Execution Copy
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.,
Depositor
DLJ MORTGAGE CAPITAL, INC.,
Seller
FREMONT INVESTMENT & LOAN,
Servicer
▇▇▇▇▇ FARGO BANK, N.A.,
Back-Up Servicer
THE MURRAYHILL COMPANY,
Credit Risk Manager
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 2004
CSFB HOME EQUITY PASS-THROUGH CERTIFICATES, SERIES 2004-FRE1
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i
Table of Contents
Page
ARTICLE I DEFINITIONS..................................................12
SECTION 1.01 Definitions.........................................12
SECTION 1.02 Interest Calculations...............................44
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES.45
SECTION 2.01 Conveyance of Mortgage Loans........................45
SECTION 2.02 Acceptance by the Trustee of the Mortgage Loans.....47
SECTION 2.03 Representations and Warranties of the Seller, the
Servicer and the Back-Up Servicer...................49
SECTION 2.04 Representations and Warranties of the Depositor
as to the Mortgage Loans............................52
SECTION 2.05 Delivery of Opinion of Counsel in Connection with
Substitutions.......................................52
SECTION 2.06 Execution and Delivery of Certificates..............53
SECTION 2.07 REMIC Matters.......................................53
SECTION 2.08 Covenants of the Servicer...........................53
SECTION 2.09 Conveyance of Pooling REMIC Regular Interests,
Subsidiary REMIC Regular Interests and Intermediate
REMIC Regular Interests and Acceptance of Master
REMIC, Respectively, by the Trustee;
Issuance of Certificates............................54
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...............55
SECTION 3.01 Servicer to Service the Mortgage Loans..............55
SECTION 3.02 Subservicing; Enforcement of the Obligations
of Subservicers.....................................56
SECTION 3.03 [Reserved]..........................................57
SECTION 3.04 Notification of Adjustments.........................57
SECTION 3.05 Trustee or Back-up Servicer to Act as Servicer......58
SECTION 3.06 Collections on Mortgage Loans; Collection Account;
Certificate Account.................................58
SECTION 3.07 Establishment of and Deposits to Escrow Accounts;
Permitted Withdrawals from Escrow Accounts; Payments
of Taxes, Insurance and Other Charges...............61
SECTION 3.08 Access to Certain Documentation and Information
Regarding the Mortgage Loans; Inspections...........63
SECTION 3.09 Permitted Withdrawals from the Collection Account
and Certificate Account.............................63
SECTION 3.10 Maintenance of Hazard Insurance; Mortgage Impairment
Insurance and Primary Insurance Policy; Claims;
Restoration of Mortgaged Property...................65
SECTION 3.11 Enforcement of Due-on-Sale Clauses; Assumption
Agreements..........................................67
SECTION 3.12 Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans................68
SECTION 3.13 Trustee to Cooperate; Release of Mortgage Files.....71
SECTION 3.14 Documents, Records and Funds in Possession of the
Servicer to be Held for the Trustee.................72
SECTION 3.15 Servicing Compensation; Compensating Interest
Payments; Back-Up Servicer's Indemnity..............73
SECTION 3.16 Access to Certain Documentation.....................74
SECTION 3.17 Annual Statement as to Compliance...................74
SECTION 3.18 Annual Independent Public Accountants' Servicing
Statement; Financial Statements.....................74
SECTION 3.19 Maintenance of Fidelity Bond and Errors and Omissions
Insurance...........................................75
SECTION 3.20 Prepayment Premiums.................................76
SECTION 3.21 Duties and Removal of the Credit Risk Manager.......76
ARTICLE IV DISTRIBUTIONS AND ADVANCES...................................78
SECTION 4.01 Advances............................................78
SECTION 4.02 Priorities of Distribution..........................78
SECTION 4.03 Allocation of Losses................................85
SECTION 4.04 Monthly Statements to Certificateholders............86
SECTION 4.05 Servicer to Cooperate...............................88
SECTION 4.06 Basis Risk Reserve Fund.............................88
ARTICLE V THE CERTIFICATES.............................................90
SECTION 5.01 The Certificates....................................90
SECTION 5.02 Certificate Register; Registration of Transfer and Exchange
of Certificates.....................................90
SECTION 5.03 Mutilated, Destroyed, Lost or Stolen Certificates...95
SECTION 5.04 Persons Deemed Owners...............................95
SECTION 5.05 Access to List of Certificateholders' Names
and Addresses.......................................95
SECTION 5.06 Maintenance of Office or Agency.....................96
ARTICLE VI THE DEPOSITOR, THE SELLER, THE SERVICER AND
THE BACK-UP SERVICER.........................................97
SECTION 6.01 Respective Liabilities of the Depositor, the Seller, the
Servicer and the Back-Up Servicer...................97
SECTION 6.02 Merger or Consolidation of the Depositor, the Seller, the
Back-Up Servicer or the Servicer....................97
SECTION 6.03 Limitation on Liability of the Depositor, the Seller, the
Back-Up Servicer and the Servicer...................98
SECTION 6.04 Limitation on Resignation of the Servicer; Pledge of
Servicing Rights....................................99
SECTION 6.05 Limitation Upon Liability of the Credit Risk Manager100
ARTICLE VII DEFAULT.....................................................101
SECTION 7.01 Events of Default..................................101
SECTION 7.02 Back-up Servicer/Trustee to Act; Appointment
of Successor.......................................104
SECTION 7.03 Notification to Certificateholders.................106
SECTION 7.04 Termination of Duties of Back-Up Servicer..........106
ARTICLE VIII CONCERNING THE TRUSTEE......................................107
SECTION 8.01 Duties of the Trustee..............................107
SECTION 8.02 Certain Matters Affecting the Trustee..............108
SECTION 8.03 Trustee Not Liable for Certificates
or Mortgage Loans..................................109
SECTION 8.04 Trustee May Own Certificates.......................110
SECTION 8.05 Trustee's Fees and Expenses........................110
SECTION 8.06 Eligibility Requirements for the Trustee...........110
SECTION 8.07 Resignation and Removal of the Trustee.............111
SECTION 8.08 Successor Trustee..................................112
SECTION 8.09 Merger or Consolidation of the Trustee.............112
SECTION 8.10 Appointment of Co-Trustee or Separate Trustee......112
SECTION 8.11 Tax Matters........................................114
SECTION 8.12 Periodic Filings...................................117
SECTION 8.13 Trust Obligations..................................119
SECTION 8.14 Determination of Certificate Index.................119
SECTION 8.15 Indemnification with Respect to Certain Taxes and
Loss of REMIC Status...............................119
SECTION 8.16 Incentive Agreement................................119
ARTICLE IX TERMINATION.................................................120
SECTION 9.01 Termination upon Liquidation, Purchase or Auction
of the Mortgage Loans..............................120
SECTION 9.02 Final Distribution on the Certificates.............121
SECTION 9.03 Additional Termination Requirements................122
ARTICLE X MISCELLANEOUS PROVISIONS....................................124
SECTION 10.01 Amendment..........................................124
SECTION 10.02 Recordation of Agreement; Counterparts.............125
SECTION 10.03 Governing Law......................................125
SECTION 10.04 Intention of Parties...............................126
SECTION 10.05 Notices............................................126
SECTION 10.06 Severability of Provisions.........................127
SECTION 10.07 Assignment.........................................127
SECTION 10.08 Limitation on Rights of Certificateholders.........127
SECTION 10.09 Certificates Nonassessable and Fully Paid..........128
SECTION 10.10 Protection of Assets...............................128
SECTION 10.11 Non-Solicitation...................................128
EXHIBITS:
EXHIBIT A Form of Class A-1 and Class A-2 Certificate
EXHIBIT B Form of Class M Certificate
EXHIBIT C Form of Class B Certificate
EXHIBIT D Form of Residual Certificate
EXHIBIT E Form of Class X Certificate
EXHIBIT F Form of Interest Only Certificates
EXHIBIT G Form of Initial Certification of Custodian
EXHIBIT H Form of Final Certification of Custodian
EXHIBIT I Transfer Affidavit
EXHIBIT J Form of Transferor Certificate
EXHIBIT K Form of Investment Letter (Non-rule 144A)
EXHIBIT L Form of Rule 144A Letter
EXHIBIT M Request for Release
EXHIBIT N Officer's Certificate with Respect to Principal Prepayments
EXHIBIT O Form of Servicer Report
EXHIBIT P Form of Depositor Certification
EXHIBIT Q Form of Trustee Certification
EXHIBIT R Form of Servicer Certification
SCHEDULE I Mortgage Loan Schedule for Mortgage Loans
SCHEDULE IIA Representations and Warranties of Seller - DLJMC
SCHEDULE IIB Representations and Warranties of Servicer
SCHEDULE IIC Representations and Warranties of Back-Up Servicer
SCHEDULE III Representations and Warranties - Mortgage Loans
8
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THIS POOLING AND SERVICING AGREEMENT, dated as of August 1, 2004, among CREDIT SUISSE
FIRST BOSTON MORTGAGE SECURITIES CORP., a Delaware corporation, as the depositor (the
"Depositor"), DLJ MORTGAGE CAPITAL, INC., a Delaware corporation, as seller (the "Seller"),
FREMONT INVESTMENT & LOAN, as servicer (the "Servicer"), ▇▇▇▇▇ FARGO BANK, N.A., a national
banking association, as back-up servicer (the "Back-Up Servicer"), THE MURRAYHILL COMPANY,
a Colorado corporation, as credit risk manager (the "Credit Risk Manager") and U.S. BANK
NATIONAL ASSOCIATION, a national banking association, as trustee (the "Trustee").
WITNESSETH THAT
In consideration of the mutual agreements herein contained, the parties hereto agree
as follows:
PRELIMINARY STATEMENT
As provided herein, the Trustee shall elect that the Trust Fund (exclusive of the
assets held in the Basis Risk Reserve Fund and any entitlement to Prepayment Premiums) be
treated for federal income tax purposes as comprising four real estate mortgage investment
conduits (each a "REMIC" or, in the alternative, the Pooling REMIC, the Subsidiary REMIC,
the Intermediate REMIC, and the Master REMIC"). Each Certificate, other than the Class R
Certificate, represents ownership of a regular interest in the Master REMIC for purposes of
the REMIC Provisions. In addition, each Class of LIBOR Certificates represents the right
to receive payments pursuant to contractual arrangements as described in Section 8.11 of
this Agreement. The Class X Certificate also represents ownership of the assets held from
time to time in the Basis Risk Reserve Fund and rights to receive certain payments from the
holder of the Class R Certificate as described in Section 8.11 of this Agreement. The
Class R Certificate represents ownership of the sole class of residual interest in each of
the Subsidiary REMIC, the Intermediate REMIC, and the Master REMIC for purposes of the
REMIC Provisions. The Class R-II Certificate represents ownership of the sole class of
residual interest in the Pooling REMIC. The Master REMIC shall hold as its assets the
several classes of uncertificated Lower Tier Interests in the Intermediate REMIC, other
than the Class LT2-R Interest, and each such Lower Tier Interest is hereby designated as a
regular interest in the Intermediate REMIC for purposes of the REMIC Provisions. The
Intermediate REMIC shall hold as its assets the several classes of uncertificated Lower
Tier Interests in the Subsidiary REMIC, other than the Class LT1-R Interest, and each such
Lower Tier Interest is hereby designated as a regular interest in the Subsidiary REMIC.
The Subsidiary REMIC shall hold as its assets the several classes of uncertificated Lower
Tier Interests in the Pooling REMIC. The Pooling REMIC shall hold as assets the property
of the Trust Fund other than the Lower Tier Interests in the Pooling REMIC, the Subsidiary
REMIC and the Intermediate REMIC, the Basis Risk Reserve Fund and any entitlement to
Prepayment Premiums. The startup day for each REMIC created hereby for purposes of the
REMIC Provisions is the Closing Date. In addition, for purposes of the REMIC Provisions,
the latest possible maturity date for each regular interest in each REMIC created hereby is
the fourth month following month in which the Mortgage Loan having the latest maturity date
matures.
The Pooling REMIC
The following table sets forth (or describes) the class designation, interest rate,
and initial class principal amount for each class of Pooling REMIC Lower Tier Interests.
Pooling
REMIC
Pooling REMIC Lower Tier
Lower Tier Interest Initial Class
Class Designation Rate Principal Amount
Class LTP-A (1) $ 87,095,133.00
Class LTP-F1 2.80% $ 17,000,000.00
Class LTP-V1 (2) $ 17,000,000.00
Class LTP-F2 2.80% $ 16,500,000.00
Class LTP-V2 (2) $ 16,500,000.00
Class LTP-F3 2.80% $ 15,500,000.00
Class LTP-V3 (2) $ 15,500,000.00
Class LTP-F4 2.80% $ 15,000,000.00
Class LTP-V4 (2) $ 15,000,000.00
Class LTP-F5 2.80% $ 14,000,000.00
Class LTP-V5 (2) $ 14,000,000.00
Class LTP-F6 2.80% $ 13,500,000.00
Class LTP-V6 (2) $ 13,500,000.00
Class LTP-F7 2.80% $ 12,500,000.00
Class LTP-V7 (2) $ 12,500,000.00
Class LTP-F8 2.80% $ 12,000,000.00
Class LTP-V8 (2) $ 12,000,000.00
Class LTP-F9 2.80% $ 11,500,000.00
Class LTP-V9 (2) $ 11,500,000.00
Class LTP-F10 2.80% $ 11,000,000.00
Class LTP-V10 (2) $ 11,000,000.00
Class LTP-F11 2.80% $ 10,500,000.00
Class LTP-V11 (2) $ 10,500,000.00
Class LTP-F12 2.80% $ 10,000,000.00
Class LTP-V12 (2) $ 10,000,000.00
Class LTP-F13 2.80% $ 9,000,000.00
Class LTP-V13 (2) $ 9,000,000.00
Class LTP-F14 2.80% $ 9,000,000.00
Class LTP-V14 (2) $ 9,000,000.00
Class LTP-F15 2.80% $ 8,500,000.00
Class LTP-V15 (2) $ 8,500,000.00
Class LTP-F16 2.80% $ 8,000,000.00
Class LTP-V16 (2) $ 8,000,000.00
Class LTP-F17 2.80% $ 8,000,000.00
Class LTP-V17 (2) $ 8,000,000.00
Class LTP-F18 2.80% $ 7,000,000.00
Class LTP-V18 (2) $ 7,000,000.00
Class LTP-F19 2.80% $ 7,000,000.00
Class LTP-V19 (2) $ 7,000,000.00
Class LTP-F20 2.80% $ 6,500,000.00
Class LTP-V20 (2) $ 6,500,000.00
Class LTP-F21 2.80% $ 6,000,000.00
Class LTP-V21 (2) $ 6,000,000.00
Class LTP-F22 2.80% $ 120,500,000.00
Class LTP-V22 (2) $ 120,500,000.00
Class R-II (3) (2) $ 25.00
(1) The interest rate with respect to any Distribution Date (and the related Accrual
Period) for the Class LTP-A Interest is a per annum rate equal to the Net WAC Rate.
(2) The interest rate with respect to any Distribution Date (and the related Accrual
Period) for each of these Pooling REMIC Lower Tier Interests is a per annum rate
equal to the excess, if any of (i) the product of (a) the Net WAC Rate, and (b) 2,
over (ii) 2.80%.
(3) The Class R-II Certificate represents ownership of the sole class of residual
interest in the Pooling REMIC. On each Distribution Date, Available Funds remaining
after all distributions with respect to the other Pooling REMIC Interests have been
made in the manner described below shall be distributed with respect to the
Class LTP-R Interest.
On each Distribution Date, the Trustee shall first pay or charge as an expense of the
Pooling REMIC all expenses of the Trust for such Distribution Date.
On each Distribution Date the Trustee shall distribute the remaining Interest
Remittance Amount for Loan Group 1 and Loan Group 2 with respect to each of the Lower Tier
Interests in the Pooling REMIC based on the above-described interest rates.
On each Distribution Date, the Trustee shall distribute the Principal Remittance
Amount with respect to Loan Group 1 and Loan Group 2 with respect to the Pooling REMIC
Interests, first to the Class LT-R-II Certificate until its Class Principal Balance is
reduced to zero, then to the Class LTP-A Interest until its principal balance is reduced to
zero, and then sequentially, to the other Pooling REMIC Interests in ascending order of
their numerical class designation, and, with respect to each pair of classes having the
same numerical designation, in equal amounts to each such class, until the principal
balance of each such class is reduced to zero. All losses on the Mortgage Loans shall be
allocated among the Pooling REMIC Interests in the same manner that principal distributions
are allocated.
The Subsidiary REMIC
The following table sets forth (or describes) the class designation, interest rate,
and initial principal amount for each class of Subsidiary REMIC Lower Tier Interests.
Corresponding
Subsidiary REMIC Subsidiary REMIC Class of
Lower Tier Lower Tier Initial Class Intermediate REMIC
Class Designation Interest Rate Principal Balance Interests
Class LT1-A-1A (1) $ 95,112,500.00 Class LT2-A-1A
Class LT1-A-1B (1) $ 176,637,500.00 Class LT2-A-1B
Class LT1-A-2A (1) $ 15,942,500.00 Class LT2-A-2A
Class LT1-A-2B (1) $ 29,607,500.00 Class LT2-A-2B
Class LT1-M-1 (1) $ 12,550,000.00 Class LT2-M-1
Class LT1-M-2 (1) $ 13,500,000.00 Class LT2-M-2
Class LT1-M-3 (1) $ 7,712,500.00 Class LT2-M-3
Class LT1-M-4 (1) $ 6,750,000.00 Class LT2-M-4
Class LT1-M-5 (1) $ 5,787,500.00 Class LT2-M-5
Class LT1-M-6 (1) $ 5,787,500.00 Class LT2-M-6
Class LT1-B-1 (1) $ 4,625,000.00 Class LT2-B-1
Class LT1-B-2 (1) $ 3,862,500.00 Class LT2-B-2
Class LT1-B-3 (1) $ 3,862,500.00 Class LT2-B-3
Class LT1-B-4 (1) $ 4,050,000.00 Class LT2-B-4
Class LT1-Q (1) $ 385,787,500.00 N/A
Class LT1-AIO-2 (2) (2) Class LT2-AIO-2
Class LT1-R (3) (4) N/A
___________________________
(1) The interest rate for each of these Subsidiary REMIC Lower Tier Interests with
respect to any Distribution Date (and the related Accrual Period) is a per annum rate
equal to the weighted average of the interest rates on the Pooling REMIC Lower Tier
Interests (other than the Class R-II Certificate Interests), provided, however, that
for any Distribution Date on which the Class LT1-AIO-2 Interest is entitled to a
portion of the interest accruals on a Pooling REMIC Lower Tier Interest having an "F"
in its class designation, as described in footnote two, below, such weighted average
shall be computed by first subjecting the rate on such Pooling REMIC Lower Tier
Interest to a cap equal to the product of (i) 2 and (ii) the Certificate Index.
(2) The Class LT1-AIO-2 is an interest only class that does not have a principal
balance. For only those Distribution Dates listed in the first column in the table
below, the Class LT1-AIO-2 shall be entitled to interest accrued on the Pooling REMIC
Lower Tier Interest listed in second column in the table below at a per annum rate
equal to the excess, if any, of (i) 1.40% over (ii) the product of (a) 2, and (b) the
Certificate Index.
Pooling REMIC
Distribution Dates Class Designation
3 Class LTP-F-1
3-4 Class LTP-F-2
3-5 Class LTPI-F-3
3-6 Class LTP-F-4
3-7 Class LTP-F-5
3-8 Class LTP-F-6
3-9 Class LTP-F-7
3-10 Class LTP-F-8
3-11 Class LTP-F-9
3-12 Class LTP-F-10
3-13 Class LTP-F-11
3-14 Class LTP-F-12
3-15 Class LTP-F-13
3-16 Class LTP-F-14
3-17 Class LTP-F-15
3-18 Class LTP-F-16
3-19 Class LTP-F-17
3-20 Class LTP-F-18
3-21 Class LTP-F-19
3-22 Class LTP-F-20
3-23 Class LTP-F-21
3-24 Class LTP-F-22
(3) The Class LT1-R Interest is the sole class of residual interest in the Subsidiary
REMIC. It does not have an interest rate or a principal balance.
On each Distribution Date the Trustee shall distribute interest on the Lower Tier
Interests in the Subsidiary REMIC based on the above-described interest rates, provided,
however, that interest that accrues on the Class LT1-Q Interest shall be deferred in an
amount equal to one-half of the increase, if any, in the Overcollateralization Amount for
such Distribution Date. Any interest so deferred shall itself bear interest at the
interest rate for the Class LT1-Q Interest. An amount equal to the interest so deferred
shall be distributed as additional principal on the other Subsidiary REMIC Lower Tier
Interests having a principal balance in the manner described below.
On each Distribution Date principal shall be distributed, and Realized Losses shall
be allocated, among the Lower Tier Interests in the Subsidiary REMIC in the following order
of priority:
(i) First, to the Class LT1-A-1A Interest until the principal balance of such Lower Tier
Interest equals one-half of the Class Principal Balance of the Class LT2-A-1A
Interest immediately after such Distribution Date;
(ii) Second, to the Class LT1-A-1B Interest until the principal balance of such Lower Tier
Interest equals one-half of the Class Principal Balance of the Class LT2-A-1B
Interest immediately after such Distribution Date;
(iii) Third, to the Class LT1-A-2A Interest until the principal balance of such Lower Tier
Interest equals one-half of the Class Principal Balance of the Class LT2-A-2A
Interest immediately after such Distribution Date;
(iv) Fourth, to the Class LT1-A-2B Interest until the principal balance of such Lower Tier
Interest equals one-half of the Class Principal Balance of the Class LT2-A-2B
Interest immediately after such Distribution Date;
(v) Fifth, to the Class LT1-M-1 Interest until its principal balance equals one-half of
the Class Principal Balance of the Class M-1 Certificates immediately after such
Distribution Date;
(vi) Sixth, to the Class LT1-M-2 Interest until its principal balance equals one-half of
the Class Principal Balance of the Class M-2 Certificates immediately after such
Distribution Date;
(vii) Seventh, to the Class LT1-M-3 Interest until its principal balance equals one-half of
the Class Principal Balance of the Class M-3 Certificates immediately after such
Distribution Date;
(viii) Eighth, to the Class LT1-M-4 Interest until its principal balance equals
one-half of the Class Principal Balance of the Class M-4 Certificates immediately
after such Distribution Date;
(ix) Ninth, to the Class LT1-M-5 Interest until its principal balance equals one-half of
the Class Principal Balance of the Class M-5 Certificates immediately after such
Distribution Date;
(x) Tenth, to the Class LT1-M-6 Interest until its principal balance equals one-half of
the Class Principal Balance of the Class M-6 Certificates immediately after such
Distribution Date;
(xi) Eleventh, to the Class LT1-B-1 Interest until its principal balance equals one-half
of the Class Principal Balance of the Class B-1 Certificates immediately after such
Distribution Date;
(xii) Twelfth, to the Class LT1-B-2 Interest until its principal balance equals one-half of
the Class Principal Balance of the Class B-2 Certificates immediately after such
Distribution Date;
(xiii) Thirteenth, to the Class LT1-B-3 Interest until its principal balance equals
one-half of the Class Principal Balance of the Class B-3 Certificates immediately
after such Distribution Date;
(xiv) Fourteenth, to the Class LT1-B-4 Interest until its principal balance equals one-half
of the Class Principal Balance of the Class B-4 Certificates immediately after such
Distribution Date; and
(xv) Finally, to the Class LT1-Q Interest, any remaining amounts.
The Intermediate REMIC
The following table sets forth (or describes) the class designation, interest rate,
and initial principal amount for each class of Intermediate REMIC Lower Tier Interests.
Intermediate Intermediate Corresponding Class
REMIC REMIC Initial Class of Certificate(s)
Class Designation Interest Rate Principal Balance or Component
Class LT2-A-1A (1) $ 190,225,000.00 Class A-1
Class LT2-A-1B (2) $ 353,275,000.00 Class A-1
Class LT2-A-2A (3) $ 31,885,000.00 Class A-2
Class LT2-A-2B (2) $ 59,215,000.00 Class A-2
Class LT2-M-1 (4) $ 25,100,000.00 Class M-1
Class LT2-M-2 (4) $ 27,000,000.00 Class M-2
Class LT2-M-3 (4) $ 15,425,000.00 Class M-3
Class LT2-M-4 (4) $ 13,500,000.00 Class M-4
Class LT2-M-5 (4) $ 11,575,000.00 Class M-5
Class LT2-M-6 (4) $ 11,575,000.00 Class M-6
Class LT2-B-1 (4) $ 9,250,000.00 Class B-1
Class LT2-B-2 (4) $ 7,725,000.00 Class B-2
Class LT2-B-3 (4) $ 7,725,000.00 Class B-3
Class LT2-B-4 (4) $ 8,100,000.00 Class B-4
Class LT2-AIO-2 (5) (5) Class AIO-2
Class LT2-X (6) (9) Class X
Class LT2-R (7) (7) Class R
___________________________
(1) The interest rate for the Class LT2-A-1A Interest with respect to any Distribution
Date (and the related Accrual Period) on or before the Distribution Date in August
2006 is the per annum rate equal to the lesser of (i) the product of (a) the sum of
(I) the product of (A) 185.714285714286%, multiplied by (B) the Certificate Index,
plus, (II) 8.914285714286%, multiplied by (b) a fraction, the numerator of which is
(I) the greater of 30 or the actual number of days in the Accrual Period for the
LIBOR Certificates, and the denominator of which is (II) 30, and (ii) the quotient of
(a) the weighted average of the interest rates on the Subsidiary REMIC Lower Tier
Interests (other than the Class LT1-AIO-2 and Class LT1-R Interests), divided by
(b) 35%. For any Distribution Date (and the related Accrual Period) thereafter, a
per annum rate equal to the rate at which interest accrues on the Corresponding Class
of Certificates, subject to a cap equal to the weighted average of the interest rates
on the Subsidiary REMIC Lower Tier Interests (other than the Class LT1-AIO-2 and
Class LT1-R Interests)
(2) The interest rate for each of these Intermediate REMIC Lower Tier Interests with
respect to any Distribution Date (and the related Accrual Period) on or before the
Distribution Date in August 2006 is the per annum rate equal to 0.00%. For any
Distribution Date (and the related Accrual Period) thereafter, a per annum rate equal
to the rate at which interest accrues on the Corresponding Class of Certificates,
subject to a cap equal to the weighted average of the interest rates on the
Subsidiary REMIC Lower Tier Interests (other than the Class LT1-AIO-2 and Class LT1-R
Interests).
(3) The interest rate for the Class LT2-A-2A Interest with respect to any Distribution
Date (and the related Accrual Period) on or before the Distribution Date in August
2006 is the per annum rate equal to the lesser of (i) the product of (a) the sum of
(I) the product of (A) 185.714285714286%, multiplied by (B) the Certificate Index,
plus, (II) 9.000000000000%, multiplied by (b) a fraction, the numerator of which is
(I) the greater of 30 or the actual number of days in the Accrual Period for the
LIBOR Certificates, and the denominator of which is (II) 30, and (ii) the quotient of
(a) the weighted average of the interest rates on the Subsidiary REMIC Lower Tier
Interests (other than the Class LT1-AIO-2 and Class LT1-R Interests), divided by (b)
35%. For any Distribution Date (and the related Accrual Period) thereafter, a per
annum rate equal to the rate at which interest accrues on the Corresponding Class of
Certificates, subject to a cap equal to the weighted average of the interest rates on
the Subsidiary REMIC Lower Tier Interests (other than the Class LT1-AIO-2 and
Class LT1-R Interests).
(4) The interest rate with respect to any Distribution Date (and the related Accrual
Period) for each of these Intermediate REMIC Lower Tier Interests is a per annum rate
equal to the lesser of (i) the rate at which interest accrues on the Corresponding
Class of Certificates and (ii) the weighted average of the interest rates on the
Subsidiary REMIC Lower Tier Interests (other than the Class LT1-AIO-2 and Class LT1-R
Interests).
(5) With respect to any Distribution Date, the Class LT2-AIO-2 Interest shall be entitled
to all amounts distributable with respect to the Class LT1-AIO-2 Interest.
(6) The Class LT2-X Interest will accrue interest on its Notional Amount. Its Notional
Amount shall for any Distribution Date (and the related Accrual Period) equal the sum
of the principal balances of the Subsidiary REMIC Lower Tier Interests. For each
Accrual Period, the Class X Certificate shall accrue interest on its Notional Amount
at a per annum rate equal to the excess of (i) the weighted average of the interest
rates on the Subsidiary REMIC Lower Tier Interests (other than the Class LT1-AIO-2
and Class LT1-R Interests), over (ii) the Adjusted Subsidiary REMIC WAC. Interest
accrued on the Class X Certificate for any Accrual Period shall not be distributed on
the related Distribution Date but shall be deferred to the extent of any increase in
the Overcollateralization Amount for such Distribution Date. Any interest so deferred
shall not itself accrue interest.
(7) The Class LT2-R Interest is the sole class of residual interest in the Intermediate
REMIC. It does not have an interest rate or a principal balance.
On each Distribution Date, the Trustee shall distribute interest on the Intermediate
REMIC Lower Tier Interests at the above-described rates.
On each Distribution Date, the Trustee shall distribute principal on, and shall
allocate Realized Losses among, the Intermediate REMIC Lower Tier Interests in the same
amount that the Trustee distributes principal, or allocates Realized Losses, on the
Corresponding Class of Certificates, provided, however, that in the case of the
Class LT2-A-1A and Class LT2-A-2A, Interests, on each Distribution Date principal payments
shall be made and losses shall be allocated such that the principal balance of each such
Intermediate REMIC Lower Tier Interest equals 35% of the Class Principal Balance of the
Corresponding Class of Certificates, and, that in the case of the Class LT2-A-1B and
Class LT2-A-2B Interests, on each Distribution Date principal payments shall be made and
losses shall be allocated such that the principal balance of each such Intermediate REMIC
Lower Tier Interest equals 65% of the Class Principal Balance of the Corresponding Class of
Certificates.
The Master REMIC
The following table sets forth (or describes) the Class designation, Pass-Through
Rate, initial Class Principal Balance, and minimum Denomination for each Class of
Certificates comprising interests in the Trust Fund created hereunder.
Initial
Certificate Minimum
Principal Denominations Integral
Balance or Assumed Final or Multiples
Class Initial Class Pass-Through Maturity Date Percentage in Excess
Designation Notional Amount Rate (1) Interest of Minimum
Class A-1 $543,500,000.00 (2) April 25, 2034 $25,000 $1
Class A-2 $ 91,100,000.00 (2) April 25, 2034 $25,000 $1
Class A-IO-1 (3) (3) August 25,2006 $25,000 $1
Class A-IO-2 (4) (4) August 25,2006 $25,000 $1
Class M-1 $ 25,100,000.00 (2) April 25, 2034 $25,000 $1
Class M-2 $ 27,000,000.00 (2) April 25, 2034 $25,000 $1
Class M-3 $ 15,425,000.00 (2) April 25, 2034 $25,000 $1
Class M-4 $ 13,500,000.00 (2) April 25, 2034 $25,000 $1
Class M-5 $ 11,575,000.00 (2) April 25, 2034 $25,000 $1
Class M-6 $ 11,575,000.00 (2) April 25, 2034 $25,000 $1
Class B-1 $ 9,250,000.00 (2) April 25, 2034 $25,000 $1
Class B-2 $ 7,725,000.00 (2) April 25, 2034 $25,000 $1
Class B-3 $ 7,725,000.00 (2) April 25, 2034 $25,000 $1
Class B-4 $ 8,100,000.00 (2) April 25, 2034 $25,000 $1
Class X-1 (5) (5) April 25, 2034 10% N/A
Class X-2 (5) (5) April 25, 2034 10% N/A
Class R(6) $ 25.00(7) (2) April 25, 2034 20% N/A
Class R-II(7) $ 25.00(8) (2) April 25, 2034 20% N/A
___________________________
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the
Distribution Date four months following the month of the maturity date for the
Mortgage Loan with the latest maturity date has been designated as the "latest
possible maturity date" for each Class of Certificates that represents one or more of
the "regular interests" in the Master REMIC.
(2) The Pass-Through Rate applicable to any Distribution Date (and the related Accrual
Period) shall equal the sum of the related Certificate Index and the Certificate
Margin for such Distribution Date subject to a cap equal to the applicable Net Funds
Cap, provided, however, that for purposes of the REMIC Provisions, such cap shall
equal the weighted average of the of the interest rates on the Intermediate REMIC
Lower Tier Interests (other than the Class LT2-AIO-2, LT2-X and Class LT2-R
Interests), computed as though each such Lower Tier Interest accrued interest based
on the weighted average of the rates on the Subsidiary REMIC Lower Tier Interests,
and any interest distributed at a rate in excess of such cap shall be deemed to have
been paid from the Basis Risk Reserve Fund.
(3) The rate shown above is the Pass-Through Rate for the September 2004 Distribution
Date (and the related Accrual Period). The Class A-IO-1 Certificates are an interest
only Class and for any Distribution Date on or before the Distribution Date in August
2006 the Class A-IO-1 Certificates shall bear interest at their Pass-Through Rate (as
defined herein) on the Class A-IO-1 Notional Amount (as defined herein). In
addition, the Class A-IO-1 Certificates shall be entitled to all Prepayment Premiums
on the Mortgage Loans and such entitlement shall not be an interest in any REMIC
created hereunder. For purposes of the REMIC Provisions, for each Distribution Date
on or before the Distribution Date in August 2006, the Class A-IO-1 Certificates
shall be entitled to a specified portion of the interest that accrues on the
Class LT2-A-1A and, Class LT2-A-2A Interests for the related Accrual Period.
o Specifically, the Class A-IO-1 Certificates shall be entitled to interest accrued on
the Class LT2-A-1A and Class LT2-A-2A Interests at a per annum rate equal to
the least of (i) the excess, if any, of 8.00% over one-month LIBOR for such
Distribution Date, (ii) the excess, if any, of (a) the weighted average of
the interest rates on the Class LT2-A-1A and Class LT2-A-2A Interests for
the Accrual Period, over (b) the product of (I) the weighted average of the
interest rates on those interests if they were each subject to a cap and a
floor equal to the Pass-Through Rates for their Corresponding Class of
Certificates for the Accrual Period multiplied by (II) a fraction, the
numerator of which is the actual number of days in the Accrual Period for
the LIBOR Certificates, and the denominator of which is 30, and (iii) 6.60%.
(4) The Class A-IO-2 Certificates are an interest only Class and for any Distribution
Date beginning with the November 2004 Distribution Date and ending with the August
2006 Distribution Date the Class A-IO-2 Certificates shall bear interest at their
Pass-Through Rate (as defined herein) on the Class A-IO-2 Notional Amount (as defined
herein). For purposes of the REMIC Provisions, the Class A-IO-2 Certificates shall,
for each Distribution Date, be entitled to all amounts distributed with respect to
the Class LT2-AIO-2 Interest.
(5) For purposes of the REMIC Provisions, the Class X Certificates are entitled on each
Distribution Date to all amounts distributable with respect to the Class LT2-X
Interest.
(6) The Class R Certificate represents ownership of the residual interest in the Master
REMIC, as well as ownership of the Class LT2-R and Class LT1-R Interests.
(7) The Class R-II Certificate represents ownership of the residual interest in the
Pooling REMIC.
Set forth below are designations of Classes of Certificates to the categories used
herein:
Book-Entry Certificates....... All Classes of Certificates other than the Physical
Certificates.
Class A Certificates.......... The Class A-1 and Class A-2 Certificates.
Class A-IO Certificates....... The Class A-IO-1 and Class A-IO-2 Certificates.
Class B Certificates.......... The Class B-1, Class B-2, Class B-3 and Class B-4
Certificates.
Class M Certificates.......... The Class M-1, Class M-2 , Class M-3, Class M-4, Class M-5
and Class M-6 Certificates.
Class X Certificates.......... The Class X-1 and Class X-2 Certificates.
ERISA-Restricted Certificates. The Residual Certificates, Private Certificates, and
Certificates of any Class that no longer satisfy the
applicable rating requirements of the Underwriters'
Exemption.
LIBOR Certificates............ The Class A, Class M, Class B, Class R and Class R-II
Certificates.
Notional Amount Certificates.. The Class A-IO and Class X Certificates.
Offered Certificates.......... All Classes of Certificates other than the Private
Certificates.
Private Certificates.......... The Class A-IO-2 and Class X Certificates.
Physical Certificates......... The Class A-IO-2, Class R, Class R-II and Class X
Certificates.
Rating Agencies............... ▇▇▇▇▇'▇ and S&P.
Regular Certificates.......... All Classes of Certificates other than the Class R and
Class R-II Certificates.
Residual Certificates......... The Class R and Class R-II Certificates.
Senior Certificates........... The Class A, Class A-IO, Class R and Class R-II
Certificates.
Subordinate Certificates...... The Class M, Class B and Class X Certificates.
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.
Whenever used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Accepted Master Servicing Practices: With respect to any Mortgage Loan, the
Servicer's normal master servicing practices, which practices shall conform to those
mortgage master servicing practices of prudent mortgage lending institutions which master
service mortgage loans for their own account and of the same type as such Mortgage Loan in
the jurisdiction where the related Mortgaged Property is located.
Accepted Servicing Practices: With respect to any Mortgage Loan, the Servicer's
normal servicing practices, which practices shall conform to those mortgage servicing
practices of prudent mortgage lending institutions which service mortgage loans for their
own account and of the same type as such Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located.
Accrual Period: For any class of LIBOR Certificates and any Distribution Date, the
period commencing on the immediately preceding Distribution Date (or, in the case of the
first Accrual Period, the Closing Date) and ending on the day immediately preceding the
related Distribution Date. For the Class A-IO Certificates, the period commencing on the
25th day of the month preceding the related Distribution Date and ending on the 24th day of
the month of such Distribution Date. For each Lower Tier Interest and the Class X
Certificates, the calendar month preceding the month in which the Distribution Date occurs.
Adjusted Subsidiary REMIC WAC: For any Accrual Period, the product of (i) two,
multiplied by (ii) the weighted average of the interest rates on the Lower Tier Interests
in the Subsidiary REMIC (other than the Class LT2-R Interest), determined by (a) subjecting
the rate on the Class LT1-Q Interest to a cap of zero and (b) subjecting the rate on the
Class LT1-A-1A, Class LT1-A-1B, Class LT1-A-2A, Class LT1-A-2B, Class LT1-M-1,
Class LT1-M-2, Class LT1-M-3, Class LT1-M-4, Class LT1-M-5, Class LT1-M-6, Class LT1-B-1,
Class LT1-B-2, Class LT1-B-3 and Class LT1-B-4 Interests to a cap equal to the Pass-Through
Rate on the Corresponding Class Intermediate REMIC Lower Tier Interests for such Accrual
Period.
Adjustment Date: With respect to each adjustable-rate Mortgage Loan each adjustment
date on which the Mortgage Rate thereon changes pursuant to the related Mortgage Note. The
first Adjustment Date following the Cut-off Date as to each such adjustable-rate Mortgage
Loan is set forth in the Mortgage Loan Schedule.
Advance: With respect to any Mortgage Loan, the payment required to be made by the
Servicer with respect to any Distribution Date pursuant to Section 4.01.
Aggregate Loan Balance: As of any date of determination, will be equal to the
aggregate of the Stated Principal Balances of the Mortgage Loans, except as otherwise
provided herein, as of the last day of the related Collection Period.
Aggregate Loan Group Balance: As to any Loan Group and as of any date of
determination, will be equal to the aggregate of the Stated Principal Balances of the
Mortgage Loans in that Loan Group, except as otherwise provided, as of the last day of the
related Collection Period.
Agreement: This Pooling and Servicing Agreement and all amendments or supplements
hereto.
Ancillary Income: All income derived from the Mortgage Loans, other than Servicing
Fees, including but not limited to, late charges, fees received with respect to checks or
bank drafts returned by the related bank for non-sufficient funds, assumption fees,
optional insurance administrative fees and all other incidental fees and charges, including
investment income on the applicable Collection Account and any interest due and actually
received from the related Mortgagor that accrued during the portion of the Prepayment
Period that is in the same calendar month as the Distribution Date with respect to such
Mortgage Loan in connection with such Principal Prepayments in full. Ancillary Income does
not include any Prepayment Premiums.
Applied Loss Amount: As to any Distribution Date, an amount equal to the excess, if
any of (i) the aggregate Class Principal Balance of the Certificates, after giving effect
to all Realized Losses incurred with respect to Mortgage Loans during the Collection Period
for such Distribution Date, payments of principal on such Distribution Date and any
additions to the Class Principal Balance of the Certificates on such Distribution Date
pursuant to Section 4.03(b) over (ii) the Aggregate Loan Balance for such Distribution Date.
Appraised Value: The amount set forth in an appraisal made in connection with the
origination of the related Mortgage Loan as the value of the Mortgaged Property.
Assignment and Assumption Agreement: The assignment and assumption agreement dated
as of August 1, 2004, by and between DLJMC, as assignor and the Depositor, as assignee,
relating to the Mortgage Loans.
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect the transfer of the Mortgage.
Auction Purchaser: As defined in Section 9.01.
Auction Date: As defined in Section 9.01.
B-1 Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balances of the Senior Certificates and the aggregate Class Principal Balances of the Class
M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates,
Class M-5 Certificates and Class M-6 Certificates, in each case, after giving effect to
payments on such Distribution Date and (ii) the Class Principal Balance of the Class B-1
Certificates immediately prior to such Distribution Date exceeds (y) the lesser of (A) the
product of (i) 91.90% and (ii) the Aggregate Loan Balance for such Distribution Date and
(B) the amount, if any, by which (i) the Aggregate Loan Balance for such Distribution Date
exceeds (ii) 0.50% of the Aggregate Loan Balance as of the Cut-off Date.
B-2 Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balances of the Senior Certificates and the aggregate Class Principal Balances of the Class
M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates,
Class M-5 Certificates, Class M-6 Certificates and Class B-1 Certificates, in each case,
after giving effect to payments on such Distribution Date and (ii) the Class Principal
Balance of the Class B-2 Certificates immediately prior to such Distribution Date exceeds
(y) the lesser of (A) the product of (i) 93.90% and (ii) the Aggregate Loan Balance for
such Distribution Date and (B) the amount, if any, by which (i) the Aggregate Loan Balance
for such Distribution Date exceeds (ii) 0.50% of the Aggregate Loan Balance as of the
Cut-off Date.
B-3 Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balances of the Senior Certificates and the aggregate Class Principal Balances of the Class
M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates,
Class M-5 Certificates, Class M-6 Certificates, Class B-1 Certificates and Class B-2
Certificates, in each case, after giving effect to payments on such Distribution Date and
(ii) the Class Principal Balance of the Class B-3 Certificates immediately prior to such
Distribution Date exceeds (y) the lesser of (A) the product of (i) 95.90% and (ii) the
Aggregate Loan Balance for such Distribution Date and (B) the amount, if any, by which
(i) the Aggregate Loan Balance for such Distribution Date exceeds (ii) 0.50% of the
Aggregate Loan Balance as of the Cut-off Date.
B-4 Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balances of the Senior Certificates and the aggregate Class Principal Balances of the Class
M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates,
Class M-5 Certificates, Class M-6 Certificates, Class B-1 Certificates, Class B-2
Certificates and Class B-3 Certificates, in each case, after giving effect to payments on
such Distribution Date and (ii) the Class Principal Balance of the Class B-4 Certificates
immediately prior to such Distribution Date exceeds (y) the lesser of (A) the product of
(i) 98.00% and (ii) the Aggregate Loan Balance for such Distribution Date and (B) the
amount, if any, by which (i) the Aggregate Loan Balance for such Distribution Date exceeds
(ii) 0.50% of the Aggregate Loan Balance as of the Cut-off Date.
Back-Up Servicer. ▇▇▇▇▇ Fargo Bank, N.A., in its capacity as back-up servicer for
the Mortgage Loans, or its successor in interest, as applicable.
Back-Up Servicing Fee: The fee, if any, payable to the Back-up Servicer on each
Distribution Date for its services as Back-up Servicer hereunder, in an amount equal to one
twelfth of the Back-up Servicing Fee Rate multiplied by the Stated Principal Balance of the
Mortgage Loans immediately prior to such Distribution Date.
Back-Up Servicing Fee Rate: 0.01% per annum.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978, as amended.
Basis Risk Reserve Fund: The separate Eligible Account created and initially
maintained by the Trustee pursuant to Section 4.06 in the name of the Trustee for the
benefit of the Certificateholders and designated "U.S. Bank National Association in trust
for registered holders of Credit Suisse First Boston Mortgage Securities Corp., CSFB Home
Equity Pass-Through Certificates, Series 2004-FRE1." The Basis Risk Reserve Fund shall not
be part of any REMIC. Funds in the Basis Risk Reserve Fund shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Basis Risk Shortfall: For any Class of LIBOR Certificates and any Distribution Date,
the sum of (i) the excess, if any, of the related Current Interest calculated on the basis
of the lesser of (x) the Certificate Index plus the applicable Certificate Margin and (y)
the Maximum Interest Rate over the related Current Interest for the applicable Distribution
Date; (ii) any Basis Risk Shortfall remaining unpaid from prior Distribution Dates; and
(iii) interest accrued during the related Accrual Period on the amount in clause (ii)
calculated at a per annum rate equal to the lesser of (x) the Certificate Index plus the
applicable Certificate Margin and (y) the Maximum Interest Rate.
Benefit Plan Investor: As defined in Section 5.02(b) hereof.
Book-Entry Certificates: As specified in the Preliminary Statement.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day on which
banking institutions in the City of New York, New York, or the city in which the Corporate
Trust Office of the Trustee is located, or savings and loan institutions in the States of
California, Maryland or Minnesota are authorized or obligated by law or executive order to
be closed.
Carryforward Interest: For any Class of Offered Certificates and the Class A-IO-2
Certificates and Distribution Date, the sum of (1) the amount, if any, by which (x) the sum
of (A) Current Interest for such Class for the immediately preceding Distribution Date and
(B) any unpaid Carryforward Interest from the immediately preceding Distribution Date
exceeds (y) the amount paid in respect of interest on such Class on such immediately
preceding Distribution Date, and (2) with respect to the Offered Certificates (other than
the Class A-IO-1 Certificates), interest on such amount for the related Accrual Period at
the applicable Pass-Through Rate for such Distribution Date.
Certificate: Any one of the Certificates executed by the Trustee in substantially
the forms attached hereto as exhibits.
Certificate Account: The separate Eligible Account created and maintained with the
Trustee, or any other bank or trust company acceptable to the Rating Agencies which is
incorporated under the laws of the United States or any state thereof pursuant to
Section 3.06, which account shall bear a designation clearly indicating that the funds
deposited therein are held in trust for the benefit of the Trustee on behalf of the
Certificateholders or any other account serving a similar function acceptable to the Rating
Agencies.
Certificate Balance: With respect to any Certificate at any date, the maximum dollar
amount of principal to which the Holder thereof is then entitled hereunder, such amount
being equal to the Denomination thereof minus all distributions of principal previously
made with respect thereto and, in the case of any Subordinate Certificates, reduced by any
Applied Loss Amounts allocated to such Class on prior Distribution Dates pursuant to
Section 4.03(a) plus the amount of any increase to the Certificate Balance of such
Certificate pursuant to Section 4.03(b).
Certificate Index: With respect to each Distribution Date, the rate for one month
United States dollar deposits quoted on Telerate Page 3750 as of 11:00 a.m., London time,
on the related Interest Determination Date relating to each Class of LIBOR Certificates.
If such rate does not appear on such page (or such other page as may replace that page on
that service, or if such service is no longer offered, such other service for displaying
LIBOR or comparable rates as may be reasonably selected by the Trustee after consultation
with the Servicer), the rate will be the Reference Bank Rate. If no such quotations can be
obtained and no Reference Bank Rate is available, the Certificate Index will be the
Certificate Index applicable to the preceding Distribution Date. On the Interest
Determination Date immediately preceding each Distribution Date, the Trustee shall
determine the Certificate Index for the Accrual Period commencing on such Distribution Date
and inform the Servicer of such rate.
Certificate Margin: As to each Class of LIBOR Certificates, the applicable amount
set forth below:
Certificate
Class of LIBOR Certificates Margin
(1) (2)
A-1........................ 0.320% 0.640%
A-2........................ 0.350% 0.700%
M-1........................ 0.570% 0.855%
M-2........................ 0.610% 0.915%
M-3........................ 0.650% 0.975%
M-4........................ 1.150% 1.650%
M-5........................ 1.230% 1.730%
M-6........................ 1.350% 1.850%
B-1........................ 1.800% 2.300%
B-2........................ 1.900% 2.400%
B-3........................ 2.750% 3.250%
B-4........................ 3.350% 3.850%
R.......................... 0.350% 0.350%
R-II....................... 0.350% 0.350%
______________________
(1) Prior to and on the Optional Termination Date.
(2) After the Optional Termination Date.
Certificate Owner: With respect to a Book-Entry Certificate, the Person who is the
beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section 5.02.
Certificateholder or Holder: The person in whose name a Certificate is registered in
the Certificate Register, except that, solely for the purpose of giving any consent
pursuant to this Agreement, any Certificate registered in the name of the Depositor or any
affiliate of the Depositor shall be deemed not to be Outstanding and the Percentage
Interest evidenced thereby shall not be taken into account in determining whether the
requisite amount of Percentage Interests necessary to effect such consent has been
obtained; provided, however, that if any such Person (including the Depositor) owns 100% of
the Percentage Interests evidenced by a Class of Certificates, such Certificates shall be
deemed to be Outstanding for purposes of any provision hereof that requires the consent of
the Holders of Certificates of a particular Class as a condition to the taking of any
action hereunder. The Trustee is entitled to rely conclusively on a certification of the
Depositor or any affiliate of the Depositor in determining which Certificates are
registered in the name of an affiliate of the Depositor.
Class: All Certificates bearing the same class designation as set forth in the
Preliminary Statement.
Class A-1 Net Funds Cap: For any Distribution Date and the Class A-1 Certificates,
will be a per annum rate equal to (a) a fraction, expressed as a percentage, the numerator
of which is the product of (1) the Optimal Interest Remittance Amount for Loan Group 1 and
such date and (2) 12, and the denominator of which is the Aggregate Loan Group Balance of
Loan Group 1 for the immediately preceding Distribution Date, multiplied by (b) a fraction,
the numerator of which is 30 and the denominator of which is the actual number of days in
the immediately preceding Accrual Period.
Class A-2 Net Funds Cap: For any Distribution Date and the Class A-2 Certificates
will be a per annum rate equal to (a) a fraction, expressed as a percentage, the numerator
of which is the product of (1) the Optimal Interest Remittance Amount for Loan Group 2 and
such date and (2) 12, and the denominator of which is the Aggregate Loan Group Balance of
Loan Group 2 for the immediately preceding Distribution Date, multiplied by (b) a fraction,
the numerator of which is 30 and the denominator of which is the actual number of days in
the immediately preceding Accrual Period.
Class A-IO-1 Net Funds Cap: For any Distribution Date and the Class A-IO-1
Certificates, a per annum rate equal to the quotient of (a) weighted average of (1)(A) the
Class A-1 Net Funds Cap (without adjustment for the actual number of days in the Accrual
Period) less (B) the rate obtained by multiplying (i) 12 and (ii) the percentage obtained
by dividing the Current Interest due the Class A-1 Certificates on that Distribution Date
by the Class Principal Balance of the Class A-1 Certificates immediately prior to that
Distribution Date; and (2)(X) the Class A-2 Net Funds Cap (without adjustment for the
actual number of days in the Accrual Period) less (Y) the rate obtained by multiplying
(i) 12 and (ii) the percentage obtained by dividing the Current Interest due the Class A-2
on that Distribution Date by the Class Principal Balance of the Class A-2 Certificates
immediately prior to that Distribution Date; weighted according to the respective Class
Principal Balances of the Class A-1 Certificates and (b) 35.00%.
Class A-IO-1 Notional Amount: For any Distribution Date on or prior to the
August 2006 Distribution Date, will equal 35.00% of the aggregate of the Class Principal
Balances of the Class A-1 and Class A-2 Certificates immediately prior to that Distribution
Date. After the Distribution Date in August 2006, the Class A-IO-1 Notional Amount will
equal zero.
Class A-IO-2 Notional Amount: For any Distribution Date beginning with the
November 2004 Distribution Date and ending with the August 2006 Distribution Date, will
equal the lesser of (x) the Aggregate Loan Balance as of the first day of the related
Collection Period for such Distribution Date and (y) the specified notional amount for that
Distribution Date (as set forth below). On the September 2004 and October 2004
Distribution Dates and after the Distribution Date in August 2006, the Class A-IO-2
Notional Amount will equal zero.
Specified
Notional Distribution Specified Notional
Distribution Date Amount ($) Date Amount ($)
September 2004 0 October 2005 399,000,000
October 2004 0 November 2005 379,000,000
November 2004 697,000,000 December 2005 361,000,000
December 2004 663,000,000 January 2006 343,000,000
January 2005 630,000,000 February 2006 326,000,000
February 2005 599,000,000 March 2006 310,000,000
March 2005 569,000,000 April 2006 294,000,000
April 2005 541,000,000 May 2006 280,000,000
May 2005 514,000,000 June 2006 266,000,000
June 2005 489,000,000 July 2006 253,000,000
July 2005 465,000,000 August 2006 241,000,000
August 2005 442,000,000 September 2006
September 2005 420,000,000 and thereafter 0
Class Principal Balance: With respect to any Class of Offered Certificates (other
than the Class A-IO-1 Certificates) and as to any date of determination, the aggregate of
the Certificate Balances of all Certificates of such Class as of such date.
Class R Certificate: A Certificate representing the residual interest in the Master
REMIC, the Intermediate REMIC and the Subsidiary REMIC.
Class R-II Certificate: A Certificate representing the residual interest in the
Pooling REMIC.
Class X Distributable Amount: With respect to any Distribution Date, the excess of
(i) the sum of (a) the interest accrued during the related Accrual Period on the
Class LT2-X notional amount at the Pass-Through Rate for the Class LT2-X Interest, as
described in the Preliminary Statement, and (b) the sum of (x) any Overcollateralization
Release Amount and (y) the excess of (I) amounts so accrued in all prior Accrual Periods
over (II) amounts distributed with respect to the Class X Certificate pursuant to
Section 4.02(e)(xiii) on prior Distribution Dates, over (ii) all amounts distributed
pursuant to Section 4.02(e)(i) through 4.02(e)(xii) on such Distribution Date.
Closing Date: August 24, 2004.
Code: The Internal Revenue Code of 1986, as the same may be amended from time to
time (or any successor statute thereto).
Collection Account: The accounts established and maintained by the Servicer in
accordance with Section 3.06.
Collection Period: With respect to any Distribution Date, the period commencing on
the second day of the month preceding the month in which such Distribution Date occurs and
ending on the first day of the month in which such Distribution Date occurs.
Commission: The Securities and Exchange Commission.
Compensating Interest Payment: For any Distribution Date, the lesser of (i) the
aggregate Servicing Fee payable to the Servicer on such Distribution Date plus any
reinvestment income payable to the Servicer from the Collection Account on such
Distribution Date and (ii) the aggregate Prepayment Interest Shortfall allocable to Payoffs
for the Mortgage Loans for that Distribution Date.
Corporate Trust Office: The designated office of the Trustee in the State of
Minnesota at which at any particular time its corporate trust business with respect to this
Agreement shall be administered, which office at the date of the execution of this
Agreement is located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: Corporate Trust
Structured Finance, Ref: CSFB Home Equity Pass-Through Certificates, Series 2004-FRE1.
Credit Risk Manager: The Murrayhill Company, a Colorado corporation, and any
successor.
Credit Risk Management Agreement: The agreement between the Servicer and the Credit
Risk Manager dated as of the Closing Date.
Credit Risk Manager Fee: The fee payable to the Credit Risk Manager on each
Distribution Date for its services as Credit Risk Manager, in an amount equal to
one-twelfth of the Credit Risk Manager Fee Rate multiplied by the Stated Principal Balance
of the Mortgage Loans immediately prior to such Distribution Date.
Credit Risk Manager Fee Rate: 0.0165% per annum.
Current Interest: For any interest bearing Class of Offered Certificates and the
Class A-IO-2 Certificates and Distribution Date, the amount of interest accruing at the
applicable Pass-Through Rate on the related Class Principal Balance, Class A-IO-1 Notional
Amount or Class A-IO-2 Notional Amount, as applicable, of such Class during the related
Accrual Period; provided, that if and to the extent that on any Distribution Date the
Interest Remittance Amount is less than the aggregate distributions required pursuant to
Section 4.02(a) without regard to this proviso as a result of Interest Shortfalls, then the
Current Interest on each Class will be reduced, on a pro rata basis in proportion to the
amount of Current Interest for each Class without regard to this proviso, by such Interest
Shortfalls for such Distribution Date.
Curtailment: Any payment of principal on a Mortgage Loan, made by or on behalf of
the related Mortgagor, other than a Scheduled Payment, a prepaid Scheduled Payment or a
Payoff, which is applied to reduce the outstanding Stated Principal Balance of the Mortgage
Loan.
Custodian: LaSalle Bank National Association, as custodian, or its successor in
interest.
Custodial Agreement: The Custodial Agreement dated as of the date hereof between
LaSalle Bank National Association, as custodian, and the Trustee.
Cut-off Date: August 1, 2004.
Cut-off Date Principal Balance: As to any Mortgage Loan, the Stated Principal
Balance thereof as of the close of business on the Cut-off Date.
Defective Mortgage Loan: Any Mortgage Loan which is required to be repurchased
pursuant to Section 2.02 or 2.03.
Deferred Amount: For any Class of Subordinate Certificates (other than the Class X
Certificates) and Distribution Date, will equal the amount by which (x) the aggregate of
the Applied Loss Amounts previously applied in reduction of the Class Principal Balance
thereof exceeds (y) the sum of (i) the aggregate of amounts previously paid in
reimbursement thereof and (ii) any additions to the Class Principal Balance pursuant to
Section 4.03(b) on such Distribution Date or any previous Distribution Date. Any payment
of Deferred Amount pursuant to Section 4.02(e) shall not result in a reduction to the Class
Principal Balance of the Class of Certificate to which it is distributed.
Definitive Certificates: Any Certificate evidenced by a Physical Certificate and any
Certificate issued in lieu of a Book-Entry Certificate pursuant to Section 5.02(e).
Deleted Mortgage Loan: As defined in Section 2.03(d) herein.
Delinquency Rate: For any month will be, generally, the fraction, expressed as a
percentage, the numerator of which is the aggregate outstanding principal balance of all
Mortgage Loans 60 or more days delinquent (including all foreclosures, bankruptcies and REO
Properties) as of the close of business on the last day of such month, and the denominator
of which is the Aggregate Loan Balance as of the close of business on the last day of such
month.
Denomination: With respect to each Certificate, the amount set forth on the face
thereof as the "Initial Certificate Balance of this Certificate" or the "Initial Notional
Amount of this Certificate" or, if neither of the foregoing, the Percentage Interest
appearing on the face thereof.
Depositor: Credit Suisse First Boston Mortgage Securities Corp., a Delaware
corporation, or its successor in interest.
Depository: The initial Depository shall be The Depository Trust Company, the
nominee of which is Cede & Co., as the registered Holder of the Book-Entry Certificates.
The Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York.
Depository Participant: A broker, dealer, bank or other financial institution or
other Person for whom from time to time a Depository effects book-entry transfers and
pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date and any Mortgage Loan, the Business
Day immediately preceding the Servicer Remittance Date.
Distribution Date: The 25th day of each month or if such day is not a Business Day,
the first Business Day thereafter, in each case commencing in September 2004.
Disqualified Organization: A "disqualified organization" under Section 860E of the
Code, which as of the Closing Date is any of: (i) the United States, any State or
political subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing, (ii) any organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code unless such organization is subject to the tax imposed by Section 511
of the Code, (iii) any organization described in Section 1381(a)(2)(C) of the Code, (iv) an
"electing large partnership" within the meaning of Section 775 of the Code or (v) any other
Person so designated by the Trustee based upon an Opinion of Counsel provided by nationally
recognized counsel to the Trustee that the holding of an ownership interest in a Class R or
Class R-II Certificate by such Person may cause the Trust Fund or any Person having an
ownership interest in any Class of Certificates (other than such Person) to incur liability
for any federal tax imposed under the Code that would not otherwise be imposed but for the
transfer of an ownership interest in the Class R or Class R-II Certificate to such Person.
A corporation will not be treated as an instrumentality of the United States or of any
state or political subdivision thereof, if all of its activities are subject to tax and, a
majority of its board of directors is not selected by a governmental unit. The term "United
States," "State" and "international organizations" shall have the meanings set forth in
Section 7701 of the Code.
DLJMC: DLJ Mortgage Capital, Inc., a Delaware corporation, and its successors and
assigns.
Due Date: With respect to each Mortgage Loan and any Distribution Date, the date on
which Scheduled Payments on such Mortgage Loan are due, which is either the first day of
the month of such Distribution Date, or if Scheduled Payments on such Mortgage Loan are due
on a day other than the first day of the month, the day in such calendar month on which
such Scheduled Payments are due, exclusive of any days of grace.
Eligible Account: Either (i) an account or accounts maintained with a federal or
state chartered depository institution or trust company acceptable to the Rating Agencies
or (ii) an account or accounts the deposits in which are insured by the FDIC to the limits
established by such corporation, provided that any such deposits not so insured shall be
maintained in an account at a depository institution or trust company whose commercial
paper or other short term debt obligations (or, in the case of a depository institution or
trust company which is the principal subsidiary of a holding company, the commercial paper
or other short term debt obligations of such holding company) have been rated by each
Rating Agency in its highest short-term rating category, or (iii) a segregated trust
account or accounts (which shall be a "special deposit account") maintained with the
Trustee or any other federal or state chartered depository institution or trust company,
acting in its fiduciary capacity. Eligible Accounts may bear interest.
Eligible Investments: Any one or more of the obligations and securities listed below:
(i) direct obligations of, and obligations fully guaranteed by, the United States of
America, or any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the United States of
America; or obligations fully guaranteed by, the United States of America; the FHLMC,
FNMA, the Federal Home Loan Banks or any agency or instrumentality of the United
States of America rated Aa3 or higher by ▇▇▇▇▇'▇ and AA- or higher by S&P;
(ii) federal funds, demand and time deposits in, certificates of deposits of, or bankers'
acceptances issued by, any depository institution or trust company incorporated or
organized under the laws of the United States of America or any state thereof and
subject to supervision and examination by federal and/or state banking authorities,
so long as at the time of such investment or contractual commitment providing for
such investment the commercial paper or other short-term debt obligations of such
depository institution or trust company (or, in the case of a depository institution
or trust company which is the principal subsidiary of a holding company, the
commercial paper or other short-term debt obligations of such holding company) are
rated in the highest ratings by each Rating Agency, and the long-term debt
obligations of such depository institution or trust company (or, in the case of a
depository institution or trust company which is the principal subsidiary of a
holding company, the long-term debt obligations of such holding company) are rated in
one of two of the highest ratings, by each Rating Agency;
(iii) repurchase obligations with a term not to exceed 30 days with respect to any security
described in clause (i) above and entered into with a depository institution or trust
company (acting as a principal) the short-term debt obligations of which are rated
A-1 or higher by S&P and rated A-2 or higher by ▇▇▇▇▇'▇; provided, however, that
collateral transferred pursuant to such repurchase obligation must be of the type
described in clause (i) above and must (A) be valued daily at current market price
plus accrued interest, (B) pursuant to such valuation, be equal, at all times, to
105% of the cash transferred by the Trustee in exchange for such collateral, and
(C) be delivered to the Trustee or, if the Trustee is supplying the collateral, an
agent for the Trustee, in such a manner as to accomplish perfection of a security
interest in the collateral by possession of certificated securities;
(iv) securities bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States of America or any state thereof
which has a long-term unsecured debt rating in the highest available rating category
of ▇▇▇▇▇'▇, and a short-term unsecured debt rating of A-1 or higher by S&P, at the
time of such investment;
(v) commercial paper having an original maturity of less than 365 days and issued by an
institution having a short-term unsecured debt rating in the highest available rating
category by each Rating Agency, at the time of such investment;
(vi) a guaranteed investment contract approved by each of the Rating Agencies and issued
by an insurance company or other corporation having a long-term unsecured debt rating
in the highest available rating category of ▇▇▇▇▇'▇, and a short-term unsecured debt
rating of A-1 or higher by S&P, at the time of such investment; and
(vii) money market funds having ratings in the highest available rating category of ▇▇▇▇▇'▇
and either "AAAm" or "AAAm-G" of S&P at the time of such investment (any such money
market funds which provide for demand withdrawals being conclusively deemed to
satisfy any maturity requirements for Eligible Investments set forth herein)
including money market funds of the Servicer or the Trustee and any such funds that
are managed by the Servicer or the Trustee or their respective Affiliates or for the
Servicer or the Trustee or any Affiliate of either acts as advisor, as long as such
money market funds satisfy the criteria of this subparagraph (vii);
provided, however, that no such instrument shall be an Eligible Investment if such
instrument evidences either (i) a right to receive only interest payments with respect to
the obligations underlying such instrument, or (ii) both principal and interest payments
derived from obligations underlying such instrument and the principal and interest payments
with respect to such instrument provide a yield to maturity of greater than 120% of the
yield to maturity at par of such underlying obligations.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA-Qualifying Underwriting: With respect to any ERISA-Restricted Certificate, a
best efforts or firm commitment underwriting or private placement that meets the
requirements of the Underwriters' Exemption.
ERISA-Restricted Certificate: As specified in the Preliminary Statement.
Errors and Omissions Insurance Policy: An errors and omissions insurance policy to
be maintained by the Servicer pursuant to Section 3.19.
Escrow Account: The separate account or accounts created and maintained by the
Servicer pursuant to Section 3.07.
Escrow Payments: With respect to any Mortgage Loan, the amounts constituting ground
rents, taxes, mortgage insurance premiums, fire and hazard insurance premiums, and any
other payments required to be escrowed by the Mortgagor with the mortgagee pursuant to the
Mortgage, applicable law or any other related document.
Event of Default: As defined in Section 7.01 herein.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Expense Fee: As to each Mortgage Loan, the sum of the Servicing Fee, the Trustee
Fee, the Back-up Servicer Fee and the Credit Risk Manager Fee.
Expense Fee Rate: As to each Mortgage Loan and any date of determination, the sum of
the Servicing Fee Rate, the Trustee Fee Rate, the Back-Up Servicing Fee Rate and the Credit
Risk Manager Fee Rate.
Fair Credit Reporting Act: 15 U.S.C. §§1681 et seq.
Fair Market Value: As defined in Section 9.01 hereof.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate instrumentality of
the United States created and existing under Title III of the Emergency Home Finance Act of
1970, as amended, or any successor thereto.
Fidelity Bond: A fidelity bond to be maintained by the Servicer pursuant to
Section 3.19.
Final Recovery Determination: With respect to any defaulted Mortgage Loan or any REO
Property (other than a Mortgage Loan or REO Property purchased by the Seller, the Depositor
or the Servicer pursuant to or as contemplated by Section 3.12(f) or Section 9.01), 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. The Servicer
shall maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.
Final Scheduled Distribution Date: The Distribution Date in October 2034.
FNMA: The Federal National Mortgage Association, a federally chartered and privately
owned corporation organized and existing under the Federal National Mortgage Association
Charter Act, or any successor thereto.
FNMA Guides: The FNMA Sellers' Guide and the FNMA Servicers' Guide and all
amendments or additions 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 Mortgage Note used to determine the
Mortgage Rate for such Mortgage Loan.
Group 1 Allocation Amount: For any Distribution Date, the product of the Senior
Principal Payment Amount for that Distribution Date and a fraction the numerator of which
is the Principal Remittance Amount derived for Loan Group 1 and the denominator of which is
the Principal Remittance Amount, in each case for that Distribution Date.
Group 1 Excess Interest Amount: For any Distribution Date, the product of the amount
of Monthly Excess Interest required to be distributed on that Distribution Date pursuant to
Section 4.02(e)(i)(A) and a fraction the numerator of which is the Principal Remittance
Amount derived from Loan Group 1 and the denominator of which is the Principal Remittance
Amount, in each case for that Distribution Date.
Group 2 Allocation Amount: For any Distribution Date, the product of the Senior
Principal Payment Amount for that Distribution Date and a fraction the numerator of which
is the Principal Remittance Amount derived from Loan Group 2 and the denominator of which
is the Principal Remittance Amount, in each case for that Distribution Date.
Incentive Agreement: The incentive servicing fee agreement, dated as of the Closing
Date, by and among the Depositor, the Seller, the Servicer and the Trustee.
Index: With respect to each adjustable-rate Mortgage Loan and with respect to each
related Adjustment Date, the index as specified in the related Mortgage Note.
Indirect Participant: A broker, dealer, bank or other financial institution or other
Person that clears through or maintains a custodial relationship with a Depository
Participant.
Insurance Policy: With respect to any Mortgage Loan included in the Trust Fund, any
Primary Insurance Policy, any standard hazard insurance policy, flood insurance policy or
title insurance policy, including all riders and endorsements thereto in effect, including
any replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds of any Primary Insurance Policies and any other
Insurance Policies with respect to the Mortgage Loans, to the extent such proceeds are not
applied to the restoration of the related Mortgaged Property or released to the Mortgagor
in accordance with the Servicer's normal servicing procedures.
Interest Determination Date: With respect to the LIBOR Certificates and for each
Accrual Period, the second LIBOR Business Day preceding the commencement of such Accrual
Period.
Interest Remittance Amount: For any Distribution Date and Loan Group, an amount
equal to the sum of (1) all interest collected (other than related Payaheads, if
applicable) or advanced in respect of Scheduled Payments on the Mortgage Loans in such Loan
Group during the related Collection Period, the interest portion of Payaheads previously
received and intended for application in the related Collection Period and the interest
portion of all Payoffs and Curtailments received on the Mortgage Loans in such Loan Group
during the related Prepayment Period (other than interest on Principal Prepayments that
occur during the portion of the Prepayment Period that is in the same calendar month as the
related Distribution Date), less (x) the Servicing Fees with respect to such Mortgage Loans
and (y) unreimbursed Advances and other amounts due to the Servicer, the Back-Up Servicer
or the Trustee with respect to such Mortgage Loans, to the extent allocable to interest,
(2) all Compensating Interest Payments paid by the Servicer and allocable to such Loan
Group pursuant to Section 3.15(e) hereof with respect to such Distribution Date, (3) the
portion of any Substitution Adjustment Amount and Repurchase Price paid with respect to
such Mortgage Loans during the calendar month immediately preceding the Distribution Date,
in each case allocable to interest and the proceeds of any purchase of the Mortgage Loans
by the Servicer pursuant to Section 9.01 in an amount not exceeding the interest portion of
the Par Value, and (4) all Net Liquidation Proceeds, and any Insurance Proceeds and other
recoveries (net of unreimbursed Advances, Servicing Advances and expenses, to the extent
allocable to interest, and unpaid Servicing Fees) collected with respect to such Mortgage
Loans during the prior calendar month, to the extent allocable to interest.
Interest Shortfall: For any Distribution Date, an amount equal to the aggregate
shortfall, if any, in collections of interest (adjusted to the related Net Mortgage Rate)
on Mortgage Loans resulting from (a) Prepayment Interest Shortfalls to the extent not
covered by a Compensating Interest Payment and (b) interest payments on certain of the
Mortgage Loans being limited pursuant to the provisions of the Relief Act.
Intermediate REMIC: As specified in the Preliminary Statement.
Late Payment Rate: An amount equal to the lesser of (a) the greater of (i) the per
annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its
principal office in New York, New York, as its prime or base lending rate (any change in
such rate of interest to be effective on the date such change is announced by JPMorgan
Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Class A
Certificates and (b) the maximum rate permissible under applicable usury or similar laws
limiting interest rates. The Late Payment Rate shall be computed on the basis of the
actual number of days elapsed over a year of 360 days.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on
which banking institutions in the States of New York or Minnesota or in the city of London,
England are required or authorized by law to be closed.
LIBOR Certificates: As defined in the Preliminary Statement.
Liquidation Mortgage Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan (including any REO Property) which was liquidated and as to which the
Servicer has determined (in accordance with this Agreement) that it has received all
amounts it expects to receive in connection with the liquidation of such Mortgage Loan,
including the final disposition of the related REO Property (exclusive of any possibility
of a deficiency judgment).
Liquidation Proceeds: Amounts, including Insurance Proceeds, received in connection
with the partial or complete liquidation of defaulted Mortgage Loans, whether through
trustee's sale, foreclosure sale or similar dispositions or amounts received in connection
with any condemnation or partial release of a Mortgaged Property and any other proceeds
received in connection with an REO Property, other than Recoveries.
Loan Group: Any of Loan Group 1 or Loan Group 2, as applicable.
Loan Group 1: All Mortgage Loans identified as Loan Group 1 Mortgage Loans on the
Mortgage Loan Schedule.
Loan Group 2: All Mortgage Loans identified as Loan Group 2 Mortgage Loans on the
Mortgage Loan Schedule.
Loan-to-Value Ratio: With respect to any first-lien Mortgage Loan and as to any date
of determination, the fraction (expressed as a percentage) the numerator of which is the
principal balance of the related Mortgage Loan at such date of determination, and the
denominator of which is (a) in the case of a purchase, the lesser of the selling price of
the related Mortgaged Property and the Appraised Value of the related Mortgaged Property,
or (b) in the case of a refinance, the amount set forth in an appraisal made in connection
with the refinancing of the related Mortgaged Loan as the value of the related Mortgaged
Property. With respect to any second-lien Mortgage Loan and as to any date of
determination, the fraction (expressed as a percentage) the numerator of which is the sum
of (x) the principal balance of the related Mortgage Loan at the date of its origination
and (y) the outstanding principal balance of the senior mortgage loan at the date of
origination of such senior mortgage loan and the denominator of which is (a) in the case of
a purchase, the lesser of the selling price of the related Mortgaged Property and the
Appraised Value of the related Mortgaged Property, or (b) in the case of a refinance, the
amount set forth in an appraisal made in connection with the refinancing of the related
Mortgaged Loan as the value of the related Mortgaged Property.
Lost Mortgage Note: Any Mortgage Note the original of which was permanently lost or
destroyed and has not been replaced.
Lower Tier Interest: An interest in any of the Pooling REMIC, the Subsidiary REMIC
or the Intermediate REMIC, as described in the Preliminary Statement, those interests
having an LTP designation being interests in the Pooling REMIC, those interests having an
LT1 designation being interests in the Subsidiary REMIC and those interests having an LT2
designation being interests in the Intermediate REMIC.
M-1 Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balance of the Senior Certificates after giving effect to payments on such Distribution
Date and (ii) the Class Principal Balance of the Class M-1 Certificates immediately prior
to such Distribution Date exceeds (y) the lesser of (A) the product of (i) 69.00% and (ii)
the Aggregate Loan Balance for such Distribution Date and (B) the amount, if any, by which
(i) the Aggregate Loan Balance for such Distribution Date exceeds (ii) 0.50% of the
Aggregate Loan Balance as of the Cut-off Date.
M-2 Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balances of the Senior Certificates and the Class Principal Balance of the Class M-1
Certificates, in each case, after giving effect to payments on such Distribution Date and
(ii) the Class Principal Balance of the Class M-2 Certificates immediately prior to such
Distribution Date exceeds (y) the lesser of (A) the product of (i) 76.00% and (ii) the
Aggregate Loan Balance for such Distribution Date and (B) the amount, if any, by which (i)
the Aggregate Loan Balance for such Distribution Date exceeds (ii) 0.50% of the Aggregate
Loan Balance as of the Cut-off Date .
M-3 Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balances of the Senior Certificates and the Class Principal Balance of the Class M-1
Certificates and Class M-2 Certificates, in each case, after giving effect to payments on
such Distribution Date and (ii) the Class Principal Balance of the Class M-3 Certificates
immediately prior to such Distribution Date exceeds (y) the lesser of (A) the product of
(i) 80.00% and (ii) the Aggregate Loan Balance for such Distribution Date and (B) the
amount, if any, by which (i) the Aggregate Loan Balance for such Distribution Date exceeds
(ii) 0.50% of the Aggregate Loan Balance as of the Cut-off Date.
M-4 Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balances of the Senior Certificates and the Class Principal Balance of the Class M-1
Certificates, Class M-2 Certificates and Class M-3 Certificates, in each case, after giving
effect to payments on such Distribution Date and (ii) the Class Principal Balance of the
Class M-4 Certificates immediately prior to such Distribution Date exceeds (y) the lesser
of (A) the product of (i) 83.50% and (ii) the Aggregate Loan Balance for such Distribution
Date and (B) the amount, if any, by which (i) the Aggregate Loan Balance for such
Distribution Date exceeds (ii) 0.50% of the Aggregate Loan Balance as of the Cut-off Date.
M-5 Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balances of the Senior Certificates and the Class Principal Balance of the Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates and Class M-4 Certificates, in
each case, after giving effect to payments on such Distribution Date and (ii) the Class
Principal Balance of the Class M-5 Certificates immediately prior to such Distribution Date
exceeds (y) the lesser of (A) the product of (i) 86.50% and (ii) the Aggregate Loan Balance
for such Distribution Date and (B) the amount, if any, by which (i) the Aggregate Loan
Balance for such Distribution Date exceeds (ii) 0.50% of the Aggregate Loan Balance as of
the Cut-off Date.
M-6 Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the sum of (i) the aggregate Class Principal
Balances of the Senior Certificates and the Class Principal Balance of the Class M-1
Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates and
Class M-5 Certificates, in each case, after giving effect to payments on such Distribution
Date and (ii) the Class Principal Balance of the Class M-6 Certificates immediately prior
to such Distribution Date exceeds (y) the lesser of (A) the product of (i) 89.50% and (ii)
the Aggregate Loan Balance for such Distribution Date and (B) the amount, if any, by which
(i) the Aggregate Loan Balance for such Distribution Date exceeds (ii) 0.50% of the
Aggregate Loan Balance as of the Cut-off Date.
Majority in Interest: As to any Class of Regular Certificates, the Holders of
Certificates of such Class evidencing, in the aggregate, at least 51% of the Percentage
Interests evidenced by all Certificates of such Class.
Master REMIC: As specified in the Preliminary Statement.
Maximum Interest Rate: For the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class R and Class R-II
Certificates and any Distribution Date, an annual rate equal to (a) the weighted average of
the Maximum Mortgage Rates minus the weighted average Expense Fee Rate of the Mortgage
Loans in the related Loan Group, multiplied by (b) a fraction, the numerator of which is 30
and the denominator of which is the actual number of days in the immediately preceding
Accrual Period. For the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class B-1, Class B-2, Class B-3 and Class B-4 Certificates and any Distribution Date, an
annual rate equal to (a) the weighted average of the Maximum Mortgage Rates minus the
weighted average Expense Fee Rate of the Mortgage Loans in both Loan Groups, multiplied by
(b) a fraction, the numerator of which is 30 and the denominator of which is the actual
number of days in the immediately preceding Accrual Period. All weighted averages
calculated hereunder shall be based on Stated Principal Balance of the applicable Mortgage
Loans as of the first day of the related Collection Period.
Maximum Mortgage Rate: With respect to each Mortgage Loan having an adjustable-rate
Mortgage Rate, 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 Mortgage Loan: Any Mortgage Loan registered with MERS on the MERS® System.
MERS® System: The system of recording transfers of mortgages electronically
maintained by MERS.
MIN: The mortgage identification number for any MERS Mortgage Loan.
Minimum Mortgage Rate: With respect to each Mortgage Loan having an adjustable-rate
Mortgage Rate, the percentage set forth in the related Mortgage Note as the minimum
Mortgage Rate thereunder.
MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee, solely as
nominee for the originator of such Mortgage Loan and its successors and assigns.
Monthly Excess Cashflow: For any Distribution Date, an amount equal to the sum of
the Monthly Excess Interest and Overcollateralization Release Amount, if any, for such date.
Monthly Excess Interest: As to any Distribution Date, the Interest Remittance Amount
remaining after the application of payments pursuant to clauses (i) through (xv) of
Section 4.02(a) and the Principal Payment Amount remaining after the application of
payments pursuant to clauses (i) through (xi) of Section 4.02(c) or 4.02(d), as applicable.
Monthly Statement: The statement delivered to the Certificateholders pursuant to
Section 4.04.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., or any successor thereto. For purposes of
Section 10.05(b) the address for notices to Moody's shall be ▇▇▇▇▇'▇ Investors Service,
Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Pass-Through
Monitoring, or such other address as Moody's may hereafter furnish to the Depositor, the
Servicer, the Back-Up Servicer and the Trustee.
Mortgage: The mortgage, deed of trust or other instrument creating a first lien on
an estate in fee simple or leasehold interest in real property securing a Mortgage Note.
Mortgage File: The Mortgage documents listed in Section 2.01(b) hereof pertaining to
a particular Mortgage Loan and any additional documents delivered to the Trustee or the
Custodian to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and assigned to the Trustee
pursuant to the provisions hereof as from time to time are held as a part of the Trust Fund
(including any REO Property), the mortgage loans so held being identified in the Mortgage
Loan Schedule, notwithstanding foreclosure or other acquisition of title of the related
Mortgaged Property. Such mortgage loans include conventional, adjustable-rate and
fixed-rate, fully amortizing, first lien residential mortgage loans, all of which have
original terms to stated maturity of up to 30 years.
Mortgage Loan Purchase Price: The price, calculated as set forth in Section 9.01, to
be paid in connection with the purchase of the Mortgage Loans by the Auction Purchaser.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to time amended by
the Seller to reflect the addition of Qualified Substitute Mortgage Loans and the purchase
of Mortgage Loans pursuant to Section 2.01, 2.02 or 2.03) transferred to the Trustee as
part of the Trust Fund and from time to time subject to this Agreement, attached hereto as
Schedule I, setting forth the following information with respect to each Mortgage Loan by
Loan Group:
(i) the Mortgage Loan identifying number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property including the state and zip code;
(iv) a code indicating the type of Mortgaged Property and the occupancy status;
(v) a code indicating the Servicer of the Mortgage Loan, as applicable;
(vi) the original months to maturity;
(vii) a code indicating the Loan-to-Value Ratio at origination;
(viii) the Mortgage Rate as of the Cut-off Date;
(ix) the stated maturity date;
(x) the amount of the Scheduled Payment as of the Cut-off Date;
(xi) the original principal amount of the Mortgage Loan;
(xii) the principal balance of the Mortgage Loan as of the close of business on the Cut-off
Date, after deduction of payments of principal due on or before the Cut-off Date
whether or not collected;
(xiii) the purpose of the Mortgage Loan (i.e., purchase, rate and term refinance,
equity take-out refinance);
(xiv) a code indicating whether a Prepayment Premium is required to be paid in connection
with a prepayment of the Mortgage Loan and the term and the amount of the Prepayment
Premium;
(xv) an indication whether the Mortgage Loan accrues interest at an adjustable Mortgage
Rate or a fixed Mortgage Rate;
(xvi) the Index that is associated with such Mortgage Loan, if applicable;
(xvii) the Gross Margin, if applicable;
(xviii) the Periodic Rate Cap, if applicable;
(xix) the Minimum Mortgage Rate, if applicable;
(xx) the Maximum Mortgage Rate, if applicable;
(xxi) the first Adjustment Date after the Cut-off Date, if applicable;
(xxii) [reserved]; and
(xxiii) a code indicating whether the Mortgage Loan is a MERS Mortgage Loan and, if so,
its corresponding MIN.
With respect to the Mortgage Loans in the aggregate, each Mortgage Loan Schedule
shall set forth the following information, as of the Cut-off Date:
(i) the number of Mortgage Loans;
(ii) the current aggregate principal balance of the Mortgage Loans as of the close of
business on the Cut-off Date, after deduction of payments of principal due on or
before the Cut-off Date whether or not collected; and
(iii) the weighted average Mortgage Rate of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Pool: All of the Mortgage Loans.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note.
Mortgaged Property: The underlying real property securing a Mortgage Loan.
Mortgagor: The obligor(s) on a Mortgage Note.
Net Excess Spread: With respect to any Distribution Date, a fraction, expressed as a
percentage, the numerator of which is equal to the excess of (i) the aggregate Stated
Principal Balance for such Distribution Date of the Mortgage Loans, multiplied by the
product of (a) the Net WAC Rate and (b) the actual number of days elapsed in the related
Accrual Period divided by 360, over (ii) the aggregate Current Interest for such
Distribution Date, and the denominator of which is an amount equal to the Aggregate Loan
Balance for such Distribution Date of the Mortgage Loans, multiplied by the actual number
of days elapsed in the related Accrual Period divided by 360.
Net Funds Cap: Any of the Class A-1 Net Funds Cap, the Class A-2 Net Funds Cap, the
Class A-IO-1 Net Funds Cap or the Subordinate Net Funds Cap, as applicable.
Net Liquidation Proceeds: Liquidation Proceeds, net of (1) unreimbursed, reasonable
out-of-pocket expenses and (2) unreimbursed Servicing Fees, Servicing Advances and Advances.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per annum rate
equal to the Mortgage Rate less the related Expense Fee Rate.
Net WAC Rate: As to any Distribution Date, a rate equal to the weighted average of
the Net Mortgage Rates on the Mortgage Loans for the related Collection Period, weighted on
the basis of the Stated Principal Balances as of the first day of the related Collection
Period.
NIM Note: Any debt instrument secured by distributions on any of the Certificates
issued by the Trust.
Nonrecoverable Advance: With respect to any Mortgage Loan, any portion of an Advance
or a Servicing Advance previously made or proposed to be made by the Servicer that, in the
good faith judgment of the Servicer will not be ultimately recoverable by the Servicer from
the related Mortgagor, related Liquidation Proceeds or otherwise from proceeds or
collections on the related Mortgage Loan.
Notional Amount Certificates: As specified in the Preliminary Statement.
Offered Certificates: As specified in the Preliminary Statement.
Officer's Certificate: A certificate signed by the Chairman of the Board or the Vice
Chairman of the Board or the President or a Vice President or an Assistant Vice President
or the Treasurer or the Secretary or one of the Assistant Treasurers or Assistant
Secretaries of the Servicer or any certificate of any Servicing Officer, and delivered to
the Depositor or the Trustee, as the case may be, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel for the
Depositor or the Servicer, including in-house counsel, reasonably acceptable to the
Trustee; provided, however, that with respect to the interpretation or application of the
REMIC Provisions, such counsel must (i) in fact be independent of the Depositor and the
Servicer, (ii) not have any material direct financial interest in the Depositor or the
Servicer or in any affiliate of either, and (iii) not be connected with the Depositor or
the Servicer as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. The cost of any Opinion of Counsel, except as
otherwise specifically provided herein, shall not be at the expense of the Trustee.
Optimal Interest Remittance Amount: For any Distribution Date and Loan Group, will
be equal to the excess of (i) the product of (1) (x) the weighted average Net Mortgage Rate
of the Mortgage Loans in such Loan Group as of the first day of the related Collection
Period divided by (y) 12 and (2) the applicable Aggregate Loan Group Balance for the
immediately preceding Distribution Date, over (ii) any expenses that reduce the Interest
Remittance Amount for that Loan Group which did not arise as a result of a default or
delinquency of the related Mortgage Loans or were not taken into account in computing the
Expense Fee Rate.
Optional Termination Date: The first Distribution Date on which the Servicer may
exercise its right to terminate the Trust Fund pursuant to Section 9.01.
OTS: The Office of Thrift Supervision.
Outsourcer: As defined in Section 3.02 herein.
Outstanding: With respect to the Certificates as of any date of determination, all
Certificates theretofore executed and authenticated under this Agreement except:
(i) Certificates theretofore canceled by the Trustee or delivered to the Trustee for
cancellation; and
(ii) Certificates in exchange for which or in lieu of which other Certificates have been
executed and delivered by the Trustee pursuant to this Agreement.
Outstanding Mortgage Loan: As of any Due Date, a Mortgage Loan with a Stated
Principal Balance greater than zero which was not the subject of a Payoff prior to such Due
Date and which did not become a Liquidation Mortgage Loan prior to such Due Date.
Overcollateralization Amount: For any Distribution Date, an amount equal to the
amount, if any, by which (x) the applicable Aggregate Loan Balance for such Distribution
Date exceeds (y) the aggregate Class Principal Balance of the Offered Certificates after
giving effect to payments on such Distribution Date.
Overcollateralization Commencement Date: Either (i) the November 2004 Distribution
Date or (ii) the October 2004 Distribution Date if more than 3% of the Mortgage Loans (by
Aggregate Loan Balance as of the Cut-off Date) which were less than 30 days delinquent as
of the Cut-off Date fail to make their Scheduled Payment due during the period commencing
on the second day of the month preceding the month in which the Cut-off Date occurs and
ending on the Cut-off Date prior to the close of business on September 30, 2004.
Overcollateralization Deficiency: For any Distribution Date will be equal to the
amount, if any, by which (x) the Targeted Overcollateralization Amount for such
Distribution Date exceeds (y) the Overcollateralization Amount for such Distribution Date,
calculated for this purpose after giving effect to the reduction on such Distribution Date
of the aggregate Class Principal Balance of the Certificates resulting from the payment of
the Principal Payment Amount on such Distribution Date, but prior to allocation of any
Applied Loss Amount on such Distribution Date.
Overcollateralization Release Amount: For any Distribution Date, an amount equal to
the lesser of (x) the related Principal Remittance Amount for such Distribution Date and
(y) the amount, if any, by which (1) the Overcollateralization Amount for such date,
calculated for this purpose on the basis of the assumption that 100% of the aggregate
Principal Remittance Amount for such date is applied on such date in reduction of the
aggregate of the Class Principal Balances of the Certificates, exceeds (2) the Targeted
Overcollateralization Amount for such date.
Ownership Interest: As to any Residual 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.
Par Value: For any Auction Date, the sum of (i) 100% of the Stated Principal Balance
of each Mortgage Loan (other than in respect of REO Property) plus accrued and unpaid
interest thereon from the date to which such interest was paid or advanced at the sum of
the applicable Mortgage Rate, to but not including the Due Date in the month of the final
Distribution Date (or the Net Mortgage Rate with respect to any related Mortgage Loan
currently serviced by the entity bidding on such Mortgage Loans), (ii) with respect to any
REO Property, the lesser of (x) the appraised value of any REO Property as determined by
the higher of two independent valuations completed by two independent companies selected by
the Depositor at the expense of the Depositor and (y) the Stated Principal Balance of each
related Mortgage Loan related to any REO Property, in each case, (iii) any remaining
unreimbursed Advances, Servicing Advances, Servicing Fees, Back-Up Servicing Fees and
Trustee Fees payable to the Servicer, Back-Up Servicer or the Trustee, as applicable.
Pass-Through Rate: With respect to the any Class of LIBOR Certificates and any
Distribution Date, a per annum rate equal to the lesser of (x) the related Certificate
Index for such Distribution Date, plus the related Certificate Margin and (y) the
applicable Net Funds Cap for such Distribution Date. With respect to the Class A-IO-1
Certificates and any Distribution Date on or prior to August 2006, a per annum rate equal
to the least of (x) the excess, if any, of 8.00% over the Certificate Index for such
Distribution Date, (y) the Class A-IO-1 Net Funds Cap for such Distribution Date and (z)
6.60% per annum. With respect to the Class A-IO-2 Certificates and for any Distribution
Date beginning with the November 2004 Distribution Date and ending with the August 2006
Distribution Date, a per annum rate equal to the excess, if any, of 1.40% over the
Certificate Index for such Distribution Date. With respect to the Class X Certificates,
the rate set forth in the Preliminary Statement.
Payahead: Any Scheduled Payment intended by the related Mortgagor to be applied in a
Collection Period subsequent to the Collection Period in which such payment was received.
Payoff: Any payment of principal on a Mortgage Loan equal to the entire outstanding
principal balance of such Mortgage Loan, if received in advance of the last scheduled Due
Date for such Mortgage Loan and accompanied by an amount of interest equal to accrued
unpaid interest on the Mortgage Loan to the date of such payment-in-full.
Percentage Interest: As to any Certificate, either the percentage set forth on the
face thereof or equal to the percentage obtained by dividing the Denomination of such
Certificate by the aggregate of the Denominations of all Certificates of the same Class.
Permitted Transferee: Any person other than a Disqualified Organization or a Person
that is not a citizen or resident of the United States, a corporation, partnership, or
other entity (treated as a corporation or partnership for federal income tax purposes)
created or organized in or under the laws of the United States, any State thereof or the
District of Columbia, or an estate whose income from sources without the United States is
includible in gross income for federal income tax purposes regardless of its connection
with the conduct of a trade or business within the United States or a trust if a court
within the United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have the authority to control all
substantial decisions of the trust unless such Person has furnished the transferor and the
Trustee with a duly completed Internal Revenue Service Form W-8ECI. The terms "United
States" and "State" shall have the meanings set forth in section 7701 of the Code or
successor provisions.
Person: Any individual, corporation, partnership, joint venture, association,
limited liability company, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
Physical Certificates: As specified in the Preliminary Statement.
Plan: An employee benefit plan or arrangement which is subject to Section 406 of
ERISA and/or Section 4975 of the Code or an entity whose underlying assets include such
plan's or arrangement's assets by reason of their investment in the entity.
Pooling REMIC: As specified in the Preliminary Statement.
Prepayment Interest Shortfall: As to any Distribution Date, Mortgage Loan and
Principal Prepayment, other than Principal Prepayments in full that occur during the
portion of the Prepayment Period that is in the same calendar month as the Distribution
Date, the difference between (i) one full month's interest at the applicable Mortgage Rate,
as reduced by the Servicing Fee Rate on the principal balance of such Principal Prepayment
and (ii) the amount of interest due and actually received from the related Mortgagor that
accrued during the month immediately preceding such Distribution Date with respect to such
Mortgage Loan and such Principal Prepayment, as reduced by the Servicing Fee.
Prepayment Premium: With respect to each Mortgage Loan, the prepayment charge or
penalty interest required to be paid by the Mortgagor in connection with a prepayment of
the related Mortgage Loan, as provided in the related Mortgage Note or Mortgage, and as
specified on the Mortgage Loan Schedule.
Prepayment Period: With respect to any Distribution Date and any Payoff, the period
from the sixteenth day of the calendar month preceding the month in which such Distribution
Date occurs (or in the case of the first Distribution Date, from the Cut-off Date) through
the fifteenth day of the month in which such Distribution Date occurs. With respect to any
Distribution Date and any Curtailment, the calendar month preceding such Distribution Date.
Principal Payment Amount: For any Distribution Date, an amount equal to the related
Principal Remittance Amount for such date minus the related Overcollateralization Release
Amount, if any, for such date.
Principal Prepayment: Any payment of principal on a Mortgage Loan which constitutes
a Payoff or Curtailment.
Principal Remittance Amount: For any Distribution Date, an amount equal to the sum
of (1) all principal collected (other than Payaheads) or advanced in respect of Scheduled
Payments on the Mortgage Loans during the related Collection Period (less unreimbursed
Advances, Servicing Advances and other amounts due to the Servicer and the Trustee with
respect to such Mortgage Loans, to the extent allocable to principal) and the principal
portion of Payaheads previously received and intended for application in the related
Collection Period, (2) all Principal Prepayments on the Mortgage Loans received during the
related Prepayment Period, (3) the outstanding principal balance of each Mortgage Loan that
was repurchased by the Seller or purchased by the Servicer during the calendar month
immediately preceding such Distribution Date and the proceeds of any purchase of the
Mortgage Loans by the Servicer pursuant to Section 9.01 in an amount not exceeding the
principal portion of the Par Value, (4) the portion of any Substitution Adjustment Amount
paid with respect to any Deleted Mortgage Loans during the calendar month immediately
preceding such Distribution Date allocable to principal, and (5) all Net Liquidation
Proceeds (net of unreimbursed Advances, Servicing Advances and other expenses, to the
extent allocable to principal) and any Recoveries collected with respect to the Mortgage
Loans during the prior calendar month, to the extent allocable to principal.
Private Certificates: As specified in the Preliminary Statement.
Qualified Substitute Mortgage Loan: One or more Mortgage Loans substituted by the
Seller for one or more Deleted Mortgage Loans which must, on the date of such substitution,
as confirmed in a Request for Release, substantially in the form of Exhibit M, individually
or in the aggregate and on a weighted average basis, as applicable, (i) have a Stated
Principal Balance, after deduction of the principal portion of the Scheduled Payment due in
the month of substitution, not in excess of, and not more than 10% less than the Stated
Principal Balance of the Deleted Mortgage Loan; (ii) be accruing interest at a rate no
lower than and not more than 1% per annum higher than, that of the Deleted Mortgage Loan;
(iii) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (iv)
have a remaining term to maturity not more than one year greater than or less than that of
the Deleted Mortgage Loan; provided that the remaining term to maturity of any such
Mortgage Loan shall be no greater than the last maturing Mortgage Loan in the Trust
immediately prior to any substitution; (v) if the Deleted Mortgage Loan is an
adjustable-rate Mortgage Loan, have a Maximum Mortgage Rate and Minimum Mortgage Rate not
less than the respective rates for the Deleted Mortgage Loan, have a Gross Margin equal to
or greater than the Deleted Mortgage Loan and have the same Index as the Deleted Mortgage
Loan, (vi) comply with each representation and warranty set forth in Section 2.03(b) and
(vii) be replaced into the Loan Group from which the Deleted Mortgage Loan was removed.
Rating Agency: Each of the Rating Agencies specified in the Preliminary Statement.
If any such organization or a successor is no longer in existence, "Rating Agency" shall be
such nationally recognized statistical rating organization, or other comparable Person, as
is designated by the Depositor, notice of which designation shall be given to the Trustee,
the Back-Up Servicer and the Servicer. References herein to a given rating or rating
category of a Rating Agency shall mean such rating category without giving effect to any
modifiers.
Ratings: As of any date of determination, the ratings, if any, of the Certificates
as assigned by the Rating Agencies.
Realized Loss: With respect to each Liquidation Mortgage Loan, an amount (not less
than zero or more than the Stated Principal Balance of the Mortgage Loan) as of the date of
such liquidation, equal to (i) the Stated Principal Balance of the Liquidation Mortgage
Loan as of the date of such liquidation, plus (ii) interest at the Net Mortgage Rate from
the related Due Date as to which interest was last paid or advanced (and not reimbursed) to
Certificateholders up to the related Due Date in the month in which Liquidation Proceeds
are required to be distributed on the Stated Principal Balance of such Liquidation Mortgage
Loan from time to time, minus (iii) the Net Liquidation Proceeds, if any, received during
the month in which such liquidation occurred, to the extent applied as recoveries of
interest at the Net Mortgage Rate and to principal of the Liquidation Mortgage Loan.
Record Date: With respect to any Class of Physical Certificates and any Distribution
Date (other than the first Distribution Date), the last day of the calendar month preceding
the month in which such Distribution Date occurs and with respect to any Class of Physical
Certificates and the first Distribution Date, the Closing Date. With respect to any Class
of Certificates that is not a Physical Certificate and any Distribution Date, the Business
Day immediately preceding such Distribution Date; provided, however, that following the
date on which Definitive Certificates for such Certificates are available pursuant to
Section 5.02, the Record Date shall be the last day of the calendar month preceding the
month in which such Distribution Date occurs.
Recovery: With respect to any Liquidated Mortgage Loan, an amount received in
respect of principal on such Mortgage Loan which has previously been allocated as a
Realized Loss to a Class or Classes of Certificates net of reimbursable expenses.
Reference Bank Rate: As to any Accrual Period relating to the LIBOR Certificates as
follows: the arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth
of a percent) of the offered rates for United States dollar deposits for one month which
are offered by the Reference Banks as of 11:00 a.m., London time, on the Interest
Determination Date prior to the first day of such Accrual Period to prime banks in the
London interbank market for a period of one month in amounts approximately equal to the
aggregate Class Principal Balance of the LIBOR Certificates; provided that at least two
such Reference Banks provide such rate. If fewer than two offered rates appear, the
Reference Bank Rate will be the arithmetic mean of the rates quoted by one or more major
banks in New York City, selected by the Trustee after consultation with the Servicer, as of
11:00 a.m., New York City time, on such date for loans in U.S. Dollars to leading European
banks for a period of one month in amounts approximately equal to the aggregate Class
Principal Balance of the LIBOR Certificates. If no such quotations can be obtained, the
Reference Bank Rate shall be the Reference Bank Rate applicable to the preceding Accrual
Period.
Reference Banks: Three major banks that are engaged in the London interbank market,
selected by the Trustee after consultation with the Servicer, as identified in writing to
the Trustee.
Regular Certificates: As specified in the Preliminary Statement.
Relief Act: The Servicemembers Civil Relief Act, as amended, or any state law
providing for similar relief.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to real estate
mortgage investment conduits, which appear at sections 860A through 860G of Subchapter M of
Chapter 1 of the Code, and related provisions, and regulations promulgated thereunder, as
the foregoing may be in effect from time to time.
REO Property: A Mortgaged Property acquired by the Trust Fund through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan required to be purchased by the
Seller pursuant to this Agreement or purchased at the option of the Servicer pursuant to
Section 3.12(f) of this Agreement, an amount equal to the sum of (i) 100% of the unpaid
principal balance of the Mortgage Loan on the date of such purchase, (ii) accrued and
unpaid interest thereon at the applicable Mortgage Rate (reduced by the Servicing Fee Rate
if the purchaser of the Mortgage Loan is also the Servicer thereof) from the date through
which interest was last paid by the Mortgagor to the Due Date in the month in which the
Repurchase Price is to be distributed to Certificateholders and (iii) in the case of a
Mortgage Loan purchased by the Seller, (a) any unreimbursed Servicing Advances and (b) any
costs and damages (including without limitation, late fees) actually incurred and paid by
or on behalf of the Trust in connection with any breach of the representation and warranty
set forth in Schedule III (xxi) as the result of a violation of a predatory or abusive
lending law applicable to such Mortgage Loan.
Request for Release: The Request for Release submitted by the Servicer or the
Trustee to the Custodian substantially in the form of Exhibit M.
Required Basis Risk Reserve Fund Amount: With respect to any Distribution Date on
which the Net Excess Spread is less than 0.25%, the lesser of (a) $15,000 and (b) the
product of 0.50% and the Aggregate Loan Balance. With respect to any Distribution Date on
which the Net Excess Spread is equal to or greater than 0.25%, $5,000.
Required Basis Risk Reserve Fund Deposit: With respect to any Distribution Date, the
sum of (i) any Basis Risk Shortfall for such date and (ii) the excess, if any, of the
Required Basis Risk Reserve Fund Amount for such Distribution Date over the amount on
deposit in the Basis Risk Reserve Fund at the close of business on the Business Day
immediately preceding such Distribution Date.
Required Insurance Policy: With respect to any Mortgage Loan, any insurance policy
that is required to be maintained from time to time under this Agreement.
Residual Certificates: As specified in the Preliminary Statement.
Responsible Officer: When used with respect to the Trustee, any Vice President, any
Assistant Vice President, any Assistant Secretary, any Trust Officer or any other officer
or employee of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also to whom, with respect to a particular matter,
such matter is referred because of such officer's or employee's knowledge of and
familiarity with the particular subject and in each case who shall have direct
responsibility for the administration of this Agreement.
Rolling Three Month Delinquency Rate: For any Distribution Date, will be equal to
the average of the related Delinquency Rates for each of the three (or one and two, in the
case of the first and second Distribution Dates) immediately preceding months.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc. For purposes of Section 10.05(c) the address for notices to S&P shall be Standard &
Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage
Surveillance Monitoring, or such other address as S&P may hereafter furnish to the
Depositor, the Servicer, the Back-Up Servicer and the Trustee.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on any Due
Date allocable to principal and/or interest on such Mortgage Loan pursuant to the terms of
the related Mortgage Note.
Securities Act: The Securities Act of 1933, as amended.
Seller: DLJMC.
Senior Certificates: As specified in the Preliminary Statement.
Senior Enhancement Percentage: For any Distribution Date, the fraction, expressed as
a percentage, the numerator of which is the sum of the aggregate Class Principal Balance of
the Subordinate Certificates and the Overcollateralization Amount (which, for purposes of
this definition only, shall not be less than zero), in each case prior to giving effect to
payments on such Distribution Date (assuming no Trigger Event has occurred), and the
denominator of which is the Aggregate Loan Balance as of the first day of the related
Collection Period.
Senior Principal Payment Amount: For any Distribution Date on or after the Stepdown
Date and as long as a Trigger Event has not occurred with respect to such Distribution
Date, will be the amount, if any, by which (x) the Class Principal Balance of the Senior
Certificates immediately prior to such Distribution Date exceeds (y) the lesser of (A) the
product of (i) 62.50% and (ii) the Aggregate Loan Balance for such Distribution Date and
(B) the amount, if any, by which (i) the Aggregate Loan Balance for such Distribution Date
exceeds (ii) 0.50% of the Aggregate Loan Balance as of the Cut-off Date.
Servicer: Fremont Investment & Loan, or such Person's successor(s), as servicer
hereunder, as the context may require.
Servicer Employee: As defined in Section 3.19 herein.
Servicer Remittance Date: With respect to any Mortgage Loan and Distribution Date,
18th day of each month, or if such 18th day is not a Business Day, the first Business Day
immediately following such 18th day.
Servicing Advance: All reasonable and customary "out of pocket" costs and expenses
incurred in the performance by the Servicer of its servicing obligations, including, but
not limited to, the cost (including reasonable attorneys' fees and disbursements) of
(i) the preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, and any litigation related to
a Mortgage Loan, (iii) the management and liquidation of any REO Property including
reasonable fees paid to any independent contractor or Outsourcer in connection therewith,
(iv) compliance with the obligations under Section 3.10 or 3.12, (v) obtaining broker price
opinions, (vi) in connection with the liquidation of a Mortgage Loan, expenditures relating
to the purchase or maintenance of a first lien Mortgage Loan, all of which reasonable and
customary out-of-pocket costs and expenses are reimbursable to the Servicer to the extent
provided in Sections 3.07(d)(ii) and 3.09(a)(iii), (iv), (vi) and (vii) obtaining or
correcting any legal documentation required to be included in the Mortgage Files and
reasonably necessary for the Servicer to perform its obligations under this Agreement.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, an amount equal
to one month's interest at the Servicing Fee Rate on the Stated Principal Balance of such
Mortgage Loan as of the Due Date related to such Distribution Date (prior to giving effect
to any Scheduled Payments due on such Mortgage Loan on such Due Date), subject to reduction
as provided in Section 3.15.
Servicing Fee Rate: 0.49% per annum plus, if the Back-up Servicer has been
terminated and no successor Back-up Servicer has been appointed, an additional 0.01% per
annum.
Servicing Officer: With respect to the Servicer, any officer of the Servicer,
involved in, or responsible for, the administration and servicing of the related Mortgage
Loans whose name and specimen signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date pursuant to this Agreement, as such list
may from time to time be amended and delivered to the Trustee.
Startup Day: The Closing Date.
Stated Principal Balance: As to any Mortgage Loan and Due Date, the unpaid principal
balance of such Mortgage Loan as of such Due Date as specified in the amortization schedule
at the time relating thereto (before any adjustment to such amortization schedule by reason
of any moratorium or similar waiver or grace period) after giving effect to any previous
Curtailments and Liquidation Proceeds allocable to principal (other than with respect to
any Liquidation Mortgage Loan) and to the payment of principal due on such Due Date and
irrespective of any delinquency in payment by the related Mortgagor.
Stepdown Date: The date occurring on the later of (x) the Distribution Date in
September 2007 and (y) the first Distribution Date on which the Senior Enhancement
Percentage (calculated for this purpose after giving effect to payments or other recoveries
in respect of the Mortgage Loans during the related Collection Period but before giving
effect to payments on the Certificates on such Distribution Date) is greater than or equal
to 37.50%.
Subordinate Certificates: As specified in the Preliminary Statement.
Subordinate Group 1 Balance: For any Distribution Date will be the Aggregate Loan
Group Balance for Loan Group 1 as of the first day of the related Collection Period less
the Class Principal Balance of the Class A-1 Certificates.
Subordinate Group 2 Balance: For any Distribution Date will be the Aggregate Loan
Group Balance for Loan Group 2 as of the first day of the related Collection Period less
the aggregate Class Principal Balances of the Class A-2, Class R and Class R-II
Certificates.
Subordinate Net Funds Cap: For any Distribution Date and the Class M-1, Class M-2,
Class M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class B-2, Class B-3 and Class B-4
Certificates, will be a per annum rate equal to a weighted average of (i) the Class A-1 Net
Funds Cap and (ii) the Class A-2 Net Funds Cap for such Distribution Date, weighted on the
basis of the Subordinate Group 1 Balance and Subordinate Group 2 Balance.
Subservicer: Any Subservicer which is subservicing any of the Mortgage Loans
pursuant to a Subservicing Agreement. Any subservicer shall meet the qualifications set
forth in Section 3.02.
Subservicing Agreement: An agreement between the Servicer and a Subservicer for the
servicing of the Mortgage Loans identified thereunder.
Subsidiary REMIC: As specified in the Preliminary Statement.
Substitution Adjustment Amount: As defined in Section 2.03 herein.
Target Amount: As defined in Section 4.07(h) hereof.
Targeted Overcollateralization Amount: For any Distribution Date prior to the
Stepdown Date, 1.00% of the Aggregate Loan Balance as of the Cut-off Date; with respect to
any Distribution Date on or after the Stepdown Date and with respect to which a Trigger
Event has not occurred, the greater of (a) 2.00% of the Aggregate Loan Balance for such
Distribution Date, or (b) 0.50% of the Aggregate Loan Balance as of the Cut-off Date; with
respect to any Distribution Date on or after the Stepdown Date with respect to which a
Trigger Event has occurred and is continuing, the Targeted Overcollateralization Amount for
the Distribution Date immediately preceding such Distribution Date.
Telerate Page 3750: The display designated as page 3750 on Bridge Telerate Service
(or such other page as may replace page 3750 on that service for the purpose of displaying
London interbank offered rates of major banks).
Transfer: Any direct or indirect transfer or sale of any Ownership Interest in a
Residual Certificate.
Transferee: Any Person who is acquiring by Transfer any Ownership Interest in a
Residual Certificate.
Trigger Event: A Trigger Event will occur for any Distribution Date if either (i)
the Rolling Three Month Delinquency Rate as of the last day of the related Collection
Period equals or exceeds 40.0% of the Senior Enhancement Percentage for such Distribution
Date or (ii) the cumulative Realized Losses as a percentage of the original Aggregate Loan
Balance on the Closing Date for such Distribution Date is greater than the percentage set
forth in the following table:
Range of Distribution Dates Percentage
September 2007 - August 2008 2.75%*
September 2008 - August 2009 4.25%*
September 2009 - August 2010 5.50%*
September 2010 - August 2011 6.00%*
September 2011 and thereafter 6.25%
* The percentages set forth above are the percentages applicable for the first Distribution
Date in the corresponding range of Distribution Dates. The percentage for each succeeding
Distribution Date in a range increases incrementally by 1/12 of the positive difference
between the percentage applicable to the first Distribution Date in that range and the
percentage applicable to the first Distribution Date in the succeeding range.
Trust: The trust established pursuant to this Agreement relating to the issuance of
the CSFB Home Equity Pass-Through Certificates, Series 2004-FRE1.
Trust Collateral: As defined in Section 9.01.
Trust Fund: The corpus of the trust created hereunder consisting of (i) the Mortgage
Loans and all interest and principal received on or with respect thereto after the Cut-off
Date, other than such amounts which were due on the Mortgage Loans on or before the Cut-off
Date; (ii) the Collection Account, the Certificate Account and the Basis Risk Reserve Fund
and all amounts deposited therein pursuant to the applicable provisions of this Agreement;
(iii) property which secured a Mortgage Loan and which has been acquired by foreclosure or
deed in lieu of foreclosure after the Cut-off Date; (iv) the Depositor's rights under the
Assignment and Assumption Agreement and (v) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing.
Trustee: U.S. Bank National Association, in its capacity as trustee under this
agreement and assigns in such capacity.
Trustee Auction Fee: The fee, payable to the Trustee in an amount equal to $10,000
plus out-of-pocket expenses, and the Trustee will use its best efforts to keep such
expenses to a minimum.
Trustee Fee: The fee, if any, payable to the Trustee on each Distribution Date for
its services as Trustee hereunder, in an amount equal to one twelfth of the Trustee Fee
Rate multiplied by the Stated Principal Balance of the Mortgage Loans immediately prior to
such Distribution Date.
Trustee Fee Rate: 0.0035% per annum.
Underwriters' Exemption: Prohibited Transaction Exemption 2002-41, 67 Fed.
Reg. 54487 (2002), as amended (or any successor thereto), or any substantially similar
administrative exemption granted by the U.S. Department of Labor.
Voting Rights: The portion of the voting rights of all the Certificates that is
allocated to any Certificate for purposes of the voting provisions of this Agreement. At
all times during the term of this Agreement, 96% of all Voting Rights shall be allocated
among the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class B-1, Class B-2, Class B-3 and Class B-4 Certificates. The portion of such
96% Voting Interests allocated to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class M-1, Class M-2, Class
M-3, Class M-4, Class M-5, Class M-6, Class B-1, Class B-2, Class B-3 and Class B-4
Certificates shall be based on the fraction, expressed as a percentage, the numerator of
which is the aggregate Class Principal Balance then outstanding and the denominator of
which is the Class Principal Balance of all such Classes then outstanding. The
Class A-IO-1, Class A-IO-2, the Class X-1 Certificates and the Class X-2 Certificates shall
each be allocated 1% of the Voting Rights. Voting Rights shall be allocated among the
Certificates within each such Class in accordance with their respective Percentage
Interests. The Class R and Class R-II shall have no voting rights.
SECTION 1.02 Interest Calculations.
Interest on the LIBOR Certificates and the Class A-IO-2 Certificates shall be
calculated on the basis of a 360-day year and the actual number of days elapsed. The
calculation of all fees and interest on the Class A-IO-1 Certificates, the Class X
Certificates and on each Lower Tier Interest shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All dollar amounts calculated hereunder shall be
rounded to the nearest ▇▇▇▇▇ with one-half of one ▇▇▇▇▇ being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery hereof, hereby sells,
transfers, assigns, sets over and otherwise conveys to the Trustee in trust for the benefit
of the Certificateholders, without recourse, all the right, title and interest of the
Depositor in and to (i) subject to Section 6.04(b), each Mortgage Loan, including all
interest and principal received or receivable on or with respect to such Mortgage Loans
after the Cut-off Date and all interest and principal payments on the Mortgage Loans
received prior to the Cut-off Date in respect of installments of interest and principal due
thereafter, but not including payments of principal and interest due and payable on the
Mortgage Loans on or before the Cut-off Date; (ii) any insurance policies in respect of the
Mortgage Loans; (iii) the Depositor's rights under the Assignment and Assumption Agreement;
and (iv) all proceeds of any of the foregoing.
It is agreed and understood by the Depositor, the Seller, the Servicer, the
Back-up Servicer and the Trustee that it is not intended that any Mortgage Loan be included
in the Trust Fund that is a "High-Cost Home Loan" as defined in the New Jersey Home
Ownership Act, effective as of November 27, 2003, or The Home Loan Protection Act of New
Mexico, effective as of January 1, 2004.
(b) In connection with the transfer and assignment set forth in clause (a) above, the
Depositor has delivered or caused to be delivered to the Custodian for the benefit of the
Certificateholders, the documents and instruments with respect to each Mortgage Loan as
assigned:
(i) the electronic Mortgage Loan Schedule;
(ii) (A) the original Mortgage Note bearing all intervening endorsements and
including any riders to the Mortgage Note, endorsed "Pay to the order of __________,
without recourse" and signed in the name of the last named endorsee by an authorized
officer, or
(B) with respect to any Lost Mortgage Note, a lost note affidavit stating that the
original Mortgage Note was lost or destroyed, together with a copy of such
Mortgage Note;
(iii) the original of any guarantee executed in connection with the Mortgage Note (if any);
(iv) for each Mortgage Loan that is not a MERS Mortgage Loan, the original Mortgage, with
evidence of recording thereon, or copies certified by the related recording office or
if the original Mortgage has not yet been returned from the recording office, a copy
certified by or on behalf of the Seller indicating that such Mortgage has been
delivered for recording (the return directions for the original Mortgage should
indicate, when recorded, mail to the Seller) and in the case of each MERS Mortgage
Loan, the original Mortgage, noting the presence of the MIN of the related Mortgage
Loan and either language indicating that the Mortgage Loan is a MOM Loan if the
Mortgage Loan is a MOM Loan or if the Mortgage Loan was not a MOM Loan at
origination, the original Mortgage and the assignment thereof to MERS, with evidence
of recording indicated thereon or a copy of the Mortgage certified by the public
recording office in which such Mortgage has been recorded;
(v) the originals of all assumption, modification, consolidation or extension agreements
(or, if an original of any of these documents has not been returned from the
recording office, a copy thereof certified by or on behalf of the Seller, the
original to be delivered to the Seller forthwith after return from such recording
office) with evidence of recording thereon, if any;
(vi) for each Mortgage Loan that is not a MERS Mortgage Loan, the original Assignment of
Mortgage as appropriate, in recordable form, for the Mortgage Loan assigned in blank;
(vii) for each Mortgage Loan that was not a MERS Mortgage Loan at its origination, the
originals of all intervening Assignments of Mortgage, showing a complete chain of
assignment from the originator of such Mortgage Loan to the Person assigning the
Mortgage to the Trustee, including warehousing assignments, with evidence of
recording on each such Assignment of Mortgage (or, if an original intervening
Assignment of Mortgage has not been returned from the recording office, a copy
thereof certified by or on behalf of the Seller, the original to be delivered to the
Trustee forthwith after return from such recording office); and
(viii) the original mortgage title insurance policy, or if the policy has not yet been
issued, an original or copy of a marked-up written commitment or a pro forma title
insurance policy marked as binding and countersigned by the title insurance company
or its authorized agent either on its face or by an acknowledged closing instruction
or escrow letter.
In addition, in connection with the assignment of any MERS Mortgage Loan, the Seller
agrees that it will cause, at the Seller's expense, the MERS® System to indicate that such
Mortgage Loans have been assigned by the Seller to the Trustee in accordance with this
Agreement for the benefit of the Certificateholders by including (or deleting, in the case
of Mortgage Loans which are repurchased or substituted in accordance with this Agreement)
the information required by the MERS® System to (a) identify the Trustee and (b) identify
the series of the Certificates issued in connection with such Mortgage Loans. The Trustee
shall confirm, or cause the Custodian to confirm, on the Final Certification of the
Custodian that such assignment has occurred. The Seller further agrees that it will not,
and will not permit the Servicer to, and the Servicer agrees that it will not, alter the
information referenced in this paragraph with respect to any Mortgage Loan during the term
of this Agreement unless and until such Mortgage Loan is repurchased or substituted in
accordance with the terms of this Agreement.
If the Seller delivers certified copies of any document or instrument set forth in
Section 2.01(b) to the Custodian because of a delay caused by the public recording office
in returning any recorded document, the Seller shall deliver to the Custodian, within 60
days of the Closing Date, an Officer's Certificate which shall (i) identify the recorded
document, (ii) state that the recorded document has not been delivered to the Custodian due
solely to a delay caused by the public recording office, and (iii) state the amount of time
generally required by the applicable recording office to record and return a document
submitted for recordation.
In the event that in connection with any Mortgage Loan the Depositor cannot deliver
(a) for a Mortgage Loan that is not a MERS Mortgage Loan, the original recorded Mortgage,
(b) all interim recorded assignments or (c) the lender's title policy (together with all
riders thereto) satisfying the requirements set forth above, concurrently with the
execution and delivery hereof because such document or documents have not been returned
from the applicable public recording office in the case of clause (a) or (b) above, or
because the title policy has not been delivered to the Seller or the Depositor by the
applicable title insurer in the case of clause (c) above, the Depositor shall promptly
deliver to the Custodian, in the case of clause (a) or (b) above, such original Mortgage or
such interim assignment, as the case may be, with evidence of recording indicated thereon
upon receipt thereof from the public recording office, or a copy thereof, certified, if
appropriate, by the relevant recording office and in the case of (c) above, such original
title policy (together with all riders thereto), upon receipt from the applicable title
insurer.
As promptly as practicable subsequent to such transfer and assignment and delivery to
it of each Assignment of Mortgage pursuant to clause (vi) above, and in any event, within
thirty (30) days thereafter, the Trustee shall (at the Seller's expense) (i) affix the
Trustee's name to each Assignment of Mortgage, as the assignee thereof, (ii) cause such
Assignment of Mortgage to be completed in proper form for recording in the appropriate
public office for real property records within thirty (30) days after receipt thereof and
(iii) cause to be delivered for recording in the appropriate public office for real
property records the Assignments of Mortgages to the Trustee, except that, with respect to
any Assignment of Mortgage as to which the Trustee has not received the information
required to prepare such Assignment of Mortgage in recordable form, the Trustee's
obligation to do so and to deliver the same for such recording shall be as soon as
practicable after receipt of such information and in any event within thirty (30) days
after the receipt thereof, and the Trustee need not cause to be recorded any Assignment of
Mortgage referred to in clause (vi) above which relates to a Mortgage Loan in any
jurisdiction under the laws of which, as evidenced by an Opinion of Counsel delivered by
the Seller (at the Seller's expense) to the Trustee within twenty (20) days of the Closing
Date, acceptable to the Rating Agencies, the recordation of such Assignment of Mortgage is
not necessary to protect the Trustee's and the Certificateholders' interest in the related
Mortgage Loan.
SECTION 2.02 Acceptance by the Trustee of the Mortgage Loans.
(a) The Trustee acknowledges receipt of the documents identified in the Initial
Certification in the form annexed hereto as Exhibit G and declares that it holds and will
hold or will cause its agent to hold such documents and the other documents delivered to it
constituting the Mortgage Files, and that it holds or will hold or will cause its agent to
hold such other assets as are included in the Trust Fund, in trust for the exclusive use
and benefit of all present and future Certificateholders. The Trustee acknowledges that it
or the Custodian will maintain possession of the Mortgage Notes in the State of Illinois,
as directed by the Seller, unless otherwise permitted by the Rating Agencies.
The Trustee agrees to deliver as of 10:00 a.m. (New York time) on the Closing Date to
the Depositor and the Servicer an Initial Certification from the Custodian in the form
annexed hereto as Exhibit G. Based on its review and examination, and only as to the
documents identified in each such Initial Certification, the Custodian acknowledges that
such documents appear regular on their face and relate to such Mortgage Loan. The Trustee
shall be under no duty or obligation to inspect, review or examine said documents,
instruments, certificates or other papers to determine that the same are genuine,
enforceable or appropriate for the represented purpose or that they have actually been
recorded in the real estate records or that they are other than what they purport to be on
their face.
Not later than 90 days after the Closing Date, the Trustee shall deliver to the
Depositor, the Seller and the Servicer a Final Certification in the form annexed hereto as
Exhibit H, with any applicable exceptions noted thereon.
If, in the course of such review, the Trustee is notified by the Custodian that any
document constituting a part of a Mortgage File does not meet the requirements of
Section 2.01, the Trustee shall cause the Custodian to list such as an exception in the
Final Certification; provided, however, that the Trustee shall not make any determination
as to whether (i) any endorsement is sufficient to transfer all right, title and interest
of the party so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note
or (ii) any assignment is in recordable form or is sufficient to effect the assignment of
and transfer to the assignee thereof under the mortgage to which the assignment relates.
The Seller shall promptly correct or cure such defect within 90 days from the date it
is so notified of such defect and, if the Seller does not correct or cure such defect
within such period, the Seller shall either (i) substitute for the related Mortgage Loan a
Qualified Substitute Mortgage Loan, which substitution shall be accomplished in the manner
and subject to the conditions set forth in Section 2.03, or (ii) purchase such Mortgage
Loan from the Trustee within 90 days from the date the Seller was notified of such defect
in writing at the Repurchase Price of such Mortgage Loan; provided, however, that if the
cure, substitution or repurchase of a Mortgage Loan pursuant to this provision is required
by reason of a delay in delivery of any documents by the appropriate recording office, then
the Seller shall be given 720 days from the Closing Date to cure such defect or substitute
for, or repurchase such Mortgage Loan; and further provided, that the Seller shall have no
liability for recording any Assignment of Mortgage in favor of the Trustee or for the
Trustee's failure to record such Assignment of Mortgage, and the Seller shall not be
obligated to repurchase or cure any Mortgage Loan as to which such Assignment of Mortgage
is not recorded. The Trustee shall deliver written notice to each Rating Agency within 270
days from the Closing Date indicating each Mortgage (a) which has not been returned by the
appropriate recording office or (b) as to which there is a dispute as to location or status
of such Mortgage. Such notice shall be delivered every 90 days thereafter until the related
Mortgage is returned to the Trustee or Custodian. Any such substitution effected more than
90 days after the Closing Date shall not be effected prior to the delivery to the Trustee
of the Opinion of Counsel required by Section 2.05 hereof and any substitution shall not be
effected prior to the additional delivery to the Trustee, or the Custodian on its behalf,
of a Request for Release substantially in the form of Exhibit M and the Mortgage File for
any such Qualified Substitute Mortgage Loan. The Repurchase Price for any such Mortgage
Loan shall be deposited by the Seller in the applicable Collection Account on or prior to
the Business Day immediately preceding the Distribution Date in the month following the
month of repurchase and, upon receipt of such deposit and certification with respect
thereto in the form of Exhibit M hereto, the Trustee, or the Custodian on its behalf, shall
release the related Mortgage File to the Seller and shall execute and deliver at such
entity's request such instruments of transfer or assignment prepared by such entity, in
each case without recourse, as shall be necessary to vest in such entity, or a designee,
the Trustee's interest in any Mortgage Loan released pursuant hereto.
If pursuant to the preceding paragraph the Seller repurchases a Mortgage Loan that is
a MERS Mortgage Loan, the Servicer shall, at the Seller's expense, either (i) cause MERS to
execute and deliver an Assignment of Mortgage in recordable form to transfer the Mortgage
from MERS to the Seller and shall cause such Mortgage to be removed from registration on
the MERS® System in accordance with MERS' rules and regulations or (ii) cause MERS to
designate on the MERS® System the Seller as the beneficial holder of such Mortgage Loan.
(b) It is understood and agreed that the obligation of the Seller to cure, substitute for
or to repurchase any Mortgage Loan which does not meet the requirements of Section 2.01
shall constitute the sole remedy respecting such defect available to the Trustee, the
Depositor and any Certificateholder against the Seller.
(c) All of the Mortgage Files are being held pursuant to the Custodial Agreement.
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 pursuant to Sections 2.01, 2.02, 2.05 and 3.12 shall be
performed by the Custodian. At the expense of DLJMC, the Trustee, from time to time, shall
instruct or cause the instruction of the Custodian to deliver the Mortgage Files to the
Trustee for completion and recordation of the Assignments of Mortgage.
SECTION 2.03 Representations and Warranties of the Seller, the Servicer and the
Back-Up Servicer.
(a) Each of DLJMC, the Servicer , and the Back-Up Servicer, in its capacity as Seller,
Servicer or Servicer, or Back-Up Servicer, as applicable, hereby makes on behalf of
themselves the representations and warranties set forth in Schedule IIA, Schedule IIB and
Schedule IIC hereto, respectively, and by this reference incorporated herein, to the
Depositor and the Trustee, as of the Closing Date, or if so specified therein, as of the
Cut-off Date.
(b) DLJMC, in its capacity as Seller, hereby makes the representations and warranties set
forth in Schedule III to the Depositor and the Trustee, as of the Closing Date, or the date
specified therein, with respect to the Mortgage Loans identified on Schedule I hereto. Any
breach of the representation and warranty set forth in clauses (xx) and (xxiii) of Schedule
III hereto shall be deemed to materially and adversely affect the interest of the
Certificateholders in that Mortgage Loan, notwithstanding the Seller's lack of knowledge
with respect to the substance of such representation and warranty.
(c) If with respect to any Mortgage Loan less than thirty days delinquent as of the
Cut-off Date (i) the obligor of such Mortgage Loan fails to make its Scheduled Payment due
during the period commencing on the second day of the month preceding the month in which
the Cut-off Date occurs and ending on the Cut-off Date and (ii) such Mortgage Loan becomes
30 days or more delinquent with respect to such Scheduled Payment, then the Seller shall be
deemed to have automatically breached the representation and warranty set forth in clause
(iv) of Schedule III hereto; provided, however, that once such representation and warranty
is breached with respect to Mortgage Loans exceeding 3% of the Aggregate Loan Balance as of
the Cut-off Date, then such representation and warranty shall not be deemed automatically
breached with respect to any additional Mortgage Loans. The Servicer shall notify the
Seller and the Trustee of any such delinquency. In connection with any such delinquency
and automatic breach relating to the Mortgage Loans constituting not more than 3% of the
Aggregate Loan Balance, the Seller shall be required to replace all such delinquent
Mortgage Loans with Qualified Substitute Mortgage Loans in accordance with the terms and
provisions of Section 2.03(d) below on or before the October 2004 Distribution Date
(without regard to any reference in Section 2.03(d) below to a "90-day" period). A breach
may exist for purposes of Section 2.03(d), notwithstanding the non-existence of an
automatic breach for purposes of this Section 2.03(c).
(d) Upon discovery by any of the parties hereto of a breach of a representation or
warranty made pursuant to Section 2.03(b) that materially and adversely affects the
interests of the Certificateholders in any Mortgage Loan, the party discovering such breach
shall give prompt notice thereof to the other parties. The Seller hereby covenants that
within 90 days of the earlier of its discovery or its receipt of written notice from any
party of a breach of any representation or warranty made by it pursuant to Section 2.03(b)
which materially and adversely affects the value of the related Mortgage Loan or the
interests of the Certificateholders, it shall cure such breach in all material respects,
and if such breach is not so cured, shall, (i) if such 90-day period expires prior to the
second anniversary of the Closing Date, remove such Mortgage Loan (a "Deleted Mortgage
Loan") from the Trust Fund and substitute in its place a Qualified Substitute Mortgage
Loan, in the manner and subject to the conditions set forth in this Section; or (ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the Trustee at the Repurchase
Price in the manner set forth below; provided, however, that any such substitution pursuant
to (i) above shall not be effected prior to the delivery to the Trustee of the Opinion of
Counsel required by Section 2.05 hereof, if any, and any such substitution pursuant to (i)
above shall not be effected prior to the additional delivery to the Trustee of a Request
for Release substantially in the form of Exhibit M and the Mortgage File for any such
Qualified Substitute Mortgage Loan. The Seller shall promptly reimburse the Servicer and
the Trustee for any actual out-of-pocket expenses reasonably incurred by the Servicer or
the Trustee in respect of enforcing the remedies for such breach. With respect to any
representation and warranty described in this Section which are made to the best of the
Seller's knowledge, if it is discovered by either the Depositor, the Seller or the Trustee
that the substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related Mortgage Loan or the interests of
the Certificateholders therein, notwithstanding the Seller's lack of knowledge with respect
to the substance of such representation or warranty, such inaccuracy shall be deemed a
breach of the applicable representation or warranty.
With respect to any Qualified Substitute Mortgage Loan or Loans, the Seller shall
deliver to the Trustee for the benefit of the Certificateholders the Mortgage Note, the
Mortgage, the related assignment of the Mortgage, and such other documents and agreements
as are required by Section 2.01(b), with the Mortgage Note endorsed and the Mortgage
assigned as required by Section 2.01. Scheduled Payments due with respect to Qualified
Substitute Mortgage Loans in the Collection Period related to the Distribution Date in the
month of substitution shall not be part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders will include
the Scheduled Payment due on any Deleted Mortgage Loan for the related Collection Period
and thereafter the Seller shall be entitled to retain all amounts received in respect of
such Deleted Mortgage Loan. The Seller shall amend the related Mortgage Loan Schedule for
the benefit of the Certificateholders to reflect the removal of such Deleted Mortgage Loan
and the substitution of the Qualified Substitute Mortgage Loan or Loans and the Seller
shall deliver the amended Mortgage Loan Schedule to the Trustee, the Servicer, the Back-Up
Servicer and the Depositor. Upon such substitution, the Qualified Substitute Mortgage Loan
or Loans shall be subject to the terms of this Agreement in all respects, and the Seller
shall be deemed to have made with respect to such Qualified Substitute Mortgage Loan or
Loans, as of the date of substitution, the representations and warranties made pursuant to
Section 2.03(b) with respect to such Mortgage Loan. Upon any such substitution and the
deposit to the applicable Collection Account of the amount required to be deposited therein
in connection with such substitution as described in the following paragraph, the Trustee
shall or shall cause the applicable Custodian to release the Mortgage File held for the
benefit of the Certificateholders relating to such Deleted Mortgage Loan to the Seller and
shall execute and deliver at the Seller's direction such instruments of transfer or
assignment prepared by the Seller, in each case without recourse, as shall be necessary to
vest title in the Seller, or its designee, the Trustee's interest in any Deleted Mortgage
Loan substituted for pursuant to this Section 2.03.
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 (if any) by which the aggregate principal balance of all such Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Stated Principal
Balance of all such Deleted Mortgage Loans (after application of the scheduled principal
portion of the monthly payments due in the month of substitution). The amount of such
shortage (the "Substitution Adjustment Amount") plus an amount equal to the sum of (i) the
aggregate of any unreimbursed Advances with respect to such Deleted Mortgage Loans and (ii)
any costs and damages actually incurred and paid by or on behalf of the Trust in connection
with any breach of the representation and warranty set forth in Schedule III (xxi) as the
result of a violation of a predatory or abusive lending law applicable to such Mortgage
Loan shall be deposited in the applicable Collection Account by the Seller on or before the
Business Day immediately preceding the Servicer Remittance Date in the month succeeding the
calendar month during which the related Mortgage Loan became required to be purchased or
replaced hereunder.
One or more mortgage loans may be substituted for one or more Deleted Mortgage
Loans. The determination of whether a mortgage loan is a Qualified Substitute Mortgage
Loan may be satisfied on an individual basis. Alternatively, if more than one mortgage
loan is to be substituted for one or more Deleted Mortgage Loans, the characteristics of
such mortgage loans and Deleted Mortgage Loans shall be aggregated or calculated on a
weighted average basis, as applicable, in determining whether such mortgage loans are
Qualified Substitute Mortgage Loans.
In the event that the Seller shall have repurchased a Mortgage Loan, the Repurchase
Price therefor shall be deposited in the Collection Account pursuant to Section 3.06 on or
before the Business Day immediately preceding the Servicer Remittance Date in the month
following the month during which the Seller became obligated hereunder to repurchase or
replace such Mortgage Loan and upon such deposit of the Repurchase Price and receipt of a
Request for Release in the form of Exhibit M hereto, the Trustee shall release or cause the
Custodian to release the related Mortgage File held for the benefit of the
Certificateholders to such Person, and the Trustee shall execute and deliver at such
Person's direction such instruments of transfer or assignment prepared by such Person, in
each case without recourse, as shall be necessary to transfer title from the Trustee. It is
understood and agreed that the obligation under this Agreement of any Person to cure,
repurchase or substitute any Mortgage Loan as to which a breach has occurred and is
continuing shall constitute the sole remedy against such Persons respecting such breach
available to Certificateholders, the Depositor or the Trustee on their behalf.
The representations and warranties made pursuant to this Section 2.03 shall survive
delivery of the respective Mortgage Files to the Trustee, or to the Custodian on the
Trustee's behalf, for the benefit of the Certificateholders.
SECTION 2.04 Representations and Warranties of the Depositor as to the Mortgage Loans.
The Depositor hereby represents and warrants to the Trustee with respect to each
Mortgage Loan that, as of the Closing Date, assuming good title has been conveyed to the
Depositor, the Depositor had good title to the Mortgage Loans and Mortgage Notes, and did
not encumber the Mortgage Loans during its period of ownership thereof, other than as
contemplated by the Agreement.
It is understood and agreed that the representations and warranties set forth in this
Section 2.04 shall survive delivery of the Mortgage Files to the Trustee, or to the
Custodian on the Trustee's behalf.
SECTION 2.05 Delivery of Opinion of Counsel in Connection with Substitutions.
(a) Notwithstanding any contrary provision of this Agreement, no substitution pursuant to
Section 2.02 shall be made more than 90 days after the Closing Date unless the Seller
delivers to the Trustee an Opinion of Counsel, which Opinion of Counsel shall not be at the
expense of either the Trustee or the Trust Fund, addressed to the Trustee, to the effect
that such substitution will not (i) result in the imposition of the tax on "prohibited
transactions" on the Trust Fund or contributions after the Startup Date, as defined in
Sections 860F(a)(2) and 860G(d) of the Code, respectively, or (ii) cause any REMIC
hereunder to fail to qualify as a REMIC at any time that any Certificates are outstanding.
(b) 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 promptly (and in any
event within five (5) Business Days of discovery) give written notice thereof to the other
parties. In connection therewith, the Trustee shall require the Seller, at the Seller's
option, to either (i) substitute, if the conditions in Section 2.03(d) with respect to
substitutions are satisfied, a Qualified Substitute Mortgage Loan for the affected Mortgage
Loan, or (ii) repurchase the affected Mortgage Loan within 90 days of such discovery in the
same manner as it would a Mortgage Loan for a breach of representation or warranty made
pursuant to Section 2.03. 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 contained in
Section 2.03.
SECTION 2.06 Execution and Delivery of Certificates.
The Trustee acknowledges receipt by the Custodian on its behalf of the documents
identified in the Initial Certification in the form annexed hereto as Exhibit G and the
amounts required to be deposited into the Basis Risk Reserve Fund and, concurrently with
such receipt, has executed and delivered to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing directly or indirectly the entire
ownership of the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of the
Certificates and to perform the duties set forth in this Agreement according to its terms.
SECTION 2.07 REMIC Matters.
The Preliminary Statement sets forth the designations and "latest possible maturity
date" for federal income tax purposes of all interests created hereby. The "Startup Day"
for purposes of the REMIC Provisions shall be the Closing Date. The "tax matters person"
with respect to each REMIC hereunder other than the Pooling REMIC shall be the holder of
the Class R Certificate. The tax matters person with respect to the Pooling REMIC shall be
the holder of the Class R-II Certificate. The Trustee on behalf of the holders of the
Class R and Class R-II Certificates shall act as agent for the "tax matters person." By
its acceptance of a Class R or Class R-II Certificate, each holder thereof shall have
agreed to such appointment and shall have consented to the appointment of the Trustee as
its agent to act on behalf of each REMIC pursuant to the specific duties outlined herein.
Each REMIC's fiscal year shall be the calendar year.
SECTION 2.08 Covenants of the Servicer.
The Servicer hereby covenants to the Depositor, and the Trustee for itself only, that
no written information, certificate of an officer, statement furnished in writing or
written report delivered to the Depositor, any affiliate of the Depositor or the Trustee
and prepared by the Servicer pursuant to this Agreement will contain any untrue statement
of a material fact.
SECTION 2.09 Conveyance of Pooling REMIC Regular Interests, Subsidiary REMIC Regular
Interests and Intermediate REMIC Regular Interests and Acceptance
of Master REMIC, Respectively, by the Trustee; Issuance of
Certificates.
(a) The Depositor, concurrently with the execution and delivery hereof, does hereby
transfer, assign, set over and otherwise convey in trust to the Trustee without recourse
all the right, title and interest of the Depositor in and to the Lower Tier Interest in the
Pooling REMIC, Subsidiary REMICs and Intermediate REMIC for the benefit of the holders of
the Certificates. The Trustee acknowledges receipt of such Lower Tier Interests (all of
which are uncertificated) and declares that it holds and will hold the same in trust for
the exclusive use and ultimate benefit of the holders of the Certificates. The interests
evidenced by the Class R Certificate, together with the Regular Certificates, constitute
the entire beneficial ownership interest in the Master REMIC.
(b) Concurrently with (i) the assignment and delivery to the Trustee of the Pooling
REMIC, the Subsidiary REMIC and the Intermediate REMIC and the acceptance by the Trustee
thereof, pursuant to Section 2.01, Section 2.02 and Section 2.09(a) and (ii) the assignment
and delivery to the Trustee of the Master REMIC (including the residual interest therein
represented by the Class R Certificate) and the acceptance by the Trustee thereof, the
Trustee, pursuant to the written request of the Depositor executed by an officer of the
Depositor, has executed, authenticated and delivered to or upon the order of the Depositor,
the Class R and Class R-II Certificates in authorized denominations evidencing the residual
interest in the Pooling REMIC, in the case of the Class R-II Certificates, and the residual
interest in the Subsidiary REMIC, the Intermediate REMIC and the Master REMIC, in the case
of the Class R Certificates.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01 Servicer to Service the Mortgage Loans.
For and on behalf of the Certificateholders, the Servicer shall service and
administer the Mortgage Loans in accordance with the terms of this Agreement and with
Accepted Servicing Practices. In connection with such servicing and administration of the
Mortgage Loans, the Servicer shall have full power and authority, acting alone and/or
through Subservicers as provided in Section 3.02 hereof, to do or cause to be done any and
all things that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject to the terms
hereof (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 (but only in the manner provided in this Agreement), (iii) to collect any
Insurance Proceeds, other Liquidation Proceeds and other Recoveries and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan, provided that the Servicer shall not take any action that is inconsistent
with or prejudices the interests of the Trust Fund or the Certificateholders in any
Mortgage Loan or the rights and interests of the Depositor, the Trustee or the
Certificateholders under this Agreement. The Servicer shall represent and protect the
interests of the Trust Fund in the same manner as it protects its own interests in mortgage
loans in its own portfolio in any claim, proceeding or litigation regarding a Mortgage
Loan, and shall not make or permit any modification, waiver or amendment of any Mortgage
Loan which would cause any REMIC hereunder to fail to qualify as a REMIC or result in the
imposition of any tax under Section 860F(a) or Section 860G(d) of the Code. Without
limiting the generality of the foregoing, the Servicer, in its own name or in the name of
the Depositor and the Trustee, in the Servicer's full discretion, is hereby authorized and
empowered by the Depositor and the Trustee and granted a limited power of attorney by the
Trustee, when the Servicer believes it appropriate in its reasonable judgment, to execute
and deliver, on behalf of the Trustee, the Depositor, the Certificateholders or any of
them, any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, with respect to the Mortgage
Loans, and with respect to the Mortgaged Properties-related to Mortgage Loans held for the
benefit of the Certificateholders. The Servicer shall prepare and deliver to the Depositor
and/or the Trustee such documents requiring execution and delivery by either or both of
them as are necessary or appropriate to enable the Servicer to service and administer the
Mortgage Loans to the extent that the Servicer is not permitted to execute and deliver such
documents pursuant to the preceding sentence. Upon receipt of such documents, the
Depositor and/or the Trustee shall execute such documents and deliver them to the Servicer.
In accordance with the standards of the preceding paragraph, the Servicer shall
advance or cause to be advanced funds as necessary for the purpose of effecting the payment
of taxes and assessments on the Mortgaged Properties, which advances shall constitute
Servicing Advances and shall be reimbursable in the first instance from related collections
from the Mortgagors pursuant to Section 3.06, and further as provided in Section 3.09;
provided that no Servicing Advance shall be made if it would be a Nonrecoverable Advance.
The costs incurred by the Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall not, for the
purpose of calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balances, notwithstanding that the terms of the related Mortgage Loans so
permit.
The Servicer of such Mortgage Loans agrees that, with respect to the Mortgagors of
such Mortgage Loans, the Servicer for each Mortgage Loan shall fully furnish, in accordance
with the Fair Credit Reporting Act and its implementing regulations, accurate and complete
information on its borrower credit files to Equifax, Experian and Trans Union Credit
Information Company on a monthly basis.
The Servicer hereby acknowledges that, to the extent the Servicer has previously
serviced some or all of the Mortgage Loans pursuant to another servicing agreement, the
provisions contained in this Agreement shall supersede the provisions contained in such
other servicing agreement.
The Servicer is authorized and empowered by the Trustee, on behalf of the
Certificateholders and the Trustee, in its own name or in the name of any Subservicer, when
the Servicer or any Subservicer, as the case may be, believes it appropriate in its best
judgment to register any Mortgage Loan on the MERS® System, or cause the removal from the
registration of any Mortgage Loan on the MERS® System, to execute and deliver, on behalf of
the Trustee and the Certificateholders or any of them, any and all instruments of
assignment and other comparable instruments with respect to such assignment or re-recording
of a Mortgage in the name of MERS, solely as nominee for the Trustee and its successors and
assigns.
SECTION 3.02 Subservicing; Enforcement of the Obligations of Subservicers.
(a) The Mortgage Loans may be subserviced by a Subservicer on behalf of the Servicer in
accordance with the servicing provisions of this Agreement, provided that the Subservicer
is a FNMA-approved lender or a FHLMC seller/servicer in good standing, and no event has
occurred, including but not limited to a change in insurance coverage, which would make it
unable to comply with the eligibility requirements for lenders imposed by FNMA or for
seller/servicer imposed by FHLMC, or which would require notification to FNMA or FHLMC.
The Servicer may perform any of its servicing responsibilities hereunder or may cause the
Subservicer to perform any such servicing responsibilities on its behalf, but the use by
the Servicer of a Subservicer shall not release the Servicer from any of its obligations
hereunder and the Servicer shall remain responsible hereunder for all acts and omissions of
a Subservicer as fully as if such acts and omissions were those of the Servicer. The
Servicer shall pay all fees and expenses of any Subservicer engaged by the Servicer from
its own funds.
Notwithstanding the foregoing, the Servicer shall be entitled to outsource one or
more separate servicing functions to a Person (each, an "Outsourcer") that does not meet
the eligibility requirements for a Subservicer, so long as such outsourcing does not
constitute the delegation of the Servicer's obligation to perform all or substantially all
of the servicing of the related Mortgage Loans to such Outsourcer. In such event, the use
by the Servicer of any such Outsourcer shall not release the Servicer from any of its
obligations hereunder and the Servicer shall remain responsible hereunder for all acts and
omissions of such Outsourcer as fully as if such acts and omissions were those of the
Servicer, and the Servicer shall pay all fees and expenses of the Outsourcer from the
Servicer's own funds.
(b) At the cost and expense of the Servicer, without any right of reimbursement from the
Depositor, Trustee, or the applicable Collection Account, the Servicer shall be entitled to
terminate the rights and responsibilities of its Subservicer and arrange for any servicing
responsibilities to be performed by a successor Subservicer meeting the requirements set
forth in Section 3.02(a); provided, however, that nothing contained herein shall be deemed
to prevent or prohibit the Servicer, at the Servicer's option, from electing to service the
related Mortgage Loans itself. In the event that the Servicer's responsibilities and
duties under this Agreement are terminated pursuant to Section 7.01, and if requested to do
so by the Trustee, the Servicer shall at its own cost and expense terminate the rights and
responsibilities of its Subservicer as soon as is reasonably possible. The Servicer shall
pay all fees, expenses or penalties necessary in order to terminate the rights and
responsibilities of its Subservicer from the Servicer's own funds without any right of
reimbursement from the Depositor, Trustee, or the applicable Collection Account.
(c) Notwithstanding any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and its Subservicer, the Servicer and its Outsourcer, or
any reference herein to actions taken through the Subservicer, the Outsourcer, or
otherwise, no Servicer shall be relieved of its obligations to the Depositor, Trustee or
Certificateholders and shall be obligated to the same extent and under the same terms and
conditions as if it alone were servicing and administering the related Mortgage Loans. The
Servicer shall be entitled to enter into an agreement with its Subservicer and Outsourcer
for indemnification of the Servicer by such Subservicer or Outsourcer, as applicable, and
nothing contained in this Agreement shall be deemed to limit or modify such indemnification.
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 related Subservicer or Outsourcer regardless of whether such payments are remitted by the
Subservicer or Outsourcer to the Servicer.
Any Subservicing Agreement and any other transactions or services relating to the
Mortgage Loans involving a Subservicer shall be deemed to be between the Subservicer and
the Servicer alone, and the Depositor, the Back-Up Servicer and the Trustee shall have no
obligations, duties or liabilities with respect to a Subservicer including no obligation,
duty or liability to pay a Subservicer's fees and expenses.
SECTION 3.03 [Reserved].
SECTION 3.04 Notification of Adjustments.
With respect to each Mortgage Loan with an adjustable Mortgage Rate, the Servicer
shall adjust the Mortgage Rate on the related Adjustment Date in compliance with the
requirements of applicable law and the related Mortgage and Mortgage Note. The Servicer
shall execute and deliver any and all necessary notices required under applicable law and
the terms of the related Mortgage Note and Mortgage regarding the Mortgage Rate
adjustments. Upon the discovery by the Servicer or the receipt of notice from the Trustee
that the Servicer has failed to adjust a Mortgage Rate in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in the Certificate Account
from its own funds the amount of any interest loss or deferral caused the Trustee thereby.
SECTION 3.05 Trustee or Back-up Servicer to Act as Servicer.
In the event that the Servicer shall for any reason no longer be the Servicer
hereunder (including by reason of an Event of Default, as defined in Section 7.01 herein),
the Back-up Servicer, or, in the event that the Back-up Servicer has been terminated
hereunder, the Trustee or its successor shall thereupon assume all of the rights and
obligations of the Servicer hereunder arising thereafter (except that the Back-up Servicer
or the Trustee, as applicable, shall not be (i) liable for losses of the Servicer pursuant
to Section 3.10 hereof or any acts or omissions of the related predecessor Servicer
hereunder, (ii) with respect to the Trustee, obligated to make Advances if it is prohibited
from doing so by applicable law, (iii) obligated to effectuate repurchases or substitutions
of Mortgage Loans hereunder including, but not limited to, repurchases or substitutions of
Mortgage Loans pursuant to Section 2.02 or 2.03 hereof or (iv) deemed to have made any
representations and warranties of the Servicer hereunder). Any such assumption shall be
subject to Section 7.02 hereof.
The Servicer shall, upon request of the Back-up Servicer or the Trustee, but at the
expense of the Servicer, deliver to the assuming party all documents and records relating
to each Subservicing Agreement or substitute Subservicing Agreement and the Mortgage Loans
then being serviced thereunder and hereunder by the Servicer and an accounting of amounts
collected or held by it and otherwise use its best efforts to effect the orderly and
efficient transfer of the substitute Subservicing Agreement to the assuming party at the
expense of such outgoing Servicer.
SECTION 3.06 Collections on Mortgage Loans; Collection Account; Certificate Account.
(a) Continuously from the date hereof until the principal and interest on all Mortgage
Loans have been paid in full or such Mortgage Loans have become Liquidation Mortgage Loans,
the Servicer shall proceed in accordance with the customary and usual standards of practice
of prudent mortgage loan servicers to collect all payments due under each of Mortgage Loan
when the same shall become due and payable to the extent consistent with this Agreement and
any related Primary Insurance Policy and shall take special care with respect to the
Mortgage Loans for which the Servicer collects escrow payments in ascertaining and
estimating Escrow Payments and all other charges that will become due and payable with
respect to the Mortgage Loans and the Mortgaged Properties, to the end that the
installments payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable. Consistent with the foregoing, the Servicer may in its
discretion (i) waive any late payment charge and (ii) extend the due dates for payments due
on a Mortgage Note for a period not greater than 180 days; provided, however, that the
Servicer cannot extend the maturity of any Mortgage Loan past the date on which the final
payment is due on the latest maturing Mortgage Loan as of the Cut-off Date. In the event
of any such arrangement, the Servicer shall make Advances on the related Mortgage Loan in
accordance with the provisions of Section 4.01 during the scheduled period in accordance
with the amortization schedule of such Mortgage Loan without modification thereof by reason
of such arrangements. The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage, Mortgage
Note or otherwise or against any public or governmental authority with respect to a taking
or condemnation) if it reasonably believes that enforcing the provision of the Mortgage or
other instrument pursuant to which such payment is required is prohibited by applicable law.
(b) The Servicer shall segregate and hold all funds collected and received pursuant to
Section 3.06(a) separate and apart from any of its own funds and general assets and shall
establish and maintain the Collection Account, in the form of time deposit or demand
accounts, titled "[Servicer's name], as servicer for U.S. Bank National Association, as
trustee, in trust for the Holders of Credit Suisse First Boston Mortgage Securities Corp.,
CSFB Home Equity Pass-Through Certificates, Series 2004-FRE1," wherein the Servicer will
have access to the Collection Account. The Collection Account shall be an Eligible
Account. Any funds deposited in the Collection Account shall at all times be either
invested in Eligible Investments or shall be fully insured to the full extent permitted
under applicable law. Funds deposited in the Collection Account may be drawn on by the
Servicer in accordance with Section 3.09.
(c) With respect to the Mortgage Loans, the Servicer shall deposit in the Collection
Account on a daily basis within two (2) Business Days following receipt, and, in each case,
retain therein, the following collections remitted by Subservicers or payments received by
the Servicer and payments made by the Servicer subsequent to the Cut-off Date, other than
payments of principal and interest due on or before the Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans, including all Principal
Prepayments;
(ii) all payments on account of interest on Mortgage Loans adjusted to the per annum rate
equal to the Mortgage Rate reduced by the Servicing Fee Rate;
(iii) all Liquidation Proceeds;
(iv) all Insurance Proceeds including amounts required to be deposited pursuant to
Section 3.10 (other than proceeds to be held in the Escrow Account and applied to the
restoration or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 3.10);
(v) all Substitution Adjustment Amounts and Repurchase Prices;
(vi) any amounts required to be deposited by the Servicer in respect of net monthly income
from REO Property pursuant to Section 3.12; and
(vii) any other amounts required to be deposited hereunder.
The foregoing requirements for deposit into each Collection Account shall be
exclusive, it being understood and agreed that, without limiting the generality of the
foregoing, Ancillary Income need not be deposited by the Servicer into the Collection
Account. In addition, notwithstanding the provisions of this Section 3.06, the Servicer
may deduct from amounts received by it, prior to deposit to the applicable Collection
Account, any portion of any Scheduled Payment representing the Servicing Fee. In the event
that the Servicer shall remit any amount not required to be remitted, it may at any time
withdraw or direct the institution maintaining the Collection Account to withdraw such
amount from the Collection Account, any provision herein to the contrary notwithstanding.
Such withdrawal or direction may be accomplished by delivering written notice thereof to
the Trustee or such other institution maintaining the Collection Account which describes
the amounts deposited in error in the Collection Account. The Trustee may conclusively
rely on such notice and shall have no liability in connection with the withdrawal of such
funds at the direction of the Servicer. The Servicer shall maintain adequate records with
respect to all withdrawals made by it pursuant to this Section. All funds deposited in the
Collection Account shall be held in trust for the Certificateholders until withdrawn in
accordance with Section 3.09(a).
(d) On or prior to the Closing Date, the Trustee shall establish and maintain, on behalf
of the Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit in the Certificate Account and retain therein the following:
(i) (a) the aggregate amount remitted by the Servicer to the Trustee pursuant to
Section 3.09(a)(viii) and 3.09(a)(ix);
(ii) all Compensating Interest Payments and Advances remitted by the Servicer to the
Trustee pursuant to Section 3.15 and Section 4.01 hereof; and
(iii) any other amounts deposited hereunder which are required to be deposited in the
Certificate Account.
In the event that the Servicer shall remit to the Trustee any amount not required to
be remitted, it may at any time in writing direct the Trustee to withdraw such amount from
the Certificate Account, any provision herein to the contrary notwithstanding. Such
direction may be accomplished by delivering written notice to the Trustee (upon which the
Trustee may conclusively rely) which describes the amounts deposited in error in the
Certificate Account. All funds deposited in the Certificate Account shall be held by the
Trustee in trust for the Certificateholders until disbursed in accordance with this
Agreement or withdrawn in accordance with Section 3.09(b). In no event shall the Trustee
incur liability for withdrawals from the Certificate Account at the direction of the
Servicer.
(e) Each institution at which the Collection Account is maintained shall either hold such
funds on deposit uninvested or shall invest the funds therein in Eligible Investments as
directed in writing by the Servicer which shall mature not later than the, the Servicer
Remittance Date and shall not be sold or disposed of prior to its maturity. All such
Eligible Investments shall be made in the name of the Trustee, for the benefit of the
Certificateholders. All income and gain net of any losses realized from any such balances
or investment of funds on deposit in the Collection Account shall be for the benefit of the
Servicer as servicing compensation and shall be remitted to it monthly. The amount of any
net investment losses in the Collection Account shall promptly be deposited by the Servicer
in the Collection Account. The Trustee in its fiduciary capacity shall not be liable for
the amount of any loss incurred in respect of any investment or lack of investment of funds
held in the Collection Account made in accordance with this Section 3.06. All funds on
deposit in the Certificate Account shall remain uninvested or may be invested by the
Trustee, in its sole discretion in Eligible Investments selected by the Trustee. All net
income and gain realized from the investment of, and all earnings on, funds deposited in
the Certificate Account shall be for the benefit of the Trustee and shall be available to
be withdrawn pursuant to Section 3.09(b)(i). The amount of any net investment losses in
the Certificate Account shall promptly be deposited by the Trustee in the Certificate
Account. The Trustee in its fiduciary capacity shall not be liable for the amount of any
loss incurred in respect of any investment or lack of investment of funds held in the
Collection Account (other than as provided in this Section 3.06(e)) and made in accordance
with this Section 3.06.
(f) The Servicer shall give notice to the Trustee of any proposed change of the location
of the Collection Account prior to any change thereof; thereafter the Trustee shall give
notice to each Rating Agency, the Back-Up Servicer and the Depositor of any such proposed
change by the Servicer. The Trustee shall give notice to the, each Rating Agency and the
Depositor of any proposed change of the location of the Certificate Account prior to any
change thereof.
SECTION 3.07 Establishment of and Deposits to Escrow Accounts; Permitted Withdrawals
from Escrow Accounts; Payments of Taxes, Insurance and Other
Charges.
(a) To the extent required by the related Mortgage Note and not in violation of current
law, the Servicer shall segregate and hold all funds collected and received pursuant to a
Mortgage Loan constituting Escrow Payments separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Escrow Accounts, in the form of
time deposit or demand accounts, titled, "[Servicer's name], in trust for various
mortgagors related to Credit Suisse First Boston Mortgage Securities Corp., CSFB Home
Equity Pass-Through Certificates, Series 2004-FRE1." The Escrow Accounts shall be Eligible
Accounts. Funds deposited in the Escrow Account may be drawn on by the Servicer in
accordance with Section 3.07(d).
(b) The Servicer shall deposit in its Escrow Account or Accounts on a daily basis within
two Business Days of receipt and retain therein:
(i) all Escrow Payments collected on account of the related Mortgage Loans, for the
purpose of effecting timely payment of any such items as required under the terms of
this Agreement; and
(ii) all amounts representing Insurance Proceeds which are to be applied to the
restoration or repair of any related Mortgaged Property.
(c) The Servicer shall make withdrawals from the related Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section 3.07(d). The
Servicer shall be entitled to retain any interest paid on funds deposited in the related
Escrow Account by the depository institution, other than interest on escrowed funds
required by law to be paid to the applicable Mortgagors. To the extent required by law,
the Servicer shall pay interest on escrowed funds to the applicable Mortgagor
notwithstanding that the related Escrow Account may be non-interest bearing or that
interest paid thereon is insufficient for such purposes.
(d) Withdrawals from the Escrow Account or Accounts may be made by the Servicer only:
(i) to effect timely payments of ground rents, taxes, assessments, water rates, mortgage
insurance premiums, condominium charges, fire, hazard and flood insurance premiums or
other items constituting Escrow Payments for the related Mortgage;
(ii) to reimburse the Servicer for any Servicing Advances made by the Servicer pursuant to
Section 3.07(e) with respect to a related Mortgage Loan, but only from amounts
received on the related Mortgage Loan which represent late collections of Escrow
Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess of the amounts required
under the terms of the related Mortgage Loan;
(iv) for transfer to the Collection Account to reduce the principal balance of the related
Mortgage Loan in accordance with the terms of the related Mortgage and Mortgage Note;
(v) for application to restore or repair of the related Mortgaged Property related to a
Mortgage Loan in accordance with the procedures outlined in Section 3.10(e);
(vi) to pay to the Servicer, or any Mortgagor related to a Mortgage Loan to the extent
required by law, any interest paid on the funds deposited in such Escrow Account;
(vii) to remove funds inadvertently placed in the related Escrow Account by the Servicer;
and
(viii) to clear and terminate such Escrow Account on the termination of this Agreement.
(e) The Servicer shall maintain accurate records reflecting the status of ground rents
and taxes and any other item or charge (including, without limitation, assessments, water
rates or sewer rents) which may become a lien senior to the lien of the related Mortgage
and the status of fire and hazard insurance coverage and shall obtain, from time to time,
all bills for the payment of such charges (including renewal premiums) and shall effect or
cause to be effected payment thereof prior to the applicable penalty or termination date.
To the extent that a Mortgage does not provide for Escrow Payments, the Servicer shall
determine that any such payments are made by the Mortgagor prior to the applicable penalty
or termination date. The Servicer assumes full responsibility for the Mortgage Loans it
services, (i) the timely payment of all such bills and shall effect timely payment of all
such charges irrespective of each Mortgagor's faithful performance in the payment of same
or the making of the Escrow Payments, and the Servicer shall make Servicing Advances from
its own funds to effect such payments to the extent that the Servicer, in accordance with
Accepted Servicing Practices, deems such Servicing Advance recoverable, and (ii) any
penalties or late charges incurred in connection with such bills; provided, however, the
Servicer shall not be so obligated with respect to any Mortgage which does not provide for
Escrow Payments.
SECTION 3.08 Access to Certain Documentation and Information Regarding the Mortgage
Loans; Inspections.
(a) The Servicer shall afford the Depositor and the Trustee reasonable access to all
records and documentation regarding the Mortgage Loans and all accounts, insurance
information and other matters relating to this Agreement, such access being afforded
without charge, but only upon reasonable request and during normal business hours at the
office designated by the Servicer. 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 costs
thereof.
(b) Upon reasonable advance notice in writing for any review requiring on-site access or
upon reasonable notice for any other type of access, the Servicer will provide to each
Certificateholder which is a savings and loan association, bank or insurance company
certain reports and reasonable access to information and documentation regarding the
Mortgage Loans sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to investment in the
Certificates; provided that the Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Servicer in providing such reports
and access.
(c) The Servicer shall inspect the related Mortgaged Properties as often as deemed
necessary by the Servicer in the Servicer's sole discretion, to assure itself that the
value of such Mortgaged Property is being preserved and shall conduct subsequent
inspections in accordance with Accepted Servicing Practices or as may be required by the
primary mortgage guaranty insurer. The Servicer shall keep a written or electronic report
of each such inspection.
SECTION 3.09 Permitted Withdrawals from the Collection Account and Certificate Account.
(a) The Servicer may from time to time make withdrawals from the Collection Account for
the following purposes:
(i) to pay to the Servicer (to the extent not previously retained by the Servicer) the
servicing compensation to which it is entitled pursuant to Section 3.15, and to pay
to the Servicer, as additional servicing compensation, earnings on or investment
income with respect to funds in or credited to the Collection Account and any
sub-account thereof;
(ii) to reimburse the Servicer for unreimbursed Advances made by it, such right of
reimbursement pursuant to this subclause (ii) being limited to amounts received on
the Mortgage Loan(s) in respect of which any such Advance was made (including without
limitation, late recoveries of payments, Liquidation Proceeds and Insurance Proceeds
to the extent received by the Servicer);
(iii) to reimburse the Servicer for any Nonrecoverable Advance previously made;
(iv) to reimburse the Servicer for (A) unreimbursed Servicing Advances, the Servicer's
right to reimbursement pursuant to this clause (iv) with respect to any Mortgage Loan
being limited to amounts received on such Mortgage Loan which represent late payments
of principal and/or interest (including, without limitation, Liquidation Proceeds and
Insurance Proceeds with respect to such Mortgage Loan) respecting which any such
advance was made, and (B) unpaid Servicing Fees as provided in Section 3.12 hereof;
(v) to pay to the purchaser, with respect to each Mortgage Loan or property acquired in
respect thereof that has been purchased pursuant to Sections 2.02, 2.03 or 3.11, all
amounts received thereon after the date of such purchase;
(vi) to reimburse the Seller, the Servicer, the Back-Up Servicer or the Depositor for
expenses incurred by any of them and reimbursable pursuant to Sections 3.10 or 6.03,
as applicable, hereof;
(vii) to withdraw any amount deposited in the Collection Account and not required to be
deposited therein;
(viii) on or prior to 4:00 p.m. New York time on the Servicer Remittance Date
preceding each Distribution Date, to withdraw an amount equal to the sum of the
portion of the Interest Remittance Amount and the Principal Remittance Amount in the
Collection Account for such Distribution Date and remit such amount to the Trustee
for deposit in the Certificate Account;
(ix) on or prior to 4:00 p.m. New York time on the Servicer Remittance Date preceding each
Distribution Date, to withdraw an amount equal to the sum of all Prepayment Premiums
received during the related Prepayment Period, and remit such amount to the Trustee
for deposit in the Certificate Account;
(x) on or prior to 4:00 p.m. New York time on the Servicer Remittance Date preceding each
Distribution Date, to withdraw an amount equal to funds in such account being held
for future distribution used by the Servicer to make an Advance pursuant to Section
4.01; and
(xi) to clear and terminate the Collection Account upon termination of this Agreement
pursuant to Section 9.01 hereof.
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 pursuant to such subclauses (i), (ii), (iv) and (v). Prior to making any
withdrawal from the Collection Account pursuant to subclause (iii), the Servicer shall
deliver to the Trustee a certificate of a Servicing Officer indicating the amount of any
previous Advance or Servicing Advance determined by the Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loans(s), and their respective portions of
such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Certificate Account for distributions to
Certificateholders in the manner specified in this Agreement (and to withhold from the
amounts so withdrawn, the amount of any taxes that it is authorized to withhold pursuant to
the sixth paragraph of Section 8.11). In addition, the Trustee may from time to time make
withdrawals from the Certificate Account for the following proposes:
(i) to pay to itself any investment income from balances in the Certificate Account prior
to distributions to Certificateholders;
(ii) to withdraw and return to the Servicer, for deposit to the Collection Account, any
amount deposited in the Certificate Account and not required to be deposited therein;
and
(iii) to clear and terminate the Certificate Account upon termination of the Agreement
pursuant to Section 9.01 hereof.
SECTION 3.10 Maintenance of Hazard Insurance; Mortgage Impairment Insurance and
Primary Insurance Policy; Claims; Restoration of Mortgaged Property.
(a) The Servicer shall cause to be maintained for each Mortgage Loan hazard insurance
such that all buildings upon the Mortgaged Property are insured by a generally acceptable
insurer rated either: "B+" or better in the current Best's Key Rating Guide ("Best's") or
acceptable to FNMA and/or FHLMC against loss by fire, hazards of extended coverage and such
other hazards as are 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 securing such Mortgage Loan and (ii) the greater of (A) the outstanding
principal balance of the Mortgage Loan and (B) an amount such that the proceeds of such
policy shall be sufficient to prevent the Mortgagor and/or the mortgagee from becoming a
co-insurer.
If upon origination of the Mortgage Loan, the related Mortgaged Property was located
in an area identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available), the
Servicer shall cause a flood insurance policy to be maintained with respect to such
Mortgage Loan. Such policy shall meet the requirements of the current guidelines of the
Federal Insurance Administration and be in an amount representing coverage equal to the
lesser of (i) the minimum amount required, under the terms of coverage, to compensate for
any damage or loss on a replacement cost basis (or the unpaid principal balance of the
mortgage if replacement cost coverage is not available for the type of building insured)
and (ii) the maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. If at any time during the term of the Mortgage Loan,
the Servicer determines in accordance with applicable law that a Mortgaged Property is
located in a special flood hazard area and is not covered by flood insurance or is covered
in an amount less than the amount required by the Flood Disaster Protection Act of 1973, as
amended, the Servicer shall notify the related Mortgagor that the Mortgagor must obtain
such flood insurance coverage, and if said Mortgagor fails to obtain the required flood
insurance coverage within 45 days after such notification, the Servicer shall immediately
force place the required flood insurance on the Mortgagor's behalf.
If a Mortgage Loan is secured by a unit in a condominium project, the Servicer shall
verify that the coverage required of the owner's association, including hazard, flood,
liability, and fidelity coverage, is being maintained in accordance with the then Accepted
Servicing Standards, and secure from the owner's association its agreement to notify the
Servicer promptly of any change in the insurance coverage or of any condemnation or
casualty loss that may have a material effect on the value of the related Mortgaged
Property as security.
The Servicer shall cause to be maintained on each Mortgaged Property such other
additional special hazard insurance as may be required pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such additional
insurance, or pursuant to the requirements of any Primary Insurance Policy insurer, or as
may be required to conform with Accepted Servicing Practices.
All policies required hereunder shall name the Servicer as loss payee and shall be
endorsed with standard or union mortgagee clauses, without contribution, which shall
provide for prior written notice of any cancellation, reduction in amount or material
change in coverage.
The Servicer shall not interfere with the Mortgagor's freedom of choice at the
origination of such Mortgage Loan in selecting either his insurance carrier or agent,
provided, however, that the Servicer shall not accept any such insurance policies from
insurance companies unless such companies are rated V:B in Best's or are acceptable to FNMA
and/or FHLMC and are licensed to do business in the jurisdiction in which the Mortgaged
Property is located. The Servicer shall determine that such policies provide sufficient
risk coverage and amounts, that they insure the property owner, and that they properly
describe the property address.
Pursuant to Section 3.06, any amounts collected by the Servicer under any such
policies (other than amounts to be deposited in the related Escrow Account and applied to
the restoration or repair of the related Mortgaged Property, or property acquired in
liquidation of the Mortgage Loan, or to be released to the Mortgagor, in accordance with
the Servicer's normal servicing procedures) shall be deposited in the Collection Account
(subject to withdrawal pursuant to Section 3.09(a)).
Any cost incurred by the Servicer in maintaining any such insurance shall not, for
the purpose of calculating monthly distributions to the Certificateholders or remittances
to the Trustee for their benefit, be added to the principal balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall be
recoverable by the Servicer out of late payments by the related Mortgagor or out of
Liquidation Proceeds or otherwise pursuant to Section 3.09(a) hereof. It is understood and
agreed that no earthquake or other additional insurance is to be required of any Mortgagor
related to a Mortgage Loan or maintained on property acquired in respect of a Mortgage
related to a Mortgage Loan other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance.
(b) In the event that the Servicer shall obtain and maintain a blanket policy insuring
against losses arising from fire and hazards covered under extended coverage on all of the
Mortgage Loans, then, to the extent such policy provides coverage in an amount equal to the
amount required pursuant to Section 3.10(a) and otherwise complies with all other
requirements of Section 3.10(a), it shall conclusively be deemed to have satisfied its
obligations as set forth in Section 3.10(a). Any amounts collected by the Servicer under
any such policy relating to a Mortgage Loan shall be deposited in the Collection Account
subject to withdrawal pursuant to Section 3.09(a). Such policy may contain a deductible
clause, in which case, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 3.10(a), and there shall have
been a loss which would have been covered by such policy, the Servicer shall deposit in the
Collection Account at the time of such loss the amount not otherwise payable under the
blanket policy because of such deductible clause, such amount to be deposited from the
Servicer's funds, without reimbursement therefor. In connection with its activities as
Servicer of the related Mortgage Loans, the Servicer agrees to present, on behalf of
itself, the Depositor, and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.
SECTION 3.11 Enforcement of Due-on-Sale Clauses; Assumption Agreements.
(a) The Servicer shall use its best efforts to enforce any "due-on-sale" provision
contained in any related Mortgage or Mortgage Note and to deny assumption by the person to
whom the Mortgaged Property has been or is about to be sold whether by absolute conveyance
or by contract of sale, and whether or not the Mortgagor remains liable on the Mortgage and
the Mortgage Note. When the Mortgaged Property has been conveyed by the Mortgagor, the
Servicer shall, to the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of the related Mortgage Loan under the "due-on-sale" clause
applicable thereto, provided, however, that the Servicer shall not exercise such rights if
prohibited by law from doing so or if the exercise of such rights would impair or threaten
to impair any recovery under the related Primary Insurance Policy, if any.
(b) If the Servicer reasonably believes it is unable under applicable law to enforce such
"due-on-sale" clause, the Servicer shall enter into (i) an assumption and modification
agreement with the person to whom such property has been conveyed, pursuant to which such
person becomes liable under the Mortgage Note and the original Mortgagor remains liable
thereon or (ii) in the event the Servicer is unable under applicable law to require that
the original Mortgagor remain liable under the Mortgage Note, a substitution of liability
agreement with the purchaser of the Mortgaged Property pursuant to which the original
Mortgagor is released from liability and the purchaser of the Mortgaged Property is
substituted as Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Servicer shall not be deemed to be in default under this Section by reason
of any transfer or assumption which the Servicer reasonably believes it is restricted by
law from preventing, for any reason whatsoever. In connection with any such assumption, no
material term of the Mortgage Note, including without limitation, the Mortgage Rate borne
by the related Mortgage Note, the term of the Mortgage Loan or the outstanding principal
amount of the Mortgage Loan shall be changed.
(c) To the extent that any Mortgage Loan is assumable, the Servicer shall inquire
diligently into the creditworthiness of the proposed transferee, and shall use the
underwriting criteria for approving the credit of the proposed transferee customarily used
by the Servicer for the servicing of similar mortgage loans. If the credit of the proposed
transferee does not meet such underwriting criteria, the Servicer diligently shall, to the
extent permitted by the Mortgage or the Mortgage Note and by applicable law, accelerate the
maturity of the Mortgage Loan.
(d) Subject to the Servicer's duty to enforce any due-on-sale clause to the extent set
forth in this Section 3.11, in any case in which a Mortgaged Property has been conveyed to
a Person by a Mortgagor, and such Person is to enter into an assumption agreement or
modification agreement or supplement to the Mortgage Note or Mortgage that requires the
signature of the Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the related Mortgage Loan, the Servicer shall
prepare and deliver or cause to be prepared and delivered to the Trustee for signature and
shall direct, in writing, the Trustee to execute the assumption agreement with the Person
to whom the Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are reasonable or
necessary to carry out the terms of the Mortgage Note or Mortgage or otherwise to comply
with any applicable laws regarding assumptions or the transfer of the Mortgaged Property to
such Person. In connection with any such assumption, no material term of the Mortgage Note
may be changed. Together with each such substitution, assumption or other agreement or
instrument delivered to the Trustee for execution by it, the Servicer shall deliver an
Officer's Certificate signed by a Servicing Officer stating that the requirements of this
subsection have been met in connection therewith. The Servicer shall notify the Trustee
that any such substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which in the case of the
original 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. Any fee collected by the Servicer for entering
into an assumption or substitution of liability agreement will be retained by the Servicer
as additional servicing compensation.
SECTION 3.12 Realization Upon Defaulted Mortgage Loans; Repurchase of Certain Mortgage
Loans.
(a) The Servicer shall use reasonable efforts to foreclose upon or otherwise comparably
convert the ownership of properties securing such of the related Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments. In connection with such foreclosure or other
conversion, the Servicer shall take such action as (i) the Servicer would take under
similar circumstances with respect to a similar mortgage loan held for its own account for
investment, (ii) shall be consistent with Accepted Servicing Practices and (iii) the
Servicer shall determine consistently with Accepted Servicing Practices to be in the best
interest of the Depositor, Trustee and Certificateholders; provided, however, that the
Servicer shall not be required to expend its own funds in connection with any foreclosure
or towards the restoration of any property unless it shall determine (i) that such
restoration and/or foreclosure will increase the proceeds of liquidation of the related
Mortgage Loan after reimbursement to itself of such expenses and (ii) that such expenses
will be recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Collection Account). The Servicer shall be
responsible for all other costs and expenses incurred by it in any such proceedings;
provided, however, that it shall be entitled to reimbursement thereof from the Liquidation
Proceeds with respect to the related Mortgaged Property or otherwise pursuant to
Section 3.09(a).
Notwithstanding anything to the contrary contained in this Agreement, in connection
with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event the
Servicer has reasonable cause to believe that a Mortgaged Property is contaminated by
hazardous or toxic substances or wastes, or if the Trustee otherwise requests, an
environmental inspection or review of such Mortgaged Property conducted by a qualified
inspector shall be arranged for by the Servicer. Upon completion of the inspection, the
Servicer shall promptly provide the Trustee and the Credit Risk Manager with a written
report of environmental inspection.
In the event the environmental inspection report indicates that the Mortgaged
Property is contaminated by hazardous or toxic substances or wastes, the Servicer shall not
proceed with foreclosure or acceptance of a deed in lieu of foreclosure if the estimated
costs of the environmental clean up, as estimated in the environmental inspection report,
together with the Servicing Advances made by the Servicer and the estimated costs of
foreclosure or acceptance of a deed in lieu of foreclosure exceeds the estimated value of
the Mortgaged Property. If however, the aggregate of such clean up and foreclosure costs
and Servicing Advances as estimated in the environmental inspection report are less than or
equal to the estimated value of the Mortgaged Property, then the Servicer may, in its
reasonable judgment and in accordance with Accepted Servicing Practices, choose to proceed
with foreclosure or acceptance of a deed in lieu of foreclosure and the Servicer shall be
reimbursed for all reasonable costs associated with such foreclosure or acceptance of a
deed in lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are insufficient to
fully reimburse the Servicer, the Servicer shall be entitled to be reimbursed from amounts
in the Collection Account pursuant to Section 3.09(a) hereof. In the event the Servicer
does not proceed with foreclosure or acceptance of a deed in lieu of foreclosure pursuant
to the first sentence of this paragraph, the Servicer shall be reimbursed for all Servicing
Advances made with respect to the related Mortgaged Property from the Collection Account
pursuant to Section 3.09(a) hereof, and the Servicer shall have no further obligation to
service such Mortgage Loan under the provisions of this Agreement.
(b) With respect to any REO Property , the deed or certificate of sale shall be taken in
the name of the Trustee for the benefit of the Certificateholders, or its nominee, on
behalf of the Certificateholders. The Trustee's name shall be placed on the title to such
REO Property solely as the Trustee hereunder and not in its individual capacity. The
Servicer shall ensure that the title to such REO Property references this Agreement and the
Trustee's capacity hereunder. Pursuant to its efforts to sell such REO Property, the
Servicer shall, in accordance with Accepted Servicing Practices, manage, conserve, protect
and operate each REO Property for the purpose of its prompt disposition and sale. The
Servicer, either itself or through an agent selected by the Servicer, shall manage,
conserve, protect and operate the REO Property in the same manner that it manages,
conserves, protects and operates other foreclosed property for its own account, and in the
same manner that similar property in the same locality as the REO Property is managed. The
Servicer shall furnish to the Trustee and the Credit Risk Manager on or before each
Distribution Date a statement with respect to any REO Property covering the operation of
such REO Property for the previous calendar month and such other information as the Trustee
shall reasonably request and which is necessary to enable the Trustee to comply with the
reporting requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Collection Account no later than the close
of business on each Determination Date. The Servicer shall perform the tax reporting and
withholding required by Sections 1445 and 6050J of the Code with respect to foreclosures
and abandonments, the tax reporting required by Section 6050H of the Code with respect to
the receipt of mortgage interest from individuals and any tax reporting required by
Section 6050P of the Code with respect to the cancellation of indebtedness by certain
financial entities, by preparing such tax and information returns as may be required for
filing.
To the extent consistent with Accepted Servicing Practices, the Servicer shall also
maintain on each REO Property fire and hazard insurance with extended coverage in amount
which is equal to the outstanding principal balance of the related Mortgage Loan (as
reduced by any amount applied as a reduction of principal at the time of acquisition of the
REO Property), liability insurance, if any, and, to the extent required and available under
the Flood Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
(c) In the event that the Trust Fund acquires any Mortgaged Property as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan, the Servicer
shall dispose of such Mortgaged Property prior to three years after the end of the calendar
year of its acquisition by the Trust Fund unless (i) the Trustee shall have been supplied
with an Opinion of Counsel to the effect that the holding by the Trust Fund of such
Mortgaged 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. Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Trust Fund shall be rented (or allowed to continue to be rented) or
otherwise used for the production of income by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
(ii) subject any REMIC hereunder to the imposition of any federal, state or local income
taxes on the income earned from such Mortgaged Property under Section 860G(c) of the Code
or otherwise, unless the Servicer has agreed to indemnify and hold harmless the Trust Fund
with respect to the imposition of any such taxes.
In the event of a default on a Mortgage Loan one or more of whose obligor is not a
United States Person, as that term is defined in Section 7701(a)(30) of the Code, in
connection with any foreclosure or acquisition of a deed in lieu of foreclosure (together,
"foreclosure") in respect of such Mortgage Loan, the Servicer will cause compliance with
the provisions of Treasury Regulation Section 1.1445-2(d)(3) (or any successor thereto)
necessary to assure that no withholding tax obligation arises with respect to the proceeds
of such foreclosure except to the extent, if any, that proceeds of such foreclosure are
required to be remitted to the obligors on such Mortgage Loan.
(d) The decision of the Servicer to foreclose on a defaulted Mortgage Loan shall be
subject to a determination by the Servicer that the proceeds of such foreclosure would
exceed the costs and expenses of bringing such a proceeding. The income earned from the
management of any REO Properties, net of reimbursement to the Servicer for expenses
incurred (including any property or other taxes) in connection with such management and net
of applicable accrued and unpaid Servicing Fees, and unreimbursed Advances and Servicing
Advances, shall be applied to the payment of principal of and interest on the related
defaulted Mortgage Loans (with interest accruing as though such Mortgage Loans were still
current) and all such income shall be deemed, for all purposes in this Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and shall be
deposited into the Collection Account. To the extent the net income received during any
calendar month is in excess of the amount attributable to amortizing principal and accrued
interest at the related Mortgage Rate on the related Mortgage Loan for such calendar
month, such excess shall be considered to be a partial prepayment of principal of the
related Mortgage Loan.
(e) The proceeds from any liquidation of a Mortgage Loan, as well as any income from an
REO Property, will be applied in the following order of priority: first, to reimburse the
Servicer for any related unreimbursed Servicing Advances and Servicing Fees; second, to
reimburse the Servicer for any unreimbursed Advances; third, to reimburse the Collection
Account for any Nonrecoverable Advances (or portions thereof) that were previously
withdrawn by the Servicer pursuant to Section 3.09(a)(iii) that related to such Mortgage
Loan; fourth, to accrued and unpaid interest (to the extent no Advance has been made for
such amount or any such Advance has been reimbursed) on the Mortgage Loan or related REO
Property, at the per annum rate equal to the related Mortgage Rate reduced by the Servicing
Fee Rate to the Due Date occurring in the month in which such amounts are required to be
distributed; and fifth, as a recovery of principal of the Mortgage Loan. Excess Proceeds,
if any, from the liquidation of a Liquidation Mortgage Loan that is a Mortgage Loan will be
retained by the Servicer as additional servicing compensation pursuant to Section 3.15.
(f) The Servicer, at its option, may (but is not obligated to) purchase from the Trust
Fund any Mortgage Loan which is 90 or more days delinquent or which is in foreclosure. If
it elects to make any such purchase, the Servicer shall purchase such Mortgage Loan with
its own funds at a price equal to the Repurchase Price.
SECTION 3.13 Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the Servicer of a
notification that payment in full will be escrowed in a manner customary for such purposes,
the Servicer will immediately notify the Custodian by delivering, or causing to be
delivered a "Request for Release" substantially in the form of Exhibit M. Upon receipt of
such request, the Custodian shall within four Business Days release the related Mortgage
File to the Servicer, and the Trustee shall within four Business Days of the Servicer's
direction execute and deliver to the Servicer the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing the lien
of the Mortgage in each case provided by the Servicer, together with the Mortgage Note with
written evidence of cancellation thereon. The Servicer shall execute lien releases under
Power of Attorney from the Trustee. Expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the related Mortgagor. From
time to time and as shall be appropriate for the servicing or foreclosure of any Mortgage
Loan, including for such purpose, collection under any policy of flood insurance, any
fidelity bond or errors or omissions policy, or for the purposes of effecting a partial
release of any Mortgaged Property from the lien of the Mortgage or the making of any
corrections to the Mortgage Note or the Mortgage or any of the other documents included in
the Mortgage File, the Trustee shall, within three Business Days of delivery to the Trustee
of a Request for Release in the form of Exhibit M signed by a Servicing Officer, release or
cause the Custodian to release the Mortgage File to the Servicer. Subject to the further
limitations set forth below, the Servicer shall cause the Mortgage File or documents so
released to be returned to the Trustee or the Custodian, as applicable, when the need
therefor by the Servicer no longer exists, unless the Mortgage Loan is liquidated and the
proceeds thereof are deposited in the Collection Account, in which case the Servicer shall
deliver to the Trustee a Request for Release in the form of Exhibit M, signed by a
Servicing Officer. The Servicer is also authorized to cause the removal from the
registration on the MERS® System of such Mortgage and to execute and deliver, on behalf of
the Trustee and the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation or of partial or full release, including an assignment of such
loan to the Trustee.
If the Servicer at any time seeks to initiate a foreclosure proceeding in respect of
any Mortgaged Property as authorized by this Agreement, the Servicer shall deliver or cause
to be delivered to the Trustee, for signature, as appropriate, any court pleadings,
requests for trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the Mortgage Note or
the Mortgage or to obtain a deficiency judgment or to enforce any other remedies or rights
provided by the Mortgage Note or the Mortgage or otherwise available at law or in equity.
SECTION 3.14 Documents, Records and Funds in Possession of the Servicer to be Held for
the Trustee.
Notwithstanding any other provisions of this Agreement, the Servicer shall transmit
to the Custodian on behalf of the Trustee as required by this Agreement all documents and
instruments in respect of a Mortgage Loan coming into the possession of the Servicer from
time to time required to be delivered to the Trustee pursuant to the terms hereof and shall
account fully to the Trustee for any funds received by the Servicer or which otherwise are
collected by the Servicer as Liquidation Proceeds or Insurance Proceeds in respect of any
Mortgage Loan. All Mortgage Files and funds collected or held by, or under the control of,
the Servicer in respect of any Mortgage Loans, whether from the collection of principal and
interest payments or from Liquidation Proceeds, including but not limited to, any funds on
deposit in a Collection Account, shall be held by the Servicer for and on behalf of the
Trustee and shall be and remain the sole and exclusive property of the Trustee, subject to
the applicable provisions of this Agreement. The Servicer also agrees that it shall not
create, incur or subject any Mortgage File or any funds that are deposited in the
Collection Account, Certificate Account or any related Escrow Account, or any funds that
otherwise are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ of
attachment or other encumbrance, or assert by legal action or otherwise any claim or right
of setoff against any Mortgage File or any funds collected on, or in connection with, a
Mortgage Loan, except, however, that the Servicer shall be entitled to set off against and
deduct from any such funds any amounts that are properly due and payable to the Servicer
under this Agreement.
SECTION 3.15 Servicing Compensation; Compensating Interest Payments; Back-Up
Servicer's Indemnity.
(a) As compensation for its services hereunder, the Servicer shall be entitled to
withdraw from the Collection Account in accordance with Section 3.09(a), payable solely
from payments of interest in respect of the related Mortgage Loan, or to retain from
interest payments on the related Mortgage Loans the amount of the Servicing Fee for each
Mortgage Loan, less any amounts in respect of Compensating Interest Payments.
(b) With respect to each Mortgage Loan, additional servicing compensation in the
form of Ancillary Income shall be retained by the Servicer. The Servicer shall be required
to pay all expenses incurred by it in connection with its servicing activities hereunder
(including the payment of any expenses incurred in connection with any Subservicing
Agreement entered into pursuant to Section 3.02 and the payment of any premiums for hazard
insurance, and maintenance of the other forms of insurance coverage required by this
Agreement) to the extent such amounts do not constitute Advances or Nonrecoverable Advances
and shall not be entitled to reimbursement thereof except as specifically provided for in
this Agreement.
(c) Notwithstanding clauses (a) and (b) above, the amount of servicing compensation
that the Servicer shall be entitled to receive for its activities hereunder for the period
ending on each Distribution Date shall be reduced (but not below zero) by the amount of
Compensating Interest Payments (if any) for such Distribution Date used to cover Prepayment
Interest Shortfalls. Such reduction shall be applied during such period as follows: first,
to any Servicing Fee to which the Servicer is entitled pursuant to Section 3.15(a); and
second, to any income or gain realized from any investment of funds held in the Collection
Account to which the Servicer is entitled pursuant to Sections 3.15(b). In making such
reduction, the Servicer shall not withdraw from the Collection Account any such amount
representing all or a portion of the Servicing Fee to which it is entitled pursuant to
Section 3.09(a). The Servicer shall not be entitled to reimbursement from the Trust for
any payment in respect of Compensating Interest.
(d) The Servicer's right to receive servicing compensation may not be transferred
in whole or in part except in connection with the transfer of all of its responsibilities
and obligations of the Servicer under this Agreement.
(e) With respect to any Distribution Date, no later than the related Servicer
Remittance Date, the Servicer shall remit to the Trustee for deposit in the Certificate
Account in accordance with Section 3.06(d) the amount of the Compensating Interest Payment
for such Distribution Date. With respect to any Distribution Date, Compensating Interest
Payments shall be used on such Distribution Date to cover any Prepayment Interest
Shortfalls in each Loan Group on a pro rata basis in accordance with the amount of
Prepayment Interest Shortfalls in each Loan Group for such Distribution Date.
(f) The Back-Up Servicer and any director, officer, employee or agent of the
Back-Up Servicer shall be indemnified by DLJMC and held harmless against any loss,
liability or expense (including reasonable attorney's fees and expenses) incurred in
connection with any claim or legal action relating to (a) this Agreement, (b) the
Certificates or (c) the performance of any of the Back-Up Servicer's duties hereunder,
other than any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of any of the Back-Up Servicer's duties hereunder or
incurred by reason of any action of the Back-Up Servicer taken at the direction of the
Certificateholders; provided, however, that DLJMC shall not be obligated to pay to the
Back-Up Servicer more than, in the aggregate, $150,000 per annum pursuant to this
Section 3.15(f). Other than as set forth in this Section 3.15 and in Sections 4.02 and
6.03 hereto, the Back-Up Servicer shall not be entitled to any other compensation or
reimbursement for loss or expenses. Such indemnity shall survive the termination of this
Agreement or the resignation or removal of the Back-Up Servicer hereunder.
SECTION 3.16 Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable regulatory
authorities supervising Holders of Subordinate Certificates and the examiners and
supervisory agents of the OTS, the FDIC and such other authorities, access to the
documentation regarding the related Mortgage Loans required by applicable regulations of
the OTS and the FDIC. Such access shall be afforded without charge, but only upon
reasonable and five Business Days prior written request and during normal business hours at
the offices designated by the Servicer. Nothing in this Section shall limit the obligation
of the Servicer to observe 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.
SECTION 3.17 Annual Statement as to Compliance.
Not later than the earlier of (a) March 15th of each calendar year (other than the
calendar year during which the Closing Date occurs) or (b) with respect to any calendar
year during which the Depositor's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the Commission, 15
calendar days before the date on which the Depositor's annual report on Form 10-K is
required to be filed in accordance with the Exchange Act and the rules and regulations of
the Commission (or, in each case, if such day is not a Business Day, the immediately
preceding Business Day), the Servicer shall deliver to the Trustee and the Trustee shall
subsequently deliver to the Depositor and the Rating Agencies, an Officer's Certificate
stating, as to the signer thereof, that (i) a review of the activities of the Servicer
during the preceding calendar year and of the performance of the Servicer under this
Agreement has been made under such officer's supervision, and (ii) to the best of such
officer's knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year, or, if there has been a material default in the
fulfillment of any such obligation, specifying each such material default known to such
officer and the nature and status thereof and the action being taken by the Servicer to
cure such material default.
SECTION 3.18 Annual Independent Public Accountants' Servicing Statement; Financial
Statements.
Not later than the earlier of (a) March 15th of each calendar year (other than the
calendar year during which the Closing Date occurs) or (b) with respect to any calendar
year during which the Depositor's annual report on Form 10-K is required to be filed in
accordance with the Exchange Act and the rules and regulations of the Commission, 15
calendar days before the date on which the Depositor's annual report on Form 10-K is
required to be filed in accordance with the Exchange Act and the rules and regulations of
the Commission (or, in each case, if such day is not a Business Day, the immediately
preceding Business Day), the Servicer, at its expense, shall cause a nationally or
regionally recognized firm of independent public accountants (who may also render other
services to the Servicer, the Seller or any affiliate thereof) which is a member of the
American Institute of Certified Public Accountants to furnish a statement (A) to the
Trustee, who shall subsequently deliver such statement to the Depositor, to the effect that
with respect to the Servicer, such firm has examined certain documents and records relating
to the servicing of residential mortgage loans which the Servicer is servicing, and that,
on the basis of such examination, conducted substantially in compliance with the Uniform
Single Attestation Program for Mortgage Bankers or the Audit Guide for HUD Approved Title
II Approved Mortgagees and Loan Correspondent Programs, nothing has come to their attention
which would indicate that such servicing has not been conducted in compliance with Accepted
Servicing Practices, except for (a) such exceptions as such firm shall believe to be
immaterial, and (b) such other exceptions as shall be set forth in such statement. In
addition, the Servicer shall disclose to such firm all significant deficiencies relating to
the Servicer's compliance with the minimum servicing standards set forth in this
Agreement. In rendering such statement, such firm may rely, as to matters relating to
direct servicing of mortgage loans by Subservicers, upon comparable statements for
examinations conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Guide for HUD Approved Title II Approved
Mortgagees and Loan Correspondent Programs (rendered within one year of such statement) of
independent public accountants with respect to the related Subservicer. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon request at the
Servicer's expense, provided such statement is delivered by the Servicer to the Trustee.
The initial statement required pursuant to this Section 3.18 shall be delivered to the
Trustee and the Depositor by the Servicer no later than March 15, 2005.
SECTION 3.19 Maintenance of Fidelity Bond and Errors and Omissions Insurance.
The Servicer shall maintain with responsible companies, at its own expense, a blanket
Fidelity Bond and an Errors and Omissions Insurance Policy, with broad coverage on all
officers, employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the related Mortgage Loans ("Servicer
Employees"). Any such Fidelity Bond and Errors and Omissions Insurance Policy shall be in
the form of the Financial Institution Bond Form 24 Fidelity Bond American International
Specialty Lines Insurance Policy form ("43350 12/90") or otherwise in a form acceptable to
FNMA or FHMLC, and shall protect and insure the Servicer against losses, including forgery,
theft embezzlement, fraud, errors and omissions and negligent acts of the Servicer
Employees. Each Fidelity Bond and Errors and Omissions Insurance Policy also shall protect
and insure the Servicer against losses in connection with the release or satisfaction of a
related Mortgage Loan without having obtained payment in full of the indebtedness secured
thereby. No provision of this Section 3.19 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The minimum coverage under any such bond and
insurance policy shall be at least equal to the corresponding amounts required by the FDIC
or other primary regulator of the Servicer.
SECTION 3.20 Prepayment Premiums.
Notwithstanding anything in this Agreement to the contrary, in the event of a
Principal Prepayment, the Servicer may not waive any Prepayment Premium or portion thereof
required by the terms of the related Mortgage Note unless (i) the related Mortgage Loan is
in default or foreseeable default and such waiver (a) is standard and customary in
servicing mortgage loans similar to the Mortgage Loans and (b) would, in the reasonable
judgment of the Servicer, maximize recovery of total proceeds taking into account the value
of such Prepayment Premium and the related Mortgage Loan, (ii) (A) the enforceability
thereof is limited (1) by bankruptcy, insolvency, moratorium, receivership, or other
similar law relating to creditors' rights generally or (2) due to acceleration in
connection with a foreclosure or other involuntary payment, or (B) the enforceability is
otherwise limited or prohibited by applicable law, (iii) the enforceability would be
considered "predatory" pursuant to written guidelines issued by any applicable federal,
state or local authority having jurisdiction over such matters, or (iv) the Servicer is
unable to locate documentation sufficient to allow it to confirm the existence and amount
of such Prepayment Premium after using commercially reasonable efforts to locate such
documentation, which efforts shall include, but are not limited to, seeking such
documentation from the Depositor, the Seller, the Custodian and from its own records or
files. For the avoidance of doubt, the Servicer may waive a Prepayment Premium in
connection with a short sale or short payoff on a defaulted Mortgage Loan. If the Servicer
has waived all or a portion of a Prepayment Premium relating to a Principal Prepayment,
other than as provided above, the Servicer shall deliver to the Trustee no later than the
next succeeding Servicer Remittance Date, for deposit into the Certificate Account the
amount of such Prepayment Premium (or such portion thereof as had been waived) for
distribution in accordance with the terms of this Agreement and if the Servicer fails to
deliver such amount either the Trustee or the Seller may enforce such obligation. If the
Servicer has waived all or a portion of a Prepayment Premium for any reason, it shall
notify the Trustee and the Seller thereof and shall include such information in any monthly
reports it provides the Trustee and the Seller. Notwithstanding any provision in this
Agreement to the contrary, in the event the Prepayment Premium payable under the terms of
the related Mortgage Note is less than the amount of the Prepayment Premium set forth in
the Mortgage Loan Schedule or other information provided to the Servicer, the Servicer
shall not have any liability or obligation with respect to such difference.
SECTION 3.21 Duties and Removal of the Credit Risk Manager.
For and on behalf of the Depositor, the Credit Risk Manager will provide reports and
recommendations concerning certain delinquent and defaulted Mortgage Loans, and as to the
collection of any Prepayment Premiums 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 Mortgage Loans. Upon any termination of the Credit
Risk Manager or the appointment of a successor Credit Risk Manager, the Trustee shall give
written notice thereof to the Servicer and the Depositor.
If Holders of the Certificates entitled to 66 2/3% or more of the Voting Rights
request in writing to the Trustee to terminate the Credit Risk Manager under this
Agreement, the Credit Risk Manager shall be removed pursuant to this Section. 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.
ARTICLE IV
DISTRIBUTIONS AND ADVANCES
SECTION 4.01 Advances.
On or before 4:00 p.m. New York time on each Servicer Remittance Date, the Servicer
shall either (i) remit to the Trustee for deposit in the Certificate Account from its own
funds, an amount equal to the Advances to be made by the Servicer in respect of the related
Distribution Date, which shall be in an aggregate amount equal to the Scheduled Payments
(with interest at the Mortgage Rate less the Servicing Fee Rate), less the amount of any
related Relief Act Shortfalls, on the Outstanding Mortgage Loans as of the related Due Date
in the related Collection Period, which Scheduled Payments were due during the related
Collection Period and not received as of the close of business on the related Determination
Date; provided that no Advance shall be made if it would be a Nonrecoverable Advance, (ii)
cause to be made an appropriate entry in the records of the Collection Account that funds
in such account being held for future distribution or withdrawal have been, as permitted by
this Section 4.01, used by the Servicer to make such Advance and remit such amounts to the
Trustee for deposit in the Certificate Account or (iii) make Advances in the form of any
combination of clauses (i) and (ii) aggregating the amount of such Advance. Any portion of
the funds in the Collection Account being held for future distribution or withdrawal so
used shall be replaced by the Servicer from its own funds by deposit in the Certificate
Account on or before 4.00 p.m. New York time on any future Servicer Remittance Date to the
extent that funds attributable to the Mortgage Loans that are available in the Collection
Account for deposit in the Certificate Account on such Servicer Remittance Date shall be
less than payments to Certificateholders required to be made on the following Distribution
Date. The determination by the Servicer that it has made a Nonrecoverable Advance or that
any proposed Advance, if made, would constitute a Nonrecoverable Advance, shall be
evidenced by a certificate of a Servicing Officer delivered to the Depositor and the
Trustee.
SECTION 4.02 Priorities of Distribution.
(a) On each Distribution Date, the Trustee shall distribute the Interest Remittance
Amount for both Loan Groups for such date in the following order of priority:
(i) from the Interest Remittance Amount for Loan Group 2, to the Trustee, the Trustee Fee
for such Distribution Date;
(ii) from the Interest Remittance Amount for Loan Group 2, to the Credit Risk Manager and
the Back-Up Servicer, pro rata based on amounts due, the Credit Risk Manager Fee and
the Back-Up Servicing Fee, respectively, for such Distribution Date;
(iii) from the Interest Remittance Amount for Loan Group 1, to the Trustee, any Trustee Fee
remaining unpaid after giving effect to clause (i);
(iv) from the Interest Remittance Amount for Loan Group 1, to the Credit Risk Manager and
the Back-Up Servicer, pro rata based on amounts due, any Credit Risk Manager Fee and
Back-Up Servicing Fee, respectively, remaining unpaid after giving effect to clause
(ii);
(v) from the Interest Remittance Amount for Loan Group 1 and Loan Group 2, to the Senior
Certificates, pro rata based on amounts due, Current Interest and any Carryforward
Interest for such Class and such Distribution Date, applied in accordance with the
allocation rules set forth in (b) below;
(vi) first, from the Interest Remittance Amount for Loan Group 2 and then from the from
the Interest Remittance Amount for Loan Group 1, to the Class M-1 Certificates,
Current Interest and any Carryforward Interest for such Class and such Distribution
Date;
(vii) first, from the Interest Remittance Amount for Loan Group 2 and then from the
Interest Remittance Amount for Loan Group 1, to the Class M-2 Certificates, Current
Interest and any Carryforward Interest for such Class and such Distribution Date;
(viii) first, from the Interest Remittance Amount for Loan Group 2 and then from the
Interest Remittance Amount for Loan Group 1, to the Class M-3 Certificates, Current
Interest and any Carryforward Interest for such Class and such Distribution Date;
(ix) first, from the Interest Remittance Amount for Loan Group 2 and then from the
Interest Remittance Amount for Loan Group 1, to the Class M-4 Certificates, Current
Interest and any Carryforward Interest for such Class and such Distribution Date;
(x) first, from the Interest Remittance Amount for Loan Group 2 and then from the
Interest Remittance Amount for Loan Group 1, to the Class M-5 Certificates, Current
Interest and any Carryforward Interest for such Class and such Distribution Date;
(xi) first, from the Interest Remittance Amount for Loan Group 2 and then from the
Interest Remittance Amount for Loan Group 1, to the Class M-6 Certificates, Current
Interest and any Carryforward Interest for such Class and such Distribution Date;
(xii) first, from the Interest Remittance Amount for Loan Group 2 and then from the
Interest Remittance Amount for Loan Group 1, to the Class B-1 Certificates, Current
Interest and any Carryforward Interest for such Class and such Distribution Date;
(xiii) first, from the Interest Remittance Amount for Loan Group 2 and then from the
Interest Remittance Amount for Loan Group 1, to the Class B-2 Certificates, Current
Interest and any Carryforward Interest for such Class and such Distribution Date;
(xiv) first, from the Interest Remittance Amount for Loan Group 2 and then from the
Interest Remittance Amount for Loan Group 1, to the Class B-3 Certificates, Current
Interest and any Carryforward Interest for such Class and such Distribution Date;
(xv) first, from the Interest Remittance Amount for Loan Group 2 and then from the
Interest Remittance Amount for Loan Group 1, to the Class B-4 Certificates, Current
Interest and any Carryforward Interest for such Class and such Distribution Date; and
(xvi) for application as part of Monthly Excess Cashflow for such Distribution Date, as
provided in Section 4.02(e), any such Interest Remittance Amount remaining after
application pursuant to clauses (i) through (xv) above for such Distribution Date.
(b) The Interest Remittance Amount for Loan Group 1 and Loan Group 2 distributed pursuant
to clause (v) above will be applied to the applicable Senior Certificates as follows:
(i) amounts distributed to the Class A-1 Certificates will reduce the Interest Remittance
Amount for Loan Group 1 before any reduction to the Interest Remittance Amount for
Loan Group 2 in respect of such distribution; and
(ii) amounts distributed to the Class R, Class R-II, Class A-2, Class A-IO-1 and
Class A-IO-2 Certificates shall reduce the Interest Remittance Amount for Loan
Group 2 before any reduction to the Interest Remittance Amount for Loan Group 1 in
respect of such distributions.
(c) On each Distribution Date (1) prior to the Stepdown Date or (2) with respect to which
a Trigger Event has occurred, the Trustee shall distribute the Principal Payment Amount for
such date in the following order of priority:
(i) (A) from the Principal Remittance Amount derived from Loan Group 1, sequentially,
to (x) the Class A-1 Certificates and (y) after application of payments in
clause (c)(i)(B)(y) below, the Class A-2 Certificates, in that order, in each
case until the Class Principal Balance of such Class has been reduced to zero;
and
(B) from the Principal Remittance Amount derived from Loan Group 2, sequentially, to (x)
the Class R and Class R-II Certificates, pro rata, (y) the Class A-2
Certificates and (z) after application of payments in clause (c)(i)(A)(x)
above, the Class A-1 Certificates, in that order, in each case until the Class
Principal Balance of such Class has been reduced to zero;
(ii) to the Class M-1 Certificates, until the Class Principal Balance of such Class has
been reduced to zero;
(iii) to the Class M-2 Certificates, until the Class Principal Balance of such Class has
been reduced to zero;
(iv) to the Class M-3 Certificates, until the Class Principal Balance of such Class has
been reduced to zero;
(v) to the Class M-4 Certificates, until the Class Principal Balance of such Class has
been reduced to zero;
(vi) to the Class M-5 Certificates, until the Class Principal Balance of such Class has
been reduced to zero;
(vii) to the Class M-6 Certificates, until the Class Principal Balance of such Class has
been reduced to zero;
(viii) to the Class B-1 Certificates, until the Class Principal Balance of such Class
has been reduced to zero;
(ix) to the Class B-2 Certificates, until the Class Principal Balance of such Class has
been reduced to zero;
(x) to the Class B-3 Certificates, until the Class Principal Balance of such Class has
been reduced to zero;
(xi) to the Class B-4 Certificates, until the Class Principal Balance of such Class has
been reduced to zero; and
(xii) for application as part of Monthly Excess Cashflow for such Distribution Date, as
provided in Section 4.02(e), any such Principal Payment Amount remaining after
application pursuant to clauses (i) through (xi) above, for such Distribution Date.
(d) On each Distribution Date (1) on or after the Stepdown Date and (2) with respect to
which a Trigger Event has not occurred, the Principal Payment Amount for such date will be
paid in the following order of priority:
(i) (A) from the Principal Remittance Amount derived from Loan Group 1, the Group 1
Allocation Amount, sequentially, to (x) the Class A-1 Certificates and (y)
after application of payments in clause (d)(i)(B)(x) below, the Class A-2
Certificates, in that order, in each case until the Class Principal Balance of
such Class has been reduced to zero; and
(B) from the Principal Remittance Amount derived from Loan Group 2, the Group 2
Allocation Amount, sequentially, to (x) the Class A-2 Certificates and (y)
after application of payments in clause (d)(i)(A)(x) above, the Class A-1
Certificates, in that order, in each case until the Class Principal Balance of
such Class has been reduced to zero;
(ii) to the Class M-1 Certificates, the M-1 Principal Payment Amount for such Distribution
Date, until the Class Principal Balance of such Class has been reduced to zero;
(iii) to the Class M-2 Certificates, the M-2 Principal Payment Amount for such Distribution
Date, until the Class Principal Balance of such Class has been reduced to zero;
(iv) to the Class M-3 Certificates, the M-3 Principal Payment Amount for such Distribution
Date, until the Class Principal Balance of such Class has been reduced to zero;
(v) to the Class M-4 Certificates, the M-4 Principal Payment Amount for such Distribution
Date, until the Class Principal Balance of such Class has been reduced to zero;
(vi) to the Class M-5 Certificates, the M-5 Principal Payment Amount for such Distribution
Date, until the Class Principal Balance of such Class has been reduced to zero;
(vii) to the Class M-6 Certificates, the M-6 Principal Payment Amount for such Distribution
Date, until the Class Principal Balance of such Class has been reduced to zero;
(viii) to the Class B-1 Certificates, the B-1 Principal Payment Amount for such
Distribution Date, until the Class Principal Balance of such Class has been reduced
to zero;
(ix) to the Class B-2 Certificates, the B-2 Principal Payment Amount for such Distribution
Date, until the Class Principal Balance of such Class has been reduced to zero;
(x) to the Class B-3 Certificates, the B-3 Principal Payment Amount for such Distribution
Date, until the Class Principal Balance of such Class has been reduced to zero;
(xi) to the Class B-4 Certificates, the B-3 Principal Payment Amount for such Distribution
Date, until the Class Principal Balance of such Class has been reduced to zero; and
(xii) for application as part of Monthly Excess Cashflow for such Distribution Date, as
provided in Section 4.02(e), any such Principal Payment Amount remaining after
application pursuant to clauses (i) through (xi) above, for such Distribution Date.
(e) On each Distribution Date, the Trustee shall distribute the Monthly Excess Cashflow
for such date in the following order of priority:
(i) (A) beginning on the Overcollateralization Commencement Date, until the aggregate
Class Principal Balance of the Offered Certificates (other than the
Class A-IO-1 Certificates) equals the Aggregate Loan Balance for such
Distribution Date minus the Targeted Overcollateralization Amount for such
date, on each Distribution Date (a) prior to the Stepdown Date or (b) with
respect to which a Trigger Event has occurred, to the extent of Monthly Excess
Interest for such Distribution Date, to the Offered Certificates (other than
the Class A-IO-1 Certificates), in the following order of priority:
(aa) (i) to the extent of the Monthly Excess Interest derived from Loan
Group 1, the Group 1 Excess Interest Amount, sequentially, to the
Class A-1 Certificates and Class A-2 Certificates, in that order,
in each case until the Class Principal Balance of such Class has
been reduced to zero;
(ii) sequentially, to the Class A-2 Certificates and Class A-1
Certificates, in that order, in each case until the Class
Principal Balance of such Class has been reduced to zero;
(bb) to the Class M-1 Certificates, until the Class
Principal Balance of such Class has been reduced to zero;
(cc) to the Class M-2 Certificates, until the Class Principal
Balance of such Class has been reduced to zero;
(dd) to the Class M-3 Certificates, until the Class Principal
Balance of such Class has been reduced to zero;
(ee)to the Class M-4 Certificates, until the Class Principal
Balance of such Class has been reduced to zero;
(ff)to the Class M-5 Certificates, until the Class Principal
Balance of such Class has been reduced to zero;
(gg)to the Class M-6 Certificates, until the Class Principal
Balance of such Class has been reduced to zero;
(hh) to the Class B-1 Certificates, until the Class Principal
Balance of such Class has been reduced to zero;
(ii) to the Class B-2 Certificates, until the Class Principal
Balance of such Class has been reduced to zero;
(jj) to the Class B-3 Certificates, until the Class Principal
Balance of such Class has been reduced to zero; and
(kk) to the Class B-4 Certificates, until the Class Principal
Balance of such Class has been reduced to zero.
(B) on each Distribution Date on or after the Stepdown Date and with respect to which a
Trigger Event has not occurred, to fund any principal distributions required to
be made on such Distribution Date pursuant to Section 4.02(d), after giving
effect to the distribution of the Principal Payment Amount for such
Distribution Date, in accordance with the priorities set forth therein (any
distributions required to be made pursuant to Section 4.02(d)(i)(A) or (B) will
be made notwithstanding the limitation in such clauses that the amounts
distributed are derived from the Principal Remittance Amount);
(ii) to the Class M-1 Certificates, any Deferred Amount for such Class, with interest
thereon at the applicable Pass-Through Rate;
(iii) to the Class M-2 Certificates, any Deferred Amount for such Class, with interest
thereon at the applicable Pass-Through Rate;
(iv) to the Class M-3 Certificates, any Deferred Amount for such Class, with interest
thereon at the applicable Pass-Through Rate;
(v) to the Class M-4 Certificates, any Deferred Amount for such Class, with interest
thereon at the applicable Pass-Through Rate;
(vi) to the Class M-5 Certificates, any Deferred Amount for such Class, with interest
thereon at the applicable Pass-Through Rate;
(vii) to the Class M-6 Certificates, any Deferred Amount for such Class, with interest
thereon at the applicable Pass-Through Rate;
(viii) to the Class B-1 Certificates, any Deferred Amount for such Class, with
interest thereon at the applicable Pass-Through Rate;
(ix) to the Class B-2 Certificates, any Deferred Amount for such Class, with interest
thereon at the applicable Pass-Through Rate;
(x) to the Class B-3 Certificates, any Deferred Amount for such Class, with interest
thereon at the applicable Pass-Through Rate;
(xi) to the Class B-4 Certificates, any Deferred Amount for such Class, with interest
thereon at the applicable Pass-Through Rate;
(xii) to the Basis Risk Reserve Fund, the Required Basis Risk Reserve Fund Deposit, and
from the Basis Risk Reserve Fund sequentially as follows:
(A) to the Class A-1 and Class A-2 Certificates, pro rata based on amounts due, any
applicable Basis Risk Shortfall for such Class;
(B) to the Class M-1 Certificates, any applicable Basis Risk Shortfall for such Class;
(C) to the Class M-2 Certificates, any applicable Basis Risk Shortfall for such Class;
(D) to the Class M-3 Certificates, any applicable Basis Risk Shortfall for such Class;
(E) to the Class M-4 Certificates, any applicable Basis Risk Shortfall for such Class;
(F) to the Class M-5 Certificates, any applicable Basis Risk Shortfall for such Class;
(G) to the Class M-6 Certificates, any applicable Basis Risk Shortfall for such Class;
(H) to the Class B-1 Certificates, any applicable Basis Risk Shortfall for such Class;
(I) to the Class B-2 Certificates, any applicable Basis Risk Shortfall for such Class;
(J) to the Class B-3 Certificates, any applicable Basis Risk Shortfall for such Class;
(K) to the Class B-4 Certificates, any applicable Basis Risk Shortfall for such Class;
(xiii) to the Class X Certificates, the Class X Distributable Amount (with such amount
to be allocated between the Class X-1 and Class X-2 Certificates by the Trustee in
accordance with the Incentive Agreement unless the Incentive Agreement as been
terminated, in which case, such amount shall be allocated to the Class X-1
Certificates) for such Distribution Date together with amounts withdrawn from the
Basis Risk Reserve Fund for distribution to the Class X Certificates (with such
amount to be allocated between the Class X-1 and Class X-2 Certificates by the
Trustee in accordance with the Incentive Agreement unless the Incentive Agreement as
been terminated, in which case, such amount shall be allocated to the Class X-1
Certificates) pursuant to Section 4.06(b), (c), (d) and Section 4.07(b); and
(xiv) to the Class R or Class R-II Certificate, as applicable, any remaining amount,
provided, however, that any amount that would be distributable pursuant to this
priority (xii) shall not be paid with respect to the Class R Certificate but shall be
paid instead with respect to the Class X Certificates (with such amount to be
allocated between the Class X-1 and Class X-2 Certificates by the Trustee in
accordance with the Incentive Agreement unless the Incentive Agreement as been
terminated, in which case, such amount shall be allocated to the Class X-1
Certificates) pursuant to a contract that exists under this Agreement between the
Class R or Class R-II Certificateholders and the Class X Certificateholders.
(f) On each Distribution Date, the Trustee shall distribute to the Holder of the
Class A-IO-1 Certificates, the aggregate of all Prepayment Premiums for Mortgage Loans
collected or paid by the Servicer with respect to the preceding Prepayment Period.
SECTION 4.03 Allocation of Losses.
(a) On each Distribution Date, the Trustee shall determine the total of the Applied Loss
Amount, if any, for such Distribution Date. The Applied Loss Amount for any Distribution
Date shall be applied by reducing the Class Principal Balance of each Class of Subordinate
Certificates beginning with the Class of Subordinate Certificates then outstanding with the
lowest relative payment priority, in each case until the respective Class Principal Balance
thereof is reduced to zero. Any Applied Loss Amount allocated to a Class of Subordinate
Certificates shall be allocated among the Subordinate Certificates of such Class in
proportion to their respective Percentage Interests.
(b) With respect to any Class of Subordinate Certificates to which an Applied Loss Amount
has been allocated (including any such Class for which the related Class Principal Balance
has been reduced to zero), the Class Principal Balance of such Class will be increased on
any Distribution Date by the amount of related Recoveries for such Distribution Date,
beginning with the Class of Subordinate Certificates with the highest relative payment
priority, up to the amount of the Deferred Amount for that Class. Any increase in a Class
Principal Balance on a Distribution Date pursuant to this Section 4.03(b) shall be made
prior to giving effect to distributions on that Distribution Date.
Any increase to the Class Principal Balance of a Class of Subordinate Certificates
shall increase the Certificate Balance of the related Class pro rata in accordance with
each Percentage Interest.
SECTION 4.04 Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Trustee shall prepare and cause to be
forwarded by first class mail to each Certificateholder, the Servicer, the Depositor and
each Rating Agency, a statement based on the information provided by the Servicer pursuant
to Section 4.05 herein setting forth with respect to the related distribution:
(i) the amount thereof allocable to principal, indicating the portion thereof
attributable to Scheduled Payments and Principal Prepayments;
(ii) the amount thereof allocable to interest or any Carryforward Interest included in
such distribution;
(iii) if the distribution to the Holders of such Class of Certificates is less than the
full amount that would be distributable to such Holders if there were sufficient
funds available therefor, the amount of the shortfall and the allocation thereof as
between principal and interest;
(iv) the Class Principal Balance of each Class of Certificates after giving effect to the
distribution of principal on such Distribution Date;
(v) the Aggregate Loan Balance and the Aggregate Loan Group Balance for such Distribution
Date;
(vi) the Overcollateralization Amount for such Distribution Date;
(vii) the amount of the Servicing Fee, the Trustee Fee, the Back-up Servicer Fee, the
Credit Risk Manager Fee and any other mortgage insurance fees, if applicable, with
respect to such Distribution Date;
(viii) the Pass-Through Rate for each Class of LIBOR Certificates with respect to such
Distribution Date and the Pass-Through Rate for each Class of Class A-IO Certificates;
(ix) the amount of Advances included in the distribution on such Distribution Date and the
aggregate amount of Advances outstanding as of the last day of the calendar month
preceding such Distribution Date;
(x) the number and aggregate principal amounts of Mortgage Loans which are delinquent (1)
30 to 59 days, (2) 60 to 89 days and (3) 90 or more days (to include such delinquent
loans which are also in bankruptcy or foreclosure), for each Loan Group and for the
Mortgage Loans in the aggregate, as of the close of business on the last day of the
calendar month preceding such Distribution Date;
(xi) the number and aggregate principal amounts of Mortgage Loans that were in
foreclosure, for each Loan Group and for the Mortgage Loans in the aggregate, as of
the close of business on the last day of the calendar month preceding such
Distribution Date;
(xii) the number and aggregate principal amounts of Mortgage Loans that were in bankruptcy,
for each Loan Group and for the Mortgage Loans in the aggregate, as of the close of
business on the last day of the calendar month preceding such Distribution Date;
(xiii) the number and aggregate principal amounts of Mortgage Loans with respect to
which Prepayment Premiums were collected and the aggregate amount of such Prepayment
Premiums;
(xiv) the Rolling Three Month Delinquency Rate for such Distribution Date;
(xv) the total number and principal balance of any REO Properties (and market value, if
available), for each Loan Group and for the Mortgage Loans in the aggregate, as of
the last day of the calendar month preceding such Distribution Date;
(xvi) the total number and principal balance of any Mortgage Loans that were repurchased
during the calendar month preceding such Distribution Date;
(xvii) the aggregate amount of Realized Losses incurred during the preceding calendar
month and aggregate Realized Losses included in such distribution;
(xviii) the weighted average term to maturity of the Mortgage Loans as of the close of
business on the last day of the calendar month preceding such Distribution Date;
(xix) the portion of any distribution to the Class A Certificateholders constituting an
Insured Payment for such Distribution Date;
(xx) the gross weighted average coupon of the Mortgage Loans as of the first date of the
applicable period for such Distribution Date;
(xxi) the aggregate number of Mortgage Loans in the pool;
(xxii) the Net WAC Rate;
(xxiii) the Senior Enhancement Percentage;
(xxiv) the Net Excess Spread; and
(xxv) any amounts deposited in the Basis Risk Reserve Fund on such Distribution Date
pursuant to Section 4.02(e)(xii), and the balance of the Basis Risk Reserve Fund
after all distributions have been made on such Distribution Date;
The Trustee's responsibility for disbursing the above information to the
Certificateholders is limited to the availability, timeliness and accuracy of the
information derived from the Servicer.
On each Distribution Date, the Trustee shall provide Bloomberg Financial Markets,
L.P. ("Bloomberg") CUSIP Level Factors for each Class of Offered Certificates as of such
Distribution Date, using a format and media mutually acceptable to the Trustee and
Bloomberg. In connection with providing the information specified in this Section 4.04 to
Bloomberg, the Trustee and any director, officer, employee or agent of the Trustee shall be
indemnified and held harmless by DLJMC, to the extent, in the manner and subject to the
limitations provided in Section 8.05. The Trustee will also make the monthly statements to
Certificateholders available each month to each party referred to in this Section 4.04(a)
via the Trustee's website. The Trustee's website can be accessed at
▇▇▇▇://▇▇▇.▇▇▇▇▇▇.▇▇▇/▇▇▇ or at such other site as the Trustee may designate from time to
time. The Trustee may fully rely upon and shall have no liability with respect to
information provided by the Servicer.
(b) Upon request, within a reasonable period of time after the end of each calendar year,
the Trustee shall cause to be furnished to each Person who at any time during the calendar
year was a Certificateholder, a statement containing the information set forth in clauses
(a)(i), (a)(ii) and (a)(vii) of this Section 4.04 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 in effect.
SECTION 4.05 Servicer to Cooperate.
The Servicer shall provide to the Trustee and the Back-Up Servicer information which
is mutually agreeable to the Trustee and the Servicer, no later than the second Business
Day following the Determination Date necessary to enable the Trustee to perform its
distribution, accounting and reporting requirements hereunder.
SECTION 4.06 Basis Risk Reserve Fund.
(a) On the Closing Date, the Trustee shall establish and maintain in its name, in trust
for the benefit of the Holders of the Certificates, the Basis Risk Reserve Fund. The Basis
Risk Reserve Fund shall be an Eligible Account, and funds on deposit therein shall be held
separate and apart from, and shall not be commingled with, any other moneys, including
without limitation, other moneys held by the Trustee pursuant to this Agreement.
(b) On the Closing Date, $5,000.00 will be deposited by the Depositor into the Basis Risk
Reserve Fund. On each Distribution Date, the Trustee shall transfer from the Certificate
Account to the Basis Risk Reserve Fund pursuant to Section 4.02(e)(xi) the Required Basis
Risk Reserve Fund Deposit. Amounts on deposit in the Basis Risk Reserve Fund shall be
withdrawn by the Trustee in connection with any Distribution Date to fund the amounts
required to be distributed to holders of the Offered Certificates in respect of Basis Risk
Shortfalls. Any distributions of Monthly Excess Cashflow to the holders of the Offered
Certificates pursuant to Sections 4.02(e)(xi)(A)-(K) shall be deemed to have been deposited
in the Basis Risk Reserve Fund and paid to such holders. On any Distribution Date, any
amounts on deposit in the Basis Risk Reserve Fund in excess of the Required Basis Risk
Reserve Fund Amount shall be distributed to the Class X Certificateholder pursuant to
Section 4.02(e)(xiii).
(c) Funds in the Basis Risk Reserve Fund may be invested in Eligible Investments by the
Trustee at the direction of the holders of the Class X-1 Certificates maturing on or prior
to the next succeeding Distribution Date. Any net investment earnings on such amounts shall
be payable to the holders of the Class X Certificates pursuant to Section 4.02(e)(xiii).
The Trustee shall account for the Basis Risk Reserve Fund as an outside reserve fund within
the meaning of Treasury regulation 1.860G-2(h) and not an asset of any REMIC created
pursuant to this Agreement. The Class X Certificates shall evidence ownership of the Basis
Risk Reserve Fund for federal tax purposes and the Holders thereof shall direct the Trustee
in writing as to the investment of amounts therein. The Trustee shall treat amounts
transferred by the Master REMIC to the Basis Risk Reserve Fund as distributions to the
Class X Certificateholder for all Federal tax purposes. In the absence of such written
direction, all funds in the Basis Risk Reserve Fund shall remain uninvested. The Trustee
shall have no liability for losses on investments in Eligible Investments made pursuant to
this Section 4.06(c) (other than as obligor on any such investments). Upon termination of
the Trust Fund, any amounts remaining in the Basis Risk Reserve Fund shall be distributed
to the Holders of the Class X Certificates in the same manner as if distributed pursuant to
Section 4.02(e)(xiii) hereof.
(d) On the Distribution Date immediately after the Distribution Date on which the
aggregate Class Principal Balance of the LIBOR Certificates equals zero, any amounts on
deposit in the Basis Risk Reserve Fund not payable on the LIBOR Certificates shall be
deposited into the Certificate Account and distributed to the Holders of the Class X
Certificates in the same manner as if distributed pursuant to Section 4.02(e)(xiii) hereof.
ARTICLE V
THE CERTIFICATES
SECTION 5.01 The Certificates.
The Certificates shall be substantially in the forms attached hereto as exhibits. The
Certificates shall be issuable in registered form, in the minimum denominations, integral
multiples in excess thereof (except that one Certificate in each Class may be issued in a
different amount which must be in excess of the applicable minimum denomination) and
aggregate denominations per Class set forth in the Preliminary Statement.
Subject to Section 9.02 respecting the final distribution on the Certificates, on
each Distribution Date the Trustee shall make distributions to each Certificateholder of
record on the preceding Record Date either (x) by wire transfer in immediately available
funds to the account of such holder at a bank or other entity having appropriate facilities
therefor, if (i) such Holder has so notified the Trustee at least five Business Days prior
to the related Record Date and (ii) such Holder shall hold (A) a Notional Amount
Certificate, (B) 100% of the Class Principal Balance of any Class of Certificates or (C)
Certificates of any Class with aggregate principal Denominations of not less than
$1,000,000 or (y) by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register.
The Certificates shall be executed by manual or facsimile signature on behalf of the
Trustee by a Responsible Officer upon the written order of the Depositor. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind the
Trustee, notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of any such Certificates or did not
hold such offices at the date of such Certificate. No Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless there appears on such
certificate a Certificate of Authentication in the form provided herein, executed by the
Trustee by manual signature, and such authentication upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly executed
and delivered hereunder. All Certificates shall be dated the date of their
countersignature. On the Closing Date, the Trustee shall authenticate the Certificates to
be issued at the written direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee on a continuous
basis, an adequate inventory of Certificates to facilitate transfers.
SECTION 5.02 Certificate Register; Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall maintain, or cause to be maintained in accordance with the
provisions of Section 5.06, a Certificate Register for the Trust Fund in which, subject to
the provisions of subsections (b) and (c) below and 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. Upon surrender for
registration of transfer of any Certificate, the Trustee shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Certificates of the same
Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for other
Certificates of the same Class in authorized denominations and evidencing the same
aggregate Percentage Interest upon surrender of the Certificates to be exchanged at the
office or agency of the Trustee. 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 registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the holder
thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any registration of
transfer or exchange of Certificates, but 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 may be required.
All Certificates surrendered for registration of transfer or exchange shall be
cancelled and subsequently disposed of by the Trustee in accordance with the Trustee's
customary procedures.
(b) No transfer of a Private Certificate shall be made unless such transfer is made
pursuant to an effective registration statement under the Securities Act and any applicable
state securities laws or is exempt from the registration requirements under said Act and
such state securities laws. Except in connection with any transfer of a Private
Certificate by the Depositor to any affiliate, in the event that a transfer is to be made
in reliance upon an exemption from the Securities Act and such laws, in order to assure
compliance with the Securities Act and such laws, the Certificateholder desiring to effect
such transfer shall certify to the Trustee in writing the facts surrounding the transfer in
substantially the form set forth in Exhibit J (the "Transferor Certificate") and such
Certificateholder's prospective transferee shall either (i) deliver a letter in
substantially the form of (A) Exhibit L (the "Rule 144A Letter") or (B) if the Private
Certificate subject to such transfer represents the entire Class or the Depositor otherwise
consents to such transfer, Exhibit K (the "Investment Letter") or (ii) there shall be
delivered to the Trustee at the expense of the transferor an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Securities Act. The Depositor shall
provide to any Holder of a Private Certificate and any prospective transferee designated by
any such Holder, information regarding the related Certificates and the Mortgage Loans and
such other information as shall be necessary to satisfy the condition to eligibility set
forth in Rule 144A(d)(4) for transfer of any such Private Certificate without registration
thereof under the Securities Act pursuant to the registration exemption provided by Rule
144A. The Trustee shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the Depositor such
information regarding the Certificates, the Mortgage Loans and other matters regarding the
Trust Fund as the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the Seller, the
Back-up Servicer 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.
No transfer of an ERISA-Restricted Certificate shall be made unless the Trustee shall
have received in accordance with Exhibit I, Exhibit K or Exhibit L, as applicable, either
(i) a representation letter from the transferee of such Certificate, acceptable to and in
form and substance satisfactory to the Trustee, to the effect that such transferee is not a
Plan or a Person acquiring such ERISA-Restricted Certificate for, on behalf of or with the
assets of, any such Plan, (a "Benefit Plan Investor"), which representation letter shall
not be an expense of the Trustee or the Trust Fund, (ii) in the case of an ERISA-Restricted
Certificate (other than a Class A-IO-2 Certificate) if the purchaser is an insurance
company and the Certificate has been the subject of an ERISA-Qualifying Underwriting, a
representation that the purchaser is an insurance company which is purchasing such
Certificates with funds contained in an "insurance company general account" (as such term
is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"))
and that the purchase and holding of such Certificates are covered under Sections I and III
of PTCE 95-60 or (iii) if the purchaser is a Benefit Plan Investor acquiring a Class A-IO-2
Certificate, such Certificate has been the subject of an ERISA-Qualifying Underwriting, or
(iv) in the case of any ERISA-Restricted Certificate presented for registration in the name
of a Benefit Plan Investor without a representation as required above, an Opinion of
Counsel satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in prohibited transactions under Section 406 of ERISA and/or
Section 4975 of the Code and will not subject the Depositor, the Trustee, the Back-Up
Servicer or the Servicer to any obligation in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of such parties. In the event
the representations referred to in the preceding sentence are not furnished, such
representations shall be deemed to have been made to the trustee by the transferee's
acceptance of an ERISA-Restricted Certificate by any beneficial owner who purchases an
interest in such Certificate in book-entry form. In the event that a representation is
violated, or any attempt to transfer an ERISA-Restricted Certificate to a Benefit Plan
Investor is attempted without the delivery to the Trustee of the Opinion of Counsel
described above, the attempted transfer or acquisition of such Certificate shall be void
and of no effect.
To the extent permitted under applicable law (including, but not limited to, ERISA),
the Trustee shall be under no liability to any Person for any registration of transfer of
any ERISA-Restricted Certificate that is in fact not permitted by this Section 5.02(b) or
for making any payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement so long as the
transfer was registered by the Trustee in accordance with the foregoing requirements.
(c) 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 the rights of each Person acquiring any
Ownership Interest in a Residual Certificate are expressly subject to the following
provisions:
(i) 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.
(ii) No Ownership Interest in a Residual Certificate may be registered on the Closing Date
or thereafter transferred, and the Trustee shall not register the Transfer of any
Residual Certificate unless, in addition to the certificates required to be delivered
to the Trustee under subparagraph (b) above, the Trustee shall have been furnished
with an affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a Residual Certificate
shall agree (A) to obtain a Transfer Affidavit from any other Person to whom such
Person attempts to Transfer its Ownership Interest in a Residual Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is acting as
nominee, trustee or agent in connection with any Transfer of a Residual Certificate
and (C) not to Transfer its Ownership Interest in a Residual Certificate or to cause
the Transfer of an Ownership Interest in a Residual Certificate to any other Person
if it has actual knowledge that such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest in a Residual
Certificate in violation of the provisions of this Section 5.02(c) shall be
absolutely null and void and shall vest no rights in the purported Transferee. If any
purported transferee shall become a Holder of a Residual Certificate in violation of
the provisions of this Section 5.02(c), then the last preceding Permitted Transferee
shall be restored to all rights as Holder thereof retroactive to the date of
registration of Transfer of such Residual Certificate. The Trustee shall be under no
liability to any Person for any registration of a Transfer of a Residual Certificate
that is in fact not permitted by Section 5.02(b) and this Section 5.02(c) or for
making any payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement so long as
the Transfer was registered after receipt of the related Transfer Affidavit,
Transferor Certificate and either the Rule 144A Letter or the Investment Letter. The
Trustee shall be entitled but not obligated to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time it became a
Holder or, at such subsequent time as it became other than a Permitted Transferee,
all payments made on such Residual Certificate at and after either such time. Any
such payments so recovered by the Trustee shall be paid and delivered by the Trustee
to the last preceding Permitted Transferee of such Certificate.
(v) The Depositor shall use its best efforts to make available, upon receipt of written
request from the Trustee, all information necessary to compute any tax imposed under
Section 860E(e) of the Code as a result of a Transfer of an Ownership Interest in a
Residual Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the legend on a
Residual Certificate may be deleted) with respect to Transfers occurring after delivery to
the Trustee of an Opinion of Counsel, which Opinion of Counsel shall not be an expense of
the Trust Fund, the Trustee, the Seller or the Servicer to the effect that the elimination
of such restrictions will not cause the REMIC hereunder to fail to qualify as a REMIC at
any time that the Certificates are outstanding or result in the imposition of any tax on
the Trust Fund, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Residual Certificate hereby consents to any amendment of this
Agreement which, based on an Opinion of Counsel furnished to the Trustee, is reasonably
necessary (a) to ensure that the record ownership of, or any beneficial interest in, a
Residual Certificate is not transferred, directly or indirectly, to a Person that is not a
Permitted Transferee and (b) to provide for a means to compel the Transfer of a Residual
Certificate which is held by a Person that is not a Permitted Transferee to a Holder that
is a Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions referred to above in
this Section 5.02 in connection with transfer shall be at the expense of the parties to
such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at all times remain
registered in the name of the Depository or its nominee and at all times: (i) registration
of the Certificates may not be transferred by the Trustee except to another Depository;
(ii) the Depository shall maintain book-entry records with respect to the Certificate
Owners and with respect to ownership and transfers of such Book-Entry Certificates; (iii)
ownership and transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository; (iv) the
Depository may collect its usual and customary fees, charges and expenses from its
Depository Participants; (v) the Trustee shall deal with the Depository, Depository
Participants and indirect participating firms as representatives of the Certificate Owners
of the Book-Entry Certificates for purposes of exercising the rights of holders under this
Agreement, and requests and directions for and votes of such representatives shall not be
deemed to be inconsistent if they are made with respect to different Certificate Owners;
and (vi) the Trustee may rely and shall be fully protected in relying upon information
furnished by the Depository with respect to its Depository Participants and furnished by
the Depository Participants with respect to indirect participating firms and persons shown
on the books of such indirect participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be made in
accordance with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only transfer
Book-Entry Certificates of Certificate Owners it represents or of brokerage firms for which
it acts as agent in accordance with the Depository's normal procedures.
If (x) (i) the Depository or the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its responsibilities as
Depository, and (ii) the Trustee or the Depositor is unable to locate a qualified
successor, (y) the Depositor, with the consent of the applicable Depository Participants,
advises the Trustee in writing that it elects to terminate the book-entry system through
the Depository or (z) after the occurrence of an Event of Default, Certificate Owners
representing at least 51% of the Certificate Balance of the Book-Entry Certificates
together advise the Trustee and the Depository through the Depository Participants in
writing that the continuation of a book-entry system through the Depository is no longer in
the best interests of the Certificate Owners and the Depository Participants consent to the
termination, the Trustee shall notify all Certificate Owners, through the Depository, of
the occurrence of any such event and of the availability of definitive, fully-registered
Certificates (the "Definitive Certificates") to Certificate Owners requesting the same.
Upon surrender to the Trustee of the related Class of Certificates by the Depository,
accompanied by the instructions from the Depository for registration, the Trustee shall
issue the Definitive Certificates. None of the Seller, the Servicer, the Depositor or the
Trustee shall be liable for any delay in delivery of such instruction and each may
conclusively rely on, and shall be protected in relying on, such instructions. The
Depositor shall provide the Trustee with an adequate inventory of certificates to
facilitate the issuance and transfer of Definitive Certificates. 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; provided that the Trustee shall not by virtue of its assumption of such
obligations become liable to any party for any act or failure to act of the Depository.
SECTION 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) 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 (b) there is delivered to the Trustee such security or indemnity as may be required by
it to hold it harmless, then, in the absence of notice to the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and Percentage Interest. In connection
with the issuance of any new Certificate under this Section 5.03, 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 5.03 shall constitute complete and indefeasible evidence of ownership, as if
originally issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
SECTION 5.04 Persons Deemed Owners.
The Servicer and the Trustee and any agent of the Servicer or the Trustee may treat
the Person in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions as provided in this Agreement and for all other
purposes whatsoever, and none of the Servicer or the Trustee or any agent of the Servicer
or the Trustee shall be affected by any notice to the contrary.
SECTION 5.05 Access to List of Certificateholders' Names and Addresses.
If three or more Certificateholders (a) request such information in writing from the
Trustee, (b) state that such Certificateholders desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under the
Certificates, and (c) provide a copy of the communication which such Certificateholders
propose to transmit, or if the Depositor or the Servicer shall request such information in
writing from the Trustee, then the Trustee shall, within ten Business Days after the
receipt of such request, provide the Depositor, the Servicer or such Certificateholders at
such recipients' expense the most recent list of the Certificateholders of such Trust Fund
held by the Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by reason of
the disclosure of any such information as to the list of the Certificateholders hereunder,
regardless of the source from which such information was derived.
SECTION 5.06 Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an office or
offices or agency or agencies in St. ▇▇▇▇, Minnesota where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its Corporate
Trust Office for such purposes. The Trustee will give prompt written notice to the
Certificateholders of any change in such location of any such office or agency.
ARTICLE VI
THE DEPOSITOR, THE SELLER, THE SERVICER AND
THE BACK-UP SERVICER
SECTION 6.01 Respective Liabilities of the Depositor, the Seller, the Servicer and the
Back-Up Servicer.
The Depositor, the Seller, the Servicer and the Back-Up Servicer shall each be liable
in accordance herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by them herein.
SECTION 6.02 Merger or Consolidation of the Depositor, the Seller, the Back-Up
Servicer or the Servicer.
The Depositor, the Seller, the Back-Up Servicer and the Servicer will each keep in
full effect its existence, rights and franchises as a corporation under the laws of the
United States or under the laws of one of the states thereof and will each 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, or any of the Mortgage Loans and to perform its
respective duties under this Agreement.
Any Person into which the Depositor, the Seller, the Back-Up Servicer or the Servicer
may be merged or consolidated, or any Person resulting from any merger or consolidation to
which the Depositor, the Seller, the Back-Up Servicer or the Servicer shall be a party, or
any person succeeding to the business of the Depositor, the Seller, the Back-Up Servicer or
the Servicer, shall be the successor of the Depositor, the Seller, the Back-Up Servicer or
the Servicer, as the case may be, hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding, provided, however, that the successor or surviving Person with
respect to a merger or consolidation of the Servicer or the Back-Up Servicer shall be an
institution either (i) having a net worth of not less than $10,000,000 or whose deposits
are insured by the FDIC through the BIF or the SAIF, or (ii) which is a FNMA or FHLMC
approved servicer in good standing.
Notwithstanding the provision of Section 6.04 herein to the contrary, the Back-Up
Servicer or, in the event that the Servicer determines that it will no longer engage in the
business of servicing mortgage loans, the Servicer, may assign its rights under this
Agreement, provided that (i) the Depositor in its sole discretion has consented, (ii) the
Rating Agencies' ratings of the Offered Certificates and the Class A-IO-2 Certificates in
effect immediately prior to such action will not be qualified, reduced or withdrawn as a
result thereof (as evidenced by a letter to such effect from the Rating Agencies) and (iii)
the Servicer or the Back-Up Servicer, as applicable, shall be liable for all costs and
expenses (including attorney's fees) incurred in connection with the assignment and related
transfer of servicing or back-up servicing, as applicable, provided further, that the
Servicer or Back-Up Servicer, as applicable, shall indemnify and hold the Trust, the
Trustee, the Depositor, any Subservicer, successor Servicer or successor Back-Up Servicer,
as applicable, and each Certificateholder harmless against any and all claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs, judgments and any
other costs, fees and expenses that the Trust, the Trustee, the Depositor, any Subservicer,
the successor Servicer or successor Back-Up Servicer, as applicable, and each
Certificateholder may sustain in any way related to such assignment. No assignment by the
Servicer or the Back-Up Servicer, as applicable, shall become effective until a successor
Servicer or Back-Up Servicer, as applicable, acceptable to the Depositor and the Trustee
shall have assumed the Servicer's or Back-Up Servicer's, as applicable, responsibilities,
duties, liabilities (other than those liabilities arising prior to the appointment of such
successor) and obligations under this Agreement. Any such assignment shall not relieve the
Servicer or the Back-Up Servicer, as applicable, of responsibility for any of the
obligations specified herein except to the extent that such responsibilities have been
expressly assumed by such successor Servicer or Back-Up Servicer, respectively.
SECTION 6.03 Limitation on Liability of the Depositor, the Seller, the Back-Up
Servicer and the Servicer.
(a) None of the Depositor, the Seller, the Back-Up Servicer or the Servicer nor any of
the directors, officers, employees or agents of the Depositor, the Seller, the Back-Up
Servicer or the Servicer shall be under any liability to 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 Seller, the Back-Up Servicer, the Servicer or any such Person
against any breach of representations or warranties made by it herein or protect the
Depositor, the Seller, the Back-Up Servicer, the Servicer or any such Person from any
liability which would otherwise be imposed by reasons 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 Seller, the Back-Up Servicer, the Servicer and any director,
officer, employee or agent of the Depositor, the Seller, the Back-Up Servicer or the
Servicer may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder. The Depositor, the
Seller, the Back-Up Servicer, the Servicer and any director, officer, employee or agent of
the Depositor, the Seller, the Back-Up Servicer or the Servicer shall be indemnified by the
Trust Fund out of the Collection Account and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement, or the
Certificates, other than any loss, liability or expense (i) relating to any specific
Mortgage Loan or Mortgage Loans (and, in the case of the Servicer, relating to the
Servicer's failure to service such Mortgage Loan or Mortgage Loans in accordance with this
Agreement, unless such loss, liability or expense is otherwise reimbursable pursuant to
this Agreement) or (ii) incurred by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder or by reason of reckless disregard of
obligations and duties hereunder.
None of the Depositor, the Seller, the Back-Up Servicer or the Servicer shall be
under any obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and which in its opinion may involve it in
any expense or liability; provided, however, that any of the Depositor, the Seller or the
Servicer may in its discretion undertake any such action that it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Trust Fund, and the Depositor, the Seller, the Back-Up
Servicer and the Servicer shall be entitled to be reimbursed therefor from the Trust Fund.
Each such Person's right to indemnity and reimbursement pursuant to this Section 6.03 shall
survive the resignation or termination of such Person as set forth herein.
(b) The Servicer shall indemnify the Trustee and the Back-Up Servicer and hold it
harmless against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trustee or the Back-Up Servicer may sustain in any way related to the
failure of the Servicer to perform its duties and service the Mortgage Loans in compliance
with the terms of this Agreement. The Servicer immediately shall notify the Trustee if a
claim is made by a third party with respect to this Agreement or the Mortgage Loans, assume
(with the prior written consent of the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against it or the Trustee in respect of
such claim. The Servicer shall follow any written instructions received from the Trustee
in connection with such claim. Except as otherwise provided herein, the Trustee promptly
shall reimburse the Servicer for all amounts advanced by such entity pursuant to the second
preceding sentence except when the claim is in any way related the failure of the Servicer
to service and administer the Mortgage Loans in compliance with the terms of this Agreement.
SECTION 6.04 Limitation on Resignation of the Servicer; Pledge of Servicing Rights.
(a) Subject to Sections 6.04(b) and (c) below, the Servicer shall not resign from the
obligations and duties hereby imposed on it except (i)(a) upon appointment of a successor
Servicer and (b) receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not result in a downgrading of the rating of any of the
Certificates related to the applicable Mortgage Loans, or (ii) upon determination that its
duties hereunder are no longer permissible under applicable law. Any such determination
under clause (ii) permitting the resignation of the Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor Servicer shall have assumed the
Servicer's responsibilities, duties, liabilities and obligations hereunder.
(b) Notwithstanding the foregoing, at DLJMC's request, so long as it is the owner of the
related servicing rights, the Servicer shall resign upon the selection and appointment of a
successor Servicer; provided that the Seller delivers to the Trustee the letter required by
Section 6.04(a)(i) above.
(c) Notwithstanding the foregoing, on or after the Closing Date, the Servicer may pledge
and assign all of its rights, title and interest in, to and under this Agreement to one or
more lenders ("Servicing Rights Pledgees") selected by the Servicer; provided, however,
that no such pledge or assignment shall be effective without the prior written consent of
the Seller, which consent will be granted or withheld in the Seller's sole discretion.
Provided that no Event of Default exists, the Trustee, the Servicer, the Back-Up Servicer,
the Seller, the Credit Risk Manager and the Depositor agree that upon delivery to the
Trustee by a Servicing Rights Pledgee of a letter signed by the Servicer pursuant to which
the Servicer resigns as servicer under this Agreement pursuant to this Section 6.04, the
Trustee shall appoint such Servicing Rights Pledgee or its designee as successor Servicer,
provided that at the time of such appointment, such Servicing Rights Pledgee or its
designee meets the requirements of a successor Servicer pursuant to Section 7.02 (including
the requirement that such successor Servicer 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) and that such Servicing Rights Pledgee or its designee agrees to be
subject to the terms of this Agreement.
SECTION 6.05 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 hereunder 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 or the Credit Risk Management 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, gross negligence or bad faith in its performance of its duties or
by reason of reckless disregard for its obligations and duties under this Agreement or the
Credit Risk Management Agreement. 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.
ARTICLE VII
DEFAULT
SECTION 7.01 Events of Default.
"Event of Default," wherever used herein, means any one of the following events:
(i) any failure by the Servicer to make any deposit or payment required pursuant to this
Agreement (including but not limited to Advances to the extent required under
Section 4.01) 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 Trustee or the Depositor, or to the
Servicer and the Trustee by the Holders of Certificates having not less than 25% of
the Voting Rights evidenced by the Certificates; or
(ii) any failure by the Servicer duly to observe or perform in any material respect any
other of the covenants or agreements on the part of the Servicer set forth in this
Agreement, or if any of the representations and warranties of the Servicer in
Section 2.03(a) proves to be untrue in any material respect, which failure or breach
continues unremedied for a period of 60 days after the date on which written notice
of such failure or breach, requiring the same to be remedied, shall have been given
to the Servicer by the Trustee or the Depositor, or to the Servicer and the Trustee
by the Holders of Certificates having not less than 25% of the Voting Rights
evidenced by the Certificates, provided, however, that in the case of a failure that
cannot be cured within 60 days, the cure period may be extended if the Servicer can
demonstrate to the reasonable satisfaction of the Trustee that the Servicer is
diligently pursuing remedial action; or
(iii) failure by the Servicer to maintain, if required, its license or authorization to do
business in any jurisdiction where the related Mortgaged Property is located, unless
such failure does not have a material adverse effect on the Servicer's duties,
obligations and responsibilities under this Agreement; or
(iv) (a) any reduction or withdrawal of the Ratings or any shadow ratings of any Class of
Certificates attributable solely to the Servicer or the servicing of the Mortgage
Loans or (b) any placement by a Rating Agency of any Class of Certificates on credit
watch with negative implications attributable solely to the Servicer or the servicing
of the Mortgage Loans; or
(v) any reduction or withdrawal of the public rating of the Servicer as a servicer of
subprime mortgage loans by one of the Rating Agencies that maintains a servicer
rating system and a Rating on the Certificates 2 levels or more below the Servicer's
rating as of the Closing Date or reduction of the public rating of the Servicer as a
servicer of subprime mortgage loans by more than one Rating Agency that maintains a
servicer rating system and a Rating on the Certificates 1 level or more below the
Servicer's rating as of the Closing Date ; or
(vi) a decree or order of a court or agency or supervisory authority having jurisdiction
for the appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshaling of assets and liabilities or
similar proceedings, 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 60 consecutive days; or
(vii) the Servicer shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or relating
to all or substantially all of its property; or
(viii) the Servicer shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of or commence a voluntary case
under, any applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of its
obligations; or
(ix) any failure by the Servicer to (a) remit payment of a Prepayment Premium to the
Collection Account or (b) remit funds in the amount equal to a Prepayment Premium
which the Servicer has failed to collect, in each case as required pursuant to this
Agreement, which failure 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 Trustee or the Depositor.
The Trustee shall deliver the written notice to the Servicer of the Event of Default
set forth in clause (i) above on any Servicer Remittance Date on which the Servicer fails
to make any deposit or payment required pursuant to this Agreement (including but not
limited to Advances to the extent required under Section 4.01). Upon termination of the
Servicer pursuant to an Event of Default under clause (i) above and assumption of the
duties of the Servicer by the Back-Up Servicer, the Trustee or other successor Servicer, as
applicable, appointed pursuant to this Section 7.01 and Section 7.02, such successor
Servicer shall make any related deposit or payment required pursuant to this Agreement
(including but not limited to Advances to the extent required herein) no later than the
Distribution Date related to the Servicer Remittance Date. In the event that the Servicer
cures any Event of Default under clause (i) above by late deposit or payment of any amount
required pursuant to this Agreement and the Back-up Servicer, the Trustee or other
successor Servicer, as applicable, shall have previously made any or all of such deposit or
payment on behalf of the Servicer or in its capacity as successor to the Servicer, the
Servicer shall be obligated to reimburse the Back-Up Servicer, the Trustee or other
successor Servicer, as applicable, for the amount of any such deposit or payment plus
interest on such amount from the date of deposit or payment by the Back-Up Servicer, the
Trustee or other successor Servicer, as applicable, through the date of reimbursement by
the Servicer calculated at a rate equal the prime rate as then published in The Wall Street
Journal plus 2.0% per annum.
Other than an Event of Default resulting from a failure of the Servicer make any
required Advance if an Event of Default shall occur and a Responsible Officer of the
Trustee has knowledge thereof, then, and in each and every such case, so long as such Event
of Default shall not have been remedied, the Trustee, may, or at the direction of the
Holders of Certificates evidencing not less than 51% of the Voting Rights evidenced by the
Certificates, the Trustee shall by notice in writing to the Servicer (with a copy to each
Rating Agency), terminate all of the rights and obligations of the Servicer under this
Agreement and in and to the related Mortgage Loans and the proceeds thereof (other than its
rights as a Certificateholder hereunder).
If an Event of Default results from the failure of the Servicer to make a required
Advance or the Trustee shall, by notice in writing to the Servicer, the Back-Up Servicer
and the Depositor (with a copy to each Rating Agency), terminate all of the rights and
obligations of the Servicer, as applicable, under this Agreement and in and to the related
Mortgage Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder.
Upon receipt by the Servicer of such written notice of termination, all authority and
power of the Servicer under this Agreement, whether with respect to the related Mortgage
Loans or otherwise, shall, subject to Section 7.02, pass to and be vested in the Back-Up
Servicer or its affiliate, or other successor Servicer appointed by DLJMC, so long as DLJMC
is the owner of the servicing rights of the related Mortgage Loans, provided, however, that
the Back-Up Servicer shall not be required to assume such duties as successor Servicer
until the completion of the transition of servicing from the Servicer (which transition
shall be completed within 90 days of the Servicer's termination, and during which
transition the Servicer shall continue to perform the duties of, and be entitled to the
rights and protections provided to the Servicer under this Agreement); provided, further,
that in the event that the Back-Up Servicer (or such other successor Servicer appointed by
DLJMC) fails to assume the duties of the Servicer within the 90 day transition period
described above, all authority and power of the Servicer shall pass to and be vested in the
Trustee. Upon written request from the Trustee, the Back-Up Servicer or DLJMC, as
applicable, or the Servicer shall prepare, execute and deliver to the successor entity
designated by the Trustee, the Back-Up Servicer or DLJMC, as applicable, any and all
documents and other instruments, place in such successor's possession all related Mortgage
Files, and do or cause to be done all other reasonable and customary acts or things
necessary or appropriate to effect the purposes of such notice of termination, including
but not limited to the transfer and endorsement or assignment of the related Mortgage Loans
and related documents, at the Servicer's sole expense or at the expense of DLJMC if the
Servicer fails to cover such expenses. In addition, DLJMC, to the extent not reimbursed by
the Servicer, shall reimburse the Back-Up Servicer for all of the Back-Up Servicer's
reasonable and customary costs and expenses associated with any termination of the
Servicer, appointment of a successor Servicer or the transfer or assumption of servicing
upon termination of the Servicer, including but not limited to all costs and expenses
(including legal expenses) associated with an evaluation of potential termination of the
Servicer, all costs and expenses associated with the complete transfer of servicing,
including the transfer of all servicing files and all servicing data as may be required by
the successor Servicer to correct any errors or insufficiencies in the servicing data or
otherwise to enable the successor Servicer to service the Mortgage Loans in accordance with
the Agreement; provided, however that in no event shall DLJMC be required to cover any
expenses of the Back-Up Servicer incurred in connection with the transfer of servicing to
the Back-Up Servicer upon termination of the Servicer in excess of $300,000 in any calendar
year, provided that any amounts not reimbursed to the Back-Up Servicer in any calendar year
due to application of the $300,000 annual limit shall be reimbursed in subsequent calendar
years, subject to the same annual limit.
A terminated Servicer shall cooperate with the Trustee and such successor in
effecting the termination of the Servicer's responsibilities and rights hereunder,
including without limitation, with respect to a terminated Servicer, the transfer to such
successor for administration by it of all cash amounts which shall at the time be credited
by the Servicer to the Collection Account or Escrow Account or thereafter received with
respect to the related Mortgage Loans. The Trustee, the Back-Up Servicer or other
successor Servicer, as applicable, shall thereupon make any Advance (notwithstanding the 90
day transition period set forth above with respect to the Back-Up Servicer) to the extent
required pursuant to Section 4.01 and subject to the Trustee, the Back-Up Servicer or such
other successor's determination that such Advance would not constitute a Nonrecoverable
Advance or unless prohibited by applicable law. The Trustee or other successor entity, as
applicable, is hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments,
and to do or accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and endorsement or
assignment of the related Mortgage Loans and related documents, or otherwise.
All reasonable out of pocket costs and expenses (including attorney's fees) incurred
in connection with transferring servicing to a successor Servicer shall be paid by the
predecessor Servicer (or if the predecessor Servicer is the Trustee, the initial Servicer)
upon presentation of reasonable documentation of such costs and expenses. The Seller shall
reimburse the Back-Up Servicer for its reasonable fees and expenses in the event that the
Servicer fails to do so. Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection of a
Scheduled Payment that was due prior to the notice terminating the Servicer's rights and
obligations as the Servicer hereunder and received after such notice, that portion of the
Servicing Fee thereof to which the Servicer would have been entitled to pursuant to
Section 3.09 hereof the entitlement to which arose prior to the termination of its
activities hereunder in accordance with Section 3.09 hereof and in the time period
specified in Section 3.09 hereof. The Servicer shall continue to be entitled to the
benefits of Section 6.03 hereof, notwithstanding any termination hereunder, with respect to
any events occurring prior to such termination.
In no event shall the termination of the Servicer under this Agreement result in any
diminution of the Servicer's right to reimbursement for any outstanding Advances or
Servicing Advances or accrued and unpaid Servicing Fees due the Servicer at the time of
termination. The successor Servicer shall reimburse the terminated Servicer for
outstanding Advances and Servicing Advances and accrued and unpaid Servicing Fees to the
extent that such amounts become reimbursable from time to time pursuant to Section 3.09 of
this Agreement; provided, however, that such right of reimbursement shall be limited to
funds that are on deposit in the Collection Account and available to the Servicer for such
purposes pursuant to Section 3.09 of this Agreement. In addition, any such reimbursement
for outstanding Advances and Servicing Advances and accrued and unpaid Servicing Fees shall
be made on a first in, first out ("FIFO") basis no later than the Servicer Remittance Date
of each month.
SECTION 7.02 Back-up Servicer/Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination pursuant to
Section 7.01 of this Agreement, the Back-Up Servicer, the Trustee or successor Servicer
appointed pursuant to Section 7.01, subject to and to the extent provided herein, either
shall be the successor to the Servicer, but only in its capacity as servicer under this
Agreement, respectively, and not in any other, and the transactions set forth herein or
shall appoint a successor Servicer, and in either event such successor Servicer shall be
subject to all the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof and applicable law including the obligation to
make Advances pursuant to Section 4.01. As compensation therefor, the successor Servicer
shall be entitled to all funds relating to the related Mortgage Loans that the terminated
Servicer would have been entitled to charge to the Collection Account, provided that the
terminated Servicer shall nonetheless be entitled to payment or reimbursement as provided
in Section 3.09(a) to the extent that such payment or reimbursement relates to the period
prior to the completion of the transfer of servicing to a successor Servicer.
Notwithstanding the foregoing, if the Trustee or Back-Up Servicer has become the successor
to the terminated Servicer in accordance with Section 7.01, the Trustee or Back-Up Servicer
may, if it shall be unwilling to so act, or shall, if it is prohibited by applicable law
from making Advances pursuant to 4.01 hereof, or if it is otherwise unable to so act,
appoint, or petition a court of competent jurisdiction to appoint, any established mortgage
loan servicing institution the appointment of which does not adversely affect the then
current rating of the Certificates by each Rating Agency, as the successor to the
terminated Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. Any successor to the Servicer shall be an
institution which is a FNMA or FHLMC approved seller/servicer in good standing, which has a
net worth of at least $10,000,000, which is willing to service the related Mortgage Loans
and which executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, containing an assumption by such Person of the rights,
powers, duties, responsibilities, obligations and liabilities of the Servicer (other than
liabilities of the Servicer under Section 6.03 hereof incurred prior to termination of the
Servicer under Section 7.01 hereunder), with like effect as if originally named as a party
to this Agreement; provided that each Rating Agency acknowledges that its rating of the
Certificates in effect immediately prior to such assignment and delegation will not be
qualified or reduced as a result of such assignment and delegation. The Back-Up Servicer
(or its affiliate) or any successor Servicer appointed by DLJMC shall be rated as a
servicer of subprime mortgage loans as "average" (or its equivalent) or better by each
Rating Agency that maintains a servicer rating system. Pending appointment of a successor
to the Servicer hereunder, the Trustee, the Back-Up Servicer or other successor Servicer,
unless such entity is prohibited by law from so acting, shall, subject to the limitations
described herein, act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the compensation of
such successor out of payments on the related Mortgage Loans as it and such successor shall
agree. The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Neither the Trustee,
the Back-Up Servicer nor any other successor Servicer shall be deemed to be in default by
reason of any failure to make, or any delay in making, any distribution hereunder or any
portion thereof or any failure to perform, or any delay in performing, any duties or
responsibilities hereunder, in either case caused by the failure of the terminated Servicer
to deliver or provide, or any delay in delivering or providing, any cash, information,
documents or records to it.
Any successor to the Servicer or shall give notice to the Mortgagors of such change
of servicer. Any successor to the Servicer shall, during the term of its service as the
Servicer maintain in force the policy or policies of the type that the Servicer is required
to maintain pursuant to this Agreement.
In connection with the termination or resignation of the Servicer hereunder, either
(i) the successor Servicer, including the Trustee if the Trustee is acting as successor
Servicer, shall represent and warrant that it is a member of MERS in good standing and
shall agree to comply in all material respects with the rules and procedures of MERS in
connection with the servicing of the Mortgage Loans that are registered with MERS, or (ii)
the predecessor Servicer, at its sole expense, shall cooperate with the successor Servicer
either (x) in causing MERS to execute and deliver an Assignment of Mortgage in recordable
form to transfer the Mortgage from MERS to the Trustee and to execute and deliver such
other notices, documents and other instruments as may be necessary or desirable to effect a
transfer of such Mortgage Loan or servicing of such Mortgage Loan on the MERS® System to
the successor Servicer or (y) in causing MERS to designate on the MERS® System the
successor Servicer as the servicer of such Mortgage Loan (at the cost and expense of the
successor Servicer to the extent such costs relate to the qualification of such successor
Servicer as a member of MERS, otherwise at the cost and expense of the predecessor
Servicer). The predecessor Servicer shall file or cause to be filed any such assignment in
the appropriate recording office. The successor Servicer shall cause such assignment to be
delivered to the Trustee promptly upon receipt of the original with evidence of recording
thereon or a copy certified by the public recording office in which such assignment was
recorded.
SECTION 7.03 Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the Servicer, the Trustee
shall give prompt written notice thereof to Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the Trustee shall
transmit by mail to all Certificateholders notice of each such Event of Default hereunder
actually known to a Responsible Officer the Trustee, unless such Event of Default shall
have been cured or waived.
SECTION 7.04 Termination of Duties of Back-Up Servicer.
The rights and obligations of the Back-Up Servicer under this Agreement shall
terminate upon the earlier of (i) the appointment of the Back-Up Servicer (or its
affiliate) as successor Servicer and (ii) the termination of the Back-Up Servicer by the
Seller. The Seller may terminate the Back-Up Servicer at any time. In the event that the
Seller terminates the Back-up Servicer prior to August 24, 2004, the Seller shall pay the
Back-up Servicer a fee equal to the Back-up Servicing Fee that the Back-up Servicer would
have received for the period commencing on its date of termination until August 24, 2005.
Such fee shall be determined by assuming that each Mortgage Loan receives its Scheduled
Payment by the related Due Date from the termination date until the Due Date in August 2005
and assuming that the Mortgage Loans prepay at the same speed that Principal Prepayments
and Curtailments have been received prior to the date of termination.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01 Duties of the Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the curing or
waiver of all Events of Default that may have occurred, shall undertake to perform such
duties and only such duties as are specifically set forth in this Agreement. In case an
Event of Default has occurred and remains uncured and not waived, the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments furnished to the Trustee that are
specifically required to be furnished pursuant to any provision of this Agreement shall
examine them to determine whether they are in the form required by this Agreement;
provided, however, that the Trustee shall not be responsible for the accuracy or content of
any such resolution, certificate, statement, opinion, report, document, order or other
instrument.
No provision of this Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:
(i) unless an Event of Default actually known to the Trustee shall have occurred and be
continuing, the duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this Agreement
against the Trustee and the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the requirements
of this Agreement which it believed in good faith to be genuine and to have been duly
executed by the proper authorities respecting any matters arising hereunder;
(ii) the Trustee shall not be liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee, unless it shall be
finally proven that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not 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 evidencing not less than 25% of the Voting Rights of Certificates
relating to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the Trustee
under this Agreement;
(iv) no provision of this Agreement shall require the Trustee to act as Servicer or be
responsible in any way for the acts or omissions of the Servicer until such time as
it acts as successor Servicer pursuant to the terms of this Agreement; and
(v) the Trustee shall have no duty (A) (other than in its capacity as successor Servicer)
to see to any recording, filing or depositing of this Agreement or any agreement
referred to herein or any financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such recording or filing or
depositing of any thereof, (B) (other than in its capacity as successor Servicer) to
see to any insurance, (C) (other than with respect to Section 8.11 hereof) to see to
the payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied against,
any part of the Trust Fund, (D) to confirm or verify the contents of any certificates
of the Servicer delivered to the Trustee pursuant to this Agreement believed by the
Trustee to be genuine and to have been signed or presented by the appropriate party.
SECTION 8.02 Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(i) the Trustee may request and conclusively rely upon and shall be protected in acting
or refraining from acting upon any resolution, Officer's Certificate, certificate of
auditors or any other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or parties and
the Trustee shall have no responsibility to ascertain or confirm the genuineness of
any signature of any such party or parties;
(ii) the Trustee may consult with counsel, financial advisers or accountants and the
advice of any such counsel, financial advisers or accountants and any Opinion of
Counsel shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
(iii) the Trustee shall not 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;
(iv) the Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Holders of Certificates evidencing not less than 25%
of the Voting Rights allocated to each Class of Certificates;
(v) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, affiliates, accountants or
attorneys and the Trustee shall not be responsible for any negligence or willful
misconduct on the part of such agents, affiliates, accountants or attorneys appointed
by it with due care;
(vi) the Trustee shall not be required to risk or expend its own funds or otherwise incur
any financial liability in the performance of any of its duties or in the exercise of
any of its rights or powers hereunder if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk or
liability is not assured to it;
(vii) the Trustee shall not be liable for any loss on any investment of funds pursuant to
this Agreement (other than as issuer of the investment security);
(viii) the Trustee shall not be deemed to have actual knowledge of an Event of Default
until a Responsible Officer of the Trustee shall have received written notice thereof;
(ix) the Trustee shall be under no obligation to exercise any of the trusts, rights or
powers vested in it by this Agreement or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction of any
of the Certificateholders, pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable security or indemnity
satisfactory to the Trustee against the costs, expenses and liabilities which may be
incurred therein or thereby;
(x) the rights of the Trustee to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and the Trustee shall not be answerable
for other than its negligence or willful misconduct in the performance of such act;
(xi) anything to the contrary in this Agreement notwithstanding, in no event shall the
Trustee be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including, but not limited to, lost profits) even if the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action; and
(xii) the Trustee shall not be required to give any bond or surety in respect of the
execution of the Trust Fund created hereby or the powers granted hereunder.
SECTION 8.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates shall be taken as the
statements of the Depositor, the Servicer or the Seller, as the case may be, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the Certificates
or of any Mortgage Loan or related document or of MERS or the MERS® System, other than with
respect to the Trustee's execution and authentication of the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor, the Servicer of any
funds paid to the Depositor, the Servicer in respect of the Mortgage Loans or deposited in
or withdrawn from the Collection Account by the Depositor or the Servicer.
SECTION 8.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates and may transact business with the Depositor, the Seller, the Servicer and
their affiliates, with the same rights as it would have if it were not the Trustee.
SECTION 8.05 Trustee's Fees and Expenses.
(a) In addition to the Trustee Fee, the Trustee, as compensation for its activities
hereunder, shall be entitled to withdraw from the Certificate Account on each Distribution
Date prior to making distributions pursuant to Section 4.02 any investment income or other
benefit derived from balances in the Certificate Account for such Distribution Date
pursuant to Section 3.09(b). Subject to the limitations set forth in Section 8.05(b), the
Trustee and any director, officer, employee or agent of the Trustee shall be indemnified by
the Depositor and held harmless against any loss, liability or expense (including
reasonable attorney's fees and expenses) incurred in connection with any claim or legal
action relating to (a) this Agreement or the Custodial Agreement, (b) the Certificates, or
(c) the performance of any of the Trustee's duties hereunder or under the Custodial
Agreement, other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of any of the Trustee's duties
hereunder or incurred by reason of any action of the Trustee taken at the direction of the
Certificateholders. Such indemnity shall survive the termination of this Agreement or the
resignation or removal of the Trustee hereunder. Without limiting the foregoing, the
Depositor covenants and agrees, subject to the limitation set forth in Section 8.05(b), and
except for any such expense, disbursement or advance as may arise from the Trustee's
negligence, bad faith or willful misconduct, to pay or reimburse the Trustee, for all
reasonable expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement with respect to: (A) the reasonable
compensation and the expenses and disbursements of its counsel not associated with the
closing of the issuance of the Certificates, (B) the reasonable compensation, expenses and
disbursements of any accountant, engineer or appraiser that is not regularly employed by
the Trustee, to the extent that the Trustee must engage such persons to perform acts or
services hereunder, (C) printing and engraving expenses in connection with preparing any
Definitive Certificates and (D) any other reasonable expenses incurred other than in the
ordinary course of its business by the Trustee in connection with its duties hereunder.
Except as otherwise provided herein, the Trustee shall not be entitled to payment or
reimbursement for any routine ongoing expenses incurred by the Trustee in the ordinary
course of its duties as Trustee or Paying Agent hereunder or for any other expenses.
(b) Notwithstanding anything to the contrary in this Agreement, the Depositor shall not
be obligated to pay to the Trustee more than, in the aggregate, $150,000 pursuant to
Section 8.05(a) hereof. Other than as set forth in this Section 8.05, the Trustee shall
not be entitled to any other compensation or reimbursement for loss or expenses.
SECTION 8.06 Eligibility Requirements for the Trustee.
The Trustee hereunder shall at all times be a corporation or association organized
and doing business under the laws of a 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, subject to supervision or examination by federal or state
authority and with a credit rating which would not cause either of the Rating Agencies to
reduce their respective then current Ratings of the Certificates (or having provided such
security from time to time as is sufficient to avoid such reduction), as evidenced in
writing by each Rating Agency. If such corporation or association publishes reports of
condition at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the proposes of this Section 8.06 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 condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the provisions
of this Section 8.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07. The entity serving as Trustee may have normal banking
and trust relationships with the Depositor, the Seller or the Servicer and their
affiliates; provided, however, that such entity cannot be an affiliate of the Seller, the
Depositor or the Servicer other than the Trustee in its role as successor to the Servicer.
SECTION 8.07 Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice of resignation to the Depositor, the Seller, the Servicer and each
Rating Agency not less than 60 days before the date specified in such notice, when, subject
to Section 8.08, such resignation is to take effect, and acceptance by a successor trustee
in accordance with Section 8.08 meeting the qualifications set forth in Section 8.06. If
the Trustee gives notice of such resignation, the Depositor shall promptly appoint a
successor trustee. If no successor trustee meeting such qualifications shall have been so
appointed and have accepted appointment within 30 days after the giving of such notice of
resignation or removal (as provided below), the resigning or removed Trustee may petition
any court of competent jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.06 and shall fail to resign after written request thereto by the
Depositor, or if at any time the Trustee shall become incapable of acting, or shall be
adjudged as bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or liquidation, or a
tax is imposed with respect to the Trust Fund by any state in which the Trustee or the
Trust Fund is located and the imposition of such tax would be avoided by the appointment of
a different trustee, then the Depositor may remove the Trustee and appoint a successor
trustee by written instrument, in a sufficient number of copies to provide one copy of to
the Trustee, one copy to the Servicer, one copy to the Seller and one copy to the successor
trustee.
The Holders of Certificates entitled to at least 51% of the Voting Rights may at any
time remove the Trustee and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact duly
authorized, one complete set of which shall be delivered by the successor Trustee to the
Depositor, the Servicer and the Seller, one complete set to the Trustee so removed and one
complete set to the successor so appointed. Notice of any removal of the Trustee shall be
given to each Rating Agency by the successor trustee.
Any resignation or removal of the Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section 8.07 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section 8.08.
SECTION 8.08 Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor and to its predecessor trustee, the Servicer and
the Seller an instrument accepting such appointment hereunder and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with the like effect as if
originally named as trustee herein. The Depositor, the Servicer, the Seller, the Back-up
Servicer and the predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties, and obligations.
No successor trustee shall accept appointment as provided in this Section 8.08 unless
at the time of such acceptance such successor trustee shall be eligible under the
provisions of Section 8.06 and its appointment shall not adversely affect the then current
rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.08, the Depositor shall mail notice of the succession of such trustee hereunder
to all Holders of Certificates. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee shall cause
such notice to be mailed at the expense of the Depositor.
SECTION 8.09 Merger or Consolidation of the Trustee.
Any corporation into which the Trustee may be merged or converted or with which it
may be consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation succeeding to the
business of the Trustee, shall be the successor of the Trustee hereunder, provided that
such corporation shall be eligible under the provisions of Section 8.06 without the
execution or filing of any paper or further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
SECTION 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the Trust Fund
or property securing any Mortgage Note may at the time be located, the Depositor and the
Trustee acting jointly shall have the power and shall execute and deliver all instruments
to appoint one or more Persons approved by the Trustee to act as co-trustee or co-trustees
jointly with the Trustee, or separate trustee or separate trustees, of all or any part of
the Trust Fund, and to vest in such Person or Persons, in such capacity and for the benefit
of the Certificateholders, such title to the Trust Fund or any part thereof, whichever is
applicable, and, subject to the other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Depositor and the Trustee may consider necessary or
desirable. If the Depositor shall not have joined in such appointment within 15 days after
the receipt by it of a request to do so, or in the case an Event of Default shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to meet the
terms of eligibility as a successor trustee under Section 8.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee shall be
required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted by law, be
appointed and act subject to the following provisions and conditions:
(i) To the extent necessary to effectuate the purposes of this Section 8.10, all rights,
powers, duties and obligations conferred or imposed upon the Trustee, except for the
obligation of the Trustee in its capacity as successor Servicer under this Agreement
to advance funds on behalf of the Servicer, shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular set or acts are to be
performed (whether as Trustee hereunder or as successor to the Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the holding of title to
the applicable Trust Fund or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) No trustee hereunder shall be held personally liable by reason of any act or omission
of any other trustee hereunder and such appointment shall not, and shall not be
deemed to, constitute any such separate trustee or co-trustee as agent of the Trustee;
(iii) The Trustee may at any time accept the resignation of or remove any separate trustee
or co-trustee; and
(iv) The Depositor, and not the Trustee, shall be liable for the payment of reasonable
compensation, reimbursement and indemnification to any such separate trustee or
co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed to have
been given to each of the separate trustees and co-trustees, when and as effectively as if
given to each of them. Every instrument appointing any separate trustee or co-trustee
shall refer to this Agreement and the conditions of this Article VIII. Each separate
trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every such
instrument shall be filed with the Trustee and a copy thereof given to the Servicer and the
Depositor.
Any separate trustee or co-trustee may, at any time, constitute the Trustee its agent
or attorney-in-fact, with full power and authority, to the extent not prohibited by law, to
do any lawful act under or in respect of this Agreement on its behalf and in its name. If
any separate trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
SECTION 8.11 Tax Matters.
It is intended that the assets with respect to which any REMIC election is to be
made, as set forth in the Preliminary Statement, shall constitute, and that the conduct of
matters relating to such assets shall be such as to qualify such assets as, multiple "real
estate mortgage investment conduits" as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Trustee covenants and agrees that it
shall act as agent (and the Trustee is hereby appointed to act as agent) on behalf of the
REMICs and that in such capacity it shall: (a) prepare, sign and file, or cause to be
prepared and filed, in a timely manner, a U.S. Real Estate Mortgage Investment Conduit
Income Tax Return (Form 1066 or any successor form adopted by the Internal Revenue Service)
and prepare and file or cause to be prepared and filed with the Internal Revenue Service
and applicable state or local tax authorities income tax or information returns for each
taxable year with respect to each REMIC, containing such information and at the times and
in the manner as may be required by the Code or state or local tax laws, regulations, or
rules, and furnish or cause to be furnished to Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby; (b) within
thirty days of the Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Forms 8811 or as otherwise may be required by the Code, the name, title,
address, and telephone number of the person that the holders of the Certificates may
contact for tax information relating thereto, together with such additional information as
may be required by such form, and update such information at the time or times in the
manner required by the Code; (c) make or cause to be made elections that each group of
segregated assets be treated as a REMIC on the federal tax return for its first taxable
year (and, if necessary, under applicable state law) and apply for an employee
identification number from the IRS via a Form SS-4 or any other acceptable method for all
tax entities; (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state tax
authorities, all information returns and reports as and when required to be provided to
them in accordance with the REMIC Provisions, including without limitation, the calculation
of any original issue discount using the Prepayment Assumption; (e) provide information
necessary for the computation of tax imposed on the transfer of a Residual Certificate to a
Person that is not a Permitted Transferee, or an agent (including a broker, nominee or
other middleman) of a Non-Permitted Transferee, or a pass-through entity in which a
Non-Permitted Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable for such
tax); (f) to the extent that they are under its control, conduct matters relating to such
assets at all times that any Certificates are outstanding so as to maintain the status of
any REMIC as a REMIC under the REMIC Provisions; (g) not knowingly or intentionally take
any action or omit to take any action that would cause the termination of the REMIC status
of any REMIC hereunder; (h) pay, from the sources specified in the sixth paragraph of this
Section 8.11, the amount of any federal or state tax, including prohibited transaction
taxes as described below, imposed on any REMIC hereunder prior to its termination when and
as the same shall be due and payable (but such obligation shall not prevent the Trustee or
any other appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Trustee from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings); (i) ensure that federal, state or local income
tax or information returns shall be signed by the Trustee or such other person as may be
required to sign such returns by the Code or state or local laws, regulations or rules; (j)
maintain records relating to the REMICs, including but not limited to the income, expenses,
assets and liabilities thereof and the fair market value and adjusted basis of the assets
determined on the accrual method or at such internals as may be required by the Code, as
may be necessary to prepare the foregoing returns, schedules, statements or information;
and (k) as and when necessary and appropriate, represent any such REMIC in any
administrative or judicial proceedings relating to an examination or audit by any
governmental taxing authority, request an administrative adjustment as to any taxable year
of any REMIC, enter into settlement agreements with any governmental taxing agency, extend
any statute of limitations relating to any tax item of any such REMIC, and otherwise act on
behalf of the REMICs in relation to any tax matter or controversy involving it.
In order to enable the Trustee to perform its duties as set forth herein, the
Depositor shall provide, or cause to be provided, to the Trustee within ten (10) days after
the Closing Date all information or data that the Trustee requests in writing and
determines to be relevant for tax purposes to the valuations and offering prices of the
Certificates, including, without limitation, the price, yield, prepayment assumption and
projected cash flows of the Certificates and the Mortgage Loans. Thereafter, the Depositor
shall provide to the Trustee promptly upon written request therefor any such additional
information or data that the Trustee may, from time to time, reasonably request in order to
enable the Trustee to perform its duties as set forth herein. DLJMC hereby indemnifies the
Trustee for any losses, liabilities, damages, claims or expenses of the Trustee arising
from any errors or miscalculations of the Trustee that result from any failure of the
Depositor to provide, or to cause to be provided, accurate information or data to the
Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of any REMIC as
defined in Section 860F(a)(2) of the Code, on the "net income from foreclosure property" of
any REMIC as defined in Section 860G(c) of the Code, on any contribution to the REMICs
after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax is imposed,
including, without limitation, any minimum tax imposed upon any REMICs pursuant to Sections
23153 and 24874 of the California Revenue and Taxation Code, if not paid as otherwise
provided for herein, such tax shall be paid by (i) the Trustee, if any such other tax
arises out of or results from a breach by the Trustee of any of its obligations under this
Agreement, (ii) the Seller, in the case of any such minimum tax, if such tax arises out of
or results from a breach by the Seller of any of its obligations under this Agreement or
(iii) the Seller, if any such tax arises out of or results from the Seller's obligation to
repurchase a related Mortgage Loan pursuant to Section 2.02 or 2.03 or (iv) in all other
cases, or in the event that the Trustee or the Seller fails to honor its obligations under
the preceding clauses (i), (ii) or (iii) or the Servicer fails to honor its obligations
pursuant to Section 8.15, any such tax will be paid with amounts otherwise to be
distributed to the Certificateholders, as provided in Section 3.09(b).
The Trustee shall treat the Basis Risk Reserve Fund as an outside reserve fund within
the meaning of Treasury Regulation 1.860G-2(h) that is owned by the Class X
Certificateholder, and not as an asset of any REMIC. The Trustee shall treat the rights of
the LIBOR Certificateholders to receive payments from the Basis Risk Reserve Fund as rights
in an interest rate cap contract written by the Class X Certificateholder in favor of the
LIBOR Certificateholders. In addition, the Class X Certificateholders shall be deemed to
have entered into a contractual arrangement with the Class R Certificateholders whereby the
Class R Certificateholders agree to pay to the Class X Certificateholders on each
Distribution Date amounts that would, in the absence of such contractual agreement, be
distributable with respect to the residual interest in the Master REMIC pursuant to
Section 4.02(e)(xii). Thus, each REMIC Regular Interest shall be treated as representing
ownership of not only REMIC Regular Interests, but also ownership of an interest in
interest rate cap contracts or a separate contractual right. For purposes of determining
the issue price of the REMIC Regular interests, the Trustee shall assume that the Basis
Risk Reserve Fund has a de minimis value.
The Trustee, the Servicer and the Holders of Certificates shall take any action or
cause any REMIC to take any action necessary to create or maintain the status of each REMIC
as a REMIC under the REMIC Provisions and shall assist each other as necessary to create or
maintain such status. None of the Trustee, the Servicer or the Holder of any Residual
Certificate shall knowingly take any action, cause any REMIC created hereunder to take any
action or fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the status of any
REMIC as a REMIC or (ii) result in the imposition of a tax upon any REMIC (including but
not limited to the tax on prohibited transactions as defined in Code Section 860F(a)(2) and
the tax on prohibited contributions set forth on Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee and the Servicer have received an
Opinion of Counsel (at the expense of the party seeking to take such action) to the effect
that the contemplated action will not endanger such status or result in the imposition of
such a tax.
Each Holder of a Residual Certificate shall pay when due any and all taxes imposed on
each REMIC created hereunder by federal or state governmental authorities. To the extent
that such Trust taxes are not paid by a Residual Certificateholder, the Trustee shall pay
any remaining REMIC taxes out of current or future amounts otherwise distributable to the
Holder of the Residual Certificate in the REMICs or, if no such amounts are available, out
of other amounts held in the Distribution Account, and shall reduce amounts otherwise
payable to Holders of regular interests in the related REMIC.
The Trustee shall, for federal income tax purposes, maintain books and records with
respect to each REMIC created hereunder on a calendar year and on an accrual basis.
The Trustee will apply for an Employee Identification Number from the Internal
Revenue Service via a Form SS-4 or other acceptable method for all tax entities.
SECTION 8.12 Periodic Filings.
(a) The Trustee and the Servicer shall reasonably cooperate with the Depositor in
connection with the Trust's satisfying the reporting requirements under the Exchange Act.
The Trustee shall prepare on behalf of the Depositor any Forms 8-K and 10-K customary for
similar securities as required by the Exchange Act and the rules and regulations of the
Commission thereunder, and the Depositor shall sign and the Trustee shall file (via ▇▇▇▇▇)
such Forms on behalf of the Depositor. The Depositor hereby grants to the Trustee a
limited power of attorney to execute and file each such document on behalf of the
Depositor. Such power of attorney shall continue until the earlier of (i) receipt by the
Trustee from the Depositor of written termination of such power of attorney and (ii) the
termination of the Trust.
(b) Each Form 8-K shall be filed by the Trustee within 15 days after each Distribution
Date, with a copy of the statement to the Certificateholders for such Distribution Date as
an exhibit thereto. Prior to March 31st of the calendar year following the calendar year
during which the Closing Date occurs (or such earlier date as may be required by the
Exchange Act and the rules and regulations of the Commission), the Trustee shall file a
Form 10-K, in substance as required by applicable law or applicable Commission staff's
interpretations. Such Form 10-K shall include as exhibits, the Servicer's annual statement
of compliance described under Section 3.17 and each accountant's report described under
Section 3.18, in each case to the extent they have been timely delivered to the Trustee.
If they are not so timely delivered, the Trustee shall file an amended Form 10-K including
such documents as exhibits promptly after they are delivered to the Trustee. The Trustee
shall have no liability with respect to any failure to properly or timely prepare or file
such periodic reports resulting from or relating to the Trustee's inability or failure to
obtain any information not resulting from its own negligence or willful misconduct. The
Form 10-K shall also include a certification in the form attached hereto as Exhibit P (the
"Depositor Certification"), which shall be signed by the senior officer of the Depositor in
charge of securitization. Not later than 5 Business Days before the date on which the
Depositor's annual report on Form 10-K is required to be filed in accordance with the
Exchange Act and the rules and regulations of the Commission, the Depositor will deliver to
the Trustee a form of the Depositor Certification. The Depositor shall subsequently
deliver to the Trustee the executed Depositor Certification no later than the date on which
the annual report on Form 10-K is required to be filed. The Trustee shall have no
responsibility to file any items other than those specified in this Section 8.12.
(c) Not later than 15 calendar days before the date on which the Depositor's annual
report on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and regulations of the Commission (or, if such day is not a Business Day, the
immediately preceding Business Day, the Trustee shall sign a certification in the form
attached hereto as Exhibit Q (the "Trustee Certification") for the benefit of the Depositor
and its officers, directors and affiliates regarding certain aspects of items 1 through 3
of the Depositor Certification. In addition, the Trustee shall, subject to the provisions
of Sections 8.01 and 8.02 hereof, indemnify and hold harmless the Depositor, the Servicer,
each Person, if any, that "controls" the Depositor or the Servicer within the meaning of
the Securities Act and their respective officers, directors and affiliates from and against
any losses, damages, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments and other costs and expenses arising out of or based upon a breach
of the Trustee's obligations under this Section 8.12 or any inaccuracy made in the Trustee
Certification. If the indemnification provided for in this Section 8.12(c) is unavailable
or insufficient to hold harmless such Persons, then the Trustee shall contribute to the
amount paid or payable by such Persons as a result of the losses, claims, damages or
liabilities of such Persons in such proportion as is appropriate to reflect the relative
fault of the Depositor or the Servicer on the one hand and the Trustee on the other. The
Trustee acknowledges that the Depositor is relying on the Trustee's performance of its
obligations under this Section 8.12 in order to perform its obligations under
Section 8.12(b) above.
(d) Not later than 15 calendar days before the date on which the Depositor's annual
report on Form 10-K is required to be filed in accordance with the Exchange Act and the
rules and regulations of the Commissions (or, if such day is not a Business Day, the
immediately preceding Business Day) the Servicer will deliver to the Depositor and the
Trustee an Officer's Certificate for the prior calendar year, substantially in the form
attached hereto as Exhibit R (the "Servicer Certification"). The Servicer agrees to
indemnify and hold harmless each of the Depositor, the Trustee and each Person, if any,
who "controls" the Depositor or the Trustee, within the meaning of the Securities Act and
their respective officers, directors and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments and other costs and expenses that such Person may sustain arising out of third
party claims based on (i) the failure of the Servicer to deliver or cause to be delivered
when required any Officer's Certificate required pursuant to this Section 8.12(d), or
(ii) any material misstatement or omission contained in any Officer's Certificate provided
pursuant to this Section 8.12(d). If an event occurs that would otherwise result in an
indemnification obligation under clauses (i) or (ii) above, but the indemnification
provided for in this Section 8.12(d) by the Servicer is unavailable or insufficient to hold
harmless such Persons, then the Servicer shall contribute to the amount paid or payable by
such Persons as a result of the losses, claims, damages or liabilities of such Persons in
such proportion as is appropriate to reflect the relative fault of the Depositor or the
Trustee, on the one hand and the Servicer on the other. The Servicer acknowledges that the
Depositor, the Trustee and each other Servicer are relying on the Servicer's performance of
its obligations under this Agreement in order to perform their respective obligations under
this Section 8.12.
(e) Upon any filing with the Commission, the Trustee shall promptly deliver to the
Depositor and the Servicer a copy of any executed report, statement or information.
(f) If the Commission issues additional interpretative guidance or promulgates additional
rules or regulations, or if other changes in applicable law occur, that would require the
reporting arrangements, or the allocation of responsibilities with respect thereto,
described in this Section 8.12, to be conducted differently than as described, the
Depositor, the Servicer and the Trustee will reasonably cooperate to amend the provisions
of this Section 8.12 in order to comply with such amended reporting requirements and such
amendment of this Section 8.12. Any such amendment shall be made in accordance with
Section 10.01 without the consent of the Certificateholders, and may result in a change in
the reports filed by the Trustee on behalf of the Trust under the Exchange Act.
Notwithstanding the foregoing, the Depositor, the Servicer and the Trustee shall not be
obligated to enter into any amendment pursuant to this Section 8.12 that adversely affects
its obligations and immunities under this Agreement.
(g) Prior to January 31 of the first year in which the Trustee is able to do so under
applicable law, the Trustee shall file a Form 15D Suspension Notification with respect to
the Trust.
SECTION 8.13 Trust Obligations.
For all purposes herein, any and all rights, duties and obligations of the Trustee on
behalf of the Trust shall be the rights, duties and obligations of the Trust itself.
SECTION 8.14 Determination of Certificate Index.
On each Interest Determination Date, the Trustee shall determine the Certificate
Index for the Accrual Period and inform the Servicer of such rate.
SECTION 8.15 Indemnification with Respect to Certain Taxes and Loss of REMIC Status.
In the event that any REMIC fails to qualify as a REMIC, loses its status as a REMIC,
or incurs federal, state or local taxes as a result of a prohibited transaction or
prohibited contribution under the REMIC Provisions due to the negligent performance by the
Servicer of its duties and obligations set forth herein, the Servicer shall indemnify the
Trustee and the Trust Fund against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; provided, however, that the Servicer
shall not be liable for any such Losses attributable to the negligence of the Trustee, the
Depositor or the Holder of such Class R or Class R-II Certificate, as applicable, nor for
any such Losses resulting from misinformation provided by the Holder of such Class R or
Class R-II Certificate on which the Servicer has relied. The foregoing shall not be deemed
to limit or restrict the rights and remedies of the Holder of such Class R or Class R-II
Certificate now or hereafter existing at law or in equity. Notwithstanding the foregoing,
however, in no event shall the Servicer have any liability (1) for any action or omission
that is taken by it in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement, (2) for any Losses other than
arising out of a negligent performance by the Servicer of its duties and obligations set
forth herein, and (3) for any special or consequential damages to Certificateholders (in
addition to payment of principal and interest on the Certificates).
SECTION 8.16 Incentive Agreement.
The Trustee is hereby directed to enter into the Incentive Agreement and to perform
the duties and obligations provided for therein. In entering into the Incentive Agreement,
and in performing any duties or obligations or taking any actions thereunder, the Trustee
will be doing so as Trustee under this Agreement, and will be entitled to all of the
rights, protections and indemnities provided in this Agreement in connection with its
serving as Trustee hereunder. In furtherance of the foregoing, the Incentive Agreement
shall be deemed to constitute a part of this Agreement for purposes of this Article VIII.
ARTICLE IX
TERMINATION
SECTION 9.01 Termination upon Liquidation, Purchase or Auction of the Mortgage Loans.
Subject to Section 9.03, the obligations and responsibilities of the Depositor, the
Seller, the Servicer, the Back-Up Servicer (to the extent not previously terminated as
provided herein) and the Trustee created hereunder with respect to the Trust Fund shall
terminate upon the earlier of:
(A) the purchase by the Servicer of all Mortgage Loans (and REO Properties) remaining
at the price equal to the greater of (I) the sum of (i) 100% of the Stated Principal
Balance of each Mortgage Loan (other than in respect of REO Property) plus one
month's accrued interest thereon at the applicable Mortgage Rate, (ii) with respect
to any REO Property, the lesser of (x) the appraised value of any REO Property as
determined by the higher of two appraisals completed by two independent appraisers
selected by the Depositor at the expense of the Depositor and (y) the Stated
Principal Balance of each Mortgage Loan related to any REO Property, in each case and
related to any REO Property, in each case plus accrued and unpaid interest thereon at
the applicable Mortgage Rate and (iii) any unreimbursed Advances, Servicing Advances,
Servicing Fees and Trustee Fees payable to the Servicer or the Trustee, as
applicable, which shall be entitled to withdraw such amounts from the applicable
Collection Account pursuant to Section 3.09(a) (the sum of (i), (ii) and (iii),
collectively, the "Par Value") and (II) the Fair Market Value.
The "Fair Market Value" shall be the fair market value of all of the property of the
Trust, as agreed upon between the Servicer and a majority of the holders of the
Class R-II Certificates; provided, however, that if the Servicer and a majority of
the holders of the Class R-II Certificates do not agree upon the fair market value of
all the property of the Trust, the Trustee, shall solicit bids for all of the
property of the Trust until it has received three bids, and the Fair Market Value
shall be equal to the highest of such three bids.
(B) the later of (i) the maturity or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan remaining in the Trust Fund and the disposition of
all REO Property and (ii) the distribution to Certificateholders of all amounts
required to be distributed to them pursuant to this Agreement.
(C) the purchase by the Auction Purchaser of all the Mortgage Loans and all property
acquired in respect of any remaining Mortgage Loan (the "Trust Collateral") as
described below.
In no event shall the trusts created hereby continue beyond the expiration of (i) 21
years from the death of the survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
Ambassador of the United States to the Court of St. James's, living on the date hereof or
(ii) the Distribution Date in October 2034.
The right to repurchase all Mortgage Loans and REO Properties pursuant to clause (A)
above shall be conditioned upon (x) if no NIM Note is outstanding, the aggregate Stated
Principal Balance of the Mortgage Loans, at the time of any such repurchase, aggregating
less than ten percent (10%) of the Aggregate Loan Balance as of the Cut-off Date and (y) if
any NIM Note is outstanding, the aggregate Stated Principal Balance of the Mortgage Loans,
at the time of any such repurchase, aggregating less than five percent (5%) of the
Aggregate Loan Balance as of the Cut-off Date.
On any Distribution Date on or after the date on which the aggregate Principal
Balance of the Mortgage Loans at the time of the purchase is less than 5% of the aggregate
Principal Balance of the Mortgage Loans as of the Cut-off Date (the "Auction Date"), the
Trustee shall solicit bids for the Trust Collateral from at least three institutions that
are regular purchasers and/or sellers in the secondary market of residential whole mortgage
loans similar to the Mortgage Loans. If the Trustee receives at least three bids for the
Trust Collateral, and one of such bids is equal to or greater than the Par Value plus the
Trustee Auction Fee, the Trustee shall sell the Trust Collateral to the highest bidder (the
"Auction Purchaser") at the price offered by the Auction Purchaser (the "Mortgage Loan
Purchase Price"). If the Trustee receives less than three bids, or does not receive any
bid that is equal to or greater than the Par Value plus the Trustee Auction Fee, the
Trustee shall, on each six-month anniversary of the initial Auction Date, repeat these
auction procedures until the Trustee receives a bid that is equal to or greater than the
Par Value plus the Trustee Auction Fee, and sells the Trust Collateral to the Auction
Purchaser at the Mortgage Loan Purchase Price. The Trustee shall give notice to the Rating
Agencies of the sale of the Trust Collateral pursuant to this Section 9.01 and of the
Auction Date.
SECTION 9.02 Final Distribution on the Certificates.
If on any Determination Date, the Trustee determines that there are no Outstanding
Mortgage Loans and no other funds or assets in the Trust Fund other than the funds in the
Collection Account and Certificate Account, the Trustee shall promptly send a final
distribution notice to each Certificateholder. If the Servicer elects to terminate the
Trust Fund or the Auction Purchaser purchases the Mortgage Loans pursuant to Section 9.01,
at least 20 days prior to the date notice is to be mailed to the affected
Certificateholders, the Servicer or the Auction Purchaser, as applicable, shall notify the
Rating Agencies, the Back-Up Servicer and the Trustee of the date it intends to terminate
the Trust Fund and of the applicable repurchase price of the Mortgage Loans and REO
Properties.
Notice of any termination of the Trust Fund, specifying the Distribution Date on
which Certificateholders may surrender their Certificates for payment of the final
distribution and cancellation, shall be given promptly by the Trustee by letter to
Certificateholders mailed not earlier than the 15th day and not later than the 25th day of
the month next preceding the month of such final distribution. Any such notice shall
specify (a) the Distribution Date upon which final distribution on the Certificates will be
made upon presentation and surrender of Certificates at the office therein designated, (b)
the amount of such final distribution, (c) the location of the office or agency at which
such presentation and surrender must be made, and (d) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified. The Trustee
shall give such notice to each Rating Agency at the time such notice is given to
Certificateholders.
On the final Distribution Date, the Trustee shall cause to be distributed to the
Certificateholders of each Class, upon presentation and surrender of the Certificates, and
to the Trustee and the Credit Risk Manager distributions and payments in accordance with
Section 4.02. Notwithstanding the foregoing, if the final Distribution Date has occurred
as a result of a Servicer's purchase of the Trust Fund pursuant to Section 9.01(A), all
amounts, if any, in excess of the Par Value shall be distributed by the Trustee directly to
the Class X Certificates.
In the event that any affected Certificateholders shall not surrender Certificates
for cancellation within six months after the date specified in the above mentioned written
notice, the Trustee shall give a second written notice to the remaining Certificateholders
to surrender their Certificates for cancellation and receive the final distribution with
respect thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee may take
reasonable and appropriate steps, or may appoint an agent to take reasonable and
appropriate steps, to contact the remaining Certificateholders concerning surrender of
their Certificates, and the cost thereof shall be paid out of the funds and other assets
which remain a part of the Trust Fund. If within one year after the second notice all
Certificates shall not have been surrendered for cancellation, the Class R and Class R-II
Certificateholders shall be entitled to all unclaimed funds and other assets of the Trust
Fund which remain subject hereto and the Trustee shall be discharged from all further
liability with respect to the Certificates and this Agreement.
SECTION 9.03 Additional Termination Requirements.
(a) In the event the Servicer exercises its purchase option with respect to the Mortgage
Loans as provided in Section 9.01, at such time as the Mortgage Loans are so purchased, the
Trust Fund shall be terminated in accordance with the following additional requirements,
unless the Trustee has been provided with an Opinion of Counsel, at the expense of the
Servicer, to the effect that the failure to comply with the requirements of this
Section 9.03 will not (i) result in the imposition of taxes on "prohibited transactions" on
any REMIC as defined in Section 860E of the Code, or (ii) cause any REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding:
(1) Within 90 days prior to the final Distribution Date set forth in
the notice given by the Trustee under Section 9.02, the Depositor shall prepare
and the Trustee shall adopt a plan of complete liquidation within the meaning
of Section 860F(a)(4) of the Code which, as evidenced by an Opinion of Counsel
(which opinion shall not be an expense of the Trustee or the Trust Fund), meets
the requirements of a qualified liquidation;
(2) Within 90 days after the time of adoption of such a plan of
complete liquidation, the Trustee shall sell all of the assets of the Trust
Fund to the Depositor for cash in accordance with Section 9.01; and
(3) On the date specified for final payment of the Certificates, the
Trustee shall, after payment of any unreimbursed Advances, Servicing Advances,
Servicing Fees or other fee compensation payable to the Servicer pursuant to
this Agreement, make final distributions of principal and interest on the
Certificates in accordance with Section 4.02 and distribute or credit, or cause
to be distributed or credited, to the Holders of the Residual Certificates all
cash on hand after such final payment (other than the cash retained to meet
claims), and the Trust Fund (and each REMIC) shall terminate at that time.
(b) The Trustee as agent for each REMIC hereby agrees to adopt and sign such a plan of
complete liquidation upon the written request of the Depositor, and the receipt of the
Opinion of Counsel referred to in Section 9.03(a)(1) and to take such other action in
connection therewith as may be reasonably requested by the Depositor.
(c) By their acceptance of the Certificates, the Holders thereof hereby authorize the
Depositor to prepare and the Trustee to adopt and sign a plan of complete liquidation.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01 Amendment.
This Agreement may be amended from time to time by the Depositor, the Servicer, the
Back-Up Servicer (to the extent that it has not been terminated as provided herein) the
Seller and the Trustee without the consent of any of the Certificateholders (i) to cure any
ambiguity or mistake, (ii) to correct any defective provision herein or to supplement any
provision herein which may be inconsistent with any other provision herein, (iii) to add to
the duties of the Depositor, the Seller, the Back-Up Servicer or the Servicer, (iv) in
connection with the appointment of a successor Servicer, to modify, eliminate or add to any
of the servicing or master servicing provisions contained in this Agreement, providing the
Rating Agencies confirm the then current rating of the Certificates giving effect to such
amendment, (v) to add any other provisions with respect to matters or questions arising
hereunder or (vi) to modify, alter, amend, add to or rescind any of the terms or provisions
contained in this Agreement; and, provided, further, that any action pursuant to clauses
(v) or (vi) above shall not, as evidenced by an Opinion of Counsel (which Opinion of
Counsel shall not be an expense of the Trustee or the Trust Fund, but shall be at the
expense of the party proposing such amendment), adversely affect in any material respect
the interests of any Certificateholder; provided, however, that no such Opinion of Counsel
shall be required if the Person requesting the amendment obtains a letter from each Rating
Agency stating that the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Certificates. The Trustee, the Depositor, the
Seller, the Back-Up Servicer and the Servicer also may at any time and from time to time
amend this Agreement without the consent of the Certificateholders to modify, eliminate or
add to any of its provisions to such extent as shall be necessary or helpful to
(i) maintain the qualification of any REMIC as a REMIC under the Code, (ii) avoid or
minimize the risk of the imposition of any tax on any REMIC pursuant to the Code that would
be a claim at any time prior to the final redemption of the Certificates or (iii) comply
with any other requirements of the Code; provided, that the Trustee has been provided an
Opinion of Counsel, 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, to the effect
that such action is necessary or helpful to, as applicable, (i) maintain such
qualification, (ii) avoid or minimize the risk of the imposition of such a tax or
(iii) comply with any such requirements of the Code.
Except as provided in the immediately following paragraph, this Agreement may also be
amended from time to time by the Depositor, the Servicer, the Back-Up Servicer, the Seller
and the Trustee with the consent of the Holders of each Class of Certificates affected
thereby evidencing 66% of the aggregate Class Principal Balance of such Class 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 required to be distributed on any Certificate
without the consent of the Holder of such Certificate, or (ii) reduce the aforesaid
percentages of Certificates the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all such Certificates then outstanding.
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, which opinion shall not be an expense of the Trustee or the Trust Fund, but
shall be at the expense of the party requesting such amendment, to the effect that such
amendment will not cause the imposition of any federal tax on any REMIC or the
Certificateholders or cause any REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement requiring the consent
of Certificateholders, the Trustee shall furnish written notification of the substance or a
copy of such amendment to each Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section 10.01 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.
Nothing in this Agreement shall require the Trustee to enter into an amendment
without receiving an Opinion of Counsel (which Opinion shall not be an expense of the
Trustee or the Trust Fund), satisfactory to the Trustee that (i) such amendment is
permitted and is not prohibited by this Agreement and that all requirements for amending
this Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder or (B) the
conclusion set forth in the immediately preceding clause (A) is not required to be reached
pursuant to this Section 10.01. The Trustee shall have no obligation to consent to any
amendment that it reasonably believes will materially and adversely affect its rights or
immunities under this Agreement.
SECTION 10.02 Recordation of Agreement; Counterparts.
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
its expense, but only upon direction by the Trustee (acting at the direction of holders of
Certificates evidencing a majority of the aggregate Class Principal Balance) accompanied by
an Opinion of Counsel (at the Depositor's expense) 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 10.03 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.04 Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the Trust Fund,
including the Mortgage Loans, by the Depositor to the Trustee be, and be construed as, an
absolute sale thereof. It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof. However, in the event that, notwithstanding the
intent of the parties, such assets are held to be the property of the Depositor, or if for
any other reason this Agreement is held or deemed to create a security interest in either
such assets to secure payment or performance of an obligation, then the Depositor for the
benefit of the Certificateholders shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that the Trustee for the benefit of the
Certificateholders shall have and shall continue to have a perfected security interest to
secure payment or performance of an obligation of first priority under applicable law
throughout the term of the Agreement. The Depositor shall arrange for filing any Uniform
Commercial Code financing statements and continuation statements in connection with such
security interest.
SECTION 10.05 Notices.
The Trustee shall use its best efforts to promptly provide notice to each Rating
Agency and the Back-Up Servicer with respect to each of the following of which it has
actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Servicer or the Trustee and the appointment of
any successor;
4. The repurchase or substitution of Mortgage Loans pursuant to Sections 2.02 and 2.03;
and
5. The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating Agency and the Back-Up
Servicer copies of the following:
1. Each report to Certificateholders described in Section 4.05 and 3.21;
2. Each annual statement as to compliance described in Section 3.17;
3. Each annual independent public accountants' servicing report described in
Section 3.18; and
4. Any notice of a purchase of a Mortgage Loan pursuant to Section 2.02, 2.03 or 3.11.
All directions, demands and notices hereunder shall be in writing and shall be deemed
to have been duly given when delivered to (a) in the case of the Depositor,
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ (with a
copy to Credit Suisse First Boston Mortgage Acceptance Corp., ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Office of the General Counsel-RMBS), (b) in the case
of the Trustee, at the Corporate Trust Office or such other address as the Trustee may
hereafter furnish to the Depositor and the Servicer, (c) in the case of each of the Rating
Agencies, the address specified therefor in the definition corresponding to the name of
such Rating Agency, (d) in the case of the Credit Risk Manager, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, (e) in the case of the Back-Up
Servicer, ▇▇▇▇▇ Fargo Bank, N.A., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇-▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: CSFB 2004-FRE1; and (f) in the case of the Servicer,
Fremont Investment & Loan, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
SVP - Finance, or such other address as may be hereafter furnished in writing by the
Servicer to the Depositor, the Back-Up Servicer and the Trustee. Notices to
Certificateholders shall be deemed given when mailed, first class postage prepaid, to their
respective addresses appearing in the Certificate Register.
SECTION 10.06 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 10.07 Assignment.
Notwithstanding anything to the contrary contained herein, except as provided in
Sections 3.22, 6.02 and 6.04, this Agreement may not be assigned by the Servicer without
the prior written consent of the Trustee and Depositor.
SECTION 10.08 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the trust created hereby, nor entitle such Certificateholder's legal
representative or heirs to claim an accounting or to take any action or commence any
proceeding in any court for a petition or winding up of the trust created hereby, or
otherwise affect the rights, obligations and liabilities of the parties hereto or any of
them.
No Certificateholder shall have any right to vote (except as provided 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 the Certificates be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties to this
Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder previously shall
have given to the Trustee a written notice of an Event of Default and of the continuance
thereof, as herein provided, and unless the Holders of Certificates evidencing not less
than 25% of the Voting Rights evidenced by the Certificates shall also have made written
request to the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or thereby, and
the Trustee, for 60 days after its receipt of such notice, request and offer of indemnity
shall have neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or themselves
of any provisions of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section 10.08, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be given either
at law or in equity.
SECTION 10.09 Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the interests in the Trust Fund represented
by the Certificates shall be nonassessable for any reason whatsoever, and that the
Certificates, upon due authentication thereof by the Trustee pursuant to this Agreement,
are and shall be deemed fully paid.
SECTION 10.10 Protection of Assets.
(a) Except for transactions and activities entered into in connection with the
securitization that is the subject of this agreement, the trust created by this agreement
is not authorized and has no power to:
(i) borrow money or issue debt;
(ii) merge with another entity, reorganize, liquidate or sell assets; or
(iii) engage in any business or activities.
(b) Each party to this agreement agrees that it will not file an involuntary bankruptcy
petition against the Trust Fund or initiate any other form of insolvency proceeding until
after the Certificates have been paid.
SECTION 10.11 Non-Solicitation.
From and after the date of this Agreement, each of the Depositor, the Seller, the
Servicer and the Trustee agrees that it will not take any action or permit or cause any
action to be taken by any of its agents or affiliates, or by any independent contractors on
any such party's behalf, to personally, by telephone, by mail, or electronically by e-mail
or through the internet or otherwise, solicit the borrower or obligor under any Mortgage
Loan to refinance the Mortgage Loan, in whole or in part. Notwithstanding the foregoing,
it is understood and agreed that promotions undertaken by the Depositor, the Seller, the
Servicer or the Trustee or any affiliate of any such party that originates mortgage loans
in the normal course of business, which are directed to the general public at large, or
segments thereof, including, without limitation, mass mailings based on commercially
acquired mailing lists or newspaper, internet, company website, radio and television
advertisements shall not constitute solicitation under this Section 10.11, provided, that
no segment of the general public shall consist primarily of the borrowers or obligors under
the Mortgage Loans. None of the Depositor, the Seller, the Servicer or the Trustee shall
permit the sale of the name of any Mortgagor or any list of names that consist primarily of
the Mortgages to any Person.
IN WITNESS WHEREOF, the Depositor, the Trustee, the Seller, the Credit Risk Manager,
the Servicer and the Back-Up Servicer have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP.,
as Depositor
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee
By: /s/ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
Name: ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
DLJ MORTGAGE CAPITAL, INC.,
as Seller
By: /s/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
FREMONT INVESTMENT & LOAN,
as Servicer
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: SVP
▇▇▇▇▇ FARGO BANK, N.A.,
as Back-Up Servicer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
THE MURRAYHILL COMPANY,
as Credit Risk Manager
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Title: Chief Executive Office
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ___ day of August 2004, before me, personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇, known
to me to be a Vice President of Credit Suisse First Boston Mortgage 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]
▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
: ss.:
COUNTY OF NEW YORK )
On the ___ day of August 2004, before me, personally appeared ▇▇▇▇▇ ▇▇▇▇, known to me
to be a Vice President of DLJ Mortgage Capital, Inc., 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]
STATE OF MINNESOTA )
: ss.:
COUNTY OF ▇▇▇▇▇▇ )
On the ____ of August 2004 before me, a Notary Public in and for said State,
personally appeared __________________ known to me to be a Vice President of U.S. Bank
National Association, the national banking association that executed the within instrument
and also known to me to be the person who executed it on behalf of said national banking
association, and acknowledged to me that such national banking association 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]
STATE OF NEW YORK )
: ss.:
COUNTY OF QUEENS )
On the ____ of August 2004, before me, a Notary Public in and for said State,
personally appeared ______________________ known to me to be President and General Counsel
of The Murrayhill Company, one of the parties 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]
STATE OF MARYLAND )
: ss.:
COUNTY OF )
On the ____ of August 2004, before me, a Notary Public in and for said State,
personally appeared ______________________ known to me to be a
______________________________ of ▇▇▇▇▇ Fargo Bank, N.A., one of the parties 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]
STATE OF CALIFORNIA )
: ss.:
COUNTY OF )
On the 24th day of August 2004, before me, a Notary Public in and for said State,
personally appeared _____________________________, known to me to be a
_________________________ of Fremont Investment & Loan., one of the parties 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]