce
the obligations of the Seller under the Mortgage Loan Purchase Agreement to
repurchase such Mortgage Loan from REMIC I at the Purchase Price within 90 days
after the date on which the Seller was notified of such missing document, defect
or breach, if and to the extent that the Seller is obligated to do so under the
Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased
Mortgage Loan shall be remitted to the Servicer for deposit in the Collection
Account and the Trustee, upon receipt of written certification from the Servicer
of such deposit, shall release or cause the Custodian (upon receipt of a request
for release in the form attached to the Custodial Agreement) to 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,
representation or warranty, 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 I (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(b).
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 Trustee and the
Certificateholders.
In addition, promptly upon the earlier of discovery by the
Servicer or receipt of notice by the Servicer of the breach of the
representation or covenant of the Seller set forth in Section 5(xiv) of the
Mortgage Loan Purchase Agreement which materially and adversely affects the
interests of the Holders of the Class P Certificates in any Prepayment Charge,
the Servicer shall promptly notify
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the Seller and the Trustee of such breach. The Trustee shall enforce the
obligations of the Seller under the Mortgage Loan Purchase Agreement to remedy
such breach to the extent and in the manner set forth in the Mortgage Loan
Purchase Agreement.
(b) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the date which is two years after the Startup Day for REMIC I.
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 or the Custodian on behalf of
the Trustee, for such Qualified Substitute Mortgage Loan or Loans, the Mortgage
Note, the Mortgage, the Assignment to the Trustee, and such other documents and
agreements, with all necessary endorsements thereon, as are required by Section
2 of the Custodial Agreement, as applicable, 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
Custodian on behalf of the Trustee shall acknowledge receipt of such Qualified
Substitute Mortgage Loan or Loans and, within ten Business Days thereafter,
review such documents and deliver to the Depositor, the Trustee and the
Servicer, with respect to such Qualified Substitute Mortgage Loan or Loans, an
initial certification pursuant to the Custodial Agreement, with any applicable
exceptions noted thereon. Within one year of the date of substitution, the
Custodian on behalf of the Trustee shall deliver to the Depositor, the Trustee
and the Servicer a final certification pursuant to the Custodial Agreement 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 I
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 Depositor shall give or cause to
be given written notice to the Certificateholders that such substitution has
taken place, shall amend 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 Trustee and the Servicer. Upon such
substitution, such Qualified Substitute Mortgage Loan or Loans shall constitute
part of the Trust Fund and shall be subject in all respects to the terms of this
Agreement and the Mortgage Loan Purchase Agreement including all applicable
representations and warranties thereof included herein or in the Mortgage Loan
Purchase Agreement.
For any month in which the Seller substitutes one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
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 Scheduled Principal Balance thereof as of the date of substitution, together
with one month's interest on such Scheduled Principal Balance at the applicable
Net Mortgage Rate, plus all outstanding P&I Advances and Servicing Advances
(including Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances)
related thereto. On the date of such substitution, the Seller will
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deliver or cause to be delivered to the Servicer for deposit in the Collection
Account an amount equal to the Substitution Shortfall Amount, if any, and the
Trustee or the Custodian on behalf of the Trustee, upon receipt of the related
Qualified Substitute Mortgage Loan or Loans, upon receipt of a request for
release in the form attached to the Custodial Agreement and certification by the
Servicer of such deposit, shall release to the Seller the related Mortgage File
or Files and the Trustee shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, representation or warranty, as the
Seller shall deliver to it and as shall be necessary to vest therein any Deleted
Mortgage Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and
deliver to the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on any Trust
REMIC, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (b) any Trust REMIC
to fail to qualify as a REMIC at any time that any Certificate is outstanding.
(c) Upon discovery by the Depositor, the Seller, the 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 Seller shall repurchase or 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. Such repurchase or substitution shall be
made by (i) the Seller if the affected Mortgage Loan's status as a non-qualified
mortgage is or results from a breach of any representation, warranty or covenant
made by the Seller under the Mortgage Loan Purchase Agreement or (ii) the
Depositor, if the affected Mortgage Loan's status as a non-qualified mortgage is
a breach of no representation or warranty. 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.
(d) With respect to a breach of the representations made
pursuant to Section 5(xiv) of the Mortgage Loan Purchase Agreement that
materially and adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Seller shall be required to take the
actions set forth in this Section 2.03.
(e) Within 90 days of the earlier of discovery by the Servicer
or receipt of notice by the Servicer of the breach of any representation,
warranty or covenant of the Servicer set forth in Section 2.05 which materially
and adversely affects the interests of the Certificateholders in any Mortgage
Loan or Prepayment Charge, the Servicer shall cure such breach in all material
respects.
SECTION 2.04. Representations and Warranties of the Master
Servicer.
The Master Servicer hereby represents, warrants and covenants to
the Servicer, the Depositor and the Trustee, for the benefit of each of the
Trustee and the Certificateholders, that as of the Closing Date or as of such
date specifically provided herein:
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(i) The Master Servicer is a national banking association duly
formed, validly existing and in good standing under the laws of the United
States of America and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Master Servicer;
(ii) The Master Servicer has the full power and authority to
conduct its business as presently conducted by it and to execute, deliver and
perform, and to enter into and consummate, all transactions contemplated by this
Agreement. The Master Servicer has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this Agreement,
and this Agreement, assuming due authorization, execution and delivery by the
Depositor and the Trustee, constitutes a legal, valid and binding obligation of
the Master Servicer, enforceable against it in accordance with its terms except
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity;
(iii) The execution and delivery of this Agreement by the Master
Servicer, the consummation by the Master 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 charter and 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 does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant made
by it and contained in this Agreement;
(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 perform any of its
other obligations hereunder in accordance with the terms hereof,
(vi) There are no actions or proceedings against, or
investigations known to it of, the Master Servicer before any court,
administrative or other tribunal (A) that might prohibit its entering into this
Agreement, (B) seeking to prevent the consummation of the transactions
contemplated by this Agreement or (C) that might prohibit or materially and
adversely affect the performance by the Master Servicer of its obligations
under, or validity or enforceability of, this Agreement; and
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(vii) 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 it 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.
It is understood and agreed that the representations, warranties
and covenants set forth in this Section 2.04 shall survive the resignation or
termination of the parties hereto and the termination of this Agreement and
shall inure to the benefit of the Trustee, the Depositor and the
Certificateholders.
SECTION 2.05. Representations, Warranties and Covenants of the
Servicer.
The Servicer hereby represents, warrants and covenants to the
Master Servicer, the Securities Administrator, the Depositor and the Trustee,
for the benefit of each of such Persons and the Certificateholders that as of
the Closing Date or as of such date specifically provided herein:
(i) The Servicer is a federally chartered savings bank duly
organized and validly existing under the laws of the United States and is
duly authorized and qualified to transact any and all business
contemplated by this Agreement to be conducted by the Servicer 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
this Agreement;
(ii) The Servicer has the full power and authority to conduct
its business as presently conducted by it and to execute, deliver and
perform, and to enter into and consummate, all transactions contemplated
by this Agreement. The Servicer has duly authorized the execution,
delivery and performance of this Agreement, has duly executed and
delivered this Agreement, and this Agreement, assuming due authorization,
execution and delivery by the Depositor and the Trustee, constitutes a
legal, valid and binding obligation of the Servicer, enforceable against
it in accordance with its terms except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity;
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans by the Servicer hereunder,
the consummation by the 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 Servicer and will not (A)
result in a breach of any term or provision of the charter of by-laws of
the 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 Servicer is a party or by
which it may be bound, or any statute, order or regulation applicable to
the Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the
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Servicer; and the 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
Servicer's knowledge, would in the future materially and adversely
affect, (x) the ability of the Servicer to perform its obligations under
this Agreement, (y) the business, operations, financial condition,
properties or assets of the Servicer taken as a whole or (z) the
legality, validity or enforceability of this Agreement;
(iv) The Servicer does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant made
by it and contained in this Agreement;
(v) No litigation is pending against the Servicer that would
materially and adversely affect the execution, delivery or enforceability
of this Agreement or the ability of the Servicer to service the Mortgage
Loans or to perform any of its other obligations hereunder in accordance
with the terms hereof;
(vi) There are no actions or proceedings against, or
investigations known to it of, the Servicer before any court,
administrative or other tribunal (A) that might prohibit its entering
into this Agreement, (B) seeking to prevent the consummation of the
transactions contemplated by this Agreement or (C) that might prohibit or
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement;
(vii) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Servicer of, or compliance by the Servicer with,
this Agreement or the consummation by it 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; and
(viii) The Servicer has fully furnished and will continue to fully
furnish, in accordance with the Fair Credit Reporting Act and its
implementing regulations, accurate and complete information (e.g.,
favorable and unfavorable) on its borrower credit files to Equifax,
Experian and Trans Union Credit Information Company or their successors
on a monthly basis.
It is understood and agreed that the representations, warranties
and covenants set forth in this Section 2.05 shall survive the resignation or
termination of the parties hereto, the termination of this Agreement and the
delivery of the Mortgage Files to the Custodian and shall inure to the benefit
of the Trustee, the Master Servicer, the Securities Administrator, the Depositor
and the Certificateholders. Upon discovery by any such Person or the Servicer 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 Trustee. Subject to Section 8.01,
unless such breach shall not be susceptible of cure within 90 days, the
obligation of the Servicer set forth in Section 2.03(c) to
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cure breaches shall constitute the sole remedy against the 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 2.05.
SECTION 2.06. Issuance of the REMIC I Regular Interests and
the Class R-I Interest.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to the Custodian on its behalf of the Mortgage Loan
Documents, subject to the provisions of Section 2.01 and Section 2.02 hereof and
Section 2 of the Custodial Agreement, together with the assignment to it of all
other assets included in REMIC I, the receipt of which is hereby acknowledged.
The interests evidenced by the Class R-I Interest, together with the REMIC I
Regular Interests, constitute the entire beneficial ownership interest in REMIC
I. The rights of the Holders of the Class R-I Interest and REMIC I (as holder of
the REMIC I Regular Interests) to receive distributions from the proceeds of
REMIC I in respect of the Class R-I Interest and the REMIC I Regular Interests,
respectively, and all ownership interests evidenced or constituted by the Class
R-I Interest and the REMIC I Regular Interests, shall be as set forth in this
Agreement.
SECTION 2.07. Conveyance of the REMIC I Regular Interests;
Acceptance of REMIC I by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests). The Trustee
acknowledges receipt of the REMIC I Regular Interests and declares that it holds
and will hold the same in trust for the exclusive use and benefit of all present
and future Holders of the Class R-II Interest and REMIC II (as holder of the
REMIC I Regular Interests). The rights of the Holder of the Class R-II Interest
and REMIC II (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC II in respect of the Class R-II
Interest and REMIC II Regular Interests, respectively, and all ownership
interests evidenced or constituted by the Class R-II Interest and the REMIC II
Regular Interests, shall be as set forth in this Agreement. The Class R-II
Interest and the REMIC II Regular Interests shall constitute the entire
beneficial ownership interest in REMIC II.
SECTION 2.08. Issuance of Class R Certificates.
The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, 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 Class R Certificates in authorized denominations. The Class R
Certificates evidence ownership in the Class R-I Interest and the Class R-II
Interest.
SECTION 2.09. Establishment of the Trust.
The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience,
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as "ACE Securities Corp., Home Equity Loan Trust, Series 2003-TC1" and does
hereby appoint Bank One, National Association, as Trustee in accordance with the
provisions of this Agreement.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS; ACCOUNTS
SECTION 3.01. Servicer to Act as Servicer.
The Servicer shall service and administer the Mortgage Loans on
behalf of the Trust Fund and in the best interests of and for the benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment) in
accordance with the terms of this Agreement and the respective Mortgage Loans
and all applicable law and regulations 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 prudent mortgage lenders and loan servicers
administering similar mortgage loans but without regard to:
(i) any relationship that the Servicer or any Affiliate of the
Servicer may have with the related Mortgagor;
(ii) the ownership of any Certificate by the Servicer or any
Affiliate of the Servicer;
(iii) the Servicer's obligation to make P&I Advances or Servicing
Advances; or
(iv) the Servicer's right to receive compensation for its
services hereunder.
To the extent consistent with the foregoing, the Servicer shall
also seek to maximize the timely and complete recovery of principal and interest
on the Mortgage Notes and (b) shall waive (or permit a Sub-Servicer to waive) a
Prepayment Charge only under the following circumstances: (i) such waiver is
standard and customary in servicing similar Mortgage Loans and (ii) either (A)
such waiver is related to a default or reasonably foreseeable default and would,
in the reasonable judgement of the Servicer, maximize recovery of total proceeds
taking into account the value of such Prepayment Charge and the related Mortgage
Loan and, if such waiver is made in connection with a refinancing of the related
Mortgage Loan, such refinancing is related to a default or a reasonably
foreseeable default or (B) such waiver is made in connection with a refinancing
of the related Mortgage Loan unrelated to a default or a reasonably foreseeable
default where (x) the related Mortgagor has stated to the Servicer or an
applicable Sub-Servicer an intention to refinance the related Mortgage Loan and
(y) the Servicer has concluded in its reasonable judgement that the waiver of
such Prepayment Charge would induce such Mortgagor to refinance with the
Servicer or (iii) such Prepayment Charge is unenforceable in accordance with
applicable law or the collection of such related Prepayment Charge would
otherwise violate applicable law. If a Prepayment Charge is waived as permitted
by meeting both of the standards described in clauses (i) and (ii)(B) above,
then the Servicer is required to pay the amount of such waived Prepayment
Charge, for the benefit of the Holders of the Class P Certificates, by
depositing such amount into the Collection Account within 90 days of notice or
discovery of such waiver not meeting the standard set forth in both clauses (i)
and (ii)(B) above. Notwithstanding any provision in this Agreement to the
contrary, in the event the Prepayment Charge payable under the terms of the
Mortgage Note is less than the
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amount of the Prepayment Charge set forth in the Prepayment Charge Schedule or
other information provided to the Servicer, the Servicer shall not have any
liability or obligation with respect to such difference, and in addition shall
not have any liability or obligation to pay the amount of any uncollected
Prepayment Charge if the failure to collect such amount is the direct result of
inaccurate or incomplete information on the Prepayment Charge Schedule.
Furthermore, notwithstanding any other provisions of this Agreement, any
payments made by the Servicer in respect of any waived Prepayment Charges
pursuant to clauses (i) and (ii) above and the preceding sentence shall be
deemed to be paid outside of the Trust Fund.
Subject only to the above-described servicing standards (the
"Accepted Servicing Practices") and the terms of this Agreement and of the
respective Mortgage Loans, the Servicer shall have full power and authority, 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 Servicer in its own name is hereby authorized
and empowered by the Trustee when the Servicer believes it appropriate in its
best judgment, to execute and deliver, on behalf of the Trust Fund, the
Certificateholders and the Trustee or any of them, and upon written 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, for the benefit of the Trust Fund and the
Certificateholders. The 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 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 3.14, the Trustee shall execute, at the written request of
the Servicer, and furnish to the Servicer any special or limited powers of
attorney and other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder and furnished to the
Trustee by the Servicer, and the Trustee shall not be liable for the actions of
the Servicer under such powers of attorney and shall be indemnified by the
Servicer for any cost, liability or expense incurred by the Trustee in
connection with the Servicer's use or misuse of any such power of attorney.
In accordance with Accepted Servicing Practices, the Servicer
shall make or cause to be made Servicing Advances as necessary for the purpose
of effecting the payment of taxes and assessments on the Mortgaged Properties,
which Servicing Advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.07, and further as
provided in Section 3.09; provided, however, the Servicer shall only make such
Servicing Advance if the Mortgagor has not made such payment, if the failure to
make such Servicing Advance would result in the loss of the Mortgaged Property
due to a tax sale or foreclosure as result of a tax lien. Any cost incurred by
the Servicer in effecting the payment of taxes and assessments on a Mortgaged
Property shall not, for the purpose of calculating the Stated Principal Balance
of a Mortgage Loan or 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.
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Notwithstanding anything in this Agreement to the contrary, the
Servicer may not make any future advances with respect to a Mortgage Loan and
the Servicer shall not 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
3.06, the Mortgagor is in default with respect to the Mortgage Loan or such
default is, in the judgment of the Servicer, reasonably foreseeable) or 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 created hereunder 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.
SECTION 3.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
The Servicer may arrange for the subservicing of any Mortgage Loan
by a Sub- Servicer pursuant to a Sub-Servicing Agreement; provided that such
sub-servicing arrangement and the terms of the related Sub-Servicing Agreement
must provide for the servicing of such Mortgage Loans in a manner consistent
with the servicing arrangements contemplated hereunder. Each Sub- Servicer shall
be (i) authorized to transact business in the state or states where 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 and (ii) a ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇
Mae approved mortgage servicer. Notwithstanding the provisions of any
Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer or a Sub-Servicer or reference
to actions taken through a Servicer or otherwise, the Servicer shall remain
obligated and liable to the Depositor, the Trustee and the Certificateholders
for the servicing and administration of the Mortgage Loans in accordance with
the provisions of this Agreement 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 Servicer alone were servicing and
administering the Mortgage Loans. Every Sub-Servicing Agreement entered into by
the Servicer shall contain a provision giving the successor Servicer the option
to terminate such agreement in the event a successor Servicer is appointed. All
actions of each Sub-Servicer performed pursuant to the related Sub-Servicing
Agreement shall be performed as an agent of the Servicer with the same force and
effect as if performed directly by the Servicer.
For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by a Sub- Servicer regardless of whether such
payments are remitted by the Sub-Servicer to the Servicer.
SECTION 3.03. Successor Sub-Servicers.
Any Sub-Servicing Agreement shall provide that Servicer shall be
entitled to terminate any Sub-Servicing Agreement and to either itself directly
service the related Mortgage Loans or enter into a Sub-Servicing Agreement with
a successor Sub-Servicer which qualifies under
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Section 3.02. Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the successor Servicer (which may be
the Trustee or the Master Servicer) without fee, in accordance with the terms of
this Agreement, in the event that the Servicer (or any successor Servicer)
shall, for any reason, no longer be the Servicer (including termination due to a
Servicer Event of Default).
SECTION 3.04. No Contractual Relationship Between Sub-
Servicer, Trustee or the Certificateholders.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee and the
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Sub-Servicer
except as set forth in Section 3.05.
SECTION 3.05. Assumption or Termination of Sub-Servicing
Agreement by Successor Servicer.
In connection with the assumption of the responsibilities, duties
and liabilities and of the authority, power and rights of the Servicer hereunder
by a successor Servicer (which may be the Trustee or the Master Servicer)
pursuant to Section 8.02, it is understood and agreed that the Servicer's rights
and obligations under any Sub-Servicing Agreement then in force between the
Servicer and a Sub-Servicer shall be assumed simultaneously by such successor
Servicer without act or deed on the part of such successor Servicer; provided,
however, that any successor Servicer may terminate the Sub-Servicer.
The Servicer shall, upon the reasonable request of the Master
Servicer, but at the expense of the Servicer, deliver to the assuming party
documents and records relating to each Sub- Servicing Agreement and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party.
The Servicing Fee payable to any such successor Servicer shall be
payable from payments received on the Mortgage Loans in the amount and in the
manner set forth in this Agreement.
SECTION 3.06. Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and Accepted
Servicing Practices, 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 Servicer may in its discretion (i)
waive any late payment charge or, if applicable, 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
shall not affect the amortization schedule of any Mortgage Loan
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for purposes of any computation hereunder. Notwithstanding the foregoing, in the
event that any Mortgage Loan is in default or, in the judgment of the Servicer,
such default is reasonably foreseeable, the Servicer, consistent with Accepted
Servicing Practices may waive, modify or vary any term of such Mortgage Loan
(including modifications that 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, or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor if in the Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Certificateholders (taking into account any estimated Realized
Loss that might result absent such action).
SECTION 3.07. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
To the extent the terms of a Mortgage provide for Escrow Payments,
the Servicer shall establish and maintain one or more accounts (the "Servicing
Accounts"), into which all collections from the Mortgagors (or related advances
from Sub-Servicers) for the payment of taxes, assessments, fire, flood, and
hazard insurance premiums, and comparable items for the account of the
Mortgagors ("Escrow Payments") shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Servicer shall deposit in the Servicing
Accounts on a daily basis and in no event later than the second Business Day
after receipt, and retain therein, all Escrow Payments collected on account of
the Mortgage Loans, for the purpose of effecting the timely 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 timely payment of taxes,
assessments, fire, flood, and hazard insurance premiums, and comparable items;
(ii) reimburse the Servicer out of related collections for any advances made
pursuant to Section 3.01 (with respect to taxes and assessments) and Section
3.11 (with respect to fire, flood and 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; or (v) clear and terminate the Servicing Account at the termination of
the Servicer's obligations and responsibilities in respect of the Mortgage Loans
under this Agreement in accordance with Article IX. As part of its servicing
duties, the Servicer 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. Notwithstanding the
foregoing, the Servicer shall not be obligated to collect Escrow Payments if the
related Mortgage Loan does not require such payments but the Servicer shall
nevertheless be obligated to make Servicing Advances as provided in Section 3.01
and Section 3.11. In the event the Servicer shall deposit in the Servicing
Accounts any amount not required to be deposited therein, it may at any time
withdraw such amount from the Servicing Accounts, any provision to the contrary
notwithstanding.
To the extent that a Mortgage does not provide for Escrow
Payments, the Servicer (i) shall determine whether any such payments are made by
the Mortgagor in a manner and at a time that is necessary to avoid the loss of
the Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien and (ii) shall ensure that all insurance required to be maintained on the
Mortgaged Property pursuant to this Agreement is maintained. If any such payment
has not been
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made and the Servicer receives notice of a tax lien with respect to the Mortgage
Loan being imposed, the Servicer shall, promptly and to the extent required to
avoid loss of the Mortgaged Property, advance or cause to be advanced funds
necessary to discharge such lien on the Mortgaged Property. The Servicer assumes
full responsibility for the payment of all such bills 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 Servicing
Advances to effect such payments subject to its determination of recoverability.
SECTION 3.08. Collection Account and Distribution Account.
(a) On behalf of the Trust Fund, the Servicer shall establish
and maintain 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 Servicer shall deposit or
cause to be deposited in the Collection Account on a daily basis and in no event
later than two Business Days after receipt, as and when received or as otherwise
required hereunder, the following payments and collections received or made by
it on or subsequent to the Cut-off Date:
(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 and any Prepayment Interest Excess) on each
Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds
(other than proceeds collected in respect of any particular REO
Property and amounts paid by the Servicer in connection with a
purchase of Mortgage Loans and REO Properties pursuant to Section
10.01);
(iv) any amounts required to be deposited pursuant to
Section 3.10 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 Servicer
pursuant to the second paragraph of Section 3.11(a) in respect of
any blanket policy deductibles;
(vi) any Purchase Price or Substitution Shortfall Amount
delivered to the Servicer and all proceeds (net of amounts payable
or reimbursable to the Servicer, the Master Servicer, the Trustee,
the Custodian or the Securities Administrator) of Mortgage Loans
purchased in accordance with Section 2.03, Section 3.13 or Section
10.01; and
(vii) any Prepayment Charges collected by the Servicer in
connection with the Principal Prepayment of any of the Mortgage
Loans or amounts required to be deposited by the Servicer in
connection with a breach of its obligations under Section 3.01.
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The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
assumption fees or other similar fees need not be deposited by the Servicer in
the Collection Account and may be retained by the Servicer as additional
compensation. In the event the 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, the Trust Fund and the
Certificateholders. On behalf of the Trust Fund, the Servicer shall deliver to
the Trustee in immediately available funds for deposit in the Distribution
Account (i) on or before 3:00 p.m. New York time on the Servicer Remittance
Date, that portion of the Available Distribution Amount (calculated without
regard to the references in clause (2) of 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 and the amount of all Prepayment
Charges collected by the Servicer in connection with the Principal Prepayment of
any of the Mortgage Loans (including any Servicer Prepayment Charge Payment
Amount) then on deposit in the Collection Account and the amount of any funds
reimbursable to an Advance Financing Person pursuant to Section 3.25, and (ii)
on each Business Day as of the commencement of which the 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 Servicer shall, on or
before 5:00 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 Servicer, the Trustee or the Seller pursuant to Section 3.09 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 3.10. The Servicer shall give notice to the
Trustee and the Master Servicer 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 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 Servicer in immediately available funds to the Trustee for
deposit in the Distribution Account. In the event the 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 such
amount from the Distribution Account and remit to it any such amount, any
provision herein to the contrary notwithstanding. In no event shall the Trustee
incur liability as a result of withdrawals from the Distribution Account at the
direction of the Servicer in accordance with the immediately preceding sentence.
In addition, the Servicer shall deliver to the Trustee no later than the
Servicer Remittance Date the amounts set forth in clauses (i) through (iv)
below:
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(i) any P&I Advances, as required pursuant to Section
5.03;
(ii) any amounts required to be deposited pursuant to
Section 3.21(d) or 3.21(f) in connection with any REO Property;
(iii) any amounts to be paid in connection with a purchase
of Mortgage Loans and REO Properties pursuant to Section 10.01;
and
(iv) any amounts required to be deposited pursuant to
Section 3.22 in connection with any Prepayment Interest
Shortfalls.
SECTION 3.09. Withdrawals from the Collection Account and
Distribution Account.
(a) The Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or as described in
Section 5.03:
(i) to remit to the Trustee for deposit in the
Distribution Account the amounts required to be so remitted
pursuant to Section 3.08(b) or permitted to be so remitted
pursuant to the first sentence of Section 3.08(d);
(ii) subject to Section 3.13(d), to reimburse the
Servicer (including any successor Servicer) for P&I Advances made
by it, 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 P&I Advances
were made in accordance with the provisions of Section 5.03;
(iii) subject to Section 3.13(d), to pay the Servicer any
unpaid Servicing Fees and reimburse the Servicer any unreimbursed
Servicing Advances with respect to each Mortgage Loan, but only to
the extent of any Liquidation Proceeds and Insurance Proceeds
received with respect to such Mortgage Loan;
(iv) to pay to the Servicer as servicing compensation (in
addition to the Servicing Fee) on the Servicer Remittance Date any
interest or investment income earned on funds deposited in the
Collection Account;
(v) to pay to the 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
3.13(c) all amounts received thereon not included in the Purchase
Price or the Substitution Shortfall Amount;
(vi) to reimburse the Servicer (including any successor
Servicer) for any P&I Advance or Servicing Advance previously made
by it which the Servicer has determined to be a Nonrecoverable P&I
Advance or a Nonrecoverable Servicing Advance in accordance with
the provisions of Section 5.03;
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(vii) to reimburse the Servicer or the Depositor for
expenses incurred by or reimbursable to the Servicer or the
Depositor, as the case may be, pursuant to Section 3.01 or Section
7.03;
(viii) to reimburse the Servicer or the Trustee, as the
case may be, for 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;
(ix) to pay, or to reimburse the Servicer for advances in
respect of, expenses incurred in connection with any Mortgage Loan
pursuant to Section 3.13(b);
(x) to pay the Servicer any Prepayment Interest Excess
on the Mortgage Loans (to the extent not retained pursuant to
Section 3.08(a)(ii)); and
(xi) to clear and terminate the Collection Account
pursuant to Section 10.01.
The 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), (ix) and (x) above.
The Servicer shall provide written notification to the Trustee on or prior to
the next succeeding Servicer Remittance Date, upon making any withdrawals from
the Collection Account pursuant to subclauses (vi) and (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 5.01;
(ii) to pay to itself, the Custodian, the Master Servicer
and the Securities Administrator amounts to which it is entitled
pursuant to Section 9.05 or any other provision of this Agreement
and any Extraordinary Trust Fund Expenses;
(iii) to reimburse itself or the Master Servicer pursuant
to Section 8.02;
(v) to pay to an Advance Financing Person reimbursements
for P&I Advances and/or Servicing Advances pursuant to Section
3.25;
(vi) to pay any amounts in respect of taxes pursuant to
Section 11.01(g)(vi);
(vii) to pay the Master Servicing Fee to the Master
Servicer;
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(viii) to pay the Credit Risk Management Fee to the Credit
Risk Manager;
(ix) to pay the MGIC Fee to MGIC; and
(x) to clear and terminate the Distribution Account
pursuant to Section 10.01.
SECTION 3.10. Investment of Funds in the Investment Accounts.
(a) The Servicer may direct, by means of written directions
(which may be standing directions), any depository institution maintaining the
Collection Account to invest the funds in the Collection Account (for purposes
of this Section 3.10, an "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.
Amounts in the Distribution Account shall be invested in Permitted Investments
as directed in writing by the Master Servicer. All such Permitted Investments
shall be held to maturity, unless payable on demand. Any investment of funds
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 over each such investment and, subject to subsection (b) below, the
income thereon, 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 the Collection
Account are at any time invested in a Permitted Investment payable on demand,
the party with investment discretion over such Investment Account 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 determination 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 held by or on behalf of the Servicer or the
Trustee, shall be for the benefit of the Servicer and shall be subject to its
withdrawal in accordance with Section 3.09. The Servicer shall deposit in the
Collection Account the amount of any loss incurred in respect of any such
Permitted Investment made with funds in such account immediately upon
realization of such loss. All earnings and gain realized from the investment of
funds deposited in the Distribution Account shall be for the benefit of the
Master Servicer. The Master Servicer shall remit from its own funds
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for deposit into the Distribution Account the amount of any loss incurred on
Permitted Investments in the Distribution Account.
(c) 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 9.01 and Section
9.02(v), shall, at the written direction of the Servicer, take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.
(d) The Trustee, the Master Servicer or their respective
Affiliates are permitted to receive additional compensation that could be deemed
to be in the Trustee's or the Master Servicer's economic self-interest for (i)
serving as investment adviser, administrator, shareholder servicing agent,
custodian or sub-custodian with respect to certain of the Permitted Investments,
(ii) using Affiliates to effect transactions in certain Permitted Investments
and (iii) effecting transactions in certain Permitted Investments. Such
compensation shall not be considered an amount that is reimbursable or payable
to the Trustee or the Master Servicer pursuant to Section 3.09 or 3.10 or
otherwise payable in respect of Extraordinary Trust Fund Expenses.
SECTION 3.11. Maintenance of Hazard Insurance, Errors and
Omissions and Fidelity Coverage and Primary
Mortgage Insurance.
(a) The terms of each Mortgage Note require the related
Mortgagor to maintain fire, flood and hazard insurance policies. To the extent
such policies are not maintained, the Servicer shall cause to be maintained for
each Mortgaged Property fire and hazard insurance with extended coverage as is
customary in the area where the Mortgaged Property is located in an amount which
is at least equal to the lesser of the current principal balance of such
Mortgage Loan and the amount necessary to compensate fully for any damage or
loss to the improvements which are a part of such property on a replacement cost
basis, 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 Servicer shall also cause to be maintained fire and hazard
insurance on each REO Property with extended coverage as is customary in the
area where the Mortgaged Property is located 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. The 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 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 Accepted
Servicing Practices, 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 3.09, if received in respect of a Mortgage Loan,
or in the REO Account, subject to withdrawal pursuant to Section 3.21, if
received in respect of an REO Property. Any cost incurred by the 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
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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, the 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 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 otherwise acceptable to ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac insuring
against hazard losses on all of the Mortgage Loans, it shall conclusively be
deemed to have satisfied its obligations to cause fire and hazard insurance to
be maintained on the Mortgaged Properties, it being understood and agreed that
such policy may contain a deductible clause, in which case the 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 3.11, 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 Servicer agrees to prepare and present, on behalf of itself,
the Trustee, the Trust Fund and the Certificateholders, claims under any such
blanket policy in a timely fashion in accordance with the terms of such policy.
(b) The 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 its respective obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac if it were the purchaser of the
Mortgage Loans, unless the Servicer, has obtained a waiver of such requirements
from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. The Servicer shall each also maintain a fidelity
bond in the form and amount that would meet the requirements of ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac, unless the Servicer, has obtained a waiver of such requirements
from ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac. The Servicer shall be deemed to have complied
with this provision if an Affiliate of the 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 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.
(c) The Servicer shall not take any action that would result in
noncoverage under the MGIC PMI Policy or any other applicable primary mortgage
insurance policy of any loss which, but for the actions of the Servicer would
have been covered thereunder. The Servicer shall use its best efforts to keep in
force and effect the MGIC PMI Policy and, to the extent that the Mortgage Loan
requires the Mortgagor to maintain such insurance, any other primary mortgage
insurance applicable to any Mortgage Loan. Except as required by applicable law
or the related Mortgage Loan Documents, the Servicer shall not cancel or refuse
to renew any such primary mortgage insurance
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policy that is in effect at the date of the initial issuance of the Mortgage
Note and is required to be kept in force hereunder.
The Servicer agrees to present on behalf of the Trustee and the
Certificateholders, claims to MGIC under the MGIC PMI Policy or the applicable
insurer under any other primary mortgage insurance policies and, in this regard,
to take such reasonable action as shall be necessary to permit recovery under
the MGIC PMI Policy or any other primary mortgage insurance policies respecting
defaulted Mortgage Loans. Pursuant to Section 3.08, any amounts collected by the
Servicer under the MGIC PMI Policy or any other primary mortgage insurance
policies shall be deposited in the Collection Account, subject to withdrawal
pursuant to Section 3.09.
SECTION 3.12. Enforcement of Due-on-Sale Clauses; Assumption
Agreements.
The Servicer shall, to the extent it has knowledge of any
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 Servicer shall
not exercise any such rights if prohibited by law from doing so. If the 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 Servicer shall 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 Servicer is also authorized to
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 then current underwriting criteria of the Servicer for mortgage
loans similar to the Mortgage Loans. In connection with any assumption or
substitution, the 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 Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy. Any fee collected by
the Servicer in respect of an assumption or substitution of liability agreement
will be retained by the 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 Servicer shall notify the Trustee (or the
Custodian) that any such substitution or assumption agreement has been completed
by forwarding to the Trustee 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.
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Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the 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 Servicer may be restricted by law from preventing, for any
reason whatever. For purposes of this Section 3.12, 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 3.13. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with
Accepted Servicing Practices, to foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Mortgage Loans 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 3.06. The Servicer shall
be responsible for all costs and expenses incurred by it in any such
proceedings; provided, however, that such costs and expenses will be recoverable
as Servicing Advances by the Servicer as contemplated in Sections 3.09 and 3.21.
The foregoing is subject to the provision that, in any case in which a Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Servicer shall
not be required to expend its own funds toward the restoration of such property
unless it shall determine in its 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
3.13 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trust Fund, 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 Trust Fund, the Trustee 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 Servicer has also previously
determined, based on its reasonable judgment and a prudent report prepared by an
Independent 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
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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.
The cost of the environmental audit report contemplated by this
Section 3.13 shall be advanced by the Servicer, subject to the Servicer's right
to be reimbursed therefor from the Collection Account as provided in Section
3.09(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.
If the 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 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 Servicer, subject to the
Servicer's right to be reimbursed therefor from the Collection Account as
provided in Sections 3.09(a)(iii) or 3.09(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.
(c) The Servicer shall have the right to purchase from REMIC I
any defaulted Mortgage Loan that is 90 days or more delinquent, which the
Servicer determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee, in form and substance satisfactory to the Servicer and the Trustee
prior to purchase), at a price equal to the Purchase Price. The Purchase Price
for any Mortgage Loan purchased hereunder shall be deposited in the Collection
Account, and the Trustee, upon receipt of written certification from the
Servicer of such deposit, shall release or cause to be released to the Servicer
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty, as the Servicer shall furnish and as shall be
necessary to vest in the Servicer title to any Mortgage Loan released pursuant
hereto.
(d) Proceeds 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
Servicer for any related unreimbursed Servicing Advances and P&I Advances,
pursuant to Section 3.09(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 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
Servicer pursuant to Section 3.09(a)(iii). The portion of the recovery allocated
to interest (net of unpaid Servicing Fees)
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and the portion of the recovery allocated to principal of the Mortgage Loan
shall be applied as follows: first, to reimburse the Servicer for any related
unreimbursed Advances in accordance with Section 3.09(a)(ii) and any other
amounts reimbursable to the Servicer pursuant to Section 3.09, and second, as
part of the amounts to be transferred to the Distribution Account in accordance
with Section 3.08(b).
SECTION 3.14. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a notification that payment in full has
been escrowed in a manner customary for such purposes for payment to
Certificateholders on the next Distribution Date, the Servicer will promptly
furnish to the Custodian, on behalf of the Trustee, two copies of a request for
release substantially in the form attached to the Custodial Agreement signed by
a Servicing Officer or in a mutually agreeable electronic format which will, in
lieu of a signature on its face, originate from a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payment that are required to be deposited in the
Collection Account have been or will be so deposited) and shall request that the
Custodian, on behalf of the Trustee, deliver to the Servicer the related
Mortgage File. Upon receipt of such certification and request, the Custodian, on
behalf of the Trustee, shall promptly release the related Mortgage File to the
Servicer and the Trustee and Custodian shall have no further responsibility with
regard to such Mortgage File. Upon any such payment in full, the Servicer is
authorized, to give, as agent for the Trustee, as the mortgagee under the
Mortgage that secured the Mortgage Loan, an instrument of satisfaction (or
assignment of mortgage without recourse) regarding the Mortgaged Property
subject to the Mortgage, which instrument of satisfaction or assignment, as the
case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of such payment, it being understood and agreed that no
expenses incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Collection Account.
(b) From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee shall execute such documents as
shall be prepared and furnished to the Trustee by the Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings. The Custodian, on behalf of the Trustee, shall, upon the
request of the Servicer, and delivery to the Custodian, on behalf of the
Trustee, of two copies of a request for release signed by a Servicing Officer
substantially in the form attached to the Custodial Agreement (or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer), release the related Mortgage File held in
its possession or control to the Servicer. Such trust receipt shall obligate the
Servicer to return the Mortgage File to the Custodian on behalf of the Trustee,
when the need therefor by the Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified, the Mortgage File shall be
released by the Custodian, on behalf of the Trustee, to the Servicer.
Notwithstanding the foregoing, in connection with a Principal
Prepayment in full of any Mortgage Loan, the Master Servicer may request release
of the related Mortgage File from the Custodian, in accordance with the
provisions of the Custodial Agreement, in the event the Servicer fails to do so.
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Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Servicer, any court pleadings, requests for
trustee's sale or other documents 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. 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 and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale. So long as no Servicing Termination Event shall have occurred
and be continuing, the Servicer shall have the right to execute any and all such
court pleadings, requests and other documents as attorney-in-fact for, and on
behalf of the Trustee.
SECTION 3.15. Servicing Compensation.
As compensation for the activities of the Servicer, hereunder, the
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 3.22. In addition, the Servicer shall be entitled to recover
unpaid Servicing Fees out of Insurance Proceeds or Liquidation Proceeds to the
extent permitted by Section 3.09(a)(iii) and out of amounts derived from the
operation and sale of an REO Property to the extent permitted by Section 3.21.
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 Servicer's
responsibilities and obligations under this Agreement to the extent permitted
herein.
Additional servicing compensation in the form of assumption fees,
late payment charges and other miscellaneous fees (other than Prepayment
Charges) shall be retained by the Servicer only to the extent such fees or
charges are received by the Servicer. The Servicer shall also be entitled
pursuant to Section 3.09(a)(iv) to withdraw from the Collection Account and
pursuant to Section 3.21(b) to withdraw from any REO Account, as additional
servicing compensation, interest or other income earned on deposits therein,
subject to Section 3.10 and shall be entitled to retain or withdraw from the
Collection Account, pursuant to Section 3.09(x), Prepayment Interest Excess as
additional servicing compensation. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement therefor except as specifically
provided herein.
SECTION 3.16. Reports to the Trustee; Collection Account
Statements.
Not later than fifteen days after each Distribution Date, the
Servicer shall forward to the Master Servicer, the Trustee and the Depositor a
statement prepared by the institution at which the Collection Account is
maintained 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 3.08(a) and
each category of withdrawal specified in Section 3.09. 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 Servicer to the Trustee.
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SECTION 3.17. Statement as to Compliance.
Not later than March 15th of each calendar year commencing in
2004, the Servicer shall deliver to the Trustee, the Master Servicer and the
Depositor an Officers' Certificate (upon which the Master Servicer can
conclusively rely in connection with its obligations under Section 5.06)
stating, as to each signatory thereof, that (i) a review of the activities of
the 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
officer's knowledge, based on such review, the 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, upon
request at the expense of the requesting party, provided such statement is
delivered by the Servicer to the Trustee.
SECTION 3.18. Independent Public Accountants' Servicing Report.
Not later than March 15th of each calendar year commencing in
2004, the Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Servicer a report
stating that (i) it has obtained a letter of representation regarding certain
matters from the management of the Servicer which includes an assertion that the
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. Immediately upon receipt of such report, the Servicer shall
furnish a copy of such report to the Master Servicer, the Trustee and each
Rating Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Servicer's expense, provided that such
statement is delivered by the Servicer to the Trustee.
SECTION 3.19 Annual Certification.
(a) The Servicer shall deliver to the Master Servicer, on or
before March 15th of each calendar year beginning March 15, 2004 (or, if any
such day is not a Business Day, the immediately preceding Business Day) or such
alternative date reasonably specified by the Master Servicer which shall occur
not earlier than 15 days prior to the date any Form 10-K is required to be filed
with the Commission in connection with the transactions contemplated by this
Agreement, a certification in the form attached hereto as Exhibit C. Such
certification shall be signed by the senior officer in charge of servicing of
the Servicer. In addition, the Servicer shall provide such other information
with respect to the Mortgage Loans and the servicing and administration thereof
within the control of the Servicer which shall be required to enable the Master
Servicer to comply with the reporting requirements of the Securities and
Exchange Act of 1934, as amended pursuant to Section 5.06 hereof.
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(b) The Servicer shall indemnify and hold harmless the Master
Servicer, the Trustee, the Depositor and their respective officers, directors,
agents and affiliates from and against any losses, damages, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments and other costs
and expenses arising out of or based upon a breach by the Servicer or any of its
officers, directors, agents or affiliates of its obligations under this Section
3.19 or the Servicer's negligence, bad faith or willful misconduct in connection
therewith. Such indemnity shall survive the termination or resignation of the
parties hereto or the termination of this Agreement. If the indemnification
provided for herein is unavailable or insufficient to hold harmless the Master
Servicer, the Trustee and the Depositor, then the Servicer agrees that it shall
contribute to the amount paid or payable by the Master Servicer, the Trustee and
the Depositor as a result of the losses, claims, damages or liabilities of the
Master Servicer, the Trustee and the Depositor in such proportion as is
appropriate to reflect the relative fault of the Master Servicer, the Trustee
and the Depositor on the one hand and the Servicer on the other in connection
with a breach of the Servicer's obligations under this Section 3.19.
SECTION 3.20. Access to Certain Documentation.
The 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 Certificate Owner, access to the
documentation regarding the Mortgage Loans 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
Servicer designated by it. Nothing in this Section 3.20 shall limit the
obligation of the Servicer to comply with any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section. Nothing in this
Section 3.20 shall require the Servicer to collect, create, collate or otherwise
generate any information that it does not generate in its usual course of
business. The Servicer shall not be required to make copies of or ship documents
to any Person unless provisions have been made for the reimbursement of the
costs thereof.
SECTION 3.21. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, on behalf of the Trust Fund
and for the benefit of the Certificateholders. The Servicer, on behalf of REMIC
I, shall either sell any REO Property by the close of the third calendar year
following the calendar year in which REMIC I acquires ownership of such REO
Property for purposes of Section 860(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 Servicer had delivered to the Trustee an Opinion of
Counsel, addressed to the Trustee and the Depositor, to the effect that the
holding by REMIC I of such REO Property subsequent to three years after its
acquisition will not result in the imposition on any Trust REMIC created
hereunder of taxes on "prohibited transactions" thereof, as defined in Section
860F of the Code, or cause any Trust REMIC hereunder to fail to qualify as a
REMIC under Federal law at any time that any Certificates are outstanding. The
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
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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 created
hereunder 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 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
with respect to REO Properties an account held in trust for the Trustee, on
behalf of the Trust Fund and for the benefit of the Certificateholders (the "REO
Account"), which shall be an Eligible Account. The Servicer shall be permitted
to allow the Collection Account to serve as the REO Account, subject to separate
ledgers for each REO Property. The Servicer shall be entitled to retain or
withdraw any interest income paid on funds deposited in the REO Account.
(c) The 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 Servicer manages and operates similar property owned by the
Servicer or any of its Affiliates, all on such terms and for such period as the
Servicer deems to be in the best interests of Certificateholders. In connection
therewith, the Servicer shall deposit, or cause to be deposited, on a daily
basis in the REO 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;
(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 Servicer
shall advance from its own funds such amount as is necessary for such purposes
if, but only if, the Servicer would make such advances if the Servicer owned the
REO Property and if in the Servicer's judgment, the payment of such amounts will
be recoverable from the rental or sale of the REO Property.
Subject to compliance with applicable laws and regulations as
shall at any time be in force, and notwithstanding the foregoing, the Servicer,
on behalf of the Trust Fund, shall not:
(i) 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) permit any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
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(iii) authorize or permit 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) allow 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 Servicer has obtained an Opinion of Counsel,
provided to the Servicer 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 I, in which case the Servicer may take such actions as are specified in
such Opinion of Counsel.
The 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 Servicer as 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 3.21(c) relating to
any such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Servicer of any of its duties
and obligations to the Trustee on behalf of the Trust Fund and for the
benefit of the Certificateholders with respect to the operation and
management of any such REO Property; and
(iv) the 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 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 Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall be solely liable for all fees owed by
it to any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.15 is sufficient to pay such fees. Any such
agreement shall include a provision that such agreement may be immediately
terminated by the Trustee (as successor Servicer) or any other successor
Servicer (including the Master Servicer) without fee, in the event the Servicer
shall for any reason, no longer be the Servicer (including termination due to a
Servicer Event of Default).
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(d) In addition to the withdrawals permitted under Section
3.21(c), the Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself 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 Servicer Remittance Date, the
Servicer shall withdraw from each REO Account maintained by it and deposit into
the Distribution Account in accordance with Section 3.08(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 3.21(c) or this Section
3.21(d).
(e) Subject to the time constraints set forth in Section
3.21(a), each REO Disposition shall be carried out by the Servicer at such price
and upon such terms and conditions as the Servicer shall deem necessary or
advisable, as shall be normal and usual in accordance with Accepted Servicing
Practices.
(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 Servicer as provided above, shall
be deposited in the Distribution Account in accordance with Section 3.08(d)(ii)
on the 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).
(g) The Servicer shall file information returns (and shall
provide a certification of a Servicing Officer to the Master Servicer that such
filings have been made) 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 3.22. Obligations of the Servicer in Respect of
Prepayment Interest Shortfalls; Relief Act
Interest Shortfalls.
The Servicer shall deliver to the Trustee for deposit into the
Distribution Account on or before 5:00 p.m. New York time on the Servicer
Remittance Date from its own funds an amount equal to the lesser of (i) the
aggregate of the Prepayment Interest Shortfalls attributable to prepayments in
full for the related Distribution Date resulting solely from voluntary Principal
Prepayments received by the Servicer during the related Prepayment Period and
(ii) the aggregate Servicing Fee for the most recently ended Prepayment Period.
The Servicer shall not have the right to reimbursement for any amounts remitted
to the Trustee in respect of this Section 3.22. The Servicer shall not be
obligated to pay the amounts set forth in this Section 3.22 with respect to
shortfalls resulting from the application of the Relief Act.
SECTION 3.23. Obligations of the Servicer in Respect of
Mortgage Rates and Monthly Payments.
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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 Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the 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 Servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement. Notwithstanding the
foregoing, this Section 3.23 shall not limit the ability of the Servicer to seek
recovery of any such amounts from the related Mortgagor under the terms of the
related Mortgage Note and Mortgage, to the extent permitted by applicable law.
SECTION 3.24. Reserve Fund.
(a) No later than the Closing Date, the Trustee shall establish
and maintain a separate, segregated trust account titled, "Reserve Fund, Bank
One, National Association, in trust for the registered holders of ACE Securities
Corp. Home Equity Loan Trust, Series 2003-TC1, Asset Backed Pass-Through
Certificates." On the Closing Date, the Depositor will deposit, or cause to be
deposited, into the Reserve Fund $1,000. In addition, the amount deposited in
the Reserve Fund shall be increased by any payments received by the Trustee
under the Cap Contracts and deposited into Reserve Fund the for the benefit of
the Class A-1 Certificates and Class A-2 Certificates.
(b) 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 will deposit, based on the instructions received by it
from the Securities Administrator, into the Reserve Fund the amounts described
in Section 5.01(a)(7)(xi), rather than distributing such amounts to the Class CE
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 of the
Class A Certificates and the Mezzanine Certificates in the amounts and
priorities set forth in Section 5.01(a). If no Net WAC Rate Carryover Amounts
are payable on a Distribution Date, the Trustee shall deposit, based on the
instructions received by it from the Securities Administrator, into the Reserve
Fund on behalf of the Class CE Certificateholders, from amounts otherwise
distributable to the Class CE 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.
(c) For federal and state income tax purposes, the Class CE
Certificateholders will 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 II to the Holders of
the Class CE Certificates. Upon the termination of the Trust Fund, 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 Trust
Fund and distributed to the Class CE Certificateholders or their designees. The
Reserve Fund will be part of the Trust Fund but not part of any REMIC and any
payments to the Holders of the Class A Certificates or the Mezzanine
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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).
(d) By accepting a Class CE Certificate, each Class CE
Certificateholder hereby agrees that the Trustee will deposit into the Reserve
Fund the amounts described above on each Distribution Date rather than
distributing such amounts to the Class CE Certificateholders. By accepting a
Class CE Certificate, each Class CE Certificateholder further agrees that its
agreement to such action by the Trustee is given for good and valuable
consideration, the receipt and sufficiency of which is acknowledged by such
acceptance.
(e) At the direction of the Holders of a majority in Percentage
Interest in the Class CE 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. All income and gain earned upon such investment shall be deposited
into the Reserve Fund. In no event shall the Trustee be liable for any
investments made pursuant to this clause (e). If the Holders of a majority in
Percentage Interest in the Class CE Certificates fail to provide investment
instructions, funds on deposit in the Reserve Fund shall be held uninvested by
the Trustee without liability for interest or compensation.
(f) For federal tax return and information reporting, the right
of the Class A Certificateholders and the Mezzanine Certificateholders to
receive payments from the Reserve Fund in respect of any Net WAC Rate Carryover
Amount shall be assigned a value of zero.
SECTION 3.25. Advance Facility.
(a) Notwithstanding anything to the contrary contained herein,
(i) the Servicer is hereby authorized to enter into an advance facility
("Advance Facility") under which (A) the Servicer sells, assigns or pledges to
an advancing person the Servicer's rights under this Agreement to be reimbursed
for any Advances or Servicing Advances and/or (B) an advancing person agrees to
fund some or all Advances or Servicing Advances required to be made by the
Servicer pursuant to this Agreement and (ii) the Servicer is hereby authorized
to assign its rights to the Servicing Fee (which rights shall terminate upon the
resignation, termination or removal of the Servicer pursuant to the terms of
this Agreement); it being understood that neither the Trust Fund nor any party
hereto shall have a right or claim (including without limitation any right of
offset) to the portion of the Servicing Fee so assigned. No consent of the
Depositor, Trustee, Certificateholders or any other party is required before the
Servicer may enter into an Advance Facility, but the Servicer shall provide
notice to the Depositor, Master Servicer and the Trustee of the existence of any
such Advance Facility promptly upon the consummation thereof. Notwithstanding
the existence of any Advance Facility under which an advancing person agrees to
fund Advances and/or Servicing Advances on the Servicer's behalf, the Servicer
shall remain obligated pursuant to this Agreement
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to make Advances and Servicing Advances pursuant to and as required by this
Agreement, and shall not be relieved of such obligations by virtue of such
Advance Facility.
(b) Reimbursement amounts shall consist solely of amounts in
respect of Advances and/or Servicing Advances made with respect to the Mortgage
Loans for which the Servicer would be permitted to reimburse itself in
accordance with this Agreement, assuming the Servicer had made the related
Advance(s) and/or Servicing Advance(s).
(c) The Servicer shall maintain and provide to any successor
Servicer a detailed accounting on a loan-by-loan basis as to amounts advanced
by, pledged or assigned to, and reimbursed to any advancing person. The
successor Servicer shall be entitled to rely on any such information provided by
the predecessor Servicer, and the successor Servicer shall not be liable for any
errors in such information.
(d) The documentation establishing any Advance Facility shall
require that such reimbursement amounts distributed with respect to each
Mortgage Loan be allocated to outstanding unreimbursed Advances or Servicing
Advances (as the case may be) made with respect to that Mortgage Loan on a
"first-in, first out" (FIFO) basis. Such documentation shall also require the
Servicer to provide to the related advancing person or its designee loan-by-loan
information with respect to each such reimbursement amount distributed to such
advancing person or Advance Facility trustee on each Distribution Date, to
enable the advancing person or Advance Facility trustee to make the FIFO
allocation of each such reimbursement amount with respect to each Mortgage Loan.
The Servicer shall remain entitled to be reimbursed by the advancing person or
Advance Facility trustee for all Advances and Servicing Advances funded by the
Servicer to the extent the related rights to be reimbursed therefor have not
been sold, assigned or pledged to an advancing person.
(e) Any amendment to this Section 3.25 or to any other
provision of this Agreement that may be necessary or appropriate to effect the
terms of an Advance Facility as described generally in this Section 3.25,
including amendments to add provisions relating to a successor Servicer, may be
entered into by the Trustee, the Depositor, and the Servicer without the consent
of any Certificateholder, notwithstanding anything to the contrary in this
Agreement, provided, that the Trustee has been provided an Opinion of Counsel
that such amendment is authorized hereunder and has no material adverse effect
on the Certificateholders, which opinion shall be an expense of the party
requesting such opinion but in any case shall not be an expense of the Trustee
or the Trust Fund; provided, further, that the amendment shall not be deemed to
adversely affect in any material respect the interests of the Certificateholders
if the Person requesting the amendment obtains a letter from each Rating Agency
(instead of obtaining an Opinion of Counsel to such effect) stating that the
amendment would not result in the downgrading or withdrawal of the respective
ratings then assigned to the Certificates; it being understood and agreed that
any such rating letter in and of itself will not represent a determination as to
the materiality of any such amendment and will represent a determination only as
to the credit issues affecting any such rating. Prior to entering into an
Advance Facility, the Servicer shall notify the lender under such facility in
writing that: (a) the Advances financed by and/or pledged to the lender are
obligations owed to the Servicer on a non-recourse basis payable only from the
cash flows and proceeds received under this Agreement for reimbursement of
Advances only to the extent provided
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herein, and the Trustee and the Trust are not otherwise obligated or liable to
repay any Advances financed by the lender; (b) the Servicer will be responsible
for remitting to the lender the applicable amounts collected by it as Servicing
Fees and as reimbursement for Advances funded by the lender, as applicable,
subject to the restrictions and priorities created in this Agreement; and (c)
the Trustee shall not have any responsibility to track or monitor the
administration of the financing arrangement between the Servicer and the lender.
SECTION 3.26. Servicer Indemnification.
The Servicer agrees to indemnify the Trustee, Master Servicer and
the Securities Administrator, from, and hold the Trustee, Master Servicer and
the Securities Administrator harmless against, any loss, liability or expense
(including reasonable attorney's fees and expenses) incurred by any such Person
by reason of the Servicer's willful misfeasance, bad faith or gross negligence
in the performance of its duties under this Agreement or by reason of the
Servicer's reckless disregard of its obligations and duties under this
Agreement. Such indemnity shall survive the termination or discharge of this
Agreement and the resignation or removal of the Servicer, the Trustee, the
Master Servicer and the Securities Administrator. Any payment hereunder made by
the Servicer to any such Person shall be from the Servicer's own funds, without
reimbursement from REMIC I therefor.
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ARTICLE IV
ADMINISTRATION AND MASTER SERVICING
OF THE MORTGAGE LOANS BY THE MASTER SERVICER
SECTION 4.01. Master Servicer.
The Master Servicer shall supervise, monitor and oversee the
obligation of the Servicer to service and administer the Mortgage Loans in
accordance with the terms of the Agreement and shall have full power and
authority to do any and all things which it may deem necessary or desirable in
connection with such master servicing and administration. In performing its
obligations hereunder, the Master Servicer shall act in a manner consistent with
Accepted Master Servicing Practices. Furthermore, the Master Servicer shall
oversee and consult with the Servicer as necessary from time-to-time to carry
out the Master Servicer's obligations hereunder, shall receive, review and
evaluate all reports, information and other data provided to the Master Servicer
by the Servicer and shall cause the Servicer to perform and observe the
covenants, obligations and conditions to be performed or observed by the
Servicer under this Agreement. The Master Servicer shall independently and
separately monitor the Servicer's servicing activities with respect to each
related Mortgage Loan, reconcile the results of such monitoring with such
information provided in the previous sentence on a monthly basis and coordinate
corrective adjustments to the Servicer's and Master Servicer's records, and
based on such reconciled and corrected information, prepare the statements
specified in Section 5.03 and any other information and statements required to
be provided by the Master Servicer hereunder. The Master Servicer shall
reconcile the results of its Mortgage Loan monitoring with the actual
remittances of the Servicer to the Distribution Account pursuant to the terms
hereof based on information provided to the Master Servicer by the Trustee
pursuant to the fourth paragraph of Section 9.01.
The Trustee shall furnish the Servicer and the Master Servicer
with any limited powers of attorney and other documents in form as provided to
it necessary or appropriate to enable the Servicer and the Master Servicer to
service and administer the related Mortgage Loans and REO Property. The Trustee
shall have no responsibility for any action of the Master Servicer or any
Servicer pursuant to any such limited power of attorney and shall be indemnified
by the Master Servicer or the Servicer, as applicable, for any cost, liability
or expense incurred by the Trustee in connection with such Person's use or
misuse of any such power of attorney.
The Trustee, the Custodian and the Securities Administrator shall
provide access to the records and documentation in possession of the Trustee,
the Custodian or the Securities Administrator regarding the related Mortgage
Loans and REO Property and the servicing thereof to the Certificateholders, the
FDIC, and the supervisory agents and examiners of the FDIC, such access being
afforded only upon reasonable prior written request and during normal business
hours at the office of the Trustee, the Custodian or the Securities
Administrator; provided, however, that, unless otherwise required by law, none
of the Trustee, the Custodian or the Securities Administrator shall be required
to provide access to such records and documentation if the provision thereof
would violate the legal right to privacy of any Mortgagor. The Trustee, the
Custodian and the Securities Administrator shall allow representatives of the
above entities to photocopy any of the records and
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documentation and shall provide equipment for that purpose at a charge that
covers the Trustee's, the Custodian's or the Securities Administrator's actual
costs.
The Trustee shall execute and deliver to the Servicer or the
Master Servicer upon request any court pleadings, requests for trustee's sale or
other documents necessary or desirable to (i) the foreclosure or trustee's sale
with respect to a Mortgaged Property; (ii) any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or any other Mortgage Loan
Document; (iii) obtain a deficiency judgment against the Mortgagor; or (iv)
enforce any other rights or remedies provided by the Mortgage Note or any other
Mortgage Loan Document or otherwise available at law or equity.
SECTION 4.02. REMIC-Related Covenants.
For as long as each REMIC shall exist, the Trustee and the
Securities Administrator shall act in accordance herewith to treat such REMIC as
a REMIC, and the Trustee and the Securities Administrator shall comply with any
directions of the Seller, the Servicer or the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any investment of
deposits in an Account unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee has received a REMIC
Opinion prepared at the expense of the Trust Fund; and (b) other than with
respect to a substitution pursuant to the Mortgage Loan Purchase Agreements or
Section 2.03 of this Agreement, as applicable, accept any contribution to any
REMIC after the Startup Day without receipt of a Opinion of Counsel stating that
such contribution will not result in an Adverse REMIC Event as deferred in
Section 11.01(f).
SECTION 4.03. Monitoring of Servicer.
(a) The Master Servicer shall be responsible for monitoring the
compliance by the Servicer with its duties under this Agreement. In the review
of the Servicer's activities, the Master Servicer may rely upon an officer's
certificate of the Servicer with regard to the Servicer's compliance with the
terms of this Agreement. In the event that the Master Servicer, in its judgment,
determines that the Servicer should be terminated in accordance with the terms
hereof, or that a notice should be sent pursuant to the terms hereof with
respect to the occurrence of an event that, unless cured, would constitute an
Event of Default, the Master Servicer shall notify the Seller and the Trustee
thereof and the Master Servicer shall issue such notice or take such other
action as it deems appropriate.
(b) The Master Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of the Servicer under this
Agreement, and shall, in the event that the Servicer fails to perform its
obligations in accordance with this Agreement, subject to the preceding
paragraph and Article VIII, cause the Trustee to terminate the rights and
obligations of the Servicer hereunder in accordance with the provisions of
Article VIII. Such enforcement, including, without limitation, the legal
prosecution of claims 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, provided that the Master
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Servicer shall not be required to prosecute or defend any legal action except to
the extent that the Master Servicer shall have received reasonable indemnity for
its costs and expenses in pursuing such action.
(c) The Master Servicer shall be entitled to be reimbursed by
the Servicer (or from amounts on deposit in the Distribution Account if the
Servicer is unable to fulfill its obligations hereunder) for all reasonable
out-of-pocket or third party costs associated with the transfer of servicing
from the predecessor Servicer (or if the predecessor Servicer is the Master
Servicer, from the Servicer immediately preceding the Master Servicer),
including without limitation, any reasonable out-of-pocket or third party 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 Master Servicer to correct any errors or insufficiencies in the servicing
data or otherwise to enable the Master Servicer to service the Mortgage Loans
properly and effectively, upon presentation of reasonable documentation of such
costs and expenses.
(d) The Master Servicer shall require the Servicer to comply
with the remittance requirements and other obligations set forth in this
Agreement.
(e) If the Master Servicer acts as successor Servicer, it will
not assume liability for the representations and warranties of the terminated
Servicer.
SECTION 4.04. Fidelity Bond.
The Master Servicer, at its expense, shall maintain in effect a
blanket fidelity bond and an errors and omissions insurance policy, affording
coverage with respect to all directors, officers, employees and other Persons
acting on such Master Servicer's behalf, and covering errors and omissions in
the performance of the Master Servicer's obligations hereunder. The errors and
omissions insurance policy and the fidelity bond shall be in such form and
amount generally acceptable for entities serving as master servicers or
trustees.
SECTION 4.05. Power to Act; Procedures.
The Master Servicer shall master service the Mortgage Loans and
shall have full power and authority, subject to the REMIC Provisions and the
provisions of Article XI, to do any and all things that it may deem necessary or
desirable in connection with the master servicing and administration of the
Mortgage Loans, including but not limited to the power and authority (i) to
execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the Mortgage
Notes and related Mortgages, (iii) to collect any Insurance Proceeds and
Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion of
the ownership of the Mortgaged Property securing any Mortgage Loan, in each
case, in accordance with the provisions of this Agreement; provided, however,
that the Master Servicer shall not (and, consistent with its responsibilities
under Section 4.03, shall not permit the Servicer to) knowingly or intentionally
take any action, or fail to take (or fail to cause to be taken) any action
reasonably within its control and the scope of duties more specifically set
forth herein, that, under the REMIC Provisions, if taken or not taken, as the
case may be, would cause REMIC I or REMIC II to fail to
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qualify as a REMIC or 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) unless the Master Servicer has received an
Opinion of Counsel (but not at the expense of the Master Servicer) to the effect
that the contemplated action will not would cause REMIC I or REMIC II to fail to
qualify as a REMIC or result in the imposition of a tax upon REMIC I or REMIC
II, as the case may be. The Trustee shall furnish the Master Servicer, upon
written request from a Servicing Officer, with any powers of attorney empowering
the Master Servicer or the Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and to
foreclose upon or otherwise liquidate Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with this Agreement, and the Trustee shall
execute and deliver such other documents, as the Master Servicer or the Servicer
may request, to enable the Master Servicer to master service and administer the
Mortgage Loans and carry out its duties hereunder, in each case in accordance
with Accepted Master Servicing Practices (and the Trustee shall have no
liability for misuse of any such powers of attorney by the Master Servicer or
the Servicer and shall be indemnified by the Master Servicer or the Servicer, as
applicable, for any cost, liability or expense incurred by the Trustee in
connection with such Person's use or misuse of any such power of attorney). If
the Master Servicer or the Trustee has been advised that it is likely that the
laws of the state in which action is to be taken prohibit such action if taken
in the name of the Trustee or that the Trustee would be adversely affected under
the "doing business" or tax laws of such state if such action is taken in its
name, the Master Servicer shall join with the Trustee in the appointment of a
co-trustee pursuant to Section 9.10. In the performance of its duties hereunder,
the Master Servicer shall be an independent contractor and shall not, except in
those instances where it is taking action in the name of the Trustee, be deemed
to be the agent of the Trustee.
SECTION 4.06. Due-on-Sale Clauses; Assumption Agreements.
To the extent Mortgage Loans contain enforceable due-on-sale
clauses, the Master Servicer shall cause the Servicer to enforce such clauses in
accordance with this Agreement. If applicable law prohibits the enforcement of a
due-on-sale clause or such clause is otherwise not enforced in accordance with
this Agreement, and, as a consequence, a Mortgage Loan is assumed, the original
Mortgagor may be released from liability in accordance with this Agreement.
SECTION 4.07. Reserved.
SECTION 4.08. Documents, Records and Funds in Possession of
Master Servicer To Be Held for Trustee.
(a) The Master Servicer shall transmit to the Trustee or
Custodian such documents and instruments coming into the possession of the
Master Servicer from time to time as are required by the terms hereof to be
delivered to the Trustee or Custodian. Any funds received by the Master Servicer
in respect of any Mortgage Loan or which otherwise are collected by the Master
Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
Mortgage Loan shall be remitted to the Trustee for deposit in the Distribution
Account. The Master Servicer shall, and, subject to Section 3.20, shall cause
the Servicer to, provide access to information and documentation
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regarding the Mortgage Loans to the Trustee, its agents and accountants at any
time upon reasonable request and during normal business hours, and to
Certificateholders that are savings and loan associations, banks or insurance
companies, the Office of Thrift Supervision, the FDIC and the supervisory agents
and examiners of such Office and Corporation or examiners of any other federal
or state banking or insurance regulatory authority if so required by applicable
regulations of the Office of Thrift Supervision or other regulatory authority,
such access to be afforded without charge but only upon reasonable request in
writing and during normal business hours at the offices of the Master Servicer
designated by it. In fulfilling such a request the Master Servicer shall not be
responsible for determining the sufficiency of such information.
(b) All Mortgage Files and funds collected or held by, or under
the control of, the Master Servicer, in respect of any Mortgage Loans, whether
from the collection of principal and interest payments or from Liquidation
Proceeds or Insurance Proceeds, shall be remitted to the Trustee for deposit in
the Distribution Account.
SECTION 4.09. Standard Hazard Insurance and Flood Insurance
Policies.
For each Mortgage Loan, the Master Servicer shall enforce the
obligation of the Servicer under this Agreement to maintain or cause to be
maintained standard fire and casualty insurance and, where applicable, flood
insurance, all in accordance with the provisions of this Agreement. It is
understood and agreed that such insurance shall be with insurers meeting the
eligibility requirements set forth in Section 3.11 and that no earthquake or
other additional insurance is to be required of any Mortgagor or to be
maintained on property acquired in respect of a defaulted loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance.
SECTION 4.10. Presentment of Claims and Collection of Proceeds.
The Master Servicer shall enforce the Servicer's obligations
under this Agreement to, prepare and present on behalf of the Trustee and the
Certificateholders all claims under the Insurance Policies and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured's claim) as shall be necessary to realize recovery under such policies.
Any proceeds disbursed to the Master Servicer in respect of such policies, bonds
or contracts shall be promptly remitted to the Trustee for deposit in the
Distribution Account upon receipt, except that any amounts realized that are to
be applied to the repair or restoration of the related Mortgaged Property as a
condition precedent to the presentation of claims on the related Mortgage Loan
to the insurer under any applicable insurance policy need not be so or remitted.
SECTION 4.11. Maintenance of the Primary Mortgage Insurance
Policies.
(a) The Master Servicer shall not take, or permit the Servicer
to take (to the extent such action is prohibited by this Agreement), any action
that would result in noncoverage under any primary mortgage insurance policy of
any loss which, but for the actions of the Master Servicer or the Servicer,
would have been covered thereunder. The Master Servicer shall use its best
reasonable efforts to cause the Servicer to keep in force and effect (to the
extent that the Mortgage Loan requires the Mortgagor to maintain such
insurance), primary mortgage insurance applicable to each Mortgage
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Loan in accordance with the provisions of this Agreement. The Master Servicer
shall not, and shall not permit the Servicer to, cancel or refuse to renew any
primary mortgage insurance policy that is in effect at the date of the initial
issuance of the Mortgage Note and is required to be kept in force hereunder
except in accordance with the provisions of this Agreement.
(b) The Master Servicer agrees to cause the Servicer to
present, on behalf of the Trustee and the Certificateholders, claims to the
insurer under any primary mortgage insurance policies and, in this regard, to
take such reasonable action as shall be necessary to permit recovery under any
primary mortgage insurance policies respecting defaulted Mortgage Loans.
SECTION 4.12. Trustee to Retain Possession of Certain Insurance
Policies and Documents.
The Trustee or the applicable Custodian, shall retain possession
and custody of the originals (to the extent available) of any primary mortgage
insurance policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates has been distributed in full and the Master Servicer and the
Servicer have otherwise fulfilled their respective obligations under this
Agreement, the Trustee or the Custodian shall also retain possession and custody
of each Mortgage File in accordance with and subject to the terms and conditions
of this Agreement and the Custodial Agreement. The Master Servicer shall
promptly deliver or cause to be delivered to the Trustee or the Custodian, upon
the execution or receipt thereof the originals of any primary mortgage insurance
policies, any certificates of renewal, and such other documents or instruments
that constitute Mortgage Loan Documents that come into the possession of the
Master Servicer from time to time.
SECTION 4.13. Realization Upon Defaulted Mortgage Loans.
The Master Servicer shall cause the Servicer to foreclose upon,
repossess or otherwise comparably convert the ownership of Mortgaged Properties
securing such of the Mortgage Loans as come into and continue in default and as
to which no satisfactory arrangements can be made for collection of delinquent
payments, all in accordance with this Agreement.
SECTION 4.14. Compensation for the Master Servicer.
As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Master Servicing Fee and
the income from investment of or earnings on the funds from time to time in the
Distribution Account, as provided in Section 3.10. The Master Servicing Fee
payable to the Master Servicer in respect of any Distribution Date shall be
reduced in accordance with Section 4.19. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder
and shall not be entitled to reimbursement therefor except as provided in this
Agreement.
SECTION 4.15. REO Property.
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(a) In the event the Trust Fund acquires ownership of any REO
Property in respect of any related Mortgage Loan, the deed or certificate of
sale shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders. The Master Servicer shall cause the Servicer to sell, any
REO Property as expeditiously as possible and in accordance with the provisions
of this Agreement. Further, the Master Servicer shall cause the Servicer to sell
any REO Property prior to three years after the end of the calendar year of its
acquisition by REMIC I unless (i) the Trustee shall have been supplied by the
Servicer with an Opinion of Counsel to the effect that the holding by the Trust
Fund of such REO Property subsequent to such three-year period will not result
in the imposition of taxes on "prohibited transactions" of any REMIC hereunder
as defined in section 860F of the Code or cause any REMIC hereunder to fail to
qualify as a REMIC at any time that any Certificates are outstanding, in which
case the Trust Fund may continue to hold such Mortgaged Property (subject to any
conditions contained in such Opinion of Counsel) or (ii) the Servicer shall have
applied for, prior to the expiration of such three-year period, an extension of
such three-year period in the manner contemplated by Section 856(e)(3) of the
Code, in which case the three-year period shall be extended by the applicable
extension period. The Master Servicer shall cause the Servicer to protect and
conserve, such REO Property in the manner and to the extent required by this
Agreement, in accordance with the REMIC Provisions and in a manner that does not
result in a tax on "net income from foreclosure property" or cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code.
(b) The Master Servicer shall cause the Servicer to deposit all
funds collected and received in connection with the operation of any REO
Property in the Collection Account.
SECTION 4.16. Annual Officer's Certificate as to Compliance.
(a) The Master Servicer shall deliver to the Trustee and the
Rating Agencies on or before March 15 of each year, commencing on March 15,
2004, an Officer's Certificate, certifying that with respect to the period
ending December 31 of the prior year: (i) such Servicing Officer has reviewed
the activities of such Master Servicer during the preceding calendar year or
portion thereof and its performance under this Agreement, (ii) to the best of
such Servicing Officer's knowledge, based on such review, such Master Servicer
has performed and fulfilled its duties, responsibilities and obligations under
this Agreement in all material respects throughout such year, or, if there has
been a default in the fulfillment of any such duties, responsibilities or
obligations, specifying each such default known to such Servicing Officer and
the nature and status thereof, (iii) nothing has come to the attention of such
Servicing Officer to lead such Servicing Officer to believe that the Servicer
has failed to perform any of its duties, responsibilities and obligations under
this Agreement in all material respects throughout such year, or, if there has
been a material default in the performance or fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to such
Servicing Officer and the nature and status thereof.
(b) Copies of such statements shall be provided to any
Certificateholder upon request, by the Master Servicer or by the Trustee at the
Master Servicer's expense if the Master Servicer failed to provide such copies
(unless (i) the Master Servicer shall have failed to provide the Trustee with
such statement or (ii) the Trustee shall be unaware of the Master Servicer's
failure to provide such statement).
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SECTION 4.17. Annual Independent Accountant's Servicing Report.
If the Master Servicer has, during the course of any calendar
year, directly serviced any of the Mortgage Loans, then the Master Servicer at
its expense shall cause a nationally recognized firm of independent certified
public accountants to furnish a statement to the Trustee, the Rating Agencies
and the Seller on or before March 15 of each year, commencing on March 15, 2004
to the effect that, with respect to the most recently ended fiscal year, such
firm has examined certain records and documents relating to the Master
Servicer's performance of its servicing obligations under this Agreement and
pooling and servicing and trust agreements in material respects similar to this
Agreement and to each other and that, on the basis of such examination conducted
substantially in compliance with the audit program for mortgages serviced for
▇▇▇▇▇▇▇ Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance with this Agreement, or that such examination has disclosed no
material items of noncompliance except for (i) such exceptions as such firm
believes to be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages Serviced by ▇▇▇▇▇▇▇ Mac
requires it to report. Copies of such statements shall be provided to any
Certificateholder upon request by the Master Servicer, or by the Trustee at the
expense of the Master Servicer if the Master Servicer shall fail to provide such
copies. If such report discloses exceptions that are material, the Master
Servicer shall advise the Trustee whether such exceptions have been or are
susceptible of cure, and will take prompt action to do so.
SECTION 4.18. UCC.
The Depositor agrees to file continuation statements for any
Uniform Commercial Code financing statements which the Seller has informed the
Depositor were filed on the Closing Date in connection with the Trust. The
Depositor shall file any financing statements or amendments thereto required by
any change in the Uniform Commercial Code.
SECTION 4.19. Obligation of the Master Servicer in Respect of
Prepayment Interest Shortfalls.
In the event of a Prepayment Interest Shortfall, the Master
Servicer shall remit to the Trustee not later than the Distribution Date an
amount equal to the lesser of (i) the aggregate amounts required to be paid by
the Servicer with respect to Prepayment Interest Shortfalls attributable to
Principal Prepayments on the related Mortgage Loans for the related Distribution
Date, and not so paid by the Servicer and (ii) the Master Servicing Fee for such
Distribution Date, without reimbursement therefor.
SECTION 4.20. Collection Account.
The Master Servicer shall enforce the obligation of the Servicer
to establish and maintain a Collection Account in accordance with this
Agreement, with records to be kept with respect thereto on a Mortgage Loan by
Mortgage Loan basis, into which accounts shall be deposited within two Business
Days of receipt all collections of principal and interest on any Mortgage Loan
and with respect to any REO Property received by the Servicer, including
Principal Prepayments,
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Insurance Proceeds, Liquidation Proceeds, and advances made from the Servicer's
own funds (less servicing compensation as permitted by Section 3.15) and all
other amounts to be deposited in the Collection Account.
SECTION 4.21. Prepayment Penalty Verification.
On or prior to each Servicer Remittance Date, the Servicer shall
provide in an electronic format acceptable to the Master Servicer and the
Servicer the data necessary for the Master Servicer to perform its verification
duties set forth in this Section 4.21. The Master Servicer or a third party
reasonably acceptable to the Master Servicer and the Depositor (the
"Verification Agent") will perform such verification duties and will use its
best efforts to issue its findings in a report (the "Verification Report")
delivered to the Master Servicer and the Depositor within ten (10) Business Days
following the related Distribution Date; provided, however, that if the
Verification Agent is unable to issue the Verification Report within ten (10)
Business Days following the Distribution Date, the Verification Agent may issue
and deliver to the Master Servicer and the Depositor the Verification Report
upon the completion of its verification duties. The Master Servicer shall
forward the Verification Report to the Servicer and shall notify the Servicer if
the Master Servicer has determined that such Servicer did not deliver the
appropriate Prepayment Charge to the Trustee or the appropriate Servicer
Prepayment Charge Payment Amount in accordance with this Agreement. Such written
notification from the Master Servicer shall include the loan number, prepayment
penalty code and prepayment penalty amount as calculated by the Master Servicer
or the Verification Agent, as applicable, of each Mortgage Loan for which there
is a discrepancy. If the Servicer agrees with the verified amounts, the Servicer
shall adjust the immediately succeeding Servicer Report and the amount remitted
to the Trustee with respect to prepayments accordingly. If the Servicer
disagrees with the determination of the Master Servicer, the Servicer shall,
within five (5) Business Days of its receipt of the Verification Report, notify
the Master Servicer of such disagreement and provide the Master Servicer with
detailed information to support such Servicer's position. The Servicer and the
Master Servicer shall cooperate to resolve any discrepancy on or prior to the
immediately succeeding Servicer Remittance Date, and the Servicer will indicate
the effect of such resolution on the related Servicer Report and shall adjust
the amount remitted with respect to prepayments on such Servicer Remittance Date
accordingly.
During such time as the Servicer and the Master Servicer are
resolving discrepancies with respect to the Prepayment Charges, no payments in
respect of any disputed Prepayment Charges will be remitted to the Trustee for
deposit in the Distribution Account and the Master Servicer shall not be
obligated to remit such payments, unless otherwise required pursuant to Section
8.01 hereof. In connection with such duties, the Master Servicer shall be able
to rely solely on the information provided to it by the Servicer in accordance
with this Section. The Master Servicer shall not be responsible for verifying
the accuracy of any of the information provided to it by the Servicer.
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ARTICLE V
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 5.01. Distributions.
(a)(1)(A) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates, in respect
of the Class R-I Interest, as the case may be:
(i) to Holders of REMIC I Regular Interest I-LTAA, REMIC
Regular Interest I-LTA1, REMIC I Regular Interest I-LTA2, REMIC I Regular
Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest
I-LTM3, REMIC I Regular Interest I-LTM4, REMIC I Regular Interest I-LTZZ and
REMIC I Regular Interest I-LTP, PRO RATA, in an amount equal to (A) the
Uncertificated Interest for such Distribution Date, plus (B) any amounts in
respect thereof remaining unpaid from previous Distribution Dates. Amounts
payable as Uncertificated Interest in respect of REMIC I Regular Interest I-LTZZ
shall be reduced when the REMIC I Overcollateralization Amount is less than the
REMIC I Required Overcollateralization Amount, by the lesser of (x) the amount
of such difference and (y) the Maximum I-LTZZ Uncertificated Interest Deferral
Amount and such amount will be payable to the Holders of REMIC I Regular
Interest I- LTA1, REMIC I Regular Interest I-LTA2, REMIC I Regular Interest
I-LTM1, REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3 and
REMIC I Regular Interest I-LTM4 in the same proportion as the
Overcollateralization Increase Amount is allocated to the Corresponding
Certificates;
(ii) to Holders of REMIC I Regular Interest I-LT1A, REMIC I
Regular Interest I-LT1B, REMIC I Regular Interest I-LT2A, REMIC I Regular
Interest I-LT2B and REMIC I Regular Interest I-LTXX, pro rata, in an
amount equal to (A) the Uncertificated Interest for such Distribution
Date, plus (B) any amounts in respect thereof remaining unpaid from
previous Distribution Dates
(iii) to the Holders of REMIC I Regular Interests, in an amount
equal to the remainder of the REMIC I Marker Allocation Percentage 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 I Regular Interest I-LTAA, 98.00%
of such remainder, until the Uncertificated Balance of such Uncertificated REMIC
I Regular Interest is reduced to zero;
(b) to the Holders of REMIC I Regular Interest I-LTA1, REMIC I
Regular Interest I-LTA2, REMIC I Regular Interest I-LTM1, REMIC I Regular
Interest I-LTM2, REMIC I Regular Interest I-LTM3 and REMIC I Regular Interest
I-LTM4, 1.00% of such remainder, in the same proportion as principal payments
are allocated to the Corresponding Certificates, until the Uncertificated
Balances of such REMIC I Regular Interests are reduced to zero;
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(c) to the Holders of REMIC I Regular Interest I-LTZZ, 1.00% of
such remainder, until the Uncertificated Balance of such REMIC I Regular
Interest is reduced to zero;
(d) to the Holders of REMIC I Regular Interest I-LTP, 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-I
Interest, in respect of the Class R-I Interest;
provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to an Overcollateralization Reduction Amount shall be allocated to
Holders of REMIC I Regular Interest I-LTAA and REMIC I Regular Interest I-LTZZ,
respectively.
(iv) to the Holders of REMIC I Regular Interests, in an amount
equal to the remainder of the REMIC I Sub WAC Allocation Percentage of
Available Funds for such Distribution Date after the distributions made
pursuant to clause (i) above, such that distributions of principal shall
be deemed to be made to the REMIC I Regular Interests first, so as to
keep the Uncertificated Balance of each REMIC I Regular Interest ending
with the designation "B" equal to 0.01% of the aggregate Stated Principal
Balance of the Mortgage Loans in the related Loan Group; second, to each
REMIC I Regular Interest ending with the designation "A," so that the
Uncertificated Balance of each such REMIC I Regular Interest is equal to
0.01% of the excess of (x) the aggregate Stated Principal Balance of the
Mortgage Loans in the related Loan Group over (y) the current Certificate
Principal Balance of the Class A Certificate in the related Loan Group
(except that if any such excess is a larger number than in the preceding
distribution period, the least amount of principal shall be distributed
to such REMIC I Regular Interests such that the REMIC I Subordinated
Balance Ratio is maintained); and third, any remaining principal to REMIC
I Regular Interest I-LTXX.
(2) On each Distribution Date, based solely on the instructions
of the Securities Administrator, the Trustee shall withdraw from the
Distribution Account to the extent on deposit therein an amount equal to the
Group I Interest Remittance Amount and make the following disbursements and
transfers in the order of priority described below, in each case to the extent
of the Group I Interest Remittance Amount remaining for such Distribution Date:
FIRST, to the Holders of the Class A-1 Certificates, the Senior Interest
Distribution Amount allocable to the Class A-1 Certificates; and
SECOND, to the Holders of the Class A-2 Certificates, the Senior Interest
Distribution Amount allocable to the Class A-2 Certificates, to the
extent remaining unpaid after the distribution of the Group II Interest
Remittance Amount as set forth in clause FIRST of Section 5.01(a)(3)
below.
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(3) On each Distribution Date, based solely on the instructions
of the Securities Administrator, the Trustee shall withdraw from the
Distribution Account to the extent on deposit therein an amount equal to the
Group II Interest Remittance Amount and make the following disbursements and
transfers in the order of priority described below, in each case to the extent
of the Group II Interest Remittance Amount remaining for such Distribution Date:
FIRST, to the Holders of the Class A-2 Certificates, the Senior Interest
Distribution Amount allocable to the Class A-2 Certificates; and
SECOND, to the Holders of the Class A-1 Certificates, the Senior Interest
Distribution Amount allocable to the Class A-1 Certificates, to the
extent remaining unpaid after the distribution of the Group I Interest
Remittance Amount as set forth in clause FIRST of Section 5.01(a)(2)
above.
(4) On each Distribution Date, based solely on the instructions
of the Securities Administrator, the Trustee shall withdraw from the
Distribution Account to the extent on deposit therein an amount equal to the
Group I Interest Remittance Amount and the Group II Interest Remittance Amount
remaining and make the following disbursements and transfers in the order of
priority described below, in each case to the extent of the Group I Interest
Remittance Amount and Group II Interest Remittance Amount remaining for such
Distribution Date:
FIRST, to the Holders of the Class M-1 Certificates, the Interest
Distribution Amount allocable to the Class M-1 Certificates;
SECOND, to the Holders of the Class M-2 Certificates, the Interest
Distribution Amount allocable to the Class M-2 Certificates;
THIRD, to the Holders of the Class M-3 Certificates, the Interest
Distribution Amount allocable to the Class M-3 Certificates; and
FOURTH, to the Holders of the Class M-4 Certificates, the Interest
Distribution Amount allocable to the Class M-4 Certificates.
(5) On each Distribution Date (a) prior to the Stepdown Date or
(b) on which a Trigger Event is in effect, based solely on the instructions of
the Securities Administrator, the Trustee shall withdraw from the Distribution
Account to the extent on deposit therein an amount equal to the Group I
Principal Distribution Amount and the Group II Principal Distribution Amount and
distribute to the Certificateholders the following amounts, in the following
order of priority:
(i) The Group I Principal Distribution Amount shall be
distributed in the following order of priority:
FIRST, to the Holders of the Class A-1 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero; and
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SECOND, to the Holders of the Class A-2 Certificates after
taking into account the distribution of the Group II
Principal Distribution Amount pursuant to clause FIRST of
Section 5.01(a)(5)(ii) below, until the Certificate
Principal Balance of such Class has been reduced to zero.
(ii) The Group II Principal Distribution Amount shall be
distributed in the following order of priority:
FIRST, to the Holders of the Class A-2 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero; and
SECOND, to the Holders of the Class A-1 Certificates, after
taking into account the distribution of the Group I
Principal Distribution Amount pursuant to clause FIRST of
Section 5.01(a)(5)(i) above, until the Certificate
Principal Balance of such Class has been reduced to zero.
(iii) The Group I Principal Distribution Amount and Group
II Principal Distribution Amount remaining after distributions pursuant
to Section 5.01(a)(5)(i) and (ii) above shall be distributed in the
following order of priority:
FIRST, to the Holders of the Class M-1 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero;
SECOND, to the Holders of the Class M-2 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero;
THIRD, to the Holders of the Class M-3 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero; and
FOURTH, to the Holders of the Class M-4 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero.
(6) On each Distribution Date (a) on or after the Stepdown Date
and (b) on which a Trigger Event is not in effect, based solely on the
instructions of the Securities Administrator, the Trustee shall withdraw from
the Distribution Account to the extent on deposit therein an amount equal to the
Group I Principal Distribution Amount and the Group II Principal Distribution
Amount and distribute to the Certificateholders the following amounts, in the
following order of priority:
(i) The Group I Principal Distribution Amount shall be
distributed in the following order of priority:
FIRST, to the Holders of the Class A-1 Certificates, the
Class A-1 Principal Distribution Amount, until the
Certificate Principal Balance of such Class has been
reduced to zero;
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SECOND, to the extent of the portion, if any, of the Class
A-1 Principal Distribution Amount remaining undistributed
pursuant to clause FIRST of this Section 5.01(a)(6)(i), to
the Holders of the Class A-2 Certificates, after taking
into account the distribution of the Group II Principal
Distribution Amount pursuant to clause FIRST of Section
5.01(a)(6)(ii) below, until the Certificate Principal
Balance of such Class has been reduced to zero; and
THIRD, to the Holders of the Class A-2 Certificates, after
taking into account the distribution of the Group II
Principal Distribution Amount pursuant to clause FIRST of
Section 5.01(a)(6)(ii) below, up to the amount, if any, of
the Class A-2 Principal Distribution Amount remaining
unpaid on such Distribution Date, until the Certificate
Principal Balance of such Class has been reduced to zero.
(ii) The Group II Principal Distribution Amount shall be
distributed in the following order of priority:
FIRST, to the Holders of the Class A-2 Certificates, the
Class A-2 Principal Distribution Amount, until the
Certificate Principal Balance of such Class has been
reduced to zero;
SECOND, to the extent of the portion, if any, of the Class
A-2 Principal Distribution Amount remaining undistributed
pursuant to clause FIRST of this Section 5.01(a)(6)(ii), to
the Holders of the Class A-1 Certificates, after taking
into account the distribution of the Group I Principal
Distribution Amount pursuant to clause FIRST of Section
5.01(a)(6)(i) above, until the Certificate Principal
Balance of such Class has been reduced to zero; and
THIRD, to the holders of the Class A-1 Certificates, after
taking into account the distribution of the Group I
Principal Distribution Amount pursuant to clause FIRST of
Section 5.01(a)(6)(i) above, up to the amount, if any, of
the Class A-1 Principal Distribution Amount remaining
unpaid on such Distribution Date, until the Certificate
Principal Balance of such Class has been reduced to zero.
(iii) The Principal Distribution Amount remaining after
distributions pursuant to Section 5.01(a)(6)(i) and (ii) above shall be
distributed in the following order of priority:
FIRST, to the Class M-1 Certificates, the lesser of (x) the
remaining Principal Distribution Amount and (y) the Class
M-1 Principal Distribution Amount, until the Certificate
Principal Balance of such Class has been reduced to zero;
SECOND, to the Class M-2 Certificates, the lesser of (x)
the excess of (i) the remaining Principal Distribution
Amount over (ii) the amount distributed to the Holders of
the Class M-1 Certificates pursuant to clause FIRST of this
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Section 5.01(a)(6)(iii) and (y) the Class M-2 Principal
Distribution Amount until the Certificate Principal Balance
of such Class has been reduced to zero;
THIRD, to the Class M-3 Certificates, the lesser of (x) the
excess of (i) the remaining Principal Distribution Amount
over (ii) the sum of the amounts distributed to the Holders
of the Class M-1 Certificates pursuant to clause FIRST of
this Section 5.01(a)(6)(iii) and to the Holders of the
Class M-2 Certificates pursuant to clause SECOND of this
Section 5.01(a)(6)(iii) and (y) the Class M-3 Principal
Distribution Amount, until the Certificate Principal
Balance of such Class has been reduced to zero; and
FOURTH, to the Class M-4 Certificates, the lesser of (x)
the excess of (i) the remaining Principal Distribution
Amount over (ii) the sum of the amounts distributed to the
Holders of the Class M-1 Certificates pursuant to clause
FIRST of this Section 5.01(a)(6)(iii), to the Holders of
the Class M-2 Certificates pursuant to clause SECOND of
this Section 5.01(a)(6)(iii) and to the Holders of the
Class M-3 Certificates pursuant to clause THIRD of this
Section 5.01(a)(6)(iii) and (y) the Class M-4 Principal
Distribution Amount, until the Certificate Principal
Balance of such Class has been reduced to zero.
(7) On each Distribution Date, the Net Monthly Excess Cashflow
(or, in the case of clause (i) below, the Net Monthly Excess Cashflow exclusive
of any Overcollateralization Reduction Amount) shall be distributed as follows
based solely on the instructions of the Securities Administrator:
(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 in
accordance with the priorities set forth in Section 5.01(b)
below;
(ii) to the Holders of the Class M-1 Certificates, in an
amount equal to the Interest Carry Forward Amount allocable
to such Class of Certificates;
(iii) to the Holders of the Class M-2 Certificates, in an
amount equal to the Interest Carry Forward Amount allocable
to such Class of Certificates;
(iv) to the Holders of the Class M-3 Certificates, in an
amount equal to the Interest Carry Forward Amount allocable
to such Class of Certificates;
(v) to the Holders of the Class M-4 Certificates, in an
amount equal to the Interest Carry Forward Amount allocable
to such Class of Certificates;
(vi) to the Holders of the Class A Certificates, in an
amount equal to the aggregate of any Prepayment Interest
Shortfalls (to the extent not covered by payments pursuant
to Section 3.22 or Section 4.19) and any Relief Act
Interest Shortfall, in each case that were allocated to
such Class for such
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Distribution Date and for any prior Distribution Date, to
the extent not previously reimbursed pursuant to Section
1.02;
(vii) to the Holders of the Class M-1 Certificates, in an
amount equal to the aggregate of any Prepayment Interest
Shortfalls (to the extent not covered by payments pursuant
to Section 3.22 or Section 4.19) and any Relief Act
Interest Shortfall, in each case that were allocated to
such Class for such Distribution Date and for any prior
Distribution Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(viii) to the Holders of the Class M-2 Certificates, in an
amount equal to the aggregate of any Prepayment Interest
Shortfalls (to the extent not covered by payments pursuant
to Section 3.22 or Section 4.19) and any Relief Act
Interest Shortfall, in each case that were allocated to
such Class for such Distribution Date and for any prior
Distribution Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(ix) to the Holders of the Class M-3 Certificates, in an
amount equal to the aggregate of any Prepayment Interest
Shortfalls (to the extent not covered by payments pursuant
to Section 3.22 or Section 4.19) and any Relief Act
Interest Shortfall, in each case that were allocated to
such Class for such Distribution Date and for any prior
Distribution Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(x) to the Holders of the Class M-4 Certificates, in an
amount equal to the aggregate of any Prepayment Interest
Shortfalls (to the extent not covered by payments pursuant
to Section 3.22 or Section 4.19) and any Relief Act
Interest Shortfall, in each case that were allocated to
such Class for such Distribution Date and for any prior
Distribution Date, to the extent not previously reimbursed
pursuant to Section 1.02;
(xi) to the Reserve Fund from amounts otherwise payable
to the Class CE Certificates, and then from the Reserve
Fund to the Class A, Class M-1, Class M-2, Class M-3 and
Class M-4 Certificates, in that order, in an amount equal
to the unpaid amount of any Net WAC Rate Carryover Amount
for each such Class for such Distribution Date;
(xii) to the Reserve Fund, the amount required to be
deposited therein pursuant to Section 3.24(b), after taking
into account amounts received under the Cap Contracts;
(xiii) to the Holders of the Class CE Certificates, the
Interest Distribution Amount and any Overcollateralization
Reduction Amount for such Distribution Date; and
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(xiv) to the Holders of the Class R Certificates, in
respect of the Class R-II Interest, any remaining amounts;
provided that if such Distribution Date is the Distribution
Date immediately following the expiration of the latest
Prepayment Charge term as identified on the Mortgage Loan
Schedule or any Distribution Date thereafter, then any such
remaining amounts will be distributed first, to the Holders
of the Class P Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and
second, to the Holders of the Class R Certificates.
On each Distribution Date, after making the distributions of the
Available Distribution Amount as set forth above, the Trustee, based solely on
the instructions of the Securities Administrator, will FIRST, withdraw from the
Reserve Fund all income from the investment of funds in the Reserve Fund and
distribute such amount to the Holders of the Class CE Certificates, and SECOND,
withdraw from the Reserve Fund, to the extent of amounts remaining on deposit
therein, the amount of any Net WAC Rate Carryover Amount for such Distribution
Date and distribute such amount FIRST, to the Class A Certificates; SECOND, to
the Class M-1 Certificates, THIRD, to the Class M- 2 Certificates, FOURTH, to
the Class M-3 Certificates and FIFTH, to the Class M-4 Certificates, in each
case to the extent to the extent any Net WAC Rate Carryover Amount is allocable
to each such Class.
(b) (i) On each Distribution Date (a) prior to the Stepdown
Date or (b) on which a Trigger Event is in effect, the Extra Principal
Distribution Amount shall be distributed, based solely on the instructions of
the Securities Administrator, in the following order of priority;
FIRST, to the Holders of the Class A Certificates, until
the Certificate Principal Balance of each such Class has
been reduced to zero;
SECOND, to the Holders of the Class M-1 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero;
THIRD, to the Holders of the Class M-2 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero;
FOURTH, to the Holders of the Class M-3 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero; and
FIFTH, to the Holders of the Class M-4 Certificates, until
the Certificate Principal Balance of such Class has been
reduced to zero.
(ii) On each Distribution Date (a) on or after the
Stepdown Date and (b) on which a Trigger Event is not in effect,
distributions of principal to the extent of the Extra Principal
Distribution Amount shall be distributed, based solely on the
instructions of the Securities Administrator, in the following
order of priority;
FIRST, (A) the lesser of (x) the Group I Principal
Distribution Amount and (y) the Class A-1 Principal
Distribution Amount, shall be distributed to the
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Holders of the Class A-1 Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero, and (B) the lesser of (x) the Group II
Principal Distribution Amount and (y) the Class A-2
Principal Distribution Amount, shall be distributed to the
Holders of the Class A-2 Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero;
SECOND, the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the amount distributed to the
Holders of the Class A Certificates pursuant to clause
FIRST of this Section 5.01(b)(ii) and (y) the Class M-1
Principal Distribution Amount, shall be distributed to the
Holders of the Class M-1 Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero;
THIRD, the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class A Certificates
pursuant to clause FIRST of this Section 5.01(b)(ii) and to
the Holders of the Class M-1 Certificates pursuant to
clause SECOND of this Section 5.01(b)(ii) and (y) the Class
M-2 Principal Distribution Amount, shall be distributed to
the Holders of the Class M-2 Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero;
FOURTH, the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class A Certificates
pursuant to clause FIRST of this Section 5.01(b)(ii), to
the Holders of the Class M-1 Certificates pursuant to
clause SECOND of this Section 5.01(b)(ii) and to the
Holders of the Class M-2 Certificates pursuant to clause
THIRD of this Section 5.01(b)(ii) and (y) the Class M-3
Principal Distribution Amount, shall be distributed to the
Holders of the Class M-3 Certificates, until the
Certificate Principal Balance of such Class has been
reduced to zero; and
FIFTH, the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amounts
distributed to the Holders of the Class A Certificates
pursuant to clause FIRST of this Section 5.01(b)(ii), to
the Holders of the Class M-1 Certificates pursuant to
clause SECOND of this Section 5.01(b)(ii), to the Holders
of the Class M-2 Certificates pursuant to clause THIRD of
this Section 5.01(b)(ii) and to the Holders of the Class
M-3 Certificates pursuant to clause FOURTH of this Section
5.01(b)(ii) and (y) the Class M-4 Principal Distribution
Amount, shall be distributed to the Holders of the Class
M-4 Certificates, until the Certificate Principal Balance
of such Class has been reduced to zero.
(c) On each Distribution Date, the Trustee shall withdraw,
based solely on the instructions of the Securities Administrator, any amounts
then on deposit in the Distribution Account that represent Prepayment Charges
and shall distribute such amounts to the Class P Certificateholders as described
above.
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(d) 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 5.01(e) or
Section 10.01 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 that is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the initial Certificate Principal Balance 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 Certifcateholders
of such final distribution.
Each distribution with respect to a Book-Entry Certificate shall
be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting 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. None of the Trustee, the
Depositor, the Servicer, the Securities Administrator or the Master Servicer
shall have any responsibility therefor except as otherwise provided by this
Agreement or applicable law.
(e) 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, the
Servicer, the Securities Administrator 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.
(f) Except as otherwise provided in Section 10.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than three (3) days before the related Distribution Date, mail to 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 Interest Accrual Period.
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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 5.01(e) 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 the Depositor 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) on the final Distribution Date for final
payment thereof in accordance with this Section 5.01(e). Any such amounts held
in trust by the Trustee shall be held uninvested in an Eligible Account.
(g) 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 5.04 and (b) distributed to the Holder of such Certificate
in reduction of the Certificate Principal Balance thereof pursuant to this
Section 5.01 from Net Monthly Excess Cashflow and (ii) in no event shall the
Uncertificated Balance of a REMIC Regular Interest be reduced more than once in
respect of any particular amount both (a) allocated to such REMIC Regular
Interest in respect of Realized Losses pursuant to Section 5.04 and (b)
distributed on such REMIC Regular Interest in reduction of the Uncertificated
Balance thereof pursuant to this Section 5.01.
SECTION 5.02. Statements to Certificateholders.
On each Distribution Date, the Securities Administrator (based on
the information set forth in the Servicer Report for such Distribution Date)
shall make available to each Holder of the Certificates, a statement as to the
distributions made on such Distribution Date setting forth:
(i) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
principal, and the amount of the distribution made on such Distribution
Date to the Holders of the Class P Certificates allocable to Prepayment
Charges;
(ii) the amount of the distribution made on such Distribution
Date to the Holders of the Certificates of each Class allocable to
interest;
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(iii) the aggregate Servicing Fee received by the Servicer and
Master Servicing Fee received by the Master Servicer during the related
Due Period;
(iv) the aggregate amount of P&I Advances for such Distribution
Date;
(v) Reserved;
(vi) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage Rate of the
Mortgage Loans as of the related Due Date;
(vii) the number and aggregate unpaid principal balance of
Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 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;
(viii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number of such
Mortgage Loan, the unpaid principal balance and the Scheduled Principal
Balance of such Mortgage Loan;
(ix) if available, the book value of any REO Property as of the
close of business on the last Business Day of the calendar month
preceding the Distribution Date;
(x) the aggregate amount of Principal Prepayments made during
the related Prepayment Period and the aggregate amount of any Prepayment
Charges (or Servicer Prepayment Charge Payment Amounts payments by the
Servicer in respect of any waived Prepayment Charges) received in respect
thereof;
(xi) the aggregate amount of Realized Losses incurred during the
related Prepayment Period and the aggregate amount of Realized Losses
incurred since the Closing Date;
(xii) the aggregate amount of Extraordinary Trust Fund Expenses
withdrawn from the Distribution Account for such Distribution Date;
(xiii) the aggregate Certificate Principal Balance of each Class
of Certificates, after giving effect to the distributions, and
allocations of Realized Losses, made on such Distribution Date,
separately identifying any reduction thereof due to allocations of
Realized Losses;
(xiv) the Certificate Factor for each such Class of Certificates
applicable to such Distribution Date;
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(xv) the Interest Distribution Amount in respect of the Class
A Certificates, the Mezzanine Certificates and the Class CE Certificates
for such Distribution Date and the Interest Carry Forward Amount, if any,
with respect to the Class A Certificates and the Mezzanine Certificates
on such Distribution Date, and in the case of the Class A Certificates
and the Mezzanine Certificates, separately identifying any reduction
thereof due to allocations of Realized Losses, Prepayment Interest
Shortfalls, Relief Act Interest Shortfalls and Net WAC Rate Carryover
Amounts;
(xvi) the aggregate amount of any Prepayment Interest Shortfall
for such Distribution Date, to the extent not covered by payments by the
Servicer pursuant to Section 3.22 or the Master Servicer pursuant to
Section 4.19;
(xvii) the aggregate amount of Relief Act Interest Shortfalls
for such Distribution Date;
(xviii) the Required Overcollateralization Amount and the Credit
Enhancement Percentage for such Distribution Date;
(xix) the Overcollateralization Increase Amount, if any, for
such Distribution Date;
(xx) the Overcollateralization Reduction Amount, if any, for
such Distribution Date;
(xxi) the Net WAC Rate Carryover Amount, if any, for such
Distribution Date;
(xxii) the Net WAC Rate Carryover Amount, if any, outstanding
after reimbursements therefor on such Distribution Date and any amounts
received under the Cap Contracts;
(xxiii) the respective Pass-Through Rates applicable to the Class
A Certificates, the Mezzanine Certificates and the Class CE Certificates
for such Distribution Date;
(xxiv) the amount of any deposit to the Reserve Fund
contemplated by Section 3.24(b);
(xxv) the balance of the Reserve Fund prior to the deposit or
withdrawal of any amounts on such Distribution Date;
(xxvi) the amount of any withdrawal from the Reserve Fund
pursuant to Section 5.01(a)(7)(xi);
(xxvii) the balance of the Reserve Fund after all deposits and
withdrawals on such Distribution Date;
(xxviii) the Loss Severity Percentage with respect to each
Mortgage Loan; and
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(xxix) the Aggregate Loss Severity Percentage.
The Securities Administrator will make such statement (and, at its
option, any additional files containing the same information in an alternative
format) available each month to the Certificateholders and the Rating Agencies
via the Securities Administrator's internet website. The Securities
Administrator's internet website shall initially be located at
http:\\▇▇▇.▇▇▇▇▇▇▇.▇▇▇ and assistance in using the website can be obtained by
calling the Securities Administrator'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 Securities Administrator 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
Securities Administrator 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 as a dollar amount per
Single Certificate of the relevant Class.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish upon request to each Person who at any time
during the calendar year was a Holder of a Regular Certificate 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 provided by the Trustee pursuant to any requirements of the
Code as from time to time are in force.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish upon request to each Person who at any time
during the calendar year was a Holder of a Residual Certificate a statement
setting forth the amount, if any, actually distributed with respect to the
Residual Certificates, as appropriate, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
The Securities Administrator shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, as applicable, or otherwise
with respect to the purposes of this Agreement, all such reports or information
to be provided at the expense of the Certificateholder, in accordance with such
reasonable and explicit instructions and directions as the Certificateholder may
provide.
On each Distribution Date the Securities Administrator 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 Securities Administrator and Bloomberg.
SECTION 5.03. Servicer Reports; P&I Advances.
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(a) On or before 12:00 noon New York time on the second
Business Day following each Determination Date, but in no event later than 12:00
noon New York time on the 18th calendar day of each month, the Servicer shall
deliver to the Master Servicer and the Securities Administrator by telecopy or
electronic mail (or by such other means as the Servicer, the Master Servicer and
the Securities Administrator may agree from time to time) a remittance report
containing such information with respect to the Mortgage Loans and the related
Distribution Date as is reasonably available to the Servicer as the Master
Servicer or the Securities Administrator may reasonably require so as to enable
the Master Servicer to master service the Mortgage Loans and oversee the
servicing by the Servicer and the Securities Administrator to fulfill its
obligations hereunder with respect to securities and tax reporting.
(b) The amount of P&I Advances to be made by the Servicer on
any Distribution Date shall equal, subject to Section 5.03(d), (i) the aggregate
amount of Monthly Payments (net of the related Servicing Fee), due during the
related Due Period in respect of the Mortgage Loans, which Monthly Payments were
delinquent as of the close of business on the related Determination Date and
(ii) with respect to each REO Property, 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 REO Imputed Interest on such REO Property
for the most recently ended calendar month, over the net income from such REO
Property deposited in the Collection Account pursuant to Section 3.21 for
distribution on such Distribution Date; provided, however, the Servicer shall
not be required to make P&I Advances with respect to Relief Act Interest
Shortfalls, or with respect to Prepayment Interest Shortfalls in excess of its
obligations under Section 3.22. For purposes of the preceding sentence, the
Monthly Payment on each Balloon Mortgage Loan with a delinquent Balloon Payment
is equal to the assumed monthly payment that would have been due on the related
Due Date based on the original principal amortization schedule for such Balloon
Mortgage Loan.
By 3:00 p.m. New York time on the Servicer Remittance Date, the
Servicer shall remit in immediately available funds to the Trustee for deposit
in the Distribution Account an amount equal to the aggregate amount of P&I
Advances, if any, to be made in respect of the Mortgage Loans for the related
Distribution Date either (i) from its own funds or (ii) from the Collection
Account, to the extent of any Amounts Held For Future Distribution on deposit
therein (in which case it will cause to be made an appropriate entry in the
records of the Collection Account that Amounts Held For Future Distribution have
been, as permitted by this Section 5.03, used by the Servicer in discharge of
any such P&I Advance) or (iii) in the form of any combination of (i) and (ii)
aggregating the total amount of P&I Advances to be made by the Servicer with
respect to the Mortgage Loans. In addition, the Servicer shall have the right to
reimburse itself for any outstanding P&I Advance made by it from its own funds
from Amounts Held for Future Distribution. Any Amounts Held For Future
Distribution used by the Servicer to make P&I Advances or to reimburse itself
for outstanding P&I Advances shall be appropriately reflected in the Servicer's
records and replaced by the Servicer by deposit in the Collection Account no
later than the close of business on the Servicer Remittance Date immediately
following the Due Period or Prepayment Period for which such amounts relate. The
Trustee will notify the Servicer and the Master Servicer by the close of
business on the Business Day prior to the Distribution Date in the event that
the amount remitted by the Servicer to the Trustee on such date is less than the
P&I Advances required to be made by the Servicer for the related Distribution
Date.
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(c) The obligation of the Servicer to make such P&I Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until a Final Recovery Determination in connection therewith or the
removal thereof from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I
Advance or Servicing Advance shall be required to be made hereunder by the
Servicer if such P&I Advance or Servicing Advance would, if made, constitute a
Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance, respectively.
The determination by the Servicer that it has made a Nonrecoverable P&I Advance
or a Nonrecoverable Servicing Advance or that any proposed P&I Advance or
Servicing Advance, if made, would constitute a Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance, respectively, shall be evidenced by a
certification of a Servicing Officer delivered to the Master Servicer.
(e) Subject to and in accordance with the provisions of Article
VIII, in the event the Servicer fails to make any such P&I Advance, then the
Master Servicer (in its capacity as successor servicer) or any other successor
Servicer shall be required to make such P&I Advance on the Distribution Date on
which the Servicer was required to make such Advance, subject to its
determination of recoverability.
(f) Two Business Days prior to each Distribution Date, the
Securities Administrator shall deliver to the Trustee by telecopy (or by such
other means as the Securities Administrator and the Trustee may agree from time
to time) a Remittance Report with respect to the related Distribution Date in
form and substance acceptable to the Trustee which shall contain the
instructions of the Securities Administrator with respect to all distributions,
allocations, deposits, withdrawals and other actions to be taken by the Trustee
on such Distribution Date as set forth in this Article V. The Trustee shall not
be obligated to recompute, recalculate or verify any information provided to it
by the Securities Administrator.
SECTION 5.04. Allocation of Realized Losses.
(a) Prior to the Determination Date, the Servicer shall
determine as to each Mortgage Loan and REO Property and include in the monthly
remittance report provided to the Master Servicer and the Securities
Administrator: (i) the total amount of Realized Losses, if any, incurred in
connection with any Final Recovery Determinations made during the related
Prepayment Period; and (ii) the respective portions of such Realized Losses
allocable to interest and allocable to principal. Prior to each Determination
Date, the 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.
(b) All Realized Losses on the Mortgage Loans allocated to any
REMIC I Regular Interest pursuant to Section 4.04(c) on the Mortgage Loans shall
be allocated by the Trustee, based solely on the instructions of the Securities
Administrator on each Distribution Date as follows: first,
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to Net Monthly Excess Cashflow; second, to the Class CE Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; third, to the
Class M-4 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; fourth, to the Class M-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; fifth, to the Class M-2
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero; and sixth, to the Class M-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero. All Realized Losses to be
allocated 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 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 CE Certificates shall be made by reducing the amount otherwise payable
in respect thereof pursuant to Section 5.01(a)(7)(xiii). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A Certificates or the Class P Certificates.
As used herein, an allocation of a Realized Loss on a "pro rata
basis" among two or more specified Classes of Certificates means an allocation
on a pro rata basis, among the various Classes so specified, to each such Class
of Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on such Distribution
Date. All Realized Losses and all other losses allocated to a Class of
Certificates hereunder will be allocated among the, Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.
(c)(i) The REMIC I Marker Percentage of all Realized Losses on the
Mortgage Loans shall be allocated by the Trustee, based solely on the
instructions of the Securities Administrator, on each Distribution Date to the
following REMIC I Regular Interests in the specified percentages, as follows:
first, to Uncertificated Interest payable to the REMIC I Regular Interest I-LTAA
and REMIC I Regular Interest I-LTZZ up to an aggregate amount equal to the REMIC
I Interest Loss Allocation Amount, 98% and 2%, respectively; second, to the
Uncertificated Balances of the REMIC I Regular Interest I-LTAA and REMIC I
Regular Interest I-LTZZ up to an aggregate amount equal to the REMIC I Principal
Loss Allocation Amount, 98% and 2%, respectively; third, to the Uncertificated
Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM4 and
REMIC I Regular Interest I-LTZZ, 98%, 1.00% and 1%, respectively, until the
Uncertificated Balances of REMIC I Regular Interest I-LTM4 has been reduced to
zero; fourth to the Uncertificated Balances of REMIC I Regular Interest I-LTAA,
REMIC I Regular Interest I-LTM3 and REMIC I Regular Interest I-LTZZ, 98%, 1.00%,
and 1%, respectively, until the Uncertificated Balance of REMIC I Regular
Interest I-LTM3 has been reduced to zero; fifth to the Uncertificated Balances
of REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM2 and REMIC I
Regular Interest I-LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated
Balance of REMIC I Regular Interest I-LTM2 has been reduced to zero; and sixth
to the Uncertificated Balances of REMIC I Regular Interest I-LTAA, REMIC I
Regular Interest I-LTM1 and REMIC I Regular
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Interest I-LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Balance
of REMIC I Regular Interest I-LTM1 has been reduced to zero.
(ii) The REMIC I Sub WAC Allocation Percentage of all Realized
Losses shall be applied after all distributions have been made on each
Distribution Date first, so as to keep the Uncertificated Balance of each REMIC
I Regular Interest ending with the designation "B" equal to 0.01% of the
aggregate Stated Principal Balance of the Mortgage Loans in the related Loan
Group; second, to each REMIC I Regular Interest ending with the designation "A,"
so that the Uncertificated Balance of each such REMIC I Regular Interest is
equal to 0.01% of the excess of (x) the aggregate Stated Principal Balance of
the Mortgage Loans in the related Loan Group over (y) the current Certificate
Principal Balance of the Class A Certificate in the related Loan Group (except
that if any such excess is a larger number than in the preceding distribution
period, the least amount of Realized Losses shall be applied to such REMIC I
Regular Interests such that the REMIC I Subordinated Balance Ratio is
maintained); and third, any remaining Realized Losses shall be allocated to
REMIC I Regular Interest I-LTXX.
SECTION 5.05. 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 Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.
SECTION 5.06. Reports Filed with Securities and Exchange
Commission.
The Depositor shall prepare or cause to be prepared the initial
current report on Form 8-K. Within 15 days after each Distribution Date, the
Securities Administrator shall, in accordance with industry standards, file with
the Commission via the Electronic Data Gathering and Retrieval System ("▇▇▇▇▇"),
a Form 8-K with a copy of the statement to be furnished to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2004, the Securities Administrator shall, in accordance with
industry standards, file a Form 15 Suspension Notice with respect to the Trust
Fund, if applicable. Prior to (i) March 20, 2004 and (ii) unless and until a
Form 15 Suspension Notice shall have been filed, prior to March 20th of each
year thereafter, the Master Servicer shall provide the Securities Administrator
with a Master Servicer Certification, together with a copy of the annual
independent accountant's servicing report and annual statement of compliance of
the Servicer to be delivered pursuant to this Agreement, and, if applicable, the
annual independent accountant's servicing report and annual statement of
compliance to be delivered by the Master Servicer pursuant to Sections 4.16 and
4.17. Prior to (i) March 31, 2004 and (ii) unless and until a Form 15 Suspension
Notice shall have been filed, March 31 of each year thereafter, the Securities
Administrator shall file a Form 10-K, in substance conforming to industry
standards, with respect to the Trust. Such Form 10-K shall include the Master
Servicer Certification and other documentation provided by the Master Servicer
pursuant to the second preceding sentence. The Depositor hereby grants to the
Securities Administrator a limited power of attorney to execute
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and file each such document on behalf of the Depositor. Such power of attorney
shall continue until either the earlier of (i) receipt by the Securities
Administrator 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 Securities Administrator, from time to time upon
request, such further information, reports and financial statements within its
control related to this Agreement, the Mortgage Loans as the Securities
Administrator reasonably deems appropriate to prepare and file all necessary
reports with the Commission. The Securities Administrator shall have no
responsibility to file any items other than those specified in this Section
5.06; provided, however, the Securities Administrator will cooperate with the
Depositor in connection with any additional filings with respect to the Trust
Fund as the Depositor deems necessary under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Fees and expenses incurred by the Securities
Administrator in connection with this Section 5.06 shall not be reimbursable
from the Trust Fund.
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ARTICLE VI
THE CERTIFICATES
SECTION 6.01. 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 I.
The Certificates will be substantially in the forms annexed hereto
as Exhibits A-1 through A-5. 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,
authenticated and delivered by the Trustee to and upon the order of the
Depositor. The Certificates shall be executed by manual or facsimile signature
on behalf of the Trust by 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 Trust, 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 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 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 Servicer and,
if the Trustee is not the Book-Entry Custodian, the Trustee, any other transfer
agent (including
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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, the 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 Servicer, the Securities Administrator, the
Master Servicer 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 exercising 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 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 cause the Definitive Certificates to be issued. Such
Definitive Certificates will be issued in minimum denominations of $10,000
except that any beneficial ownership that was represented by a Book-Entry
Certificate in an amount less than $10,000 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
Servicer, 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 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.
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SECTION 6.02. 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 9.11, 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 of any Class CE Certificate, Class P
Certificate or Residual Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and effective registration or qualification
under applicable state securities laws, or is made in a transaction that does
not require such registration or qualification. In the event that such a
transfer of a Class CE Certificate, Class P Certificate or Residual Certificate
is to be made without registration or qualification (other than in connection
with the initial transfer of any such Certificate by the Depositor), the Trustee
shall require receipt of: (i) if such transfer is purportedly being made in
reliance upon Rule 144A under the 1933 Act, written certifications from the
Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the form attached
hereto as Exhibit B-1; (ii) if such transfer is purportedly being made in
reliance upon Rule 501(a) under the 1933 Act, written certifications from the
Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the form attached
hereto as Exhibit B-2 and (iii) in all other cases, an Opinion of Counsel
satisfactory to the Trustee that such transfer may be made without such
registration or qualification (which Opinion of Counsel shall not be an expense
of the Trust Fund or of the Depositor, the Trustee, the Master Servicer, the
Securities Administrator or the Servicer), together with copies of the written
certification(s) of the Certificateholder desiring to effect the transfer and/or
such Certificateholder's prospective transferee upon which such Opinion of
Counsel is based, if any. Neither of the Depositor nor the Trustee is obligated
to register or qualify any such Certificates under the 1933 Act or any other
securities laws or to take any action not otherwise required under this
Agreement to permit the transfer of such Certificates without registration or
qualification. Any Certificateholder desiring to effect the transfer of any such
Certificate shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Master Servicer, the Securities Administrator and the Servicer
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) No transfer of a Class CE Certificate, Class P Certificate
or a Residual 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
Trustee is provided with an Opinion of Counsel on which the Depositor, the
Master Servicer, the Securities Administrator, the Trustee and the Servicer may
rely, which establishes to the satisfaction of the Trustee 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 Servicer, the Trustee, the Master Servicer,
the Securities Administrator 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
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not be an expense of the Depositor, the Servicer, the Trustee, the Master
Servicer, the Securities Administrator or the Trust Fund. An Opinion of Counsel
will not be required in connection with the initial transfer of any such
Certificate by the Depositor to an affiliate of the Depositor (in which case,
the Depositor or any affiliate thereof shall have deemed to have represented
that such affiliate 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 such transferee as an affiliate of the Depositor.
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") 94-84 or FAN
97-03E, as amended by PTE 97-34, 62 Fed. Reg. 39021 (July 21, 1997), PTE
2000-58, 65 Fed. Reg. 67765 (November 13, 2000) and PTE 2002-41, 67 Fed. Reg.
54487 (August 22, 2002) (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. 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. If any Mezzanine
Certificate or any interest therein is acquired or held in violation of the
conditions described in this paragraph, the next preceding permitted beneficial
owner will be treated as the beneficial owner of that Mezzanine 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 conditions described in
this paragraph shall indemnify and hold harmless the Depositor, the Trustee, the
Servicer, the Master Servicer, the Securities Administrator 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) (i) Each Person who has or who acquires any Ownership
Interest in a Residual 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 authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of Transfer and to do all other
things necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly subject
to the following provisions:
(A) Each Person holding or acquiring any
Ownership Interest in a Residual 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.
(B) In connection with any proposed Transfer of
any Ownership Interest in a Residual Certificate, the
Trustee shall require delivery to it, and
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shall not register the Transfer of any Residual Certificate
until its receipt of, an affidavit and agreement (a
"Transfer Affidavit and Agreement," in the form attached
hereto as Exhibit B-3) from the proposed Transferee, in
form and substance satisfactory to the Trustee,
representing and warranting, among other things, that such
Transferee is a Permitted Transferee, that it is not
acquiring its Ownership Interest in the Residual
Certificate that is the subject of the proposed Transfer as
a nominee, trustee or agent for any Person that is not a
Permitted Transferee, that for so long as it retains its
Ownership Interest in a Residual Certificate, it will
endeavor to remain a Permitted Transferee, and that it has
reviewed the provisions of this Section 6.02(d) and agrees
to be bound by them.
(C) Notwithstanding the delivery of a Transfer
Affidavit and Agreement by a proposed Transferee under
clause (B) above, if a Responsible Officer of the Trustee
who is assigned to this transaction has actual knowledge
that the proposed Transferee is not a Permitted Transferee,
no Transfer of an Ownership Interest in a Residual
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall agree
(x) to require a Transfer Affidavit and Agreement from any
other Person to whom such Person attempts to transfer its
Ownership Interest in a Residual Certificate and (Y) not to
transfer its Ownership Interest unless it provides a
Transferor Affidavit (in the form attached hereto as
Exhibit B-2) to the Trustee stating that, among other
things, it has no actual knowledge that such other Person
is not a Permitted Transferee.
(E) Each Person holding or acquiring an Ownership
Interest in a Residual Certificate, by purchasing an
Ownership Interest in such Certificate, agrees to give the
Trustee written notice that it is a "pass-through interest
holder" within the meaning of temporary Treasury regulation
Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Residual Certificate, if it is, or
is holding an Ownership Interest in a Residual Certificate
on behalf of, a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any
Residual Certificate only if it shall have received the Transfer
Affidavit and Agreement and all of such other documents as shall
have been reasonably required by the Trustee as a condition to
such registration. In addition, no Transfer of a Residual
Certificate shall be made unless the Trustee shall have received a
representation letter from the Transferee of such Certificate to
the effect that such Transferee is a Permitted Transferee.
(iii) (A) If any purported Transferee shall become a
Holder of a Residual Certificate in violation of the provisions of
this Section 6.02(d), then the last preceding Permitted Transferee
shall be restored, to the extent permitted by law, to
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all rights as holder thereof retroactive to the date of
registration of such Transfer of such Residual Certificate. The
Trustee shall be under no liability to any Person for any
registration of Transfer of a Residual Certificate that is in fact
not permitted by this Section 6.02(d) or for making any payments
due on such Certificate to the holder thereof or for taking any
other action with respect to such holder under the provisions of
this Agreement.
(B) If any purported Transferee shall become a
holder of a Residual Certificate in violation of the
restrictions in this Section 6.02(d) and to the extent that
the retroactive restoration of the rights of the holder of
such Residual Certificate as described in clause (iii)(A)
above shall be invalid, illegal or unenforceable, then the
Trustee shall have the right, without notice to the holder
or any prior holder of such Residual Certificate, to sell
such Residual Certificate to a purchaser selected by the
Trustee on such terms as the Trustee may choose. Such
purported Trustee shall promptly endorse and deliver each
Residual Certificate in accordance with the instructions of
the Trustee. Such purchaser may be the Trustee itself or
any Affiliate of the Trustee. The proceeds of such sale,
net of the commissions (which may include commissions
payable to the Trustee or its Affiliates), expenses and
taxes due, if any, will be remitted by the Trustee to such
purported Transferee. The terms and conditions of any sale
under this clause (iii)(B) shall be determined in the sole
discretion of the Trustee, and the Trustee shall not be
liable to any Person having an Ownership Interest in a
Residual Certificate as a result of its exercise of such
discretion.
(iv) The Trustee shall make available to the Internal
Revenue Service and those Persons specified by the REMIC
Provisions all information necessary to compute any tax imposed
(A) as a result of the Transfer of an Ownership Interest in a
Residual Certificate to any Person who is a Disqualified
Organization, including the information described in Treasury
regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with
respect to the "excess inclusions" of such Residual Certificate
and (B) as a result of any regulated investment company, real
estate investment trust, common trust fund, partnership, trust,
estate or organization described in Section 1381 of the Code that
holds an Ownership Interest in a Residual Certificate having as
among its record holders at any time any Person which is a
Disqualified Organization. Reasonable compensation for providing
such information may be charged or collected by the Trustee.
(v) The provisions of this Section 6.02(d) set forth
prior to this subsection (v) may be modified, added to or
eliminated, provided that there shall have been delivered to the
Trustee at the expense of the party seeking to modify, add to or
eliminate any such provision the following:
(A) written notification from each Rating Agency
to the effect that the modification, addition to or
elimination of such provisions will not cause
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such Rating Agency to downgrade its then-current ratings of
any Class of Certificates; and
(B) an Opinion of Counsel, in form and substance
satisfactory to the Trustee, to the effect that such
modification of, addition to or elimination of such
provisions will not cause any Trust REMIC to cease to
qualify as a REMIC and will not cause any Trust REMIC, as
the case may be, to be subject to an entity-level tax
caused by the Transfer of any Residual Certificate to a
Person that is not a Permitted Transferee or a Person other
than the prospective transferee to be subject to a
REMIC-tax caused by the Transfer of a Residual Certificate
to a Person that is not a Permitted Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 9.11, the Trustee shall
execute, 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 9.11. 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 to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Trustee in accordance with its customary
procedures.
SECTION 6.03. 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 of the ownership thereof, and (ii) there is
delivered to Trustee such security or indemnity as may be required by it to save
it harmless, then, in the absence of actual knowledge by the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee, shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of the same
Class and of like denomination and Percentage Interest. Upon the issuance of any
new
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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) connected therewith. Any replacement Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the applicable REMIC created hereunder, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
SECTION 6.04. Persons Deemed Owners.
The Depositor, the Servicer, the Trustee, the Master Servicer, the
Securities Administrator and any agent of any of them may treat the Person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 4.01 and for all
other purposes whatsoever, and none of the Depositor, the Servicer, the Trustee,
the Master Servicer, the Securities Administrator or any agent of any of them
shall be affected by notice to the contrary.
SECTION 6.05. Certain Available Information.
On or prior to the date of the first sale of any Class CE
Certificate, Class P Certificate or Residual Certificate to an Independent third
party, the Depositor shall provide to the Securities Administrator ten copies of
any private placement memorandum or other disclosure document used by the
Depositor in connection with the offer and sale of such Certificate. In
addition, if any such private placement memorandum or disclosure document is
revised, amended or supplemented at any time following the delivery thereof to
the Securities Administrator, the Depositor promptly shall inform the Securities
Administrator of such event and shall deliver to the Securities Administrator
ten copies of the private placement memorandum or disclosure document, as
revised, amended or supplemented. The Securities Administrator shall maintain at
its office as set forth in Section 12.05 hereof and shall make available free of
charge during normal business hours for review by any Holder of a Certificate or
any Person identified to the Securities Administrator as a prospective
transferee of a Certificate, originals or copies of the following items: (i) in
the case of a Holder or prospective transferee of a Class CE Certificate, Class
P Certificate or Residual Certificate, the related private placement memorandum
or other disclosure document relating to such Class of Certificates, in the form
most recently provided to the Securities Administrator; and (ii) in all cases,
(A) this Agreement and any amendments hereof entered into pursuant to Section
11.01, (B) all monthly statements required to be delivered to Certificateholders
of the relevant Class pursuant to Section 4.02 since the Closing Date, and all
other notices, reports, statements and written communications delivered to the
Certificateholders of the relevant Class pursuant to this Agreement since the
Closing Date and (C) any copies of all officers' certificates of the Servicer
since the Closing Date delivered to the Master Servicer to evidence such
Person's determination that any P&I Advance or Servicing Advance was, or if
made, would be a Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance.
Copies and mailing of any and all of the foregoing items will be available from
the Securities Administrator upon request at the expense of the Person
requesting the same.
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ARTICLE VII
THE DEPOSITOR, THE SERVICER AND THE MASTER SERVICER
SECTION 7.01. Liability of the Depositor, the Servicer and the
Master Servicer.
The Depositor, the Servicer and the Master Servicer each shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed by this Agreement upon them in their respective capacities as Depositor,
Servicer and Master Servicer and undertaken hereunder by the Depositor, the
Servicer and the Master Servicer herein.
SECTION 7.02. Merger or Consolidation of the Depositor, the
Servicer 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 Servicer will keep in full effect its existence, rights and franchises as a
federally chartered savings bank. 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 formation. The Depositor,
the Servicer 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, the Servicer 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, the Servicer or the Master Servicer shall
be a party, or any Person succeeding to the business of the Depositor, the
Servicer or the Master Servicer, shall be the successor of the Depositor, the
Servicer 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 any successor of the Servicer or the Master Servicer shall meet
the eligibility requirements set forth in clauses (i) and (iii) of the last
paragraph of Section 8.02 or Section 7.06, as applicable.
SECTION 7.03. Limitation on Liability of the Depositor, the
Servicer, the Master Servicer and Others.
None of the Depositor, the Servicer, the Master Servicer or any of
the directors, officers, employees or agents of the Depositor, the Servicer 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
Servicer, the Master Servicer or any such person against any breach of
warranties, representations or covenants made herein or against any specific
liability imposed on any such Person pursuant hereto or against any liability
which
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would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Servicer, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Servicer and 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 Servicer, the
Master Servicer and any director, officer, employee or agent of the Depositor,
the Servicer 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 or any
loss, liability or expense incurred other than by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties hereunder. None of the
Depositor, the Servicer or 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,
the Servicer 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, 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 gross 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, the Servicer and the Master Servicer shall be
entitled to be reimbursed therefor from the Collection Account or the
Distribution Account as and to the extent provided in Article III and Article
IV, any such right of reimbursement being prior to the rights of the
Certificateholders to receive any amount in the Collection Account and the
Distribution Account.
Notwithstanding anything to the contrary contained herein, the
Servicer shall not be liable for any actions or inactions of any prior servicer
of the Mortgage Loans.
SECTION 7.04. Limitation on Resignation of the Servicer.
(a) The Servicer shall not resign from the obligations and
duties hereby imposed on it except upon determination that its duties hereunder
are no longer permissible under applicable law or as provided in Section
7.04(c). Any such determination pursuant to the preceding sentence permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect obtained at the expense of the Servicer and delivered to the Trustee
and the Rating Agencies. No resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
(b) Except as expressly provided herein, the Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Servicer hereunder. The foregoing prohibition on assignment
shall not prohibit the Servicer from designating a Sub-Servicer as payee of any
indemnification amount payable to the Servicer hereunder; provided, however,
that as provided in Section 3.02, no Sub-
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Servicer shall be a third-party beneficiary hereunder and the parties hereto
shall not be required to recognize any Subservicer as an indemnitee under this
Agreement.
(c) Notwithstanding anything to the contrary herein, the
Servicer may pledge or assign as collateral all its rights, title and interest
under this Agreement to a lender (the "Lender"), provided, that:
(1) upon an Event of Default and receipt of a notice of
termination by the Servicer, the Lender may direct the Servicer or its
designee to appoint a successor Servicer pursuant to the provisions, and
subject to the conditions, set forth in Section 8.02 regarding the
Servicer's appointment of a successor Servicer;
(2) the Lender's rights are subject to this Agreement; and
(3) the Servicer shall remain subject to termination as
servicer under this Agreement pursuant to the terms hereof.
SECTION 7.05. Limitation on Resignation of the Master Servicer.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon determination that its duties hereunder
are no longer permissible under applicable law. Any such determination pursuant
to 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 and the Rating
Agencies. No resignation of the Master Servicer shall become effective until the
Trustee or a successor Master Servicer 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.
SECTION 7.06. Assignment of Master Servicing.
The Master Servicer may sell and assign its rights and delegate
its duties and obligations in its entirety as Master Servicer under this
Agreement; provided, however, that: (i) the purchaser or transferee accept in
writing such assignment and delegation and assume the obligations of the Master
Servicer hereunder (a) shall be a Person which shall be qualified to service
mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac; (b) shall have a net worth of not
less than $15,000,000 (unless otherwise approved by each Rating Agency pursuant
to clause (ii) below); (c) shall be reasonably satisfactory to the Trustee (as
evidenced in a writing signed by the Trustee); and (d) shall execute and deliver
to the Trustee an agreement, in form and substance reasonably satisfactory to
the Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement, any custodial agreement
from and after the effective date of such agreement; (ii) each Rating Agency
shall be given prior written notice of the identity of the proposed successor to
the Master Servicer and each Rating Agency's rating of the Certificates in
effect immediately prior to such assignment, sale and delegation will not be
downgraded, qualified or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect delivered to the Master
Servicer and the Trustee; and (iii) the Master Servicer assigning and selling
the master servicing
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shall deliver to the Trustee an officer's certificate and an Opinion of
Independent counsel, each stating that all conditions precedent to such action
under this Agreement have been completed and such action is permitted by and
complies with the terms of this Agreement. No such assignment or delegation
shall affect any liability of the Master Servicer arising out of acts or
omissions prior to the effective date thereof.
SECTION 7.07. Rights of the Depositor in Respect of the Servicer
and the Master Servicer.
Each of the Master Servicer and the Servicer shall afford (and any
Sub-Servicing Agreement shall provide that each Sub-Servicer shall afford) the
Depositor and the Trustee, upon reasonable notice, during normal business hours,
access to all records maintained by the Master Servicer or the Servicer (and any
such Sub-Servicer) in respect of the Servicer's rights and obligations hereunder
and access to officers of the Master Servicer or the Servicer (and those of any
such Sub-Servicer) responsible for such obligations. Upon request, each of the
Master Servicer and the Servicer shall furnish to the Depositor and the Trustee
its (and any such Sub-Servicer's) most recent financial statements and such
other information relating to the Master Servicer's or Servicer's capacity to
perform its obligations under this Agreement as it possesses (and that any such
Sub- Servicer possesses). To the extent such information is not otherwise
available to the public, the Depositor and the Trustee shall not disseminate any
information obtained pursuant to the preceding two sentences without the Master
Servicer's or the Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) to its legal
counsel, auditors, taxing authorities or other governmental agencies and the
Certificateholders, (ii) pursuant to any law, rule, regulation, order, judgment,
writ, injunction or decree of any court or governmental authority having
jurisdiction over the Depositor and the Trustee or the Trust Fund, and in any
case, the Depositor or the Trustee, (iii) disclosure of any and all information
that is or becomes publicly known, or information obtained by the Trustee from
sources other than the Depositor, the Servicer or the Master Servicer, (iv)
disclosure as required pursuant to this Agreement or (v) disclosure of any and
all information (A) in any preliminary or final offering circular, registration
statement or contract or other document pertaining to the transactions
contemplated by the Agreement approved in advance by the Depositor, the Servicer
or the Master Servicer or (B) to any affiliate, independent or internal auditor,
agent, employee or attorney of the Trustee having a need to know the same,
provided that the Trustee advises such recipient of the confidential nature of
the information being disclosed, shall use its best efforts to assure the
confidentiality of any such disseminated non-public information. Nothing in this
Section 7.07 shall limit the obligation of the Servicer to comply with any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicer to provide access as provided in this Section
7.07 as a result of such obligation shall not constitute a breach of this
Section. Nothing in this Section 7.07 shall require the Servicer to collect,
create, collate or otherwise generate any information that it does not generate
in its usual course of business. The Servicer shall not be required to make
copies of or ship documents to any party unless provisions have been made for
the reimbursement of the costs thereof. The Depositor may, but is not obligated
to, enforce the obligations of the Master Servicer and the 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 or the Servicer under
this Agreement or exercise the rights of the Master Servicer or the Servicer
under this Agreement; provided that neither the Master Servicer nor the Servicer
shall be relieved of any of its obligations under this Agreement by virtue
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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 or the Servicer and is not obligated to supervise the
performance of the Master Servicer or the Servicer under this Agreement or
otherwise.
SECTION 7.08. Duties of the Credit Risk Manager.
For and on behalf of the Depositor, pursuant to the Credit Risk
Management Agreement the Credit Risk Manager will provide reports and
recommendations concerning certain delinquent and defaulted Mortgage Loans, and
as to the collection of any Prepayment Charges with respect to the Mortgage
Loans. Such reports and recommendations will be based upon information provided
to the Credit Risk Manager pursuant to the Credit Risk Management Agreement, and
the Credit Risk Manager shall look solely to the Servicer for all information
and data (including loss and delinquency information and data) relating to the
servicing of the related Mortgage Loans. Upon any termination of the Credit Risk
Manager or the appointment of a successor Credit Risk Manager, the Depositor
shall give written notice thereof to the Servicer, the Master Servicer, the
Trustee, and each Rating Agency. Notwithstanding the foregoing, the termination
of the Credit Risk Manager pursuant to this Section shall not become effective
until the appointment of a successor Credit Risk Manager.
SECTION 7.09. Limitation Upon Liability of the Credit Risk
Manager.
Neither the Credit Risk Manager, nor any of its directors,
officers, employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action taken or for refraining from
the taking of any action made in good faith pursuant to this Agreement, in
reliance upon information provided by the Servicer under the Credit Risk
Management Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Credit Risk Manager or any such person against
liability that would otherwise be imposed by reason of willful malfeasance or
bad faith in its performance of its duties. The Credit Risk Manager and any
director, officer, employee, or agent of the Credit Risk Manager may rely in
good faith on any document of any kind PRIMA FACIE properly executed and
submitted by any Person respecting any matters arising hereunder, and may rely
in good faith upon the accuracy of information furnished by the Servicer
pursuant to the Credit Risk Management Agreement in the performance of its
duties thereunder and hereunder.
SECTION 7.10. Removal of the Credit Risk Manager.
The Credit Risk Manager may be removed as Credit Risk Manager by
Certificateholders holding not less than 66 2/3% of the Voting Rights in the
Trust Fund, in the exercise of its or their sole discretion. The
Certificateholders shall provide written notice of the Credit Risk Manager's
removal to the Trustee. Upon receipt of such notice, the Trustee shall provide
written notice to the Credit Risk Manager of its removal, which shall be
effective upon receipt of such notice by the Credit Risk Manager.
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ARTICLE VIII
DEFAULT
SECTION 8.01. Servicer Events of Default.
(a) "Servicer Event of Default," wherever used herein, means
any one of the following events:
(i) any failure by the Servicer to remit to the Trustee
for distribution to the Certificateholders any payment (other than a P&I
Advance required to be made from its own funds on any Servicer Remittance
Date pursuant to Section 5.03) 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
Servicer by the Depositor or the Trustee (in which case notice shall be
provided by telecopy), or to the Servicer, the Depositor, the Trustee and
by the Holders of Certificates entitled to at least 25% of the Voting
Rights; or
(ii) any failure on the part of the Servicer duly to
observe or perform in any material respect any other of the covenants or
agreements on the part of the Servicer contained in this Agreement, or
the breach by the Servicer of any representation and warranty contained
in Section 2.05, which continues unremedied for a period of 30 days after
the date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by the Depositor or
the Trustee or to the Servicer, the Depositor and the Trustee by the
Holders of Certificates entitled to at least 25% of the Voting Rights;
provided, however, that in the case of a failure that cannot be cured
within thirty (30) days, the cure period may be extended for an
additional thirty (30) days if the Servicer can demonstrate to the
reasonable satisfaction of the Trustee that the Servicer is diligently
pursuing remedial action; 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, marshalling of
assets and liabilities or similar proceeding, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged or
unstayed for a period of 90 days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling 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
(v) the 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
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or reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations;
(vi) failure by the Servicer to duly perform, within the
required time period, its obligations under Section 3.17, 3.18 or 3.19
which failure continues unremedied for a period of thirty (30) days after
the date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by any party to this
Agreement; or
(vii) any failure of the Servicer to make any P&I Advance
on any Servicer Remittance Date required to be made from its own funds
pursuant to Section 5.03 which continues unremedied until 3:00 p.m. New
York time on the Business Day immediately following the Servicer
Remittance Date.
If a 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
Servicer Event of Default shall not have been remedied, the Depositor or the
Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Servicer (and to the Depositor if given by the Trustee or to the
Trustee if given by the Depositor) with a copy to the Master Servicer and each
Rating Agency, terminate all of the rights and obligations of the Servicer in
its capacity as Servicer under this Agreement, to the extent permitted by law,
and in and to the Mortgage Loans and the proceeds thereof. If a Servicer Event
of Default described in clause (vii) hereof shall occur, the Trustee shall, by
notice in writing to the Servicer, the Depositor and the Master Servicer,
terminate all of the rights and obligations of the Servicer in its capacity as
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof. Subject to Section 8.02, on or after the receipt by the Servicer of
such written notice, all authority and power of the 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 Master Servicer pursuant to and under this Section, and, without
limitation, the Master Servicer is hereby authorized and empowered, as
attorney-in-fact or otherwise, to execute and deliver, on behalf of and at the
expense of the 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 Servicer agrees promptly (and in any event no later than ten
Business Days subsequent to such notice) to provide the Master Servicer with all
documents and records requested by it to enable it to assume the Servicer's
functions under this Agreement, and to cooperate with the Master Servicer in
effecting the termination of the Servicer's responsibilities and rights under
this Agreement, including, without limitation, the transfer within one Business
Day to the Master Servicer for administration by it of all cash amounts which at
the time shall be or should have been credited by the Servicer to the Collection
Account held by or on behalf of the Servicer or thereafter be received with
respect to the Mortgage Loans or any REO Property (provided, however, that the
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 P&I Advances, Servicing Advances, accrued and unpaid Servicing
Fees or otherwise, and shall continue to be entitled to the benefits of Section
7.03, notwithstanding any such termination, with respect to events occurring
prior to such termination). For purposes of this Section 8.01(a), the
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Trustee shall not be deemed to have knowledge of a 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 Servicer Event of Default is
received by the Trustee and such notice references the Certificates, the Trust
or this Agreement. The Trustee shall promptly notify the Master Servicer and the
Rating Agencies of the occurrence of a Servicer Event of Default of which it has
knowledge as provided above.
The Master Servicer shall be entitled to be reimbursed by the
Servicer (or from amounts on deposit in the Distribution Account if the Servicer
is unable to fulfill its obligations hereunder) for all reasonable out-of-pocket
or third party costs associated with the transfer of servicing from the
predecessor Servicer (or if the predecessor Servicer is the Master Servicer,
from the Servicer immediately preceding the Master Servicer), including without
limitation, any reasonable out-of-pocket or third party 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
Master Servicer to correct any errors or insufficiencies in the servicing data
or otherwise to enable the Master Servicer to service the Mortgage Loans
properly and effectively, upon presentation of reasonable documentation of such
costs and expenses.
(b) "Master Servicer Event of Default," wherever used herein,
means any one of the following events:
(i) any failure on the part of the Master Servicer duly
to observe or perform in any material respect any other of the covenants
or agreements on the part of the Master Servicer contained in this
Agreement, or the breach by the Master Servicer of any representation and
warranty contained in Section 2.04, which continues unremedied for a
period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Master
Servicer by the Depositor or the Trustee or to the Master Servicer, the
Depositor and the Trustee by the Holders of Certificates entitled to at
least 25% of the Voting Rights; or
(ii) 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, marshalling 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 such decree or order shall have remained in force
undischarged or unstayed for a period of 90 days; or
(iii) the Master Servicer shall consent to the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to it or of or relating to all or
substantially all of its property; or
(iv) 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
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or reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations.
If a Master Servicer Event of Default 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
Holders of Certificates entitled to at least 51% of Voting Rights, the Trustee
shall, by notice in writing to the Master Servicer (and to the Depositor if
given by the Trustee or to the Trustee if given by the Depositor) with a copy to
each Rating Agency, 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. 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 including, without limitation, the compensation
payable to the Master Servicer under this Agreement, 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 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 (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 and shall continue to be entitled to the benefits of Section 7.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 8.01(b), 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, the Trust or this
Agreement. The Trustee shall promptly notify the Rating Agencies of the
occurrence of a Master Servicer Event of Default of which it has knowledge as
provided above.
To the extent that the costs and expenses of the Trustee related
to the termination of the Master Servicer, appointment of a successor Master
Servicer or the transfer and assumption of the master servicing by the Trustee
(including, without limitation, (i) all legal costs and expenses and all due
diligence costs and expenses associated with an evaluation of the potential
termination of the Master Servicer as a result of a Master Servicer Event of
Default and (ii) all costs and expenses associated with the complete transfer of
the master servicing, including all servicing files and all servicing data and
the completion, correction or manipulation of such servicing data as may be
required by the successor Master Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
Master Servicer to master service the Mortgage Loans in accordance with this
Agreement) are not fully and timely reimbursed by the terminated Master
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Servicer, the Trustee shall be entitled to reimbursement of such costs and
expenses from the Distribution Account.
SECTION 8.02. Master Servicer to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination, the Master Servicer shall be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein, and all the responsibilities, duties and
liabilities relating thereto and arising thereafter shall be assumed by the
Master Servicer (except for any representations or warranties of the Servicer
under this Agreement, the responsibilities, duties and liabilities contained in
Section 2.03 and the obligation to deposit amounts in respect of losses pursuant
to Section 3.23(c)) by the terms and provisions hereof including, without
limitation, the Servicer's obligations to make P&I Advances pursuant to Section
5.03; provided, however, that if the Master Servicer is prohibited by law or
regulation from obligating itself to make advances regarding delinquent mortgage
loans, then the Master Servicer shall not be obligated to make P&I Advances
pursuant to Section 5.03; and provided further, that any failure to perform such
duties or responsibilities caused by the Servicer's failure to provide
information required by Section 7.01 shall not be considered a default by the
Master Servicer as successor to the Servicer hereunder; provided, however, that
(1) it is understood and acknowledged by the parties hereto that there will be a
period of transition (not to exceed 120 days) before the actual servicing
functions can be fully transferred to the Master Servicer or any successor
Servicer appointed in accordance with the following provisions and (2) any
failure to perform such duties or responsibilities caused by the Servicer's
failure to provide information required by Section 8.01 shall not be considered
a default by the Master Servicer as successor to the Servicer hereunder. As
compensation therefor, the Master Servicer shall be entitled to the Servicing
Fee and all funds relating to the Mortgage Loans to which the Servicer would
have been entitled if it had continued to act hereunder. Notwithstanding the
above and subject to the immediately following paragraph, the Master Servicer
may, if it shall be unwilling to so act, or shall, if it is unable to so act
promptly appoint or petition a court of competent jurisdiction to appoint, a
Person that satisfies the eligibility criteria set forth below as the successor
to the Servicer under this Agreement in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer under this Agreement.
Notwithstanding any provision in this Agreement to the contrary,
for a period of 20 days following the date on which the Servicer shall have
received a notice of termination pursuant to Section 8.01, the terminated
Servicer or its designee may appoint a successor Servicer that satisfies the
eligibility criteria of a successor Servicer set forth below, which appointment
shall be subject to the consent of the Depositor, the Seller, the Master
Servicer, and the Trustee, which consent shall not be unreasonably withheld or
delayed; provided that such successor Servicer agrees to fully effect the
servicing transfer within 120 days following the termination of the Servicer and
to make all P&I Advances that would otherwise be made by the Master Servicer
under Section 8.01 as of the date of such appointment, and to reimburse the
terminated Servicer and/or the Master Servicer for any ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances
they have made and any reimburseable expenses that they may have incurred in
connection with this Section 8.02. Any proceeds received in connection with the
appointment of such successor Servicer shall be the property of the terminated
Servicer or its designee. This 20-day period shall terminate immediately (i) at
the close of business on the second Business Day of such 20-day period if (A)
the Servicer was terminated because of an Event
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of Default described in Section 8.01 (a)(vii) for failing to make a required P&I
Advance, and (B) the Servicer shall have failed to make (or cause to be made)
such P&I Advance, or shall fail to reimburse (or cause to be reimbursed) the
Master Servicer for a P&I Advance made by the Master Servicer, by the close of
business on such second Business Day, or (ii) at the close of business on the
second Business Day following the date (if any) during such 20-day period on
which a P&I Advance is due to be made, if the terminated Servicer shall have
failed to make (or caused to be made) such P&I Advance, or the terminated
Servicer shall have failed to reimburse (or cause to be reimbursed) the Master
Servicer for such P&I Advance, by the close of business on such second Business
Day.
Notwithstanding anything herein to the contrary, in no event shall
the Trustee or the Master Servicer 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.
Any successor Servicer appointed under this Agreement must (i) be
an established mortgage loan servicing institution that is a ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ Mac approved seller/servicer, (ii) be approved by each Rating Agency by
a written confirmation from each Rating Agency that the appointment of such
successor Servicer would not result in the reduction or withdrawal of the then
current ratings of any outstanding Class of Certificates, (iii) have a net worth
of not less than $15,000,000 and (iv) assume all the responsibilities, duties or
liabilities of the Servicer (other than liabilities of the Servicer hereunder
incurred prior to termination of the Servicer under Section 8.01 herein) under
this Agreement as if originally named as a party to this Agreement.
(b)(1) All servicing transfer costs (including, without
limitation, servicing transfer costs of the type described in Section 8.02(a)
and incurred by the Trustee, the Master Servicer and any successor Servicer
under paragraph (b)(2) below) shall be paid by the terminated Servicer upon
presentation of reasonable documentation of such costs, and if such predecessor
or initial Servicer, as applicable, defaults in its obligation to pay such
costs, the successor Servicer, the Master Servicer and the Trustee shall be
entitled to reimbursement therefor from the assets of the Trust Fund.
(2) No appointment of a successor to the Servicer under this
Agreement shall be effective until the assumption by the successor of all of the
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 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 Servicer under this
Agreement, the Trustee shall act in such capacity as hereinabove provided.
SECTION 8.03. Notification to Certificateholders.
(a) Upon any termination of the Servicer or the Master Servicer
pursuant to Section 7.01(a) or (b) above or any appointment of a successor to
the Servicer or the Master Servicer pursuant to Section 7.02 above, the Trustee
shall give prompt written notice thereof to the Certificateholders at their
respective addresses appearing in the Certificate Register.
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(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 Servicer Event of Default or 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 notice of each such occurrence, unless such default or
Servicer Event of Default or Master Servicer Event of Default shall have been
cured or waived.
SECTION 8.04. Waiver of Servicer Events of Default.
The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default, Servicer Event
of Default or Master Servicer Event of Default hereunder may waive such default,
Servicer Event of Default or Master Servicer Event of Default; PROVIDED,
HOWEVER, that a default, Servicer Event of Default under clause (i) or (vi) of
Section 7.01 may be waived only by all of the Holders of the Regular
Certificates. Upon any such waiver of a default, Servicer Event of Default or
Master Servicer Event of Default, such default, Servicer Event of 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, Servicer Event of 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 IX
CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
SECTION 9.01. Duties of Trustee and Securities Administrator.
The Trustee, prior to the occurrence of a Master Servicer Event of
Default and after the curing or waiver of all Master Servicer Events of Default
which may have occurred, and the Securities Administrator each undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement as duties of the Trustee and the Securities Administrator,
respectively. During the continuance of 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 its 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.
Each of the Trustee and the Securities Administrator, upon receipt
of all resolutions, certificates, statements, opinions, reports, documents,
orders or other instruments furnished to it, 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 or the Securities Administrator, as the case may
be, shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to its satisfaction, the
Securities Administrator will provide notice to the Trustee thereof and the
Trustee will provide notice to the Certificateholders.
The Trustee shall promptly remit to the Servicer any complaint,
claim, demand, notice or other document (collectively, the "Notices") delivered
to the Trustee as a consequence of the assignment of any Mortgage Loan hereunder
and relating to the servicing of the Mortgage Loans; provided than any such
notice (i) is delivered to the Trustee at is Corporate Trust Office, (ii)
contains information sufficient to permit the Trustee to make a determination
that the real property to which such document relates is a Mortgaged Property.
The Trustee shall have no duty hereunder with respect to any Notice it may
receive or which may be alleged to have been delivered to or served upon it
unless such Notice is delivered to it or served upon it at its Corporate Trust
Office and such Notice contains the information required pursuant to clause (ii)
of the preceding sentence.
The Trustee agrees to notify the Master Servicer in writing no
later than 5:00 pm (Eastern Time) on each Servicer Remittance Date of the
aggregate dollar amount of the funds received by the Trustee from the Servicer
on such Servicer Remittance Date and any other information reasonably requested
by the Master Servicer, so as to enable the Master Servicer to make the
reconciliations and verifications required to be made by it pursuant to Sections
4.01 and 4.21.
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:
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(i) Prior to the occurrence of a Master Servicer Event
of Default, and after the curing or waiver of all such Master
Servicer Events of Default which may have occurred with respect to
the Trustee and at all times with respect to the Securities
Administrator, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement,
neither the Trustee nor the Securities Administrator shall 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 or the Securities Administrator and, in the absence of
bad faith on the part of the Trustee or the Securities
Administrator, respectively, the Trustee or the Securities
Administrator, respectively, 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 or the Securities Administrator, respectively, that
conform to the requirements of this Agreement;
(ii) Neither the Trustee nor the Securities Administrator
shall be liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee or an
officer or officers of the Securities Administrator, respectively,
unless it shall be proved that the Trustee or the Securities
Administrator, respectively, was negligent in ascertaining the
pertinent facts; and
(iii) Neither the Trustee nor the Securities Administrator
shall be 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 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 the Securities Administrator or exercising any trust or power
conferred upon the Trustee or the Securities Administrator under
this Agreement.
SECTION 9.02. Certain Matters Affecting Trustee and Securities
Administrator.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee and the Securities Administrator may
request and rely upon and shall be 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;
(ii) The Trustee and the Securities Administrator may
consult with counsel of its selection and any advice of such
counsel or 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 advice or Opinion of Counsel;
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(iii) Neither the Trustee nor the Securities Administrator
shall be under any obligation to exercise any of the trusts or
powers vested in it by this Agreement or to institute, conduct or
defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders,
pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee or the
Securities Administrator, as the case may be, reasonable 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) Neither the Trustee nor the Securities Administrator
shall be 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 or waiver of all Master
Servicer Events of Default which may have occurred with respect to
the Trustee and at all times with respect to the Securities
Administrator, neither the Trustee nor the Securities
Administrator shall be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in
writing to do so by 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 or the Securities
Administrator of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the
opinion of the Trustee or the Securities Administrator, as
applicable, not reasonably assured to the Trustee or the
Securities Administrator by such Certificateholders, the Trustee
or the Securities Administrator, as applicable, may require
reasonable indemnity satisfactory to it against such expense, or
liability from such Certificateholders as a condition to taking
any such action;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder;
(vii) The Trustee shall not be liable for any loss
resulting from the investment of funds held in the Collection
Account at the direction of the Servicer pursuant to Section
3.23(c), for any loss resulting from the investment of funds held
in the Reserve Fund at the direction of the Holder of the Class CE
Certificate or for
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any loss resulting from the redemption or sale of any such
investment as therein authorized;
(viii) the Trustee shall not be deemed to have notice of
any default, Master Servicer Event of Default or Servicer Event of
Default unless a Responsible Officer of the Trustee has knowledge
thereof or unless written notice of any event which is in fact
such a default is received by the Trustee at the Corporate Trust
Office of the Trustee, and such notice references the Certificates
and this Agreement; and
(ix) the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its
right to be indemnified, are extended to, and shall be enforceable
by, each agent, custodian and other Person employed to act
hereunder.
(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.
(c) The Trustee is hereby directed by the Depositor to execute
the Cap Contracts on behalf of the Trust Fund in the form presented to it by the
Depositor and shall have no responsibility for the contents of such Cap
Contracts, including, without limitation, the representations and warranties
contained therein. Any funds payable by the Trustee under the Cap Contracts at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained herein or in the Cap Contracts, the Trustee shall not be required to
make any payments to the counterparty under the Cap Contracts.
SECTION 9.03. Trustee and Securities Administrator not Liable
for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than
the signature of the Trustee, the 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 9.12) shall be taken as
the statements of the Depositor and neither the Trustee nor the Securities
Administrator assumes any responsibility for their correctness. Neither the
Trustee nor the Securities Administrator makes any representations or warranties
as to the validity or sufficiency of this Agreement (other than as specifically
set forth in Section 9.12) or of the Certificates (other than the signature of
the Trustee and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor or the Master Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Collection Account by the Servicer, other
than any funds held by or on behalf of the Trustee in accordance with Section
3.23 and 3.24.
SECTION 9.04. Trustee and Securities Administrator May Own
Certificates.
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Each of the Trustee and the Securities Administrator in its
individual capacity or any other capacity may become the owner or pledgee of
Certificates and may transact business with other interested parties and their
Affiliates with the same rights it would have if it were not Trustee or the
Securities Administrator.
SECTION 9.05. Fees and Expenses of Trustee and Securities
Administrator.
The fees of the Trustee and the Securities Administrator hereunder
and of ▇▇▇▇▇ Fargo under the Custodial Agreement shall be paid in accordance
with a side letter agreement with the Master Servicer and at the sole expense of
the Master Servicer. In addition, the Trustee, the Securities Administrator, the
Custodian and any director, officer, employee or agent of the Trustee, the
Securities Administrator and the Custodian shall be indemnified by the Trust and
held harmless against any loss, liability or expense (including reasonable
attorney's fees and expenses) incurred by the Trustee, the Custodian or the
Securities Administrator in connection with any claim or legal action or any
pending or threatened claim or legal action arising out of or in connection with
the acceptance or administration of its respective obligations and duties under
this Agreement, including the Cap Contracts and any and all other agreements
related hereto, other than any loss, liability or expense (i) for which the
Trustee is indemnified by the Master Servicer or the Servicer, (ii) that
constitutes a specific liability of the Trustee or the Securities Administrator
pursuant to Section 11.01(g) or (iii) any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder by the Trustee or the Securities Administrator reason of
reckless disregard of obligations and duties hereunder. In no event shall the
Trustee or the Securities Administrator be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if it has been advised of the likelihood of such loss or
damage and regardless of the form of action. The Master Servicer agrees to
indemnify the Trustee, from, and hold the Trustee harmless against, any loss,
liability or expense (including reasonable attorney's fees and expenses)
incurred by the Trustee by reason of the Master Servicer's willful misfeasance,
bad faith or gross negligence in the performance of its duties under this
Agreement or by reason of the Master Servicer's reckless disregard of its
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 hereunder made by the Master Servicer to the Trustee shall
be from the Master Servicer's own funds, without reimbursement from REMIC I
therefor.
SECTION 9.06. Eligibility Requirements for Trustee and
Securities Administrator.
The Trustee and the Securities Administrator 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 (or a member of a bank holding company whose
capital and surplus is 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
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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 or the
Securities Administrator, as applicable, shall cease to be eligible in
accordance with the provisions of this Section, the Trustee or the Securities
Administrator, as applicable, shall resign immediately in the manner and with
the effect specified in Section 9.07.
SECTION 9.07. Resignation and Removal of Trustee and Securities
Administrator.
The Trustee and the Securities Administrator may at any time
resign and be discharged from the trust hereby created by giving written notice
thereof to the Depositor, to the Master Servicer, to the Securities
Administrator (or the Trustee, if the Securities Administrator resigns) and to
the Certificateholders. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor trustee or successor securities administrator
by written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee or Securities Administrator, as applicable, and to the
successor trustee or successor securities administrator, as applicable. A copy
of such instrument shall be delivered to the Certificateholders, the Trustee,
the Securities Administrator and the Master Servicer by the Depositor. If no
successor trustee or successor securities administrator shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee or Securities Administrator, as the
case may be, may, at the expense of the Trust Fund, petition any court of
competent jurisdiction for the appointment of a successor trustee, successor
securities administrator, Trustee or Securities Administrator, as applicable.
If at any time the Trustee or the Securities Administrator shall
cease to be eligible in accordance with the provisions of Section 9.06 and shall
fail to resign after written request therefor by the Depositor, or if at any
time the Trustee or the Securities Administrator shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee
or the Securities Administrator or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or the Securities
Administrator or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Depositor may remove the Trustee or the
Securities Administrator, as applicable and appoint a successor trustee or
successor securities administrator, as applicable, by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or the Securities
Administrator so removed and to the successor trustee or successor securities
administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee, the Securities Administrator and the Master
Servicer by the Depositor.
The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee or the Securities Administrator and
appoint a successor trustee or successor securities administrator 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 or the Securities
Administrator so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders, the
Trustee (in the case of the removal of the Securities Administrator), the
Securities Administrator (in the case of the removal of the Trustee) and the
Master Servicer by the Depositor.
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Any resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor trustee or successor securities
administrator pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee or successor
securities administrator, as applicable, as provided in Section 8.08.
Notwithstanding anything to the contrary contained herein, the
Master Servicer and the Securities Administrator shall at all times be the same
Person.
SECTION 9.08. Successor Trustee or Securities Administrator.
Any successor trustee or successor securities administrator
appointed as provided in Section 9.07 shall execute, acknowledge and deliver to
the Depositor and its predecessor trustee or predecessor securities
administrator an instrument accepting such appointment hereunder, and thereupon
the resignation or removal of the predecessor trustee or predecessor securities
administrator shall become effective and such successor trustee or successor
securities administrator 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 or
securities administrator herein. The predecessor trustee or predecessor
securities administrator shall deliver to the successor trustee or successor
securities administrator all Mortgage Loan Documents and related documents and
statements to the extent held by it hereunder, as well as all moneys, held by it
hereunder, and the Depositor and the predecessor trustee or predecessor
securities administrator 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 or successor securities administrator
all such rights, powers, duties and obligations.
No successor trustee or successor securities administrator shall
accept appointment as provided in this Section unless at the time of such
acceptance such successor trustee or successor securities administrator shall be
eligible under the provisions of Section 8.06 and the appointment of such
successor trustee or successor securities administrator shall not result in a
downgrading of any Class of Certificates by any Rating Agency, as evidenced by a
letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee or successor
securities administrator 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 or successor securities administrator, the
successor trustee or successor securities administrator shall cause such notice
to be mailed at the expense of the Depositor.
SECTION 9.09. Merger or Consolidation of Trustee or Securities
Administrator.
Any corporation or association into which the Trustee or the
Securities Administrator 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 or the Securities Administrator
shall be a party, or any corporation or association succeeding to the business
of the Trustee or the Securities Administrator shall be the successor of the
Trustee or the Securities
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Administrator 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.
SECTION 9.10. 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 the REMIC I or property securing the same may at the time be located, the
Trustee shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of REMIC I, and to vest in such Person or Persons, in such
capacity, and for the benefit of the Holders of the Certificates, such title to
REMIC I, or any part thereof, and, subject to the other provisions of this
Section 9.10, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 9.06 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.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.10 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 a defaulting 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 IX. 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, 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 or co-trustee.
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SECTION 9.11. Appointment of Office or Agency.
The Certificates may be surrendered for registration of transfer
or exchange at the Trustee's office located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and presented for final distribution at the Corporate
Trust Office where notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served.
SECTION 9.12. Representations and Warranties.
The Trustee hereby represents and warrants to the Master Servicer,
the Securities Administrator and the Depositor as applicable, 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
of America.
(ii) The execution and delivery of this Agreement by it, and the
performance and compliance with the terms of this Agreement by it, will
not violate its articles of association 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.
(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 other parties hereto, constitutes a valid, legal and
binding obligation of it, enforceable against it 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.
(v) It is not in violation of, and its execution and delivery
of this Agreement and its performance and compliance with the terms of
this Agreement will not constitute a violation of, any law, any order or
decree of any court or arbiter, or any order, regulation or demand of any
federal, state or local governmental or regulatory authority, which
violation, in its good faith and reasonable judgment, is likely to affect
materially and adversely either the ability of it to perform its
obligations under this Agreement or its financial condition.
(vi) No litigation is pending or, to the best of its knowledge,
threatened against it, which would prohibit it from entering into this
Agreement or, in its good faith reasonable judgment, is likely to
materially and adversely affect either the ability of it to perform its
obligations under this Agreement or its financial condition.
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ARTICLE X
TERMINATION
▇▇▇▇▇▇▇ ▇▇.▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ or Liquidation of All
Mortgage Loans.
(a) Subject to Section 10.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Servicer and the
Trustee (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 9.05 and of the Servicer to make remittances to the Trustee
and the Trustee to make payments in respect of the REMIC I Regular Interests,
REMIC I 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 I 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 I; 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 I shall be at a price (the "Termination
Price") equal to the sum of (i) the greater of (A) the aggregate Purchase Price
of all the Mortgage Loans included in REMIC I, plus the appraised value of each
REO Property, if any, included in REMIC I, 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 I (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 (ii) any amounts due the Servicer
and the Master Servicer in respect of unpaid Servicing Fees, Master Servicing
Fees and outstanding P&I Advances and Servicing Advances.
(b) The Class CE Certificateholder (so long as it is not an
Affiliate of the Seller) shall have the right (the party exercising such right,
the "Terminator"), to purchase all of the Mortgage Loans and each REO Property
remaining in REMIC I 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 I 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 reduced to 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 Holder of the Residual
Certificates agrees, in connection with any termination hereunder, to assign and
transfer any portion of the Termination Price 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 CE Certificates.
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(c) Notice of the liquidation of the Certificates shall be
given promptly by the Trustee by letter to the 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 the final payment in respect of the REMIC I Regular Interests, REMIC I
Regular Interests or 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 I Regular Interests, REMIC I Regular
Interests or Certificates from and after the Interest 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. 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 I by the
Terminator, the Terminator shall deliver to the Trustee for deposit in the
Distribution Account not later than the Business Day prior to the Distribution
Date on which the final distribution on the Certificates an amount in
immediately available funds equal to the above-described Termination Price. The
Trustee shall remit to the Servicer, the Master Servicer, the Securities
Administrator and the Custodian from such funds deposited in the Distribution
Account (i) any amounts which the Servicer would be permitted to withdraw and
retain from the Collection Account pursuant to Sections 3.22 and 3.23 and (ii)
any other amounts otherwise payable by the Trustee to the Master Servicer, the
Securities Administrator, the Custodian and the Servicer from amounts on deposit
in the Distribution Account pursuant to the terms of this Agreement prior to
making any final distributions pursuant to Section 11.01(d) below. Upon
certification to the Trustee by a Servicing Officer of the making of such final
deposit, the Trustee shall promptly release to the Terminator the Mortgage Files
for the remaining Mortgage Loans, and 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 5.01 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
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
10.01 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 the remaining 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 the Depositor all such amounts,
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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) on the final
Distribution Date for final payment thereof in accordance with this Section
10.01. Any such amounts held in trust by the Trustee shall be held uninvested in
an Eligible Account.
SECTION 10.02. 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 I pursuant to Section
10.01, 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 by and 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 I 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 requesting Terminator (or, if the
Trust Fund is being terminated as a result of the occurrence of the event
described in clause (ii) of the first paragraph of Section 10.01, at the expense
of the Trust Fund), the Terminator 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 10.02.
(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 XI
REMIC PROVISIONS
SECTION 11.01. 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 by the Securities Administrator on Form 1066 or other
appropriate federal tax or information return or any appropriate state return
for the taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC election in respect of
REMIC I, the REMIC I Regular Interests shall be designated as the Regular
Interests in REMIC I and the Class R-I Interest shall be designated as the
Residual Interests in REMIC I. The Class A Certificates, the Mezzanine
Certificates, the Class P Certificates and the Class CE Certificates shall be
designated as the Regular Interests in REMIC II and the Class R-II Interest
shall be designated as the Residual Interests in REMIC II. The Trustee shall not
permit the creation of any "interests" in each Trust REMIC (within the meaning
of Section 860G of the Code) other than the REMIC I 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 Securities Administrator shall be reimbursed for 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 each Trust REMIC that involve the Internal Revenue Service or
state tax authorities), including the expense of obtaining any tax related
Opinion of Counsel except as specified herein. The Securities Administrator, as
agent for 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. The holder of the largest Percentage Interest of
each class of Residual 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 the related REMIC created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Residual Certificates hereby agrees to irrevocably appoint the
Securities Administrator or an Affiliate as its agent to perform all of the
duties of the tax matters person for the Trust Fund.
(d) The Securities Administrator shall prepare and file and the
Trustee shall sign all of the Tax Returns in respect of each REMIC created
hereunder. The expenses of preparing and filing such returns shall be borne by
the Securities Administrator without any right of reimbursement therefor.
(e) The Securities Administrator 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
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Provisions or other such compliance guidance, the Securities Administrator 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 upon receipt of
additional reasonable compensation, (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
Depositor shall provide or cause to be provided to the Securities Administrator,
within ten (10) days after the Closing Date, all information or data that the
Securities Administrator 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.
(f) To the extent in the control of the Trustee or the
Securities Administrator, each such Person (i) shall take such action and shall
cause each 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,
(ii) 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 (A) endanger the
status of each Trust REMIC as a REMIC or (B) 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 such action or inaction is permitted
under this Agreement or the Trustee and the Securities Administrator have
received an Opinion of Counsel, addressed to the them (at the expense of the
party seeking to take such action but in no event at the expense of the Trustee
or the Securities Administrator) 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 (iii) shall the Securities Administrator 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 Securities Administrator may 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. 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 Securities Administrator 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 any Trust REMIC, and the Securities
Administrator 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. The Trustee may consult with counsel to make
such written advice, and the cost of same shall be home 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.
(g) In the event that any tax is imposed on "prohibited
transactions" of any 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
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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 11.03, 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 Securities
Administrator pursuant to Section 11.03, if such tax arises out of or results
from a breach by the Securities Administrator of any of its obligations under
this Article XI, (iii) to the Master Servicer pursuant to Section 11.03, if such
tax arises out of or results from a breach by the Master Servicer of any of its
obligations under Article IV or under this Article XI, (iv) to the Servicer
pursuant to Section 11.03, if such tax arises out of or results from a breach by
the Servicer of any of its obligations under Article III or under this Article
XI, or (v) in all other cases, against amounts on deposit in the Distribution
Account and shall be paid by withdrawal therefrom.
(h) The Securities Administrator 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.
(i) Following the Startup Day, neither the Securities
Administrator nor the Trustee shall 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 the related REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
(j) Neither the Trustee nor the Securities Administrator shall
knowingly enter into any arrangement by which any Trust REMIC will receive a fee
or other compensation for services nor permit either REMIC 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.
(k) The Securities Administrator shall apply for an employer
identification number with the Internal Revenue Service via a Form SS-4 or other
comparable method for each REMIC. In connection with the foregoing, the
Securities Administrator shall provide the name and address of the person who
can be contacted to obtain information required to be reported to the holders of
Regular Interests in each REMIC as required by IRS Form 8811.
SECTION 11.02. Prohibited Transactions and Activities.
None of the Depositor, the Servicer, the Securities Administrator,
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 I, (iii) the termination of REMIC I pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
purchase of Mortgage Loans pursuant to Article II 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
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Section 2.03), unless it has received an Opinion of Counsel, addressed to the
Trustee and the Trustee (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 11.03. Indemnification.
(a) The Trustee agrees to be liable for any taxes and costs
incurred by the Trust Fund, the Depositor, the Master Servicer, the Securities
Administrator or the Servicer including, without limitation, any reasonable
attorneys fees imposed on or incurred by the Trust Fund, the Depositor, the
Master Servicer, the Securities Administrator or the Servicer as a result of the
Trustee's failure to perform its covenants set forth in this Article XI in
accordance with the standard of care of the Trustee set forth in this Agreement.
(b) The Servicer agrees to indemnify the Trust Fund, the
Depositor, the Master Servicer, the Securities Administrator and the Trustee for
any taxes and costs including any reasonable attorneys' fees imposed on or
incurred by the Trust Fund, the Depositor, the Master Servicer, the Securities
Administrator or the Trustee, as a result of the Servicer's failure to perform
its covenants set forth in Article III in accordance with the standard of care
of the Servicer set forth in this Agreement.
(c) The Master Servicer agrees to indemnify the Trust Fund, the
Depositor, the Servicer and the Trustee for any taxes and costs including any
reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Depositor, the Servicer or the Trustee, as a result of the Master Servicer's
failure to perform its covenants set forth in Article IV in accordance with the
standard of care of the Master Servicer set forth in this Agreement.
(d) The Securities Administrator agrees to be liable for any
taxes and costs incurred by the Trust Fund, the Depositor or the Trustee
including any reasonable attorneys fees imposed on or incurred by the Trust
Fund, the Depositor or the Trustee as a result of the Securities Administrator's
failure to perform its covenants set forth in this Article XI in accordance with
the standard of care of the Securities Administrator set forth in this
Agreement.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Amendment.
This Agreement may be amended from time to time by the Depositor,
the Servicer, the Master Servicer, the Securities Administrator and the Trustee,
but 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 (iii)
to make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
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; provided that any such amendment shall be
deemed not to adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates. 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 may also be amended from time to time by the
Depositor, the Servicer, the Master Servicer, the Securities Administrator and
the Trustee 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 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 12.01, Certificates registered in the name of
the Depositor or the Servicer or any Affiliate thereof shall be entitled to
Voting Rights with respect to matters affecting such Certificates. Without
limiting the generality of the foregoing, any amendment to this Agreement
required in connection with the compliance with or the clarification of any
reporting obligations described in Section 5.06 hereof shall not require the
consent of any Certificateholder and without the need for any Opinion of Counsel
or Rating Agency confirmation.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that such amendment is
permitted hereunder and will not result in the imposition of any tax on any
Trust REMIC pursuant to the REMIC Provisions or cause any Trust
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REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding and that such amendment is authorized or permitted by this
Agreement.
Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders
under this Section 12.01 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 12.01 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 12.02. 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 Depositor at the expense of the Certificateholders, but only
upon direction of the Trustee accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement
as herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
SECTION 12.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor 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 Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as
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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
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 whatsoever 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, 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, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
SECTION 12.04. Governing Law.
This Agreement shall be construed in accordance with the laws of
the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws without regard to
conflicts of laws principles thereof.
SECTION 12.05. Notices.
All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when received if sent by facsimile,
receipt confirmed, if personally delivered at or mailed by first class mail,
postage prepaid, or by express delivery service or delivered in any other manner
specified herein, to (a) in the case of the Depositor, ACE Securities Corp.,
AMACAR GROUP, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (telecopy number:(▇▇▇) ▇▇▇-▇▇▇▇), or such
other address or telecopy number as may hereafter be furnished to the Servicer,
the Master Servicer, the Securities Administrator and the Trustee in writing by
the Depositor, (b) in the case of the Servicer, Ocwen Federal Bank FSB, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention:
Secretary (telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇)), or such other address or telecopy
number as may hereafter be furnished to the Trustee, the Master Servicer, the
Securities Administrator and the Depositor in writing by the Servicer, (c) in
the case of the Master Servicer and the Securities Administrator, ▇.▇. ▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and for overnight delivery to ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Ace Securities Corp., 2003-TC1 (telecopy
number: (▇▇▇) ▇▇▇-▇▇▇▇), or such other address or telecopy number as may
hereafter be furnished to the Trustee, the Depositor
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and the Servicer in writing by the Master Servicer or the Securities
Administrator and (d) in the case of the Trustee, at the Corporate Trust Office
or such other address or telecopy number as the Trustee may hereafter be furnish
to the Servicer, the Master Servicer, the Securities Administrator and the
Depositor in writing by the Trustee. Any notice required or permitted to be
given to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the appropriate party in the manner
set forth above.
SECTION 12.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 12.07. Notice to Rating Agencies.
The Trustee shall use its best efforts promptly to provide notice
to the Rating Agencies with respect to each of the following of which a
Responsible Officer has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Servicer Event of Default or Master
Servicer Event of Default that has not been cured or
waived;
3. The resignation or termination of the Servicer, 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 Distribution Account; and
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7. Any event that would result in the inability of the Trustee
as successor Servicer to make advances regarding delinquent
Mortgage Loans.
In addition, the Securities Administrator shall promptly make
available to each Rating Agency copies of each report to Certificateholders
described in Section 5.02.
The Servicer shall make available to each Rating Agency copies of
the following:
1. Each annual statement as to compliance described in Section
3.17;
2. Each annual independent public accountants' servicing
report described in Section 3.18; and
3. Any change in the location of the Collection Account.
Any such notice pursuant to this Section 12.07 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, or by express delivery service to Standard
& Poor's, a division of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, to ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and to Fitch Ratings, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ or such other addresses as the Rating Agencies may designate in
writing to the parties hereto.
SECTION 12.08. 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 12.09. 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, on behalf of the Trust
and for the benefit of the Certificateholders, be, and be construed as, a sale
of the Mortgage Loans by the Depositor and not a pledge of the Mortgage Loans 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, on behalf of the Trust and for the benefit of the
Certificateholders, 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
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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 shall be deemed to be
a grant by the Depositor to the Trustee, on behalf of the Trust and for the
benefit of the Certificateholders, 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, 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, on
behalf of the Trust and for the benefit of the Certificateholders, 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 obligations 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, on behalf of the Trust and for the benefit of the
Certificateholders.
SECTION 12.10. Survival of Indemnification.
Any and all indemnities to be provided by any party to this
Agreement shall survive the termination and resignation of any party hereto and
the termination of this Agreement.
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IN WITNESS WHEREOF, the Depositor, the Servicer, the Master
Servicer, the Securities Administrator and the Trustee have caused their names
to be signed hereto by their respective officers thereunto duly authorized, in
each case as of the day and year first above written.
ACE SECURITIES CORP.,
as Depositor
By:
-------------------------------------------------
Name:
Title:
By:
-------------------------------------------------
Name:
Title:
OCWEN FEDERAL BANK FSB,
as Servicer
By:
-------------------------------------------------
Name:
Title:
BANK ONE, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee
By:
-------------------------------------------------
Name:
Title:
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
as Master Servicer and Securities Administrator
By:
-------------------------------------------------
Name:
Title:
For purposes of Sections 7.08, 7.09 and 7.10:
THE MURRAYHILL COMPANY
By:
-------------------------------------------------
Name:
Title:
ACE 2003-TC1
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of July 2003, before me, a notary public in and for
said State, personally appeared _____________________ known to me to be a
_____________________ of ACE Securities Corp., one of the corporations 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
[Notarial Seal] My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the __ day of July 2003, before me, a notary public in and for
said State, personally appeared ___________________________ known to me to be a
____________________ of ACE Securities Corp., one of the corporations 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
[Notarial Seal] My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of July, 2003, before me, a notary public in and
for said State, personally appeared _______________ known to me to be a
_______________ of ________________, Ocwen Federal Bank FSB, one of the
corporations 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
[Notarial Seal] My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of July, 2003, before me, a notary public in and
for said State, personally appeared ____________________, known to me to be a
__________________ of ▇▇▇▇▇ Fargo Bank Minnesota, National Association, one of
the corporations 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
[Notarial Seal] My commission expires
STATE OF )
) ss.:
COUNTY OF )
On the ___ day of July, 2003, before me, a notary public in and
for said State, personally appeared ____________________, known to me to be a
__________________ of Bank One, National Association, one of the corporations
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
[Notarial Seal] My commission expires
EXHIBIT A-1
-----------
FORM OF CLASS A-[1][2] 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 (THE "CODE").
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Series 2003-TC1, Class A-[1][2] Aggregate Certificate Principal Balance
of the Class A-[1][2] Certificates as
of the Issue Date:
Pass-Through Rate: Variable $
Date of Pooling and Servicing Agreement Denomination: $
and Cut-off Date: July 1, 2003
Master Servicer: ▇▇▇▇▇ Fargo Bank
Minnesota, National Association
First Distribution Date:
August 25, 2003 Trustee: Bank One National Association
No.__ Issue Date: July 15, 2003
CUSIP:________________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
A-1-1
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2003-TC1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed and sold
by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE UNITED STATES.
This certifies that ________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-[1][2]
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-[1][2] Certificates in REMIC II created pursuant to
a Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among ACE Securities Corp., as depositor (hereinafter called the "Depositor",
which term includes any successor entity under the Agreement), ▇▇▇▇▇ Fargo Bank
Minnesota, National Association as master servicer (the "Master Servicer") and
securities administrator (the "Securities Administrator"), Ocwen Federal Bank
FSB as servicer (the "Servicer") and Bank One National Association, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the Business Day immediately
preceding such Distribution Date (the "Record Date"), in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to the Holders of Class A- [1][2] Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person 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 Class A-[1][2] Certificates the aggregate initial
Certificate Principal Balance of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial Certificate
A-1-2
Principal Balance of the Class A-[1][2] Certificates, or otherwise by check
mailed by first class mail to the address of the Person entitled thereto, as
such name and address shall appear on the Certificate Register. Notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose as provided in the Agreement.
The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of (i) One-Month LIBOR plus [_____]%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One-Month LIBOR plus [_____]% per annum, in the case of any
Distribution Date thereafter and (ii) the applicable Net WAC Pass-Through Rate
for such Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee, the Securities Administrator, the
Servicer and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the Servicer with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. 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 herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holders attorney duly authorized in
writing, and thereupon one or more new Certificates of the same
A-1-3
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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 of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and any agent of the Depositor, the Master Servicer,
the Trustee, the Securities Administrator or the Servicer may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee does not assume responsibility for their correctness.
Unless the certificate of authentication hereon has been executed
by the Trustee, by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.
A-1-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: July 15, 2003
BANK ONE NATIONAL ASSOCIATION
as Trustee
By:_______________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[1][2] Certificates referred to in the
within-mentioned Agreement.
BANK ONE NATIONAL ASSOCIATION
as Trustee
By:_______________________________________
Authorized Signatory
A-1-5
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
----------
(Cust) (Minor)
under Uniform Gifts
to Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right --------------
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
----------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee or the Trustee to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------.
Dated:
--------------------------------------
Signature by or on behalf of assignor
--------------------------------------
Signature Guaranteed
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.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF CLASS M-[1][2][3][4] 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 (THE "CODE").
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES
[,/AND] CLASS M-1 CERTIFICATES[,/AND] CLASS M-2
CERTIFICATES[,/AND] CLASS M-3 CERTIFICATES] TO THE EXTENT
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
ANY TRANSFEREE OF THIS CERTIFICATE SHALL BE DEEMED TO MAKE THE
REPRESENTATIONS SET FORTH IN SECTION 6.02(C) OF THE AGREEMENT
REFERRED TO HEREIN.
A-2-1
Series 2003-TC1, Class M-[1][2][3][4] Aggregate Certificate Principal Balance
of the Class M-[1][2][3][4]
Certificates as of the Issue
Pass-Through Rate: Variable Date: $______________
Date of Pooling and Servicing Agreement Denomination: $______________
and Cut-off Date: July 1, 2003
Master Servicer:
▇▇▇▇▇ Fargo Bank Minnesota,
National Association
First Distribution Date:
August 25, 2003 Trustee: Bank One National Association
No.___ Issue Date: July 15, 2003
CUSIP:_________________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
A-2-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2003-TC1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed and sold
by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE UNITED STATES.
This certifies that _____________________ is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class
M-[1][2][3][4] Certificates as of the Issue Date) in that certain beneficial
ownership interest evidenced by all the Class M-[1][2][3][4] Certificates in
REMIC III created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among ACE Securities Corp., as depositor
(hereinafter called the "Depositor", which term includes any successor entity
under the Agreement), ▇▇▇▇▇ Fargo Bank Minnesota, National Association as master
servicer (the "Master Servicer") and securities administrator (the "Securities
Administrator"), Ocwen Federal Bank FSB as servicer (the "Servicer") and Bank
One National Association, as trustee (the "Trustee"), a summary of certain of
the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the Business Day immediately
preceding such Distribution Date (the "Record Date"), in an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to the Holders of Class M-[1][2][3][4] Certificates
on such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person 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 Class M-[1][2][3][4] Certificates the aggregate initial
Certificate Principal Balance of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial
A-2-3
Certificate Principal Balance of the Class M-[1][2][3][4] Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.
The Pass-Through Rate applicable to the calculation of interest
payable with respect to this Certificate on any Distribution Date shall equal a
rate per annum equal to the lesser of (i) One-Month LIBOR plus ____%, in the
case of each Distribution Date through and including the Distribution Date on
which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One-Month LIBOR plus ____ % per annum, in the case of any Distribution
Date thereafter and (ii) the applicable Net WAC Pass-Through Rate for such
Distribution Date.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee, the Securities Administrator, the
Servicer and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the Servicer with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. 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 herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the
A-2-4
same Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
Any transferee of this Certificate shall be deemed to make the
representations set forth in Section 6.02(c) of the Agreement.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and any agent of the Depositor, the Master Servicer,
the Trustee, the Securities Administrator or the Servicer may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee does no assume responsibility for their correctness.
Unless the certificate of authentication hereon has been executed
by the Trustee by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.
A-2-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: July 15, 2003
BANK ONE NATIONAL ASSOCIATION
as Trustee
By:_____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-[1][2][3][4] Certificates referred to
in the within-mentioned Agreement.
BANK ONE NATIONAL ASSOCIATION
as Trustee
By:_____________________________________
Authorized Signatory
A-2-6
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
----------
(Cust) (Minor)
under Uniform Gifts
to Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right ---------------
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
----------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to _____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a
like Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: .
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------.
Dated:
--------------------------------------
Signature by or on behalf of assignor
--------------------------------------
Signature Guaranteed
A-2-7
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.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF CLASS CE 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 (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
CLASS M-1 CERTIFICATES, THE CLASS M- 2 CERTIFICATES, THE CLASS M-3
CERTIFICATES AND THE CLASS M-4 CERTIFICATES TO THE EXTENT
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
HEREIN.
A-4-1
Series 2003-TC1 Aggregate Certificate Principal
Balance of the Class CE Certificates
as of the Issue Date:
Pass-Through Rate: Variable $_____________
Cut-off Date and date of Pooling and Denomination: $_________________
Servicing Agreement: July 1, 2003
Master Servicer: ▇▇▇▇▇ Fargo Bank
First Distribution Date: August 25, 2003 Minnesota, National Association
No. __ Trustee: Bank One National Association
Aggregate Notional Amount of the Class Issue Date: July 15, 2003
CE Certificates as of the Issue Date:
$-------------
Notional Amount: $_______________
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
A-4-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2003-TC1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE UNITED STATES.
This certifies that ________________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class CE Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class CE Certificates in REMIC II created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among ACE
Securities Corp., as depositor (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), ▇▇▇▇▇ Fargo Bank Minnesota,
National Association, as master servicer (the "Master Servicer") and securities
administrator (the "Securities Administrator"), Ocwen Federal Bank FSB, as
servicer (the "Servicer") and Bank One National Association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the last Business Day of the
calendar month immediately preceding the month in which the related Distribution
Date occurs (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class CE Certificates on such Distribution Date
pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person 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 Class CE Certificates the aggregate initial Certificate
Principal Balance of which
A-4-3
is in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class CE Certificates, or otherwise
by check mailed by first class mail to the address of the Person entitled
thereto, as such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee, the Securities Administrator, the
Servicer and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the Servicer with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. 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 herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee 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 evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of this Certificate shall be made unless the transfer
is made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt
A-4-4
of (i) if such transfer is purportedly being made in reliance upon Rule 144A
under the 1933 Act, written certifications from the Holder of the Certificate
desiring to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit B-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Master Servicer or the Securities Administrator in their respective capacities
as such), together with copies of the written certification(s) of the Holder of
the Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. Neither the Depositor
nor the Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities Administrator
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.
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 6.02(c) of the Agreement.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and any agent of the Depositor, the Master Servicer,
the Trustee, the Securities Administrator or the Servicer may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the
A-4-5
aggregate Stated Principal Balance of the Mortgage Loans at the time of purchase
being less than 10% of the aggregate principal balance of the Mortgage Loans as
of the Cut-off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed
by the Trustee, by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.
A-4-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: July 15, 2003
BANK ONE NATIONAL ASSOCIATION
as Trustee
By:___________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.
BANK ONE NATIONAL ASSOCIATION
as Trustee
By:___________________________________
Authorized Officer
A-4-7
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
----------
(Cust) (Minor)
under Uniform Gifts
to Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right --------------
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
----------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a
like Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------.
Dated:
--------------------------------------
Signature by or on behalf of assignor
--------------------------------------
Signature Guaranteed
A-4-8
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.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
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 (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
HEREIN.
A-5-1
Series 2003-TC1 Aggregate Certificate Principal
Balance of the Class P Certificates
as of the Issue Date: $100.00
Cut-off Date and date of Pooling and
Servicing Agreement: July 1, 2003 Denomination: $100.00
First Distribution Date: August 25, 2003 Master Servicer: ▇▇▇▇▇ Fargo Bank
Minnesota, National Association
No. __
Trustee: Bank One National Association
Issue Date: July 15, 2003
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
DENOMINATION OF THIS CERTIFICATE.
A-5-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2003-TC1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE UNITED STATES.
This certifies that____________________ is the registered owner of
a Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class P Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class P Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among ACE Securities
Corp., as depositor (hereinafter called the "Depositor", which term includes any
successor entity under the Agreement), ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as master servicer (the "Master Servicer"), and securities
administrator (the "Securities Administrator"), Ocwen Federal Bank FSB as
servicer (the "Servicer") and Bank One National Association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following such 25th day (a "Distribution Date"),
commencing on the First Distribution Date specified above, to the Person in
whose name this Certificate is registered on the last Business Day of the
calendar month immediately preceding the month in which the related Distribution
Date occurs (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class P Certificates on such Distribution Date
pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person 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 Class P Certificates the aggregate initial Certificate
Principal Balance of which
A-5-3
is in excess of the lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate
initial Certificate Principal Balance of the Class P Certificates, or otherwise
by check mailed by first class mail to the address of the Person entitled
thereto, as such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee, the Securities Administrator, the
Servicer and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the Servicer with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. 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 herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee 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 evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of this Certificate shall be made unless the transfer
is made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt
A-5-4
of (i) if such transfer is purportedly being made in reliance upon Rule 144A
under the 1933 Act, written certifications from the Holder of the Certificate
desiring to effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit B-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Master Servicer or the Securities Administrator in their respective capacities
as such), together with copies of the written certification(s) of the Holder of
the Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. Neither the Depositor
nor the Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities Administrator
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.
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 6.02(c) of the Agreement.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations 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
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and any agent of the Depositor, the Master Servicer,
the Trustee, the Securities Administrator or the Servicer may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the
A-5-5
aggregate Stated Principal Balance of the Mortgage Loans at the time of purchase
being less than 10% of the aggregate principal balance of the Mortgage Loans as
of the Cut-off Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed
by the Trustee, by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.
A-5-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: July 15, 2003
BANK ONE NATIONAL ASSOCIATION
as Trustee
By:_______________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class P Certificates referred to in the
within-mentioned Agreement.
BANK ONE NATIONAL ASSOCIATION
as Trustee
By:_______________________________________
Authorized Officer
A-5-7
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
----------
(Cust) (Minor)
under Uniform Gifts
to Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right --------------
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
----------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee) a Percentage Interest equal to ____%
evidenced by the within Asset Backed Pass-Through Certificates and hereby
authorize(s) the registration of transfer of such interest to assignee on the
Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a
like Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address:
------------------------------------------------------------------------------
------------------------------------------------------------------------------.
Dated:
--------------------------------------
Signature by or on behalf of assignor
--------------------------------------
Signature Guaranteed
A-5-8
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.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON- UNITED STATES
PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS THE SOLE "RESIDUAL INTEREST" IN EACH OF THREE "REAL
ESTATE MORTGAGE INVESTMENT CONDUITS" ("REMIC"), AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02 OF
THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED
STATES OR ANY POSSESSION THEREOF, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A COOPERATIVE
DESCRIBED
A-6-1
IN SECTION 521 OF THE CODE) THAT 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, (3) ANY ORGANIZATION
DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON
DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3) SHALL
HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR
(4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF
SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX,
AND (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS
RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OF
ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL
FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO
BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT
NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE
DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND
THE PROVISIONS OF SECTION 6.02(D) OF THE AGREEMENT REFERRED TO
HEREIN. ANY PERSON THAT IS A DISQUALIFIED ORGANIZATION IS
PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF THIS
CERTIFICATE.
Series 2003-TC1, Class R Aggregate Percentage Interest of the Class R
Certificates as of the Issue Date: 100.00%
Date of Pooling and Servicing
Agreement and Cut-off Date:
July 1, 2003 Master Servicer: ▇▇▇▇▇ Fargo Bank Minnesota,
National Association
First Distribution Date: Trustee: Bank One National Association
August 25, 2003
No __ Issue Date: July 15, 2003
A-6-2
ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2003-TC1
ASSET BACKED PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed and sold
by
ACE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
ADMINISTRATOR, THE SERVICER, THE TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE UNITED STATES.
A-6-3
This certifies that _______________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class R Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among ACE Securities
Corp., as depositor (hereinafter called the "Depositor", which term includes any
successor entity under the Agreement), ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as master servicer (the "Master Servicer") and securities
administrator (the "Securities Administrator"), Ocwen Federal Bank FSB as
servicer (the "Servicer") and Bank One National Association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person 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 Class R Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Asset Backed Pass-Through Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class of Certificates specified on the face hereof equal to the
denomination specified on the face hereof divided by the aggregate Certificate
Principal Balance of the Class of Certificates specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
A-6-4
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee, the Securities Administrator, the
Servicer and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the Servicer with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. 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 herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder hereof or such Holders attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
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 evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate shall be made unless the transfer
is made pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), and an effective registration or
qualification under applicable state securities laws, or is made in a
transaction that does not require such registration or qualification. In the
event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit B-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made without such registration or qualification (which Opinion of Counsel
shall not be an expense of the Trust Fund or of the Depositor, the Trustee, the
Master Servicer or the Securities Administrator in their respective capacities
as such), together with copies of the written certification(s) of the Holder of
the Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. Neither the Depositor
nor the Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities Administrator
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-6-5
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 6.02 of the Agreement.
Prior to registration of any transfer, sale or other disposition
of this Certificate, the proposed transferee shall provide to the Trustee (i) an
affidavit to the effect that such transferee is any Person other than a
Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R Certificates have been designated as
representing the beneficial ownership of the residual interests in each of REMIC
I and REMIC II, (B) it will include in its income a PRO RATA share of the net
income of the Trust Fund and that such income may be an "excess inclusion," as
defined in the Code, that, with certain exceptions, cannot be offset by other
losses or benefits from any tax exemption, and (C) it expects to have the
financial means to satisfy all of its tax obligations including those relating
to holding the Class R Certificates. Notwithstanding the registration in the
Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.
The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 6.02 of the Agreement and
to any amendment of the Agreement deemed necessary by counsel of the Depositor
to ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause any portion of the Trust
Fund to cease to qualify as a REMIC or cause the imposition of a tax upon any
REMIC.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee, the Securities
Administrator, the Servicer and any agent of the Depositor, the Master Servicer,
the Trustee, the Securities Administrator or the Servicer may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Master Servicer, the Trustee, the
Securities Administrator, the Servicer nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the
A-6-6
Agreement to purchase from REMIC I all the Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee does not assume responsibility for their correctness.
Unless the certificate of authentication hereon has been executed
by the Trustee, by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.
A-6-7
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: July 15, 2003
BANK ONE NATIONAL ASSOCIATION
as Trustee
By:_______________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
BANK ONE NATIONAL ASSOCIATION
as Trustee
By:_______________________________________
Authorized Signatory
A-6-8
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
----------
(Cust) (Minor)
under Uniform Gifts
to Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right --------------
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
----------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
a Percentage Interest equal to _____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Trustee to issue a new Certificate of a
like Percentage Interest and Class to the above named assignee and deliver such
Certificate to the following address: .
--------------------------------------------------------------------------------
------------------------------------------------------------------------------.
Dated:
--------------------------------------
Signature by or on behalf of assignor
--------------------------------------
Signature Guaranteed
A-6-9
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.
C-1-1
EXHIBIT B-1
-----------
FORM OF TRANSFEROR REPRESENTATION LETTER
[Date]
Bank One National Association
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: ACE Securities Corp. Home Equity Loan Trust,
Series 2003-TC1 Asset Backed Pass-Through Certificates,
Class CE, Class P and Class R Certificates
Ladies and Gentlemen:
In connection with the transfer by ______________________ (the
"Transferor") to ___________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferor hereby
certifies as follows:
Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of July
1, 2003, among ACE Securities Corp. as Depositor, Ocwen Federal Bank FSB as
Servicer, ▇▇▇▇▇ Fargo Bank Minnesota, National Association as Master Servicer
and Securities Administrator and Bank One National Association as trustee (the
"Pooling and Servicing Agreement"), pursuant to which Pooling and Servicing
Agreement the Certificates were issued.
B-1-1
Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
Very truly yours,
[Transferor]
By:
----------------------------------------
Name:
Title:
B-1-2
FORM OF TRANSFEREE REPRESENTATION LETTER
[Date]
Bank One National Association
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: ACE Securities Corp. Home Equity Loan Trust,
Series 2003-TC1 Asset Backed Pass-Through Certificates,
Class CE, Class P and Class R Certificates
-------------------------------------------------------
Ladies and Gentlemen:
In connection with the purchase from ____________________________
(the "Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), (the "Transferee") hereby certifies as follows:
1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act of
1933 (the "1933 Act") and has completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. The
Transferee is aware that the sale to it is being made in reliance on Rule
144A. The Transferee is acquiring the Certificates for its own account or
for the account of a qualified institutional buyer, and understands that
such Certificate may be resold, pledged or transferred only (i) to a
person reasonably believed to be a qualified institutional buyer that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to
another exemption from registration under the 1933 Act.
2. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the nature,
performance and servicing of the Mortgage Loans, (c) the Pooling and
Servicing Agreement referred to below, and (d) any credit enhancement
mechanism associated with the Certificates, that it has requested.
3. The Transferee: (a) is not an employee benefit or other
plan subject to the prohibited transaction provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA), or Section
4975 of the Internal Revenue Code of 1986, as amended ("Plan"), or any
other person (including an investment manager, a named fiduciary or a
trustee of any Plan) acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any Plan within the
meaning of the Department of Labor ("DOL") regulation at 29 C.F.R.
ss.2510.3-101 or (b) has provided the Trustee with
B-1-3
an opinion of counsel on which the Trustee, the Depositor, the Master
Servicer, the Securities Administrator and the Servicer may rely,
acceptable to and in form and substance satisfactory to the Trustee to
the effect that the purchase of Certificates is permissible under
applicable law, will not constitute or result in any non-exempt
prohibited transaction under ERISA or Section 4975 of the Code and will
not subject the Trustee, the Depositor, the Master Servicer, the
Securities Administrator or the Servicer to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the
Code) in addition to those undertaken in the Pooling and Servicing
Agreement.
In addition, the Transferee hereby certifies, represents and warrants to,
and covenants with, the Depositor, the Trustee and the Servicer that the
Transferee will not transfer such Certificates to any Plan or person unless such
Plan or person meets the requirements set forth in either 3(a) or (b) above.
All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of July 1, 2003, among ACE Securities Corp. as Depositor, ▇▇▇▇▇ Fargo
Bank Minnesota, National Association as Master Servicer and Securities
Administrator, Ocwen Federal Bank FSB as Servicer and Bank One National
Association as Trustee, pursuant to which the Certificates were issued.
[TRANSFEREE]
By:
---------------------------------------
Name:
Title:
▇-▇-▇
▇▇▇▇▇ ▇ ▇▇ ▇▇▇▇▇▇▇ ▇-▇
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Bank One National Association, as Trustee,
with respect to the asset backed pass-through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
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
Transferee's most recent fiscal year (such amount being calculated in accordance
with Rule 144A) and (ii) the Transferee satisfies the criteria in the category
marked below.
___ CORPORATION, ETC. The Transferee is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986.
___ BANK. The Transferee (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 Transferee (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.
--------
(1) Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that
case, Transferee must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
B-1-5
___ BROKER-DEALER. The Transferee is a dealer registered
pursuant to Section 15 of the Securities Exchange Act of
1934.
___ INSURANCE COMPANY. The Transferee 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 Transferee 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 Transferee is an employee benefit plan
within the meaning of Title I of the Employee Retirement
Income Security Act of 1974.
___ INVESTMENT ADVISOR The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee 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 Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Certificates
Yes No only for the Transferee's own account?
B-1-6
6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.
7. The Transferee 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 Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
Dated:
----------------------------------------------------
Print Name of Transferee
By:
-------------------------------------------------
Name:
Title:
▇-▇-▇
▇▇▇▇▇ ▇ ▇▇ ▇▇▇▇▇▇▇ ▇-▇
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Bank One National Association, as Trustee,
with respect to the asset backed pass-through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee'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 Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.
___ The Transferee owned $________________________ in
securities (other than the excluded securities referred to
below) as of the end of the Transferee's most recent fiscal
year (such amount being calculated in accordance with Rule
144A).
___ The Transferee 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 Transferee'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 Transferee or are part of the
Transferee'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, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.
B-1-8
5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
Dated:
----------------------------------------------------
Print Name of Transferee or Advisor
By:
-------------------------------------------------
Name:
Title:
IF AN ADVISER:
----------------------------------------------------
Print Name of Transferee
B-1-9
FORM OF TRANSFEREE REPRESENTATION LETTER
The undersigned hereby certifies on behalf of the purchaser named
below (the "Purchaser") as follows:
1. I am an executive officer of the Purchaser.
2. The Purchaser is a "qualified institutional buyer",
as defined in Rule 144A, ("Rule 144A") under the Securities Act of 1933,
as amended.
3. As of the date specified below (which is not earlier
than the last day of the Purchaser's most recent fiscal year), the amount
of "securities", computed for purposes of Rule 144A, owned and invested
on a discretionary basis by the Purchaser was in excess of $100,000,000.
Name of Purchaser
--------------------------------------------------------------
By: (Signature)
----------------------------------------------------------------
Name of Signatory
--------------------------------------------------------------
Title
--------------------------------------------------------------------------
Date of this certificate
-------------------------------------------------------
Date of information provided in paragraph 3
------------------------------------
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF TRANSFEROR REPRESENTATION LETTER
____________, 20__
Bank One National Association
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: ACE Securities Corp. Home Equity Loan Trust,
Series 2003-TC1 Asset Backed Pass-Through Certificates,
CLASS CE, CLASS P AND CLASS R CERTIFICATES
-------------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ________________ (the
"Transferor") to __________________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferor hereby
certifies as follows:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933 (the "Act'), that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant thereto. The Seller
will not act, in any manner set forth in the foregoing sentence with respect to
any Certificate. The Seller has not and will not sell or otherwise transfer any
of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
Very truly yours,
(Transferor)
By:
-------------------------------------------------
Name:
Title:
B-2-1
FORM OF TRANSFEREE LETTER
_______________, 20__
Bank One National Association
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: ACE Securities Corp. Home Equity Loan Trust,
Series 2003-TC1 Asset Backed Pass-Through Certificates,
CLASS CE, CLASS P AND CLASS R CERTIFICATES
Ladies and Gentlemen:
In connection with the transfer by ______________________ (the
"Transferor") to __________________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferee hereby
certifies as follows:
1. The Transferee understands that (a) the Certificates have
not been and will not be registered or qualified under the Securities Act
of 1933, as amended (the "Act") or any state securities law, (b) the
Depositor is not required to so register or qualify the Certificates, (c)
the Certificates may be resold only if registered and qualified pursuant
to the provisions of the Act or any state securities law, or if an
exemption from such registration and qualification is available, (d) the
Pooling and Servicing Agreement contains restrictions regarding the
transfer of the Certificates and (e) the Certificates will bear a legend
to the foregoing effect.
2. The Transferee is acquiring the Certificates for its own
account for investment only and not with a view to or for sale in
connection with any distribution thereof in any manner that would violate
the Act or any applicable state securities laws.
3. The Transferee is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters, and, in particular, in such matters related to
securities similar to the Certificates, such that it is capable of
evaluating the merits and risks of investment in the Certificates, (b)
able to bear the economic risks of such an investment and (c) an
"accredited investor" within the meaning of Rule 501(a) promulgated
pursuant to the Act.
4. The Transferee has been furnished with, and has had an
opportunity to review (a) a copy of the Pooling and Servicing Agreement
and (b) such other information concerning the Certificates, the Mortgage
Loans and the Depositor as has been requested by the Transferee from the
Depositor or the Transferor and is relevant to the Transferee's
B-2-2
decision to purchase the Certificates. The Transferee has had any
questions arising from such review answered by the Depositor or the
Transferor to the satisfaction of the Transferee.
5. The Transferee has not and will not nor has it authorized
or will it authorize any person to (a) offer, pledge, sell, dispose of or
otherwise transfer any Certificate, any interest in any Certificate or
any other similar security to any person in any manner, (b) solicit any
offer to buy or to accept a pledge, disposition of other transfer of any
Certificate, any interest in any Certificate or any other similar
security from any person in any manner, (c) otherwise approach or
negotiate with respect to any Certificate, any interest in any
Certificate or any other similar security with any person in any manner,
(d) make any general solicitation by means of general advertising or in
any other manner or (e) take any other action, that (as to any of (a)
through (e) above) would constitute a distribution of any Certificate
under the Act, that would render the disposition of any Certificate a
violation of Section 5 of the 1933 Act or any state securities law, or
that would require registration or qualification pursuant thereto. The
Transferee will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing
Agreement.
6. The Transferee: (a) is not an employee benefit or other
plan subject to the prohibited transaction provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended ("Plan"), or any
other person (including an investment manager, a named fiduciary or a
trustee of any Plan) acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any Plan within the
meaning of the Department of Labor ("DOL") regulation at 29 C.F.R.
ss.2510.3-101 or (b) has provided the Trustee with an opinion of counsel
on which the Depositor, the Master Servicer, the Securities
Administrator, the Trustee and the Servicer may rely, acceptable to and
in form and substance satisfactory to the Trustee to the effect that the
purchase of Certificates is permissible under applicable law, will not
constitute or result in any non-exempt prohibited transaction under ERISA
or Section 4975 of the Code and will not subject the Trustee, the Master
Servicer, the Securities Administrator, the Depositor or the Servicer to
any obligation or liability (including obligations or liabilities under
ERISA or Section 4975 of the Code) in addition to those undertaken in the
Pooling and Servicing Agreement.
In addition, the Transferee hereby certifies, represents and warrants to,
and covenants with, the Depositor, the Trustee and the Servicer that the
Transferee will not transfer such Certificates to any Plan or person unless such
Plan or person meets the requirements set forth in either 6(a) or (b) above.
Very truly yours,
By:
--------------------------------------------------
Name:
Title:
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
___________________________ being duly sworn, deposes, represents and
warrants as follows:
1. I am a _____________________ of _______________________________
(the "Owner") a corporation duly organized and existing under the
laws of _________________________, the record owner of ACE
Securities Corp. Home Equity Loan Trust, Series 2003-TC1, Asset
Backed Pass-Through Certificates, Series 2003-TC1, Class R
Certificates (the "Class R Certificates"), on behalf of whom I
make this affidavit and agreement. Capitalized terms used but not
defined herein have the respective meanings assigned thereto in
the Pooling and Servicing Agreement pursuant to which the Class R
Certificates were issued.
2. The Owner (i) is and will be a "Permitted Transferee" as of
____________________. ____ and (ii) is acquiring the Class R
Certificates for its own account or for the account of another
Owner from which it has received an affidavit in substantially the
same form as this affidavit. A "Permitted Transferee" is any
person other than a "disqualified organization" or a possession of
the United States. For this purpose, a "disqualified organization"
means the United States, any state or political subdivision
thereof, any agency or instrumentality of any of the foregoing
(other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage
Corporation, a majority of whose board of directors is not
selected by any such governmental entity) or any foreign
government, international organization or any agency or
instrumentality of such foreign government or organization, any
real electric or telephone cooperative, or any organization (other
than certain farmers' cooperatives) that is generally exempt from
federal income tax unless such organization is subject to the tax
on unrelated business taxable income.
3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified
organizations under the Internal Revenue Code of 1986 that applies
to all transfers of the Class R Certificates after March 31, 1988;
(ii) that such tax would be on the transferor or, if such transfer
is through an agent (which person includes a broker, nominee or
middleman) for a non-Permitted Transferee, on the agent; (iii)
that the person otherwise liable for the tax shall be relieved of
liability
B-3-1
for the tax if the transferee furnishes to such person an
affidavit that the transferee is a Permitted Transferee and, at
the time of transfer, such person does not have actual knowledge
that the affidavit is false; and (iv) that each of the Class R
Certificates may be a "noneconomic residual interest" within the
meaning of proposed Treasury regulations promulgated under 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 is to impede the assessment or collection of tax.
4. The Owner is aware of the tax imposed on a "pass-through entity"
holding the Class R Certificates if, at any time during the
taxable year of the pass-through entity, a non-Permitted
Transferee is the record holder of an interest in such entity.
(For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)
5. The Owner is aware that the Trustee will not register the transfer
of any Class R Certificate unless the transferee, or the
transferee's agent, delivers to the Trustee, among other things,
an affidavit in substantially the same form as this affidavit. The
Owner expressly agrees that it will not consummate any such
transfer if it knows or believes that any of the representations
contained in such affidavit and agreement are false.
6. The Owner consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to
constitute a reasonable arrangement to ensure that the Class R
Certificates will only be owned, directly or indirectly, by an
Owner that is a Permitted Transferee.
7. The Owner's taxpayer identification number is ________________.
8. The Owner has reviewed the restrictions set forth on the face of
the Class R Certificates and the provisions of Section 6.02(d) of
the Pooling and Servicing Agreement under which the Class R
Certificates were issued (in particular, clauses (iii)(A) and
(iii)(B) of Section 6.02(d) which authorize the Trustee to deliver
payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds
such Certificate in violation of Section 6.02(d)); and that the
Owner expressly agrees to be bound by and to comply with such
restrictions and provisions.
9. The Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of
any tax.
10. The Owner anticipates that it will, so long as it holds the Class
R Certificates, have sufficient assets to pay any taxes owed by
the holder of such Class R Certificates, and hereby represents to
and for the benefit of the person from whom it acquired the Class
R Certificates that the Owner intends to pay taxes associated with
holding such
B-3-2
Class R Certificates as they become due, fully understanding that
it may incur tax liabilities in excess of any cash flows generated
by the Class R Certificates.
11. The Owner has no present knowledge that it may become insolvent or
subject to a bankruptcy proceeding for so long as it holds the
Class R Certificates.
12. The Owner has no present knowledge or expectation that it will be
unable to pay any United States taxes owed by it so long as any of
the Certificates remain outstanding.
13. The Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or
entity that will not have sufficient assets to pay any taxes owed
by the holder of such Class R Certificates, or that may become
insolvent or subject to a bankruptcy proceeding, for so long as
the Class R Certificates remain outstanding.
14. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, obtain from its transferee the
representations required by Section 6.02(d) of the Pooling and
Servicing Agreement under which the Class R Certificate were
issued and will not consummate any such transfer if it knows, or
knows facts that should lead it to believe, that any such
representations are false.
15. The Owner will, in connection with any transfer that it makes of
the Class R Certificates, deliver to the Trustee an affidavit,
which represents and warrants that it is not transferring the
Class R Certificates to impede the assessment or collection of any
tax and that it has no actual knowledge that the proposed
transferee: (i) has insufficient assets to pay any taxes owed by
such transferee as holder of the Class R Certificates; (ii) may
become insolvent or subject to a bankruptcy proceeding for so long
as the Class R Certificates remains outstanding; and (iii) is not
a "Permitted Transferee".
16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in,
or under the laws of, the United States or any political
subdivision thereof, or an estate or trust whose income from
sources without the United States may be included 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.
17. The Owner of the Class R Certificate, hereby agrees that in the
event that the Trust Fund created by the Pooling and Servicing
Agreement is terminated pursuant to Section 10.01 thereof, the
undersigned shall assign and transfer to the Holders of the Class
CE and the Class P Certificates any amounts in excess of par
received in connection with such termination. Accordingly, in the
event of such termination, the Trustee is hereby authorized to
withhold any such amounts in excess of par and to pay such amounts
directly to the Holders of the Class CE and the Class P
Certificates. This agreement shall bind and be enforceable against
any successor, transferee or assigned of the undersigned in the
Class R Certificate. In connection with any transfer of the Class
R Certificate, the Owner shall obtain an agreement substantially
similar to this clause from any subsequent owner.
B-3-3
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
_________________, ____.
[OWNER]
By:
--------------------------------------------------
Name:
Title: [Vice] President
ATTEST:
By:
----------------------------------------
Name:
Title: [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 a [Vice] President of the Owner, and acknowledged to me
that [he/she] executed the same as [his/her] free act and deed and the free act
and deed of the Owner.
Subscribed and sworn before me this ______________ day of
__________, ____.
--------------------------------------------------
Notary Public
County of
--------------------------
State of
---------------------------
My Commission expires:
B-3-5
FORM OF TRANSFEROR AFFIDAVIT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
_________________________, being duly sworn, deposes, represents
and warrants as follows:
1. I am a ____________________ of _________________________
(the "Owner"), a corporation duly organized and existing under the laws of
_____________, on behalf of whom I make this affidavit.
2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.
3. The Owner has no actual knowledge that the Person that is
the proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.
4. The Owner understands that the Purchaser has delivered to
the Trustee or a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit B-2. The Owner does not know or
believe that any representation contained therein is false.
5. At the time of transfer, the Owner has conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Owner has determined that the Purchaser has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Owner understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Owner may continue to be liable for United States income taxes
associated therewith) unless the Owner has conducted such an investigation.
6. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement.
B-3-6
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
________________, ____.
[OWNER]
By:
-------------------------------------------------
Name:
Title: [Vice] President
ATTEST:
By:
----------------------------------------
Name:
Title. [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 a [Vice] President of the Owner, and acknowledged to me
that [he/she] executed the same as [his/her] free act and deed and the free act
and deed of the Owner.
Subscribed and sworn before me this ______ day of _____________,
____.
Notary Public
County of
--------------------------
State of
---------------------------
My Commission expires:
H-1
EXHIBIT C
FORM OF SERVICER CERTIFICATION
Re: ACE Securities Corp. Home Equity Loan Trust, Series 2003-TC1 Asset Backed
Pass-Through Certificates
I, [identify the certifying individual], certify to ACE Securities Corp.
(the "Depositor"), Bank One National Association (the "Trustee") and ▇▇▇▇▇ Fargo
Bank Minnesota, National Association (the "Master Servicer"), and their
respective officers, directors and affiliates, and with the knowledge and intent
that they will rely upon this certification, that:
1. Based on my knowledge, the information in the Annual Statement of
Compliance, the Annual Independent Public Accountant's Servicing Report and all
servicing reports, officer's certificates and other information relating to the
servicing of the Mortgage Loans submitted to the Master Servicer taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact constituting information required to be provided by the Servicer
under the Pooling and Servicing Agreement necessary to make the statements made,
in light of the circumstances under which such statements were made, not
misleading as of the date of this certification.
2. Based on my knowledge, the servicing information required to be
provided to the Master Servicer by the Servicer under the Pooling and Servicing
Agreement has been provided to the Master Servicer.
3. I am responsible for reviewing the activities performed by the
Servicer under the Pooling and Servicing Agreement and based upon my knowledge
and the review required by the Pooling and Servicing Agreement, and except as
disclosed in the Annual Statement of Compliance or the Annual Independent Public
Accountant's Servicing Report submitted to the Master Servicer, the Servicer has
fulfilled its obligations under the Pooling and Servicing Agreement; and
4. I have disclosed to the Master Servicer all significant
deficiencies relating to the Servicer's compliance with the minimum servicing
standards in accordance with a review conducted in compliance with the Uniform
Single Attestation Program for Mortgage Bankers or similar standard as set forth
in the Pooling and Servicing Agreement.
C-1
Capitalized terms used and not otherwise defined herein have the meanings
assigned thereto in the Pooling and Servicing Agreement, dated as of July 1,
2003, among ACE Securities Corp., Ocwen Federal Bank FSB, ▇▇▇▇▇ Fargo Bank
Minnesota, National Association and Bank One National Association.
Date:
--------------------------
-------------------------------
[Signature]
[Title]
C-2