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POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1999
by and among
PaineWebber Mortgage Acceptance Corporation IV
(Depositor)
and
New South Federal Savings Bank
(Transferor and Servicer)
and
The Bank of New York
(Trustee)
New South Home Equity Trust 1999-2
New South Home Equity Asset Backed Certificates,
Series 1999-2
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
Section 1.1 Certain Defined Terms.......................................
Section 1.2 Provisions of General Application...........................
ARTICLE II
Establishment of the Trust;
Sale and Conveyance of Trust Fund
Section 2.1 Sale and Conveyance of Trust Fund; Priority and
Subordination of Ownership Interests; Establishment of
the Trust..................................................
Section 2.2 Possession of Loan Files; Access to Loan Files..............
Section 2.3 Delivery of Loan Documents..................................
Section 2.4 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee....................
Section 2.5 Subsequent Transfers........................................
Section 2.6 Creation of the Uncertificated Regular Interests and
Residual Interests; Basis Risk Arrangements; Issuance
of Certificates............................................
Section 2.7 Designations under REMIC Provisions; Designation of
Startup Day and Latest Possible Maturity Date..............
Section 2.8 Application of Principal and Interest.......................
Section 2.9 Grant of Security Interest..................................
Section 2.10 Further Assurances; Powers of Attorney......................
ARTICLE III
Representations and Warranties
Section 3.1 Representations of the Servicer.............................
Section 3.2 Representations, Warranties and Covenants of the
Depositor..................................................
Section 3.3 Representations and Warranties of the Transferor............
Section 3.4 Representations and Warranties of the Transferor
Regarding Individual Loans.................................
Section 3.5 Purchase and Substitution...................................
Section 3.6 Servicer Covenants..........................................
ARTICLE IV
The Certificates
Section 4.1 The Certificates............................................
Section 4.2 Registration of Transfer and Exchange of Certificates.......
Section 4.3 Mutilated, Destroyed, Lost or Stolen Certificates...........
Section 4.4 Persons Deemed Owners.......................................
ARTICLE V
Administration and Servicing of the Loans
Section 5.1 Appointment of the Servicer.................................
Section 5.2 Subservicing Agreements Between the Servicer and
Subservicers...............................................
Section 5.3 Collection of Certain Loan Payments; Collection Account.....
Section 5.4 Permitted Withdrawals from the Collection Account...........
Section 5.5 Payment of Taxes, Insurance and Other Charges...............
Section 5.6 Maintenance of Casualty Insurance...........................
Section 5.7 [Reserved]..................................................
Section 5.8 Fidelity Bond; Errors and Omissions Policy..................
Section 5.9 Collection of Taxes, Assessments and Other Items............
Section 5.10 Periodic Filings with the Securities and Exchange
Commission; Additional Information.........................
Section 5.11 Enforcement of Due-on-Sale Clauses; Assumption
Agreements.................................................
Section 5.12 Realization upon Defaulted Loans............................
Section 5.13 Trustee to Cooperate; Release of Loan Files.................
Section 5.14 Servicing Fee; Servicing Compensation.......................
Section 5.15 Reports to the Trustee; Collection Account Statements.......
Section 5.16 Annual Statement as to Compliance...........................
Section 5.17 Annual Independent Public Accountants' Servicing Report.....
Section 5.18 Reports to be Provided by the Servicer......................
Section 5.19 Adjustment of Servicing Compensation in Respect of
Prepaid Loans..............................................
Section 5.20 Periodic Advances...........................................
Section 5.21 Indemnification; Third Party Claims.........................
Section 5.22 Maintenance of Corporate Existence and Licenses; Merger
or Consolidation of the Servicer...........................
Section 5.23 Assignment of Agreement by Servicer; Servicer Not to
Resign.....................................................
Section 5.24 Pre-Funding Account.........................................
Section 5.25 Capitalized Interest Account................................
ARTICLE VI
Distributions and Payments
Section 6.1 Establishment of Certificate Account, Deposits to the
Certificate Account........................................
Section 6.2 Permitted Withdrawals From the Certificate Account..........
Section 6.3 Collection of Money.........................................
Section 6.4 The Certificate Insurance Policy............................
Section 6.5 Distributions...............................................
Section 6.6 Investment of Accounts......................................
Section 6.7 Reports by Trustee..........................................
Section 6.8 Additional Reports by Trustee and by Servicer...............
Section 6.9 Compensating Interest.......................................
Section 6.10 Effect of Payments by the Certificate Insurer;
Subrogation................................................
ARTICLE VII
Default
Section 7.1 Events of Default...........................................
Section 7.2 Trustee to Act; Appointment of Successor....................
Section 7.3 Waiver of Defaults..........................................
Section 7.4 Loans, Trust Fund and Accounts Held for Benefit of the
Certificate Holders and Certificate Insurer................
ARTICLE VIII
Termination
Section 8.1 Termination.................................................
Section 8.2 Additional Termination Requirements.........................
Section 8.3 Accounting Upon Termination of Servicer.....................
ARTICLE IX
The Trustee
Section 9.1 Duties of Trustee...........................................
Section 9.2 Certain Matters Affecting the Trustee.......................
Section 9.3 Not Liable for Certificates or Loans........................
Section 9.4 Trustee May Own Certificates................................
Section 9.5 Trustee's Fees and Expenses; Indemnity......................
Section 9.6 Eligibility Requirements for Trustee........................
Section 9.7 Year 2000 Compliance........................................
Section 9.8 Resignation and Removal of the Trustee......................
Section 9.9 Successor Trustee...........................................
Section 9.10 Merger or Consolidation of Trustee..........................
Section 9.11 Appointment of Co-Trustee or Separate Trustee...............
Section 9.12 Tax Returns; OID Interest Reporting.........................
Section 9.13 Retirement of Certificates..................................
ARTICLE X
Miscellaneous Provisions
Section 10.1 Limitation on Liability of the Depositor and the
Servicer....
Section 10.2 Acts of Certificateholders; Certificateholders' Rights......
Section 10.3 Amendment or Supplement.....................................
Section 10.4 Recordation of Agreement....................................
Section 10.5 Duration of Agreement.......................................
Section 10.6 Notices.....................................................
Section 10.7 Severability of Provisions..................................
Section 10.8 No Partnership..............................................
Section 10.9 Counterparts................................................
Section 10.10 Successors and Assigns......................................
Section 10.11 Headings....................................................
Section 10.12 The Certificate Insurer Default.............................
Section 10.13 Third Party Beneficiary.....................................
Section 10.14 Intent of the Parties.......................................
Section 10.15 Appointment of Tax Matters Person...........................
Section 10.16 GOVERNING LAW...............................................
EXHIBITS
EXHIBIT A Specimen Certificate Insurance Policy
EXHIBIT B-1 Specimen Class A-1 Certificate
EXHIBIT B-2 Specimen Class A-2 Certificate
EXHIBIT B-3 Specimen Class A-3 Certificate
EXHIBIT B-4 Specimen Class A-4 Certificate
EXHIBIT B-5 Specimen Class A-5 Certificate
EXHIBIT B-6 Specimen Class A-6 Certificate
EXHIBIT B-7 Specimen Class B Certificate
EXHIBIT B-8 Specimen Class R-I Certificate
EXHIBIT B-9 Specimen Class R-II Certificate
EXHIBIT B-10 Specimen Class R-III Certificate
EXHIBIT C Loan Schedule
EXHIBIT D-1 Form of Initial Certification of Trustee
EXHIBIT D-2 Form of Updated Initial Certification of the Trustee
EXHIBIT E Form of Final Certification of Trustee
EXHIBIT F Form of Request for Release of Loan Files
EXHIBIT G1 Form of Transfer Affidavit
EXHIBIT G2 Form of Transferor Letter
EXHIBIT H Form of Investment Representation Letter
EXHIBIT I Form of ERISA Investment Representation Letter
EXHIBIT J Form of Officer's Certificate of the Transferor: Prepaid Loans
EXHIBIT K Form of Servicer Remittance Report
EXHIBIT L Form of Subsequent Transfer Agreement
EXHIBIT M Form of Liquidation Report
This Pooling and Servicing Agreement (the "Agreement"), relating to New
South Home Equity Trust 1999-2 (the "Trust"), dated as of November 1, 1999 by
and among PaineWebber Mortgage Acceptance Corporation IV, as depositor of the
Trust (the "Depositor"), New South Federal Savings Bank, as Transferor (in such
capacity, the "Transferor") and as Servicer (in such capacity, the "Servicer"),
and The Bank of New York, in its capacity as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Depositor wishes to establish a trust which provides for the
allocation and sale of the beneficial interests therein and the maintenance and
distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Loans (as described
herein), which constitute the principal assets of the trust estate;
WHEREAS, The Bank of New York is willing to serve in the capacity of
Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate Insurer") is intended
to be a third-party beneficiary of this Agreement, and is hereby recognized by
the parties hereto to be a third-party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Depositor, the Transferor, the Servicer and the Trustee
hereby agree as follows:
PRELIMINARY STATEMENT
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the Loans and certain other related assets subject to this
Agreement as a REMIC for federal income tax purposes, and such segregated pool
of assets will be designated as "REMIC I." The Class R-I Certificates will
represent the sole "residual interest" in REMIC I for purposes of the REMIC
Provisions under federal income tax law. The REMIC I Regular Interest will have:
(i) a Pass-Through Rate equal to or calculated based upon the Net Loan Rate; and
(ii) an initial REMIC I Principal Balance equal to the sum of (i) the Principal
Balances of all the Loans as of the applicable Cut-Off Date and (ii) the
Original Pre-Funding Amount. The REMIC I Regular Interest will not be
certificated.
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the REMIC I Regular Interest as a REMIC for federal income
tax purposes, and such segregated pool of assets will be designated as "REMIC
II". The Class R-II Interest will represent the sole class of "residual
interests" in REMIC II for purposes of the REMIC Provisions under federal income
tax law. The following table sets forth the designation, the Pass-Through Rate
and the initial Lower-Tier Balance for each of the REMIC II Regular Interests.
None of the REMIC II Regular Interests will be certificated. The Class R-II
Interest will be an asset of a Grantor Trust, whose ownership is represented by
the Class R-II Certificates.
Designation Pass-Through Rate Lower-Tier Balance
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LA-1 (1) $87,000,000
LA-2 (2) $22,000,000
LA-3 (3) $47,000,000
LA-4 (4) $29,000,000
LA-5 (5) $20,155,000
LA-6 (6) $23,500,000
LB (7) $6,345,000
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(1) A per annum rate (calculated on the basis of actual days elapsed and an
assumed year of 360 days) equal to the lesser of (i) the Class A-1 LIBOR
Rate and (ii) the Net Loan Rate.
(2) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 7.130% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
(3) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 7.310% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
(4) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 7.590% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
(5) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 7.780% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
(6) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 7.530% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
(7) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 9.230% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the REMIC II Regular Interests as a REMIC for federal
income tax purposes, and such segregated pool of assets will be designated as
"REMIC III." The Class R-III Certificates will represent the sole class of
"residual interests" in REMIC III for purposes of the REMIC Provisions under
federal income tax law. The following table irrevocably sets forth the
designation, the Pass-Through Rate and the initial Upper-Tier Balance for each
of the Classes of REMIC III Regular Interests. None of the REMIC III Regular
Interests will be certificated. The REMIC III Regular Interests will be assets
of a Grantor Trust, whose ownership is represented by the alphabetically and
numerically corresponding Certificates.
Designation Pass-Through Rate Upper-Tier Balance
----------- ----------------- ------------------
UA-1 (1) $87,000,000
UA-2 (2) $22,000,000
UA-3 (3) $47,000,000
UA-4 (4) $29,000,000
UA-5 (5) $20,155,000
UA-6 (6) $23,500,000
UB (7) $6,345,000
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(1) A per annum rate (calculated on the basis of actual days elapsed and an
assumed year of 360 days) equal to the lesser of (i) the Class A-1 LIBOR
Rate and (ii) the Net Loan Rate.
(2) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 7.130% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
(3) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 7.310% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
(4) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 7.590% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
(5) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 7.780% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
(6) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 7.530% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
(7) A per annum rate (calculated on the basis of an assumed month of 30 days
and an assumed year of 360 days) equal to the lesser of (i) 9.230% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Net Loan Rate.
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. Whenever used herein the following
words and phrases, unless the context otherwise requires, shall have the
following meanings.
"Accepted Servicing Practices" shall mean the Servicer's normal servicing
practices in servicing and administering mortgage loans for its own account,
which in general will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account loans of the
same type as the Loans in the jurisdictions in which the related Properties are
located and will give due consideration to the Certificate Insurer's and the
Certificateholders' reliance on the Servicer.
"Account" shall mean any Eligible Account established hereunder.
"Accrual Period" shall mean (i) with respect to the Class A-1 Certificates
and any Distribution Date, the period commencing on the immediately preceding
Distribution Date or, in the case of the first Distribution Date, the Closing
Date, and ending on the day preceding such Distribution Date and (ii) with
respect to the Certificates other than the Class A-1 Certificates and any
Distribution Date, the calendar month immediately prior to the month in which
such Distribution Date occurs.
"Addition Notice" shall mean, for any date during the Pre-Funding Period, a
notice (which shall be in writing) given to the Rating Agencies and the
Certificate Insurer, and the Trustee pursuant to Section 2.5 hereof.
"Advance" shall mean any Servicing Advance or Periodic Advance.
"Adverse REMIC Event" shall have the meaning set forth in Section 5.1(c).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Class A Principal Balance" shall mean the sum of the Class A-1
Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal
Balance, the Class A-4 Principal Balance, the Class A-5 Principal Balance and
the Class A-6 Principal Balance.
"Aggregate Class Principal Balance" shall mean the sum of the Class A-1
Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal
Balance, the Class A-4 Principal Balance, the Class A-5 Principal Balance, the
Class A-6 Principal Balance and the Class B Principal Balance.
"Aggregate Principal Balance" shall mean the sum of the Principal Balances
of each of the Loans as of any date of determination.
"Agreement" shall mean this Pooling and Servicing Agreement, including the
Exhibits hereto, as amended or supplemented from time to time in accordance
herewith.
"Appraised Value" shall mean the lesser of (i) the appraised value of any
Property, based upon the appraisal or other property valuation made at the time
the related Loan is originated and (ii) the purchase price of such Property.
"Assignment of Mortgage" shall mean, with respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument (which
may be in blank) in recordable form and sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer.
"Authorized Denominations" shall mean, in the case of the Class A
Certificates, $25,000 or integral multiples of $1 in excess thereof; provided,
however, that one Class A-1 Certificate, one Class A-2 Certificate, one Class
A-3 Certificate, one Class A-4 Certificate, one Class A-5 Certificate, one Class
A-6 Certificate, and one Class B Certificate, each is issuable in a denomination
equal to an amount less than $1 such that the aggregate denomination of all
Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class
A-4 Certificates, Class A-5 Certificates, Class A-6 Certificates and Class B
Certificates, as the case may be, shall be equal to the applicable initial Class
Principal Balance set forth in the Preliminary Statement hereto. In the case of
the Class R Certificates, a 25% Percentage Interest therein.
"Available Distribution Amount" shall mean for any Distribution Date, the
(i) the Servicer Remittance Amount for such Distribution Date actually on
deposit in the Certificate Account minus (ii) the sum of the (A) Trustee Fee for
such Distribution Date and (B) the Certificate Insurance Premium Amount for such
Distribution Date, plus (iii) the Capitalized Interest Requirement, if any, with
respect to such Distribution Date.
"Avondale" shall mean Avondale ▇▇▇▇▇▇▇.▇▇▇.▇▇▇., Woodridge, IL, a
wholly-owned subsidiary of New South, and any successors in interest thereof.
"Basis Risk Arrangements" shall mean the rights of the Class A and Class B
Certificates to receive the deemed payments from the Class R-II Certificates as
set forth in Section 6.5(c). The Basis Risk Arrangements are held by the Trustee
as assets of the Grantor Trust portion of the Trust Fund.
"Borrower" shall mean the obligor on a Mortgage Note.
"Business Day" shall mean any day other than (i) a Saturday or Sunday, (ii)
a day on which the Certificate Insurer is closed as indicated on the schedule
delivered to the Trustee by the Certificate Insurer, or (iii) a day on which
banking institutions in the States of New York or Alabama are authorized or
obligated by law or executive order to be closed.
"Capitalized Interest Account" shall mean the account designated as such,
established and maintained pursuant to Section 5.25 hereof. The Capitalized
Interest Account is held by the Trustee as an asset of the Grantor Trust portion
of the Trust Fund.
"Capitalized Interest Initial Deposit" is an amount equal to $799,573.
"Capitalized Interest Required Amount" shall mean, with respect to the
Distribution Date in December 1999, an amount equal to the product of (i) the
Pre-Funding Amount after taking into account all withdrawals from the
Pre-Funding Account on or prior to such Distribution Date, (ii) one-twelfth of
the Net WAC and (iii) 3 (the remaining months in the Pre-Funding Period).
With respect to the Distribution Date in January 2000, an amount equal to
the product of (i) the Pre-Funding Amount after taking into account all
withdrawals from the Pre-Funding Account on or prior to such Distribution Date,
(ii) one-twelfth of the Net WAC and (iii) 2 (the remaining months in the
Pre-Funding Period).
With respect to the Distribution Date in February 2000, an amount equal to
the product of (i) the Pre-Funding Amount after taking into account all
withdrawals from the Pre-Funding Account on or prior to such Distribution Date,
(ii) one-twelfth of the Net WAC and (iii) 1 (the remaining months in the
Pre-Funding Period).
With respect to the Distribution Date in March 2000, zero.
"Capitalized Interest Requirement" shall mean, with respect to the
Distribution Date in December 1999, the excess of (i) the product of (a) the
related Pre-Funding Amount on the Closing Date and (b) one-twelfth and (c) the
CWAC for such Distribution Date over (ii) in the case of any Subsequent Loan
transferred to the Trust during the related Due Period, the amount of any
interest collected after the Cut-Off Date applicable to such Subsequent Loan and
during such related Due Period.
With respect to the Distribution Date in January 2000, the excess of (i)
the product of (a) the related Pre-Funding Amount on the first day of the
related Due Period and (b) one-twelfth and (c) the CWAC for such Distribution
Date over (ii) in the case of any Subsequent Loan transferred to the Trust
during the related Due Period, the amount of any interest collected after the
Cut-Off Date applicable to such Subsequent Loan and during such related Due
Period.
With respect to the Distribution Date in February 2000, the excess of (i)
the product of (a) the related Pre-Funding Amount on the first day of the
related Due Period and (b) one-twelfth and (c) the CWAC for such Distribution
Date over (ii) in the case of any Subsequent Loan transferred to the Trust
during the related Due Period, the amount of any interest collected after the
Cut-Off Date applicable to such Subsequent Loan and during such related Due
Period.
With respect to the Distribution Date in March 2000, zero.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.
"Certificate" shall mean any Class A Certificate, any Class B Certificate
or any Class R Certificate executed by the Trustee on behalf of the Trust Fund
and authenticated by the Trustee.
"Certificate Account" shall mean the Certificate Account established in
accordance with Section 6.1(a) hereof and maintained by the Trustee.
"Certificate Insurance Policy" shall mean the certificate guaranty
insurance policy #30895, issued by the Certificate Insurer for the benefit of
the Class A Certificateholders, a copy of which is attached hereto as Exhibit A.
"Certificate Insurance Premium Amount" shall mean for any Distribution Date
the product of 1/12th of the Premium Percentage and the Aggregate Class A
Principal Balance after taking into account all distributions of principal of
the Class A Certificates to occur on such Distribution Date.
"Certificate Insurer" shall mean MBIA Insurance Corporation, a stock
insurance company organized under the laws of the State of New York, and any
successors thereto.
"Certificate Insurer Default" shall mean the existence and continuance of
any of the following: (i) a failure by the Certificate Insurer to make a payment
required under a Certificate Insurance Policy in accordance with its terms; (ii)
the entry of a nonappealable decree or nonappealable order of a court or agency
having jurisdiction in respect of the Certificate Insurer in an involuntary case
under any present or future federal or state bankruptcy, insolvency or similar
law appointing a conservator or receiver or liquidator or other similar official
of the Certificate Insurer or of any substantial part of its property, or the
entering of a nonappealable order for the winding up or liquidation of the
affairs of the Certificate Insurer and the continuance of any such decree or
order undischarged or unstayed and in force for a period of 90 consecutive days;
(iii) the Certificate Insurer shall consent to the appointment of a conservator
or receiver or liquidator or other similar proceedings or of relating to the
Certificate Insurer or of or relating to all or substantially all of its
property; or (iv) the Certificate Insurer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take advantage
of or otherwise voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations.
"Certificate Register" shall have the meaning described in Section 4.2(a).
"Certificateholder" shall mean, except as provided in Article X, each
Person in whose name a Certificate is registered in the Certificate Register,
except that, solely for the purposes of giving any consent (except any consent
required to be obtained pursuant to Section 10.2), waiver, requestor demand
pursuant to this Agreement, any Certificate registered in the name of the
Servicer or any Subservicer or the Transferor, or any Affiliate of any of them,
shall be deemed not to be outstanding and the undivided interest in the Trust
Fund evidenced thereby shall not be taken into account in determining whether
the requisite percentage of Certificates necessary to effect any such consent,
waiver, request or demand has been obtained. For purposes of any consent,
waiver, request or demand of Certificateholders pursuant to this Agreement, upon
the Trustee's request, the Servicer and the Transferor shall provide to the
Trustee a notice identifying any of their respective Affiliates or the
Affiliates of any Subservicer that is a Certificateholder as of the date(s)
specified by the Trustee in such request. Any Certificates on which payments are
made under the Certificate Insurance Policy shall be deemed to be outstanding
and held by the Certificate Insurer to the extent of such payment.
"Civil Relief Act" shall mean the Soldiers' and Sailors' Civil Relief Act
of 1940, as amended.
"Class" shall mean any designated Class of Certificates of this Series or
of any new Series issued hereunder.
"Class A Certificate" shall mean any Class A-1 Certificate, Class A-2
Certificate, Class A-3 Certificate, Class A-4 Certificate, Class A-5 Certificate
or Class A-6 Certificate.
"Class A Certificateholder" shall mean a Holder of a Class A-1 Certificate,
Class A-2 Certificate, Class A-3 Certificate, Class A-4 Certificate, Class A-5
Certificate or Class A-6 Certificate.
"Class A Turbo Amount" shall mean for any Distribution Date the lesser of
(a) the amount of the Available Distribution Amount remaining after the
distribution is made in Section 6.5(b)(vi) hereof on such Distribution Date and
(b) the Overcollateralization Deficiency Amount for such Distribution Date.
"Class A-1 Available Funds Cap Rate" shall mean with respect to the Class
A-1 Certificates for any Distribution Date a per annum rate determined by taking
the amount of interest that would accrue on the Class Principal Balance of the
Class A-1 Certificates at the Fixed Rate Available Funds Cap Rate (assuming that
interest were to accrue on the Class A-1 Certificates on the basis of a 360-day
year consisting of twelve 30-day months) and converting such amount of interest
into a per annum rate calculated on the basis of a 360-day year and the actual
number of days elapsed in the Accrual Period for the applicable Distribution
Date. The Class A-1 Available Funds Cap Rate shall only apply when the Class A-1
Certificates are determined to be one of the Classes whose interest will be
capped after determining the Fixed Rate Available Funds Cap Rate described in
the definition thereof.
"Class A-1 Certificate" shall mean any Certificate designated as a "Class
A-1 Certificate" on the face thereof, in the form of Exhibit B-1 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein.
"Class A-1 Certificateholder" shall mean a Holder of a Class A-1
Certificate.
"Class A-1 LIBOR Interest Carryover" shall mean for any Distribution Date
and the Class A-1 Certificates, the sum of (i) the difference between (a) the
amount of interest the Class A-1 Certificates would be entitled to receive on
such Distribution Date at its applicable Uncapped Pass-Through Rate and (b) the
amount of interest actually distributed to the Class A-1 Certificates on such
Distribution Date pursuant to Section 6.5(b)(iii) of this Agreement, (ii) the
portion of any amount calculated pursuant to clause (i) above remaining unpaid
from prior Distribution Dates and (iii) interest accrued thereon at the
then-applicable Class A-1 LIBOR Rate.
"Class A-1 LIBOR Rate" shall mean with respect to the Class A-1
Certificates for any Distribution Date a per annum rate (calculated on the basis
of actual days elapsed and an assumed year of 360 days) equal to the sum of (a)
LIBOR on the Interest Determination Date plus a margin of (b) 0.240% per annum
or, commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.480% per annum.
"Class A-1 Pass-Through Rate" with respect to any Distribution Date, will
be equal to a per annum rate (calculated on the basis of actual days elapsed and
an assumed year of 360 days) equal to the lesser of (i) the Class A-1 LIBOR Rate
and (ii) the Class A-1 Available Funds Cap Rate.
"Class A-1 Principal Balance" shall mean, as of any date of determination,
the Original Class Principal Balance for such Class less all distributions
pursuant to Section 6.5(b) attributable to principal on the Class A-1
Certificates on all prior Distribution Dates.
"Class A-2 Certificate" shall mean any Certificate designated as a "Class
A-2 Certificate" on the face thereof, in the form of Exhibit B-2 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein.
"Class A-2 Certificateholder" shall mean a Holder of a Class A-2
Certificate.
"Class A-2 Pass-Through Rate" with respect to any Distribution Date, will
be equal to a per annum rate (calculated on the basis of an assumed month of 30
days and an assumed year of 360 days) equal to the lesser of (i) 7.130% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Fixed Rate Available Funds Cap Rate.
"Class A-2 Principal Balance" shall mean, as of any date of determination,
the Original Class Principal Balance of such Class less all distributions
pursuant to Section 6.5(b) attributable to principal on the Class A-2
Certificates on all prior Distribution Dates.
"Class A-3 Certificate" shall mean any Certificate designated as a "Class
A-3 Certificate" on the face thereof, in the form of Exhibit B-3 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein.
"Class A-3 Certificateholder" shall mean a Holder of a Class A-3
Certificate.
"Class A-3 Pass-Through Rate" with respect to any Distribution Date, will
be equal to a per annum rate (calculated on the basis of an assumed month of 30
days and an assumed year of 360 days) equal to the lesser of (i) 7.310% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Fixed Rate Available Funds Cap Rate.
"Class A-3 Principal Balance" shall mean, as of any date of determination,
the Original Class Principal Balance of such Class less all distributions
pursuant to Section 6.5(b) attributable to principal on the Class A-3
Certificates on all prior Distribution Dates.
"Class A-4 Certificate" shall mean any Certificate designated as a "Class
A-4 Certificate" on the face thereof, in the form of Exhibit B-4 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein.
"Class A-4 Certificateholder" shall mean a Holder of a Class A-4
Certificate.
"Class A-4 Pass-Through Rate" with respect to any Distribution Date, will
be equal to a per annum rate (calculated on the basis of an assumed month of 30
days and an assumed year of 360 days) equal to the lesser of (i) 7.590% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Fixed Rate Available Funds Cap Rate.
"Class A-4 Principal Balance" shall mean, as of any date of determination,
the Original Class Principal Balance of such Class less all distributions
pursuant to Section 6.5(b) attributable to principal on the Class A-4
Certificates on all prior Distribution Dates.
"Class A-5 Certificate" shall mean any Certificate designated as a "Class
A-5 Certificate" on the face thereof, in the form of Exhibit B-5 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein.
"Class A-5 Certificateholder" shall mean a Holder of a Class A-5
Certificate.
"Class A-5 Pass-Through Rate" with respect to any Distribution Date, will
be equal to a per annum rate (calculated on the basis of an assumed month of 30
days and an assumed year of 360 days) equal to the lesser of (i) 7.780% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Fixed Rate Available Funds Cap Rate.
"Class A-5 Principal Balance" shall mean, as of any date of determination,
the Original Class Principal Balance of such Class less all distributions
pursuant to Section 6.5(b) attributable to principal on the Class A-5
Certificates on all prior Distribution Dates.
"Class A-6 Certificate" shall mean any Certificate designated as a "Class
A-6 Certificate" on the face thereof, in the form of Exhibit B-6 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein.
"Class A-6 Certificateholder" shall mean a Holder of a Class A-6
Certificate.
"Class-A-6 Lockout Distribution Amount" shall mean with respect to any
Distribution Date, the product of (a) the applicable Class A-6 Lockout
Percentage for such Distribution Date and (b) the Class A-6 Lockout Pro Rata
Distribution Amount for such Distribution Date.
"Class A-6 Lockout Percentage" shall mean with respect to each Distribution
Date as follows:
LOCKOUT
DISTRIBUTION DATES PERCENTAGE
------------------ ----------
December 1999 - November 2002 0%
December 2002 - November 2004 45%
December 2004 - November 2005 80%
December 2005 - November 2006 100%
December 2006 and thereafter 300%
"Class A-6 Lockout Pro Rata Distribution Amount" shall mean with respect to
any Distribution Date, an amount equal to the product of (a) a fraction, the
numerator of which is the Class A-6 Principal Balance immediately prior to such
Distribution Date and the denominator of which is the aggregate Class Principal
Balances for all Class A Certificates immediately prior to such Distribution
Date and (b) the Principal Distribution Amount for such Distribution Date.
"Class A-6 Lockout Pro Rata Turbo Amount" shall mean with respect to any
Distribution Date, an amount equal to the product of (a) a fraction, the
numerator of which is the Class A-6 Principal Balance immediately prior to such
Distribution Date and the denominator of which is the aggregate Class Principal
Balances of the Principal Balance Certificates immediately prior to such
Distribution Date and (b) the Class A Turbo Amount for such Distribution Date.
"Class A-6 Lockout Turbo Amount" shall mean with respect to any
Distribution Date, the product of (a) the applicable Class A-6 Lockout
Percentage for such Distribution Date and (b) the Class A-6 Lockout Pro Rata
Turbo Amount for such Distribution Date.
"Class A-6 Pass-Through Rate" with respect to any Distribution Date will be
equal to a per annum rate (calculated on the basis of an assumed month of 30
days and an assumed year of 360 days) equal to the lesser of (i) 7.530% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Fixed Rate Available Funds Cap Rate.
"Class A-6 Principal Balance" shall mean, as of any date of determination,
the Original Class Principal Balance for such Class less all distributions
pursuant to Section 6.5(b) allocable to principal on the Class A-6 Certificates
on all prior Distribution Dates.
"Class B Certificate" shall mean any Certificate designated as a "Class B
Certificate" on the face thereof, in the form of Exhibit B-7 hereto, and
authenticated by or on behalf of the Trustee in accordance with the procedures
set forth herein.
"Class B Certificateholder" shall mean a Holder of a Class B Certificate.
"Class B Pass-Through Rate" with respect to any Distribution Date, will be
equal to a per annum rate (calculated on the basis of an assumed month of 30
days and an assumed year of 360 days) equal to the lesser of (i) 9.230% plus,
commencing on the first day of the Accrual Period during which the Optional
Termination Date occurs, 0.50% and (ii) the Fixed Rate Available Funds Cap Rate.
"Class B Principal Balance" shall mean, as of any date of determination,
the Original Class Principal Balance of such Class less all distributions
pursuant to Section 6.5(b) attributable to principal on the Class B Certificates
on all prior Distribution Dates.
"Class LA-1 Interest" shall mean the REMIC II Regular Interest having an
initial Lower-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class LA-2 Interest" shall mean the REMIC II Regular Interest having an
initial Lower-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class LA-3 Interest" shall mean the REMIC II Regular Interest having an
initial Lower-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class LA-4 Interest" shall mean the REMIC II Regular Interest having an
initial Lower-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class LA-5 Interest" shall mean the REMIC II Regular Interest having an
initial Lower-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class LA-6 Interest" shall mean the REMIC II Regular Interest having an
initial Lower-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class LB Interest" shall mean the REMIC II Regular Interest having an
initial Lower-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class Principal Balance" shall mean, with respect to the Class A
Certificates, the Class B Certificates and, except as provided in the next
sentence, the Uncertificated Regular Interests, as of any time of determination,
the related initial REMIC I Principal Balance, Lower-Tier Balances or Upper-Tier
Balances set forth in the Preliminary Statement hereto, less any amounts
distributed as principal pursuant to Section 6.5(b) or Section 6.5(d), as
applicable, respectively, on all prior Distribution Dates, and with respect to
the Class B Certificates, less any Realized Losses allocated to the Class B
Certificates on prior Distribution Dates. Any amounts reimbursed to the Class B
Certificates in respect of Realized Losses previously allocated in reduction of
the Class Principal Balance of the Class B Certificates shall not reduce the
Class Principal Balance of the Class B Certificates. The Class R-I, Class R-II
and Class R-III Certificates and the Class R-II Interest have no Class Principal
Balances.
"Class R Certificate" shall mean any of the Class R-I, Class R-II or Class
R-III Certificates.
"Class R-I Certificate" shall mean any Certificate denominated as a Class
R-I Certificate, which Certificate shall be in the form of Exhibit B-8 hereto.
"Class R-I Certificateholder" shall mean a Holder of a Class R-I
Certificate.
"Class R-II Certificate" shall mean any Certificate denominated as a Class
R-II Certificate, representing beneficial ownership of the Class R-II Interest
and the obligation to make payments under the Basis Risk Arrangements, which
Certificate shall be in the form of Exhibit B-9 hereto.
"Class R-II Certificateholder" shall mean a Holder of a Class R-II
Certificate.
"Class R-II Interest" shall mean the residual interest in REMIC II
represented by the Class R Certificate. The Class R-II Interest shall be held by
the Trustee as an asset of the Grantor Trust portion of the Trust Fund.
"Class R-III Certificate" shall mean any Certificate denominated as a Class
R-III Certificate, which Certificate shall be in the form of Exhibit B-10
hereto.
"Class R-III Certificateholder" shall mean a Holder of a Class R-III
Certificate.
"Class UA-1 Interest" shall mean the REMIC III Regular Interest having an
initial Upper-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class UA-2 Interest" shall mean the REMIC III Regular Interest having an
initial Upper-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class UA-3 Interest" shall mean the REMIC III Regular Interest having an
initial Upper-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class UA-4 Interest" shall mean the REMIC III Regular Interest having the
initial Upper-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class UA-5 Interest" shall mean the REMIC III Regular Interest having the
initial Upper-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class UA-6 Interest" shall mean the REMIC III Regular Interest having the
initial Upper-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Class UB Interest" shall mean the REMIC III Regular Interest having the
initial Upper-Tier Balance and Pass-Through Rate set forth in the Preliminary
Statement hereto.
"Closing Date" shall mean December 2, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collection Account" shall mean the Eligible Account established and
maintained for the benefit of the Certificateholders and the Certificate Insurer
pursuant to Section 5.3(a) hereof.
"Combined Loan-to-Value Ratio" shall mean with respect to any Loan, (i) the
sum of (x) if applicable, the outstanding Principal Balance of any mortgage loan
senior to such Loan and secured by the related Property as of the date of
origination of the related Loan, plus (y) the Principal Balance of the related
Loan as of the Cut-Off Date, divided by (ii) the Appraised Value of such
Property.
"Commission" shall mean the Securities and Exchange Commission.
"Compensating Interest" shall have the meaning defined in Section 6.9
hereof.
"Curtailment" shall mean, with respect to a Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of the
amount of the Monthly Payment due for such Due Period and which is neither
intended to satisfy the Loan in full, intended as an advance payment of an
amount due in a subsequent Due Period, nor intended to cure a delinquency.
"Custodian" shall have the meaning defined in Section 2.2(c).
"Cut-Off Date" shall mean the beginning of business on November 1, 1999
with respect to the Initial Loans transferred to the Trust on the Closing Date.
With respect to the Subsequent Loans transferred to the Trust after the Closing
Date, the date specified in the applicable Subsequent Transfer Agreement.
"CWAC" shall mean, with respect to any Distribution Date, the weighted
average of the Pass-Through Rates of the Class A-1, Class A-2 Class A-3, Class
A-4, Class A-5, Class A-6 and Class B Certificates for such Distribution Date,
weighted on the basis of the Principal Balances of such Classes immediately
prior to such Distribution Date.
"Debt Instrument" shall mean the Mortgage Note or other evidence of
indebtedness evidencing the indebtedness of a Borrower under a Loan.
"Debt Service Reduction" shall mean, with respect to any Loan, a reduction
by a court of competent jurisdiction of the Monthly Payment due on such Loan in
a proceeding under the United States Bankruptcy Code (11 U.S.C.) as amended from
time to time, except such a reduction that constitutes a Deficient Valuation or
a permanent forgiveness of principal.
"Deficient Valuation" shall mean, with respect to any Loan, a valuation of
the related Property by a court of competent jurisdiction in an amount less than
the then outstanding principal balance of the Loan, which valuation results from
a proceeding initiated under the United States Bankruptcy Code.
"Deleted Loan" shall mean a Loan replaced by a Qualified Substitute Loan or
repurchased pursuant to Sections 2.4(c) or 3.5 hereof.
"Delinquency Amount" shall mean for any Distribution Date, the product of:
(i) the Delinquency Percentage for such Distribution Date, and (ii) an amount
equal to the Principal Balance of the Loans as of the end of the related Due
Period plus the Pre-Funding Amount, if any.
"Delinquency Percentage" shall mean for any Distribution Date, the average
for such Distribution Date and the two immediately preceding Distribution Dates
of the respective percentages, expressed as a fraction: (i) the numerator of
which is the sum of: (1) the aggregate Principal Balance of all Loans which are
90 or more days Delinquent as of the end of each of the related Due Periods; (2)
the aggregate Principal Balance of all Loans which are in foreclosure as of the
end of each of the related Due Periods; and (3) the aggregate Principal Balance
of all Loans which relate to REO Properties as of the end of each of the related
Due Periods; and (ii) the denominator of which is Principal Balance of the Loans
as of the end of the related Due Period.
"Delinquent" shall mean a Loan for which any payment due thereon is not
made by the close of business on the day such payment is scheduled to be due. A
Loan is "30 days delinquent" if such payment has not been received by the close
of business on the corresponding day of the month immediately succeeding the
month in which such payment was due, or, if there is no such corresponding day
(e.g., as when a 30-day month follows a 31-day month in which a payment was due
on the 31st day of such month) then on the last day of such immediately
succeeding month. Similarly for "60 days delinquent," "90 days delinquent" and
so on. For purposes of the definition of Delinquency Amount, a Loan for which
the Servicer has extended the Due Date shall be considered 90 days Delinquent in
same manner described in the preceding sentences without giving effect to the
extension of the Due Date. For purposes of the definition of Delinquency
Percentage, no Loan shall be included in more than a single category. For
purposes of the definition of Delinquency Percentage, a Loan will be considered
90 days Delinquent if the related Borrower is in bankruptcy or other similar
proceeding and such Borrower is 90 or more days Delinquent in accordance with
the terms of the Mortgage Note.
"Depositor" shall mean PaineWebber Mortgage Acceptance Corporation IV and
any successor thereto.
"Depository" shall mean the Depository Trust Company, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named.
"Determination Date" shall mean the 18th calendar day of each month, or if
such day is not a Business Day, then the immediately preceding Business Day.
"Direct Participant" shall mean any broker-dealer, bank or other financial
institution for which the Depository holds Class A Certificates from time to
time as a securities depositary.
"Disqualified Organization" shall mean any of (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing (other than an instrumentality which is a corporation if all of
its activities are subject to tax and, except for the FHLMC, a majority of its
board of directors is not selected by such governmental unit), (ii) any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (unless such organization is subject to the tax
imposed by Section 511 of the Code on unrelated business taxable income), or
cooperatives engaged in furnishing electric energy, or providing telephone
service, to persons in rural areas as described in Section 1381(a)(2)(C) of the
Code and (iv) any other Person so designated by the Trustee based upon an
Opinion of Counsel provided to the Trustee that the holding of an ownership
interest in a Class R Certificate by such Person may cause any of the REMICs or
any Person having an ownership interest in any Class of Certificates (other than
such Person) to incur liability for any federal tax imposed under the Code that
would not otherwise be imposed but for the transfer of an ownership interest in
the Class R Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code.
"Distributable Certificate Interest" shall mean with respect to each Class
of Class A and Class B Certificates for each Distribution Date, an amount equal
to interest at the Pass-Through Rate applicable to such Class of Certificates
for such Distribution Date accrued on the related Class Principal Balance during
the related Accrual Period outstanding immediately prior to such Distribution
Date, reduced by such Class of Certificate's allocable share of any Net
Prepayment Interest Shortfalls for such Distribution Date pursuant to Section
6.5(f) hereof. Distributable Certificate Interest will be calculated on the
basis of a 360-day year consisting of twelve 30-day months, except that such
interest calculated with respect to the Class A-1 Certificates will be based on
a 360-day year and the actual number of days elapsed.
"Distribution Date" shall mean the 25th day of any month or if such 25th
day is not a Business Day, the next succeeding Business Day, commencing in
December 1999 with respect to the Class A-1 Certificates, and in January, 2000
with respect to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-4, Class A-5, Class A-6 and
Class B Certificates.
"Due Date" shall mean, with respect to any Loan, the day of the month upon
which payment is due from the related Borrower on a Loan.
"Due Period" shall mean, with respect to each Distribution Date, the period
beginning on the opening of business on the first day of the calendar month
preceding the calendar month in which such Distribution Date occurs, and ending
at the close of business on the last day of the calendar month preceding the
calendar month in which such Distribution Date occurs.
"Eligible Account" shall mean either (i) a segregated interest bearing
trust account or accounts maintained with a depositary institution which is
acceptable to the Certificate Insurer and to each Rating Agency, and such trust
account shall be held in (a) the corporate trust account department of such
depositary institution and (b) an institution with capital and surplus of not
less than $50,000,000, and a minimum unsecured debt rating of BBB by S&P and
Baa3 by ▇▇▇▇▇'▇; or (ii) an account or accounts maintained with an institution
acceptable to the Certificate Insurer and whose deposits are insured by the
FDIC, the unsecured and uncollateralized debt obligations of which institution
shall be rated AA or better by S&P and Aa2 or better by ▇▇▇▇▇'▇ and the highest
short-term rating by S&P and ▇▇▇▇▇'▇, and which is (a) a federal savings and
loan association duly organized, validly existing and in good standing under the
federal banking laws, (b) an institution duly organized, validly existing and in
good standing under the applicable banking laws of any state, (c) a national
banking association duly organized, validly existing and in good standing under
the federal banking laws institution (including the Trustee), (d) a principal
subsidiary of a bank holding company, or (e) approved in writing by the
Certificate Insurer, S&P and ▇▇▇▇▇'▇, having capital and surplus of not less
than $50,000,000, acting in its fiduciary capacity.
"ERISA" shall have the meaning defined in Section 4.2(j) hereof.
"Event of Default" shall have the meaning described in Section 7.1.
"FDIC" shall mean the Federal Deposit Insurance Corporation and any
successor thereto.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation and any
successor thereto.
"Fixed Rate Available Funds Cap Rate" shall mean for any Distribution Date
and for each of the Class ▇-▇, ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-5, Class A-6 and Class B
Certificates if such Class's Uncapped Pass-Through Rate would be greater than
the Net Loan Rate, the rate per annum determined for each such Class by taking
(A) all interest that accrued on the Loans at the Net Loan Rate and was due in
the related Due Period, less (B) all interest accrued on the Class ▇-▇, ▇▇▇▇▇
▇-▇, Class A-3, Class A-4, Class A-5, Class A-6 and Class B Certificates during
their related Accrual Periods, in each case only if their respective Uncapped
Pass-Through Rates are less than or equal to the Net Loan Rate, divided by (C)
the sum of the Class Principal Balance of such Class and the Class Principal
Balance of each other Class of Certificates whose accrued interest is not
included in clause (B) above, and multiplied by (D) 12. This calculation shall
be repeated as appropriate so that in no event will the capped rate so
calculated exceed any such Class's Uncapped Pass-Through Rate.
"Fixed Rate Interest Carryover" shall mean for any Distribution Date and
any Class of Class ▇-▇, ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-5, Class A-6 and Class B
Certificates subject to the Fixed Rate Available Funds Cap, an amount equal to
the sum of (i) the difference between (a) the amount of interest such Class
would be entitled to receive on such Distribution Date without regard to the
applicable Fixed Rate Available Funds Cap Rate and (b) the amount of interest
actually distributed to such Class with respect to such Distribution Date
pursuant to Section 6.5(b)(iii) of this Agreement, (ii) the portion of any
amount calculated pursuant to clause (i) above remaining unpaid from prior
Distribution Dates and (iii) interest accrued thereon at the applicable Uncapped
Pass-Through Rate without regard to the Fixed Rate Available Funds Cap Rate.
"FNMA" shall mean the Federal National Mortgage Association and any
successor thereto.
"Foreclosure Profits" shall mean, as to any Distribution Date, the excess,
if any, of (i) Net Liquidation Proceeds in respect of each Loan that became a
Liquidated Loan in the Due Period prior to such Distribution Date over (ii) the
sum of the unpaid principal balance of each such Liquidated Loan plus accrued
and unpaid interest at the applicable Loan Interest Rate on the unpaid principal
balance thereof from the Due Date to which interest was last paid by the
Borrower (or, in the case of a Liquidated Loan that had been an REO Loan, from
the Due Date to which interest was last deemed to have been paid pursuant to
Section 5.12) to the first day of the month following the month in which such
Loan became a Liquidated Loan.
"Grantor Trust" shall mean that portion of the Trust Fund exclusive of the
Trust REMICs, which is comprised of the REMIC III Regular Interests, the Class
R-II Interest, amounts deemed distributed thereon and held in the Certificate
Account, the Pre-Funding Account, the Capitalized Interest Account and the Basis
Risk Arrangements.
"Hazardous Materials" shall mean any dangerous, toxic or hazardous
pollutants, chemical wastes or substances, including, without limitation, those
identified pursuant to CERCLA or any other federal, state or local environmental
related laws now existing or hereafter enacted.
"Holder" shall mean each Person in whose name a Certificate is registered
in the Certificate Register, except that solely for the purposes of giving any
consent (except any consent required to be obtained pursuant to Section 10.2),
waiver, request or demand pursuant to this Agreement, any Certificate registered
in the name of the Servicer or any Subservicer or the Transferor, or any
Affiliate of any of them, shall be deemed not to be outstanding and in the case
of any Certificate, the undivided interest in the Trust Fund evidenced thereby
shall not be taken into account in determining whether the requisite percentage
of Certificates necessary to effect any such consent, waiver, request or demand
has been obtained.
"Indemnification Agreement" shall mean that certain Indemnification
Agreement among the Certificate Insurer, the Depositor, the Transferor and the
Underwriters.
"Indirect Participant" shall mean any financial institution for who many
Direct Participant holds an interest in a Class A Certificate.
"Initial Loans" shall mean the pool of Loans conveyed to the Trust pursuant
to this Agreement on the Closing Date together with the payments thereon
(exclusive of any prepayment penalties, which are retained by the Transferor)
and proceeds therefrom received on or after the Cut-Off Date (exclusive of
$1,041,110 of interest collections on the Initial Loans for the month of
November 1999, which will be retained by the Transferor), as identified on the
Loan Schedule annexed hereto as Exhibit C, as amended from time to time.
"Insurance Agreement" shall mean that certain Insurance Agreement among the
Certificate Insurer, the Depositor, the Trustee and New South Federal Savings
Bank, as Transferor and Servicer dated as of December 1, 1999.
"Insurance Proceeds" shall mean proceeds paid by any insurer pursuant to
any insurance policy covering a Loan to the extent such proceeds are not applied
to the restoration of the related Property or released to the related Borrower
in accordance with Accepted Servicing Practices. "Insurance Proceeds" do not
include "Insured Payments."
"Insured Payment" shall have the meaning assigned thereto in the
Certificate Insurance Policy.
"Interest Collections" shall mean all amounts (including, without
limitation, Monthly Payments (or Periodic Advances in respect thereof) and
Liquidation Proceeds) collected on any Loan allocable to interest pursuant to
the terms of the related Mortgage Note, or if no provision for allocation is
made therein, pursuant to the terms hereof.
"Interest Determination Date" shall mean, with respect to any Accrual
Period applicable to the Class A-1 Certificates, the second LIBOR Business Day
preceding the first day of such Accrual Period.
"Interest Reduction Amount" shall mean, for any Distribution Date, the
amount equal to the sum of the Servicing Fee, the Trustee Fee and the
Certificate Insurance Premium Amount for such Distribution Date.
"Late Payment Rate" shall have the meaning assigned thereto in the
Insurance Agreement.
"LIBOR" shall mean, for any Accrual Period, the rate for United States
dollar deposits for one month that appears on the Telerate Screen Page 3750 as
of 11:00 a.m., London, England time, on the second LIBOR Business Day prior to
the first day of such Accrual Period. If such rate does not appear on such page
(or such other page as may replace such page on such 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, LIBOR will be LIBOR
applicable to the preceding Distribution Date.
The establishment of LIBOR on each Interest Determination Date by the
Trustee and the Trustee's calculation of the rate of interest applicable to the
Class A-1 Certificates for the related Accrual Period shall (in the absence of
manifest error) be final and binding.
"LIBOR Business Day" shall mean any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in the city of London,
England are required or authorized by law to be closed.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), claim, charge, preference, priority, right, interest or
other security agreement or preferential arrangement of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financial statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing.
"Liquidated Loan" shall mean a Loan (i) with respect to which the related
Property has been acquired, liquidated and/or foreclosed upon by the Servicer or
(ii) which the Servicer has elected to write down the outstanding Principal
Balance of such Loan that has been delinquent for a period equal to or greater
than 270 days to zero and, in either case, with respect to which the Servicer
determines that all Liquidation Proceeds which it expects to recover have been
recovered, as set forth in a Liquidation Report in the form of Exhibit M hereto,
delivered to the Trustee and the Certificate Insurer.
"Liquidated Loan Loss" shall mean, with respect to any Distribution Date,
the aggregate of the amount of losses with respect to each Loan which became a
Liquidated Loan in the Due Period prior to such Distribution Date, equal to the
excess of (i) the unpaid principal balance of each such Liquidated Loan, plus
accrued interest thereon in accordance with the amortization schedule at the
time applicable thereto at the applicable Loan Interest Rate from the Due Date
as to which interest was last paid with respect thereto through the last day of
the month in which such Loan became a Liquidated Loan, over (ii) Net Liquidation
Proceeds with respect to such Liquidated Loan.
"Liquidation Expenses" shall mean expenses incurred by the Servicer in
connection with the liquidation of any defaulted Loan, REO Loan or REO Property
(including, without limitation, legal fees and expenses, committee or referee
fees, and, if applicable, brokerage commissions and conveyance taxes), any
unreimbursed amount expended by the Servicer pursuant to Sections 5.5, 5.6 and
5.12 respecting the related Loan and any unreimbursed expenditures for real
property taxes or for property restoration or preservation of the related
Property. Liquidation Expenses shall not include any previously incurred
expenses in respect of an REO Loan which have been netted against related REO
Proceeds.
"Liquidation Proceeds" shall mean amounts received by the Servicer
(including Insurance Proceeds) in connection with the liquidation of defaulted
or written-down Loans or property acquired in respect thereof, whether through
foreclosure, sale or otherwise, including payments in connection with such Loans
received from the Borrower, other than amounts required to be paid to the
Borrower pursuant to the terms of the applicable Mortgage or to be applied
otherwise pursuant to law.
"Loan" shall mean a Mortgage Loan.
"Loan File" shall include the Loan documents described in Section 2.3
hereof and such documents as are required to be included in the Loan File
pursuant to the Loan Sale Agreement.
"Loan Interest Rate" shall mean, as to any Loan, the per annum rate at
which interest accrues on the unpaid principal balance thereof as set forth in
the related Mortgage Note.
"Loan Repurchase Price" shall have the meaning defined in Section 2.4(c) as
set forth in an Officer's Certificate of the Servicer.
"Loan Sale Agreement" shall mean the Loan Sale Agreement dated as of
November 1, 1999, between New South Federal Savings Bank, as seller thereunder,
and the Depositor, as purchaser thereunder, as such agreement may be amended,
modified or supplemented from time to time.
"Loan Schedule" shall mean the list of the Loans transferred to the Trustee
on the Closing Date as part of the Trust Fund and attached hereto as Exhibit C
(and also provided to the Certificate Insurer and the Trustee on a computer
readable magnetic tape or disk). The Loan Schedule shall set forth at a minimum
the following information as to each Loan:
(A) the Loan identifying number;
(B) the Principal Balance of the Loan;
(C) the city, state and ZIP code of the Property;
(D) the type of property;
(E) the current Monthly Payment as of the Cut-Off Date;
(F) the original number of months to maturity;
(G) the scheduled maturity date;
(H) the Combined Loan-to-Value Ratio as of the Cut-Off Date;
(I) the Loan Interest Rate as of the Cut-Off Date;
(J) the Appraised Value;
(K) the documentation type (as described in the Underwriting Guidelines);
(L) the lien priority;
(M) the loan purpose;
(N) whether such loan is a balloon loan;
(O) the paid through date;
(P) whether such loan provides for prepayment penalties; and
(Q) if the related Property is an Owner-Occupied Mortgaged Property.
Such "Loan Schedule" may consist of multiple reports that collectively set forth
all of the information required, including the aggregate number of Loans and the
Aggregate Principal Balance as of the Cut-Off Date. In addition, a summary of
the information regarding the Loans shall be included as a part of the Loan
Schedule which summary shall include such consolidated and aggregated
information as may be requested by the Trustee or the Certificate Insurer from
time to time.
"Lower-Tier Balance" shall mean with respect to the Class ▇▇-▇, ▇▇▇▇▇ ▇▇-▇,
Class LA-3. Class LA-4, Class LA-5, Class LA-6 and Class LB Interests and any
date of determination, an amount equal to the original Upper-Tier Balance for
the Class UA-1, Class UA-2, Class UA-3, Class UA-4, Class UA-5, Class UA-6 and
Class UB Certificates, respectively, reduced by the sum of all amounts
previously distributed as a reduction of the Upper-Tier Balance for such
Interest on all previous Distributions Dates prior to such date of determination
as provided in Section 6.5(e)(iii), and with respect to the Class LB Interest,
minus the amount of all Realized Losses allocated to the Class UB Interests on
prior Distribution Dates. Any amounts reimbursed to the Class LB Interest in
respect of Realized Losses previously allocated in reduction of the Lower-Tier
Balance of the Class LB Interest shall not further reduce the Lower-Tier Balance
of the Class LB Interest.
"Lower-Tier Capitalized Interest Requirement" shall mean with respect to
the Distribution Date in December 1999, the excess of (i) the product of (a) the
related Pre-Funding Amount on the Closing Date and (b) one-twelfth and (c) the
Net WAC for such Distribution Date over (ii) in the case of any Subsequent Loan
transferred to the Trust during the related Due Period, the amount of any
interest collected after the Cut-Off Date applicable to such Subsequent Loan and
during such related Due Period.
With respect to the Distribution Date in January 2000, the excess of (i)
the product of (a) the related Pre-Funding Amount on the first day of the
related Due Period and (b) one-twelfth and (c) the Net WAC for such Distribution
Date over (ii) in the case of any Subsequent Loan transferred to the Trust
during the related Due Period, the amount of any interest collected after the
Cut-Off Date applicable to such Subsequent Loan and during such related Due
Period.
With respect to the Distribution Date in February 2000, the excess of (i)
the product of (a) the related Pre-Funding Amount on the first day of the
related Due Period and (b) one-twelfth and (c) the Net WAC for such Distribution
Date over (ii) in the case of any Subsequent Loan transferred to the Trust
during the related Due Period, the amount of any interest collected after the
Cut-Off Date applicable to such Subsequent Loan and during such related Due
Period.
With respect to the Distribution Date in March 2000, the excess of (i) the
product of (a) the related Pre-Funding Amount on the first day of the related
Due Period and (b) one-twelfth and (c) the Net WAC for such Distribution Date
over (ii) in the case of any Subsequent Loan transferred to the Trust during the
related Due Period, the amount of any interest collected after the Cut-Off Date
applicable to such Subsequent Loan and during such related Due Period.
"Majority Certificateholders" shall mean the Holder or Holders of Class A
Certificates evidencing an undivided beneficial ownership interest in the Class
A Certificates in excess of 50% in the aggregate by Class Principal Balance.
"Mandatory Redemption Date" shall mean the Distribution Date immediately
following the end of the Pre-Funding Period.
"Maximum Collateral Amount" shall mean, with respect to the Loans, the sum
of (i) the Principal Balance of the Initial Loans as of the Cut-Off Date and
(ii) the Original Pre-Funding Amount.
"Monthly Payment" shall mean, as to any Loan (including any REO Loan) and
any Due Date, the scheduled payment of principal and interest due thereon by
such Due Date (after adjustment for any Curtailments and Deficient Valuations
occurring prior to such Due Date but before any adjustment to such amortization
schedule by reason of any bankruptcy, other than Deficient Valuations or similar
proceeding or any moratorium or similar waiver or grace period).
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., a corporation
organized and existing under Delaware law, or any successor thereto and if such
corporation no longer for any reason performs the services of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized rating agency designated by the Certificate Insurer.
"Mortgage" shall mean the mortgage, deed of trust or other instrument
creating a lien on the Mortgaged Property to secure the Mortgage Loan.
"Mortgage Documents" shall mean the documents described in Section 2.3
hereof or required to be contained in a Loan File pursuant to the Loan Sale
Agreement.
"Mortgage Loan" shall mean (i) each fixed rate, closed end mortgage loan
identified on the Loan Schedule on the Closing Date secured by a lien on the
related Mortgaged Property, (ii) any additional fixed rate, closed end mortgage
loans identified on the Loan Schedule after the Closing Date, as such schedule
is amended and supplemented from time to time to reflect the deletion of the
Deleted Loans and the substitution of Qualified Substitute Loans for Deleted
Loans, (iii) each Mortgage Note evidencing any loan referred to in (i) or (ii)
above, including all amounts now or hereafter due under such Mortgage Notes,
whether relating to such loans or other loans which may be made from time to
time, and (iv) the related Mortgage. Unless otherwise clearly indicated by the
context, Mortgage Loan shall be deemed to refer to the related REO Loan and REO
Property.
"Mortgage Note" shall mean the original, executed note, loan agreement or
other evidence of indebtedness evidencing the indebtedness of a Borrower under a
Mortgage Loan.
"Mortgaged Property" shall mean the underlying property securing a Mortgage
Loan, consisting of a fee simple estate in a single parcel of land improved by a
Residential Dwelling.
"Net Foreclosure Profits" shall mean, as to any Distribution Date, the
excess, if any, of (i) the aggregate Foreclosure Profits for such Distribution
Date, over (ii) the Liquidated Loan Loss for such Distribution Date.
"Net Liquidation Proceeds" shall mean, as to any Liquidated Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances made by the Servicer related to the Liquidated Loan. For
purposes of this Agreement, Net Liquidation Proceeds shall be allocated first to
the payment of the related Loan as provided in the related Loan document and if
not so provided, first to accrued and unpaid interest on the related Loan and
then to the unpaid principal balance thereof.
"Net Loan Rate" shall mean with respect to any Distribution Date a number
which is the annualized percentage (expressed on a 30/360 basis (other than the
Class LA-1 Interest and Class UA-1 Interest, which shall be expressed on an
actual/360 basis)), derived from the fraction, (x) the numerator of which is the
aggregate amount of all interest due on the Loans and the Capitalized Interest
Requirement during the related Due Period minus the Interest Reduction Amount
for such Distribution Date, and (y) the denominator of which is the sum of the
Aggregate Principal Balance of the Loans and the Pre-Funding Amount, each as of
the end of the related Due Period.
"Net Prepayment Interest Shortfall" shall mean, with respect to any
Distribution Date and as to any Loan, any Prepayment Interest Shortfall for
which no payment of Compensating Interest is paid.
"Net REO Proceeds" shall mean, as to any REO Loan, REO Proceeds net of any
related expenses of the Servicer related to such REO Loan.
"Net WAC" shall mean, with respect to any Distribution Date, the annualized
percentage, expressed on a 30/360 basis, derived from the fraction, (a) the
numerator of which is the amount of all interest due on the Loans during the
related Due Period and minus the Servicing Fee, the Trustee Fee and the
Certificate Insurance Premium Amount, in each case, for such Distribution Date
and (b) the denominator of which is the Principal Balance of the Loans as of the
end of the related Due Period.
"Non-United States Person" shall mean any Person other than a United States
Person.
"Nonrecoverable Advance" shall mean, with respect to any Loan, (i) any
Advance previously made and not reimbursed pursuant to Section 5.4(a), or (ii) a
Advance proposed to be made in respect of a Loan or REO Property either of
which, in the good faith business judgment of the Servicer, as evidenced by an
Officer's Certificate delivered to the Certificate Insurer and the Trustee no
later than the Business Day following such determination, would not be
ultimately recoverable pursuant to Section 5.4(a).
"Officer's Certificate" shall mean a certificate signed by the Chairman of
the Board, the President or a Vice President and the Treasurer, the Secretary or
one of the Assistant Treasurers, Assistant Secretaries or other Responsible
Officer of the Transferor, the Servicer or the Depositor, as required by this
Agreement.
"Opinion of Counsel" shall mean a written opinion of counsel, who may,
without limitation, be counsel for the Transferor, the Servicer, the Trustee, a
Certificateholder or a Certificateholder's prospective transferee or the
Certificate Insurer (including, except as otherwise provided herein, in-house
counsel) reasonably acceptable to each addressee of such opinion and experienced
in matters relating to the subject of such opinion; except that any opinion of
counsel relating to (i) the qualification of any of the Trust REMICs as a REMIC,
or (ii) compliance with the REMIC Provisions must be an opinion of counsel who
(a) is in fact independent of the Transferor, the Servicer and the Trustee, (b)
does not have any direct financial interest or any material indirect financial
interest in the Transferor or the Servicer or the Trustee or in an Affiliate
thereof, (c) is not connected with the Transferor or the Servicer or the Trustee
as an officer, employee, director or person performing similar functions, and
(d) is reasonably acceptable to the Certificate Insurer. The Certificate Insurer
shall be an addressee on each Opinion of Counsel relating to, or otherwise
affecting, the Series 1999-2 Certificates.
"Optional Termination Date" shall mean the first Distribution Date upon
which the Aggregate Principal Balance is less than 10% of the Maximum Collateral
Amount.
"Original Class Principal Balance" shall mean, with respect to (i) Class
A-1, $87,000,000, (ii) Class A-2, $22,000,000, (iii) Class A-3, $47,000,000,
(iv) Class A-4, $29,000,000, (v) Class A-5, $20,155,000, (vi) Class A-6,
$23,500,000 and (vii) Class B, $6,345,000.
"Original Pre-Funding Amount" shall mean $56,841,692.78, which is equal to
the amount of funds deposited into the Pre-Funding Account on the Closing Date
that may be used by the Trustee on behalf of the Trust to acquire Subsequent
Loans.
"Outstanding Loan" shall mean, as to any Due Date, a Loan (including an REO
Loan) which has not been paid in full prior to such Due Date, which did not
become a Liquidated Loan prior to such Due Date and which was not repurchased by
the Transferor prior to such Due Date pursuant to Sections 2.4 or 3.5.
"Overcollateralization Amount" shall mean, with respect to any Distribution
Date, the excess, if any, of (i) the Aggregate Principal Balance as of the close
of business on the last day of the related Due Period and the Pre-Funding Amount
as of the end of the Due Period over (ii) the Aggregate Class A Principal
Balance as of such Distribution Date (after taking into account all
distributions of the Principal Distribution Amount made to the Class A
Certificates for such Distribution Date).
"Overcollateralization Deficiency Amount" shall mean, with respect to any
Distribution Date, the excess, if any, of the Overcollateralization Target
Amount over the Overcollateralization Amount.
"Overcollateralization Deficit" shall mean, with respect to any
Distribution Date, the amount, if any, by which (i) the Aggregate Class A
Principal Balance, after taking into account all distributions of the Principal
Distribution Amount to be made on such Distribution Date but without regard to
the application of any related Insured Payment on such Distribution Date,
exceeds (ii) the sum of (a) the aggregate Principal Balance of the Loans as of
the close of business on the last day of the related Due Period and (b) the
Pre-Funding Amount as of such Distribution Date.
"Overcollateralization Reduction Amount" shall mean, with respect to any
Distribution Date, the lesser of (i) the excess, if any, of (a) the
Overcollateralization Amount, assuming principal payments distributed on such
Distribution Date are equal to the Principal Distribution Amount, without regard
to this Overcollateralization Reduction Amount, over (b) the
Overcollateralization Target Amount and (ii) the Principal Distribution Amount,
as determined without the deduction of this Overcollateralization Reduction
Amount from that amount, on such Distribution Date.
"Overcollateralization Target Amount" shall mean (i) with respect to any
Distribution Date occurring prior to the Stepdown Date, an amount equal to the
greatest of (a) an amount equal to 5.50% of the Maximum Collateral Amount; and
(b) 150% of the Delinquency Amount or (ii) with respect to any Distribution Date
occurring on or after the Stepdown Date, an amount equal to the greatest of: (a)
an amount equal to 11.00% of the Principal Balance of the Loans as of the end of
the related Due Period; (b) 150% of the Delinquency Amount; (c) 0.75% of the
aggregate of the Maximum Collateral Amount; and (d) an amount equal to the
aggregate Principal Balance then outstanding of the three largest Loans;
provided, however, for any Distribution Date occurring on or after the Stepdown
Date, if the amount described in clause (ii)(b) above exceeds the amount
described in clause (ii)(a) above, the Overcollateralization Target Amount for
such Distribution Date must equal an amount sufficient to cause the product of:
(i) the Senior Enhancement Percentage and (ii) the Aggregate Principal Balance
of the Loans, plus any Pre-Funding Amount, in each case, as of the end of the
related Due Period, to equal 175% of the Delinquency Amount. The Certificate
Insurer may, at anytime, modify clauses (i)(b) or (ii)(b) above for the purpose
of reducing or eliminating, in whole or in part, the application of clauses
(i)(b) or (ii)(b) above. However, the Certificate Insurer may only make this
modification if it will not cause a downgrade, withdrawal or qualification by
the Rating Agencies of the then current ratings on the Class A Certificates. The
Certificate Insurer has reserved the right to increase the Overcollateralization
Target Amount based on the characteristics of the Loans following the end of the
Pre-Funding Period. However, with respect to any Distribution Date, the
Overcollateralization Target Amount will not exceed the Aggregate Class A
Principal Balance then outstanding.
"Owner-Occupied Mortgaged Property" shall mean a Residential Dwelling as to
which (i) the related Borrower represented an intent to occupy as such
Borrower's primary, secondary or vacation residence at the origination of the
Mortgage Loan, and (ii) the Transferor has no actual knowledge that such
Residential Dwelling is not so occupied.
"Ownership Interest" shall mean, as to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate" shall mean, (i) for each of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6 and Class B Certificates, the Class
A-1 Pass-Through Rate, the Class A-2 Pass-Through Rate, the Class A-3
Pass-Through Rate, the Class A-4 Pass-Through Rate, the Class A-5 Pass-Through
Rate, the Class A-6 Pass-Through Rate and the Class B Pass-Through Rate,
respectively, and (ii) for the REMIC I Regular Interest, REMIC II Regular
Interests and REMIC III Regular Interests, the applicable Pass-Through Rate set
forth in the Preliminary Statement hereto.
"Percentage Interest" shall mean, with respect to a Class A-1 Certificate,
Class A-2 Certificate, Class A-3 Certificate, Class A-4 Certificate, Class A-5
Certificate, Class A-6 Certificate or Class B Certificate, the portion of the
total beneficial ownership interest in the Loans evidenced by such Certificate,
expressed as a percentage rounded to four decimal places, equal to a fraction
the numerator of which is the original denomination of such Certificate and the
denominator of which is the respective initial Class Principal Balance thereof
set forth in the Preliminary Statement hereto. With respect to a Class R
Certificate, the portion evidenced thereby as stated on the face of such
Certificate.
"Periodic Advance" shall mean the aggregate of the advances required to be
made by the Servicer on any Servicer Remittance Date pursuant to Section 5.20
hereof, the amount of any such advances being equal to the sum of: (i) all the
interest portion of all Monthly Payments (net of the related Servicing Fee and
any amount excluded from the Servicer Remittance Amount pursuant to clauses (A)
- (H) of the definition of "Servicer Remittance Amount") on the Loans that are
not received by the Servicer as of the close of business on the related
Determination Date and have not been determined by the Servicer to be
Nonrecoverable Advances, plus (ii) with respect to each REO Property which was
acquired during or prior to the related Due Period and as to which an REO
Disposition did not occur during the related Due Period, an amount equal to the
excess, if any, of (a) interest on the Principal Balance of the related REO Loan
at the related Loan Interest Rate, net of the Servicing Fee, for the most
recently ended Due Period for the related Loan over (b) the net income from the
REO Property transferred to the Certificate Account for such Distribution Date.
"Permitted Investments" shall mean each of the following:
(1) obligations of, or guaranteed as to principal and interest by, the
United States of America, FHLMC, FNMA 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;
(2) a repurchase agreement that satisfies the following criteria: (A)
it must be between the Trustee and either (x) primary dealers on the
Federal Reserve reporting dealer list which are rated one of the two
highest ratings for long-term unsecured debt obligations by each Rating
Agency or (y) banks rated in the highest categories for long-term unsecured
debt obligations by each Rating Agency; and (B) it must be in writing and
include the following terms: (a) the securities acceptable for transfer are
either (i) direct U.S. government obligations or (ii) obligations of a
federal agency that are backed by the full faith and credit of the U.S.
government or by FNMA or FHLMC; (b) a term no greater than 30 days for any
repurchase transaction; (c) the collateral must be delivered to the Trustee
or a third party custodian acting as agent for the Trustee by appropriate
book entries and confirmation statements, and must have been delivered
before or simultaneously with payment (i.e., perfection by possession of
certificated securities); and (d) the securities sold thereunder must be
valued daily, marked-to-market at current market price plus accrued
interest and the value of the collateral must be equal to at least 105% of
the amount of cash transferred by the Trustee under the repurchase
agreement and, if the value of the securities held as collateral declines
to an amount below 105% of the cash transferred by the Trustee plus accrued
interest (i.e., a margin call), then additional cash and/or acceptable
securities must be transferred to the Trustee to satisfy such margin call;
(3) certificates of deposit, time deposits and bankers acceptances of
any United States depository institution or trust company incorporated
under the laws of the United States or any state, and subject to
supervision and examination by federal and/or state authorities, which have
an original term to maturity of not more than 365 days; provided, however,
that the debt obligations of such depository institution or trust company
at the date of the acquisition thereof have been rated by each Rating
Agency in the highest short-term rating categories;
(4) deposits, including deposits with the Transferor or Trustee, which
are fully insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC, as the case may be;
(5) commercial paper of any corporation incorporated under the laws of
the United States or any state thereof, including corporate Affiliates of
the Trustee, which at the date of acquisition is rated by each Rating
Agency in its highest short-term rating category and which has an original
maturity of not more than 365 days;
(6) debt obligations rated by each Rating Agency at the time at which
the investment is made in its highest long-term rating category which have
an original term to maturity of not more than 365 days (or those
investments specified in (3) above with depository institutions which have
debt obligations rated by each Rating Agency in the highest long-term
rating categories);
(7) money market funds which are rated by each Rating Agency at the
time at which the investment is made in its highest long-term rating
category; provided that any such money market funds invest only in other
Permitted Investments and such money market funds provide for demand
withdrawals being conclusively deemed to satisfy any maturity requirements
for Permitted Investments set forth in this Agreement; or
(8) any other demand, money market or time deposit obligation,
security or investment as may be acceptable to each Rating Agency and the
Certificate Insurer at the time at which the investment is made;
provided, however, that no instrument described in the foregoing subparagraphs
shall evidence either the right to receive (a) only interest with respect to the
obligations underlying such instrument or (b) both principal and interest
payments derived from obligations underlying such instrument where the interest
and principal payments with respect to such instrument provide a yield to
maturity at par greater than 120% of the yield to maturity at par of the
underlying obligations; and provided, further, that no instrument described in
the foregoing subparagraphs may be purchased at a price greater than par.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
estate, national banking association, unincorporated organization or government
or any agency or political subdivision thereof.
"Pre-Funding Account" shall mean an account created and maintained by the
Trustee pursuant to Section 5.24 hereof. The Pre-Funding Account shall be held
by the Trustee as an asset of the Grantor Trust portion of the Trust Fund.
"Pre-Funding Amount" shall mean, with respect to any date, the amount on
deposit in the Pre-Funding Account, net of investment earnings on that amount.
"Pre-Funding Earnings" shall mean, with respect to the Distribution Date in
December 1999, the actual investment earnings earned on amounts on deposit in
the Pre-Funding Account during the period from December 2, 1999 through and
including December 26, 1999. With respect to the Distribution Date in January
2000, the actual investment earnings earned on amounts on deposit in the
Pre-Funding Account from December 27, 1999 through and including January 24,
2000. With respect to the Distribution Date in February 2000, the actual
investment earnings earned on amounts on deposit in the Pre-Funding Account from
January 25, 2000 through and including February 24, 2000. With respect to the
Distribution Date in March 2000, the actual investment earnings earned on
amounts on deposit in the Pre-Funding Account from February 25, 2000 through and
including March 24, 2000.
"Pre-Funding Period" shall mean, with respect to each Class of
Certificates, the period commencing on the Closing Date and ending on the
earlier to occur of: (i) the date on which the Pre-Funding Amount for that Class
of Certificates is less than $50,000 and (ii) March 2, 2000.
"Preference Amount" shall have the meaning assigned thereto in the
Certificate Insurance Policy.
"Premium Percentage" shall have the meaning assigned thereto in the
Insurance Agreement.
"Prepayment Assumption" shall mean 100% Constant Prepayment Rate (CPR).
"Prepayment Interest Shortfall" shall mean with respect to any Distribution
Date and any Loan, an amount equal to the excess, if any, of (a) 30 days'
interest on the outstanding Principal Balance of such Loan at a per annum rate
equal to the related Loan Interest Rate, less any Deficient Valuation and/or any
Debt Service Reduction, and less the rate at which the Servicing Fee is
calculated, over (b) the amount of interest actually remitted by the borrower in
connection with the related Principal Prepayment, less the Servicing Fee for
such Loan in such month.
"Principal Balance" shall mean with respect to any Loan, (i) at the Cut-Off
Date, the outstanding unpaid principal balance of the Loan as of the Cut-Off
Date after giving effect to payments due on or prior to such date, and (ii) with
respect to any date of determination, the outstanding unpaid principal balance
of the Loan as of the last day of the preceding Due Period (after giving effect
to all payments received thereon and the allocation of any Liquidated Loan Loss
with respect thereto which relates to such Due Period), without giving effect to
amounts received in respect of such Loan or related REO Property after such Due
Period; provided, however, that any Liquidated Loan shall have a Principal
Balance of zero.
"Principal Balance Certificates" shall mean the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6 Certificates and Class B Certificates.
"Principal Deficiency Amount" shall mean, (i) with respect to any
Distribution Date, other than as set forth in clause (ii) below, the excess, if
any, of (a) the Aggregate Class A Principal Balance as of the related
Distribution Date, after giving effect to all distributions of principal on the
Class A Certificates on the related Distribution Date, but without giving effect
to the application of any Insured Payment to be made on the related Distribution
Date, over (b) the Aggregate Principal Balance of all the Loans as of the end of
the related Due Period, plus the Pre-Funding Amount, if any, and (ii) with
respect to the final Distribution Date of the Certificates, the Aggregate Class
A Principal Balance, after giving effect to all distributions of principal on
the Class A Certificates on the final Distribution Date, but without giving
effect to the application of any Insured Payment to be made on the final
Distribution Date.
"Principal Distribution Amount" shall mean, the sum, without duplication,
of: (i) that portion of all scheduled installments of principal in respect of
the Loans which is received during the related Due Period together with all
unscheduled recoveries of principal (including Principal Prepayments,
Curtailments and Deficient Valuations) on such Loans actually collected by the
Servicer during the prior calendar month, (ii) the Principal Balance of each
Loan that either was, effective on such Distribution Date, repurchased by the
Transferor but only to the extent the amount equal to such Principal Balance is
actually received by the Trustee, (iii) any Substitution Adjustment amounts
delivered by the Transferor on the related Distribution Date in connection with
a substitution of a Loan, to the extent such Substitution Adjustments are
actually received by the Trustee, (iv) with respect to each Loan that became a
Liquidated Loan during the prior calendar month, the Principal Balance of such
Loan immediately prior to the time when such Loan became a Liquidated Loan, and
(v) the principal portion of the proceeds relating to the Loans received by the
Trust Fund following any optional termination of the Trust Fund and the Trust
REMICs by either the Servicer or Certificate Insurer in accordance with Section
8.1 hereof, up to the then outstanding aggregate Class Principal Balance plus
the Overcollateralization Amount.
The Principal Distribution Amount for any Distribution Date will be
reduced, but not to less than zero, by the Overcollateralization Reduction
Amount, if any, for such Distribution Date.
"Principal Prepayment" shall mean any payment or other recovery of
principal on a Loan equal to the outstanding Principal Balance thereof, received
in advance of the final scheduled Due Date which is not intended as an advance
payment of a Scheduled Monthly Payment.
"Property" shall mean a Mortgaged Property.
"Property State" shall mean any state in which any Property is located.
"Prospectus Supplement" shall mean the Prospectus Supplement dated November
24, 1999, as amended and supplemented, relating to the Class A Certificates and
the Class B Certificates and filed with the Commission in connection with the
Registration Statement heretofore filed or to be filed with the Commission
pursuant to Rule 424(b).
"Qualified Appraiser" shall mean an appraiser, duly appointed by the
Servicer, who had no interest, direct or indirect, in the Property or in any
loan made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Loan, and such appraiser and the appraisal made
by such appraiser both satisfy the requirements of Title XI of the Federal
Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the Loan was originated.
"Qualified Mortgage" shall have the meaning set forth from time to time in
the definition of "Qualified Mortgage" at Section 860G(a)(3) of the Code (or any
successor statute thereto), but without regard to the provision of Treasury
Regulations Section 1.860G-2(f)(2) (or any substantially similar successor
provision), which treats a defective mortgage loan as a "Qualified Mortgage" for
certain purposes.
"Qualified Substitute Loan" shall mean a mortgage loan or mortgage loans
which (i) has an interest rate at least equal to the Deleted Loan for which it
is to be substituted (ii) relates or relate to a detached one-family residence
or to the same type of Residential Dwelling as the Deleted Loan for which it is
to be substituted and in each case has or have the same occupancy status or is
an Owner-Occupied Mortgaged Property, (iii) matures or mature no later than (and
not more than one year earlier than) the Deleted Loan for which it is to be
substituted, (iv) has or have a Combined Loan-to-Value Ratio or Combined
Loan-to-Value Ratios at the time of such substitution no higher than the
Combined Loan-to-Value Ratio of the Deleted Loan for which it is to be
substituted, (v) has or have a principal balance or principal balances (after
application of all payments received on or prior to the date of substitution)
not substantially less than the Principal Balance of the Deleted Loan for which
it is to be substituted as of such date, (vi) satisfies or satisfy the criteria
set forth from time to time in the definition of "qualified replacement
mortgage" at Section 860G(a)(4) of the Code (or any successor statute thereto),
(vii) has or have an applicable borrower or borrowers with the same or better
traditionally ranked credit status as the borrower or borrowers under the
Deleted Loan for which it is to be substituted, and (viii) complies or comply as
of the date of substitution with each representation and warranty set forth in
Section 3.4 herein.
"Rating Agency" shall mean S&P or Moody's.
"Realized Losses" shall mean with respect to any Distribution Date the
amount, if any, by which (1) the aggregate Class Principal Balance of the Class
A and Class B Certificates after giving effect to distributions made on that
Distribution Date exceeds (2) the Aggregate Principal Balance of the Loans after
giving effect to any payments of principal received or advanced with respect to
the related Due Period.
"Record Date" shall mean, with respect to any Distribution Date, the last
Business Day of the calendar month immediately preceding the month in which such
Distribution Date occurs.
"Reference Bank Rate" shall mean, with respect to any Accrual Period, as
follows: the arithmetic mean (rounded upwards, if necessary, to the nearest one
sixteenth of one 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,
England time, on the second LIBOR Business Day 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 then outstanding Class A-1 Principal
Balance; provided, that at least two such Reference Banks provide such rate. If
fewer than two offered rates appear, the Reference Bank Rate will be the
arithmetic mean of the rates quoted by one or more major banks in New York City,
selected by the Trustee after consultation with the Servicer, as of 11:00 a.m.,
New York 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 then outstanding
Class A-1 Principal Balance. If no such quotations can be obtained, the
Reference Bank Rate will be the Reference Bank Rate applicable to the preceding
Accrual Period.
"Reference Banks" shall mean Bankers Trust Company, ▇▇▇▇▇▇▇'▇ Bank PLC, The
Bank of Tokyo and National Westminster Bank PLC; provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with the Depositor or any affiliate thereof, (iii) whose
quotations appear on the Reuters Screen LIBO Page on the relevant Interest
Determination Date and (iv) which have been designated as such by the Trustee
after consultation with the Servicer.
"Reimbursement Amount" shall mean, as of any Distribution Date, the sum of
(i) all Insured Payments previously paid by the Certificate Insurer and in each
case not previously repaid to the Certificate Insurer pursuant to Section
6.5(b)(viii) hereof plus (ii) interest accrued on such Insured Payments not
previously repaid calculated at the Late Payment Rate from the date such Insured
Payment was paid, plus (iii) any amounts then due and owing to the Certificate
Insurer under the Insurance Agreement, as certified to the Trustee by the
Certificate Insurer, plus (iv) interest on such amounts at the Late Payment
Rate. The Certificate Insurer shall notify the Trustee and the Depositor of the
amount of any Reimbursement Amount.
"Released Property Proceeds" shall mean, as to any Loan, proceeds received
by the Servicer in connection with (i) a taking of an entire Property by
exercise of the power of eminent domain or condemnation or (ii) any release of
part of the Property from the lien of the related Mortgage, whether by partial
condemnation, sale or otherwise; which are not released to the Borrower in
accordance with applicable law, Accepted Servicing Practices and this Agreement.
"Relief Act Shortfalls" shall mean interest shortfalls incurred by any
Class of Certificates resulting from the application of the Civil Relief Act.
"REMIC" shall mean a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Change of Law" shall mean any proposed, temporary or final
regulation, revenue ruling, revenue procedure or other official announcement or
interpretation relating to the Trust REMICs and the REMIC Provisions issued
after the Closing Date.
"REMIC I" shall mean the segregated asset pool of the Trust Fund comprised
of items (i)-(vii) of the definition of "Trust Fund," excluding the Pre-Funding
Account, the Capitalized Interest Account and amounts in the Certificate Account
attributable to REMIC II, REMIC III or the Grantor Trust as set forth herein.
"REMIC I Principal Balance" shall mean, prior to the first Distribution
Date, the sum of the Aggregate Principal Balance of the Initial Loans as of the
Cut-Off Date and the Original Pre-Funding Amount, and as of any date of
determination thereafter, the Aggregate Principal Balance of the Loans and the
Pre-Funding Amount as of the last day of the preceding Due Period.
"REMIC I Regular Interests" shall mean the uncertificated regular interest
representing the Loans in the aggregate that are assets of REMIC I having the
initial REMIC I Principal Balance and Pass-Through Rate set forth in the
Preliminary Statement hereto.
"REMIC II" shall mean the segregated asset pool of the Trust Fund comprised
of the REMIC I Regular Interest and all amounts distributed thereon and held in
the Certificate Account.
"REMIC II Regular Interests" shall mean any of the regular interests
represented by the Class ▇▇-▇, ▇▇▇▇▇ ▇▇-▇, Class LA-3, Class LA-4, Class LA-5,
Class LA-6 and Class LB Interests having the initial Lower-Tier Balances and
Pass-Through Rates set forth in the Preliminary Statement hereto.
"REMIC III" shall mean the segregated asset pool of the Trust Fund
comprised of the REMIC II Regular Interests and all amounts distributed thereon
and held in the Certificate Account.
"REMIC III Regular Interests" shall mean the regular interests represented
by the Class UA-1, Class UA-2, Class UA-3, Class UA-4, Class UA-5, Class UA-6
and Class UB Interests having the initial Upper-Tier Balances and Pass-Through
Rates set forth in the Preliminary Statement hereto. The REMIC III Regular
Interests are held by the Trustee as assets of the Grantor Trust portion of the
Trust Fund.
"REMIC Provisions" shall mean 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 temporary and final regulations promulgated thereunder and
published rulings, notices and announcements, as the foregoing may be in effect
from time to time.
"REO Disposition" shall mean the final sale by the Servicer of a Property
acquired by the Servicer in foreclosure or by deed in lieu of foreclosure.
"REO Loan" shall mean any Loan that is not a Liquidated Loan and as to
which the indebtedness evidenced by the related Mortgage Note is discharged and
the related Property is held as part of the Trust Fund.
"REO Proceeds" shall mean proceeds received in respect of any REO Loan
(including, without limitation, proceeds from the rental of the related
Property).
"REO Property" shall have the meaning described in Section 5.12.
"Representation Letter" shall mean letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates and the Class B Certificates registered in the Certificate Register
under the nominee name of the Depository.
"Request for Release" shall mean a request for release in substantially the
form attached as Exhibit F hereto.
"Residential Dwelling" shall mean a one- to four-family dwelling, a unit in
a planned unit development, a unit in a condominium development, a townhouse or
a manufactured housing unit.
"Residual Interest" shall mean any of the Class R-I, Class R-II and Class
R-III Interests, or all of them.
"Responsible Officer" shall mean, when used with respect to the Trustee,
any officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Senior Trust Officer, Trust Officer, Assistant
Trust Officer, any Assistant Secretary, any trust officer or any other officer
of the Trustee, in each case having direct responsibility for the administration
of this Agreement customarily performing functions similar to those performed by
any of the above designated officers and to whom, with respect to a particular
matter, such matter is referred because of such officer's knowledge of and
familiarity with the particular subject. When used with respect to the
Transferor or the Servicer, the President or any Vice President, Assistant Vice
President, or any Secretary or Assistant Secretary.
"S&P" shall mean Standard & Poor's Ratings Services, Inc. or any successor
thereto and if such corporation no longer for any reason performs the services
of a securities rating agency, "S&P" shall be deemed to refer to any other
nationally recognized statistical rating organization designated by the
Certificate Insurer.
"Senior Enhancement Percentage" shall mean for any Distribution Date, the
percentage expressed as a fraction (i) the numerator of which is the
Overcollateralization Amount for such Distribution Date; and (ii) the
denominator of which is the Aggregate Principal Balance of the Loans as of the
end of the related Due Period, plus the Pre-Funding Amount for such Distribution
Date, if any.
"Series" shall mean the New South Home Equity Asset Backed Certificates,
Series 1999-2.
"Servicer" shall mean New South Federal Savings Bank, a federal savings
bank, or any successor appointed as herein provided.
"Servicer Employees" shall have the meaning as defined in Section 5.8
hereof.
"Servicer Remittance Amount" shall mean, with respect to any Determination
Date, an amount equal to the sum of (i) all unscheduled collections of principal
and interest on the Loans (including Principal Prepayments, Net REO Proceeds,
Net Foreclosure Profits, minus any portion payable to the Servicer pursuant to
Section 5.3 and Net Liquidation Proceeds, if any, and any amounts deposited in
the Collection Account or Certificate Account in connection with a repurchase of
the Loans) collected by the Servicer during the Due Period and all scheduled
Monthly Payments due on the Loans on the Due Date and received by the Servicer
during the related Due Period, plus (ii) all Periodic Advances made by the
Servicer with respect to interest payments due to be received on the Loans on
the related Due Date, plus (iii) the amount of Compensating Interest due with
respect to Loans that prepay with respect to the related Due Period, plus (iv)
all previously undistributed payments or other receipts on account of interest
on the Loans, which were scheduled to be paid during the related Due Period,
plus (v) any other amounts required to be placed in the Certificate Account with
respect to Loans by the Servicer pursuant to this Pooling and Servicing
Agreement but excluding, without duplication, the following:
(A) amounts received on a particular Loan as late payments of interest
and respecting which the Servicer has previously made an unreimbursed
Periodic Advance;
(B) the portion of Liquidation Proceeds on a particular Loan used to
reimburse any unreimbursed Periodic Advances by the Servicer with respect
to such Loan;
(C) those portions of each payment of interest on a particular Loan
which represent the Servicing Fee with respect to such Loan;
(D) that portion of Liquidation Proceeds and REO Proceeds on a
particular Loan which represents any unpaid Servicing Fee with respect to
such Loan;
(E) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(F) all amounts in respect of late fees, assumption fees, fees
associated with prepayments (which will be remitted to the Transferor),
demand statement fees, reconveyance and recording fees and other service
related fees;
(G) all other amounts which are explicitly reimbursable to the
Servicer hereunder with respect to a particular Loan, including (1) as
provided in Section 5.4 hereof; and (2) any unreimbursed and accrued
Liquidation Expenses with respect to a particular Loan from Liquidation
Proceeds related to such Loan and without duplication of any amounts
reimbursed to the Servicer as a Servicing Advance or a Non-recoverable
Advance;
(H) the portion of Net Foreclosure Profits representing any unpaid
Servicing Fee; and
(I) all amounts representing scheduled payments of interest due after
the Due Period in which such Distribution Date relates to.
"Servicer Remittance Date" shall mean the fourth Business Day prior to a
Distribution Date.
"Servicer Termination Delinquency Rate Trigger" shall have the meaning
assigned thereto in the Insurance Agreement.
"Servicer Termination Financial Trigger" shall have the meaning assigned
thereto in the Insurance Agreement.
"Servicer Termination Loss Trigger" shall have the meaning assigned thereto
in the Insurance Agreement.
"Servicing Advances" shall mean 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 of (i) the
preservation, restoration and protection of the Property, (ii) any enforcement
proceedings, including foreclosures, (iii) expenditures relating to the purchase
or maintenance of a first lien not included in the Trust Fund on the Property,
(iv) the management and liquidation of the REO Property, including reasonable
fees paid to any independent contractor in connection therewith, (v) compliance
with the obligations under Sections 5.2 (limited solely to the reasonable and
customary out-of-pocket expenses of the Subservicer), 5.5, 5.6 or 5.9, all of
which reasonable and customary out-of-pocket costs and expenses are reimbursable
to the Servicer to the extent provided in Section 5.4(a).
"Servicing Compensation" shall mean the Servicing Fee and other amounts to
which the Servicer is entitled pursuant to Section 5.14.
"Servicing Fee" shall mean, as to each Loan, the monthly fee payable to the
Servicer, which is calculated as an amount equal to the product of (i) 1/12 of
the Servicing Fee Rate, and (ii) the Principal Balance thereof. Such fee shall
be calculated and payable only on amounts actually received in respect of
interest on such Loan and shall be computed on the basis of the same principal
amount and for the period respecting which any related interest payment on a
Loan is computed. The Servicing Fee includes any servicing fees owed or payable
to any Subservicer.
"Servicing Fee Rate" shall mean, as to each Loan, 0.50% per annum.
"Servicing Officer" shall mean any officer or Responsible Officer of the
Servicer or the Transferor involved in, or responsible for, the administration
and servicing of the Loans whose name and specimen signature appear on a list of
servicing officers furnished to the Trustee and the Certificate Insurer by the
Servicer, as such list may from time to time be amended.
"Startup Day" shall mean the day designated as such pursuant to Section
2.7(d) hereof.
"Stepdown Date" shall mean the first distribution date occurring on the
later of (i) December 25, 2002 or (ii) the Distribution Date on which the Senior
Enhancement Percentage equals 11.00%.
"Subsequent Cut-Off Date Deposit" shall mean, with respect to any
Subsequent Transfer Date and any Subsequent Loan transferred to the Trustee
during any month, which Subsequent Loan does not have a Monthly Payment due
until the second Due Period following such month, an amount equal to the product
of (a) the Principal Balance of such Subsequent Loan on the related Cut-Off Date
and (b) one-twelfth of the Loan Interest Rate on such Subsequent Loan.
"Subsequent Loan" shall mean each Loan transferred to the Trustee for
inclusion in the Trust pursuant to Section 2.5 hereof and the related Subsequent
Transfer Agreement, which Loan shall be listed on the related Subsequent Loan
Schedule.
"Subsequent Loan Schedule" shall mean the schedule of Subsequent Loans
transferred to the Trustee pursuant to the related Subsequent Transfer Agreement
and attached thereto.
"Subsequent Transfer Agreement" shall mean each Subsequent Transfer
Agreement executed by the Trustee, Depositor and the Transferor substantially in
the form of Exhibit L attached hereto by which Subsequent Loans are sold and
assigned to the Depositor by the Transferor and transferred by the Depositor to
the Trustee.
"Subsequent Transfer Date" shall mean the date specified in each Subsequent
Transfer Agreement; provided, however, that in no event shall there be more than
three (3) such Subsequent Transfer Agreements.
"Subservicer" shall mean any Person with whom the Servicer has entered into
a Subservicing Agreement and who satisfies the requirements set forth in Section
5.2(a) hereof in respect of the qualification of a Subservicer.
"Subservicing Agreement" shall mean any agreement between the Servicer and
any Subservicer relating to subservicing and/or administration of certain Loans
as provided in Section 5.2(b), a copy of which shall be delivered, along with
any modifications thereto, to the Trustee and the Certificate Insurer.
"Substitution Adjustment" shall mean, as to any date on which a
substitution occurs pursuant to Section 2.4 or 3.5, the amount (if any) by which
the aggregate principal balances (after application of principal payments
received on or before the date of substitution of any Qualified Substitute Loans
as of the date of substitution) are less than the aggregate of the Principal
Balances of the related Deleted Loans together with 30 days' interest thereon at
the Loan Interest Rate, and plus any unreimbursed Servicing Advances with
respect to such Deleted Loans as set forth in an Officer's Certificate of the
Servicer.
"Tax Matters Person" shall mean the Person or Persons appointed pursuant to
Section 10.15 from time to time to act as the "tax matters person" (within the
meaning of the REMIC Provisions) of each of the Trust REMICs.
"Tax Returns" shall mean the federal income tax returns on Internal Revenue
Service Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax
Return," including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of each of the Trust REMICs due to their classification as
REMICs under the REMIC Provisions, together with any and all other information
reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provision of federal, state
or local tax laws.
"Telerate Page 3750" shall mean the display page so designated on the
Bridge Telerate Service (or such other page as may replace page 3750 on such
service for the purpose of displaying London interbank offered rates of major
banks). If such rate does not appear on such page (or such other page as may
replace such page on such service, or if such service is no longer offered, such
other service for displaying LIBOR or comparable rates as may be selected by the
Issuer after consultation with the Trustee), the rate will be the Reference Bank
Rate.
"Termination Price" shall mean an amount equal to the greater of: (1) the
sum of (a) 100% of the unpaid Principal Balance of each outstanding Loan
(including each REO Loan); (b) the aggregate amount of accrued and unpaid
interest on the unpaid Principal Balances of the Loans through the related Due
Period and any unreimbursed Periodic Advances and Servicing Advances; and (c)
any unreimbursed amounts due to the Trustee and the Certificate Insurer under
the Pooling and Servicing Agreement or the Certificate Insurance Agreement; and
(2) the sum of (a) the Aggregate Class A Principal Balance, together with all
accrued and unpaid interest on the Class A Certificates; (b) any unreimbursed
Periodic Advances and Servicing Advances; and (c) any unreimbursed amounts due
to the Trustee and the Certificate Insurer under the Pooling and Servicing
Agreement or the Certificate Insurance Agreement.
"Transaction Documents" shall mean this Agreement, the Loan Sale Agreement,
the Indemnification and Contribution Agreement, dated November 24, 1999 among
the Depositor, New South and the Underwriters, the Insurance Agreement and the
Indemnification Agreement.
"Transfer" shall mean any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transfer Affidavit and Agreement" shall have the meaning as defined in
Section 4.2(i)(ii).
"Transferee" shall mean any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor" shall mean New South Federal Savings Bank, a federal savings
bank.
"Transferor Excess Capitalized Interest Amount" shall mean with respect to
any Distribution Date during the Pre-Funding Period, an amount equal to the
excess, if any, of (i) the amount on deposit in the Capitalized Interest Account
on such Distribution Date, after taking into account of withdrawals of the
Capitalized Interest Requirement for such Distribution Date over (ii) the
Capitalized Interest Required Amount for such Distribution Date.
"Trust" shall mean New South Home Equity Trust 1999-2, the trust created
hereunder.
"Trust Fund" shall mean (i) each Loan transferred to the Trust pursuant to
the provisions hereof (exclusive of prepayment penalties and charges and
$1,041,110 of interest collections on the Initial Loans for the month of
November 1999, which, in each case, are retained by the Transferor), (ii) such
assets as from time to time are identified as REO Property and collections
thereon and proceeds thereof, (iii) all assets deposited in the Accounts,
including any amounts on deposit in the Collection Account, the Pre-Funding
Account, the Capitalized Interest Account and the Certificate Account and all
amounts in the Accounts invested in Permitted Investments, (iv) the Trustee's
rights with respect to the Loans under all insurance policies (other than the
Certificate Insurance Policy) required to be maintained pursuant to this
Agreement and any Insurance Proceeds, (v) all Liquidation Proceeds, (vi) all
Released Property Proceeds, (vii) all rights against the Transferor arising
under the Loan Sale Agreement, (viii) the REMIC I Regular Interest, (ix) the
REMIC II Regular Interests, (x) the REMIC III Regular Interests, (xi) the Class
R-II Interest and (xii) the Basis Risk Arrangements.
"Trust REMIC" shall mean REMIC I, REMIC II and REMIC III, or any of them.
"Trustee" shall mean The Bank of New York, or its successor in interest, or
any successor trustee appointed as herein provided.
"Trustee Fee" shall mean, as to any Distribution Date, the fee payable to
the Trustee in respect of its services as Trustee and as agent for the Tax
Matters Person that accrues at a monthly rate equal to 1/12 of 0.0065% of the
Class Principal Balances of the Principal Balance Certificates as of first day
of the related Due Period.
"Trustee's Loan File" shall mean the documents delivered to the Trustee or
its designated agent pursuant to Section 2.3.
"Trustee's Report" shall have the meaning as defined in Section 6.7.
"Uncapped Fixed Pass-Through Rate" shall mean with respect to any
Distribution Date and the Class A-2, Class A-3, Class A-4, Class A-5, Class A-6
and Class B Certificates, the Class A-2 Pass-Through Rate, the Class A-3
Pass-Through Rate, the Class A-4 Pass-Through Rate, the Class A-5 Pass-Through
Rate, the Class A-6 Pass-Through Rate and the Class B Pass-Through Rate
respectively, in each case calculated without the imposition of the Fixed Rate
Available Funds Cap Rate.
"Uncapped Pass-Through Rate" shall mean with respect to any Distribution
Date and (i) the Class A-1 Certificates, the Class A-1 LIBOR Rate and (ii) the
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class B Certificates,
the applicable Uncapped Fixed Pass-Through Rate.
"Uncertificated Regular Interests" shall mean any of the REMIC I Regular
Interests, REMIC II Regular Interests and REMIC III Regular Interests.
"Underwriters" shall mean PaineWebber Incorporated and First Union
Securities, Inc.
"Underwriting Guidelines" shall mean the underwriting guidelines with
respect to the Loans, a copy of which is attached as Exhibit A to the Loan Sale
Agreement.
"United States Person" shall mean a beneficial owner of a Certificate that
is for United States federal income tax purposes (i) a citizen or resident of
the United States, (ii) a corporation or partnership created or organized in or
under the laws of the United States, any state or the District of Columbia,
including any entity treated as a corporation or partnership for federal income
tax purposes (other than a partnership that is not treated as a United States
person under any applicable Treasury regulations), (iii) an estate whose income
is subject to United States federal income tax regardless of its source or (iv)
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 such United
States Persons have the authority to control all substantial decisions of the
trust (or, to the extent provided in applicable Treasury regulations, certain
trusts in existence on August 20, 1996 which are eligible to elect to be treated
as United States Persons).
"Unpaid REO Amortization" shall mean, as to any REO Loan and any month, the
aggregate of the installments of principal and accrued interest deemed to be due
in such month and in any prior months that remain unpaid, calculated in
accordance with Section 5.12.
"Unreimbursed Servicing Transfer Costs" shall mean the costs and expenses
associated with the transfer of servicing from the Servicer or successor
Servicer to a successor Servicer to the extent the costs and expenses have not
been paid by the predecessor Servicer.
"Upper-Tier Balance" shall mean with respect to the Class UA-1, Class UA-2,
Class UA-3, Class UA-4, Class UA-5, Class UA-6 and Class UB Interests and any
date of determination, an amount equal to the original Class Principal Balance
for the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and
Class B Certificates, respectively, reduced by the sum of all amounts previously
distributed in respect of principal for such Interest on all previous
Distributions Dates prior to such date of determination as provided in Section
6.5(b), and with respect to the Class UB Interest, minus the amount of all
Realized Losses allocated to the Class B Certificates on prior Distribution
Dates. Any amounts reimbursed to the Class UB Interest in respect of Realized
Losses previously allocated in reduction of the Upper-Tier Balance of the Class
UB Interest shall not further reduce the Upper-Tier Balance of the Class UB
Interest.
Section 1.2 Provisions of General Application.
(a) All accounting terms not specifically defined herein shall be construed
in accordance with generally accepted accounting principles.
(b) The terms defined in this Article include the plural as well as the
singular.
(c) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole. All references to Articles and
Sections shall be deemed to refer to Articles and Sections of this Agreement.
(d) Reference to statutes are to be construed as including all statutory
provisions consolidating, amending or replacing the statute to which reference
is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest relating to the Class A-1 Certificates
(other than with respect to the Loans, or as otherwise specifically set forth
herein) provided for herein shall be made on the basis of actual days elapsed
divided by a year comprised of 360 days. All calculations of interest relating
to the Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates,
Class A-5 Certificates, Class A-6 Certificates or Class B Certificates (other
than with respect to the Loans, or as otherwise specifically set forth herein)
provided for herein, shall be made on the basis of an assumed year of 360 days
consisting of twelve 30 day months. All calculations of interest with respect to
any Loan provided for herein shall be made in accordance with the terms of the
related Mortgage Note and Mortgage or, if such documents do not specify the
basis upon which interest accrues thereon, on the basis of dividing actual days
elapsed by a 365 day year.
(f) Any Loan payment is deemed to be received on the date such payment is
actually received by the Servicer; provided, however, that for purposes of
calculating distributions on the Certificates prepayments with respect to any
Loan are deemed to be received on the date they are applied in accordance with
customary servicing practices consistent with the terms of the related Mortgage
Note and Mortgage to reduce the outstanding principal balance of such Loan on
which interest accrues.
ARTICLE II
ESTABLISHMENT OF THE TRUST;
SALE AND CONVEYANCE OF TRUST FUND
Section 2.1 Sale and Conveyance of Trust Fund; Priority and
Subordination of Ownership Interests; Establishment of the
Trust.
(a) The Depositor does hereby sell, transfer, assign, set over and convey
to the Trust for the benefit of the Certificateholders and the Certificate
Insurer without recourse but subject to the provisions in this Section 2.1 and
the other terms and provisions of this Agreement, all of the right, title and
interest of the Depositor in and to the Trust Fund, exclusive of the obligations
of the Depositor, Transferor or any other party with respect to the Loans.
(b) The rights of the Certificateholders to receive payments with respect
to the Loans in respect of the Certificates and all ownership interests of the
Certificateholders, shall be as set forth in this Agreement. In this regard, all
rights of the Class R Certificateholders to receive payments in respect of the
Class R Certificates, are subject and subordinate to the preferential rights of
the Class A and Class B Certificateholders to receive payments in respect of the
Class A and Class B Certificates and to the Certificate Insurer's rights to
receive the Reimbursement Amount.
(c) The Depositor does hereby establish, pursuant to the further provisions
of this Agreement and the laws of the State of New York, an express trust to be
known, for convenience, as "New South Home Equity Trust 1999-2" and does hereby
appoint The Bank of New York as Trustee in accordance with the provisions of
this Agreement.
Section 2.2 Possession of Loan Files; Access to Loan Files.
(a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage, and the contents of the related Loan File related to each
Loan shall be vested in the Trustee for the benefit of the Certificateholders
and the Certificate Insurer, as their respective interests may appear.
(b) Pursuant to Section 2.2 of the Loan Sale Agreement, New South Federal
Savings Bank has delivered or caused to be delivered the Trustee's Loan File
related to each Loan to the Trustee.
(c) The Trustee may enter into a custodial agreement in form and substance
acceptable to the Certificate Insurer pursuant to which the Trustee will appoint
a custodian (a "Custodian") to hold the Trustee's Loan Files in trust for the
benefit of the Trustee; provided, however, that the custodian so appointed shall
in no event be the Depositor, the Transferor or the Servicer or any Person known
to a Responsible Officer of the Trustee to be an Affiliate of any of them and
the appointment of any Custodian other than the Trustee shall require the prior
written consent of the Certificate Insurer. The Trustee shall be the initial
Custodian.
(d) The Trustee and the Custodian shall afford the Depositor, the
Certificate Insurer and the Servicer reasonable access to all records and
documentation regarding the Loans relating to this Agreement, such access being
afforded at customary charges, upon reasonable request and during normal
business hours at the offices of the Trustee or the Custodian, as applicable.
Section 2.3 Delivery of Loan Documents.
(a) In connection with each conveyance pursuant to Section 2.1 or 2.2
hereof, the Transferor has delivered or does hereby agree to deliver on or
before the Closing Date to the Trustee the Certificate Insurance Policy and each
of the following documents for each Loan sold by the Transferor to the Depositor
and sold by the Depositor to the Trust Fund:
(1) The original Mortgage Note, bearing, or accompanied by, all prior
and intervening endorsements or assignments showing a complete chain of
endorsement or assignment from the originator of the Loan to Transferor and
further endorsed without recourse in the following form: "Pay to the order
of ___________, without recourse" and signed by manual or facsimile
signature in the name of an authorized officer of the Transferor;
(2) The original Mortgage with evidence of recording indicated
thereon; provided, however, that if such Mortgage has not been returned
from the applicable recording office, then such recorded Mortgage shall be
delivered when so returned;
(3) An assignment of the original Mortgage, in suitable form for
recordation in the jurisdiction in which the related Mortgaged Property is
located, in the name of the holder of record of the Mortgage Loan by an
authorized officer (with evidence of submission for recordation of such
assignment in the appropriate real estate recording office for such
Mortgaged Property to be received by the Trustee within 30 days of the
Closing Date with respect to the Initial Loans and, with respect to the
Subsequent Loans, within 30 days of the Subsequent Transfer Date unless the
related Mortgage or intervening assignment has not been returned from the
applicable recording office, in which case the Transferor shall submit the
Assignment of Mortgage for recording within 30 days of the return of the
related Mortgage or intervening assignment and a recorded Assignment of
original Mortgage to be received by the Trustee within 360 days of the
Closing Date with respect to the Initial Loans, and with respect to the
Subsequent Loans, within 360 days of the Subsequent Transfer Date);
provided, however, that if the related Mortgage has not been returned from
the applicable recording office, then such assignment shall be delivered
when so returned (and a blanket assignment with respect to each unrecorded
Mortgage shall be delivered on the Closing Date);
(4) Any recorded intervening assignments of the Mortgage with evidence
of recording thereon;
(5) Any assumption, modification, consolidation or extension
agreements; and
(6) the original or duplicate lender's title insurance policy and all
riders thereto, or title insurance binder/commitment, if applicable;
provided, however, that in the case of any Loans which have been prepaid in full
on or after the Cut-Off Date and prior to the date of the execution of this
Agreement, the Transferor, in lieu of delivering the above documents, hereby
delivers to the Trustee a certification of an officer of the Transferor of the
nature set forth in Exhibit J attached hereto; and provided, further, however,
that as to certain Mortgages or assignments thereof which have been delivered or
are being delivered to recording offices for recording and have not been
returned to the Transferor in time to permit their delivery hereunder at the
time of such transfer, in lieu of delivering such original documents, the
Transferor is delivering to the Trustee a true copy thereof with a certification
by the Transferor on the face of such copy substantially as follows: "certified
true and correct copy of original which has been transmitted for recordation."
The Transferor has agreed pursuant to the Loan Sale Agreement that it will
deliver such original documents on behalf of the Depositor to the Trustee on or
prior to the Closing Date; provided, further, that in those instances where the
public recording office retains the original Mortgage, intervening assignment or
Assignment of Mortgage after it has been recorded or such original document has
been lost by the recording office, the Transferor shall be deemed to have
satisfied its obligations hereunder if it shall have delivered to the Trustee a
copy of such original Mortgage, intervening assignment or Assignment of Mortgage
certified by the public recording office to be a true copy of the recorded
original thereof. The Transferor agrees, at its own expense, to record (or to
provide the Trustee with evidence of recordation thereof) each assignment within
30 days of the Closing Date with respect to the Initial Loans, and with respect
to the Subsequent Loans, within 30 days of the Subsequent Transfer Date, in the
appropriate public office for real property records, unless the related Mortgage
or intervening assignment has not been returned from the applicable recording
office, in which case the Transferor shall submit the Assignment of Mortgage for
recording within 30 days of the return of the related Mortgage or intervening
assignment and provided, further, that Assignments of Mortgages shall not be
required to be submitted for recording with respect to any Mortgage Loan which
relates to the Trustee's Loan File if the Trustee, each of the Rating Agencies
and the Certificate Insurer shall have received an opinion of counsel
satisfactory to the Trustee, each of the Rating Agencies and the Certificate
Insurer stating that, in such counsel's opinion, recordation of such assignment
is not necessary under applicable states law to preserve the Trustee's interest
in the related loan against the claim of any subsequent transferee of such Loan
or any successor to, or creditor of the Depositor or the Transferor; provided,
further, that any Assignment of Mortgage for which an opinion has been delivered
shall be recorded by the Servicer upon the earlier to occur of (1) receipt by
the Trustee of the Certificate Insurer's written direction to record such
Mortgage, (2) the occurrence of any Event of Default, as such term is defined in
this Agreement, or (3) a bankruptcy or insolvency proceeding involving the
Borrower is initiated or foreclosure proceedings are initiated against the
Mortgaged Property as a consequence of an event of default under the Mortgage
Loan.
On or prior to the Closing Date the Servicer, at its own expense shall
complete the endorsement of each Mortgage Note such that the final endorsement
appears in the following form:
"Pay to the order of _________, without recourse, New South Federal Savings
Bank."
The Servicer, at its own expense shall also complete each Assignment of
Mortgage either in blank or such that the final Assignment of Mortgage appears
in the following form:
"The Bank of New York, as Trustee for New South Home Equity Trust 1999-2
formed pursuant to the Pooling and Servicing Agreement dated as of November
1, 1999, among PaineWebber Mortgage Acceptance Corporation IV as Depositor,
New South Federal Savings Bank, as Transferor and as Servicer and The Bank
of New York, as Trustee."
(b) Without diminution of the requirements of Sections 2.2(c) and this
Section 2.3, all original documents relating to the Loans that are not delivered
to the Trustee are and shall be delivered to the Servicer by the Transferor on
behalf of the Depositor pursuant to the Loan Sale Agreement, and shall be held
by the Servicer in trust for the benefit of the Trustee on behalf of the
Certificateholders and the Certificate Insurer. In the event that any such
original document is required pursuant to the terms of this Section 2.3 to be a
part of a Loan File, the Servicer shall promptly deliver such original document
to the Trustee. In acting as custodian of any such original document, the
Servicer agrees further that it does not and will not have or assert any
beneficial ownership interest in the Loans or the Loan Files. Promptly upon the
Depositor's and the Trust's acquisition thereof and the Servicer's receipt
thereof, the Servicer on behalf of the Trust shall ▇▇▇▇ the Transferor's master
data processing records evidencing each Loan with a legend, acceptable to the
Trustee and the Certificate Insurer, evidencing that the Trust has purchased the
Loans and all right and title thereto and interest therein pursuant to the Loan
Sale Agreement and this Agreement.
(c) In the event that any Mortgage Note required to be delivered pursuant
to this Section 2.3 is conclusively determined by any of the Transferor or the
Servicer, to be lost, stolen or destroyed, the Transferor shall, on the Closing
Date or the later date upon which such Mortgage Note has been conclusively
determined to be lost, deliver to the Trustee a "lost note affidavit" in form
and substance acceptable to the Trustee and the Certificate Insurer, and shall
further agree to hold the Trustee and the Certificate Insurer harmless from any
loss or damage resulting from any action taken in reliance on the delivery and
possession by the Trustee of such lost note affidavit; provided, however, that
the Aggregate Principal Balance of the Loans with lost notes may not exceed 1%
of the Maximum Collateral Amount. Delivery by the Transferor of such lost note
affidavit to the Trustee, with a copy to the Certificate Insurer, shall not
affect the obligations of the Transferor under the Loan Sale Agreement with
respect to the related Mortgage Loan.
Section 2.4 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee.
(a) The Trustee agrees to execute and deliver to the Depositor, the
Certificate Insurer, the Servicer and the Transferor on or prior to the Closing
Date an acknowledgment of receipt of the Certificate Insurance Policy and, with
respect to each Initial Loan, the original Mortgage Note (with any exceptions
noted and the Original Assignment of Mortgage as provided in Section 2.3(a)(3)),
in the form attached as Exhibit D-1 hereto and declares that it will hold such
documents and any amendments, replacements or supplements thereto, as well as
any other assets included in the definition of Trust Fund and delivered to the
Trustee, as Trustee in trust upon and subject to the conditions set forth herein
for the benefit of the Certificateholders and the Certificate Insurer.
(b) The Trustee agrees, for the benefit of the Certificateholders and the
Certificate Insurer, to review (or cause to be reviewed) each Trustee's Loan
File within 180 Business Days after the Closing Date with respect to the Initial
Loans, and with respect to the Subsequent Loans, within 180 days of the
Subsequent Transfer Date, and to deliver to the Transferor, the Servicer, the
Depositor and the Certificate Insurer an interim certification in the form
attached hereto as Exhibit D-2 (with applicable exceptions noted thereon, with
the exceptions divided into two categories, namely "critical exceptions" and
"non-critical exceptions"; critical exceptions shall consist of the lack of (1)
an original Mortgage Note or a certificated copy of the Mortgage Notes, together
with a lost note affidavit, (2) an original Mortgage, with evidence of recording
or a certified copy of the Mortgage, with evidence of recording and (3) a
recorded Assignment of Mortgage or a certified copy of recorded Assignment of
Mortgage; non-critical exceptions shall be, with respect to Mortgage Loans, the
items described in Section 2.3(a)(4) and (6)) to the effect that, as to each
Loan listed in Loan Schedule (other than any Loan paid in full or any Loan
specifically identified in such certification as not covered by such
certification), (1) all documents required to be delivered to it pursuant to
Section 2.3 hereof are in its possession, (2) each such document has been
reviewed by it, has been, to the extent required, executed and has not been
mutilated, damaged, torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical alteration if initialed by
the Borrower), appears regular on its face and relates to such Loan. The Trustee
shall be under no duty or obligation to (1) inspect, review or examine any such
documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, or appropriate for the represented purpose or that they
are other than what they purport to be on their face or (2) determine whether
any Trustee's Loan File should contain any of the documents referred to in
Section 2.3(a)(5). On the 60th day following delivery of the interim certificate
by the Trustee and each 60th day thereafter until the earlier of (1) the
clearing of all critical exceptions by the Transferor and (2) the delivery of
the final certificate as described below by the Trustee, the Trustee shall
deliver critical exception reports to the Certificate Insurer.
Within 360 days of the Closing Date with respect to the Initial Loans and
with respect to the Subsequent Loans, within 360 days of the Subsequent Transfer
Date, the Trustee shall deliver (or cause to be delivered) to the Servicer, the
Transferor, the Depositor and the Certificate Insurer a final certification in
the form attached hereto as Exhibit E to the effect that, as to each Loan listed
in the Loan Schedule (other than any Loan paid in full or any Loan specifically
identified in such certification as not covered by such certification), and as
to any document noted in an exception included in the Trustee's initial
certifications, (i) all documents required to be delivered to it pursuant to
Section 2.3 hereof and the Loan Sale Agreement are in its possession (other than
the documents referred to in Section 2.3(a)(5)), (ii) each such document has
been reviewed by it, has been, to the extent required, executed and has not been
mutilated, damaged, torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical alteration if initialed by
the Borrower), appears regular on its face and relates to such Loan.
(c) If the Certificate Insurer or the Trustee during the process of
reviewing the Trustee's Loan Files finds any document constituting a part of a
Trustee's Loan File which is not executed, has not been received, is unrelated
to the Loan identified in the related Loan Schedule, or does not conform to the
requirements of Section 2.3 or the description thereof as set forth in the
related Loan Schedule, the Trustee or the Certificate Insurer, as applicable,
shall promptly so notify the Servicer, the Transferor, the Certificate Insurer
and the Trustee. In performing any such review, the Trustee may conclusively
rely on the Transferor as to the purported genuineness of any such document and
any signature thereon. It is understood that the scope of the Trustee's review
of the Loan Files is limited solely to confirming that the documents listed in
Section 2.3 have been executed and received and relate to the Loan Files
identified in the related Loan Schedule (other than the documents referred to in
Section 2.3(a)(5)). Pursuant to the Loan Sale Agreement, the Transferor has
agreed to use reasonable efforts to cause to be remedied a material defect in a
document constituting part of a Loan File of which it is so notified by the
Trustee or otherwise becomes aware. If, however, within 180 days after the
Trustee's or Certificate Insurer's, as applicable, notice to it respecting such
defect (or within 90 days if such defect would cause the Loan not to be a
Qualified Mortgage) the Transferor has not caused to be remedied the defect and
the defect materially and adversely affects the value of the Loans or the
interest of the Certificateholders or the Certificate Insurer in such Loan (in
the reasonable determination of the Certificate Insurer), the Transferor shall
either (1) substitute in lieu of such Loan a Qualified Substitute Loan in the
manner and subject to the conditions set forth in Section 3.5 hereof or (2)
purchase such Loan at a purchase price equal to the outstanding Principal
Balance of such Loan as of the date of purchase, plus the greater of (x) all
accrued and unpaid interest to the Due Date for such Loan in the related Due
Period and (y) 30 days' interest thereon, computed at the related Loan Interest
Rate, plus the amount of any unreimbursed Servicing Advances made by the
Servicer with respect to such Loan, as set forth in an Officer's Certificate of
the Servicer, copies of which shall be provided by the Servicer to the Trustee
and the Certificate Insurer, which purchase price shall be deposited in the
Collection Account on the next succeeding Determination Date, after deducting
therefrom any amounts received in respect of such repurchased Loan or Loans and
being held in the Collection Account for future distribution to the extent such
amounts have not yet been applied to principal or interest on such Loan (the
"Loan Repurchase Price"); provided, however, the lack of a recorded Assignment
of Mortgage in a Loan File shall not be considered a defect until 360 days after
the Closing Date with respect to the Initial Loans and within 360 days after the
Subsequent Transfer Date with respect to the Subsequent Loans.
(d) Upon receipt by the Trustee of a certification of a Servicing Officer
of such substitution or purchase and, in the case of a substitution, upon
receipt of the related Trustee's Loan File, and the deposit of the amounts
described above into the Certificate Account (which certification shall be in
the form of Exhibit F hereto), the Trustee shall release to the Servicer for
release to the Transferor the related Trustee's Loan File and shall execute,
without recourse, and deliver such instruments of transfer furnished by the
Transferor as may be necessary to transfer such Loan to the Transferor. The
Trustee shall notify the Certificate Insurer if the Transferor fails to
repurchase or substitute for a Loan in accordance with the foregoing.
Section 2.5 Subsequent Transfers.
(a) Subject to the satisfaction of the conditions set forth in this Section
2.5 and pursuant to the terms of the related Subsequent Transfer Agreement, in
consideration of the Trustee's delivery on each Subsequent Transfer Date to or
upon the order of the Depositor, and in consideration of the Depositor's
delivery on each Subsequent Transfer Date to or upon the order of the
Transferor, of all or a portion of the Pre-Funding Amount, in any case on
deposit in the Pre-Funding Account, the Transferor shall on such Subsequent
Transfer Date sell, transfer, assign, set over and otherwise convey without
recourse to the Depositor, and the Depositor shall on such Subsequent Transfer
Date sell, transfer, assign, set over and otherwise convey without recourse to
the Trustee, for the benefit of the Certificateholders and the Certificate
Insurer, all of its right, title and interest in and to each Subsequent Loan
listed on the related Subsequent Loan Schedule. The Trustee may only acquire
Subsequent Loans with an aggregate Principal Balance of up to the Original
Pre-Funding Amount. The transfer by the Transferor to the Depositor, and by the
Depositor to the Trustee of the Subsequent Loans set forth in the related
Subsequent Transfer Agreement shall be absolute and shall be intended by all
parties hereto to be treated as a sale by the Transferor to the Depositor, and a
sale by the Depositor to the Trustee. If the assignment and transfer of the
Subsequent Loans and the other property specified in this Section 2.5(a) from
the Transferor to the Depositor, and from the Depositor to the Trustee pursuant
to this Agreement is held or deemed not to be a sale or is held or deemed to be
a pledge of security for a loan, the Transferor and the Depositor intend that
the rights and obligations of the parties shall be established pursuant to the
terms of this Agreement and that, in such event, (a)(i) the Transferor shall be
deemed to have granted and does hereby grant to the Depositor as of each
Subsequent Transfer Date a perfected, first priority security interest in the
entire right, title and interest of the Transferor in and to the related
Subsequent Loans and all other property conveyed to the Depositor pursuant to
this Section 2.5(a) and all proceeds thereof, and (ii) this Agreement shall
constitute a security agreement under applicable law and (b)(i) the Depositor
shall be deemed to have granted and does hereby grant to the Trustee, for the
benefit of the Certificateholders and the Certificate Insurer, as of each
Subsequent Transfer Date a perfected, first priority security interest in the
entire right, title and interest of the Depositor in and to the related
Subsequent Loans and all other property conveyed to the Trustee pursuant to this
Section 2.5(a) and all proceeds thereof, and (ii) this Agreement shall
constitute a security agreement under applicable law. The amount released to the
Transferor from the Pre-Funding Account shall be one hundred percent (100%) of
the aggregate Principal Balances of the Subsequent Loans as of the related
Cut-Off Date so transferred.
(b) The Trustee shall transfer funds from the Pre-Funding Account funds in
an amount equal to one hundred percent (100%) of the aggregate Principal
Balances of the Subsequent Loans as of the related Cut-Off Date so transferred
to the Trustee and use such cash to acquire the Subsequent Loans on behalf of
the Trust, along with the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) The Transferor on its behalf and on behalf of the Depositor, shall
have provided the Trustee and the Rating Agencies with an Addition Notice,
which notice shall be given no fewer than five (5) Business Days prior to
the related Subsequent Transfer Date and shall designate the Subsequent
Loans to be sold by the Transferor to the Depositor and by the Depositor to
the Trustee and the aggregate Principal Balances of such Subsequent Loans
as of the related Cut-Off Date and the Rating Agencies shall have provided
written confirmation that the purchase of such Subsequent Loans will not
result in a downgrade, withdrawal or qualification of the ratings then in
effect for the then outstanding Certificates;
(ii) The Transferor on its behalf and on behalf of the Depositor,
shall have deposited in the Collection Account all principal collected
after the related Cut-Off Date and interest payments collected after the
related Cut-Off Date in respect of each Subsequent Loan and the related
Subsequent Cut-Off Date Deposit;
(iii) The Transferor shall have delivered to the Depositor, the
Certificate Insurer and the Trustee, an Officer's Certificate confirming
that, as of each Subsequent Transfer Date, the Transferor was not
insolvent, would not be made insolvent by such transfer and was not aware
of any pending insolvency;
(iv) The Pre-Funding Period shall not have ended;
(v) The Transferor shall have delivered to the Depositor, the
Certificate Insurer and the Trustee, an Officer's Certificate confirming
the satisfaction of each condition precedent specified in this paragraph
(b) (including those set forth in clause (B) of subparagraph (vii) below)
and in the related Subsequent Transfer Agreement;
(vi) The Transferor shall have delivered to the Depositor, the
Certificate Insurer and the Trustee, an Officer's Certificate confirming
that the representations and warranties of the Transferor pursuant to
Section 3.3 (other than to the extent representations and warranties relate
to statistical information as to the characteristics of the Initial Loans
in the aggregate) and pursuant to Section 3.4 are true and correct with
respect to the Subsequent Loans and the Transferor, as of the Subsequent
Transfer Date;
(vii) Each of the Depositor and the Trustee shall not purchase a
Subsequent Loan unless:
(A) each Rating Agency shall consent thereto (which consent shall
be evidenced by a letter from the Rating Agency);
(B) the Depositor and the Transferor shall have delivered to the
Certificate Insurer, the Rating Agencies and the Trustee Opinions of
Counsel with respect to the transfer of the Subsequent Loans
substantially in the form of the Opinions of Counsel delivered to the
Certificate Insurer, the Rating Agencies and the Trustee on the
Closing Date relating to corporate formalities and enforceability; and
(C) the following conditions shall have been satisfied as
evidenced by an Officer's Certificate pursuant to Section 2.5 (b)(v)
above:
(1) no Subsequent Loans may be 30 or more days Delinquent as of the
applicable Cut-Off Date;
(2) the Subsequent Loan must be secured by a first or second priority lien;
(3) no Subsequent Loan may have an outstanding Principal Balance of more
than $499,000 as of the applicable Cut-Off Date and the average Principal
Balance of all the Subsequent Loans will not be greater than $64,479;
(4) the Subsequent Loan is a balloon loan or a fully amortizing loan with
level payments over the remaining term of no more than 30 years;
(5) the Subsequent Loan must have a fixed interest rate equal to at least
8.25% per annum;
(6) the Subsequent Loan must have a CLTV of no more than 100%;
(7) the Subsequent Loan must be underwritten, re-underwritten or reviewed,
as applicable, in accordance with the underwriting guidelines similar to those
of the Initial Loans;
(8) following the acquisition of the Subsequent Loans by the trust, all of
the loans included in the trust must satisfy the following:
(a) The minimum FICO credit score must be at least 620 for the Loans
originated by Avondale;
(b) The percentage of Loans originated by Avondale may not be more
than 34.82% of the total Loans based on Aggregate Principal
Balance;
(c) The weighted average CLTV of all the Loans may not be more than
79.15%;
(d) The percentage of Loans with a CLTV of greater than 80% may not
be greater than 34.72% based on Aggregate Principal Balance;
(e) The percentage of Loans with a CLTV of greater than 90% may not
be greater than 8.61% based on Aggregate Principal Balance;
(f) The percentage of Loans that are second liens may not be greater
than 10.53% based on Aggregate Principal Balance;
(g) Of the Loans that are second liens, the percentage of Loans
originated by New South that are second liens may not be greater
than 8.06% of the total Loans originated by New South based on
Aggregate Principal Balance and the percentage of Loans
originated by Avondale that are second liens may not be greater
than 15.16% of the total Loans originated by Avondale based on
Aggregate Principal Balance;
(h) The percentage of A classified Loans from New South shall be no
less than 42.74% based on Aggregate Principal Balance;
(i) The percentage of AA classified Loans from New South shall be no
less than 28.60% based on Aggregate Principal Balance;
(j) [Reserved];
(k) The percentage of C classified Loans from New South shall be no
more than 6.42% based on Aggregate Principal Balance;
(l) The percentage of Loans that are non-owner occupied properties
may not be greater than 1.80% based on Aggregate Principal
Balance;
(m) The percentage of Loans which are balloon loans may not be
greater than 14.80% based on Aggregate Principal Balance;
(n) The percentage of Loans that are considered "Full Doc" or "Time
Saver" shall be no less than 65.42% based on Aggregate Principal
Balance;
(o) The percentage of Loans that are secured by mortgaged properties
considered single family residences may not be less than 96.56%
based on Aggregate Principal Balance;
(p) The weighted average interest rate of the Loans must be at least
9.91% based on Aggregate Principal Balance;
(q) No more than 0.93% of the Loans, by Aggregate Principal Balance
may be concentrated in any single zip code;
(r) No more than 22.00% of the Loans, by Aggregate Principal Balance
may be secured by properties located in the State of Alabama;
(viii) in connection with the transfer and assignment of the
Subsequent Loans, the Transferor on its behalf, and on behalf of the
Depositor, shall satisfy the document delivery requirements set forth in
Section 2.3 hereof; and
(ix) each proposed Subsequent Loan must be listed on the Loan Schedule
hereto as the same may be amended from time to time with the approval of
the Depositor.
(c) In connection with each Subsequent Transfer Date and on the related
Distribution Date, the Trustee shall determine, based on the written
instructions received from the Servicer (i) the amount and correct dispositions
of the Capitalized Interest Requirement and Pre-Funding Earnings for such
Distribution Date in accordance with the provisions of this Agreement and (ii)
any other necessary matters in connection with the administration of the
Pre-Funding Account and the Capitalized Interest Account. In the event that any
amounts are released as a result of calculation error by the Trustee from the
Pre-Funding Account or from the Capitalized Interest Account, the Trustee shall
not be liable therefor and the Transferor shall immediately repay such amounts
to the Trustee.
Section 2.6 Creation of the Uncertificated Regular Interests and
Residual Interests; Basis Risk Arrangements; Issuance of Certificates.
(a) Concurrently with the assignment to the Trustee of the assets included
in REMIC I, and in exchange therefor, at the direction of the Depositor, the
REMIC I Regular Interest and Class R-I Certificate have been issued hereunder.
The interests evidenced by the REMIC I Regular Interests and Class R-I
Certificate constitute the entire beneficial ownership of REMIC I. The rights of
the REMIC II and the Class R-I Certificateholders to receive distributions from
the proceeds of REMIC I in respect of the REMIC I Regular Interest and the Class
R-I Certificate, respectively, and all ownership interests of REMIC II and the
Class R-I Certificateholders in and to such distributions, shall be as set forth
in this Agreement.
(b) The Depositor, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the REMIC I Regular
Interest to the Trustee for the benefit of the Trustee as Holder of the REMIC II
Regular Interests and the Class R-II Interest. The Trustee acknowledges the
assignment to it of the REMIC I Regular Interest and declares that it holds and
will hold the same in trust for the exclusive use and benefit of all present and
future Certificateholders (other than the Class R-I Certificateholders) and of
the Trustee as Holder of the REMIC II Regular Interests and the Class R-II
Interest.
(c) Concurrently with the assignment to the Trustee of the REMIC I Regular
Interest, and in exchange therefor, at the direction of the Depositor, the REMIC
II Regular Interests and Class R-II Interest have been issued hereunder. The
rights of REMIC III and the Class R-II Certificateholders to receive
distributions from the proceeds of REMIC II in respect of the REMIC II Regular
Interests and the Class R-II Interest, respectively, and all ownership interests
of REMIC III and the Class R-II Certificateholders in and to such distributions,
shall be as set forth in this Agreement.
(d) The Depositor, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the REMIC II Regular
Interests to the Trustee for the benefit of the Trustee as Holder of the REMIC
III Regular Interests and the Class R-III Certificateholders. The Trustee
acknowledges the assignment to it of the REMIC II Regular Interests and declares
that it holds and will hold the same in trust for the exclusive use and benefit
of all present and future Certificateholders (other than the Class R-I and Class
R-II Certificateholders) and of the Trustee as Holder of the REMIC III Regular
Interests.
(e) Concurrently with the assignment to the Trustee of the REMIC III
Regular Interests and the entering into of the Basis Risk Arrangements, and in
exchange therefor, at the direction of the Depositor, the Trustee has executed,
authenticated and delivered to or upon the order of the Depositor, the
Certificates (other than the Class R-I and Class R-II Certificates) in
Authorized Denominations evidencing the beneficial ownership of the Grantor
Trust; provided, however, that the Class R-I and Class R-III Certificates
represent direct interests in REMIC I and REMIC III and the Class R-II
Certificates represent beneficial ownership of the portion of the Grantor Trust
consisting of the Class R-II Interest. The rights of the respective Classes of
Holders of the Certificates (other than the Class R-I and Class R-II
Certificates) to receive distributions from the proceeds of REMIC III and to
receive amounts under the Basis Risk Arrangements in respect of their
Certificates, and all ownership interests of the respective Classes of Holders
of the Certificates in and to such distributions, shall be as set forth in this
Agreement.
(f) The Holders of the Certificates (other than the Class R-I and Class
R-III Certificates), by their acceptance of their certificates, acknowledge and
agree for federal income tax purposes that it is their intention that the
amounts distributable to the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6 and Class B Certificates pursuant to Sections 6.5(b)(iii)(B),
6.5(b)(iv)(B), 6.5(b)(xii) and 6.5(b)(xiii) be treated as having been deemed
distributed with respect to the Class R-II Interest and paid on behalf of the
Holders of the Class R-II Certificates to the Holders of the foregoing Classes
of Certificates, as set forth in Section 6.05(c) and that such Basis Risk
Arrangements be treated as notional principal contracts held by the Grantor
Trust for federal income tax purposes.
(g) The Trustee acknowledges that it holds as assets of the Grantor Trust
(i) the REMIC III Regular Interests, which are beneficially owned by the Holders
of the respective Classes of Certificates (other than the Class R Certificates),
(ii) the Pre-Funding Account and the Capitalized Interest Account and all
amounts on deposit therein, which shall be beneficially owned by the Transferor,
(iii) the Class R-II Interest, which shall be beneficially owned by the Class
R-II Certificateholders, (iv) the prepayment penalties and charges payable by a
Borrower on any Loan, which shall be beneficially owned by the Transferor, and
(v) the Basis Risk Arrangements, which are beneficially owned by the Class A
Certificateholders and the Class B Certificateholders, as set forth in the
definition of "Basis Risk Arrangement."
Section 2.7 Designations under REMIC Provisions; Designation of Startup
Day and Latest Possible Maturity Date.
(a) The REMIC I Regular Interest is hereby designated as the "regular
interest," and the Class R-I Certificate is hereby designated as the single
Class of "residual interest" in REMIC I for purposes of the REMIC Provisions.
(b) The Class ▇▇-▇, ▇▇▇▇▇ ▇▇-▇, Class LA-3, Class LA-4, Class LA-5, Class
LA-6 and Class LB Interests are hereby designated as the "regular interests,"
and the Class R-II Interest is hereby designated as the single Class of
"residual interest" in REMIC II for purposes of the REMIC Provisions.
(c) The Class UA-1, Class UA-2, Class UA-3, Class UA-4, Class UA-5, Class
UA-6, and Class UB Certificates are hereby designated as representing beneficial
interests in the "regular interests," and the Class R-III Certificate is hereby
designated as the single Class of "residual interest" in REMIC III for purposes
of the REMIC Provisions.
(d) The Closing Date will be the "startup day" of each of the Trust REMICs
within the meaning of Section 860G(a)(9) of the Code (the "Startup Day").
(e) The "latest possible maturity date," within the meaning of Treasury
Regulations Section 1.860G-1(a)(4)(iii) will be April 1, 2030 with respect to
the Uncertificated Regular Interests.
Section 2.8 Application of Principal and Interest. In the event that Net
Liquidation Proceeds on a Liquidated Loan are less than the outstanding
Principal Balance of the related Loan plus accrued interest thereon, or any
Borrower makes a partial payment of any Monthly Payment due on a Loan, such Net
Liquidation Proceeds or partial payment shall be applied to payment of the
related Loan as provided therein, and if not so provided, first to interest
accrued at the Loan Interest Rate, then to the principal owed on such Loan.
Section 2.9 Grant of Security Interest.
(a) It is the intention of the parties hereto that the conveyance by the
Depositor of the Trust Fund to the Trustee on behalf of the Trust shall
constitute a purchase and sale of such Trust Fund and not a loan. In the event,
however, that a court of competent jurisdiction were to hold that the
transaction evidenced hereby constitutes a loan and not a purchase and sale, it
is the intention of the parties hereto that this Agreement shall constitute a
security agreement under applicable law, and that the Depositor shall be deemed
to have granted and hereby grants to the Trustee, on behalf of the Trust, a
first priority perfected security interest in all of the Depositor's right,
title and interest in, to and under the Trust Fund to secure a loan in an amount
equal to the purchase price of the Loans. The conveyance by the Depositor of the
Trust Fund to the Trustee on behalf of the Trust shall not constitute and are
not intended to result in an assumption by the Trustee, the Certificate Insurer
or any Certificateholder of any obligation of the Transferor or any other Person
in connection with the Trust Fund.
(b) The Depositor and the Servicer shall take no action inconsistent with
the Trust's ownership of the Trust Fund and shall indicate or shall cause to be
indicated in its records and records held on its behalf that ownership of each
Loan and the assets in the Trust Fund are held by the Trustee on behalf of the
Trust. In addition, the Depositor and the Servicer shall respond to any
inquiries from third parties with respect to ownership of a Loan or any other
asset in the Trust Fund by stating that it is not the owner of such asset and
that ownership of such Loan or other Trust Fund asset is held by the Trustee on
behalf of the Trust.
Section 2.10 Further Assurances; Powers of Attorney.
(a) The Servicer agrees that, from time to time, at its expense, it shall
cause the Transferor, promptly to execute and deliver all further instruments
and documents, and take all further action, that may be necessary or
appropriate, or that the Servicer or the Trustee may reasonably request, in
order to perfect, protect or more fully evidence the transfer of ownership of
the Trust Fund or to enable the Trustee to exercise or enforce any of its rights
hereunder. Without limiting the generality of the foregoing, the Servicer and
the Depositor will, upon the request of the Servicer or of the Trustee execute
and file (or cause to be executed and filed) such real estate filings, financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or appropriate.
(b) In the event that the Depositor is unable to fulfill its obligations in
subsection (a) above, the Depositor hereby grants to the Servicer powers of
attorney to execute all documents on its behalf under this Agreement and the
Loan Sale Agreement as may be necessary or desirable to effectuate the
foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations of the Servicer. The Servicer hereby
represents and warrants to the Trustee, the Depositor, the Certificate Insurer
and the Certificateholders as of the Closing Date and during the term of this
Agreement:
(a) the Servicer is a federally chartered savings bank duly organized,
validly existing and in good standing under the laws of the United States of
America, and has full power and authority to own its assets and to transact the
business in which it is currently engaged. The Servicer is duly qualified to do
business and is in good standing in each jurisdiction in which the character of
the business transacted by it or properties owned or leased by it requires such
qualification and in which the failure to so qualify would have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Servicer;
(b) the Servicer has full power and authority to make, execute, deliver and
perform this Agreement and all of the transactions contemplated hereunder, and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement;
(c) the Servicer is not required to obtain the consent of any other Person
or any consent, license, approval or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consent, license, approval or authorization or
registration or declaration as shall have been obtained or filed, as the case
may be;
(d) the execution and delivery of this Agreement and the performance of the
transactions contemplated hereby by the Servicer will not violate any material
provision of any existing law or regulation or any order or decree of any court
applicable to the Servicer or any provision of the federal charter or bylaws of
the Servicer, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Servicer is a party or by which it may
be bound;
(e) no suit in equity, action at law or other judicial or administrative
proceeding of or before any court, tribunal or governmental body is currently
pending or, to the knowledge of the Servicer, threatened against the Servicer or
any of its properties or with respect to this Agreement or the Securities that
in the opinion of the Servicer has a reasonable likelihood of resulting in a
material adverse effect on the transactions contemplated by this Agreement; and
(f) any custom-made software or hardware designed or purchased or licensed
by the Servicer, which the Servicer has identified as being mission-critical to
its business for purposes of its operations and for purposes of compiling,
reporting or generating data required by this Agreement, is capable of
accurately performing calculations or other processing with respect to dates
after December 31, 1999 as a result of the changing of the date from 1999 to
2000, including leap year calculations, when used for the purpose for which it
was intended, assuming that all other products, including other software or
hardware, when used in combination with such software or hardware designed or
purchased or licensed by the Servicer, properly exchange date data.
It is understood and agreed that the representations, warranties and covenants
set forth in this Section 3.1 shall survive the delivery of the respective Loan
Files to the Trustee or to a custodian, as the case may be, and inure to the
benefit of the Trustee and the Certificate Insurer.
Section 3.2 Representations, Warranties and Covenants of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee and the
Certificate Insurer that as of the date of this Agreement or as of such date
specifically provided herein:
(a) The Depositor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to convey the Loans
and to execute, deliver and perform, and to enter into and consummate
transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer and the Trustee, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of, or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except as have been received or obtained on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby or thereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement, (1) conflicts or
will conflict with or results or will result in a breach of, or constitutes or
will constitute a default or results or will result in an acceleration under (i)
the charter or bylaws of the Depositor, or (ii) of any term, condition or
provision of any material indenture, deed of trust, contract or other agreement
or instrument to which the Depositor or any of its subsidiaries is a party or by
which it or any of its subsidiaries is bound; (2) results or will result in a
violation of any law, rule, regulation, order, judgment or decree applicable to
the Depositor of any court or governmental authority having jurisdiction over
the Depositor or its subsidiaries; or (3) results in the creation or imposition
of any lien, charge or encumbrance which would have a material adverse effect
upon the Loans or any documents or instruments evidencing or securing the Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement; and
(g) The Depositor is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency that would materially and adversely affect its performance
hereunder.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.2 shall survive delivery of the respective
Loan Files to the Trustee or to a custodian, as the case maybe, and shall inure
to the benefit of the Trustee and the Certificate Insurer.
Section 3.3 Representations and Warranties of the Transferor. The
Transferor hereby represents and warrants to the Trustee, the Certificate
Insurer, the Certificateholders and the Depositor that as of the Closing Date
(except as otherwise specifically provided herein):
(a) The Transferor is a federally chartered savings bank duly organized,
validly existing and in good standing under the laws of the United States of
America and has and had at all relevant times, full corporate power to originate
or purchase the Loans, to own its property, to carry on its business as
presently conducted and to enter into and perform its obligations under each
Transaction Document to which it is a party.
(b) The execution and delivery of each Transaction Document to which it is
a party by the Transferor and its performance of and compliance with the terms
of each Transaction Document to which it is a party will not violate the
Transferor's federal charter or by-laws or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
or result in the breach or acceleration of, any material contract, agreement or
other instrument to which the Transferor is a party or which may be applicable
to the Transferor or any of its assets.
(c) The Transferor has the full power and authority to enter into and
consummate all transactions contemplated by the Transaction Documents to which
it is a party, has duly authorized the execution, delivery and performance of
each Transaction Document to which it is a party and has duly executed and
delivered each Transaction Document to which it is a party. Each Transaction
Document to which the Transferor is a party, assuming due authorization,
execution and delivery by the other parties thereto, constitutes a valid, legal
and binding obligation of the Transferor, enforceable against it in accordance
with the terms thereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(d) The Transferor is not in violation of, and the execution and delivery
of any Transaction Documents by the Transferor and its performance and
compliance with the terms thereof will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction, which violation
would materially and adversely affect the condition (financial or otherwise) or
operations of the Transferor or its properties or materially and adversely
affect the performance of its duties hereunder or thereunder.
(e) There are no actions or proceedings against, or investigations of, the
Transferor currently pending with regard to which the Transferor has received
service of process and no action or proceeding against, or investigation of, the
Transferor is, to the knowledge of the Transferor, threatened or otherwise
pending, before any court, administrative agency or other tribunal that (A) if
determined adversely, would prohibit its entering into this Agreement or render
the Certificates invalid, (B) seek to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this Agreement or
(C) if determined adversely, would prohibit or materially and adversely affect
the sale of the Loans to the Depositor, the performance by the Transferor of its
obligations under, or the validity or enforceability of, this Agreement or the
Certificates.
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for: (1) the execution, delivery and
performance by the Transferor of, or compliance by the Transferor with, this
Agreement, (2) the issuance of the Certificates, (3) the sale of the Loans under
the Loan Sale Agreement or (4) the consummation of the transactions required of
it by this Agreement, except such as shall have been obtained before the Closing
Date.
(g) The Transferor acquired title to the Loans in good faith, without
notice of any adverse claim.
(h) The collection practices used by the Transferor with respect to the
Loans have been, in all material respects, legal, proper, prudent and customary
in the servicing of loans of the same type as the Loans.
(i) No Officer's Certificate, statement, report or other document prepared
by the Transferor and furnished or to be furnished by it pursuant to any
Transaction Document or in connection with the transactions contemplated hereby
contains any untrue statement of material fact.
(j) The Transferor is solvent, is able to pay its debts as they become due
and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
any Transaction Document or by the performance of its obligations hereunder; no
petition of bankruptcy (or similar insolvency proceeding) has been filed by or
against the Transferor prior to the date hereof.
(k) The Prospectus Supplement does not contain an untrue statement of a
material fact and does not omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the Transferor makes no statement with
respect to: (1) the statements set forth in the final paragraph of the cover of
the Prospectus Supplement; and (2) statements set forth under the following
captions: (i) "SUMMARY--Tax Status," "--ERISA Considerations," and "--Legal
Investment"; (ii) "CERTAIN FEDERAL INCOME TAX CONSEQUENCES," (iii) "ERISA
CONSIDERATIONS," (iv) "LEGAL INVESTMENT," and (v) "UNDERWRITING."
(l) The Transferor has transferred the Loans without any intent to hinder,
delay or defraud any of its creditors.
(m) The origination and collection practices used with respect to each Loan
have been in all material respects legal, proper, prudent and customary in the
mortgage origination and servicing business and in compliance with the
Transferor's underwriting criteria as described in the Prospectus Supplement.
(n) The transfer, assignment and conveyance of the Loans by the Transferor
pursuant to the Loan Sale Agreement are not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
Section 3.4 Representations and Warranties of the Transferor Regarding
Individual Loans. The Transferor hereby represents and warrants to the
Depositor, the Trustee, the Certificate Insurer and the Certificateholders, with
respect to each Loan as of the Closing Date, except as otherwise expressly
stated:
(a) Loan Schedule. The information with respect to each Loan set forth in
the Loan Schedule is complete, true and correct as of the Cut-Off Date.
(b) Delivery of Loan File. All of the original or certified documentation
required to be delivered by the Transferor on the Closing Date or as otherwise
provided herein or in the Loan Sale Agreement has or will be so delivered as
provided. The Loan File contains each of the documents and instruments specified
to be included therein duly executed and in due and proper form, and each such
document or instrument is in a form generally acceptable to prudent loan lenders
that regularly originate or purchase mortgage loans comparable to the Loans for
sale to prudent investors in the secondary market that invest in mortgage loans
such as the Loans. To the best knowledge and belief of the Transferor, no such
documentation contains any untrue statement of a material fact or omits to state
a fact necessary to make the statements contained therein not misleading
(c) Nature of Mortgaged Property. Each Mortgaged Property consists of a
single parcel of residential real property, separately assessed for tax
purposes, owned by the related Borrower in fee simple absolute and is improved
by a one-to-four-family residential dwelling.
(d) Servicing. Each Loan is being serviced by the Servicer.
(e) Fixed Interest Rate. The Debt Instrument related to all of the Loans
bears a fixed Loan Interest Rate. The Loan Interest Rate is not less than 7.75%
nor more than 16.88% and as of the Cut-Off Date, the weighted average Loan
Interest Rate on the Loans is approximately 9.91%.
(f) Priority of Lien. Each Mortgage is a valid and subsisting first or
second lien of record on a single parcel of real estate constituting the
Mortgaged Property, subject in all cases to the exceptions to title set forth in
the title insurance policy, with respect to the related Loan, which exceptions
are generally acceptable to mortgage lending companies, and such other
exceptions to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the benefits
of the security intended to be provided by such Mortgage or the interests of the
Certificate Insurer or the Certificateholders.
(g) Title. Except with respect to liens released immediately prior to the
transfer herein contemplated, immediately prior to the transfer and assignment
herein contemplated the Transferor held good and marketable title to, and was
the sole owner of, each Loan, subject to no liens, charges, mortgages,
encumbrances or rights of others; and immediately upon the transfer and
assignment by the Depositor to the Trustee herein contemplated, the Trust will
hold good and marketable title to, and be the sole owner of, each Loan, subject
to no liens, charges, mortgages, encumbrances or rights of others.
(h) Delinquencies. As of the Cut-Off Date, less than 1% of the Loans by
aggregate Principal Balance are 30 or more days delinquent and less than 0.44%
of the Loans by aggregate Principal Balance are 60 or more days delinquent; and
no Loans are more than 89 days delinquent.
(i) Tax Liens; Status of Property. There is no delinquent tax or assessment
lien on any Property, and each Property is free of material damage and is in
good repair.
(j) No Defenses. The Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Loan, or the exercise of any right
thereunder, render the Loan unenforceable in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or defense has
been asserted with respect thereto.
(k) No Mechanics Lien. There is no mechanic's lien or claim for work, labor
or material affecting any Property which is or may be a lien prior to, or equal
to or on a parity with, the lien of such Mortgage, except those which are
insured against by the title insurance policy referred to in clause (m) below.
(l) Origination in Compliance with Laws. Each Loan complies, at the time it
was made complied and at all times has complied in all material respects with
applicable local, state and federal laws and regulations, including, without
limitation, usury, truth-in-lending, real estate settlement procedure, consumer
credit protection, equal credit opportunity, disclosure and recording laws and
the Transferor has and shall maintain in its possession available for inspection
and shall deliver upon demand, evidence of compliance with all such
requirements; and, to the Transferor's knowledge, no fraud or misrepresentation
was committed by any person or entity in connection with the origination of each
Loan.
(m) Title Insurance. With respect to each Mortgage Loan other than any
second Mortgage Loans with a Principal Balance at origination of less than
$50,000 secured by a Mortgaged Property not located in the State of Illinois, a
written commitment for a lender's title insurance policy, issued in standard
American Land Title Association or California Land Title Association form, or
other form acceptable in a particular jurisdiction, by a title insurance company
authorized to transact business in the state in which the related Property is
situated, together with a condominium endorsement, if applicable, in an amount
at least equal to the original Principal Balance of such Loan insuring the
mortgagee's interest under the related Loan as the holder of a valid first lien
of record on the real property described in the Mortgage subject only to
exceptions of the character referred to in paragraph (g) above, was effective on
the date of the origination of such Loan, and, as of the Closing Date, such
commitment will be valid and thereafter the policy issued pursuant to such
commitment shall continue in full force and effect. The Transferor is the sole
named insured of such mortgage title insurance policy and the assignment to the
Trust of the Transferor's interest in such mortgage title insurance policy does
not require the consent of or notification to the insurer, and such mortgage
title insurance policy is in full force and effect and will be in full force and
effect and inure to the benefit of the Trust upon the consummation of the
transactions contemplated by this Agreement and the Loan Sale Agreement. No
claims have been made under such mortgage title insurance policy and no prior
holder of the related Mortgage, including the Transferor, has done, by act or
omission, anything that would impair the coverage of such mortgage title
insurance policy.
(n) Hazard Insurance. The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a generally acceptable carrier
that provides for fire and extended coverage representing coverage not less than
the least of (1) the outstanding Principal Balance of the related Loan, (2) the
minimum amount required to compensate for damage or loss on a replacement cost
basis or (3) the full insurable value of the Property. All individual insurance
policies (collectively, the "Hazard Insurance Policy") are the valid and binding
obligation of the insurer and contain a standard mortgagee clause naming the
Transferor, its successors and assigns, as mortgagee. All premiums thereon have
been paid. The Loan obligated the Borrower thereunder to maintain all such
insurance at the Borrower's cost and expense, and upon the Borrower's failure to
do so, authorizes the holder of the Loan to obtain and maintain such insurance
at the Borrower's cost and expense and to seek reimbursement therefor from the
Borrower.
(o) Flood Insurance. If any Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the requirements of
the current guidelines of the Federal Insurance Administration is in effect with
respect to such Property with a generally acceptable carrier in an amount
representing coverage not less than the least of (A) the outstanding Principal
Balance of the related Loan, (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis or (C) the maximum amount of
insurance that is available under the National Flood Insurance Act of 1968, as
amended. The Mortgage obligated the Borrower thereunder to maintain all such
insurance at the Borrower's cost and expense, and upon the Borrower's failure to
do so, authorizes the holder of the Mortgage to obtain and maintain such
insurance at the Borrower's cost and expense and to seek reimbursement therefor
from the Borrower.
(p) Enforceability. Each Mortgage and Debt Instrument is genuine and is the
legal, valid and binding obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law), and all parties to each Loan had full legal capacity to execute all
Loan documents and convey the estate therein purported to be conveyed and the
Mortgage and Debt Instrument have been duly and properly executed by such
parties; the Borrower is a natural person who is a party to the Debt Instrument
and the Mortgage in an individual capacity and not in the capacity of a trustee
or otherwise.
(q) [Reserved].
(r) Geographic Concentration. No more than approximately 0.94% of the
Aggregate Principal Balance is secured by Properties located within any single
zip code area; no more than 22.11% of the Aggregate Principal Balance is located
in Alabama, no more than 14.93% of the Aggregate Principal Balance is located in
Louisiana, no more than 12.03% of the Aggregate Principal Balance is located in
Florida, and no more than 7.54% of the Aggregate Principal Balance is located
within any other single state.
(s) Primary Residence. At the time of origination, at least 98.19% of the
Aggregate Principal Balance is secured by Properties as to which the related
Borrower represented that such property is maintained by the Borrower as such
Borrower's primary residence.
(t) No Modification. The terms of the Debt Instrument and the Mortgage have
not been impaired, altered or modified in any material respect, except by a
written instrument which has been recorded or is in the process of being
recorded, if necessary, to protect the interest of the Certificateholders and
the Certificate Insurer and which has been or will be delivered to the Trustee
or the Custodian. The substance of any such alteration or modification has been
approved by the applicable title insurer, to the extent required by the
applicable title insurance policy, is reflected on the Loan Schedule.
(u) No Waiver. Except for modifications and partial releases otherwise
included in the Loan File, no instrument or release or waiver has been executed
in connection with the Loan, and no Borrower has been released, in whole or in
part.
(v) Taxes and Insurance. All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable.
(w) No Advances. Except for payments in the nature of escrow payments,
including without limitation, taxes and insurance payments, the Servicer has not
advanced funds, or induced, solicited or knowingly received any advance of funds
by a party other than the Borrower, directly or indirectly, for the payment of
any amount required by the Loan, except for interest accruing from the date of
the Debt Instrument or date of disbursement of the Loan proceeds, whichever is
greater, to the day which precedes by one month the Due Date of the first
installment of principal and interest.
(x) Condemnation; Damage. There is no proceeding pending or threatened for
the total or partial condemnation of the Property, nor is such a proceeding
currently occurring. No Property is damaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to affect adversely
the value of the Property as security for the Loan or the use for which the
premises were intended.
(y) No Encroachments. All the improvements which were included for the
purpose of determining the appraised value of the Property lie wholly within the
boundaries and building restriction lines of such property, and no improvements
on adjoining properties encroach upon the Property.
(z) Property in Compliance with Law. No improvement located on or being
part of the Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Property and, with respect to the use
and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities and the Property is lawfully occupied under
applicable law.
(aa) No Future Advances. The proceeds of the Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee or any person
to make, or option on the part of the Borrower to request, future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
satisfied. All costs, fees and expenses incurred in making or closing or
recording the Loans were paid.
(bb) Sole Security. The related Debt Instrument is not and has not been
secured by any collateral, pledged account or other security except the lien of
the corresponding Mortgage.
(cc) No-Buy-Down Loans. No Loan was originated under a buydown plan.
(dd) No Transferor Payment Obligations. There is no obligation on the part
of the Servicer or any other party to make payments in addition to those made by
the Borrower.
(ee) Deeds of Trust. With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the Certificateholders, the
Certificate Insurer or the Trust to the trustee under the deed of trust, except
in connection with a trustee's sale after default by the Borrower.
(ff) No Shared Appreciation. No Loan has a shared appreciation feature, or
other contingent interest feature.
(gg) State Qualification. All parties which have had any interest in the
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Property is located, and (2) (A) organized under the laws of such
state, or (B) qualified to do business in such state or exempt from such
qualifications or requirements, or (C) federal savings and loans associations or
national banks having principal offices in such state or (D) not doing business
in such state so as to require qualification or licensing.
(hh) Due on Sale. The Loan contains a customary provision for the
acceleration of the payment of the unpaid Principal Balance of the Loan in the
event the related Property is sold without the prior consent of the lender
thereunder.
(ii) Borrower Bankruptcy. No Borrower is a debtor in any state or federal
insolvency or bankruptcy proceeding.
(jj) Enforcement Rights. The related Mortgage contains customary and
enforceable provisions which render the rights and remedies of the holder
thereof adequate for the realization against the Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Borrower which would materially
interfere with the right to sell the Property at a trustee's sale or the right
to foreclose upon the related Mortgage.
(kk) No Default. Other than delinquent Loans set forth in clause (h) of
this Section 3.4, there is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Debt Instrument or
Manufactured Home Contract and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration; and neither the Servicer
nor the Transferor has waived any default, breach, violation or event of
acceleration.
(ll) Deposit of Payments. All amounts received on and after the Cut-Off
Date with respect to the Loans to which the Transferor is not entitled to will
be deposited into the Collection Account.
(mm) Underwriting. All of the Loans were originated and underwritten by the
Transferor (or in the case of the Loans originated by Avondale, originated and
underwritten by Avondale), or purchased and re-underwritten by the Transferor,
in each case in accordance with the applicable Underwriting Guidelines. The
Underwriting Guidelines conform in all material respects to the description
thereof set forth in the Prospectus Supplement.
(nn) Conformity to Prospectus. Each Loan conforms, and all such Loans in
the aggregate conform, to the description thereof set forth in the Prospectus
and the Prospectus Supplement.
(oo) No Adverse Selection. The Loans were not selected by the Transferor
for inclusion in the Trust on any basis intended to adversely affect the Trust.
The Loans are representative of the Transferor's portfolio of fixed rate
mortgage loans.
(pp) Appraisal. If required pursuant to the Underwriting Guidelines, full
appraisal on forms approved by FNMA or FHLMC was performed in connection with
the origination of the related Loan. Each appraisal meets guidelines that would
be generally acceptable to prudent lenders that regularly originate or purchase
mortgage loans comparable to the Loan for sale to prudent investors in the
secondary market that invest in loans such as the Loans. Each Loan is secured by
a property having an Appraised Value of at least $15,000.
(qq) Combined Loan-To-Value. As of the Cut-Off Date, no Loan had a Combined
Loan-To-Value Ratio in excess of 100% and as of the Cut-Off Date, the weighted
average Combined Loan-To-Value Ratio is 79.17%.
(rr) Environmental Matters. To the best of the Transferor's knowledge, (i)
no Property was, as of the Cut-Off Date, (A) located within a one-mile radius of
any site containing environmental or hazardous waste risks, and (B) in violation
of any environmental law or regulation; and (ii) no Property contained any
environmentally hazardous material, substance or waste.
(ss) Term. No Loan has a remaining term in excess of 360 months.
(tt) REMIC Qualification. Each Loan is a Qualified Mortgage.
(uu) Computer Tape. The computer tape from which the selection of the Loans
being acquired on the Closing Date was made available to the accountants that
are providing a comfort letter to the Certificate Insurer and the
Certificateholders in connection with any information contained in the
Prospectus Supplement, and such information was complete and accurate as of its
date and includes a description of the same Loans that are described on the Loan
Schedule and the payments due thereunder as of the Closing Date or the date of
substitution, as applicable.
(vv) One Original. Except as previously disclosed in writing to the Trustee
and the Certificate Insurer, with respect to each Loan, there is only one
originally executed Debt Instrument not stamped as a duplicate.
(ww) Entire Agreement. Except as otherwise disclosed and contained in the
Loan File, the Mortgage and the Debt Instrument contain the entire agreement of
the parties and all obligations of the seller or subcontractor under the related
Loan, and no other agreement defines, modifies, or expands the obligations of
the seller or subcontractor under the Loan.
(xx) No Consent Required. The rights with respect to each Loan are
assignable by the Transferor without the consent of any Person other than
consents which will have been obtained on or before the Closing Date.
(yy) Recordation. Each Mortgage was recorded or has been submitted for
recordation, and all intervening assignments of the original Mortgage have been
recorded or has been submitted for recordation in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as against
creditors of the Transferor. Except for states in which the Certificate Insurer,
the Trustee and each Rating Agency have previously agreed, each Mortgage and
Assignment of Mortgage is in recordable form and is acceptable for recording
under the laws of the jurisdiction in the property securing such Mortgage is
located.
(zz) No Proceedings. There are no proceedings pending, or to the best of
the Transferor's knowledge, threatened, wherein the Mortgagor or any
governmental agency has alleged that any Loan is illegal or unenforceable.
(aaa) Mortgagor Information. To the best knowledge and belief of the
Transferor, the documents, instruments and agreements submitted by each Borrower
for loan underwriting were not falsified and contain no untrue statement of a
material fact and do not omit to state a material fact required to be stated
therein or necessary to make the information and statements contained therein
not misleading.
(bbb) Full Disbursement. Each Loan has been closed and all proceeds of such
Loan have been fully disbursed and there is no requirement of further
disbursements thereunder. Except as otherwise disclosed and contained in the
Loan File, any and all requirements as to completion of any on-site or off-site
improvement and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing the
Loan and the recording of the related Mortgage were paid, and the related
Borrower is not entitled to any refund of any amounts paid or due under the
related Debt Instrument or Mortgage.
(ccc) First Payment Date. The first date on which the applicable Borrower
must make a payment on each Initial Loan is due no later than November 10, 1999.
(ddd) Aggregate Balance. The Aggregate Principal Balance of all Initial
Loans as of the Closing Date is $178,158,307.22.
(eee) Condominiums & Townhouses. No more than 2.15% of the Initial Loans
are secured by condominiums or townhouses.
(fff) No Coops. No property securing a Loan includes cooperatives.
(ggg) Civil Relief Act. As of November 1, 1999, no Borrower has requested
relief under the Soldiers' and Sailors' Civil Relief Act of 1940.
(hhh) No Adverse Circumstances. To the best knowledge and belief of the
Transferor, there do not exist any circumstances or conditions with respect to
the Mortgage, the property securing same, the Borrower or the Borrower's credit
standing that reasonably can be expected to cause private institutional
investors to regard the related Loan as an unacceptable investment, cause the
Loan to become delinquent, or adversely affect the value or marketability of the
Loan.
(iii) To the best knowledge and belief of the Transferor, all information
regarding a Loan which could reasonably be expected to affect adversely the
value or marketability of any property securing such Loan has been disclosed to
the Certificate Insurer.
(jjj) HOEPA. With respect to each Loan that is a "mortgage" as such term is
defined in 15 U.S.C. 1602(aa), no obligor has or will have a claim or defense
under such Loan.
(kkk) Each Loan secured by a manufactured housing unit is secured by a
manufacturing housing unit which is classified as part of the real estate under
the laws of the jurisdiction in which the manufactured housing unit is located.
(lll) 6.62% of the Initial Loans have simultaneous second liens for which
the second lien is not owned by the Trust.
(mmm) None of the Borrowers under the Loans are employees of New South
Federal Savings Bank or Avondale.
(nnn) None of the Loans are blanket loans.
(ooo) Since the date of its origination, no Loan has been foreclosed upon
and no Borrower under a Loan has filed for bankruptcy or other insolvency
protection.
Section 3.5 Purchase and Substitution.
(a) It is understood and agreed that the representations and warranties set
forth in Sections 3.3 and 3.4 of this Agreement shall survive delivery of the
Certificates to the Certificateholders. With respect to any representation or
warranty contained in Section 3.3 or 3.4 of this Agreement that is made to the
best of the Transferor's knowledge, if it is discovered by the Servicer, the
Trustee, the Certificate Insurer or any Certificateholder that the substance of
such representation and warranty was inaccurate as of the Closing Date and such
inaccuracy materially and adversely affects the value of the related Loan, then
notwithstanding the Transferor's lack of knowledge with respect to the
inaccuracy at the time the representation or warranty was made, such inaccuracy
shall be deemed a breach of the applicable representation or warranty. Upon
discovery by any of the Certificateholders, the Transferor, the Servicer, the
Trustee or the Certificate Insurer of a breach of any of such representations
and warranties as of the Closing Date which materially and adversely affects the
value of the Loans or the interest of the Certificateholders or the Certificate
Insurer, or which materially and adversely affects the interests of the
Certificate Insurer or the Certificateholders in the related Loan in the case of
a representation and warranty relating to a particular Loan (notwithstanding
that such representation and warranty was made to the Transferor's best
knowledge), the party discovering such breach shall give prompt written notice
to the others. Subject to the last paragraph of this Section 3.5, within 60 days
of the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Transferor shall be required to (1) promptly
cure such breach in all material respects, (2) purchase such Loan in the manner
and at the price specified in Section 2.4(c) (in which case the Loan shall
become a Deleted Loan), or (3) remove such Loan from the Trust Fund (in which
case the Loan shall become a Deleted Loan) and substitute one or more Qualified
Substitute Loans; provided, that, such substitution is effected not later than
the date which is two years after the Startup Day. Any such substitution shall
be accompanied by payment by the Transferor of the Substitution Adjustment, if
any, to the Servicer to be deposited in the Collection Account.
(b) As to any Deleted Loan for which the Transferor substitutes a Qualified
Substitute Loan or Loans, the Transferor shall be required to effect such
substitution by delivering to the Trustee a certification in the form attached
hereto as Exhibit F, executed by a Servicing Officer and the documents described
in Sections 2.3(a) for such Qualified Substitute Loan or Loans.
(c) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Loan or Loans after the
date of such substitution. Monthly Payments received with respect to Qualified
Substitute Loans on or before the date of substitution will be retained by the
Transferor. The Trust Fund will own all payments received on the Deleted Loan on
or before the date of substitution, and the Transferor shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Loan. The Servicer shall give written notice to the Trustee and the Certificate
Insurer that such substitution has taken place and shall amend the Loan Schedule
to reflect the removal of such Deleted Loan from the terms of this Agreement and
the substitution of the Qualified Substitute Loan. Upon such substitution, such
Qualified Substitute Loan or Loans shall be subject to the terms of this
Agreement in all respects.
(d) It is understood and agreed that the obligation of the Transferor set
forth in this Section 3.5 to cure, purchase, substitute or otherwise pay amounts
to the Trust or the Certificate Insurer for a defective Loan constitutes the
sole remedies of the Trustee and the Certificateholders with respect to a breach
of the representations and warranties of the Transferor set forth in Sections
3.3 and 3.4 of this Agreement. The Trustee shall give prompt written notice to
the Certificate Insurer of any repurchase or substitution made pursuant to
Section 3.5 or Section 2.4(b) hereof.
(e) Upon discovery by the Servicer, the Trustee or any Certificateholder
that any Loan does not constitute a Qualified Mortgage, the Person discovering
such fact shall promptly (and in any event within 5 days of the discovery) give
written notice thereof to the others of such Persons and the Certificate
Insurer. Upon discovery by the Certificate Insurer that any Loan does not
constitute a Qualified Mortgage, the Certificate Insurer may promptly give
written notice thereof to the Servicer, the Trustee and the Certificateholders.
In connection therewith, the Transferor shall be required to repurchase or
substitute a Qualified Substitute Mortgage Loan for the affected Mortgage Loan
within 60 days of the earlier of such discovery by any of the foregoing parties,
or the Trustee's or the Transferor's receipt of notice or the discovery by the
Transferor of such failure to qualify as a Qualified Mortgage, in the same
manner as it would a Loan for a breach of representation or warranty contained
in Section 3.3 or 3.4 of this Agreement. The Trustee shall reconvey to the
Transferor the Loan to be released pursuant hereto in the same manner, and on
the same terms and conditions, as it would a Loan repurchased for breach of a
representation or warranty contained in Section 3.3 or 3.4 of this Agreement.
Section 3.6 Servicer Covenants. The Servicer hereby covenants to the
Trustee, the Depositor and the Certificate Insurer and the Certificateholders
that as of the Closing Date and during the term of this Agreement:
(a) The Servicer shall deliver on the Closing Date an opinion from the
general counsel or the corporate counsel of the Servicer as to general corporate
matters in form and substance reasonably satisfactory to Underwriters' counsel
and counsel to the Certificate Insurer; and
(b) The Servicer may in its discretion (1) waive any prepayment penalty or
other charge, assumption fee, late payment charge or other charge in connection
with a Loan, and (2) arrange a schedule, running for no more than 180 days after
the Due Date for payment of any installment on any Mortgage Note for the
liquidation of delinquent items; provided, that the Servicer shall not agree to
the modification or waiver of any provision of a Loan at a time when such Loan
is not in default or such default is not imminent, or if such modification or
waiver would be treated as a taxable exchange under Code Section 1001, unless
such exchange would not be considered a "prohibited transaction" under the REMIC
Provisions as certified in writing by the Servicer to the Certificate Insurer
and the Trustee.
It is understood and agreed that the covenants set forth in this Section 3.6
shall survive the delivery of the respective Trustee Loan Files to the Trustee
or to a custodian, as the case may be, and inure to the benefit of the Trustee
and the Certificate Insurer.
ARTICLE IV
THE CERTIFICATES
Section 4.1 The Certificates. The Certificates shall be substantially in
the forms annexed hereto as, in the case of the Class A-1 Certificates, Exhibit
B-1, in the case of the Class A-2 Certificates, Exhibit B-2, in the case of the
Class A-3 Certificates, Exhibit B-3, in the case of the Class A-4 Certificates,
Exhibit B-4, in the case of the Class A-5 Certificates, Exhibit B-5, in the case
of the Class A-6 Certificates, Exhibit B-6, in the case of the Class B
Certificates, Exhibit B-7, in the case of the Class R-I Certificates, Exhibit
B-8, in the case of the Class R-II Certificates, Exhibit B-9 and in the case of
the Class R-III Certificates, Exhibit B-10. All Certificates shall be executed
by manual or facsimile signature on behalf of the Trustee by an authorized
officer and authenticated by the manual or facsimile signature of an authorized
officer. Any Certificates bearing the signatures of individuals who were at the
time of the execution thereof the authorized officers of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the delivery of such Certificates or did not hold
such offices at the date of such Certificates. All Certificates issued hereunder
shall be dated the date of their authentication. The Certificates are issuable
only as registered Certificates without coupons in Authorized Denominations.
Section 4.2 Registration of Transfer and Exchange of Certificates.
(a) The Trustee, as registrar, shall cause to be kept a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for the registration of Certificates
and the registration of transfer of Certificates. The Trustee is hereby
appointed registrar for the purpose of registering and transferring
Certificates, as herein provided. The Certificate Insurer and the Servicer shall
be entitled to inspect and copy the Certificate Register and the records of the
Trustee relating to the Certificates during normal business hours upon
reasonable notice. Notwithstanding anything herein to the contrary, the
Transferor and its affiliates shall not transfer the Class R-II Certificates
without the prior consent of the Certificate Insurer.
(b) All Certificates issued upon any registration of transfer or exchange
of Certificates shall be valid evidence of the same ownership interests in the
Trust and entitled to the same benefits under this Agreement as the Certificates
surrendered upon such registration of transfer or exchange.
(c) Every Certificate presented or surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Holder or
holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made to a Holder or holder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transferor
exchange shall be an expense of the Trust.
(e) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. The Class A-1 Certificates shall, except as otherwise provided in the
next paragraph, be initially issued in the form of a single fully registered
Class A-1 Certificate with a denomination equal to the Original Class Principal
Balance for such Class. The Class A-2 Certificates shall, except as otherwise
provided in the next paragraph, be initially issued in the form of a single
fully registered Class A-2 Certificate with a denomination equal to the Original
Class Principal Balance for such Class. The Class A-3 Certificates shall, except
as otherwise provided in the next paragraph, be initially issued in the form of
a single fully registered Class A-3 Certificate with a denomination equal to the
Original Class Principal Balance for such Class. The Class A-4 Certificates
shall, except as otherwise provided in the next paragraph, be initially issued
in the form of a single fully registered Class A-4 Certificate with a
denomination equal to the Original Class Principal Balance for such Class. The
Class A-5 Certificates shall, except as otherwise provided in the next
paragraph, be initially issued in the form of a single fully registered Class
A-5 Certificate with a denomination equal to the Original Class Principal
Balance for such Class. The Class A-6 Certificates shall, except as otherwise
provided in the next paragraph, be initially issued in the form of a single
fully registered Class A-6 Certificate with a denomination equal to the Original
Class Principal Balance for such Class. The Class B Certificates shall, except
as otherwise provided in the next paragraph, be initially issued in the form of
a single fully registered Class B Certificate with a denomination equal to the
Original Class Principal Balance for such Class. Upon initial issuance, the
ownership of each such Class A Certificate shall be registered in the
Certificate Register in the name of Cede & Co., or any successor thereto, as
nominee for the Depository. The Depositor and the Trustee are hereby authorized
to execute and deliver the Representation Letter with the Depository. With
respect to Class A Certificates registered in the Certificate Register in the
name of Cede & Co., as nominee of the Depository, the Depositor, the Transferor,
the Servicer, the Trustee and the Certificate Insurer shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A or Class B Certificates from time
to time as a Depository. Without limiting the immediately preceding sentence,
the Depositor, the Transferor, the Servicer, the Trustee and the Certificate
Insurer shall have no responsibility or obligation with respect to (1) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to any Ownership Interest, (2) the delivery to any
Direct or Indirect Participant or any other Person, other than a
Certificateholder, of any notice with respect to the Class A or Class B
Certificates or (3) the payment to any Direct or Indirect Participant or any
other Person, other than a Certificateholder, of any amount with respect to any
distribution of principal or interest on the Class A or Class B Certificates. No
Person other than a Certificateholder shall receive a certificate evidencing
such Class A or Class B Certificate. Upon delivery by the Depository to the
Trustee of written notice to the effect that the Depository has determined to
substitute a new nominee in place of Cede & Co., and subject to the provisions
hereof with respect to the payment of interest by the mailing of checks or
drafts to the Certificateholders appearing as Certificateholders at the close of
business on a Record Date, the name "Cede &Co." in this Agreement shall refer to
such new nominee of the Depository.
(f) In the event that (1) the Depositor or the Servicer advises the Trustee
in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A or Class B Certificates and the Servicer or the Depositor is unable to
locate a qualified successor or (2) the Servicer at its sole option elects to
terminate the book-entry system through the Depository, the Class A or Class B
Certificates shall no longer be restricted to being registered in the
Certificate Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Servicer may determine that the
Class A or Class B Certificates shall be registered in the name of and deposited
with a successor depository operating a global book-entry system, as may be
acceptable to the Servicer, or such depository's agent or designee but, if the
Servicer does not select such alternative global book-entry system, then the
Class A or Class B Certificates may be registered in whatever name or names
Certificateholders transferring Class A or Class B Certificates shall designate,
in accordance with the provisions hereof; provided, however, that any such
reregistration shall be at the expense of the Servicer.
(g) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Class A or Class B Certificate is registered in the name of Cede
& Co., as nominee of the Depository, all distributions of principal or interest
on such Class A or Class B Certificates as the case may be and all notices with
respect to such Class A or Class B Certificates as the case may be shall be made
and given, respectively, in the manner provided in the Representation Letter.
(h) No transfer, sale, pledge or other disposition of any Class R
Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
and effective registration or qualification under applicable state securities
laws or "Blue Sky" laws, or is made in a transaction that does not require such
registration or qualification. If a transfer (other than one by the Depositor to
an Affiliate thereof) of Class R Certificates is to be made in reliance upon an
exemption from the Securities Act of 1933, and under the applicable state
securities laws, then either: (i) the Trustee shall require that the transferee
deliver to the Trustee an investment representation letter (the "Investment
Representation Letter") substantially in the form of Exhibit H attached hereto,
which Investment Representation Letter shall certify, among other things, that
the transferee is an institutional "accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act (an
"Institutional Accredited Investor") or a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act (a "Qualified Institutional
Buyer"), and the Trustee may also require that the transferee deliver to the
Trustee an Opinion of Counsel if such transferee is not a Qualified
Institutional Buyer or (ii) if the certifications described in the preceding
clause (i) cannot be provided, (a) the Trustee shall require an Opinion of
Counsel reasonably satisfactory to the Trustee and the Depositor that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from registration or qualification under the
Securities Act, applicable state securities laws and other relevant laws, which
Opinion of Counsel shall not be an expense of the Trust Fund, the Depositor or
the Trustee and (b) the Trustee shall require the transferor to execute a
certification in form and substance satisfactory to the Trustee setting forth
the facts surrounding such transfer; provided, however, that a transfer of a
Class R Certificate may be made to a trust if the transferor provides to the
Trustee a certification that interests in such trust may only be transferred
subject to requirements substantially to the effect set forth in this Section
4.2 and, in the case of the Class R-II Certificate, the prior written consent of
the Certificate Insurer, which prior written consent shall not be unreasonably
withheld and provided, further, that the prior consent of the Certificate
Insurer shall not be required for any transfer of the Class R-II Certificate to
an Affiliate of the Transferor. The Trustee will furnish, or cause to be
furnished, upon the request of any Holder of Class R Certificates to a
prospective purchaser of such Class R Certificates who is a Qualified
Institutional Buyer, such information as is specified in paragraph (d)(4) of
Rule 144A with respect to the Trust Fund, unless, at the time of such request,
the entity with respect to which such information is to be provided is subject
to the reporting requirements of Section 15(d) of the Exchange Act. None of the
Depositor, the Trustee or the Servicer or the Certificate Insurer is obligated
to register or qualify any Class of Class R Certificate under the Securities Act
of 1933, as amended, or any other securities law or to take any action not
otherwise required under this Agreement to permit the transfer of any Class R
Certificate without registration or qualification. Any Holder of a Class R
Certificate desiring to effect such a transfer shall, and does hereby agree to,
indemnify the Depositor, the Trustee and the Servicer and the Certificate
Insurer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws. Promptly after
receipt by an indemnified party under this paragraph of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this paragraph,
notify the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
paragraph. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to appoint counsel reasonably satisfactory to such
indemnified party to represent the indemnified party in such action; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are in conflict with or contrary to the interests of
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action
and approval by the indemnified party of such counsel, the indemnifying party
will not be liable to such indemnified party under this paragraph for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (1) the indemnified party shall have employed
separate counsel in accordance with the proviso of the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel for any indemnified party),
(2) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (3) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. Under no circumstances shall the indemnified party enter
into a settlement agreement with respect to any lawsuit, claim or other
proceeding without the prior written consent of the indemnifying party.
Unless the Class R Certificates have been registered under the Securities
Act, each of the Class R Certificates shall bear a legend substantially to the
following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER
THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN
ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND (a) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (b) FOR SO LONG AS THIS CERTIFICATE IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (c) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, OR (d) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO THE
COMPLETION AND DELIVERY BY THE TRANSFEROR TO THE CERTIFICATE REGISTRAR
OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE OF
THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT
PURCHASER OF THIS CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN
INTEREST HEREIN, IS DEEMED TO HAVE AGREED TO COMPLY WITH CERTAIN
TRANSFER REQUIREMENTS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN INVESTMENT
REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED
INSTITUTIONAL BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY
ALSO BE REQUIRED TO DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE
IS NOT A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A.
(i) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Servicer or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under subclause (vi) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and a United States Person
and shall promptly notify the Trustee of any change or impending change in
its status as either a United States Person or a Permitted Transferee;
(ii) In connection with any proposed Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require delivery to
it, and shall not register the Transfer of any Class R Certificate until
its receipt of, an affidavit and agreement (a "Transfer Affidavit and
Agreement") attached hereto as Exhibit G from the proposed Transferee,
representing and warranting, among other things, that such Transferee is a
Permitted Transferee, that it is not acquiring its Ownership Interest in
the Class R Certificate that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in a
Class R Certificate, it will endeavor to remain a Permitted Transferee, and
that it has reviewed the provisions of this Section 4.2(i) and agrees to be
bound by them;
(iii) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (ii) above, if a
Responsible Officer of the Trustee has actual knowledge that the proposed
Transferee is not a Permitted Transferee, no Transfer of an Ownership
Interest in a Class R Certificate to such proposed Transferee shall be
effected;
(iv) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (x) to require a Transfer Affidavit and
Agreement from any other Person to whom such Person attempts to transfer
its Ownership Interest in a Class R Certificate and (y) not to transfer its
Ownership Interest unless it provides a certificate (attached hereto as
Exhibit H) to the Trustee stating that, among other things, it has no
actual knowledge that such other Person is not a Permitted Transferee;
(v) The Trustee will register the Transfer of any Class R Certificate
only if it shall have received the Transfer Affidavit and Agreement. In
addition, no Transfer of a Class R Certificate shall be made unless the
Trustee shall have received a representation letter, the form of which is
attached hereto as Exhibit G1 from the Transferee of such Certificate to
the effect that such Transferee is a United States Person and is not a
"disqualified organization" (as defined in Section 860E(e)(5) of the Code)
(such Person, a "Permitted Transferee");
(vi) Any attempted or purported transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section 4.2
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 Class R
Certificate in violation of the provisions of this Section 4.2, 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
Class R Certificate. The Trustee shall notify the Servicer upon receipt of
written notice or discovery by a Responsible Officer that the registration
of transfer of a Class R Certificate was not in fact permitted by this
Section 4.2. Knowledge shall not be imputed to the Trustee with respect to
an impermissible transfer in the absence of such a written notice or
discovery by a Responsible Officer. The Trustee shall be under no liability
to any Person for any registration of transfer of a Class R Certificate
that is in fact not permitted by this Section 4.2 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 and Transfer Certificate. The Trustee shall be entitled,
but not obligated to recover from any Holder of a Class R 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 Class R 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 Holder of such Certificate; and
(vii) In the case of the Class R-II Certificate, the prior written
consent of the Certificate Insurer, which consent shall not be unreasonably
withheld, is required in order for the Transferor or its Affiliates to
transfer the Class R-II Certificates to any Person that is not an Affiliate
of the Transferor.
(j) With respect to the Class B and Class R Certificates, no sale,
transfer, pledge or other disposition by any Holder of any such Certificate
shall be made unless the Trustee shall have received either (i) a representation
letter from the proposed purchaser or transferee of such Certificate
substantially in the form of Exhibit I attached hereto, to the effect that such
proposed purchaser or transferee is not (a) an employee benefit plan subject to
the fiduciary responsibility provisions of ERISA or Section 4975 of the Code, or
a governmental plan (as defined in Section 3(32) of ERISA) subject to any
federal, state or local law ("Similar Law") which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code (each, a "Plan") or (b)
a person acting on behalf of or using the assets of any such Plan (including an
entity whose underlying assets include Plan assets by reason of investment in
the entity by such Plan and the application of Department of Labor Regulation
Section 2510.3-101), other than an insurance company using the assets of its
general account under circumstances whereby the purchase and holding of such
Certificates by such insurance company would be exempt from the prohibited
transaction provisions of ERISA and the Code under Prohibited Transaction Class
Exemption 95-60 or (ii) if such Certificate is presented for registration in the
name of a purchaser or transferee that is any of the foregoing, an Opinion of
Counsel in form and substance satisfactory to the Trustee and the Depositor to
the effect that the acquisition and holding of such Certificate by such
purchaser or transferee will not result in the assets of the Trust Fund being
deemed to be "plan assets" and subject to the fiduciary responsibility
provisions of ERISA, the prohibited transaction provisions of the Code or the
provisions of any Similar Law, will not constitute or result in a "prohibited
transaction" within the meaning of ERISA, Section 4975 of the Code or any
Similar Law, and will not subject the Trustee, the Certificate Insurer, the
Servicer, or the Depositor to any obligation or liability (including obligations
or liabilities under ERISA, Section 4975 of the Code or any such Similar Law) in
addition to those set forth in the Agreement. The Trustee shall not register the
sale, transfer, pledge or other disposition of any such Certificate unless the
Certificate Registrar has received either the representation letter described in
clause (i) above or the Opinion of Counsel described in clause (ii) above. The
costs of any of the foregoing representation letters or Opinions of Counsel
shall not be borne by any of the Depositor, the Servicer, the Trustee, the
Certificate Insurer, or the Trust Fund. Each Holder of a Class R Certificate
shall be deemed to represent that it is not a Person specified in clauses (a) or
(b) above. Any transfer, sale, pledge or other disposition of any such
Certificates that would constitute or result in a prohibited transaction under
ERISA, Section 4975 of the Code or any Similar Law, or would otherwise violate
the provisions of this Section 4.02(j) shall be deemed absolutely null and void
ab initio, to the extent permitted under applicable law.
So long as any of the Class of Certificates remains outstanding, the
Servicer will make available, or cause to be made available, upon request, to
any Holder and any Person to whom any such Certificate of any such Class of
Certificates may be offered or sold, transferred, pledged or otherwise disposed
of by such Holder, information with respect to the Servicer, or the Loans which
(i) is necessary to the provision of an Opinion of Counsel described in this
Section 4.2(j) and (ii) pertains to the following: (A) whether the Servicer or
any Affiliate, is an Affiliate of the Trustee, (B) which of the Loans constitute
more than 5% of the aggregate unamortized Principal Balance of the Loans as of
the Closing Date, and (C) the amount of compensation paid to the Servicer and
any sub-servicer pursuant to the terms and provisions of this Agreement.
(k) Subject to the restrictions set forth in this Agreement, upon surrender
for registration of transfer of any Certificate at the Corporate Trust Office of
the Trustee accompanied by a written instrument of transfer in form satisfactory
to the Trustee and duly executed by the Holder or holder thereof or his attorney
duly authorized in writing and, the Trustee shall execute, authenticate and
deliver in the name of the designated transferee or transferees, a new
Certificate of the same Class and evidencing, in the case of a Class A-1
Certificate, Class A-2 Certificate, Class A-3 Certificate, Class A-4
Certificate, or Class A-5 Certificate, Class A-6 Certificate or Class B
Certificate, the same Percentage Interest, and in any other case, the equivalent
undivided beneficial ownership interest in the Trust Fund and dated the date of
authentication by the Trustee. At the option of the Certificateholders,
Certificates may be exchanged for other Certificates of Authorized Denominations
of a like aggregate undivided beneficial ownership interest, upon surrender of
the Certificates to be exchanged at such office. 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. No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates. All Certificates surrendered for transfer
and exchange shall be canceled by the Trustee.
Section 4.3 Mutilated, Destroyed, Lost or Stolen Certificates. (i) If
any mutilated Certificate is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Servicer, the Certificate
Insurer and the Trustee such security or indemnity as may reasonably be required
by each of them to save each of them harmless, then, in the absence of notice to
the Servicer, the Certificate Insurer and 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 tenor and representing an
equivalent beneficial ownership interest, but bearing a number not
contemporaneously outstanding. Upon the issuance of any new Certificate under
this Section 4.3, the Servicer and 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 their fees and expenses connected therewith. Any duplicate
Certificate issued pursuant to this Section 4.3 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Certificate shall be
found at any time.
Section 4.4 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer and subject to the provisions of
Section 4.2 and Article X, the Servicer, the Depositor, the Transferor, the
Certificate Insurer and the Trustee may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving remittances pursuant to Section 6.5 and for all other purposes
whatsoever, and the Servicer, the Depositor, the Transferor, the Certificate
Insurer and the Trustee shall not be affected by notice to the contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE LOANS
Section 5.1 Appointment of the Servicer.
(a) New South Federal Savings Bank agrees to act as the Servicer and to
perform all servicing duties under this Agreement subject to the terms hereof.
(b) The Servicer shall service and administer the Loans on behalf of the
Trust, for the benefit of the Certificateholders and the Certificate Insurer,
and shall have full power and authority, acting alone or through one or more
Subservicers, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Servicer, in its own name or the name of a
Subservicer, may, and is hereby authorized and empowered by the Trustee to,
execute and deliver, on behalf of itself, the Certificateholders, the
Certificate Insurer and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, with respect to the Loans, the insurance policies
and accounts related thereto and the properties subject to the Mortgages. The
Servicer shall also take such reasonable steps, at the Servicer's expense, as
are necessary to maintain perfection of security interests in the Properties.
Upon the execution and delivery of this Agreement, and from time to time as may
be required thereafter, the Trustee shall furnish the Servicer or its
Subservicers with any powers of attorney and such other documents (that have
been prepared by the Servicer for execution by the Trustee) as may be necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
In servicing and administering the Loans, the Servicer shall employ
procedures consistent with Accepted Servicing Practices and in a manner
consistent with recovery under any insurance policy required to be maintained by
the Servicer pursuant to this Agreement.
Costs incurred by the Servicer in effectuating the timely payment of taxes
and assessments on the Property securing a Loan and foreclosure costs may be
added by the Servicer to the amount owing under such Loan where the terms of
such Loan so permit; provided, however, that the addition of any such cost shall
not be taken into account for purposes of calculating the Principal Balance of
the Loan or distributions to be made to Certificateholders. Such costs shall be
recoverable by the Servicer pursuant to Section 5.4. Notwithstanding any other
provision of this Agreement, the Servicer shall at all times service the Loans
in a manner consistent with the provisions of Sections 5.1(b) and 5.1(c).
(c) It is intended that the Trust Fund formed hereunder shall constitute,
that the affairs of the Trust REMICs shall be conducted so as to qualify them
as, three separate REMICs in accordance with the REMIC Provisions and that the
affairs of the Grantor Trust be conducted so as to qualify it as a grantor trust
under Subpart E, Part I of Subchapter J of the Code. In furtherance of such
intentions, the Servicer covenants and agrees that it shall not take any action
or omit to take any action reasonably within the Servicer's control and the
scope of its duties as described in this Agreement that would (1) result in a
taxable event to the Holders of the Certificates or endanger the REMIC status of
any of the Trust REMICs or the grantor trust status of the Grantor Trust, (2)
result in the imposition on any of the Trust REMICs or the Trust Fund of a tax
on "prohibited transactions" (either clause (1) or (2) shall be an "Adverse
REMIC Event"). The Servicer shall not take any action or fail to take any action
(whether or not authorized hereunder) as to which the Trustee has been advised
prior to the date such action was taken or omitted to be taken it in writing
pursuant to an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action, and the Servicer shall have no
liability hereunder for any action taken by it in accordance with the written
instructions of the Trustee taken pursuant to such Opinion of Counsel; provided,
however, the Trustee shall have no obligation to monitor the duties or
activities of the Servicer and the Trustee shall only be required to advise the
Servicer with respect to any action that could result in an Adverse REMIC Event
to the extent the Servicer requests such advice from the Trustee. In addition,
prior to taking any action with respect to the Trust Fund that is not expressly
permitted under the terms of this Agreement (other than interest rate
modifications referred to in the provision to the second preceding sentence),
the Servicer will consult with the Trustee or its designee and the Certificate
Insurer, in writing, with respect to whether such action could cause an Adverse
REMIC Event to occur. The Trustee may consult with counsel to make such written
advice, and the cost of same shall be borne by the party seeking to take the
action not permitted by this Agreement. At all times as may be required by the
Code, the Servicer shall use its best efforts to ensure that substantially all
of the assets of the Trust REMICs will consist of "qualified mortgages" as
defined in Section 860G(a)(3) of the Code and "permitted investments" as defined
in Section 860G(a)(5) of the Code. In the event any specified time period or
other requirement set forth in this Agreement in respect of compliance with the
REMIC Provisions becomes inconsistent with the REMIC Provisions as the same may
be amended, such specified time period or other requirement shall also be deemed
amended to comply with the requirements of this Section, unless such amended
time period or other requirements shall be less protective of the interests of
the Certificateholders and the Certificate Insurer, in which case, to the extent
consistent with the REMIC Provisions, the former time period or requirement
shall continue in force.
(d) Subject to Section 5.13, the Servicer is hereby authorized and
empowered to execute and deliver on behalf of the Trustee and each
Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Loans and with respect to the Properties. If reasonably required
by the Servicer, each Certificateholder and the Trustee shall execute any powers
of attorney furnished to the Trustee by the Servicer and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
(e) On and after such time as the Trustee receives the resignation of, or
notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to resignation pursuant to Section 5.23, after
receipt by the Trustee and the Certificate Insurer of the Opinion of Counsel
required pursuant to Section 5.23, the Trustee or its designee approved by the
Certificate Insurer shall assume all of the rights and obligations of the
Servicer, subject to Section 7.2 hereof. The Servicer shall, upon request of the
Trustee but at the expense of the Servicer, deliver to the Trustee all documents
and records relating to the Loans and an accounting of amounts collected and
held by the Servicer and otherwise use its best efforts to effect the orderly
and efficient transfer of servicing rights and obligations to the assuming
party.
(f) The Servicer shall deliver a list of Servicing Officers to the Trustee
and the Certificate Insurer by the Closing Date, which list may, from time to
time, be amended, modified or supplemented by the subsequent delivery to the
Trustee and the Certificate Insurer of any superseding list of Servicing
Officers.
Section 5.2 Subservicing Agreements Between the Servicer and
Subservicers.
(a) The Servicer may, subject to the prior written approval of the
Certificate Insurer, enter into Subservicing Agreements with Subservicers for
the servicing and administration of the Loans and for the performance of any and
all other activities of the Servicer hereunder. Each Subservicer shall be either
(1) a depository institution the accounts of which are insured by the FDIC or
(2) another entity that engages in the business of originating, acquiring or
servicing loans, and in either case shall be authorized to transact business in
the state or states where the related Properties it is to service are situated
if state law requires such authorization. In addition, each Subservicer will
obtain and preserve its qualifications to do business as a foreign corporation
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Certificates and
any of the Loans and to perform or cause to be performed its duties under the
related Subservicing Agreement which shall provide that the Subservicer's rights
shall automatically terminate upon the termination, resignation or other removal
of the Servicer under this Agreement. Each account used by any Subservicer for
the deposit of payments on any of the Loans shall be an Eligible Account.
(b) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee, the
Certificate Insurer and the Certificateholders for the servicing and
administering of the Loans in accordance with the provisions of this Agreement
without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Loans. For purposes of
this Agreement, the Servicer shall be deemed to have received payments on Loans
when the Subservicer has received such payments.
In the event the Servicer shall for any reason no longer be the Servicer
(including by reason of an Event of Default), the successor Servicer may, with
the prior written consent of the Certificate Insurer, or shall, at the direction
of the Certificate Insurer, assume all of the rights and obligations of the
Servicer under each Subservicing Agreement that the Servicer may have entered
into.
Section 5.3 Collection of Certain Loan Payments; Collection Account.
(a) The Servicer shall use its reasonable efforts to collect all payments
called for under the terms and provisions of the Loans, and shall, to the extent
such procedures shall be consistent with this Agreement and any applicable
primary mortgage insurance policy, follow such collection procedures as shall
constitute Accepted Servicing Practices.
The Servicer shall establish and maintain in the name of the Trustee one or
more Collection Accounts (collectively, the "Collection Account"), in trust for
the benefit of the Holders of the Certificates and the Certificate Insurer. The
Servicer shall promptly provide notice to the Certificate Insurer, the Trustee
and each Rating Agency of any creation and establishment of a Collection Account
hereunder. Each Collection Account shall be established and maintained as an
Eligible Account. The Certificate Insurer, in its sole discretion, may direct
the Servicer to close such Collection Account and to establish and maintain a
replacement Collection Account that is an Eligible Account.
(b) On the Servicer Remittance Date prior to the first Distribution Date,
the Servicer shall have deposited into the Certificate Account the Servicer
Remittance Amount, and shall, on a daily basis thereafter (except as otherwise
provided herein), deposit such collections and payments into the Collection
Account:
(i) all scheduled and unscheduled payments received on or after the
Cut-Off Date on account of principal and interest on the Loans and all
Principal Prepayments, Curtailments and all Net REO Proceeds collected on
or after the Cut-Off Date, exclusive of approximately $1,041,110 of
interest collected on the Loans in the month of November 1999, which will
be retained by the Transferor;
(ii) [Reserved];
(iii) all Net Liquidation Proceeds, to the extent such proceeds are
not to be applied to the restoration of the related Mortgaged Property or
released to the Borrower in accordance with the express requirements of law
or in accordance with Accepted Servicing Practices;
(iv) all Insurance Proceeds, to the extent such proceeds are not to be
applied to the restoration of the related Mortgaged Property or released to
the Borrower in accordance with the express requirements of law or in
accordance with Accepted Servicing Practices;
(v) all Released Property Proceeds;
(vi) any amounts payable in connection with the repurchase of any Loan
and the amount of any Substitution Adjustment pursuant to Sections 2.4 and
3.5 hereof;
(vii) all net revenues with respect to the Property held by the Trust
fund;
(viii) amounts reimbursed by the Servicer on account of investment
losses incurred with respect to the Collection Account;
(ix) any amount expressly required to be deposited in the Collection
Account in accordance with certain provisions of this Agreement, and
amounts referenced in Sections 2.4(c), 3.5(a), 3.5(c), 5.6, and 6.6(b) of
this Agreement;
provided, however, that the Servicer shall be entitled, at its election, either
(a) to withhold and to pay to itself the applicable Servicing Fee from any
payment on account of interest or other recovery (including Net REO Proceeds) as
received and prior to deposit of such payments in the Collection Account or (b)
to withdraw the applicable Servicing Fee from the Collection Account after the
entire payment or recovery has been deposited therein; provided, further, that
with respect to any payment of interest received by the Servicer in respect of a
Loan (whether paid by the Borrower or received as Liquidation Proceeds,
Insurance Proceeds or otherwise) which is less than the full amount of interest
then due with respect to such Loan, only that portion of such payment that bears
the same relationship to the total amount of such payment of interest as the
rate used to determine the Servicing Fee bears to the Loan Interest Rate borne
by such Loan shall be allocated to the Servicing Fee with respect to such Loan.
All other amounts shall be deposited in the Collection Account not later than
two Business Days following the day of receipt and posting by the Servicer.
Notwithstanding any regularly scheduled transfer of funds to the Certificate
Account, the Servicer shall, not later than the Servicer Remittance Date
transfer to the Certificate Account all funds in each Collection Account that
are to be included in the Servicer Remittance Amount as of the Determination
Date immediately preceding the Distribution Date.
The Servicer shall direct, in writing, the institution maintaining each
Collection Account to invest the funds in the Collection Account only in
Permitted Investments in the name of the Trustee and for the benefit of the
Certificateholders and the Certificate Insurer, which mature, unless payable on
demand, no later than the Business Day preceding the related Servicer Remittance
Date. No Permitted Investment shall be sold or disposed of at a gain prior to
maturity unless the Servicer has obtained an Opinion of Counsel addressed to the
Trustee and the Certificate Insurer (at the Servicer's expense) that such sale
or disposition will not cause the Trust Fund to be subject to the tax on income
from prohibited transactions imposed by Code Section 860F(a)(1), otherwise
subject the Trust Fund to tax or cause any of the Trust REMICs to fail to
qualify as a REMIC. All income (other than any gain from a sale or disposition
of the type referred to in the preceding sentence) realized from any such
Permitted Investment shall be for the benefit of the Servicer as additional
servicing compensation. The amount of any losses incurred in respect of any such
investments shall be deposited in the Collection Account by the Servicer out of
its own funds immediately as realized. In no event whatsoever shall the
institution maintaining the Collection Account be liable for any loss on
Permitted Investments invested at the direction of the Servicer (except to the
extent the Servicer is one and the same).
The foregoing requirements for deposit in the Collection Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of those described in the last
paragraph of Section 5.14 and payments in the nature of prepayment charges, late
payment charges or assumption fees need not be deposited by the Servicer in the
Collection Account. Notwithstanding any provision herein to the contrary, the
Servicer shall not deposit in any Collection Account any amount other than
amounts required to be deposited therein in accordance with the terms of this
Agreement, and the Servicer shall have the right at all times to transfer funds
from the Collection Account to the Certificate Account. All funds deposited by
the Servicer in the Collection Account and the Certificate Account shall be held
therein for the account of the Trustee in trust for the Certificateholders and
the Certificate Insurer until disbursed in accordance with Section 6.2 or
withdrawn in accordance with Section 5.4.
(c) Prior to the time of their required deposit in the Collection Account,
all amounts required to be deposited therein may be deposited in an account in
the name of Servicer, provided that such account is an Eligible Account. All
such funds shall be held by the Servicer in trust for the benefit of the
Certificateholders and the Certificate Insurer pursuant to the terms hereof.
(d) The Collection Account may, upon written notice by the Servicer to the
Certificate Insurer and the Trustee, be transferred to a different depository so
long as such transfer is to an Eligible Account.
Section 5.4 Permitted Withdrawals from the Collection Account. The
Servicer is hereby authorized by the Trustee (such authorization to be revocable
by the Trustee at any time), from time to time, to make withdrawals from the
Collection Account, but only for the following purposes:
(a) to reimburse itself from any funds in the Collection Account for any
accrued unpaid Servicing Fees and for unreimbursed Periodic Advances and
Servicing Advances from late collections on the related Loan, including
Liquidation Proceeds, Released Property Proceeds, Insurance Proceeds and such
other amounts on deposit in the Collection Account as may be collected by the
Servicer from the related Borrower or otherwise relating to the Loan in respect
of which such unreimbursed amounts are owed. The Servicer's right to
reimbursement for unreimbursed Periodic Advances shall be limited to late
collections of interest on any Loan and to Liquidation Proceeds and Insurance
Proceeds on related Loans;
(b) [Reserved];
(c) to withdraw from the Collection Account any Preference Amount received
from a Borrower;
(d) to withdraw any funds deposited in the Collection Account that were
mistakenly deposited therein;
(e) to withdraw from the Collection Account any funds needed to pay itself
Servicing Compensation pursuant to Section 5.14 hereof to the extent not
retained or paid pursuant to Section 5.3, 5.4 or 5.14;
(f) to withdraw from the Collection Account to pay to the Transferor with
respect to each Loan or property acquired in respect thereof that has been
repurchased or replaced pursuant to Section 2.4 or 3.5 or to pay to itself with
respect to each Loan or property acquired in respect thereof that has been
purchased pursuant to Section 8.1 all amounts received thereon and not required
to be deposited into the Collection Account as a result of such repurchase or
replacement;
(g) [Reserved];
(h) to withdraw funds from the Collection Account necessary to make
deposits to the Certificate Account (which shall include the Trustee Fee and the
Certificate Insurance Premium Amount) in the amounts and in the manner provided
for in Section 6.1 hereof;
(i) to pay itself any interest earned on or investment income earned with
respect to funds in the Collection Account;
(j) to withdraw from the Collection Account to pay to the Transferor with
respect to each Loan, any prepayment penalties or charges collected on such
Loan; or
(k) to clear and terminate the Collection Account upon the termination of
this Agreement.
The Servicer shall keep and maintain a separate accounting for each Loan
for the purpose of accounting for withdrawals from the Collection Account
pursuant to subclause (a).
Section 5.5 Payment of Taxes, Insurance and Other Charges. With respect
to each Loan, the Servicer shall maintain accurate records reflecting casualty
insurance coverage.
With respect to each Loan as to which the Servicer maintains escrow
accounts in an account separate from the Collection Account, the Servicer shall
maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Property and the status of primary mortgage guaranty insurance premiums, if
any, and casualty insurance coverage and shall obtain, from time to time, all
bills for the payment of such charges (including renewal premiums) and shall
effect payment thereof prior to the applicable penalty or termination date and
at a time appropriate for securing maximum discounts allowable, employing for
such purpose deposits of the Borrower in any escrow account which shall have
been estimated and accumulated by the Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage. To the extent that a
Mortgage does not provide for escrow payments, the Servicer shall, if it has
received notice of a default or deficiency, monitor such payments to determine
if they are made by the Borrower.
Section 5.6 Maintenance of Casualty Insurance. For each Loan, the
Servicer shall maintain or cause to be maintained in accordance with the
Servicer's loan servicing policies and procedures and to the extent required by
the related Loan to be maintained by the Borrower, fire and casualty insurance
with a standard mortgagee clause and extended coverage in an amount which is not
less than the replacement value of the improvements securing such Loan or the
unpaid Principal Balance of such Loan, whichever is less. If, upon origination
of the Loan, the Property was in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards (and
flood insurance has been made available) the Servicer will cause to be
maintained in accordance with the Servicer's loan servicing policies and
procedures and to the extent required by the related Loan to be maintained by
the Borrower, a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the unpaid Principal Balance of the Loan, (ii) the full insurable value of
the Property or (iii) the maximum amount of insurance available under the Flood
Disaster Protection Act of 1973. With respect to each Loan, the Servicer shall
in accordance with the Servicer's loan servicing policies and procedures also
maintain fire insurance with extended coverage and, if applicable, flood
insurance on REO Property in an amount which is at least equal to the lesser of
(i) the full insurable value of the improvements which are a part of such
property and (ii) the Principal Balance owing on such Loan at the time of such
foreclosure, deed in lieu of foreclosure or repossession plus accrued interest
and related Liquidation Expenses. Such insurance on an REO Property may not,
however, be less than the minimum amount required to fully compensate for any
loss or damage on a replacement cost basis. It is understood and agreed that
such insurance shall be with insurers approved by the Servicer and that no
earthquake or other additional insurance is to be required of any Borrower or to
be maintained on property acquired in respect of a defaulted loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. The parties acknowledge
that the Servicer does not monitor maintenance of insurance with respect to
every Loan. Pursuant to Section 5.3, any amounts collected by the Servicer under
any insurance policies maintained pursuant to this Section 5.6 (other than
amounts to be applied to the restoration or repair of the related Property or
released to the Borrower in accordance with Accepted Servicing Practices) shall
be deposited into the Collection Account, subject to withdrawal pursuant to
Section 5.4. Any cost incurred by the Servicer in maintaining any such insurance
shall be added to the amount owing under the Loan where the terms of the Loan so
permit; provided, however, that the addition of any such cost shall not be taken
into account for purposes of calculating the Principal Balance of the Loan or
the distributions to be made to the Certificateholders. Such costs shall be
recoverable by the Servicer pursuant to Section 5.4. In the event that the
Servicer shall obtain and maintain a blanket policy issued by an insurer that is
acceptable to FNMA or FHLMC, insuring against hazard losses on all of the Loans,
it shall conclusively be deemed to have satisfied its obligation as set forth in
the first sentence of this Section 5.6, it being understood and agreed that such
policy may contain a deductible clause, in which case the Servicer shall, in the
event that there shall not have been maintained on the related mortgaged or
acquired property an insurance policy complying with the first sentence of this
Section 5.6 and there shall have been a loss which would have been covered by
such a policy had it been maintained, be required to deposit from its own funds
into the Collection Account the amount not otherwise payable under the blanket
policy because of such deductible clause.
Section 5.7 [Reserved].
Section 5.8 Fidelity Bond; Errors and Omissions Policy.
(a) The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond (a "Fidelity Bond") and an errors and omissions
insurance policy (an "Errors and Omissions Policy"), in a minimum amount
acceptable to FNMA or otherwise in an amount as is commercially available at a
cost that is not generally regarded as excessive by industry standards, 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 Loans ("Servicer Employees"). Any such fidelity bond and errors
and omissions insurance shall protect and insure the Servicer against losses,
including losses resulting from forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such Servicer Employees. Such fidelity bond
shall also protect and insure the Servicer against losses in connection with the
release or satisfaction of a Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 5.8 requiring such
fidelity bond and errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. Upon
the request of the Trustee, the Certificate Insurer or any Certificateholder,
the Servicer shall cause to be delivered to the Trustee, such Certificateholder
or the Certificate Insurer a certified true copy of such fidelity bond and
insurance policy. On the Closing Date, such bond and insurance is maintained
with certain underwriters as may be specified in writing to the Certificate
Insurer and the Trustee, from time to time. Any such fidelity bond or insurance
policy shall not be canceled or modified in a materially adverse manner without
written notice to the Trustee and the Certificate Insurer.
(b) The Servicer shall be deemed to have complied with this provision if
one of its respective Affiliates has such a Fidelity Bond and Errors and
Omissions Policy and, by the terms of such fidelity bond and errors and omission
policy, the coverage afforded thereunder extends to the Servicer. The Servicer
shall cause each and every Subservicer for it to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet the
requirements of Section 5.8(a) hereof. Any such Fidelity Bond and Errors and
Omissions Policy shall not be canceled or modified in a materially adverse
manner without written notice to the Certificate Insurer.
Section 5.9 Collection of Taxes, Assessments and Other Items. The
Servicer shall deposit all payments by Borrowers for taxes, assessments, primary
mortgage or hazard insurance premiums or comparable items in the escrow accounts
in accordance with Section 5.5 hereof. Withdrawals from such escrow accounts may
be made to effect payment of taxes, assessments, primary mortgage or hazard
insurance premiums or comparable items, to reimburse the Servicer out of related
collections for any advances made in the nature of any of the foregoing, to
refund to any Borrowers any sums determined to be overages, or to pay any
interest owed to Borrowers on such account to the extent required by law. The
Servicer shall advance the payments referred to in the first sentence of this
Section 5.9 that are not timely paid by the Borrowers on the date when the tax,
premium or other cost for which such payment is intended is due, but the
Servicer shall be required to so advance only to the extent that such advances
will be recoverable by the Servicer pursuant to Section 5.4 out of Liquidation
Proceeds, Insurance Proceeds or otherwise.
Section 5.10 Periodic Filings with the Securities and Exchange
Commission; Additional Information. The Trustee shall prepare or cause to be
prepared for filing with the Commission (other than the Current Report on Form
8-K to be filed by the Depositor in connection with computational materials and
the initial Current Report on Form 8-K to be filed by the Depositor in
connection with the issuance of the Certificates) any and all reports,
statements and information respecting the Trust Fund and/or the Certificates
required to be filed with the Commission pursuant to the Securities Exchange Act
of 1934, and shall solicit any and all proxies of the Certificateholders
whenever such proxies are required to be solicited pursuant to the Securities
Exchange Act of 1934. The Depositor shall promptly file, and exercise its
reasonable best efforts to obtain a favorable response to, no-action requests
with, or other appropriate exemptive relief from, the Commission seeking the
usual and customary exemption from such reporting requirements granted to
issuers of securities similar to the Certificates. Fees and expenses incurred by
the Depositor in connection with this Section shall not be reimbursable from the
Trust Fund.
The Servicer and the Depositor each agree to promptly furnish the Trustee,
from time to time upon request, such further information, reports and financial
statements within their respective control related to this Agreement and the
Loans as the Trustee reasonably deems appropriate to prepare and file all
necessary reports with the Commission.
Section 5.11 Enforcement of Due-on-Sale Clauses; Assumption Agreements.
In any case in which a Property has been or is about to be conveyed by the
Borrower (whether by absolute conveyance or by contract of sale, and whether or
not the Borrower remains liable thereon) and the Servicer has knowledge of such
prospective conveyance, the Servicer shall exercise its rights to accelerate the
maturity of the related Loan in accordance with the terms of any due-on-sale
provision contained in the related Mortgage Note or Mortgage. The Servicer shall
enforce any due-on-sale provision contained in such Mortgage Note or Mortgage to
the extent the requirements thereunder for an assumption of the Loan have not
been satisfied to the extent permitted under the terms of the related Mortgage
Note, unless such provision is not exercisable under applicable law and
governmental regulations or in the Servicer's judgment, such exercise is
reasonably likely to result in legal action by the Borrower, or such conveyance
is in connection with a permitted assumption of the related Loan. Subject to the
foregoing, the Servicer is authorized to take or enter into an assumption
agreement from or with the Person to whom such property has been or is about to
be conveyed, pursuant to which such person becomes liable under the related
Mortgage Note, and, unless prohibited by applicable state law, the Borrower
remains liable thereon, provided that the Loan Interest Rate and Principal
Balance with respect to such Loan shall remain unchanged. The Servicer is also
authorized to release the original Borrower from liability upon the Loan and
substitute the new Borrower as obligor thereon. In connection with such
assumption or substitution, the Servicer shall apply such underwriting standards
and follow such practices and procedures as shall be normal and usual for
mortgage loans similar to the Loans and as it applies to mortgage loans owned
solely by it. The Servicer shall notify the Trustee that any such assumption or
substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement, which copy shall be
added by the Trustee to the related Loan File and shall, for all purposes, be
considered a part of such Loan File to the same extent as all other documents
and instruments constituting a part thereof. In connection with any such
assumption or substitution agreement, the Loan Interest Rate of the related
Mortgage Note, and the payment terms shall not be changed. Any fee collected by
the Servicer for entering into an assumption or substitution of liability
agreement will be retained by the Servicer as servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any conveyance by the
Borrower of the property subject to the Mortgage, or any assumption of a Loan by
operation of law which the Servicer in good faith determines it may be
restricted by law from preventing, for any reason whatsoever, or if the exercise
of such right would impair or threaten to impair any recovery under any
applicable insurance policy or, in the Servicer's judgment, be reasonably likely
to result in legal action by the Borrower.
Section 5.12 Realization upon Defaulted Loans. Except as provided in the
last two paragraphs of this Section 5.12, the Servicer shall, on behalf of the
Trust, foreclose upon or otherwise comparably convert the ownership of
properties securing such of the Loans as come into and continue in default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 5.3. In connection with such foreclosure
or other conversion, the Servicer shall follow Accepted Servicing Practices. The
foregoing is subject to the proviso that the Servicer shall not be required to
expend its own funds in connection with any foreclosure or to restore any
damaged property unless it shall determine that (i) such foreclosure and/or
restoration will increase the proceeds of liquidation of the Loan to
Certificateholders after reimbursement to itself for such expenses and (ii) such
expenses will be recoverable to it through Liquidation Proceeds (respecting
which it shall reimburse itself for such expense prior to the deposit in the
Collection Account of such proceeds). The Servicer shall be entitled to
reimbursement of the Servicing Fee and other amounts due it, if any, to the
extent, but only to the extent, that withdrawals from the Collection Account
with respect thereto are permitted under Section 5.4.
The Servicer may foreclose against the Property securing a defaulted Loan
either by foreclosure, by sale or by strict foreclosure, and in the event a
deficiency judgment is available against the Borrower or any other person, may
proceed for the deficiency. The Servicer shall comply with the information
reporting requirements of Section 6050J of the Code with respect to Property
that is foreclosed or abandoned, at the time and in the manner required by the
Code.
In the event that title to any Property is acquired in foreclosure or by
deed in lieu of foreclosure (an "REO Property"), the deed or certificate of sale
shall be issued to the Trustee, on behalf of the Certificate Insurer and the
Certificateholders. Notwithstanding any such acquisition of title and
cancellation of the related Loan, such REO Loan shall be considered to be a Loan
held in REMIC I until such time as the related Property shall be sold and such
REO Loan becomes a Liquidated Loan. Consistent with the foregoing, for purposes
of all calculations hereunder, so long as such REO Loan shall be considered to
be an Outstanding Loan:
(a) Notwithstanding that the indebtedness evidenced by the related Mortgage
Note shall have been discharged, such Mortgage Note and the related amortization
schedule in effect at the time of any such acquisition of title (after giving
effect to any previous Curtailments and before any adjustment thereto by reason
of any bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period) shall be assumed to remain in effect, except that such schedule
shall be adjusted to reflect the application of Net REO Proceeds received in any
month pursuant to the succeeding clause.
(b) Net REO Proceeds (after payment of Servicer's expenses related to
disposition) from such Property received in any month shall be deemed to have
been received first in payment of the accrued interest that remained unpaid on
the date that title to the related REO Property was acquired by the REMIC I,
with the excess thereof, if any, being deemed to have been received in respect
of the delinquent principal installments that remained unpaid on such date.
Thereafter, Net REO Proceeds for such Property received in any month shall be
applied to the payment of installments of principal and accrued interest on such
Loan deemed to be due and payable in accordance with the terms of such Mortgage
Note and such amortization schedule. If such Net REO Proceeds exceed the then
Unpaid REO Amortization, the excess shall be treated as a Curtailment received
in respect of such Loan.
(c) The Net REO Proceeds allocated to the payment of a related Servicing
Fee shall be limited to an amount equal to the product of (x) the total amount
of Net REO Proceeds allocable to interest multiplied by (y) the fraction, the
numerator of which is the interest rate at which the Servicing Fee is determined
and the denominator of which is the Loan Interest Rate borne by such Loan.
In the event that REMIC I acquires any Property as aforesaid or otherwise
in connection with a default or imminent default on a Loan, such Property shall
be disposed of by or on behalf of such REMIC prior to the close of the third
calendar year following the year of its acquisition unless (i) the Servicer
shall have provided to the Trustee and the Certificate Insurer an Opinion of
Counsel to the effect that the holding by such REMIC of such Property subsequent
to such period (and specifying the period beyond such period for which the
Property may be held) will not cause any of the Trust REMICs to be subject to
the tax on prohibited transactions imposed by Code Section 860F(a)(1), otherwise
subject any of the Trust REMICs or the Trust Fund to tax or cause any of the
Trust REMICs to fail to qualify as a REMIC at any time that any Certificates are
outstanding, or (ii) the Servicer or the Trustee (at the Servicer's expense)
shall have applied for, at least 60 days prior to the expiration of the close of
such third calendar year, an extension of such period in the manner contemplated
by Code Section 856(e)(3), in which case the initial period shall be extended by
the applicable extension period. The Servicer shall further ensure that the
Property is administered so that it constitutes "foreclosure property" within
the meaning of Code Section 860G(a)(8) at all times, that the sale of such
property does not result in the receipt by REMIC I of any income from
non-permitted assets as described in Code Section 860F(a)(2)(B), and that REMIC
I does not derive any "net income from foreclosure property" within the meaning
of Code Section 860G(c)(2) with respect to such property.
In lieu of foreclosing upon any defaulted Loan, the Servicer may, in its
discretion, permit the assumption of such Loan if, in the Servicer's judgment,
such default is unlikely to be cured and if the assuming borrower satisfies the
Servicer's underwriting guidelines with respect to mortgage loans owned by the
Servicer. In connection with any such assumption, the Loan Interest Rate of the
related Mortgage Note and the payment terms shall not be changed. Any fee
collected by Servicer for entering into an assumption agreement will be retained
by the Servicer as servicing compensation. Alternatively, the Servicer may
encourage the refinancing of any defaulted Loan by the Borrower.
Notwithstanding the foregoing, prior to instituting foreclosure proceedings
or accepting a deed-in-lieu of foreclosure with respect to any Property, the
Servicer shall make, or cause to be made, inspection of the Property in
accordance with the Accepted Servicing Practices and, with respect to
environmental hazards, substantially comparable to such procedures as are
required by the provisions of the FNMA's selling and servicing guide applicable
to single-family homes and in effect on the date hereof. The Servicer shall be
entitled to rely upon the results of any such inspection made by others. In
cases where the inspection reveals that such Property is potentially
contaminated with or affected by hazardous wastes or hazardous substances, the
Servicer shall promptly give written notice of such fact to the Certificate
Insurer, the Trustee and the Certificateholders. The Servicer shall not commence
foreclosure proceedings or accept a deed-in-lieu of foreclosure for such
Property without obtaining the consent of the Certificate Insurer.
Section 5.13 Trustee to Cooperate; Release of Loan Files. Upon the
payment in full of any 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 shall (i) immediately deliver to the Trustee two copies of a notice
substantially in the form of the Request for Release attached hereto as Exhibit
F (which request shall include a statement to the effect that all amounts
received in connection with such payment which are required to be deposited in
the Collection Account pursuant to Section 5.3 have been or shall be so
deposited) and executed by a Servicing Officer and (ii) request delivery to it
of the Loan File. Upon receipt of such Request for Release, the Trustee, or the
Custodian on its behalf, shall promptly (and in no event later than 5 Business
Days) release the related Loan File to the Servicer. Upon any such payment in
full, the Servicer is authorized to give, as agent for the Trustee and the
mortgagee under the Mortgage which secured the Loan, an instrument of
satisfaction (or assignment of mortgage without recourse) regarding the property
subject to such Mortgage, which instrument of satisfaction or assignment, as the
case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of such payment, it being understood and agreed that no
expenses incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Collection Account.
In connection therewith, the Trustee shall execute and return to the Servicer
any required power of attorney provided to the Trustee by the Servicer and other
required documentation in accordance with Section 5.1(d). From time to time and
as appropriate for the servicing or foreclosure of any Loan and in accordance
with Accepted Servicing Practices, the Trustee shall, upon request of the
Servicer and delivery to the Trustee of a Request for Release signed by a
Servicing Officer, release, or cause the Custodian to release, the related Loan
File to the Servicer and shall execute such documents as shall be necessary to
the prosecution of any such proceedings. Such Request for Release shall obligate
the Servicer to return the Loan File to the Trustee when the need therefor by
the Servicer no longer exists unless the Loan shall be liquidated, in which
case, upon receipt of a certificate of a Servicing Officer similar to the
Request for Release herein above specified, the Loan File shall be delivered by
the Trustee to the Servicer.
Section 5.14 Servicing Fee; Servicing Compensation.
(a) The Servicer shall be entitled, at its election, either (1) to pay
itself the Servicing Fee out of any Borrower payment on account of interest or
Net REO Proceeds actually collected prior to the deposit of such payment in the
Collection Account or (2) to withdraw from the Collection Account such Servicing
Fee pursuant to Section 5.4. The Servicer shall also be entitled, at its
election, either (i) to pay itself the Servicing Fee in respect of each
delinquent Loan out of Liquidation Proceeds in respect of such Loan or other
recoveries with respect thereto to the extent permitted in Section 5.3(b) or
(ii) to withdraw from the Collection Account the Servicing Fee in respect of
each such Loan to the extent of such Liquidation Proceeds or other recoveries
with respect to such Loan, to the extent permitted by Section 5.4(a).
The aggregate Servicing Fee is reserved for the administration of the Trust
Fund and, in the event of replacement of the Servicer as Servicer of the Loans,
for the payment of other expenses related to such replacement. The aggregate
Servicing Fee shall be offset as provided in Section 5.19. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including maintenance of the hazard insurance required by
Section 5.6) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
(b) Servicing compensation in the form of assumption fees, late payment
charges, tax service fees, fees for statement of account or payoff of the Loan
(to the extent permitted by applicable law) or otherwise shall be retained by
the Servicer and are not required to be deposited in the Collection Account.
Section 5.15 Reports to the Trustee; Collection Account Statements. Not
later than 15 days after each Distribution Date, the Servicer shall provide to
the Trustee and the Certificate Insurer a statement, certified by a Servicing
Officer, setting forth the status of the Collection Account as of the close of
business on the related Determination Date, stating that all distributions
required by this Agreement to be made by the Servicer on behalf of the Trustee
have been made (or if any required distribution has not been made by the
Servicer, specifying the nature and status thereof) and showing, for the Due
Period covered by such statement, the aggregate of deposits into and withdrawals
from the Collection Account for each category of deposit specified in Section
5.3 and each category of withdrawal specified in Section 5.4, the allocation of
such amounts between principal and interest collected on the Loans and the
aggregate of deposits into the Certificate Account as specified in Section
6.1(c). Such statement shall also state the aggregate unpaid Principal Balance
of all the Loans as of the close of business on the last day of the month
preceding the month in which such Distribution Date occurs. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon
request.
Section 5.16 Annual Statement as to Compliance. The Servicer will deliver
to the Trustee, the Certificate Insurer not later than the last day of the third
month (as of the Closing Date, March 31st) subsequent to the end of the
Servicer's fiscal year, an Officers' Certificate stating as to each signer
thereof, that (i) a review of the activities of the Servicer during the
preceding calendar year and of its performance under this Agreement has been
made under such officer's supervision, and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year, or if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof including the steps being taken by the
Servicer to remedy such default. The first such Officers' Certificate shall be
delivered in March 2000. Such Officers' Certificate shall be accompanied by the
statement described in Section 5.17 of this Agreement. Copies of such statement
shall, upon request, be provided to any Certificateholder by the Servicer, or by
the Trustee at the Servicer's expense if the Servicer shall fail to provide such
copies.
Section 5.17 Annual Independent Public Accountants' Servicing Report. Not
later than the last day of the third month (as of the Closing Date, March 31,
2000) subsequent to the end of the Servicer's fiscal year, the Servicer, at its
expense, shall cause a firm of nationally recognized independent public
accountants (who may also render services to the Servicer) to furnish a
statement to the Trustee, the Certificate Insurer, to the effect that, on the
basis of an examination of certain documents and records relating to the
servicing of the mortgage loans being serviced by the Servicer under pooling and
servicing agreements similar to this Agreement (which agreements shall be
described in a schedule to such statement) during the preceding year (or such
longer period from the Closing Date to the end of the following calendar year),
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers, such firm is of the opinion that such servicing
has been conducted in compliance with the Uniform Single Attestation Program for
Mortgage Bankers and that such examination has disclosed no exceptions or errors
relating to the servicing activities of the Servicer (including servicing of
Loans subject to this Agreement) that, in the opinion of such firm, are
material, except for such exceptions as shall be set forth in such statement.
The first such statement shall be delivered on March 31, 2000. Copies of such
statement shall, upon request, be provided to Certificateholders by the
Servicer, or by the Trustee at the Servicer's expense if the Servicer shall fail
to provide such copies. For purposes of such statement, such firm may
conclusively presume that any pooling and servicing agreement which governs
asset-backed pass-through certificates offered by the Depositor (or any
predecessor or successor thereto) in a registration statement under the
Securities Act of 1933, as amended, is similar to this Agreement, unless such
other pooling and servicing agreement expressly states otherwise. In the event
such firm requires the Trustee to agree to the procedures performed by such
firm, the Servicer shall direct the Trustee in writing to agree; it being
understood and agreed that the Trustee will deliver such letter of agreement in
conclusive reliance upon the direction of the Servicer, and the Trustee shall
not make any independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or correctness
of such procedures. Delivery of such reports, information and documents to the
Trustee is for informational purposes only, and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from the information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on the Officer's Certificates).
Section 5.18 Reports to be Provided by the Servicer.
(a) In connection with the transfer of the Certificates, the Trustee on
behalf of any Certificateholder may request that the Servicer make available to
any prospective Certificateholder annual audited financial statements of the
Servicer (or, upon request, audited annual financial statements of the
Servicer's ultimate parent corporation) for one or more of the most recently
completed fiscal years for which such statements are available, which request
shall not be unreasonably denied or unreasonably delayed. Such annual audited
financial statements also shall be made available to the Certificate Insurer
pursuant to Section 2.02(c) of the Insurance Agreement. In the event such firm
requires the Trustee to agree to the procedures performed by such firm, the
Servicer shall direct the Trustee in writing to agree; it being understood and
agreed that the Trustee will deliver such letter of agreement in conclusive
reliance upon the direction of the Servicer, and the Trustee shall not make any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures. Delivery of such reports, information and documents to the Trustee
is for informational purposes only, and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from the information contained therein, including the Servicer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on the Officer's Certificates).
(b) The Servicer also agrees to make available on a reasonable basis to the
Certificate Insurer, the Trustee or any prospective Certificateholder a
knowledgeable financial or accounting officer for the purpose of answering
reasonable questions respecting recent developments affecting the Servicer or
the financial statements of the Servicer and to permit the Certificate Insurer
or any prospective Certificateholder to inspect the Servicer's servicing
facilities during normal business hours for the purpose of satisfying the
Certificate Insurer, the Trustee or such prospective Certificateholder that the
Servicer has the ability to service the Loans in accordance with this Agreement.
(c) On the 15th calendar day of each month, and if such day is not a
Business Day, the next succeeding Business Day, the Servicer shall deliver to
the Trustee and the Depositor a computer tape in a Microsoft Excel file format
that includes the "loan level" information with respect to the Loans as of the
end of the related Due Period for the loan data fields required pursuant to
Exhibit K hereof and those additional loan data fields as reasonably required by
the Trustee, the Certificate Insurer, the Depositor or the Certificate Insurer
from time to time, and the Trustee shall deliver such computer tape upon receipt
to a certain financial market publisher (which initially shall be Bloomberg,
L.P.).
(d) The Servicer shall, in each year beginning after the Cut-Off Date, make
the reports of foreclosures and abandonments of any Mortgaged Property as
required by Code Section 6050J. In order to facilitate this reporting process,
the Servicer shall, on or before January 15th of each year, provide to the
Internal Revenue Service, reports relating to each instance occurring during the
previous calendar year in which such Servicer (i) on behalf of the Trustee
acquires an interest in a Mortgaged Property through foreclosure or other
comparable conversion in full or partial satisfaction of a Mortgage Loan
serviced by such Servicer, or (ii) knows or has reason to know that a Mortgaged
Property has been abandoned. Reports from the Servicer shall be in form and
substance sufficient to meet the reporting requirements imposed by Code Section
6050J. In addition, the Servicer shall, for each year ending after the Cut-Off
Date, provide, or cause to be provided, to the Internal Revenue Service and the
related Mortgagors such information as is required under Code Sections 6050H
(regarding payment of interest) and 6050P (regarding cancellation of
indebtedness).
Section 5.19 Adjustment of Servicing Compensation in Respect of Prepaid
Loans. The aggregate amount of the Servicing Fees that the Servicer shall be
entitled to receive with respect to all of the Loans and each Distribution Date
shall be offset on such Distribution Date by an amount equal to the aggregate
Prepayment Interest Shortfall with respect to all Loans which were subjects of
Principal Prepayments during the Due Period applicable to such Distribution
Date. The amount of any offset against the aggregate Servicing Fee with respect
to any Distribution Date under this Section 5.19 shall be limited to the
aggregate amount of the Servicing Fees otherwise payable to the Servicer
(without adjustment on account of Prepayment Interest Shortfalls) with respect
to (i) scheduled payments having the Due Date occurring in the Due Period
applicable to such Distribution Date received by the Servicer prior to the
Determination Date, and (ii) Principal Prepayments, Curtailments, Released
Property Proceeds, Insurance Proceeds and Liquidation Proceeds received in the
Due Period applicable to such Distribution Date, and the rights of the
Certificateholders to the offset of the aggregate Prepayment Interest Shortfalls
shall not be cumulative.
Section 5.20 Periodic Advances. If, on the Business Day immediately
following any Determination Date, the Servicer determines that the interest
portion of any Monthly Payments due on the Due Date immediately preceding such
Determination Date have not been received as of the close of business on the
Business Day preceding such Determination Date, the Trustee shall determine the
amount of any Periodic Advance required to be made with respect to such unpaid
interest portion of all Monthly Payments on the related Servicer Remittance
Date. The Servicer, on the Business Day immediately following such Determination
Date, shall certify and deliver a magnetic tape or diskette to the Trustee and
the Depositor indicating the payment status of each Loan as of the close of
business on the Determination Date and shall cause an amount equal to the
Periodic Advance for the related Determination Date to be deposited in the
Certificate Account in accordance with Section 6.1(c) hereof, which deposit may
be made in whole or in part from funds in the Collection Account being held for
future distribution or withdrawal on or in connection with Distribution Dates in
subsequent months. Any funds being held for future distribution to
Certificateholders and so used shall be replaced by the Servicer from its own
funds by deposit into the Collection Account on or before the Determination Date
corresponding to any such future Determination Date to the extent that funds in
the Collection Account for such future Determination Date shall otherwise be
less than the amount required to be transferred to the Certificate Account in
respect of payments to Certificateholders required to be made on the
Distribution Date related to such future Determination Date.
The Trustee shall designate on its records the specific Loans and related
installments (or portions thereof) as to which such Periodic Advance shall be
deemed to have been made, such designation, except in cases of manifest error,
being conclusive for purposes of withdrawals from the Collection Account
pursuant to Section 5.4.
Section 5.21 Indemnification; Third Party Claims.
New South, as Transferor and Servicer (solely for the purpose of this
Section 5.21, the "Indemnifying Party") agrees to indemnify with its own funds
and to hold each of the Depositor, the Trustee, the Certificate Insurer and each
Certificateholder (solely for the purpose of this Section 5.21, the "Indemnified
Parties") harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Indemnified Parties may, respectively, sustain in any way
related to the failure of the Indemnifying Party to materially perform its
respective duties in compliance with the terms of this Agreement. Each
Indemnified Party and the Servicer shall promptly notify the other Indemnified
Parties if a claim is made by a third party with respect to this Agreement.
Section 5.22 Maintenance of Corporate Existence and Licenses; Merger or
Consolidation of the Servicer.
(a) The Servicer will keep in full effect its existence, rights and
franchises as a corporation, will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any of the Loans and to perform
its duties under this Agreement and will otherwise operate its business so as to
cause the representations and warranties under Section 3.1 to be true and
correct at all times under this Agreement.
(b) Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be an established mortgage loan servicing institution acceptable
to the Certificate Insurer that has a net worth of at least $50,000,000 and is a
Permitted Transferee, and in all events shall be the successor of the Servicer
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. The
Servicer shall send notice of any such merger or consolidation to the Trustee
and the Certificate Insurer.
Section 5.23 Assignment of Agreement by Servicer; Servicer Not to Resign.
The Servicer shall not assign its obligations and duties under this Agreement
nor resign from the obligations and duties hereby imposed on it except by mutual
written consent of the Certificate Insurer, the Depositor and the Trustee or
upon the determination that the Servicer's duties hereunder are no longer
permissible under applicable law and that such incapacity cannot be cured by the
Servicer without the incurrence, in the reasonable judgment of the Certificate
Insurer, of unreasonable expense. Any such determination that the Servicer's
duties hereunder are no longer permissible under applicable law permitting the
resignation of the Servicer shall be evidenced by a written Opinion of Counsel
to such effect delivered to the Trustee, the Transferor, the Depositor and the
Certificate Insurer. No such resignation shall become effective until the
Trustee or another successor appointed in accordance with the terms of this
Agreement has assumed in writing the Servicer's responsibilities and obligations
hereunder in accordance with Section 7.2. The Servicer shall provide the
Trustee, ▇▇▇▇▇'▇ and S&P and the Certificate Insurer with 30 days prior written
notice of its intention to resign pursuant to this Section 5.23.
Section 5.24 Pre-Funding Account.
(a) The Trustee for the benefit of the Certificateholders, shall cause to
be established and maintained a Pre-Funding Account (the "Pre-Funding Account"),
which shall be a separate Eligible Account and may be interest-bearing, entitled
"Pre-Funding Account, The Bank of New York, in trust for the New South Home
Equity Backed Certificates, Series 1999-2." Funds in the Pre-Funding Account
shall be invested in accordance with Section 6.6 hereof. The Pre-Funding Account
shall not be an asset of either REMIC I, REMIC II or REMIC III, but rather shall
be an asset of the Grantor Trust.
On the Closing Date, the Trustee will deposit in the Pre-Funding Account
the Pre-Funding Amount (which was received from the Depositor from the net
proceeds of the sale of the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class
A-4, Class A-5, Class A-6 and Class B Certificates). On each Subsequent Transfer
Date, upon satisfaction of the conditions set forth in Section 2.5 hereof with
respect to such transfer, the Trustee shall withdraw from the Pre-Funding
Account an amount equal to the Principal Balances of the Subsequent Loans
transferred to the Trustee pursuant to the related Subsequent Transfer Agreement
on such Subsequent Transfer Date and distribute such amount to or upon the order
of the Transferor.
(b) If the Pre-Funding Amount has not been reduced to zero on the last day
of the Pre-Funding Period after giving effect to any reductions in the
Pre-Funding Amount on such date pursuant to Section 5.24(a) above, the Trustee
shall withdraw from the Pre-Funding Account on the Mandatory Redemption Date,
the Pre-Funding Amount and deposit such amount in the Certificate Account to be
applied in reduction of the Principal Balances of the Class A and Class B
Certificates as set forth in Section 6.5(b).
(c) On the Business Day preceding each of the first, second and third
Distribution Dates, if applicable, the Trustee shall withdraw the related
Pre-Funding Earnings for the related Due Period and pay such amounts to the
Transferor.
Section 5.25 Capitalized Interest Account.
(a) The Trustee, for the benefit of the Certificateholders, shall cause to
be established and maintained a Capitalized Interest Account (the "Capitalized
Interest Account"), which shall be a separate Eligible Account and may be
interest-bearing, entitled "Capitalized Interest Account, The Bank of New York,
in trust for the New South Home Equity Asset Backed Certificates, Series
1999-2." Funds in the Capitalized Interest Account shall be invested in
accordance with Section 6.6 hereof. The Capitalized Interest Account shall not
be an asset of either REMIC I, REMIC II or REMIC III, but rather shall be an
asset of the Grantor Trust.
On the Closing Date, the Trustee will deposit in the Capitalized Interest
Account the Capitalized Interest Initial Deposit (which was received from the
Depositor and derived from the net proceeds of the sale of the Class ▇-▇, ▇▇▇▇▇
▇-▇, Class A-3, Class A-4, Class A-5, Class A-6 and Class B Certificates).
(b) On each Determination Date during the Pre-Funding Period, the Trustee
will withdraw from the Capitalized Interest Account an amount equal to the
Lower-Tier Capitalized Interest Requirement and deposit such amount into the
Certificate Account. Such amount shall be treated as having been deposited by
the Transferor into REMIC I.
(c) On the Mandatory Redemption Date, any amounts remaining in the
Capitalized Interest Account, after withdrawal of the Lower-Tier Capitalized
Interest Requirement on the immediately preceding Determination Date, shall be
paid to the Transferor.
(d) On each Distribution Date during the Pre-Funding Period, the Trustee
shall withdraw from the Capitalized Interest Account an amount equal to the
Transferor Excess Capitalized Interest Amount for such Distribution Date and pay
such amount to the Transferor.
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.1 Establishment of Certificate Account, Deposits to the
Certificate Account.
(a) The Trustee shall establish and maintain the Certificate Account which
shall be titled "Certificate Account, The Bank of New York, as trustee for the
registered holders of New South Home Equity Asset Backed Certificates, Series
1999-2" and which shall be an Eligible Account. Notice of the establishment of
the Certificate Account shall be promptly provided in writing to each of the
Servicer, the Rating Agencies and the Certificate Insurer.
(b) The Trustee shall control and receive the income from the investment of
funds in the Certificate Account. The Trustee shall deposit the amount of any
losses incurred in respect of any such investments in the Certificate Account
out of its own funds immediately as realized.
(c) On each Servicer Remittance Date, the Servicer shall cause to be
deposited in the Certificate Account from funds on deposit in the Collection
Account, an amount equal to the Servicer Remittance Amount.
(d) If the Servicer or the Certificate Insurer exercises its option to
purchase all the Loans on or after the Optional Termination Date pursuant to
Section 8.1(b), the Termination Price shall be deposited into the Certificate
Account.
Section 6.2 Permitted Withdrawals From the Certificate Account. The
Trustee shall, in accordance with the Servicer's written directions (in the case
of (a), (c) or (d) below) to the Trustee as described in Section 6.5, withdraw
or cause to be withdrawn funds from the Certificate Account for the following
purposes:
(a) to effect the distributions described in Section 6.5(b) and 6.5(d);
(b) [Reserved];
(c) to pay the Trustee any interest earned on or investment income earned
with respect to funds in the Certificate Account;
(d) to return to the Collection Account any amount deposited in the
Certificate Account that was not required to be deposited therein; and
(e) to clear and terminate the Certificate Account upon termination of the
Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for withdrawals
from the Certificate Account pursuant to each of subclauses (a) through (e)
listed above.
Section 6.3 Collection of Money. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of all money and other
property payable to or receivable by the Trustee pursuant to this Agreement,
including, but not limited to, (i) all payments due from the Servicer or any
Subservicer on the Loans in accordance with the respective terms and conditions
of such Loans and required to be paid over to the Trustee by the Servicer or by
any Subservicer and (ii) Insured Payments from the Certificate Insurer. The
Trustee shall hold all such money and property received by it as part of the
Trust Fund and shall apply it as provided in this Agreement.
Section 6.4 The Certificate Insurance Policy.
(a) Not later than 12:00 noon on the third Business Day prior to the
Distribution Date, the Trustee shall determine with respect to the immediately
following Distribution Date the amount to be on deposit in the Certificate
Account reduced by (x) the sum of the amounts described in clauses (i) and (ii)
of Section 6.5(b) for the related Distribution Date, and further not including
(y) any Insured Payment.
(b) Not later than 12:00 noon New York City time on the third Business Day
preceding each Distribution Date, the Trustee shall, if the Trustee determines
that an Insured Payment is required to be made in accordance with the
Certificate Insurance Policy complete a Notice in the form of Exhibit A to the
Certificate Insurance Policy, and submit such notice to the Certificate Insurer
and such notice shall serve as a claim for an Insured Payment in an amount equal
to the Insured Payment due with respect to the Class A Certificates for and on
such Distribution Date. The Insured Payment shall be deposited directly into the
Certificate Account in accordance with the Notice and the Certificate Insurance
Policy.
(c) The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Certificate from moneys received
under the Certificate Insurance Policy. The Certificate Insurer shall have the
right to inspect such records at reasonable times during normal business hours
upon one Business Day's prior notice to the Trustee.
(d) In the event that the Trustee has received a certified copy of an order
of the appropriate court that any amount distributed on the Class A
Certificates, including any amounts represented by an Insured Payment, has been
voided in whole or in part as a preference payment under applicable bankruptcy
law, the Trustee shall so notify the Certificate Insurer, shall comply with the
provisions of the Certificate Insurance Policy to obtain payment by the
Certificate Insurer of such voided amount distributed, and shall, at the time it
provides notice to the Certificate Insurer, notify, by mail to
Certificateholders of the affected Certificates that, in the event any
Certificateholder's amount distributed is so recovered, such Certificateholder
will be entitled to payment pursuant to the Certificate Insurance Policy, a copy
of which shall be made available through the Trustee, the Certificate Insurer or
the Certificate Insurer's fiscal agent, if any, and the Trustee shall furnish to
the Certificate Insurer or its fiscal agent, if any, its records evidencing the
payments which have been made by the Trustee and subsequently recovered from
Certificateholders, and dates on which such payments were made.
(e) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Certificates.
Each Class A Certificateholder, by its purchase of Class A Certificates, the
Servicer and the Trustee agree that, the Certificate Insurer (so long as no
Certificate Insurer Default exists) may at any time during the continuation of
any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (1) the direction of any
appeal of any order relating to such Preference Claim and (2) the posting of any
surety, supersedes or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Certificate Insurer shall be subrogated
to, and each Class A Certificateholder, the Servicer and the Trustee hereby
delegate and assign to the Certificate Insurer, to the fullest extent permitted
by law, the rights of the Servicer, the Trustee and each Class A
Certificateholder in the conduct of any such Preference Claim, including,
without limitation, all rights of any party to any adversary proceeding or
action with respect to any court order issued in connection with any such
Preference Claim.
Section 6.5 Distributions.
(a) No later than 12:00 noon New York time on the Business Day following
each Determination Date, the Servicer shall calculate and deliver to the Trustee
and the Certificate Insurer a report in a mutually agreed upon format specifying
(x) the outstanding Principal Balances of each of the Loans as of the close of
business on the Determination Date, (y) such of the information included in
Section 6.7(c) as to the Loans as the Certificate Insurer or the Trustee may
reasonably request and (z) such information as to each Loan as of the Record
Date immediately preceding such Determination Date and such other information as
the Certificate Insurer or the Trustee may reasonably request. The Trustee shall
calculate, based on such information delivered by the Servicer, and shall
deliver to the Certificate Insurer on the Business Day preceding the
Distribution Date, a remittance report specifying the following information
(which need not be in computer-readable form): (i) the Servicer Remittance
Amount, (ii) the Net Foreclosure Profits (net of any portion payable to the
Servicer) and (iii) the Periodic Advances for the related Distribution Date;
(iv) an itemization of the amounts to be distributed pursuant to Sections
6.5(b)(i)-(xv). The information with respect to the Distribution Date provided
by the Trustee to the Certificate Insurer on the Business Day preceding each
Distribution Date shall also include the Premium Percentage, the Uncapped
Pass-Through Rates, the Class A-1 Pass-Through Rate, the Class A-1 Available
Funds Cap Rate, the Class A-1 Principal Balance, the Fixed Rate Available Funds
Cap Rate, the Class A-2 Pass-Through Rate, the Class A-2 Principal Balance, the
Class A-3 Pass-Through Rate, the Class A-3 Principal Balance, the Class A-4
Pass-Through Rate, the Class A-4 Principal Balance, the Class A-5 Pass-Through
Rate, the Class A-5 Principal Balance, the Class A-6 Pass-Through Rate, the
Class A-6 Principal Balance, the Class B Pass-Through Rate, the Class B
Principal Balance, the Net Loan Rate, the Class A-1 LIBOR Interest Carryover,
the Fixed Rate Interest Carryover, the Aggregate Principal Balance of the Loans,
the Overcollateralization Deficiency Amount, the Overcollateralization Amount,
the Overcollateralization Deficit, the Overcollateralization Target Amount and
the Class A Turbo Amount. The Trustee shall also calculate and provide the
Available Distribution Amount and the amount of any Insured Payment. With
respect to the Trust REMICs, the Trustee shall also calculate the Class
Principal Balance of each Class of Uncertificated Regular Interests, the Net
Loan Rate, each other Pass-Through Rate with respect to the Uncertificated
Regular Interests. Simultaneously with the delivery of the foregoing information
to the Certificate Insurer, the Trustee shall also provide to the Certificate
Issuer with a report including information specified in each of Sections
6.7(a)(i)-(xvii).
(b) With respect to the Certificate Account (including, if deposited into
such Certificate Account, any Insured Payments), on each Distribution Date, the
Trustee shall make the following allocations, disbursements and transfers in the
following order of priority, in accordance with the information received
pursuant to the immediately preceding paragraph and each such allocation,
transfer and disbursement shall be treated as having occurred only after all
preceding allocations, transfers and disbursements have occurred:
(i) from the Servicer Remittance Amount and so long as no Certificate
Insurer Default exists, to the Certificate Insurer, the Certificate
Insurance Premium Amount;
(ii) from the Servicer Remittance Amount, to the Trustee, the Trustee
Fees then due to it;
(iii) from the Available Distribution Amount and any Insured Payment
for such Distribution Date, to the Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5 and Class A-6 Certificates, the sum of: (A) related
Distributable Certificate Interest for such Classes determined by using the
Net Loan Rate in clause (ii) of the related Pass-Through Rate definition
instead of the Fixed Rate Available Funds Cap Rate (or Class A-1 Available
Funds Cap Rate with respect to the Class A-1 Certificates), and (B) the
excess, if any, of the related Distributable Certificate Interest over the
amount determined in clause (A), pro rata, as among those Classes, based on
their respective entitlements to Distributable Certificate Interest;
(iv) from any remaining Available Distribution Amount, to the Class B
Certificates, the sum of: (A) related Distributable Certificate Interest
for the Class B Certificates determined by using the Net Loan Rate in
clause (ii) of the definition of Class B Pass-Through Rate instead of the
Fixed Rate Available Funds Cap Rate and (B) the excess, if any, of the
related Distributable Certificate Interest over the amount determined in
Clause (A);
(v) from any remaining Available Distribution Amount for such
Distribution Date, to the Class A-6 Certificates, until the Certificate
Principal Balance of the Class A-6 Certificates has been reduced to zero,
in an amount equal to the lesser of (a) the Principal Distribution Amount
and (b) the Class A-6 Lockout Distribution Amount;
(vi) from any remaining Available Distribution Amount for such
Distribution Date, to the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5 and Class A-6 Certificates, in that order, in an aggregate amount up to
the Principal Distribution Amount until the Certificate Principal Balance
of each Class has been reduced to zero. No amount will be distributed on
any class of Class A Certificates pursuant to this clause (vi) while any
Class A Certificate having a lower numerical designation remains
outstanding;
(vii) from any remaining Available Distribution Amount and any Insured
Payment for such Distribution Date, to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5 and Class A-6 Certificates, in that order, in an
amount equal to the Overcollateralization Deficit, if any, in reduction of
the Principal Balance of those Classes, in each case until the Principal
Balance of each Class is reduced to zero;
(viii) from any remaining Available Distribution Amount for such
Distribution Date, to the Certificate Insurer, to reimburse for any unpaid
Reimbursement Amounts owing to the Certificate Insurer;
(ix) from any remaining Available Distribution Amount for such
Distribution Date, to the Class A-6 Certificates, the Class A-6 Lockout
Turbo Amount, until the Certificate Principal Balance of the Class A-6
Certificates has been reduced to zero;
(x) from any remaining Available Distribution Amount for such
Distribution Date, to the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5 and Class A-6 Certificates, in that order, in an amount equal to the
remaining Overcollateralization Deficiency Amount after making the
distributions required by clauses (vii) and (ix) above, as a reduction of
the Principal Balance of those Classes, in each case, until the Principal
Balance of each Class is reduced to zero;
(xi) from any remaining Available Distribution Amount for such
Distribution Date, to the Class B Certificates, any remaining Available
Distribution Amount, until the Principal Balance of the Class B
Certificates has been reduced to zero;
(xii) from any remaining Available Distribution Amount for such
Distribution Date, to the Class A Certificates, any Class A-1 LIBOR
Interest Carryover or Fixed Rate Interest Carryover for the related
distribution date, pro rata as among those Classes in accordance with their
respective entitlements to Class A-1 LIBOR Interest Carryover or Fixed Rate
Interest Carryover;
(xiii) from any remaining Available Distribution Amount for such
Distribution Date, to the Class B Certificates, any Fixed Rate Interest
Carryover for the Class B Certificates for the related distribution date;
(xiv) on the distribution date following the Due Period in which the
termination of the Pre-Funding Period occurs, the Pre-Funding Amount, if
any, that is on deposit in the Pre-Funding Account will be distributed to
the Class A and Class B Certificates, in reduction of their Principal
Balances, pro rata, based on their Principal Balances;
(xv) to any successor Servicer, the Certificate Insurer or the
Trustee, as applicable, any Unreimbursed Servicing Transfer Costs;
(xvi) from any remaining Available Distribution Amount for such
Distribution Date, to the Class B Certificates, to reimburse in an amount
up to the aggregate realized losses allocated to the Class B Certificates
as a prior reduction of their Principal Balance, together with interest at
the Pass-Through Rate for the Class B Certificates;
(xvii) from any remaining Available Distribution Amount for such
Distribution Date, to the Servicer in an amount needed to reimburse the
Servicer for any non-recoverable Servicing Advances and Periodic Advances;
and
(xviii) to the holders of the Class R-II Certificates, any remaining
Available Distribution Amount.
Notwithstanding the priorities set forth above, if the Certificate Insurer
has defaulted under the Certificate Insurance Policy, then on any Distribution
Date on which the Overcollateralization Amount has been reduced to zero, any
amounts payable to the holders of the Class A Certificates in respect of
principal on such Distribution Date will be distributed pro rata in proportion
to the Class Principal Balance of such Certificates, and not pursuant to the
priorities set forth in clauses (vi), (vii) and (x) above.
(c) Amounts distributable to a Class of Certificates other than the Class
R-II Certificates pursuant to Section 6.5(b) shall be treated as having been
distributed from REMIC III in respect of the related REMIC III Regular
Interests, except as follows:
(i) Amounts distributable pursuant to Sections 6.5(b)(iii)(B) and
6.5(b)(iv)(B) shall be deemed to have been distributed, first, to the Class
R-II Interest, to the extent of amounts distributable pursuant to Section
6.5(b)(xviii), and then to the related Class of Certificates from the
Grantor Trust.
(ii) Amounts distributable pursuant to Sections 6.5(b)(xii) and
6.5(b)(xiii) shall be deemed to have been distributed, first, to the Class
R-II Interest, to the extent of amounts distributable pursuant to Section
6.5(b)(xviii), and then to the related Class Certificates from the Grantor
Trust.
(d) Amounts distributable pursuant to Sections 6.5(b)(viii), 6.5(b)(xv) and
6.5(b)(xvii) shall be treated as having been paid or deposited in respect of
REMIC I.
(e) With respect to the Certificate Account (including, if deposited into
the Certificate Account, any Insured Payments), on each Distribution Date, the
Trustee shall make the following allocations, disbursements and transfers in the
following order of priority, in accordance with the information received
pursuant to Section 6.5(a), in respect of the Trust REMICs:
(i) REMIC III. On each Distribution Date, the timing and amounts of
principal and interest distributions on each Class of REMIC III Regular
Interests shall be identical to the timing and amounts of principal and
interest distributions on the Classes of Certificates (other than the Class
R Certificates), except as follows: (i) the Pass-Through Rates of each
Class of REMIC III Regular Interests shall be as set forth in the
Preliminary Statement hereto, such that the amount of interest
distributable to the REMIC III Regular Interests shall correspond to the
interest distributable to the alphabetically and numerically corresponding
Class of Certificates pursuant to Sections 6.5(b)(iii)(A) and
6.5(b)(iv)(A), and (ii) Net Prepayment Interest Shortfalls shall be
allocated to the REMIC III Regular Interests in proportion to the amount of
interest distributable thereto pursuant to clause (i) (prior to allocating
such Net Prepayment Interest Shortfalls). The Upper-Tier Balance of the
Class UB Interest shall be reduced by any Realized Losses that reduced the
Class Principal Balance of the Class B Certificates pursuant to Section
6.5(g), and the Class UB Interest shall be deemed to receive any amounts
distributable to the Class B Certificates as reimbursement of Realized
Losses. Amounts in the Certificate Account deemed distributed in respect of
the REMIC III Regular Interests shall be treated as held by the Grantor
Trust for distribution in accordance with Section 6.5(b). Any amounts
remaining in REMIC III on a Distribution Date shall be distributed in
respect of the Class R-III Certificate.
(ii) REMIC II. On each Distribution Date, the timing and amounts of
principal and interest distributions and allocations of Net Prepayment
Interest Shortfalls on each Class of REMIC II Regular Interests shall be
identical to the timing, amounts and allocations in respect of the
alphabetically and numerically corresponding Classes of REMIC III Regular
Interests pursuant to Section 6.5(e)(ii). The Lower-Tier Balance of the
Class LB Interest shall be reduced by any Realized Losses allocated to the
Class UB Interest pursuant to Section 6.5(e)(i), and the Class LB Interest
shall be deemed to receive any amounts distributable to the Class UB
Interest as reimbursement of Realized Losses. Amounts in the Certificate
Account deemed distributed in respect of the REMIC II Regular Interests
shall be treated as assets of REMIC III for distribution in accordance with
Section 6.5(e)(i). Any portion of the Available Distribution Amount
remaining in REMIC II on a Distribution Date shall be distributed in
respect of the Class R-II Interest to the holders of the Class R-II
Certificates pursuant to Section 6.5(b)(xviii).
(iii) REMIC I. On each Distribution Date, the REMIC I Regular Interest
shall receive a distribution of interest and principal equal in the
aggregate to amounts distributable pursuant to Section 6.5(b)(iii), (iv),
(v), (vi), (vii), (ix), (x), (xi), (xii), (xiii), (xiv), (xvi) and (xviii)
from amounts on deposit in the Certificate Account, including any Insured
Payments. Such amounts with respect to interest shall accrue at the Net
Loan Rate on the REMIC I Principal Balance, reduced by any Net Prepayment
Interest Shortfalls and any other shortfalls of interest not covered by
Insured Payments, and such amounts with respect to principal and any
Realized Losses with respect to principal not covered by Insured Payments
shall reduce the REMIC I Principal Balance so that it corresponds to the
aggregate Principal Balance of the Loans as of the last day of the related
Due Period. Any reimbursements of Realized Losses shall be deemed to be
distributed in respect of the REMIC I Regular Interest. Amounts in the
Certificate Account deemed distributed in respect of the REMIC I Regular
Interest shall be treated as held by REMIC II for distribution in
accordance with Section 6.5(e)(ii). Any amounts remaining in REMIC I on a
Distribution Date shall be distributable in respect of the Class R-I
Certificate.
(f) On each Distribution Date, Net Prepayment Interest Shortfalls will be
allocated to reduce the amount of interest otherwise distributable on the Class
A and Class B Certificates. Such allocation will be made based on the
Distributable Certificate Interest for such Distribution Date for the Class A
and Class B Certificates prior to allocating such Net Prepayment Interest
Shortfalls (determined using Uncapped Pass-Through Rates).
(g) On each Distribution Date, any Realized Losses will be allocated to
reduce the Class Principal Balance of the Class B Certificates. The aggregate
amount of Realized Losses that may be allocated to the Class B Certificates may
not exceed the initial Class Principal Balance of the Class B Certificates.
Section 6.6 Investment of Accounts.
(a) So long as no Event of Default shall have occurred and be continuing,
and consistent with any requirements of the Code, all or a portion of any funds
on deposit in the Certificate Account held by the Trustee may be invested and
reinvested by and for the benefit of the Trustee, in one or more Permitted
Investments bearing interest or sold at a discount and maturing not later than
the next Distribution Date. Notwithstanding anything to the contrary in this
Section 6.6(a), all amounts received under the Certificate Insurance Policy
shall remain uninvested.
If any amounts are needed for disbursement from any Certificate Account
held by the Trustee and sufficient uninvested funds are not available to make
such disbursement, the Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in such Certificate Account. The
Trustee shall be liable for any investment loss or other charge resulting
therefrom.
(b) So long as no Event of Default shall have occurred and be continuing,
all net income and gain realized from investment of, and all earnings on, funds
deposited in any Collection Account shall be for the benefit of the Servicer as
servicing compensation (in addition to the Servicing Fee). The Servicer shall
deposit in the related Account the amount of any loss incurred in respect of any
Permitted Investment held therein which is in excess of the income and gain
thereon immediately upon realization of such loss, without any right to
reimbursement therefor from its own funds.
Section 6.7 Reports by Trustee.
(a) On each Distribution Date the Trustee shall forward the report prepared
by the Trustee on the Business Day preceding each Distribution Date, as
described in Section 6.5 hereof, to each Holder, to the Certificate Insurer, to
the Depositor, to the Servicer, to ▇▇▇▇▇'▇ and to S&P (the "Trustee Report").
Such report shall set forth the following information:
(i) the amount of the distributions made on such Distribution Date
with respect to the Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class B Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Principal Prepayments or
other unscheduled recoveries of principal included therein;
(iii) the amount of such distributions allocable to interest,
separately stating the amounts in Section 6.5(d)(iii) and (iv), if
applicable;
(iv) the amount of any Net Liquidation Proceeds included in such
distributions and the calculation thereof;
(v) the principal amount of the Class A-1 Certificates (based on a
Certificate in an original principal amount of $1,000), the principal
amount of the Class A-2 Certificates (based on a Certificate in an original
principal amount of $1,000), the principal amount of the Class A-3
Certificates (based on a Certificate in an original principal amount of
$1,000), the principal amount of the Class A-4 Certificates (based on a
Certificate in an original principal amount of $1,000), the principal
amount of the Class A-5 Certificates (based on a Certificate in an original
principal amount of $1,000) and the principal amount of the Class A-6
Certificates (based on a Certificate in an original principal amount of
$1,000) then outstanding, the principal amount of the Class B Certificates
(based on a Certificate in an original principal amount of $1,000) and the
outstanding amount of the aggregate Class Principal Balances of all
Principal Balance Certificates, in each case, after giving effect to any
principal payments made on such Distribution Date;
(vi) the amount of any Insured Payment included in the amounts
distributed to the Class A Certificateholders on such Distribution Date;
(vii) (a) the amount of the Overcollateralization Amount, the
Overcollateralization Reduction Amount and the Overcollateralization Target
Amount and (b) any Overcollateralization Deficit on such Distribution Date;
(viii) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in each such distribution;
(ix) the amounts, if any, of any related Liquidation Loan Losses for
the related Due Period and cumulatively since the Closing Date;
(x) the Net Loan Rate for such Distribution Date;
(xi) the amount on deposit in the Pre-Funding Account and the
Capitalized Interest Account;
(xii) for each Class A and Class B Certificate, the Uncapped
Pass-Through Rate for such Distribution Date;
(xiii) for each Class A and Class B Certificate, the Pass-Through Rate
for such Distribution Date;
(xiv) the Class A-1 LIBOR Carryover for such Distribution Date;
(xv) the Class A-1 Available Funds Capped Rate for such Distribution
Date;
(xvi) for each Class A and Class B Certificate (other than the Class
A-1 Certificates), the Fixed Rate Available Funds Capped Rate for such
Distribution Date;
(xvii) for each Class A and Class B Certificate (other than the Class
A-1 Certificates), the Fixed Rate Interest Carryover for such Distribution
Date;
(xviii) the amount of any Net Liquidation Proceeds for such
Distribution Date; and
(xix) the Principal Deficiency Amount, if any, for such Distribution
Date.
Items (i), (ii) and (iii) above shall, with respect to the Class A and Class B
Certificates, be presented on the basis of a Certificate having a $1,000
denomination. In addition, by December 1 of each calendar year following any
year during which the Certificates are outstanding, the Trustee shall furnish a
report to each Holder of record if so requested in writing at any time during
each calendar year as to the aggregate of amounts reported pursuant to (i), (ii)
and (iii) with respect to the Certificates for such calendar year.
(b) All distributions made to the Certificateholders according to Class or
type of Certificate on each Distribution Date will be made on a pro rata basis
among the Certificateholders as of the next preceding Record Date based on the
proportional beneficial ownership interest in the Trust Fund as are represented
by their respective Certificates, and shall be made by wire transfer of
immediately available funds to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if, in the case of a
Class A Certificateholder, such Certificateholder shall own of record
Certificates of the same Class which have denominations aggregating at least
$5,000,000 appearing in the Certificate Register and shall have provided
complete wiring instructions at least five Business Days prior to the Record
Date, and otherwise by check mailed to the address of such Certificateholder
appearing in the Certificate Register.
(c) In addition, on each Distribution Date the Trustee will distribute to
each Holder, to the Certificate Insurer, to the Underwriters, to the Depositor,
to ▇▇▇▇▇'▇ and to S&P, together with the information described in subsection (a)
preceding, the following information with respect to the Loans as of the close
of business on the last Business Day of the prior calendar month (except as
otherwise provided in clause (v) below), which is hereby required to be prepared
by the Servicer and furnished to the Trustee for such purpose on or prior to the
related Determination Date:
(i) the total number of Loans and the aggregate Principal Balances
thereof, together with the number, aggregate Principal Balances of such
Loans and the percentage (based on the aggregate Principal Balances of the
Loans) of the aggregate Principal Balances of such Loans to the aggregate
Principal Balance of all Loans (A) one month Delinquent, (B) two months
Delinquent and (C) three or more months Delinquent;
(ii) the number, aggregate Principal Balances of all Loans and
percentage (based on the aggregate Principal Balances of the Loans) of the
aggregate Principal Balances of such Loans to the aggregate Principal
Balance of all Loans in foreclosure proceedings and the number, aggregate
Principal Balances of all Loans and percentage (based on the aggregate
Principal Balances of the Loans) of any such Loans also included in any of
the statistics described in the foregoing clause (i);
(iii) the number, aggregate Principal Balances of all Loans and
percentage (based on the aggregate Principal Balances of the Loans) of the
aggregate Principal Balances of such Loans to the aggregate Principal
Balance of all Loans relating to Borrowers in bankruptcy proceedings and
the number, aggregate Principal Balances of all Loans and percentage (based
on the aggregate Principal Balances of the Loans) of any such Loans are
also included in any of the statistics described in the foregoing clause
(i);
(iv) the number, aggregate Principal Balances of all Loans and
percentage (based on the aggregate Principal Balances of the Loans) of the
aggregate Principal Balances of such Loans to the aggregate Principal
Balance of all Loans relating to REO Loans and the number, aggregate
Principal Balances of all Loans and percentage (based on the aggregate
Principal Balances of the Loans) of any such Loans that are also included
in any of the statistics described in the foregoing clause (i);
(v) the weighted average of the Loan Interest Rate for the Loans on
the Due Date occurring in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated maturity of all
Loans;
(vii) the book value of any REO Property as of the close of business
on the last day of the calendar month preceding the Distribution Date; and
(viii) the number and aggregate Principal Balance of Loans repurchased
or substituted by the Transferor during the related Due Period and the
cumulative number and aggregate Principal Balance of the Loans repurchased
or substituted for by the Transferor since the Closing Date.
All items set forth in this Section 6.7(c) above relating to the Loan level
information shall also be reported on a sub-pool level with the sub-pools
consisting of the Loans originated by the Transferor and the Loans originated by
Avondale.
Section 6.8 Additional Reports by Trustee and by Servicer.
(a) The Trustee shall report to the Depositor, the Servicer and the
Certificate Insurer with respect to the amount then held in the Certificate
Account held by the Trustee and the identity of the investments included
therein, as the Depositor, the Servicer or the Certificate Insurer may from time
to time request in writing.
(b) From time to time, at the request of the Certificate Insurer, the
Trustee shall report to the Certificate Insurer with respect to the actual
knowledge of a Responsible Officer of the Trustee, without independent
investigation, of any breach of any of the representations or warranties
relating to individual Loans set forth in the Loan Sale Agreement or in Section
3.4 hereof.
(c) On each Distribution Date, the Trustee shall forward to Bloomberg
Financial Markets, L.P. ("Bloomberg") and the Underwriters information prepared
by the Trustee with respect to the Loans and the Certificates as of such
Distribution Date, using a format and media mutually acceptable to the Trustee,
the Underwriters and Bloomberg.
Section 6.9 Compensating Interest. Not later than the close of business
on the Servicer Remittance Date, the Servicer shall remit to the Trustee
(without right or reimbursement therefor) for deposit into the Certificate
Account an amount equal to the lesser of (i) the aggregate of the Prepayment
Interest Shortfalls for the related Distribution Date resulting from Principal
Prepayments during the related Due Period and (ii) its aggregate Servicing Fees
received in the related Due Period (the "Compensating Interest").
Section 6.10 Effect of Payments by the Certificate Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Certificates which is made with moneys received
pursuant to the terms of the Certificate Insurance Policy shall not be
considered payment of the Certificates from the Trust. The Depositor, the
Servicer and the Trustee acknowledge, and each Holder by its acceptance of a
Certificate agrees, that without the need for any further action on the part of
the Certificate Insurer, the Depositor, the Servicer, the Trustee or the
Certificate Registrar (i) to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on the
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to, and each Certificateholder, the Servicer and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of such Holders to receive such principal and
interest from the Trust Fund, including, without limitation, any amounts due to
the Certificateholders in respect of securities law violations arising from the
offer and sale of the Certificates, and (ii) the Certificate Insurer shall be
paid such amounts but only from the sources and in the manner provided herein
for the payment of such amounts. The Trustee and the Servicer shall cooperate in
all respects with any reasonable request by the Certificate Insurer for action
to preserve or enforce the Certificate Insurer's rights or interests under this
Agreement without limiting the rights or affecting the interests of the Holders
as otherwise set forth herein.
ARTICLE VII
DEFAULT
Section 7.1 Events of Default.
(a) In case one or more of the following Events of Default by the Servicer
shall occur and be continuing, that is to say:
(i) any failure by the Servicer to remit to the Trustee any payment
required to be made by the Servicer under the terms of this Agreement
(which continues unremedied beyond any grace period permitted by the
Certificate Insurer, if any) or to deliver the report required by Section
6.5 of this Agreement;
(ii) the failure by the Servicer to make any required Servicing
Advance or Periodic Advance;
(iii) any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on
the part of the Servicer contained in this Agreement, or the breach of any
representation and warranty made pursuant to Section 3.1 to be true and
correct which continues unremedied for a period of 30 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 Depositor or the
Trustee, or to the Servicer and the Trustee by any Certificateholder or the
Certificate Insurer;
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force, undischarged or unstayed for a period of 60 days;
(v) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of the Servicer's
property;
(vi) the Servicer shall admit in writing its inability to pay its
debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations;
(vii) the occurrence of a Servicer Termination Delinquency Rate
Trigger or a Servicer Termination Loss Trigger;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied with respect to clauses (i) - (vii) above, the Trustee may
with the prior written consent of the Certificate Insurer, and shall at the
direction of the Certificate Insurer or the Majority Certificateholders with the
consent of the Certificate Insurer (in the case of any direction of the Majority
Certificateholders), by notice in writing to the Servicer, (x) remove the
Servicer, (y) terminate all the rights and obligations of the Servicer under
this Agreement and in and to the Loans and the proceeds thereof, as Servicer;
and (z) with respect to clause (vii) above, the Trustee shall, but only at the
direction of the Certificate Insurer, after notice in writing to the Servicer,
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Loans and the proceeds thereof, as Servicer. Upon receipt by
the Servicer and the Trustee of such written notice, all authority and power of
the Servicer under this Agreement, whether with respect to the Loans or
otherwise, shall, subject to Section 7.2, pass to and be vested in the Trustee
or its designee approved by the Certificate Insurer and the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, at the expense of the Servicer, any and all
documents and other instruments and do or cause to be done all other 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 Loans and related documents. The Servicer agrees to cooperate
(and pay any related costs and expenses) with the Trustee in effecting the
termination of the Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to the Trustee or its designee for
administration by it of all amounts which shall at the time be credited by the
Servicer to the Collection Account or thereafter received with respect to the
Loans. In addition, the Servicer agrees to pay the costs and expenses of the
Trustee, the Certificate Insurer and any successor Servicer related to a
transfer of the servicing of the Loans. The Trustee shall promptly notify the
Certificate Insurer, ▇▇▇▇▇'▇ and S&P upon receiving notice of, or its discovery
of, the occurrence of an Event of Default.
Section 7.2 Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 7.1, or the Trustee and the Certificate Insurer receive the
resignation of the Servicer evidenced by an Opinion of Counsel pursuant to
Section 5.23, or the Servicer is removed as Servicer pursuant to Article VII, in
which event the Trustee shall promptly notify the Certificate Insurer and
▇▇▇▇▇'▇ and S&P, except as otherwise provided in Section 7.1, the Trustee or its
designee (with the prior written consent of the Certificate Insurer) shall be
the successor in all respects to the Servicer in its capacity as Servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof arising on or after
the date of succession (except that if the Trustee is prohibited by law from
obligating itself to make advances regarding delinquent Loans, then the Trustee
will not be obligated to do so); provided, however, that the Trustee shall not
be liable for any actions or the representations and warranties of any Servicer
prior to it and including, without limitation, the obligations of the Servicer
set forth in Sections 2.4 and 3.5. The Trustee, as Successor Servicer, or any
other successor Servicer shall be obligated to pay Compensating Interest
pursuant to Section 6.9 hereof; the Trustee, as Successor Servicer is obligated
to make advances pursuant to Section 5.20 unless, and only to the extent the
Trustee, as Successor Servicer determines reasonably and in good faith that such
advances would not be recoverable pursuant to Sections 5.4(a), 5.4(b) or 5.4(j),
such determination to be evidenced by a certification of a Responsible Officer
of the Trustee, as Successor Servicer delivered to the Certificate Insurer.
(b) Notwithstanding the above, the Trustee may, if it shall be unwilling to
so act, or shall, if it is unable to so act or if the Majority
Certificateholders with the consent of the Certificate Insurer or the
Certificate Insurer so requests in writing to the Trustee, the Trustee shall
appoint, pursuant to the provisions set forth in paragraph (d) below, or
petition a court of competent jurisdiction to appoint, subject to the approval
of the Certificate Insurer, any established mortgage loan servicing institution
acceptable to the Certificate Insurer that has a net worth of not less than
$50,000,000 as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder.
(c) Any Successor Servicer shall be entitled to the same reimbursement for
Advances and to the Servicing Compensation (including a fee not to exceed the
Servicing Fee) and other funds pursuant to Section 5.14 hereof as the Servicer
if the Servicer had continued to act as Servicer hereunder.
(d) The Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession. The
Servicer agrees to cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
Servicer, as applicable, at the Servicer's cost and expense, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor Servicer, as applicable, all amounts that then have been or should
have been deposited in the Collection Account by the Servicer or that are
thereafter received with respect to the Loans. Any collections received by the
Servicer after such removal or resignation shall be endorsed by it to the
Trustee and remitted directly to the Trustee or, at the direction of the
Trustee, to the successor Servicer. Neither the Trustee nor any other successor
Servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (1) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (2) restrictions imposed by any regulatory authority having
jurisdiction over the Servicer hereunder. No appointment of a successor to the
Servicer hereunder shall be effective until the Trustee and the Certificate
Insurer shall have consented thereto, and written notice of such proposed
appointment shall have been provided by the Trustee to the Certificate Insurer
and to each Certificateholder. The Trustee shall not resign as Servicer until a
successor Servicer reasonably acceptable to the Certificate Insurer has been
appointed, the successor Servicer has accepted such appointment and the
successor Servicer has assumed the servicing of the Loans.
(e) Pending appointment of a successor to the Servicer hereunder and the
assumption of the servicing duties by the successor to the Servicer, the Trustee
shall act in such capacity as herein above provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Loans as it and such successor
shall agree; provided, however, that no such compensation shall be in excess of
that permitted the Servicer pursuant to Section 5.14, together with other
Servicing Compensation. The Servicer, the Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession.
Section 7.3 Waiver of Defaults. The Certificate Insurer or the Majority
Certificateholders may, on behalf of all Certificateholders, and subject to the
consent of the Certificate Insurer, waive any events permitting removal of the
Servicer as Servicer pursuant to this Article VII; provided, however, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to ▇▇▇▇▇'▇ and S&P.
Section 7.4 Loans, Trust Fund and Accounts Held for Benefit of the
Certificate Holders and Certificate Insurer.
(a) The Trustee shall hold the Trust Fund and the Trustee Loan Files for
the benefit of the Certificateholders and the Certificate Insurer and all
references in this Agreement and in the Certificates to the benefit of Holders
of the Certificates shall be deemed to include the Certificate Insurer. The
Trustee shall cooperate in all reasonable respects with any reasonable request
by the Certificate Insurer for action to preserve or enforce the Certificate
Insurer's rights or interests under this Agreement and the Certificates unless,
as stated in an Opinion of Counsel addressed to the Trustee and the Certificate
Insurer, such action is adverse to the interests of the Certificateholders or
diminishes the rights of the Certificateholders or imposes additional burdens or
restrictions on the Certificateholders.
(b) The Servicer hereby acknowledges and agrees that it shall service the
Loans for the benefit of the Certificateholders and for the benefit of the
Certificate Insurer, and all references in this Agreement to the benefit of or
actions on behalf of the Certificateholders shall be deemed to include the
Certificate Insurer.
ARTICLE VIII
TERMINATION
Section 8.1 Termination.
(a) This Agreement shall terminate upon written notice to the Trustee of
either: (1) the later of the distribution to Certificateholders of the final
payment or collection with respect to the last Loan (or Periodic Advances of
same by the Servicer), or the disposition of all funds with respect to the last
Loan and the remittance of all funds due hereunder and the payment of all
amounts due and payable to the Certificate Insurer under the Certificate
Insurance Agreement and the Trustee or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing; provided, however,
that in no event shall the Trust established by this Agreement terminate later
than twenty-one years after the death of the last survivor of the descendants of
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, alive as of the date hereof.
(b) In addition, the Servicer may, at its option and at its sole cost and
expense (or, if the Servicer does not exercise this option, the Certificate
Insurer may, at its option and at its sole cost and expense), repurchase all of
the Loans on any Distribution Date on or after the Optional Termination Date at
a price equal to the Termination Price. Any such purchase shall be accomplished
by deposit into the Certificate Account the Termination Price. No such
termination is permitted without the prior written consent of the Certificate
Insurer (i) if it would result in a draw on the Certificate Insurance Policy, or
(ii) unless the Servicer shall have delivered to the Certificate Insurer an
Opinion of Counsel reasonably satisfactory to the Certificate Insurer stating
that no amounts paid hereunder are subject to recapture as preferential
transfers under the United States Bankruptcy Code, 11 U.S.C. Sections 101 et
seq., as amended.
(c) If with respect to any Distribution Date, the Servicer determines that
there are no outstanding Loans and no other funds or assets in the Trust Fund
other than funds in the Certificate Account, the Servicer shall instruct the
Trustee to send a final distribution notice promptly to each such
Certificateholder in accordance with paragraph (d) below.
(d) Notice of any termination, specifying the Distribution Date upon which
the Trust Fund and the Trust REMICs will terminate and the Certificateholders
shall surrender their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Trustee by letter
to each of the Certificateholders of record as of the most recent Record Date,
and shall be mailed during the month of such final distribution before the
Distribution Date in such month, specifying (1) the Distribution Date upon which
final payment of such Certificates will be made upon presentation and surrender
of Certificates at the office of the Trustee therein designated, (2) the amount
of any such final payment and (3) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Trustee shall give such notice to the Servicer at the
time such notice is given to Certificateholders. The obligations of the
Certificate Insurer hereunder shall terminate upon the deposit by the Servicer
with the Trustee of a sum sufficient to purchase all of the Loans and REO
Properties as set forth above and when the aggregate of the Class Principal
Balances of the Principal Balance Certificates has been reduced to zero.
(e) In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the time specified
in the above-mentioned written notice, the Servicer 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 of the affected Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within nine months after the second notice all the affected
Certificates shall not have been surrendered for cancellation, the Certificate
Insurer shall, to the extent it has not otherwise been reimbursed, be entitled
to all unclaimed funds related to an Insured Payment and the Class R
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds and the Certificateholders shall
look only to the Certificate Insurer and the Class R Certificateholders,
respectively, for payment. Such funds shall remain uninvested.
Section 8.2 Additional Termination Requirements.
In the event that the Servicer exercises its purchase option as provided in
Section 8.1, each of the Trust REMICs shall be terminated in accordance with the
following additional requirements, unless the Trustee has been furnished with an
Opinion of Counsel (which shall not be an expense of the Trustee) to the effect
that the failure of the Trust REMICs to comply with the requirements of this
Section 8.2 will not (1) result in the imposition of taxes on "prohibited
transactions" of any of the Trust REMICs as defined in Section 860F of the Code
or (2) cause any such Trust REMIC to fail to qualify as a REMIC at any time that
any Certificates are outstanding:
(i) The Trustee shall treat the first date of mailing of the notice of
termination specified in Section 8.1(d) as the date of adoption of the plan
of complete liquidation of each of the Trust REMICs under Section 860F of
the Code and applicable regulations thereunder and shall specify such date
as the date of adoption of such plan of complete liquidation in the final
Tax Returns of each of the Trust REMICs; and
(ii) within 89 days of such date of adoption of the plans of complete
liquidation, the Trustee shall distribute or credit, or cause to be
distributed or credited all amounts distributable to the Trustee as holder
of the Uncertificated Regular Interests pursuant to Section 6.5(e)(i)-(iii)
and to the Holders of Certificates pursuant to Section 6.5(b), and the
Trust REMICs shall terminate at such time.
Section 8.3 Accounting Upon Termination of Servicer. Upon termination of
the Servicer, the Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet have been appointed, to
the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been appointed, to
the Trustee all Loan Files and related documents and statements held by it
hereunder and a Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been appointed, to
the Trustee a full accounting of all funds, including a statement showing the
Monthly Payments collected by it and a statement of monies held in trust by it
for the payments or charges with respect to the Loans; and
(d) execute and deliver such instruments and perform all acts reasonably
requested in order to effect the orderly and efficient transfer of servicing of
the Loans to its successor and to more fully and definitively vest in such
successor all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer under this Agreement.
ARTICLE IX
THE TRUSTEE
Section 9.1 Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and power vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Servicer or the Transferor hereunder. If any such
instrument is found not to conform on its face to the requirements of this
Agreement, the Trustee shall take action as it deems appropriate to have the
instrument corrected and, if the instrument is not corrected to the Trustee's
satisfaction, the Trustee will, at the expense of the Servicer notify the
Certificate Insurer and request written instructions as to the action the
Certificate Insurer deems appropriate to have the instrument corrected, and if
the instrument is not so corrected, the Trustee will provide notice thereof to
the Certificate Insurer who shall then direct the Trustee as to the action, if
any, to be taken.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge, and after the
curing of all such Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith on
the part of the Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or other officers of
the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or with the
consent of the Certificate Insurer or, any Class of the Class A
Certificateholders holding Class A Certificates evidencing Percentage
Interests of such Class of at least 25%, relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee,
or exercising or omitting to exercise any trust or power conferred upon the
Trustee, under this Agreement;
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or actual knowledge of any default or Event of Default (except
an Event of Default with respect to the nonpayment of any amount described
in Section 7.1(a)), unless a Responsible Officer of the Trustee shall have
received written notice thereof. In the absence of receipt of such notice,
the Trustee may conclusively assume that there is no default or Event of
Default (except a failure to make a Periodic Advance pursuant to Section
5.20 hereof);
(v) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it and none of the provisions contained in this Agreement shall in any
event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement
except during such time, if any, as the Trustee shall be the successor to,
and be vested with the rights, duties powers and privileges of, the
Servicer in accordance with the terms of this Agreement; and
(vi) Subject to the other provisions of this Agreement and without
limiting the generality of this Section, the Trustee shall have no duty (a)
to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of
any such recording or filing or depositing or to any rerecording, refiling
or redepositing of any thereof, (b) to see to any insurance, (c) to see to
the payment or discharge of any tax, assessment, or other governmental
charge or any lien or encumbrance of any kind owing with respect to,
assessed or levied against, any part of the Trust, the Trust Fund, the
Certificateholders or the Loans, (d) to confirm or verify the contents of
any reports or certificates of the Servicer delivered to the Trustee
pursuant to this Agreement believed by the Trustee to be genuine and to
have been signed or presented by the proper party or parties.
(d) It is intended that each of the Trust REMICs formed hereunder shall
constitute, and that the affairs of each such REMIC shall be conducted so as to
qualify it as, a REMIC 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)
and as Tax Matters Person on behalf of each of the Trust REMICs, and that in
such capacities it shall:
(i) 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) and any other Tax Return required to be filed by each of
the Trust REMICs, using a calendar year as the taxable year for the each
such REMIC;
(ii) make, or cause to be made, an election, on behalf of each of the
Trust REMICs, to be treated as a REMIC on the federal tax return of each
such REMIC for its first taxable year;
(iii) prepare and forward, or cause to be prepared and forwarded, to
the Trustee, the Certificateholders and to the Internal Revenue Service and
any other relevant governmental taxing authority all information returns or
reports as and when required to be provided to them in accordance with the
REMIC Provisions;
(iv) to the extent that the affairs of the Trust REMICs are within its
control, conduct such affairs of each of the Trust REMICs at all times that
any Certificates are outstanding so as to maintain the status of each of
the Trust REMICs as a REMIC under the REMIC Provisions and any other
applicable federal, state and local laws, including, without limitation,
information reports relating to "original issue discount," as defined in
the Code, based upon the Prepayment Assumption and calculated by using the
issue price of the Certificates;
(v) not knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of any of the
Trust REMICs;
(vi) pay the amount of any and all federal, state, and local taxes
imposed on any of the Trust REMICs, prohibited transaction taxes as defined
in Section 860F of the Code, other than any amount due as a result of a
transfer or attempted or purported transfer in violation of Section 4.2,
imposed on the Trust Fund 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). The Trustee shall be
entitled to withdraw funds from the Certificate Account in accordance with
Sections 9.1(c) and 9.5 hereof;
(vii) ensure that any such returns or reports filed on behalf of each
of the Trust REMICs by the Trustee are properly executed by the appropriate
person and submitted in a timely manner;
(viii) represent the Trust Fund and the Trust REMICs (at the sole cost
and expense of the Trust) in any administrative or judicial proceedings
relating to an examination or audit by any governmental taxing authority
with respect thereto, request an administrative adjustment as to any
taxable year of the Trust Fund or the Trust REMICs, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any item of the Trust Fund or the Trust REMICs and
otherwise act on behalf of the Trust Fund and the Trust REMICs in relation
to any tax matter involving the Trust Fund and the Trust REMICs;
(ix) as provided in Section 5.18 hereof, make available information
necessary for the computation of any tax imposed (1) on transferors of
residual interests to transferees that are not Permitted Transferees or (2)
on pass-through entities, any interest in which is held by an entity which
is not a Permitted Transferee. The Trustee covenants and agrees that it
will cooperate with the Servicer in the foregoing matters and that it will
sign, as Trustee, any and all Tax Returns required to be filed by the Trust
REMICs. Notwithstanding the foregoing, at such time as the Trustee becomes
the successor Servicer, the holder of the largest percentage of the Class
R-I Certificates (with respect to REMIC I), the Class R-II Certificates
(with respect to REMIC II), and the Class R-III Certificates (with respect
to REMIC III) shall serve as Tax Matters Person until such time as an
entity is appointed to succeed the Trustee as Servicer;
(x) make available to the Internal Revenue Service and those Persons
specified by the REMIC Provisions all information necessary to compute any
tax imposed (A) as a result of the Transfer of an Ownership Interest in a
Class R Certificate to any Person who is not a Permitted Transferee,
including the information described in Treasury regulations sections
1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the "excess inclusions"
of any of the Class R-I Interest (in the case of R-I Certificates), Class
R-II (in the case of Class R-II) and the Class R-III Certificates (in the
case of REMIC III) and (B) as a result of any regulated investment company,
real estate investment trust, common trust fund, partnership, trust, estate
or organization described in Section 1381 of the Code that holds an
Ownership Interest in a Class R Certificate having as among its record
holders at anytime any Person that is not a Permitted Transferee.
Reasonable compensation for providing such information may be accepted by
the Trustee;
(xi) pay out of its own funds, without any right of reimbursement from
the assets of the Trust Fund, tax return preparation and filing expenses,
and pay out of the assets of the Trust Fund all other tax related expenses
of the Trust Fund, including, but not limited to professional fees or
expenses related to audits or any administrative or judicial proceedings
with respect to the Trust Fund that involve the Internal Revenue Service or
state tax authorities, the expense of obtaining any Opinion of Counsel
required pursuant to Sections 3.5, 5.12 and 8.2 and taxes imposed on any
Trust REMIC or the Trust Fund except as specified herein, which shall be
expenses of REMIC I;
(xii) upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificates the Form 1066s and each
Form 1066Q with respect to the respective Trust REMICs and shall respond
promptly to written requests made not more frequently than quarterly by any
Holder of Class R Certificates with respect to the following matters:
(1) the original issue discount (or, in the case of the Loans,
market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to the regular or residual
interests of the respective Trust REMICs created hereunder and with
respect to the Loans, together with each constant yield to maturity
used in computing the same;
(2) the treatment of losses realized with respect to the Loans or
the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of any of the Trust
REMICs with respect to such regular interests or bad debt deductions
claimed with respect to the Loans;
(3) the amount and timing of any non-interest expenses of the
Trust REMICs; and
(4) any taxes (including penalties and interest) imposed on any
of the Trust REMICs, including, without limitation, taxes on
"prohibited transactions," "contributions" or "net income from
foreclosure property" or state or local income or franchise taxes.
In the event that any tax is imposed on "prohibited transactions" of any of
the Trust REMICs as defined in Section 860F(a)(2) of the Code, on the "net
income from foreclosure property" of REMIC I as defined in Section 860G(c) of
the Code, on any contribution to any of the Trust REMICs after the Startup Day
pursuant to Section 860G(d) of the Code, or any other tax is imposed, such tax
shall be paid by (i) the Trustee, if such tax arises out of or results from a
breach by the Trustee of any of its obligations under this Agreement, (ii) the
Servicer, if such tax arises out of or results from a breach by the Servicer of
any of its obligations under this Agreement, or otherwise (iii) the holders of
the Class R-I, Class R-II or Class R-III Certificates in proportion to their
undivided beneficial ownership interest in the related REMIC as are represented
by such Class R Certificates. To the extent such tax is chargeable against the
holders of the Class R-I, Class R-II or Class R-III Certificates,
notwithstanding anything to the contrary contained herein, the Trustee is hereby
authorized to retain from amounts otherwise distributable to the Holders of the
Class R-I, Class R-II or Class R-III Certificates on any Distribution Date
sufficient funds to reimburse the Trustee for the payment of such tax (to the
extent that the Trustee has paid the tax and not been previously reimbursed or
indemnified therefor).
(e) The Trustee shall not vary the investments of the Grantor Trust and
shall otherwise administer the Grantor Trust in compliance with the provisions
of Subpart E, Part I, Subchapter J of the Code and applicable Treasury
regulations thereunder. The Trustee shall file Form 1041 annually with the
Internal Revenue Service (providing the name and address of the Trustee and
signed by the Trustee, but otherwise completed in blank) and shall attach
thereto and shall furnish to the respective Certificateholders (other than the
Class R-I and Class R-III Certificateholders and the Transferor) their pro rata
shares of the income and deductions of the Grantor Trust for each of the accrual
periods or portions thereof for the preceding calendar year, including (i) in
the case of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6
and Class B Certificates, the amount of interest and OID income with respect to
the related Class of REMIC III Regular Interests, the amount accrued as income
on such Certificates under their related Basis Risk Arrangements in excess of
such income accrued on the REMIC III Regular Interests, and the amortized amount
of the initial purchase price paid for the respective Class of Certificates that
was allocated to the respective Basis Risk Arrangements and (ii) in the case of
the Class R-II Certificates, in addition to the information furnished in
Schedule Q to Form 1066 with respect to the Class R-II Interest, any amounts
deemed paid by the Holders of the Class R-II Certificates under the applicable
Basis Risk Arrangements as set forth in Section 6.5(c) and the applicable
amortized portions of amounts received or deemed received as the purchase price
for the Basis Risk Arrangements. In computing the amounts of interest or OID,
the amount accrued as income or expense under the related Basis Risk
Arrangements and the amortization of the purchase price for the Basis Risk
Arrangements as an income or expense, unless and until required otherwise by
applicable Treasury Regulations or other authority, the Trustee shall use the
level yield method and shall treat the original yields for the REMIC III Regular
Interests and the related Basis Risk Arrangements as corresponding to the
overall yields for the related Classes of Certificates. The Trustee shall report
to the Transferor all income and expense with respect to the Pre-Funding Account
and Capitalized Interest Account, based on information provided by the Servicer,
and any Compensating Interest paid from the Trust Fund. In making the foregoing
determinations of allocation of purchase price, income and expense with respect
to the Basis Risk Arrangements, the Trustee shall maintain information as to the
value of the Basis Risk Arrangements provided by the Class R-II Certificates to
the Class A-1 and Class B Certificates based on information provided by the
Transferor and shall treat the Basis Risk Arrangements provided by the Class
R-II Certificates to the Class A-2, Class A-3, Class A-4, Class A-5 and Class
A-6 Certificates as having a value of zero, unless and until the Transferor
otherwise notifies the Trustee that it is required otherwise by the Internal
Revenue Service.
Section 9.2 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 9.1:
(i) the Trustee (acting as Trustee or as agent for the Tax Matters
Person) may rely and shall be protected in acting or refraining from acting
upon any resolution, Officers' Certificate, Opinion of Counsel, 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;
(ii) the Trustee (acting as Trustee or as agent for the Tax Matters
Person) may consult with counsel and any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance with
such opinion of counsel;
(iii) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute, conduct or
defend litigation hereunder or in relation hereto at the request, or
direction of the Certificate Insurer or any of the Certificateholders,
pursuant to the provisions of this Agreement, unless such
Certificateholders or the Certificate Insurer, as applicable, shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) prior to the occurrence of an Event of Default hereunder and after
the curing of all Events of Default which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by the Certificate Insurer
or Holders of any Class of Class A Certificates evidencing Percentage
Interests aggregating not less than 25% of such class; provided, however,
that if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such expense or
liability as a condition to taking any such action. The reasonable expense
of every such examination shall be paid by the Servicer or, if paid by the
Trustee, shall be repaid by the Servicer upon demand from the Servicer's
own funds;
(vi) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(vii) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust created hereby or the powers granted
hereunder; and
(viii) subject to the prior consent of the Certificate Insurer, the
Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys.
(b) Following the Startup Day, the Trustee shall not knowingly accept any
contribution of assets to the Trust Fund, unless the Trustee shall have received
an Opinion of Counsel (at the expense of the Servicer) to the effect that the
inclusion of such assets in the Trust Fund will not cause any of the Trust
REMICs to fail to qualify as a REMIC at any time that any Certificates are
outstanding or subject any such REMIC to any tax under the REMIC Provisions or
other applicable provisions of federal, state and local law or ordinances. The
Trustee agrees to indemnify the Trust Fund and the Servicer for any taxes and
costs, including any attorney's fees, imposed or incurred by the Trust Fund or
the Servicer as a result of the breach of the Trustee's covenants set forth
within this subsection (b).
Section 9.3 Not Liable for Certificates or Loans. The recitals contained
herein (other than the certificate of authentication on the Certificates) shall
be taken as the statements of the Transferor or the Servicer, 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,
the Certificates, or of any Loan or related document. The Trustee shall not be
accountable for the use or application of any funds paid to the Servicer in
respect of the Loans or deposited in or withdrawn from the Collection Account by
the Servicer. The Trustee shall not be responsible for the legality or validity
of the Agreement or the validity, priority, perfection or sufficiency of the
security for the Certificates issued or intended to be issued hereunder.
Section 9.4 Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgor of Certificates with the
same rights it would have if it were not Trustee, and may otherwise deal with
the parties hereto.
Section 9.5 Trustee's Fees and Expenses; Indemnity.
(a) The Trustee acknowledges that in consideration of the performance of
its duties hereunder it is entitled to receive the Trustee Fee which shall not
be limited by any law in regard to the compensation of a trustee of an expense
trust, in accordance with the provision of Section 6.5(b) and Section 6.5(d).
The Trustee shall not be entitled to compensation for any expense, disbursement
or advance as may arise from its negligence or bad faith, and, prior to the
occurrence of an Event of Default, the Trustee shall have no lien on the Trust
Fund for the payment of its fees and expenses.
(b) The Trust Fund, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Servicer and held harmless
against any loss, liability, claim, damage or expense arising out of, or imposed
upon the Trust or the Trustee, in connection with this Agreement, the Insurance
Agreement, the Certificate Insurance Policy or any other related document or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance by the Trustee
of its duties hereunder. The Trustee and any director, officer, employee or
agent of the Trustee shall also be indemnified by the Holders of the Class R
Certificates and held harmless against any loss, liability or reasonable
expenses incurred by the Trustee in performing its duties as agent for the Tax
Matters Person for each of the Trust REMICs under this Agreement, other than any
loss, liability or expense incurred by reason of (i) the acts of the Trustee not
authorized or required pursuant to this Agreement or taken pursuant to written
instructions received from the Servicer, the Certificate Insurer or the Majority
Certificateholders, or (ii) by reason of the Trustee's reckless disregard of
obligations and duties hereunder. The obligation of the Servicer under this
Section 9.5 arising prior to any resignation or termination of the Servicer
hereunder shall survive termination of the Servicer and payment of the
Certificates, and shall extend to any co-trustee appointed pursuant to this
Article IX.
Section 9.6 Eligibility Requirements for Trustee. The Trustee and any
successor Trustee hereunder shall at all times be (a) a banking association
organized and doing business under the laws of any state or the United States of
America subject to supervision or examination by federal or state authority, (b)
authorized under such laws to exercise corporate trust powers, including taking
title to the Trust Fund assets on behalf of the Certificateholders (c) having a
combined capital and surplus of at least $50,000,000, (d) whose long-term
deposits, if any, shall be rated at least BBB by S&P and Baa2 by ▇▇▇▇▇'▇ (except
as provided herein) or such lower long-term deposit rating as may be approved in
writing by the Certificate Insurer, and (e) reasonably acceptable to the
Certificate Insurer as evidenced in writing. If such banking 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
purposes of this Section 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, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.7.
Section 9.7 Year 2000 Compliance. The Trustee warrants that it will use
commercially reasonable efforts to ensure that the computer software and
hardware systems ("Systems") that are owned by the Trustee and used to perform
its duties and obligations under this Agreement are 2000 Compliant or will be
made 2000 Compliant before December 31, 1999. With respect to software that the
Trustee licenses from third parties and uses to perform its duties and
obligations ("Third Party Software"), the Trustee warrants that it has used
commercially reasonable efforts to test the same by September 30, 1999 to
certify, in accordance with the Trustee's standard practices, that the Third
Party Software is 2000 Compliant. If the Trustee cannot certify any Third Party
Software as 2000 Compliant, the Trustee will use commercially reasonable efforts
to replace such Third Party Software with software that is warranted or
certified by its vendor as 2000 Compliant, if such replacement is available,
compatible with the Trustee's Systems and deemed by the Trustee as appropriate
under the circumstances. In the event that the Trustee uses third party service
providers to perform its duties and obligations or any portion thereof ("Third
Party Services"), the Trustee warrants that it has in place a program under
which it will use commercially reasonable efforts to contact such service
providers and obtain from them assurances that the Systems that they use in
providing Services are 2000 Compliant. As used herein, the term "2000 Compliant"
means that the Systems will function without material error caused by the
introduction of dates falling on or after January 1, 2000. Notwithstanding the
foregoing, Depositor, Transferor and Servicer acknowledge and agree that the
Trustee cannot and does not warrant that the Systems, Third Party Software or
Third Party Services will continue to interface with the hardware, firmware,
software (including operating systems), records or data used by the Depositor,
Transferor or Servicer or third parties, nor does the Trustee make any
warranties hereunder with respect to any public utility, communications service
provider, correspondent bank, securities or commodities exchange, or funds
transfer network. Moreover, because of the unprecedented nature of this issue,
the Trustee does not make any representation or warranty as to what will in fact
occur with respect to the Trustee's Systems of Third Party Software of Third
Party Services on or after January 1, 2000.
Section 9.8 Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, the Certificate
Insurer and to all Certificateholders. Upon receiving such notice of
resignation, the Servicer shall promptly appoint pursuant to Section 9.6 a
successor trustee or trustees by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee and to the successor
trustee. A copy of such instrument shall be delivered to the Depositor, the
Certificateholders, the Certificate Insurer and the Transferor by the Servicer,
and upon acceptance of appointment by a successor trustee, in accordance with
Section 9.8, the Servicer will give notice thereof to the Certificateholders.
Unless a successor trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.6 and shall fail to resign after written
request therefor by the Servicer or the Certificate Insurer, or if at any time
the Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Certificate Insurer or the Servicer with the consent of
the Certificate Insurer may remove the Trustee, and shall, within 30 days after
such removal and pursuant to Section 9.6, appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Depositor, the Certificateholders, the Certificate Insurer and
the Transferor by the Servicer.
(c) If the Trustee fails to perform in accordance with the terms of this
Agreement, the Certificate Insurer or the Servicer, with the consent of the
Certificate Insurer, may remove the Trustee and appoint a successor trustee
acceptable to the Certificate Insurer by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Servicer, one
complete set to the Trustee so removed and one complete set to the successor
Trustee so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 9.8.
Section 9.9 Successor Trustee. Any successor trustee appointed as
provided in Section 9.7 shall execute, acknowledge and deliver to the Depositor,
the Certificate Insurer, the Transferor, the Servicer and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all Loan
Files and related documents and statements held by it hereunder, and the
Servicer and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations. No successor trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 9.6. Upon acceptance
of appointment by a successor trustee as provided in this Section, the Servicer
shall mail notice of the succession of such trustee hereunder to all Holders of
Certificates at their addresses as shown in the Certificate Register and to
▇▇▇▇▇'▇ and S&P. If the Servicer 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 Servicer.
Section 9.10 Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated or
any corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national banking association succeeding to the business of the
trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 9.6, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.11 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee 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, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
9.10, such powers, duties, obligations, rights and trusts as the Servicer and
the Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 9.6 hereunder, and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 9.8 hereof. The prior consent of the Certificate Insurer
shall be required prior to the appointment of any co-trustee or separate trustee
pursuant to this Section 9.11.
(a) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
(b) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(c) 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. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee, provided
that the Trustee appointed such separate trustee or co-trustee with due care. If
any separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 9.12 Tax Returns; OID Interest Reporting. The Servicer, upon
request, will promptly furnish the Trustee with all such information as may be
reasonably required in connection with the Trustee's preparation of all Tax
Returns of the Trust REMICs and the Grantor Trust (including all such loan level
information as the Trustee may reasonably request) or for the purpose of the
Trustee responding to reasonable requests for information made by
Certificateholders in connection with tax matters. Within 10 days of the Closing
Date, the Depositor shall furnish to the Trustee the portion of the issue prices
of the Certificates allocable to the related REMIC III Regular Interests and to
the respective Basis Risk Arrangements and the yields on the Certificates and
the Prepayment Assumption with respect to the Loan. Upon request, within seven
(7) Business Days after its receipt thereof, the Servicer shall (I) sign on
behalf of the Trust Fund any Tax Return (not including Form 1066) that the
Servicer is required to sign pursuant to applicable federal, state or local tax
laws, and (ii) cause such Tax Return to have been returned to the Trustee for
filing and for distribution to Certificateholders if required.
Section 9.13 Retirement of Certificates. The Trustee shall, upon the
retirement of the Certificates pursuant hereto or otherwise, furnish to the
Certificate Insurer a notice of such retirement, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Insurance Policy,
shall surrender the Certificate Insurance Policy to the Certificate Insurer for
cancellation.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Limitation on Liability of the Depositor and the Servicer.
Neither the Depositor nor the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust, the Certificateholders or the Certificate Insurer 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 or the Servicer or any such
Person against any breach of warranties or representations made herein, or
against any specific liability imposed on each such party pursuant to this
Agreement or against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations or duties hereunder. The Depositor
or the Servicer and any director, officer, employee or agent of the Depositor or
the Servicer may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any appropriate Person respecting
any matters arising hereunder.
Section 10.2 Acts of Certificateholders; Certificateholders' Rights.
(a) Except with respect to Section 10.3 and as otherwise specifically
provided herein, whenever Certificateholder action, consent or approval is
required under this Agreement, such action, consent or approval shall be deemed
to have been taken or given on behalf of, and shall be binding upon, all
Certificateholders if the Majority Certificateholders or the Certificate Insurer
agrees to take such action or give such consent or approval.
(b) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heir to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof or thereof.
(d) The rights of the Certificateholders of Series 1999-2 will be
determined pursuant to this Agreement. The rights of the Holders of any
certificates or other instruments which may be issued by the Trustee pursuant to
Section 4.2 of this Agreement shall be determined by a supplement with respect
thereto. Such supplement may provide for any other agreements between the
parties hereto as long as such agreements do not violate, as to any Certificate,
certificates or other instruments, Section 10.3.
(e) Wherever Certificateholder action, consent or approval is required
under this Agreement, such action, consent or approval by the Holder of a
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of a Certificate and of any Certificate issued upon the transfer thereof
or in exchange therefor or in lieu thereof whether or not notation of such
consent is made upon any Certificate.
(f) No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement or any Loan, unless, with
respect to any suit, action or proceeding upon or under or with respect to this
Agreement, such Holder previously shall have given to the Trustee a written
notice of default hereunder, and of the continuance thereof, as herein before
provided, and unless also (except in the case of a default by the Trustee) the
Holders of Certificates of any Class evidencing not less than 25% of the related
Percentage Interests in such Class shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding. The Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it hereunder or to institute,
conduct or defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Holders of Certificates unless such Holders
have offered to the Trustee reasonable security against the costs, expenses and
liabilities which may be incurred therein or hereby. It is understood and
intended, and expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatsoever by virtue of any provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of such Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, which priority or preference is not otherwise provided
for herein, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 10.2(f), each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 10.3 Amendment or Supplement.
(a) This Agreement may be amended or supplemented from time to time by the
Servicer, the Depositor and the Trustee by written agreement, upon the prior
written consent of the Certificate Insurer, if any Class A Certificates are
outstanding or any amounts are due and owing to the Certificate Insurer under
the Insurance Agreement, or the Majority Certificateholders, if no Class A
Certificate is outstanding, without notice to or consent of the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel, at
the expense of the party requesting the change, delivered to the Trustee and the
Certificate Insurer, adversely affect in any material respect the interests of
any Certificateholder, adversely affect the status of any of the Trust REMICs as
a REMIC or cause a tax to be imposed on such REMIC or adversely affect the
grantor trust status of the Grantor Trust; and provided, further, that no such
amendment shall reduce in any manner the amount of, or delay the timing of,
payments received on Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, or change the
rights or obligations of any other party hereto without the consent of such
party; and provided, finally, that any such amendment shall, as evidenced by an
Opinion of Counsel, at the expense of the party requesting the change, delivered
to the Trustee and the Certificate Insurer, comply with the terms of this
Agreement. The Trustee shall give prompt written notice to ▇▇▇▇▇'▇ and S&P of
any amendment made pursuant to this Section 10.3 or if the Trustee shall have
actual knowledge of any such amendment, pursuant to Section 7.1 of the Loan Sale
Agreement.
(b) This Agreement may be amended or supplemented from time to time by the
Servicer, the Depositor and the Trustee with the consent of the Certificate
Insurer (which consent shall not be unreasonably withheld if, in the Opinion of
Counsel addressed to the Trustee and the Certificate Insurer, failure to amend
would adversely affect the interests of the Certificateholders and such consent
would not adversely affect the interests of the Certificate Insurer), and the
Majority Certificateholders 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; provided, however, that no
such amendment shall be made unless the Trustee and the Certificate Insurer
receive an Opinion of Counsel, at the expense of the party requesting the
change, that such change will not adversely affect the status of any of the
Trust REMICs as a REMIC or cause a tax to be imposed on any such REMIC or
adversely affect the grantor trust status of the Grantor Trust; and provided,
further, that no such amendment shall reduce in any manner the amount of, or
delay the timing of, payments received on Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate or reduce the percentage for the Holders of which are required to
consent to any such amendment without the consent of the Holders of 100% of
Certificates affected thereby; and provided, finally, that any such amendment
shall, as evidenced by an Opinion of Counsel, at the expense of the party
requesting the change, delivered to the Trustee and the Certificate Insurer,
comply with the terms of this Agreement.
(c) It shall not be necessary for the consent of Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
(d) Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement.
Section 10.4 Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer at the Servicer's expense on direction and at the
expense of Majority Certificateholders requesting such recordation, but only
when accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders or
is necessary for the administration or servicing of the Loans.
Section 10.5 Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 10.6 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
to (i) in the case of the Servicer or Transferor, New South Federal Savings
Bank, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, with copies to the
Transferor, (ii) in the case of the Trustee, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage Backed Securities, (iii) in the case of the
Certificateholders, as set forth in the Certificate Register, (iv) in the case
of in the case of ▇▇▇▇▇'▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Residential Mortgage Pass-Through Monitoring Group, (v) in the case
of in the case of S&P, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Residential Mortgage Surveillance Group, (vi) in the case of the Certificate
Insurer, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Insured Portfolio
Management Structured Finance (IPM-SF) (New South Home Equity Loan Trust
1999-2), (vii) in the case of PaineWebber Mortgage Acceptance Corporation IV,
1285 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇ ▇▇▇▇▇▇, Esq. Any such notices shall be deemed to be effective with respect
to any party hereto upon the receipt of such notice by such party, except that
notices to the Certificateholders shall be effective upon mailing or personal
delivery.
Section 10.7 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, 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 covenants, agreements, provisions or terms of this
Agreement.
Section 10.8 No Partnership. Nothing herein contained shall be deemed or
construed to create a co-partnership or joint venture between the parties hereto
and the services of the Servicer shall be rendered as an independent contractor
and not as agent for the Certificateholders.
Section 10.9 Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
Section 10.10 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Servicer, the Depositor, the Trustee and the
Certificateholders and their respective successors and permitted assigns.
Section 10.11 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
Section 10.12 The Certificate Insurer Default. Any right conferred to the
Certificate Insurer shall be suspended during any period in which a Certificate
Insurer Default exists. At such time as the Class A Certificates are no longer
outstanding hereunder, and no amounts owed to the Certificate Insurer under the
Certificate Insurance Agreement remain unpaid, the Certificate Insurer's rights
hereunder shall terminate.
Section 10.13 Third Party Beneficiary. The parties agree that the
Certificate Insurer is intended and shall have all rights of a third-party
beneficiary of this Agreement.
Section 10.14 Intent of the Parties. It is the intent of the Depositor and
Certificateholders that, for federal income taxes, state and local income or
franchise taxes and other taxes imposed on or measured by income, the
Certificates will be treated as evidencing beneficial ownership interests in a
REMIC and, if applicable, a Basis Risk Arrangement. The parties to this
Agreement and the holder of each Certificate, by acceptance of its Certificate,
and each beneficial owner thereof, agree to treat, and to take no action
inconsistent with the treatment of, the Certificates in accordance with the
preceding sentence for purposes of federal income taxes, state and local income
and franchise taxes and other taxes imposed on or measured by income.
Section 10.15 Appointment of Tax Matters Person. The Holders of the Class
R-I, Class R-II and Class R-III Certificates hereby appoint the Trustee to act
as the Tax Matters Person for REMIC I, REMIC II and REMIC III, respectively for
all purposes of the Code. The Tax Matters Person will perform, or cause to be
performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Holders of the Class R Certificates hereby appoint the Trustee as their agent to
perform all the duties of the Tax Matters Person of each of the Trust REMICs.
Section 10.16 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW
YORK.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the Depositor, the Transferor, the Servicer and the
Trustee have caused their names to be signed by their respective officers
thereunto duly authorized, as of the day and year first above written, to this
Pooling and Servicing Agreement.
PAINEWEBBER MORTGAGE ACCEPTANCE
CORPORATION IV, as Depositor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
NEW SOUTH FEDERAL SAVINGS BANK, in its
capacity as Transferor and Servicer
By: ______________________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By: ______________________________
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public, on this _____ day of
____________, 1999 personally appeared ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, known to me to be the
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said PAINEWEBBER MORTGAGE
ACCEPTANCE CORPORATION IV, as the Depositor, and that she executed the same as
the act of such corporation for the purpose and consideration therein expressed,
and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION
IV, this the ____ day of _______, 1999.
________________________________________
Notary Public, State of ________________
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __ day of
__________, 1999 personally appeared ____________________, known to me to be the
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said THE BANK OF NEW YORK, a
New York banking corporation, as the Trustee, and that he/she executed the same
as the act of such entity for the purposes and consideration therein expressed,
and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF THE BANK OF NEW YORK, this the __ day of
______, 1999.
________________________________________
Notary Public, State of ________________
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __ day of
______, 1999 personally appeared ____________________, known to me to be the
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said NEW SOUTH FEDERAL
SAVINGS BANK, in its capacity as the Transferor and the Servicer, and that
he/she executed the same as the act of such entity for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF NEW SOUTH FEDERAL SAVINGS BANK, this the __
day of ______, 1999.
________________________________________
Notary Public, State of ________________
(FORM OF CLASS A-1 CERTIFICATE)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Trustee or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-1-[_]
Cut-Off Date: November 1, 1999
First Distribution Date: December 27, 1999
Pass-Through Rate: LIBOR + 0.240% per annum, subject to
adjustment as described herein.
Initial Class Principal Balance of
this Certificate ("Denomination"): $87,000,000
Initial Class Principal Balances of
all Certificates of this Class: $87,000,000
CUSIP: 64880M AH 5
ISIN: US64880MAH51
COMMON CODE: 010511275
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
Class A-1
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of closed-end, fixed-rate loans (the
"Loans") secured primarily by first or second mortgages or deeds of trust
on residential one- to four-family properties.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Class Principal Balance at any time may be
less than the Class Principal Balance as set forth herein. Interest will be
distributed monthly on this Certificate, as set forth in the Agreement, at the
rate per annum set forth above; provided that on and after the first day of the
related Accrual Period during which the Optional Termination Date occurs, the
rate of interest paid on this Certificate shall be LIBOR plus 0.480%, subject to
an available funds cap described in the Agreement. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Servicer or the Trustee or any of their respective affiliates.
Neither this Certificate nor the Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "Depositor").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "Agreement") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "Servicer"), and
The Bank of New York, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(1) and
860D of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________ __, 1999
The Bank of New York, as Trustee
By: ___________________________________
Countersigned:
By: ______________________________
Authorized Signatory of
The Bank of New York,
as Trustee
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed to
the address of such Certificateholder appearing in the Certificate Register. The
final distribution on each Certificate will be made in like manner, but only
upon presentation and surrender of such Certificate at the office of the Trustee
or such other location specified in the notice to Certificateholders of such
final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Maximum Collateral Amount, the Servicer or the Certificate Insurer in
certain circumstances will have the option to repurchase, in whole, from the
Trust Fund all remaining Loans at the Termination Price as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
either (1) the later of the maturity or other liquidation (or any advance with
respect thereto) of the last Loan remaining in the Trust Fund or the disposition
of all property in respect thereof and the distribution to Certificateholders of
all amounts required to be distributed and remittance of all funds due and
payment of all amounts due and payable to the Certificate Insurer and the
Trustee pursuant to the Agreement or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
The Holder, by its purchase of this Certificate, agrees that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a claim seeking the
avoidance of characterization as a preferential transfer under applicable
bankruptcy, insolvency, receivership or similar law, direct all matters relating
to such Preference Claim.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on this Certificate to the Holders of this Certificate,
the Certificate Insurer will be fully subrogated to, and the Certificateholder
delegates and assigns to the Certificate Insurer, to the fullest extent
permitted by law, the rights of the Holders to receive such principal and
interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Statements should be mailed to _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
________________________________________
Notary Public
[Notarial Seal]
(FORM OF CLASS A-2 CERTIFICATE)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Trustee or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-2-[_]
Cut-Off Date: November 1, 1999
First Distribution Date: January 25, 2000
Pass-Through Rate: 7.130%, subject to adjustment as
described herein.
Initial Class Principal Balance of
this Certificate ("Denomination"): $22,000,000
Initial Class Principal Balances of
all Certificates of this Class: $22,000,000
CUSIP: 64880M AJ 1
ISIN: US64880MAJ18
COMMON CODE: 010511658
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
Class A-2
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
Fund consisting primarily of a pool of closed-end, fixed-rate loans
(the "Loans") secured primarily by first or second mortgages or deeds
of trust on residential one- to four-family properties.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Class Principal Balance at any time may be
less than the Class Principal Balance as set forth herein. Interest will be
distributed monthly on this Certificate, as set forth in the Agreement, at the
rate per annum set forth above; provided that on and after the first day of the
related Accrual Period during which the Optional Termination Date occurs, the
rate of interest paid on this Certificate shall be increased by a per annum rate
equal to 0.50%. This Certificate does not evidence an obligation of, or an
interest in, and is not guaranteed by the Depositor, the Servicer or the Trustee
or any of their respective affiliates. Neither this Certificate nor the Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "Depositor").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "Agreement") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "Servicer"), and
The Bank of New York, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(1) and
860D of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________ __, 1999
The Bank of New York, as Trustee
By: ___________________________________
Countersigned:
By: ______________________________
Authorized Signatory of
The Bank of New York,
as Trustee
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
(other than the initial Distribution Date) is the close of business on the last
Business Day of the calendar month immediately preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Maximum Collateral Amount, the Servicer or the Certificate Insurer in
certain circumstances will have the option to repurchase, in whole, from the
Trust Fund all remaining Loans at the Termination Price as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
either (1) the later of the maturity or other liquidation (or any advance with
respect thereto) of the last Loan remaining in the Trust Fund or the disposition
of all property in respect thereof and the distribution to Certificateholders of
all amounts required to be distributed and remittance of all funds due and
payment of all amounts due and payable to the Certificate Insurer and the
Trustee pursuant to the Agreement or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
The Holder, by its purchase of this Certificate, agrees that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a claim seeking the
avoidance of characterization as a preferential transfer under applicable
bankruptcy, insolvency, receivership or similar law, direct all matters relating
to such Preference Claim.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on this Certificate to the Holders of this Certificate,
the Certificate Insurer will be fully subrogated to, and the Certificateholder
delegates and assigns to the Certificate Insurer, to the fullest extent
permitted by law, the rights of the Holders to receive such principal and
interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Statements should be mailed to _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
________________________________________
Notary Public
[Notarial Seal]
(FORM OF CLASS A-3 CERTIFICATE)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Trustee or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-3-[_]
Cut-Off Date: November 1, 1999
First Distribution Date: January 25, 2000
Pass-Through Rate: 7.310%, subject to adjustment as
described herein.
Initial Class Principal Balance of
this Certificate ("Denomination"): $47,000,000
Initial Class Principal Balances of
all Certificates of this Class: $47,000,000
CUSIP: 64880M AK 8
ISIN: US64880MAK80
COMMON CODE: 010511763
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
Class A-3
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
Fund consisting primarily of a pool of closed-end, fixed-rate loans
(the "Loans") secured primarily by first or second mortgages or deeds
of trust on residential one- to four-family properties.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Class Principal Balance at any time may be
less than the Class Principal Balance as set forth herein. Interest will be
distributed monthly on this Certificate, as set forth in the Agreement, at the
rate per annum set forth above; provided that on and after the first day of the
related Accrual Period during which the Optional Termination Date occurs, the
rate of interest paid on this Certificate shall be increased by a per annum rate
equal to 0.50%, subject to an available funds cap described in the Agreement.
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer or the Trustee or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "Depositor").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "Agreement") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "Servicer"), and
The Bank of New York, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(1) and
860D of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _______ __, 1999
The Bank of New York, as Trustee
By: ___________________________________
Countersigned:
By: ______________________________
Authorized Signatory of
The Bank of New York,
as Trustee
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
(other than the initial Distribution Date) is the close of business on the last
Business Day of the calendar month immediately preceding the month of such
Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Maximum Collateral Amount, the Servicer or the Certificate Insurer in
certain circumstances will have the option to repurchase, in whole, from the
Trust Fund all remaining Loans at the Termination Price as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
either (1) the later of the maturity or other liquidation (or any advance with
respect thereto) of the last Loan remaining in the Trust Fund or the disposition
of all property in respect thereof and the distribution to Certificateholders of
all amounts required to be distributed and remittance of all funds due and
payment of all amounts due and payable to the Certificate Insurer and the
Trustee pursuant to the Agreement or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
The Holder, by its purchase of this Certificate, agrees that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a claim seeking the
avoidance of characterization as a preferential transfer under applicable
bankruptcy, insolvency, receivership or similar law, direct all matters relating
to such Preference Claim.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on this Certificate to the Holders of this Certificate,
the Certificate Insurer will be fully subrogated to, and the Certificateholder
delegates and assigns to the Certificate Insurer, to the fullest extent
permitted by law, the rights of the Holders to receive such principal and
interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Statements should be mailed to _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
________________________________________
Notary Public
[Notarial Seal]
(FORM OF CLASS A-4 CERTIFICATE)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Trustee or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-4-[_]
Cut-Off Date: November 1, 1999
First Distribution Date: January 25, 2000
Pass-Through Rate: 7.590%, subject to adjustment as
described herein.
Initial Class Principal Balance of
this Certificate ("Denomination"): $29,000,000
Initial Class Principal Balances of
all Certificates of this Class: $29,000,000
CUSIP: 64880M AL 6
ISIN: US64880MAL63
COMMON CODE: 010511801
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
Class A-4
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
Fund consisting primarily of a pool of closed-end, fixed-rate loans
(the "Loans") secured primarily by first or second mortgages or deeds
of trust on residential one- to four-family properties.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Class Principal Balance at any time may be
less than the Class Principal Balance as set forth herein. Interest will be
distributed monthly on this Certificate, as set forth in the Agreement, at the
rate per annum set forth above; provided that on and after the first day of the
related Accrual Period during which the Optional Termination Date occurs, the
rate of interest paid on this Certificate shall be increased by a per annum rate
equal to 0.50%, subject to an available funds cap described in the Agreement.
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer or the Trustee or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "Depositor").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "Agreement") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "Servicer"), and
The Bank of New York, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(1) and
860D of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________ __, 1999
The Bank of New York, as Trustee
By: ___________________________________
Countersigned:
By: ______________________________
Authorized Signatory of
The Bank of New York,
as Trustee
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Maximum Collateral Amount, the Servicer or the Certificate Insurer in
certain circumstances will have the option to repurchase, in whole, from the
Trust Fund all remaining Loans at the Termination Price as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
either (1) the later of the maturity or other liquidation (or any advance with
respect thereto) of the last Loan remaining in the Trust Fund or the disposition
of all property in respect thereof and the distribution to Certificateholders of
all amounts required to be distributed and remittance of all funds due and
payment of all amounts due and payable to the Certificate Insurer and the
Trustee pursuant to the Agreement or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
The Holder, by its purchase of this Certificate, agrees that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a claim seeking the
avoidance of characterization as a preferential transfer under applicable
bankruptcy, insolvency, receivership or similar law, direct all matters relating
to such Preference Claim.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on this Certificate to the Holders of this Certificate,
the Certificate Insurer will be fully subrogated to, and the Certificateholder
delegates and assigns to the Certificate Insurer, to the fullest extent
permitted by law, the rights of the Holders to receive such principal and
interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Statements should be mailed to _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
________________________________________
Notary Public
[Notarial Seal]
(FORM OF CLASS A-5 CERTIFICATE)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Trustee or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-5-[_]
Cut-Off Date: November 1, 1999
First Distribution Date: January 25, 2000
Pass-Through Rate: 7.780%, subject to adjustment as defined
herein
Initial Class Principal Balance of
this Certificate ("Denomination"): $20,155,000
Initial Class Principal Balances of
all Certificates of this Class: $20,155,000
CUSIP: 64880M AM 4
ISIN: US64880MAM47
COMMON CODE: 010511852
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
Class A-5
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
Fund consisting primarily of a pool of closed-end, fixed-rate loans
(the "Loans") secured primarily by first or second mortgages or deeds
of trust on residential one- to four-family properties.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Class Principal Balance at any time may be
less than the Class Principal Balance as set forth herein. Interest will be
distributed monthly on this Certificate, as set forth in the Agreement, at the
rate per annum set forth above; provided that on and after the first day of the
related Accrual Period during which the Optional Termination Date occurs, the
rate of interest paid on this Certificate shall be increased by a per annum rate
equal to 0.50%, subject to an available funds cap described in the Agreement.
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer or the Trustee or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "Depositor").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "Agreement") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "Servicer"), and
The Bank of New York, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(1) and
860D of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________ __, 1999
The Bank of New York, as Trustee
By: ___________________________________
Countersigned:
By: ______________________________
Authorized Signatory of
The Bank of New York,
as Trustee
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Maximum Collateral Amount, the Servicer or the Certificate Insurer in
certain circumstances will have the option to repurchase, in whole, from the
Trust Fund all remaining Loans at the Termination Price as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
either (1) the later of the maturity or other liquidation (or any advance with
respect thereto) of the last Loan remaining in the Trust Fund or the disposition
of all property in respect thereof and the distribution to Certificateholders of
all amounts required to be distributed and remittance of all funds due and
payment of all amounts due and payable to the Certificate Insurer and the
Trustee pursuant to the Agreement or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
The Holder, by its purchase of this Certificate, agrees that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a claim seeking the
avoidance of characterization as a preferential transfer under applicable
bankruptcy, insolvency, receivership or similar law, direct all matters relating
to such Preference Claim.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on this Certificate to the Holders of this Certificate,
the Certificate Insurer will be fully subrogated to, and the Certificateholder
delegates and assigns to the Certificate Insurer, to the fullest extent
permitted by law, the rights of the Holders to receive such principal and
interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Statements should be mailed to _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
________________________________________
Notary Public
[Notarial Seal]
(FORM OF CLASS A-6 CERTIFICATE)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Trustee or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Certificate No.: A-6-[_]
Cut-Off Date: November 1, 1999
First Distribution Date: January 25, 1999
Pass-Through Rate: 7.530%, subject to adjustment as
described herein.
Initial Class Principal Balance of
this Certificate ("Denomination"): $23,500,000
Initial Class Principal Balances of
all Certificates of this Class: $23,500,000
CUSIP: 64880M AN 2
ISIN: US64880MAN20
COMMON CODE: 010511887
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
Class A-6
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
Fund consisting primarily of a pool of closed-end, fixed-rate loans
(the "Loans") secured primarily by first or second mortgages or deeds
of trust on residential one- to four-family properties.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Class Principal Balance at any time may be
less than the Class Principal Balance as set forth herein. Interest will be
distributed monthly on this Certificate, as set forth in the Agreement, at the
rate per annum set forth above; provided that on and after the first day of the
related Accrual Period during which the Optional Termination Date occurs, the
rate of interest paid on this Certificate shall be increased by a per annum rate
equal to 0.50%, subject to an available funds cap described in the Agreement.
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer or the Trustee or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "Depositor").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "Agreement") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "Servicer"), and
The Bank of New York, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(1) and
860D of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________ __, 1999
The Bank of New York, as Trustee
By: ___________________________________
Countersigned:
By: ______________________________
Authorized Signatory of
The Bank of New York,
as Trustee
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Maximum Collateral Amount, the Servicer or the Certificate Insurer in
certain circumstances will have the option to repurchase, in whole, from the
Trust Fund all remaining Loans at the Termination Price as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
either (1) the later of the maturity or other liquidation (or any advance with
respect thereto) of the last Loan remaining in the Trust Fund or the disposition
of all property in respect thereof and the distribution to Certificateholders of
all amounts required to be distributed and remittance of all funds due and
payment of all amounts due and payable to the Certificate Insurer and the
Trustee pursuant to the Agreement or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
The Holder, by its purchase of this Certificate, agrees that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a claim seeking the
avoidance of characterization as a preferential transfer under applicable
bankruptcy, insolvency, receivership or similar law, direct all matters relating
to such Preference Claim.
The Holder, by its acceptance of this Certificate, agrees that without the need
for any further action on the part of the Certificate Insurer, to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on this Certificate to the Holders of this Certificate,
the Certificate Insurer will be fully subrogated to, and the Certificateholder
delegates and assigns to the Certificate Insurer, to the fullest extent
permitted by law, the rights of the Holders to receive such principal and
interest from the Trust Fund.
Whenever Certificateholder action, consent or approval is required under the
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Majority Certificateholders or the Certificate Insurer agrees to take such
action or give such consent or approval.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Statements should be mailed to _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
________________________________________
Notary Public
[Notarial Seal]
(FORM OF CLASS B CERTIFICATE)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Trustee or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THIS CLASS B CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AS AND TO
THE EXTENT SET FORTH IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS THE TRUSTEE SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION
LETTER FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM
AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, TO THE EFFECT THAT
SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT PLAN
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN (AS
DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW
("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON ACTING ON
BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE ENTITY BY
SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION SECTION
2510.3-101), OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL
ACCOUNT UNDER CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF SUBORDINATE
CERTIFICATES BY SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE PROHIBITED
TRANSACTION PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE
NAME OF A PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR TO THE
EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY SUCH PROPOSED
PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE OR THE
PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A "PROHIBITED
TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER OR THE DEPOSITOR TO
ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA,
SECTION 4975 OF THE CODE OR ANY SUCH SIMILAR LAW) IN ADDITION TO THOSE SET FORTH
IN THE POOLING AND SERVICING AGREEMENT. THE TRANSFEREE OF A BENEFICIAL INTEREST
IN A CERTIFICATE THAT IS A BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO REPRESENT
THAT IT IS NOT A PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE.
The regular interest represented by this Certificate is issued on December 2,
1999, and based on its issue price of 98.01066%, including accrued interest, and
a stated redemption price at maturity equal to its original principal balance,
is issued with original issue discount ("OID") for federal income tax purposes.
Assuming that this Certificate pays in accordance with projected cash flows
reflecting the prepayment assumption of a 27% constant prepayment rate used to
price this Certificate: (i) the amount of OID as a percentage of the initial
principal balance of this Certificate is approximately 0.41330000%; and (ii) the
annual yield to maturity of this Certificate, compounded monthly, is
approximately 10.13%.
Certificate No.: B-[_]
Cut-Off Date: November 1, 1999
First Distribution Date: January 25, 1999
Pass-Through Rate: 9.230%, subject to adjustment as
described herein.
Initial Class Principal Balance of
this Certificate ("Denomination"): $6,345,000
Initial Class Principal Balances of
all Certificates of this Class: $6,345,000
CUSIP: 64880M AP 7
ISIN: US64880MAP77
COMMON CODE: [________]
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
Class B
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
Fund consisting primarily of a pool of closed-end, fixed-rate loans
(the "Loans") secured primarily by first or second mortgages or deeds
of trust on residential one- to four-family properties.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
Principal in respect of this Certificate is distributable monthly as set forth
in the Agreement. Accordingly, the Class Principal Balance at any time may be
less than the Class Principal Balance as set forth herein. Interest will be
distributed monthly on this Certificate, as set forth in the Agreement, at the
rate per annum set forth above; provided that on and after the first day of the
related Accrual Period during which the Optional Termination Date occurs, the
rate of interest paid on this Certificate shall be increased by a per annum rate
equal to 0.50%, subject to an available funds cap described in the Agreement.
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer or the Trustee or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the aggregate initial Class Principal Balances of all
Certificates of the Class to which this Certificate belongs) in certain monthly
distributions with respect to a Trust Fund consisting primarily of the Loans
deposited by PaineWebber Mortgage Acceptance Corporation IV (the "Depositor").
The Trust Fund was created pursuant to a Pooling and Servicing Agreement dated
as of the Cut-Off Date specified above (the "Agreement") among the Depositor,
New South Federal Savings Bank, as transferor and servicer (the "Servicer"), and
The Bank of New York, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
For federal income tax purposes, this Certificate represents a beneficial
interest in (i) a "regular interest" in a "real estate mortgage investment
conduit," as those terms are defined, respectively, in Sections 860G(a)(1) and
860D of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) a
Basis Risk Arrangement as set forth in the Agreement.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
______IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: __________ __, 1999
The Bank of New York, as Trustee
By: ___________________________________
Countersigned:
By: ______________________________
Authorized Signatory of
The Bank of New York,
as Trustee
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentation and surrender of such Certificate at the
office of the Trustee or such other location specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Maximum Collateral Amount, the Servicer or the Certificate Insurer in
certain circumstances will have the option to repurchase, in whole, from the
Trust Fund all remaining Loans at the Termination Price as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
either (1) the later of the maturity or other liquidation (or any advance with
respect thereto) of the last Loan remaining in the Trust Fund or the disposition
of all property in respect thereof and the distribution to Certificateholders of
all amounts required to be distributed and remittance of all funds due and
payment of all amounts due and payable to the Certificate Insurer and the
Trustee pursuant to the Agreement or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning so long as no Certificate Insurer exists.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Statements should be mailed to _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
________________________________________
Notary Public
[Notarial Seal]
(FORM OF CLASS R-I CERTIFICATE)
FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G(a)(2) AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED TO A
DISQUALIFIED ORGANIZATION OR A NON-UNITED STATES PERSON, AND THE PROPOSED
TRANSFEREE MUST DELIVER TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE WITH
THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (a) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (b) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (c) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (d) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE
OF THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS THE TRUSTEE SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION
LETTER FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM
AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, TO THE EFFECT THAT
SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT PLAN
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, OR A
GOVERNMENTAL PLAN (AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL,
STATE OR LOCAL LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO
THE FOREGOING PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON
ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE
ENTITY BY SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION
SECTION 2510.3-101), OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS
GENERAL ACCOUNT UNDER CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF
SUBORDINATE CERTIFICATES BY SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR
REGISTRATION IN THE NAME OF A PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
DEPOSITOR TO THE EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY
SUCH PROPOSED PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST
FUND BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE
CODE OR THE PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A
"PROHIBITED TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE
OR ANY SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER OR THE
DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES
UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH SIMILAR LAW) IN ADDITION TO
THOSE SET FORTH IN THE POOLING AND SERVICING AGREEMENT. THE TRANSFEREE OF A
BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A BOOK-ENTRY CERTIFICATE SHALL BE
DEEMED TO REPRESENT THAT IT IS NOT A PERSON DESCRIBED IN CLAUSES (i) OR (ii)
ABOVE.
THIS CERTIFICATE HAS NO PRINCIPAL OR NOTIONAL BALANCE, AND IS ENTITLED TO
DISTRIBUTIONS IN ACCORDANCE WITH THE AGREEMENT
Certificate No.: R-I-[ ]
Cut-Off Date: November 1, 1999
Percentage Interest: 100%
First Distribution Date: January 25, 1999
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
Class R-I
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
Fund consisting primarily of a pool of closed-end, fixed-rate loans
(the "Loans") secured primarily by first or second mortgages or deeds
of trust on residential one- to four-family properties.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that [ ] is the registered owner of the Percentage Interest as
specified on the face hereof of the Class R-I Interest with respect to a Trust
Fund consisting of the Loans deposited by PaineWebber Mortgage Acceptance
Corporation IV (the "Depositor"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among the Depositor, New South Federal Savings Bank, as
transferor and servicer (the "Servicer"), and The Bank of New York, as trustee
(the "Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the Trust Fund will
be made only upon presentment and surrender of this Certificate at the office of
the Trustee or the office or agency maintained by the Trustee in New York, New
York.
No transfer of this Certificate shall be made unless the Trustee shall have
received either (i) a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Servicer, or (ii) in the case of any such Certificate
presented for registration in the name of an employee benefit plan subject to
ERISA, or Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan, an Opinion of Counsel satisfactory to the Trustee and the
Servicer to the effect that the purchase or holding of such Certificate will not
result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee or the Servicer to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee or the Servicer. Notwithstanding anything else to the contrary
herein, any purported transfer of this Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the opinion of
counsel satisfactory to the Trustee as described above shall be void and of no
effect.
Each Holder of this Certificate will be deemed to have agreed to be bound by the
restrictions of the Agreement, including but not limited to the restrictions
that (i) each person holding or acquiring any Ownership Interest in this
Certificate must be a Permitted Transferee and a United States Person, (ii) no
Ownership Interest in this Certificate may be transferred without delivery to
the Trustee of (a) a transfer affidavit of the proposed transferee and (b) a
transfer certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Certificate must agree to require a transfer affidavit and to
deliver a transfer certificate to the Trustee as required pursuant to the
Agreement, (iv) each person holding or acquiring an Ownership Interest in this
Certificate must agree not to transfer an Ownership Interest in this Certificate
if it has actual knowledge that the proposed transferee is not a Permitted
Transferee and (v) any attempted or purported transfer of any Ownership Interest
in this Certificate in violation of such restrictions will be absolutely null
and void and will vest no rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________ __, ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, as Trustee
By: ___________________________________
Countersigned:
By: ______________________________
Authorized Signatory of
The Bank of New York,
as Trustee
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed to
the address of such Certificateholder appearing in the Certificate Register. The
final distribution on each Certificate will be made in like manner, but only
upon presentation and surrender of such Certificate at the office of the Trustee
or such other location specified in the notice to Certificateholders of such
final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Maximum Collateral Amount, the Servicer or the Certificate Insurer in
certain circumstances will have the option to repurchase, in whole, from the
Trust Fund all remaining Loans at the Termination Price as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
either (1) the later of the maturity or other liquidation (or any advance with
respect thereto) of the last Loan remaining in the Trust Fund or the disposition
of all property in respect thereof and the distribution to Certificateholders of
all amounts required to be distributed and remittance of all funds due and
payment of all amounts due and payable to the Certificate Insurer and the
Trustee pursuant to the Agreement or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Statements should be mailed to _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
________________________________________
Notary Public
[Notarial Seal]
(FORM OF CLASS R-II CERTIFICATE)
FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE EVIDENCES (1) A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G(a)(2) AND 860D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE") AND (2) OBLIGATIONS UNDER BASIS RISK
AGREEMENTS AS SET FORTH IN THE AGREEMENT.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED TO A
DISQUALIFIED ORGANIZATION OR A NON-UNITED STATES PERSON, AND THE PROPOSED
TRANSFEREE MUST DELIVER TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE WITH
THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT WITH THE PRIOR WRITTEN
CONSENT OF THE CERTIFICATE INSURER (WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD; PROVIDED THAT SUCH CONSENT SHALL NOT BE REQUIRED IF THE TRANSFER OF
THIS CERTIFICATE IS TO AN AFFILIATE OF THE TRANSFEROR) AND IN ACCORDANCE WITH
ALL APPLICABLE STATE SECURITIES LAWS AND (a) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (b) FOR SO
LONG AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (c) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (d) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE
OF THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS THE TRUSTEE SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION
LETTER FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM
AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, TO THE EFFECT THAT
SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT PLAN
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, OR A
GOVERNMENTAL PLAN (AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL,
STATE OR LOCAL LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO
THE FOREGOING PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON
ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE
ENTITY BY SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION
SECTION 2510.3-101), OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS
GENERAL ACCOUNT UNDER CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF
SUBORDINATE CERTIFICATES BY SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR
REGISTRATION IN THE NAME OF A PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
DEPOSITOR TO THE EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY
SUCH PROPOSED PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST
FUND BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE
CODE OR THE PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A
"PROHIBITED TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE
OR ANY SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER OR THE
DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES
UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH SIMILAR LAW) IN ADDITION TO
THOSE SET FORTH IN THE POOLING AND SERVICING AGREEMENT. THE TRANSFEREE OF A
BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A BOOK-ENTRY CERTIFICATE SHALL BE
DEEMED TO REPRESENT THAT IT IS NOT A PERSON DESCRIBED IN CLAUSES (i) OR (ii)
ABOVE.
THIS CERTIFICATE HAS NO PRINCIPAL OR NOTIONAL BALANCE, AND IS ENTITLED TO
DISTRIBUTIONS IN ACCORDANCE WITH THE AGREEMENT
Certificate No.: R-II-[ ]
Cut-Off Date: November 1, 1999
Percentage Interest: 100%
First Distribution Date: January 25, 1999
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
Class R-II
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
Fund consisting primarily of a pool of closed-end, fixed-rate loans
(the "Loans") secured primarily by first or second mortgages or deeds
of trust on residential one- to four-family properties.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that [ ] is the registered owner of the Percentage Interest as
specified on the face hereof of the Class R-II Interest with respect to a Trust
Fund consisting of the Loans deposited by PaineWebber Mortgage Acceptance
Corporation IV (the "Depositor"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among the Depositor, New South Federal Savings Bank, as
transferor and servicer (the "Servicer"), and The Bank of New York, as trustee
(the "Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the Trust Fund will
be made only upon presentment and surrender of this Certificate at the office of
the Trustee or the office or agency maintained by the Trustee in New York, New
York.
No transfer of this Certificate shall be made unless the Trustee shall have
received either (i) a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Servicer, or (ii) in the case of any such Certificate
presented for registration in the name of an employee benefit plan subject to
ERISA, or Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan, an Opinion of Counsel satisfactory to the Trustee and the
Servicer to the effect that the purchase or holding of such Certificate will not
result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee or the Servicer to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee or the Servicer. Notwithstanding anything else to the contrary
herein, any purported transfer of this Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the opinion of
counsel satisfactory to the Trustee as described above shall be void and of no
effect.
Each Holder of this Certificate will be deemed to have agreed to be bound by the
restrictions of the Agreement, including but not limited to the restrictions
that (i) each person holding or acquiring any Ownership Interest in this
Certificate must be a Permitted Transferee and a United States Person, (ii) no
Ownership Interest in this Certificate may be transferred without delivery to
the Trustee of (a) a transfer affidavit of the proposed transferee and (b) a
transfer certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Certificate must agree to require a transfer affidavit and to
deliver a transfer certificate to the Trustee as required pursuant to the
Agreement, (iv) each person holding or acquiring an Ownership Interest in this
Certificate must agree not to transfer an Ownership Interest in this Certificate
if it has actual knowledge that the proposed transferee is not a Permitted
Transferee and (v) any attempted or purported transfer of any Ownership Interest
in this Certificate in violation of such restrictions will be absolutely null
and void and will vest no rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________ __, ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, as Trustee
By: ___________________________________
Countersigned:
By: ______________________________
Authorized Signatory of
The Bank of New York,
as Trustee
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed to
the address of such Certificateholder appearing in the Certificate Register. The
final distribution on each Certificate will be made in like manner, but only
upon presentation and surrender of such Certificate at the office of the Trustee
or such other location specified in the notice to Certificateholders of such
final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Maximum Collateral Amount, the Servicer or the Certificate Insurer in
certain circumstances will have the option to repurchase, in whole, from the
Trust Fund all remaining Loans at the Termination Price as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
either (1) the later of the maturity or other liquidation (or any advance with
respect thereto) of the last Loan remaining in the Trust Fund or the disposition
of all property in respect thereof and the distribution to Certificateholders of
all amounts required to be distributed and remittance of all funds due and
payment of all amounts due and payable to the Certificate Insurer and the
Trustee pursuant to the Agreement or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Statements should be mailed to _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
________________________________________
Notary Public
[Notarial Seal]
(FORM OF CLASS R-III CERTIFICATE)
FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G(a)(2) AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED TO A
DISQUALIFIED ORGANIZATION OR A NON-UNITED STATES PERSON, AND THE PROPOSED
TRANSFEREE MUST DELIVER TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE WITH
THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (a) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (b) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (c) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (d) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE
OF THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS THE TRUSTEE SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION
LETTER FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM
AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, TO THE EFFECT THAT
SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT PLAN
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, OR A
GOVERNMENTAL PLAN (AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL,
STATE OR LOCAL LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO
THE FOREGOING PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON
ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE
ENTITY BY SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION
SECTION 2510.3-101), OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS
GENERAL ACCOUNT UNDER CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF
SUBORDINATE CERTIFICATES BY SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR
REGISTRATION IN THE NAME OF A PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
DEPOSITOR TO THE EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY
SUCH PROPOSED PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST
FUND BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE
CODE OR THE PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A
"PROHIBITED TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE
OR ANY SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER OR THE
DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES
UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH SIMILAR LAW) IN ADDITION TO
THOSE SET FORTH IN THE POOLING AND SERVICING AGREEMENT. THE TRANSFEREE OF A
BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A BOOK-ENTRY CERTIFICATE SHALL BE
DEEMED TO REPRESENT THAT IT IS NOT A PERSON DESCRIBED IN CLAUSES (i) OR (ii)
ABOVE.
THIS CERTIFICATE HAS NO PRINCIPAL OR NOTIONAL BALANCE, AND IS ENTITLED TO
DISTRIBUTIONS IN ACCORDANCE WITH THE AGREEMENT
Certificate No.: R-III-[ ]
Cut-Off Date: November 1, 1999
Percentage Interest: 100%
First Distribution Date: January 25, 1999
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
Class R-III
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
Fund consisting primarily of a pool of closed-end, fixed-rate loans
(the "Loans") secured primarily by first or second mortgages or deeds
of trust on residential one- to four-family properties.
PaineWebber Mortgage Acceptance Corporation IV, as Depositor
This Certificate does not evidence an obligation of, or an interest in, and is
not guaranteed by the Depositor, the Servicer or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that [_] is the registered owner of the Percentage Interest as
specified on the face hereof of the Class R-III Interest with respect to a Trust
Fund consisting of the Loans deposited by PaineWebber Mortgage Acceptance
Corporation IV (the "Depositor"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among the Depositor, New South Federal Savings Bank, as
transferor and servicer (the "Servicer"), and The Bank of New York, as trustee
(the "Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the Trust Fund will
be made only upon presentment and surrender of this Certificate at the office of
the Trustee or the office or agency maintained by the Trustee in New York, New
York.
No transfer of this Certificate shall be made unless the Trustee shall have
received either (i) a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Servicer, or (ii) in the case of any such Certificate
presented for registration in the name of an employee benefit plan subject to
ERISA, or Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan, an Opinion of Counsel satisfactory to the Trustee and the
Servicer to the effect that the purchase or holding of such Certificate will not
result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee or the Servicer to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee or the Servicer. Notwithstanding anything else to the contrary
herein, any purported transfer of this Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the opinion of
counsel satisfactory to the Trustee as described above shall be void and of no
effect.
Each Holder of this Certificate will be deemed to have agreed to be bound by the
restrictions of the Agreement, including but not limited to the restrictions
that (i) each person holding or acquiring any Ownership Interest in this
Certificate must be a Permitted Transferee and a United States Person, (ii) no
Ownership Interest in this Certificate may be transferred without delivery to
the Trustee of (a) a transfer affidavit of the proposed transferee and (b) a
transfer certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Certificate must agree to require a transfer affidavit and to
deliver a transfer certificate to the Trustee as required pursuant to the
Agreement, (iv) each person holding or acquiring an Ownership Interest in this
Certificate must agree not to transfer an Ownership Interest in this Certificate
if it has actual knowledge that the proposed transferee is not a Permitted
Transferee and (v) any attempted or purported transfer of any Ownership Interest
in this Certificate in violation of such restrictions will be absolutely null
and void and will vest no rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose unless manually countersigned by an authorized signatory
of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________ __, ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, as Trustee
By: ___________________________________
Countersigned:
By: ______________________________
Authorized Signatory of
The Bank of New York,
as Trustee
(Form of Reverse of Certificates)
NEW SOUTH HOME EQUITY TRUST 1999-2
Home Equity Asset Backed Certificates, Series 1999-2
This Certificate is one of a duly authorized issue of Certificates designated as
Home Equity Asset Backed Certificates, of the Series specified on the face
hereof (herein collectively called the "Certificates"), and representing a
beneficial ownership interest in the Trust Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds on deposit in the Certificate Account for payment
hereunder and that the Trustee is not liable to the Certificateholders for any
amount payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and reference is
made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the 25th
day of each month or, if such 25th day is not a Business Day, the next
succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement. The Record Date applicable to each Distribution Date
is the close of business on the last Business Day of the calendar month
immediately preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of immediately
available funds to the account of the Holder hereof at a bank or other entity
having appropriate facilities therefor, if such Certificateholder shall have so
notified the Trustee in writing at least five Business Days prior to the related
Record Date and such Certificateholder shall satisfy the conditions to receive
such form of payment set forth in the Agreement, or, if not, by check mailed to
the address of such Certificateholder appearing in the Certificate Register. The
final distribution on each Certificate will be made in like manner, but only
upon presentation and surrender of such Certificate at the office of the Trustee
or such other location specified in the notice to Certificateholders of such
final distribution.
The Agreement permits, with certain exceptions therein provided, the amendment
thereof and the modification of the Agreement and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer and the Trustee with the prior written consent of the Certificate
Insurer and the Holders of Certificates affected by such amendment evidencing
the requisite Percentage Interest, as provided in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office of the Trustee accompanied by a written instrument of
transfer in form satisfactory to the Trustee and duly executed by the Holder or
holder thereof or his attorney duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized denominations and
evidencing the same Percentage Interest in the Trust Fund will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without coupons in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and the Depositor, the Servicer, the Transferor, the Certificate Insurer and the
Trustee shall not be affected by any notice to the contrary.
On the first date on which the Aggregate Principal Balance is less than 10% of
the Maximum Collateral Amount, the Servicer or the Certificate Insurer in
certain circumstances will have the option to repurchase, in whole, from the
Trust Fund all remaining Loans at the Termination Price as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
either (1) the later of the maturity or other liquidation (or any advance with
respect thereto) of the last Loan remaining in the Trust Fund or the disposition
of all property in respect thereof and the distribution to Certificateholders of
all amounts required to be distributed and remittance of all funds due and
payment of all amounts due and payable to the Certificate Insurer and the
Trustee pursuant to the Agreement or (2) mutual consent of the Servicer, the
Certificate Insurer and all Certificateholders in writing. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
Any term used herein that is defined in the Agreement shall have the meaning
assigned in the Agreement, and nothing herein shall be deemed inconsistent with
that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of ____________________________________________________________,
account number ______________, or, if mailed by check, to _____________________.
Statements should be mailed to _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the day of _______, 19__ before me, a notary public in and for said State,
personally appeared ___________________________________, known to me who, being
by me duly sworn, did depose and say that he executed the foregoing instrument.
________________________________________
Notary Public
[Notarial Seal]
EXHIBIT C
LOAN SCHEDULE
EXHIBIT D-1
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
PaineWebber Mortgage Acceptance Corporation IV
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
New South Federal Savings Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement among PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, New South Federal Savings Bank, as
Transferor and Servicer, and The Bank of New York, as Trustee, New
South Home Equity Trust 1999-2, Home Equity Asset Backed Certificates,
Series ▇▇▇▇-▇
▇▇▇▇▇▇▇▇▇:
In accordance with Section 2.3 of the above-captioned Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), the undersigned, as Trustee,
hereby certifies that, (i) it has received the Certificate Insurance Policy and
(ii) as to each Loan listed in the Loan Schedule, it has received the original
Mortgage Note and the original Assignment of Mortgage as provided in Section
2.3(a)(3) of the Pooling and Servicing Agreement, subject to the exceptions set
forth on the attached.
Based on its review and examination and only as to the foregoing documents, such
documents appear regular on their face and related to such Mortgage Loan.
The Trustee has made no independent examination of any documents contained in
each Loan File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Loan File of any of the Loans identified on the Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Loan.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By: ___________________________________
Name:
Title:
EXHIBIT D-2
FORM OF UPDATED INITIAL CERTIFICATION OF TRUSTEE
[date]
PaineWebber Mortgage Acceptance Corporation IV
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
New South Federal Savings Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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MBIA Insurance Corporation
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Re: Pooling and Servicing Agreement among PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, New South Federal Savings Bank, as
Transferor and Servicer, and The Bank of New York, as Trustee, New
South Home Equity Trust 1999-2, Home Equity Asset Backed Certificates,
Series ▇▇▇▇-▇
▇▇▇▇▇▇▇▇▇:
In accordance with Section 2.4 of the above-captioned Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), the undersigned, as Trustee,
hereby certifies that, as to each Loan listed in Loan Schedule, (1) all
documents required to be delivered to it pursuant to Section 2.3 of the Pooling
and Servicing Agreement and (2) each such document has been reviewed by it, has
been, to the extent required, executed and has not been mutilated, damaged, torn
or otherwise physically altered, appears regular on its face and relates to such
Loan, subject to the exceptions set forth on the attached, which exceptions are
divided into two categories, namely "critical exceptions" and "non-critical
exceptions" as further described in Section 2.4(b) of the Pooling and Servicing
Agreement.
The Trustee has made no independent examination of any documents contained in
each Loan File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Loan File of any of the Loans identified on the Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Loan.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By: ___________________________________
Name:
Title:
EXHIBIT E
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
PaineWebber Mortgage Acceptance Corporation IV
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New South Federal Savings Bank
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MBIA Insurance Corporation
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement among PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, New South Federal Savings Bank, as
Transferor and Servicer, and The Bank of New York, as Trustee, New
South Home Equity Trust 1999-2, Home Equity Asset Backed Certificates,
Series ▇▇▇▇-▇
▇▇▇▇▇▇▇▇▇:
In accordance with Section 2.4 of the above-captioned Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), the undersigned, as Trustee,
hereby certifies that as to each Loan listed in the Loan Schedule (other than
any Loan paid in full or any exceptions listed on the attached document
exception report, which exceptions are divided into two categories, namely
"critical exceptions" and "non-critical exceptions" as further described in
Section 2.4(b) of the Pooling and Servicing Agreement) it has received the Loan
File.
Based on its review and examination and only as to the foregoing documents, such
documents appear regular on their face and related to such Loan.
The Trustee has made no independent examination of any documents contained in
each Loan File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Loan File of any of the Loans identified on the Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Loan.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Pooling and Servicing Agreement.
The Bank of New York,
as Trustee
By: ___________________________________
Name:
Title:
EXHIBIT F
FORM OF REQUEST FOR RELEASE OF LOAN FILES
To: The Bank of New York
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Re: Pooling and Servicing Agreement among PaineWebber Mortgage
Acceptance Corporation IV, as Depositor, New South Federal
Savings Bank, as Transferor and Servicer, and The Bank of New
York, as Trustee, New South Home Equity Trust 1999-2, Home Equity
Asset Backed Certificates, Series 1999-2
Ladies and Gentlemen:
In connection with the administration of the Mortgage Loans held by you as
Trustee for PaineWebber Mortgage Acceptance Corporation IV, we request the
release of the Loan File for the Loan(s) described below, for the reason
indicated.
FT Account #: Pool #:
Borrower's Name, Address and Zip Code:
Loan Number:
Reason for Requesting Documents (check one)
1. Loan paid in full ([Servicer] hereby certifies that all amounts have
been received.)
2. Loan Liquidated ([Servicer] hereby certifies that all proceeds of
foreclosure, insurance, or other liquidation have been finally
received.)
3. Loan in Foreclosure.
4. Other (explain):
If item 1 or 2 above is checked, and if all or part of the Loan File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above-specified Loan. If item 3 or 4 is checked, upon return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
NEW SOUTH FEDERAL SAVINGS BANK
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By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:___________________________________
TRUSTEE CONSENT TO RELEASE
AND ACKNOWLEDGMENT OF RECEIPT
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:___________________________________
EXHIBIT G-1
FORM OF TRANSFER AFFIDAVIT
AFFIDAVIT PURSUANT TO
SECTION 860E(e)(4) OF THE
INTERNAL REVENUE CODE OF
1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That [he] [she] is [Title of Officer] of [Name of Transferee] (the
"Transferee"), a [description of type of entity] duly organized and existing
under the laws of the [State of __________] [United States], on behalf of which
he makes this affidavit.
2. That the Transferee's Taxpayer Identification Number is [ ].
3. That the Transferee of a Transfer of PaineWebber Mortgage Acceptance
Corporation IV, New South Home Equity Trust 1999-2, Home Equity Asset Backed
Certificates, Series 1999-2, Class [R-I] [R-II] [R-III] Certificate (the Class
[R-I] [R-II] [R-III] Certificate") is not a Disqualified Organization (as
defined below) or an agent thereof (including nominee, middleman or other
similar person) (an "Agent"), an ERISA Prohibited Holder or a Non-U.S. Person
(as defined below). For these purposes, a "Disqualified Organization" means any
of (i) the United States, any State or political subdivision thereof, any
possession of the United States, or any agency or instrumentality of any of the
foregoing (other than an instrumentality which is a corporation if all of its
activities are subject to tax and, majority of its board of directors is not
selected by such governmental unit), (ii) a foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code and (v) any other
Person so designated by the Servicer based upon an Opinion of Counsel that the
holding of an Ownership Interest in a Residual Certificate by such Person may
cause either any REMIC to fail to qualify as a REMIC or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Residual
Certificate to such Person. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions. For these purposes, "ERISA Prohibited
Holder" means an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or section 4975 of
the Code or any governmental plan (as defined in Section 3(32) of ERISA) subject
to any federal, state or local law which is, to a material extent, similar to
the foregoing provisions of ERISA or the Code (each, a "Plan") or a person
acting on behalf of or investing the assets of such a Plan. For these purposes,
"Non-U.S. Person" means any person other than a U.S. Person, unless, with
respect to the Transfer of a Residual Certificate, (i) such person holds such
Residual Certificate in connection with the conduct of a trade or business
within the United States and furnishes the Transferor and the Certificate
Registrar with an effective Internal Revenue Service Form 4224 or (ii) the
Transferee delivers to both the Transferor and the Certificate Registrar an
opinion of a nationally recognized tax counsel to the effect that such Transfer
is in accordance with the requirements of the Code and the regulations
promulgated thereunder and that such Transfer of the Residual Certificate will
not be disregarded for federal income tax purposes.
4. That the Transferee historically has paid its debts as they have come
due and intends to pay its debts as they come due in the future and the
Transferee intends to pay taxes associated with holding the Class [R-I] [R-II]
[R-III] Certificate as they become due.
5. That the Transferee understands that it may incur tax liabilities with
respect to the Class [R-I] [R-II] [R-III] Certificate in excess of any cash flow
generated by the Class [R-I] [R-II] [R-III] Certificate.
6. That the Transferee agrees not to transfer the Class [R-I] [R-II]
[R-III] Certificate to any Person or entity unless (a) the Transferee has
received from such Person or entity an affidavit substantially in the form of
this Transfer Affidavit and (b) the Transferee provides to the Certificate
Registrar a letter substantially in the form of Exhibit G-2 to the Pooling and
Servicing Agreement certifying that it has no actual knowledge that such Person
or entity is a Disqualified Organization or an Agent thereof, an ERISA
Prohibited Holder or a Non-U.S. Person and that it has no reason to know that
such Person or entity does not satisfy the requirements set forth in paragraph 4
hereof.
7. That the Transferee agrees to such amendments of Pooling and Servicing
Agreement dated as of November 1, 1999 (the "Pooling and Servicing Agreement"),
by and among PaineWebber Mortgage Acceptance Corporation IV, as Depositor, New
South Federal Savings Bank, as Servicer and Transferor and The Bank of New York,
as Trustee (the "Pooling and Servicing Agreement"), as may be required to
further effectuate the restrictions on transfer of the Class [R-I] [R-II]
[R-III] Certificate to such a Disqualified Organization or an Agent thereof, an
ERISA Prohibited Holder or a Non-U.S. Person. To the extent not defined herein,
the capitalized terms used herein shall have the meanings assigned thereto in
the Pooling and Servicing Agreement.
8. That, if a "tax matters person" is required to be designated with
respect to the [REMIC I] [REMIC II or REMIC III], the Transferee agrees to act
as "tax matters person" and to perform the functions of "tax matters person" of
the [REMIC I] [REMIC II, REMIC III] pursuant to Section 10.15 of the Pooling and
Servicing Agreement, and agrees to the irrevocable designation of the Servicer
as the Transferee's agent in performing the function of "tax matters person."
9. The Transferee has reviewed, and agrees to be bound by and to abide by,
the provisions of Section 4.02(d) of the Pooling and Servicing Agreement
concerning registration of the transfer and exchange of Class [R-I] [R-II]
[R-III] Certificates.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, by its [Title of Officer] this _____ day of __________,
19__.
[NAME OF TRANSFEREE]
By: ___________________________________
[Name of Officer]
[Title of Officer]
Personally appeared before me the above-named [Name of Officer], known or
proved to me to be the same person who executed the foregoing instrument and to
be the [Title of Officer] of the Transferee, and acknowledged to me that he
[she] executed the same as his [her] free act and deed and the free act and deed
of the Transferee.
Subscribed and sworn before me this ___ day of __________, 19__.
_____________________________________________
NOTARY PUBLIC
COUNTY OF ___________________________________
STATE OF ____________________________________
My commission expires the ___ day of __________, 19__.
EXHIBIT G-2
FORM OF TRANSFEROR LETTER
[Date]
The Bank of New York,
as Trustee
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Attention:
Re: Transfer of PaineWebber Mortgage Acceptance Corporation IV, New South
Home Equity Trust 1999-2, Home Equity Asset Backed Certificates,
Series 1999-2
Ladies and Gentlemen:
[Transferor] has reviewed the attached affidavit of [Transferee], and has
no actual knowledge that such affidavit is not true and has no reason to know
that the requirements set forth in paragraphs 3 and 4 thereof are not satisfied
or that the information contained in paragraphs 3 and 4 thereof is not true.
Very truly yours,
[Transferor]
______________________________
EXHIBIT H
FORM OF INVESTMENT REPRESENTATION LETTER
The Bank of New York,
as Trustee
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Attention:
Re: Transfer of PaineWebber Mortgage Acceptance Corporation IV, New South
Home Equity Trust 1999-2, Home Equity Asset Backed Certificates,
Series 1999-2
Ladies and Gentlemen:
This letter is delivered pursuant to Section 4.2 of the Pooling and
Servicing Agreement, dated as of November 1, 1999 (the "Pooling and Servicing
Agreement"), by and among PaineWebber Mortgage Acceptance Corporation IV, as
Depositor, New South Federal Savings Bank, as Servicer and Transferor, and The
Bank of New York, as Trustee on behalf of the holders of Transfer of PaineWebber
Mortgage Acceptance Corporation IV, New South Home Equity Trust 1999-2, Home
Equity Asset Backed Certificates, Series 1999-2 (the "Certificates") in
connection with the transfer by _________________ (the "Seller") to the
undersigned (the "Purchaser") of ____% aggregate Percentage Interest of Class
___ Certificates (the "Certificate"). Capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Pooling and Servicing Agreement.
In connection with such transfer, the Purchaser hereby represents and
warrants to you and the addressees hereof as follows:
1. Check one of the following:*
[ ] The Purchaser is an institutional "accredited investor" (an entity
meeting the requirements of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act of 1933, as amended (the "1933
Act")) and has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its
investment in the Certificates, and the Purchaser and any accounts for
which it is acting are each able to bear the economic risk of the
Purchaser's or such account's investment. The Purchaser is acquiring
the Certificates purchased by it for its own account or for one or
more accounts (each of which is an "institutional accredited
investor") as to each of which the Purchaser exercises sole investment
discretion. The Purchaser hereby undertakes to reimburse the Trust
Fund for any costs incurred by it in connection with this transfer.
[ ] The Purchaser is a "qualified institutional buyer" within the meaning
of Rule 144A ("Rule 144A") promulgated under the Securities Act of
1933, as amended (the "1933 Act") The Purchaser is aware that the
transfer is being made in reliance on Rule 144A, and the Purchaser has
had the opportunity to obtain the information required to be provided
pursuant to paragraph (d)(4)(i) of Rule 144A.
2. The Purchaser's intention is to acquire the Certificate (a) for
investment for the Purchaser's own account or (b) for resale to (i) "qualified
institutional buyers" in transactions under Rule 144A, and not in any event with
the view to, or for resale in connection with, any distribution thereof or (ii)
to institutional "accredited investors" meeting the requirements of Rule
501(a)(1), (2), (3) or (7) of Regulation D promulgated under the 1933 Act,
pursuant to any other exemption from the registration requirements of the 1933
Act, subject in the case of this clause (ii) to (w) the receipt by the
Certificate Registrar of a letter substantially in the form hereof, (x) the
receipt by the Certificate Registrar of an opinion of counsel acceptable to the
Certificate Registrar that such reoffer, resale, pledge or transfer is in
compliance with the 1933 Act, (y) the receipt by the Certificate Registrar of
such other evidence acceptable to the Certificate Registrar that such reoffer,
resale, pledge or transfer is in compliance with the 1933 Act and other
applicable laws and (z) a written undertaking to reimburse the Trust for any
costs incurred by it in connection with the proposed transfer. The Purchaser
understands that the Certificate (and any subsequent Certificate) has not been
registered under the 1933 Act, by reason of a specified exemption from the
registration provisions of the 1933 Act which depends upon, among other things,
the bona fide nature of the Purchaser's investment intent (or intent to resell
to only certain investors in certain exempted transactions) as expressed herein.
3. The Purchaser acknowledges that the Certificate (and any Certificate
issued on transfer or exchange thereof) has not been registered or qualified
under the 1933 Act or the securities laws of any State or any other
jurisdiction, and that the Certificate cannot be resold unless it is registered
or qualified thereunder or unless an exemption from such registration or
qualification is available.
4. The Purchaser hereby undertakes to be bound by the terms and conditions
of the Pooling and Servicing Agreement in its capacity as an owner of a
Certificate or Certificates, as the case may be (each, a "Certificateholder"),
in all respects as if it were a signatory thereto. This undertaking is made for
the benefit of the Trust, the Certificate Registrar and all Certificateholders
present and future.
5. The Purchaser will not sell or otherwise transfer any portion of the
Certificate or Certificates, except in compliance with Section 4.02 of the
Pooling and Servicing Agreement.
6. Check one of the following:*
__________
*Each Purchaser must include one of the two alternative certifications.
[ ] The Purchaser is a U.S. Person (as defined below) and it has attached
hereto an Internal Revenue Service ("IRS") Form W-9 (or successor
form).
[ ] The Purchaser is not a U.S. Person and under applicable law in effect
on the date hereof, no taxes will be required to be withheld by the
Trustee (or its agent) with respect to distributions to be made on the
Certificate. The Purchaser has attached hereto either (i) a duly
executed IRS Form W-8 (or successor form), which identifies such
Purchaser as the beneficial owner of the Certificate and states that
such Purchaser is not a U.S. Person or (ii) two duly executed copies
of IRS Form 4224 (or successor form), which identify such Purchaser as
the beneficial owner of the Certificate and state that interest and
original issue discount on the Certificate and Permitted Investments
is, or is expected to be, effectively connected with a U.S. trade or
business. The Purchaser agrees to provide to the Certificate Registrar
updated IRS Forms W-8 or IRS Forms 4224, as the case may be, any
applicable successor IRS forms, or such other certifications as the
Certificate Registrar may reasonably request, on or before the date
that any such IRS form or certification expires or becomes obsolete,
or promptly after the occurrence of any event requiring a change in
the most recent IRS form of certification furnished by it to the
Certificate Registrar.
For this purpose, "U.S. Person" means a citizen or resident of the United States
for U.S. federal income tax purposes, a corporation, partnership (except to the
extent provided in applicable Treasury regulations) or other entity created or
organized in or under the laws of the United States or any of its political
subdivisions, an estate the income of which is subject to U.S. federal income
taxation regardless of its source or a trust if a court within the United States
is able to exercise primary supervision over the administration of such trust,
and one or more United States fiduciaries have the authority to control all
substantial decisions of such trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which were
eligible to elect to be treated as U.S. persons).
8. Please make all payments due on the Certificates:**
[ ] (a) by wire transfer to the following account at a bank or entity in
New York, New York, having appropriate facilities therefor:
[ ] Bank: ____________________________________________
ABA #: ___________________________________________
Account #: _______________________________________
Attention: _______________________________________
[ ] (b) by mailing a check or draft to the following address:
__________
** Only to be filled out by Purchasers of Definitive Certificates. Please select
(a) or (b). For holders of Definitive Certificates, wire transfers are only
available if such holder's Definitive Certificates have an aggregate Certificate
Balance or Notional Amount, as applicable, of at least U.S. $5,000,000.
________________________________________
________________________________________
________________________________________
Very truly yours,
________________________________________
[The Purchaser]
By: ___________________________________
Name:
Title:
Dated:
EXHIBIT I
FORM OF ERISA REPRESENTATION LETTER
The Bank of New York,
as Trustee
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Re: Transfer of PaineWebber Mortgage Acceptance Corporation IV, New South
Home Equity Trust 1999-2, Home Equity Asset Backed Certificates,
Series 1999-2
Ladies and Gentlemen:
The undersigned (the "Purchaser") proposes to purchase ____% initial Percentage
Interest of PaineWebber Mortgage Acceptance Corporation IV, New South Home
Equity Trust 1999-2, Home Equity Asset Backed Certificates, Series 1999-2, Class
__ (the "Certificate") issued pursuant to that certain Pooling and Servicing
Agreement, dated as of November 1, 1999 (the "Pooling and Servicing Agreement"),
by and among PaineWebber Mortgage Acceptance Corporation IV, as Depositor, New
South Federal Savings Bank, as Servicer and Transferor, and The Bank of New
York, as Trustee (the "Trustee"). Capitalized terms used and not otherwise
defined herein have the respective meanings ascribed to such terms in the
Pooling and Servicing Agreement.
In connection with such transfer, the undersigned hereby represents and warrants
to you as follows:
1. The Purchaser is not (a) an employee benefit plan subject to the
fiduciary responsibility provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), or a governmental plan (as defined in Section
3(32) of ERISA) subject to any federal, state or local law ("Similar Law") which
is, to a material extent, similar to the foregoing provisions of ERISA or the
Code (each a "Plan") or (b) a person acting on behalf of or using the assets of
any such Plan (including an entity whose underlying assets include Plan assets
by reason of investment in the entity by such Plan and the application of
Department of Labor Regulation Section 2510.3-101), other than an insurance
company using the assets of its general account under circumstances whereby the
purchase and holding of Offered Private Certificates by such insurance company
would be exempt from the prohibited transaction provisions of ERISA and the Code
under Prohibited Transaction Class Exemption 95-60.
2. The Purchaser understands that if the Purchaser is a Person referred to
in 1(a) or (b) above, such Purchaser is required to provide to the Certificate
Registrar an opinion of counsel in form and substance satisfactory to the
Certificate Registrar and the Depositor to the effect that the acquisition and
holding of such Certificate by such purchaser or transferee will not result in
the assets of the Trust Fund being deemed to be "plan assets" and subject to the
fiduciary responsibility provisions of ERISA, the prohibited transaction
provisions of the Code or the provisions of any Similar Law, (without regard to
the identity or nature of the other Holders of Certificates of any Class) will
not constitute or result in a "prohibited transaction" within the meaning of
ERISA, Section 4975 of the Code or any similar law, and will not subject the
Trustee, the Servicer or the Depositor to any obligation or liability (including
obligations or liabilities under ERISA, Section 4975 of the Code or any such
Similar Law) in addition to those set forth in the Pooling and Servicing
Agreement, which Opinion of Counsel shall not be at the expense of the
Depositor, the Servicer, the Trustee or the Trust Fund.
IN WITNESS WHEREOF, the Purchaser hereby executes this ERISA Representation
Letter on the ___th day of __________, ____.
Very truly yours,
________________________________________
[The Purchaser]
By: ___________________________________
Name:
Title
EXHIBIT J
FORM OF OFFICER'S CERTIFICATE OF THE TRANSFEROR: PREPAID LOANS
To: The Bank of New York
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Re: Pooling and Servicing Agreement among PaineWebber Mortgage
Acceptance Corporation IV, as Depositor, New South Federal
Savings Bank, as Transferor and Servicer, and The Bank of New
York, as Trustee, New South Home Equity Trust 1999-2, Home Equity
Asset Backed Certificates, Series 1999-2
Ladies and Gentlemen:
In connection with the administration of the Loans held by you as Trustee for
PaineWebber Mortgage Acceptance Corporation IV, we hereby certify that Loan #
__________ had been paid in full. We provide this certification in lieu of the
contents of the Loan File. If all or part of the Loan File have been previously
released to you, we request that the same along with any related documents be
returned to us immediately.
NEW SOUTH FEDERAL SAVINGS BANK
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:___________________________________
TRUSTEE CONSENT TO RELEASE
AND ACKNOWLEDGMENT OF RECEIPT
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:___________________________________
EXHIBIT K
[Form of Servicer Remittance Report]
EXHIBIT L
SUBSEQUENT TRANSFER AGREEMENT (the "Subsequent Transfer Agreement"), dated
as of [________], between New South Federal Savings Bank ("Transferor") , and
The Bank of New York (the "Trustee").
W I T N E S S E T H
WHEREAS, pursuant to the terms of a Loan Sale Agreement, dated as of
November 1, 1999 (the "Loan Sale Agreement"), between PaineWebber Mortgage
Acceptance Corporation IV, as Depositor (the "Depositor") and the Transferor,
the Transferor has sold, transferred, assigned and otherwise conveyed to the
Depositor all its right, title and interest in and to certain Loans.
WHEREAS, pursuant to the terms of a Pooling and Servicing Agreement, dated
as of November 1, 1999 (the "Pooling and Servicing Agreement"), among the
Depositor, the Transferor and the Trustee, the Transferor has the obligation to
sell, transfer, assign and otherwise convey to the Depositor, and the Depositor
has the obligation to sell, transfer, assign and otherwise convey to the Trustee
all its right, title and interest in and to certain home loans as listed on
Schedule I attached hereto and the Related Documents thereto (as defined below)
(the "Subsequent Loans") pursuant to and in accordance with this Subsequent
Transfer Agreement;
WHEREAS, the parties hereto desire that the Transferor sell all its right,
title and interest in and to the Subsequent Loans and the Related Documents to
the Depositor and that the Depositor sell all its right, title and interest in
and to the Subsequent Loans and the Related Documents to the Trustee pursuant to
the terms of this Subsequent Transfer Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1 Definitions. Capitalized terms used but not defined herein have the
meanings assigned thereto in the Pooling and Servicing Agreement.
2. Sale of Subsequent Loans to Trustee. The Transferor concurrently with
the execution and delivery of this Subsequent Transfer Agreement, does hereby
sell, transfer, assign, set over, and otherwise convey to the Depositor, and the
Depositor does hereby sell, transfer, assign, set over, and otherwise convey to
the Trustee, without recourse but subject to the other terms and provisions of
this Agreement and the Pooling and Servicing Agreement, all of its right, title
and interest in and to the following, whether now existing or hereafter acquired
and wherever located: (i) such Subsequent Loans as listed in the Subsequent Loan
Schedule, as of the [__________] (the "Cut-Off Date"), together with the
Servicer's Loan Files and the Trustee's Loan Files relating thereto and all
proceeds thereof, (ii) the Mortgages and security interests in Mortgaged
Properties, (iii) all payments in respect of interest due with respect to such
Subsequent Loans on or after the Cut-Off Date and all payments in respect of
principal received after the Cut-Off Date, (iv) the Transferor's rights under
all insurance policies with respect to such Subsequent Loans and any Insurance
Proceeds on or after the Cut-Off Date, and (v) all proceeds of any of the
foregoing.
3. Obligations of the Depositor and Transferor Upon Sale. In connection
with any transfer pursuant to Section 2 hereof, the Depositor and the Transferor
as applicable, further agrees, at its own expense, on the Subsequent Transfer
Date (a) to indicate in its books and records that the Subsequent Loans have
been sold to the Depositor or to the Trustee as applicable, pursuant to this
Subsequent Transfer Agreement and (b) to deliver to the Depositor or the Trustee
as applicable, a computer file containing a true and complete list of all
Subsequent Loans in the format required by Section 2.2 of the Loan Sale
Agreement.
In connection with any conveyance by the Depositor, the Transferor shall on
behalf of the Depositor deliver to, and deposit with the Trustee, on or before
the Subsequent Transfer Date the Related Documents (as defined in the Loan Sale
Agreement) with respect to each Subsequent Loan.
In connection with any conveyance by the Depositor, the Transferor shall on
behalf of the Depositor deliver to, and deposit with the Servicer, as the
designated agent of the Trustee, on or before the Subsequent Transfer Date the
Servicer's Home Loan File with respect to each Subsequent Loan.
The Transferor hereby confirms to the Trustee that, as of the Subsequent
Transfer Date it has caused the portions of the Transferor's electronic ledger
relating to the Subsequent Loans to be clearly and unambiguously marked to
indicate that the Subsequent Loans have been sold to the Trustee.
The parties hereto intend that each of the transactions set forth herein be
a sale by the Transferor to the Depositor of all of the Transferor's right,
title and interest in and to the Subsequent Loans and other property described
above and a sale by the Depositor to the Trustee of all of the Depositor's
right, title and interest in and to the Subsequent Loans and other property
described above. In the event the transactions set forth herein are deemed not
to be a sale, the Transferor hereby grants to the Depositor a security interest
in all of the Transferor's right, title and interest in, to and under the
Subsequent Loans and other property described above, whether now existing or
hereafter created, to secure all of the Transferor's obligations hereunder and
the Depositor hereby grants to the Trustee a security interest in all of the
Depositor's right, title and interest in, to and under the Subsequent Loans and
other property described above, whether now existing or hereafter created, to
secure all of the Depositor's obligations hereunder; and this Subsequent
Transfer Agreement shall constitute a security agreement under applicable law.
4. Payment of Purchase Price for the Subsequent Loans.
(a) In consideration of the sale of the Subsequent Loans from the
Transferor to the Depositor on the Subsequent Transfer Date, the Depositor
agrees to pay to the Transferor on the Subsequent Transfer Date by transfer of
immediately available funds, an amount equal to 100% of the aggregate Principal
Balances of the Subsequent Loans as of the Cut-Off Date. In consideration of the
sale of the Subsequent Loans from the Depositor to the Trustee on the Subsequent
Transfer Date, the Trustee agrees to pay to the Depositor on the Subsequent
Transfer Date by transfer of immediately available funds, an amount equal to
100% of the aggregate Principal Balances of the Subsequent Loans as of the
Cut-Off Date.
(b) Within 30 days of the Subsequent Transfer Date, Transferor on behalf of
the Depositor, at its own expense, shall record each Assignment of Mortgage in
favor of the Trustee to the same extent required under Section 2.2 of the Loan
Sale Agreement.
5. Representations and Warranties. (a) The Transferor hereby makes the
representations and warranties to the Depositor as of the Cut-Off Date and the
Subsequent Transfer Date specified in Section 3.3 of the Pooling and Servicing
Agreement.
(b) The Transferor further represents and warrants to the Depositor and the
Trustee that with respect to the Subsequent Loans as of the Subsequent Transfer
Date each of the representations and warranties contained in Section 3.4 of the
Pooling and Servicing Agreement are true and correct and each reference to
"Loan" and "Initial Loan" shall be deemed a reference to the Subsequent Loans.
It is understood and agreed that the representations and warranties set
forth in this Section 5(b) shall survive delivery of the respective Subsequent
Loan Files to the Trustee. In the event that (a) any of the representations and
warranties of the Transferor, in Section 3.4 of the Pooling and Servicing
Agreement are determined to be untrue in a manner that materially and adversely
affects the value of, or the interests of the Certificateholders or the
Certificate Insurer in, any Subsequent Loan with respect to which such
representation or warranty is made and (b) the Transferor, shall fail to cure
such breach within the time period specified in Section 3.5 of the Pooling and
Servicing Agreement, the Transferor, shall be obligated to repurchase or
substitute the affected Subsequent Loan(s) in accordance with the provisions of
Section 3.5 of the Pooling and Servicing Agreement.
With respect to representations and warranties made by the Transferor
pursuant to this Section 5(b) that are made to the Transferor's best knowledge
as applicable, if it is discovered by the Transferor, the Depositor, the Trustee
or the Certificate Insurer that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Subsequent Loan, notwithstanding the Transferor's lack of
knowledge as applicable, such inaccuracy shall be deemed a breach of the
applicable representation and warranty.
6. Covenants of the Transferor. The Transferor will defend the right, title
and interest of the Depositor and the Trustee, in, to and under the Subsequent
Loans, against all claims of third parties claiming through or under the
Transferor or the Depositor.
Whenever and so often as requested by the Trustee, or the Depositor, or the
Transferor the other party promptly will execute and deliver or cause to be
executed and delivered all such other and further instruments, documents, or
assurances, and promptly do or cause to be done all such other things, as may be
necessary and reasonably required to vest more fully in the requesting party all
rights, interests, powers, benefits, privileges and advantages conferred or
intended to be conferred upon it by this Agreement.
7. Termination. The respective obligations and responsibilities of the
Depositor, the Transferor and the Trustee created hereby shall terminate, except
for the Transferor's indemnity obligations as provided herein and in the Pooling
and Servicing Agreement, upon the termination of the Trust as provided in
Article VIII of the Pooling and Servicing Agreement.
8. Governing Law. This Subsequent Transfer Agreement shall be governed by
and construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
9. Intention of the Parties. It is the intention of the parties that the
Depositor is purchasing, and the Transferor is selling, and the Trustee is
purchasing, and the Depositor is selling, the Subsequent Loans rather than
pledging the Subsequent Loans to secure a loan by the Depositor to the
Transferor, and a loan by the Trustee to the Depositor. The parties hereto each
intend to treat the transaction for accounting and federal income tax purposes
as a sale by the Transferor to the Depositor, and a purchase by the Trustee from
the Depositor, of the Subsequent Loans and that the Subsequent Loans shall
become assets of REMIC I as of the date hereof. The Trustee will have the right
to review the Subsequent Loans and the related Subsequent Loan Files to
determine the characteristics of the Subsequent Loans which will affect the
federal income tax consequences of owning the Subsequent Loans and the
Transferor on behalf of the Depositor will cooperate with all reasonable
requests made by the Trustee in the course of such review.
10. Third-Party Beneficiary. This Subsequent Transfer Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. The parties hereto acknowledge that the
Certificate Insurer is an express third party beneficiary hereof entitled to
enforce any rights reserved to it hereunder as if it were actually a party
hereto. Except as otherwise provided in this Section 10 no other Person shall
have the right or obligation hereunder.
IN WITNESS WHEREOF, the Transferor, the Depositor and the Trustee have
caused this Subsequent Transfer Agreement to be duly executed on their behalf by
their respective officers thereunto duly authorized as of the day and year first
above written.
New South Federal Savings Bank
as Transferor
By: ___________________________________
Name:
Title:
THE BANK OF NEW YORK, not in its
individual capacity but solely as
Trustee
By: ___________________________________
Name:
Title:
PAINEWEBBER MORTGAGE ACCEPTANCE
CORPORATION IV
Depositor
By: ___________________________________
Name:
Title:
SCHEDULE I
Subsequent Loan Schedule
EXHIBIT M
[Form of Liquidation Report]
Customer Name:
Account Number:
Original Principal Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
Date last paid
Date of foreclosure
Date of REO
Date of REO Disposition
Property Sale Price/Estimated Market Value at disposition
2. Liquidation Proceeds
Principal Prepayment $_______________
Property Sale Proceeds _______________
Insurance Proceeds _______________
Other (itemize) _______________
Total Proceeds $_______________
3. Liquidation Expenses
Servicing Advances $_______________
Delinquency Advances _______________
Monthly Advances _______________
Contingency Fees _______________
Excess Servicing Fees _______________
Servicing Fees _______________
Annual Expense Escrow Amount _______________
Other Servicing Compensation _______________
Supplemental Fee (if any) _______________
Additional Interest (if any) _______________
Total Advances $_______________
4. Net Liquidation Proceeds $ (Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $_______________
6. Loss, if any (Item 5 minus Item 4) $_______________