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EXHIBIT 4.1
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NATIONSBANC ASSET SECURITIES, INC.
Company,
and
----------------------------
Servicer
and
------------------------------
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of ____________, 199_
Asset-Backed Certificates
Series 199
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS......................................................................1
Section 1.01 CERTAIN DEFINED TERMS..........................................1
Accepted Servicing Practices.....................................................1
Account ........................................................................2
Accrual Period...................................................................2
Addition Notice..................................................................2
Affiliate........................................................................2
Agreement........................................................................2
Appraised Value..................................................................2
Assignment Of Mortgage...........................................................2
Authorized Denominations.........................................................2
Available Funds..................................................................2
Available Funds Shortfall........................................................2
Business Day.....................................................................2
Capitalized Interest Account.....................................................2
Capitalized Interest Amount......................................................2
Certificate......................................................................3
Certificate Account..............................................................3
Certificateholder or Holder......................................................3
Certificate Insurance Payments Account...........................................3
Certificate Insurance Policy.....................................................3
Certificate Insurer..............................................................3
Certificate Insurer Default......................................................3
Certificate Register.............................................................3
Class A Carry-Forward Amount.....................................................3
Class A Certificate..............................................................3
Class A Certificateholder........................................................3
Class A Interest Distribution Amount.............................................3
Class A Pass-Through Rate........................................................3
Class A Principal Distribution Amount............................................4
Class A-1 Certificate............................................................4
Class A-2 Certificate............................................................4
Class A-3 Certificate............................................................4
Class A-4 Certificate............................................................4
Class R Certificate..............................................................5
Class R Certificateholder........................................................5
Closing Date.....................................................................5
Code ...........................................................................5
Collection Account...............................................................5
Combined Loan-to-Value Ratio.....................................................5
Commission.......................................................................5
Company ........................................................................5
Compensating Interest............................................................5
Curtailment......................................................................5
Custodian........................................................................5
Cut-off Date.....................................................................5
DCR..............................................................................5
Debt Service Reduction...........................................................5
Deficient Valuation..............................................................5
Deleted Mortgage Loan............................................................5
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Delinquent.......................................................................5
Depository.......................................................................6
Direct Participant...............................................................6
Disqualified Organization........................................................6
Distribution Date................................................................6
Due Date ........................................................................6
Due Period.......................................................................6
Eligible Account.................................................................6
ERISA ...........................................................................6
Event Of Default.................................................................6
Excess Subordinated Amount.......................................................6
FDIC ...........................................................................7
FHLMC ...........................................................................7
FNMA ...........................................................................7
Fitch............................................................................7
Foreclosure Profits..............................................................7
GAAP ...........................................................................7
Indirect Participant.............................................................7
Initial Capitalized Interest Amount..............................................7
Initial Mortgage Loan............................................................7
Initial Specified Subordinated Amount............................................7
Insurance Agreement..............................................................7
Insurance Proceeds...............................................................7
Insured Distribution Amount......................................................7
Insured Payment..................................................................7
Liquidated Loan Loss.............................................................7
Liquidated Mortgage Loan.........................................................8
Liquidation Expenses.............................................................8
Liquidation Proceeds.............................................................8
Loan Repurchase Price............................................................8
Loan-to-Value Ratio or LTV.......................................................8
Majority Certificateholders......................................................8
Monthly Payment..................................................................8
▇▇▇▇▇'▇ ........................................................................8
Mortgage ........................................................................8
Mortgage File....................................................................8
Mortgage Impairment Insurance Policy.............................................8
Mortgage Interest Rate...........................................................8
Mortgage Loan....................................................................8
Mortgage Loan Schedule...........................................................8
Mortgage Note....................................................................9
Mortgaged Property...............................................................9
Mortgagor........................................................................9
Net Foreclosure Profits..........................................................10
Net Liquidation Proceeds.........................................................10
Net Monthly Excess Cashflow......................................................10
Net Mortgage Interest Rate.......................................................10
Net REO Proceeds.................................................................10
Nonrecoverable Advances..........................................................10
Non-United States Person.........................................................10
Officer's Certificate............................................................10
Opinion of Counsel...............................................................10
Original Pool Principal Balance..................................................10
Original Pre-Funded Amount.......................................................10
Original Security Balance........................................................10
Outstanding Mortgage Loan........................................................11
Ownership Interest...............................................................11
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Owner-Occupied Mortgaged Property................................................11
Percentage Interest..............................................................11
Periodic Advance.................................................................11
Permitted Investments............................................................11
Permitted Transferee.............................................................12
Person...........................................................................12
Plan ...........................................................................12
Policy Business Day..............................................................12
Pool Principal Amount............................................................12
Preference Amount................................................................12
Preference Claim.................................................................12
Pre-Funded Amount................................................................12
Pre-Funding Account..............................................................12
Pre Funding Period...............................................................12
Premium Amount...................................................................12
Premium Exhibit..................................................................12
Premium Percentage...............................................................12
Prepayment Interest Shortfall....................................................12
Principal Balance................................................................13
Principal Prepayment in Full.....................................................13
Purchase Agreement...............................................................13
Principal Remittance Amount......................................................13
Qualified Mortgage...............................................................13
Qualified Substitute Mortgage Loan...............................................13
Rating Agency....................................................................13
Record Date......................................................................13
Released Mortgaged Property Proceeds.............................................13
REMIC ...........................................................................13
REMIC Provisions.................................................................13
Reimbursement Amount.............................................................14
REO Acquisition..................................................................14
REO Disposition..................................................................14
REO Mortgage Loan................................................................14
REO Proceeds.....................................................................14
REO Property.....................................................................14
Representation Letter............................................................14
Request for Release..............................................................14
Required Subordinated Amount.....................................................14
Residential Dwelling.............................................................14
Responsible Officer..............................................................14
S&P..............................................................................14
Second Mortgage Loan.............................................................14
Security Balance.................................................................14
Seller...........................................................................15
Senior Mortgage Loan.............................................................15
Servicer.........................................................................15
Servicer Remittance Amount.......................................................15
Servicer Remittance Date.........................................................15
Servicing Account................................................................15
Servicing Advances...............................................................15
Servicing Compensation...........................................................15
Servicing Fee....................................................................15
Servicing Officer................................................................16
Startup Day......................................................................16
Subordinated Amount..............................................................16
Subordination Deficiency Amount..................................................16
Subordination Deficit............................................................16
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Subordination Increase Amount....................................................16
Subordination Reduction Amount...................................................16
Subsequent Cut-off Date..........................................................16
Subsequent Mortgage Loan.........................................................16
Subsequent Transfer Date.........................................................16
Subsequent Transfer Instrument...................................................16
Substitution Adjustment..........................................................16
Tax Matters Person...............................................................17
Tax Return.......................................................................17
Transfer ........................................................................17
Transfer Affidavit And Agreement.................................................17
Transferee.......................................................................17
Transferor.......................................................................17
Trustee ........................................................................17
Trustee Fee......................................................................17
Trustee Remittance Report........................................................17
Trust Fund.......................................................................17
UCC..............................................................................17
UCC Financing Statement..........................................................17
Underwriting Guidelines..........................................................17
United States Person.............................................................17
Unpaid REO Amortization..........................................................17
Section 1.02 PROVISIONS OF GENERAL APPLICATION..............................18
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES................................................19
Section 2.01 CONVEYANCE OF MORTGAGE LOANS; SPECIAL DEPOSIT;
PRIORITY AND SUBORDINATION OF OWNERSHIP INTERESTS..............19
Section 2.02 POSSESSION OF MORTGAGE FILES; ACCESS TO MORTGAGE FILES.........20
Section 2.03 DELIVERY OF MORTGAGE LOAN DOCUMENTS AND CERTIFICATE
INSURANCE POLICY...............................................20
Section 2.04 ACCEPTANCE BY TRUSTEE OF THE TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE........................21
Section 2.05 EXECUTION OF CERTIFICATES......................................22
Section 2.06 FURTHER ACTION EVIDENCING ASSIGNMENTS..........................23
Section 2.07 [RESERVED].....................................................23
Section 2.08 CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS....................23
ARTICLE III
REPRESENTATIONS AND WARRANTIES...................................................25
Section 3.01 REPRESENTATIONS OF THE SERVICER................................25
Section 3.02 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.......25
Section 3.03 PURCHASE AND SUBSTITUTION......................................26
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ARTICLE IV
THE CERTIFICATES.................................................................28
Section 4.01 THE CERTIFICATES...............................................28
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES..........28
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES..............32
Section 4.04 PERSONS DEEMED OWNERS..........................................32
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS...............................33
Section 5.01 APPOINTMENT OF THE SERVICER....................................33
Section 5.02 [Reserved].....................................................34
Section 5.03 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS;
COLLECTION ACCOUNT.............................................34
Section 5.04 PERMITTED WITHDRAWALS FROM THE COLLECTION ACCOUNT..............35
Section 5.05 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES..................36
Section 5.06 MAINTENANCE OF CASUALTY INSURANCE..............................36
Section 5.07 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE POLICY............37
Section 5.08 FIDELITY BOND; ERRORS AND OMISSIONS POLICY.....................37
Section 5.09 COLLECTION OF TAXES, ASSESSMENTS AND OTHER ITEMS;
SERVICING ACCOUNT..............................................37
Section 5.10 PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION; ADDITIONAL INFORMATION.............................38
Section 5.11 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS......38
Section 5.12 REALIZATION UPON DEFAULTED MORTGAGE LOANS......................39
Section 5.13 TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES................41
Section 5.14 SERVICING FEE; SERVICING COMPENSATION..........................41
Section 5.15 REPORTS TO THE TRUSTEE AND THE COMPANY; COLLECTION
ACCOUNT STATEMENTS.............................................41
Section 5.16 ANNUAL STATEMENT AS TO COMPLIANCE..............................42
Section 5.17 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT........42
Section 5.18 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS..................42
Section 5.19 REPORTS TO BE PROVIDED BY THE SERVICER.........................42
Section 5.20 ADJUSTMENT OF SERVICING COMPENSATION IN RESPECT OF PREPAID
MORTGAGE LOANS.................................................42
Section 5.21 PERIODIC ADVANCES..............................................43
Section 5.22 THIRD PARTY CLAIMS.............................................43
Section 5.23 MAINTENANCE OF CORPORATE EXISTENCE AND LICENSES; MERGER
OR CONSOLIDATION OF THE SERVICER...............................43
Section 5.24 ASSIGNMENT OF AGREEMENT BY SERVICER; SERVICER NOT TO RESIGN....43
Section 5.25 INFORMATION REPORTS TO BE FILED BY THE SERVICER................43
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ARTICLE VI
DISTRIBUTIONS AND PAYMENTS.......................................................45
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNTS; DEPOSITS TO THE
CERTIFICATE ACCOUNTS...........................................45
Section 6.02 PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT.............45
Section 6.03 COLLECTION OF MONEY............................................45
Section 6.04 THE CERTIFICATE INSURANCE POLICY...............................46
Section 6.05 DISTRIBUTIONS..................................................47
Section 6.06 INVESTMENT OF ACCOUNTS.........................................47
Section 6.07 REPORTS BY TRUSTEE.............................................48
Section 6.08 ADDITIONAL REPORTS BY TRUSTEE..................................50
Section 6.09 COMPENSATING INTEREST..........................................50
Section 6.10 EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER; SUBROGATION.....50
Section 6.11 ALLOCATION OF LIQUIDATED LOAN LOSSES...........................50
Section 6.12 PRE-FUNDING ACCOUNT............................................50
Section 6.13 CAPITALIZED INTEREST ACCOUNT...................................51
ARTICLE VII
DEFAULT..........................................................................53
Section 7.01 EVENTS OF DEFAULT..............................................53
Section 7.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.......................54
Section 7.03 WAIVER OF DEFAULTS.............................................55
Section 7.04 MORTGAGE LOANS, TRUST FUND AND ACCOUNTS HELD FOR
BENEFIT OF THE CERTIFICATE INSURER.............................55
ARTICLE VIII
TERMINATION......................................................................56
Section 8.01 TERMINATION....................................................56
Section 8.02 ADDITIONAL TERMINATION REQUIREMENTS............................57
Section 8.03 ACCOUNTING UPON TERMINATION OF SERVICER........................57
ARTICLE IX
CONCERNING THE TRUSTEE...........................................................58
Section 9.01 DUTIES OF TRUSTEE..............................................58
Section 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE..........................58
Section 9.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS..........59
Section 9.04 TRUSTEE MAY OWN CERTIFICATES...................................60
Section 9.05 PAYMENT OF TRUSTEE'S FEES......................................60
Section 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE...........................60
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Section 9.07 RESIGNATION AND REMOVAL OF THE TRUSTEE.........................60
Section 9.08 SUCCESSOR TRUSTEE..............................................61
Section 9.09 MERGER OR CONSOLIDATION OF TRUSTEE.............................61
Section 9.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE..................61
ARTICLE X
REMIC PROVISIONS.................................................................63
Section 10.01 REMIC ADMINISTRATION...........................................63
Section 10.02 PROHIBITED TRANSACTIONS AND ACTIVITIES.........................65
Section 10.03 SERVICER AND TRUSTEE INDEMNIFICATION...........................65
ARTICLE XI
MISCELLANEOUS PROVISIONS.........................................................66
Section 11.01 LIMITATION ON LIABILITY OF THE COMPANY AND THE
SERVICER.......................................................66
Section 11.02 ACTS OF CERTIFICATEHOLDERS.....................................66
Section 11.03 AMENDMENT......................................................66
Section 11.04 RECORDATION OF AGREEMENT.......................................67
Section 11.05 NOTICES........................................................67
Section 11.06 SEVERABILITY OF PROVISIONS.....................................68
Section 11.07 COUNTERPARTS...................................................68
Section 11.08 SUCCESSORS AND ASSIGNS.........................................68
Section 11.09 HEADINGS.......................................................68
Section 11.10 THE CERTIFICATE INSURER DEFAULT................................68
Section 11.11 THIRD PARTY BENEFICIARY........................................68
Section 11.12 INTENT OF THE PARTIES..........................................68
Section 11.13 NOTICE TO RATING AGENCIES AND CERTIFICATEHOLDER................68
Section 11.14 GOVERNING LAW..................................................69
Exhibit A Certificate Insurance Policy
Exhibit B-1 Form of Class [A-1] [A-2] [A-3] [A-4] Certificate
Exhibit B-2 Form of Class R Certificate
Exhibit C Mortgage File
Exhibit D Mortgage Loan Schedule
Exhibit E Trustee's Acknowledgment of Receipt
Exhibit F Initial Certification of Trustee
Exhibit G Final Certification of the Trustee
Exhibit H Request for Release of Documents
Exhibit I Form of Transfer Affidavit and Agreement
Exhibit J Form of Transferor Certificate
Exhibit K ERISA Letter
Exhibit L [Reserved]
Exhibit M Certificate Re: Prepaid Loans
Exhibit N Subsequent Transfer Instrument
Exhibit O Form of Investor Representation Letter
Exhibit P Form of Transferor Representation Letter
Exhibit Q Form of Rule 144A Investment Representation
Exhibit R Premium Exhibit 68
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POOLING AND SERVICING AGREEMENT, dated as of ____________, 199_, by and
among NATIONSBANC ASSET SECURITIES, INC., a Delaware corporation, in its
capacity as depositor (the "Company"), _____________________________, a
___________ corporation, in its capacity as servicer (the " Servicer"), and
_____________________________________, a ____________________________, in its
capacity as trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Company intends to sell asset backed certificates (collectively,
the "Certificates"), to be issued hereunder in five classes (each, a "Class"),
which in the aggregate will evidence the entire beneficial ownership interest in
the Trust Fund (as defined herein), consisting primarily of the Mortgage Loans,
the Pre-Funding Account and the Capitalized Interest Account (each, as defined
herein). As provided herein, the Trustee will make an election to treat the
Trust Fund (other than the Pre-Funding Account and the Capitalized Interest
Account) as a real estate mortgage investment conduit (a "REMIC") for federal
income tax purposes. The Class A Certificates (as defined herein) will represent
ownership of "regular interests" in the REMIC, and the Class R Certificates will
constitute the sole Class of "residual interest" in the REMIC for purposes of
the REMIC Provisions (as defined herein) under federal income tax law.
The following table sets forth the designation, type, aggregate
Original Security Balance (as defined herein), maturity date, initial ratings
and certain features for each Class of Certificates comprising the interests in
the Trust Fund created hereunder.
AGGREGATE
ORIGINAL
SECURITY
DESIGNATION TYPE BALANCE FEATURES INITIAL RATINGS
-------------- -------- ------------------ ---------- ---------------
Class A-1 Senior $ Senior
Class A-2 Senior $ Senior
Class A-3 Senior $ Senior
Class A-4 Senior $ Senior
Class R Subordinate n/a Residual n/a
The Mortgage Loans (as defined herein) have an aggregate
Principal Balance (as defined herein) as of the Cut-off Date equal to
$________________. The amount deposited by the Company in the Pre-Funding
Account on the Closing Date is $________________.
In consideration of the mutual agreements herein contained,
the Company, the Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 CERTAIN DEFINED TERMS. Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings.
"Accepted Servicing Practices": The Servicer's normal
servicing practices, which in general will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service for their own
account mortgage loans of the same type as the Mortgage Loans in the
jurisdictions in which the related Mortgaged Properties are located.
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"Account": Any Eligible Account established pursuant to
Sections 5.03, 5.09, 6.01, 6.04, 6.12 or 6.13 hereof.
"Accrual Period": With respect to any Distribution Date, the
previous calendar month.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust Fund pursuant to Section 2.08 of this Agreement, a
notice, substantially in the form of Exhibit N, which shall be given not later
than two Business Days prior to the related Subsequent Transfer Date, of the
Company's designation of Subsequent Mortgage Loans to be sold to the Trust Fund
and the aggregate principal balance as of the Subsequent Cut-off Date of such
Subsequent Mortgage Loans.
"Affiliate": 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.
"Agreement": This Pooling and Servicing Agreement, including
the Exhibits hereto, and all amendments hereof and supplements hereto.
"Appraised Value": As to any Mortgaged Property, the lesser of
(i) the appraised value of such Mortgaged Property based upon the appraisal made
at the time of the origination of the related Mortgage Loan, and (ii) the sales
price of the Mortgaged Property at such time of origination, except in the case
of a Mortgaged Property securing a refinanced or modified Mortgage Loan as to
which it is the lesser of the appraised value determined above or the appraised
value determined in an appraisal at the time of refinancing or modification, as
the case may be.
"Assignment Of Mortgage": With respect to each Mortgage Loan,
an assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the sale of the
Mortgage to the Trustee for the benefit of the Certificateholders.
"Authorized Denominations": With respect to each Class of
Class A Certificates, a minimum denomination of $________ Original Security
Balance and integral multiples of $________ Original Security Balance in excess
thereof. With respect to the Class R Certificates, a minimum Percentage Interest
of ____% and integral multiples of ____% in excess thereof.
"Available Funds": As defined in Section 6.04(a).
"Available Funds Shortfall": With respect to the Mortgage
Loans and any Distribution Date, an amount equal to the sum of (a) the Class A
Interest Distribution Amount minus the Available Funds for such Distribution
Date and (b) the Subordination Deficit.
"Business Day": Any day other than (a) a Saturday or Sunday,
or (b) a day on which banking institutions in the State of ___________, the
State of ___________ or the state where the Trustee's corporate trust office is
located are authorized or obligated by law or executive order to be closed.
"Capitalized Interest Account": The Account established and
maintained pursuant to Section 6.13, which must be an Eligible Account.
"Capitalized Interest Amount": As to any Distribution Date, an
amount equal to the lesser of (A) interest accrued for the related Accrual
Period on an amount equal to (i) the related Original Pre-Funded Amount minus
(ii) the aggregate Principal Balance of any related Subsequent Mortgage Loans
transferred prior to the first day of the month in which such Distribution Date
occurs, calculated at a rate equal to the sum of (a) the Class A Pass-Through
Rate for such Distribution Date, and (b) ____%; and (B) the related Available
Funds Shortfall (calculated without regard to the Capitalized Interest Amount
component of Available Funds).
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"Certificate": Any Class A Certificate or Class R Certificate
executed by the Trustee on behalf of the Trust Fund and authenticated by the
Trustee.
"Certificate Account": The account established in accordance
with Section 6.01(a) hereof and maintained by the Trustee.
"Certificateholder or Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that, neither a
Disqualified Organization nor a Non-United States Person shall be a Holder of a
Class R Certificate for any purposes hereof and, solely for the purposes of
giving any consent (except any consent required to be obtained pursuant to
Section 11.03), waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Company or the Servicer or any
Affiliate thereof shall be deemed not to be outstanding and the rights to which
it is entitled shall not be taken into account in determining whether the
requisite percentage of rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 11.03. The Trustee shall be
entitled to rely upon a certification of the Company or the Master Servicer in
determining if any Certificates are registered in the name of a respective
Affiliate. 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.
"Certificate Insurance Payments Account": The Certificate
Insurance Payments Account established in accordance with Section 6.04(c) hereof
and maintained by the Trustee.
"Certificate Insurance Policy": The certificate guaranty
insurance policy No. _____, and all endorsements thereto dated the Closing Date,
issued by the Certificate Insurer for the benefit of the Class A
Certificateholders, a copy of which is attached hereto as Exhibit A-1.
"Certificate Insurer": ______________________, a stock
insurance company organized and created under the laws of the State of
__________, and any successors thereto.
"Certificate Insurer Default": The failure by the Certificate
Insurer to make a payment required under the Certificate Insurance Policy in
accordance with its terms.
"Certificate Register": As described in Section 4.02(a).
"Class A Carry-Forward Amount": As of any Distribution Date,
the sum of (a) the amount, if any, by which (i) the Insured Distribution Amount
as of the immediately preceding Distribution Date exceeded (ii) the amount
actually distributed to the Holders of the Class A Certificates on such
Distribution Date in respect thereof (including, without limitation, any Insured
Payments paid to the Holders of the Class A Certificates by the Certificate
Insurer as described in Sections 6.04 and 6.05 hereof) and (b) interest accrued
for the related Accrual Period on the amount described in clause (a), calculated
at an interest rate equal to the Class A Pass-Through Rate applicable to such
Distribution Date. Any Class A Carry-Forward Amount shall be deemed to be
allocated first to any related Subordination Deficit and second to any related
Class A Interest Distribution Amount.
"Class A Certificate": Any of the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates or Class A-4 Certificates.
"Class A Certificateholder": A Holder of a Class A
Certificate.
"Class A Interest Distribution Amount": With respect to the
Class A Certificates for any Distribution Date the sum of (i) the aggregate
amount of interest accrued for the related Accrual Period on the aggregate
Security Balance immediately prior to such Distribution Date at the Class A
Pass-Through Rate (based on a 360-day year and a 30-day month) and (ii) the
portion of any Class A Carry-Forward Amount which relates to a shortfall in a
distribution of a Class A Interest Distribution Amount as of such Distribution
Date.
"Class A Pass-Through Rate": As of any Distribution Date, the
per annum rate equal to (i) the weighted average of the Mortgage Interest Rates,
minus (ii) the sum of the rates per annum used to determine the Servicing Fee,
the Trustee Fee and the Premium Percentage.
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"Class A Principal Distribution Amount": For any Distribution
Date, the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date, of
(A) the Available Funds and (B) any related Insured Payment
over (ii) the Class A Interest Distribution Amount; and
(b) the sum, without duplication, of:
(i) the portion of any Class A Carry-Forward Amount which relates
to a shortfall in a distribution of a Subordination Deficit,
(ii) all scheduled installments of principal in respect of the
Mortgage Loans received or advanced during the related Due
Period, together with all unscheduled recoveries of principal
in respect of the Mortgage Loans received by the Servicer
during the prior calendar month,
(iii) the Principal Balance of each Mortgage Loan that was
repurchased by the Seller, by an Affiliate of the Seller or by
the Company,
(iv) any Substitution Adjustments delivered by the Company on the
related Servicer Remittance Date in connection with a
substitution of a Mortgage Loan,
(v) the Net Liquidation Proceeds collected by the Servicer of all
Mortgage Loans during the related Due Period (to the extent
such Net Liquidation Proceeds related to principal),
(vi) the amount of any Subordination Deficit for such Distribution
Date,
(vii) the proceeds received by the Trustee with respect to the
Mortgage Loans from any termination of the Trust Fund (to the
extent such proceeds are related to principal),
(viii) the amount of any Subordination Increase Amount for such
Distribution Date, and
(ix) with respect to the Distribution Date occurring in __________
199_, any amounts in the Pre-Funding Account after giving
effect to any purchase of related Subsequent Mortgage Loans;
minus
(x) the amount of any Subordination Reduction Amount for such
Distribution Date.
"Class A-1 Certificate": 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 and evidencing an interest designated as a "regular interest" in the
REMIC for the purposes of the REMIC Provisions.
"Class A-2 Certificate": Any Certificate designated as a
"Class A-2 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 and evidencing an interest designated as a "regular interest" in the
REMIC for the purposes of the REMIC Provisions.
"Class A-3 Certificate": Any Certificate designated as a
"Class A-3 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 and evidencing an interest designated as a "regular interest" in the
REMIC for the purposes of the REMIC Provisions.
"Class A-4 Certificate": Any Certificate designated as a
"Class A-4 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 and evidencing an interest designated as a "regular interest" in the
REMIC for the purposes of the REMIC Provisions.
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"Class R Certificate": Any one of the Class R Certificates
executed by the Trustee and authenticated by the Certificate Registrar
substantially in the form annexed hereto as Exhibit B-2, subordinate to the
Class A Certificates in right of payment to the extent set forth herein and
evidencing an interest designated as a "residual interest" in the REMIC for
purposes of the REMIC Provisions.
"Class R Certificateholder": A Holder of a Class R
Certificate.
"Closing Date": _________, 199_.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The Eligible Account established and
maintained by the Servicer pursuant to Section 5.03.
"Combined Loan-to-Value Ratio": With respect to any Mortgage
Loan secured by a second lien on the related Mortgaged Property, as of any date,
the fraction, expressed as a percentage, the numerator of which is the sum of
(i) the original principal balance of such Mortgage Loan and (ii) the original
aggregate principal balance of the related Senior Mortgage Loans (if any) at the
date of determination, and the denominator of which is the Appraised Value of
the related Mortgaged Property.
"Commission": The Securities and Exchange Commission.
"Company": NationsBanc Asset Securities, Inc., a Delaware
corporation, and any successor thereto.
"Compensating Interest": As defined in Section 6.09 hereof.
"Curtailment": With respect to a Mortgage 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 not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
"Custodian": As defined in Section 2.02(c).
"Cut-off Date": _________, 199_.
["DCR": Duff & ▇▇▇▇▇▇ Credit Rating Co., or its successor in
interest.]
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the United States Bankruptcy Code,
except such a reduction that constitutes a Deficient Valuation or a permanent
forgiveness of principal.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the United
States Bankruptcy Code.
"Deleted Mortgage Loan": A Mortgage Loan replaced by or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage 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.
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"Depository": The Depository Trust Company, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named. The
nominee of the initial Depository for purposes of registering those Certificates
that are to be book-entry Certificates is Cede & Co. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended.
"Direct Participant": 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 Non-United States Person": A transferee of a
Class R Certificate other than a person that (i) is not a Non-United States
Person or (ii) is a Non-United States Person that holds a Class R Certificate in
connection with the conduct of a trade or business within the United States and
has furnished the transferor and the Trustee with an effective Internal Revenue
Service Form 4224 or (iii) is a Non-United States Person that has delivered to
both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect that the transfer of a Class R Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such transfer of a Class R Certificate will not be
disregarded for federal income tax purposes.
"Disqualified Organization": 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, 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 rural electric
and telephone cooperatives 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 the REMIC 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.
"Distribution Date": The 25th day of any month or if such 25th
day is not a Business Day, the first Business Day immediately following,
commencing on ______________, 199_.
"Due Date": The first day of each calendar month.
"Due Period": With respect to each Distribution Date, the
period beginning on the opening of business on the second day of the calendar
month preceding the calendar month in which such Distribution Date occurs, and
ending at the close of business on the first day of the calendar month in which
such Distribution Date occurs.
"Eligible Account": Either (A) an account or accounts
maintained with an institution (which may include the Trustee, provided such
institution otherwise meets these requirements) 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], [DCR] and [Fitch] and Aa2 or
better by [Moody's] and in the highest short term rating by the Rating Agencies,
and which is (i) a federal savings and loan association duly organized, validly
existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association
(including the Trustee) duly organized, validly existing and in good standing
under the federal banking laws, (iv) a principal subsidiary of a bank holding
company, or (v) approved in writing by the Certificate Insurer and the Rating
Agencies or (B) a trust account or accounts maintained with the corporate trust
department of a federal or state chartered depository institution acceptable to
each Rating Agency and the Certificate Insurer (the Trustee shall be deemed
acceptable, provided that the Trustee otherwise meets these requirements),
having capital and surplus of not less than $50,000,000, acting in its fiduciary
capacity.
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"ERISA": As defined in Section 4.02(m) hereof.
"Event Of Default": One or more of the events described in
Section 7.01 hereof.
"Excess Subordinated Amount": With respect to any Distribution
Date, the difference, if any, between (a) the Subordinated Amount that would
exist on such Distribution Date after taking into account all distributions to
be made on such Distribution Date (exclusive of any reductions thereto
attributable to Subordination Reduction Amounts on such Distribution Date) and
(b) the Required Subordinated Amount for such Distribution Date.
"FDIC": The Federal Deposit Insurance Corporation and any
successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation and any
successor thereto.
"FNMA": ▇▇▇▇▇▇ Mae and any successor thereto.
["Fitch": Fitch Investors Service, L.P., or its successor in
interest.]
"Foreclosure Profits": As to any Distribution Date, (i) Net
Liquidation Proceeds in respect of each Mortgage Loan that became a Liquidated
Mortgage Loan during the month immediately preceding the month of such
Distribution Date minus (ii) the sum of the unpaid principal balance of each
such Liquidated Mortgage Loan plus accrued and unpaid interest at the applicable
Mortgage Interest Rate on the unpaid principal balance thereof from the Due Date
to which interest was last paid by the Mortgagor (or, in the case of a
Liquidated Mortgage Loan that had been an REO Mortgage 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 Mortgage Loan
became a Liquidated Mortgage Loan.
"GAAP": Generally accepted accounting principles.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in a Class A Certificate.
"Initial Capitalized Interest Amount": The amount to be paid
by the Company to the Trustee for deposit into the Capitalized Interest Account
pursuant to Section 6.13(a) on the Closing Date, which amount is $
----------.
"Initial Mortgage Loan": A Mortgage Loan assigned and
transferred to the Trustee on the Closing Date, as listed on the Mortgage Loan
Schedule attached hereto as Exhibit D.
"Initial Specified Subordinated Amount": An amount equal to
___% of the Original Pool Principal Balance.
"Insurance Agreement": The Insurance Agreement dated as of
______, 199_ among the Certificate Insurer, the Company, the Servicer and the
Trustee, as such agreement may be amended or supplemented in accordance with the
provisions thereof.
"Insurance Proceeds: Proceeds paid by any insurer pursuant to
any insurance policy covering a Mortgage Loan to the extent such proceeds are
not applied to the restoration of the related Mortgaged Property or released to
the related Mortgagor in accordance with Accepted Servicing Practices.
"Insurance Proceeds" do not include "Insured Payments."
"Insured Distribution Amount": With respect to any
Distribution Date, the sum of (a) the Class A Interest Distribution Amount with
respect to such Distribution Date and (b) the Subordination Deficit, if any, as
of such Distribution Date.
"Insured Payment": The sum of (i) with respect to each
Distribution Date, the Available Funds Shortfall and (ii) any unpaid Preference
Amount.
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"Liquidated Loan Loss": With respect to any Distribution Date,
the aggregate of the amount of losses with respect to each Mortgage Loan which
became a Liquidated Mortgage Loan during the Due Period preceding such
Distribution Date, equal to (i) the unpaid principal balance of each such
Liquidated Mortgage Loan, plus accrued interest thereon in accordance with the
amortization schedule at the time applicable thereto at the applicable Mortgage
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 Mortgage Loan became a
Liquidated Mortgage Loan, minus (ii) Net Liquidation Proceeds with respect to
such Liquidated Mortgage Loan.
"Liquidated Mortgage Loan": A Mortgage Loan with respect to
which the related Mortgaged Property has been acquired, liquidated or foreclosed
and with respect to which the Servicer determines that all Liquidation Proceeds
which it expects to recover have been recovered.
"Liquidation Expenses": Expenses incurred by the Servicer in
connection with the liquidation of any defaulted Mortgage Loan or property
acquired in respect thereof (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 5.05, 5.06 and 5.12 respecting the related Mortgage Loan and any
unreimbursed expenditures for real property taxes or for property restoration or
preservation of the related Mortgaged Property. Liquidation Expenses shall not
include any previously incurred expenses in respect of an REO Mortgage Loan
which have been netted against related REO Proceeds.
"Liquidation Proceeds": Amounts received by the Servicer
(including Insurance Proceeds) in connection with the liquidation of defaulted
Mortgage Loans or property acquired in respect thereof, whether through
foreclosure, sale or otherwise, including payments in connection with such
Mortgage Loans received from the Mortgagor, other than amounts required to be
paid to the Mortgagor pursuant to the terms of the applicable Mortgage or to be
applied otherwise pursuant to law.
"Loan Repurchase Price": As defined in Section 2.04(b).
"Loan-to-Value Ratio or LTV": With respect to any Mortgage
Loan, the fraction, expressed as a percentage, the numerator of which is the
principal balance of such Mortgage Loan, as of the date of origination of the
Mortgage Loan, divided by the Appraised Value of the related Mortgaged Property.
"Majority Certificateholders": The Holder or Holders of Class
A Certificates evidencing Percentage Interests in excess of 51% in the
aggregate.
"Monthly Payment": As to any Mortgage Loan (including any REO
Mortgage Loan) and any Due Date, the scheduled payment of principal and interest
due thereon for 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": ▇▇▇▇▇'▇ Investors Service, Inc., or its successor
in interest.]
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien or second lien on the Mortgaged Property.
"Mortgage File": The mortgage documents listed in Exhibit C
attached hereto pertaining to a particular Mortgage Loan and any additional
documents required to be added to the Mortgage File pursuant to this Agreement;
provided that whenever the term "Mortgage File" is used to refer to documents
actually received by the Trustee, such term shall not be deemed to include such
additional documents required to be added unless they are actually so added.
"Mortgage Impairment Insurance Policy": As defined in Section
5.07.
"Mortgage Interest Rate": The fixed per annum rate at which
interest accrued on the unpaid principal balance thereof, which rate is the
Mortgage Interest Rate for such Mortgage Loan indicated on the related Mortgage
Loan Schedule.
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"Mortgage Loan": An individual mortgage loan which is assigned
and transferred to the Trustee pursuant to this Agreement and identified on
Exhibit D hereto, together with the rights and obligations of a holder thereof
and payments thereon and proceeds therefrom (other than payments of interest
that accrued on each Mortgage Loan up to and including the Due Date therefor
occurring, with respect to the Mortgage Loans prior to the Cut-off Date), the
Mortgage Loans originally subject to this Agreement being identified on the
Mortgage Loan Schedule. As applicable, Mortgage Loan shall be deemed to refer to
the related REO Property.
"Mortgage Loan Schedule": The lists of the Mortgage Loans
transferred to the Trustee on or before the Closing Date or Subsequent Transfer
Date as part of the Trust Fund and attached hereto as Exhibit D and delivered in
computer readable format, which list shall set forth at a minimum the following
information as to each Mortgage Loan:
(i) the Mortgage Loan identifying number;
(ii) the city, state and zip code of the Mortgaged
Property;
(iii) the type of property;
(iv) the current Monthly Payment as of the Cut-off Date;
(v) the original number of months to maturity;
(vi) the scheduled maturity date;
(vii) the Principal Balance as of the Cut-off Date (with
respect to an Initial Mortgage Loan) or subsequent
Cut-off Date (with respect to a Subsequent Mortgage
Loan);
(viii) the Loan-to-Value Ratio or Combined Loan-to-Value
Ratio at origination;
(ix) the Mortgage Interest Rate as of the Cut-off Date
(with respect to an Initial Mortgage Loan) or
Subsequent Cut-off Date (with respect to a Subsequent
Mortgage Loan);
(x) the Mortgage Interest Rate
(xi) the Appraised Value;
(xii) the stated purpose of the loan at origination;
(xiii) the type of occupancy at origination;
(xiv) the documentation type (as described in the
Underwriting Guidelines);
(xv) the loan classification (as described in the
Underwriting Guidelines);
(xvi) the Servicing Fee with respect to such Mortgage Loan,
expressed as a rate per annum; and
(xvii) whether such Mortgage Loan is secured by a first lien
or second lien.
Such schedule may consist of multiple reports that
collectively set forth all of the information required.
"Mortgage Note": The original, executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, consisting of a fee simple estate in a single parcel of land
improved by a Residential Dwelling.
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"Mortgagor": The obligor on a Mortgage Note.
"Net Foreclosure Profits": As to any Distribution Date, an
amount equal to (i) the aggregate Foreclosure Profits with respect to such
Distribution Date minus (ii) Liquidated Loan Losses with respect to such
Distribution Date.
"Net Liquidation Proceeds": As to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses and net of any
unreimbursed Periodic Advances and unreimbursed Servicing Advances made by the
Servicer. For all purposes of this Agreement, Net Liquidation Proceeds shall be
allocated first to accrued and unpaid interest on the related Mortgage Loan and
then to the unpaid principal balance thereof.
"Net Monthly Excess Cashflow": As of any Distribution Date, an
amount equal to (x) the Available Funds minus (y) the sum of (i) sum of the
Class A Interest Distribution Amount and the amount described in clause (b) of
the definition of Class A Principal Distribution Amount (calculated for this
purpose without regard to any Subordination Increase Amount, Subordination
Reduction Amount or portion thereof included therein) and (ii) the Reimbursement
Amount, if any, for such Distribution Date.
"Net Mortgage Interest Rate": With respect to each Mortgage
Loan at any time of determination, a rate equal to (i) the Mortgage Interest
Rate on such Mortgage Loan minus (ii) the sum of the per annum rates used to
determine the related Servicing Fee and Trustee Fee and the Premium Percentage.
Any regular monthly computation of interest at such rate shall be based upon
annual interest at such rate on the applicable amount divided by twelve.
"Net REO Proceeds": As to any REO Mortgage Loan, REO Proceeds
net of any related expenses of the Servicer.
"Nonrecoverable Advances": With respect to any Mortgage Loan,
(a) any Periodic Advance or Servicing Advance previously made and not reimbursed
from late collections pursuant to Section 5.04(b), or (b) a Periodic Advance or
Servicing Advance proposed to be made in respect of a Mortgage 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 would not be ultimately recoverable pursuant to Sections 5.04
and Section 6.02.
"Non-United States Person": Any Person other than a United
States Person.
"Officer's Certificate": 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 or Assistant Secretaries of the Seller and/or
the Servicer, or the Company, as required by this Agreement.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be counsel for the Seller, 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 (a) the qualification of the Trust Fund as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of counsel who (i) is in
fact independent of the Seller, the Servicer and the Trustee, (ii) does not have
any direct financial interest or any material indirect financial interest in the
Seller or the Servicer or the Trustee or in an Affiliate thereof, (iii) is not
connected with the Seller or the Servicer or the Trustee as an officer,
employee, director or person performing similar functions and (iv) is reasonably
acceptable to the Certificate Insurer.
"Original Pool Principal Balance": The Pool Principal Balance
as of the Cut-off Date, which is $-------------.
"Original Pre-Funded Amount": The amount deposited by the
Company in the Pre-Funding Account on the Closing Date, which amount is
$______________.
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"Original Security Balance": As of the Startup Day and as to
the Class A-1 Certificates, $__________, as to the Class A-2 Certificates,
$__________, as to the Class A-3 Certificates, $__________, and as to the Class
A-4 Certificates, $__________. The Class R Certificates do not have an Original
Security Balance.
"Outstanding Mortgage Loan": As to any Due Date, a Mortgage
Loan (including an REO Mortgage Loan) which was not the subject of a Principal
Prepayment in Full prior to such Due Date, which did not become a Liquidated
Mortgage Loan prior to such Due Date, which was not repurchased by the Seller
prior to such Due Date pursuant to Section 2.04 and which was not repurchased by
an Affiliate of the Seller pursuant to Section 5.18.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"Owner-Occupied Mortgaged Property": A Residential Dwelling as
to which (a) the related Mortgagor represented an intent to occupy as such
Mortgagor's primary, secondary or vacation residence at the origination of the
Mortgage Loan, and (b) the Seller has no actual knowledge that such Residential
Dwelling is not so occupied.
"Percentage Interest": With respect to a Class A Certificate
and any date of determination, the portion evidenced by such Certificate,
expressed as a percentage rounded to four decimal places, equal to a fraction
the numerator of which is the initial Authorized Denomination represented by
such Certificate and the denominator of which is the Original Security Balance
of such Class of Certificate. With respect to a Class R Certificate and any date
of determination, the portion evidenced thereby as stated on the face of such
Certificate.
"Periodic Advance": The aggregate of the advances with respect
to Mortgage Loans and REO Properties required to be made by the Servicer on any
Servicer Remittance Date pursuant to Section 5.21 hereof, the amount of any such
advances being equal to the sum of: (i) with respect to the Mortgage Loans other
than REO Properties as described in clause (ii) below), all Monthly Payments
(net of the related Servicing Fee) on such Mortgage Loans that were delinquent
as of the close of business on the Business Day preceding the related Servicer
Remittance Date, plus (ii) with respect to each REO Property, which REO Property
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
Monthly Payment (net of the related Servicing Fee) for the most recently ended
Due Period for the related Mortgage Loan minus the net income from such REO
Property transferred to the related Certificate Account for such Distribution
Date, minus (iii) the amount of any advance otherwise required for such
Distribution Date pursuant to clauses (i) and (iii) above which the Servicer has
determined to be a Nonrecoverable Advance.
"Permitted Investments": As used herein, Permitted Investments
shall include the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States and any obligation of, or guaranties by,
FHLMC or FNMA (other than senior debt obligations and mortgage
pass-through certificates guaranteed by FHLMC or FNMA) shall be a
Permitted Investment; provided that at the time of such investment,
such investment is acceptable to the Certificate Insurer, but excluding
any of such securities whose terms do not provide for payment of a
fixed dollar amount upon maturity or call for redemption;
(b) federal funds and certificates of deposit, time and demand
deposits and banker's acceptances issued by any bank or trust company
incorporated under the laws of the United States or any state thereof
and subject to supervision and examination by federal or state banking
authorities, provided that at the time of such investment or
contractual commitment providing for such investment the short-term
debt obligations of such bank or trust company at the date of
acquisition thereof have been rated in its highest rating by each
Rating Agency;
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(c) commercial paper (having original maturities of not more
than 180 days) rated in its highest rating by each Rating Agency;
(d) investments in money market funds rated in its highest
rating by each Rating Agency; and
(e) investments approved by the Rating Agencies and the
Certificate Insurer in writing delivered to the Trustee;
provided that each such Permitted Investment shall be a
"permitted investment" within the meaning of Section 860G(a)(5) of the
Code and that no instrument described hereunder shall evidence either
the right to receive (x) only interest with respect to the obligations
underlying such instrument or (y) both principal and interest payments
derived from obligations underlying such instrument and the interest
and principal payments with respect to such instrument provided 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 hereunder may be purchased at a price greater than par.
"Permitted Transferee": Any transferee of a Class R
Certificate other than a Disqualified Non-United States Person or Disqualified
Organization.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": As defined in Section 4.02(m).
"Policy Business Day": A Business Day as defined in the
Certificate Insurance Policy.
"Pool Principal Balance": The sum of the aggregate Principal
Balances of the Mortgage Loans and the Pre-Funded Amount as of any date of
determination.
"Preference Amount": Any amount previously distributed to a
Class A Certificateholder that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Preference Claim": As defined in Section 6.04(f).
"Pre-Funded Amount": With respect to any date of
determination, the amount on deposit in the Pre-Funding Account.
"Pre-Funding Account": The account established and maintained
pursuant to Section 6.12.
"Pre-Funding Period": The period beginning on the Closing Date
and ending on the earlier of the date on which (a) the amount on deposit in the
related Pre-Funding Account is less than $_________ or (b) the close of business
on __________, 199_.
"Premium Amount": Beginning on the third Distribution Date and
on each Distribution Date thereafter, the product of 1/12 of the Premium
Percentage and the aggregate Balance for the Class A Certificates immediately
prior to the related Distribution Date.
"Premium Exhibit": The document attached hereto as Exhibit R.
"Premium Percentage": With respect to any Mortgage Loan, the
rate per annum set forth in the Premium Exhibit.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was the subject during the
related Due Period of a Principal Prepayment in Full or Curtailment, an amount
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equal to (a) 30 days' interest on the Principal Balance of such Mortgage Loan at
a per annum rate equal to the Mortgage Interest Rate minus the rate at which the
Servicing Fee is calculated minus (b) the amount of interest actually remitted
by the Mortgagor in connection with such Principal Prepayment in Full or
Curtailment less the Servicing Fee for such Mortgage Loan in such month.
"Principal Balance": As to any Mortgage Loan and Distribution
Date, the principal balance of such Mortgage Loan as of the Due Date preceding
such date of determination as specified for such Due Date in the amortization
schedule (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) after giving effect to Principal
Prepayments in Full or Curtailments received prior to such Due Date, Deficient
Valuations incurred prior to such Due Date, to any Curtailments applied by the
Servicer in reduction of the unpaid principal balance of such Mortgage Loan as
of such Due Date and to the payment of principal due on such Due Date and
irrespective of any delinquency in payment by the related Mortgagor. The
Principal Balance of a Mortgage Loan which becomes a Liquidated Mortgage Loan
prior to such Due Date shall be zero.
"Principal Prepayment in Full": Any payment or other recovery
of principal on a Mortgage 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.
"Purchase Agreement": The Mortgage Loan Purchase Agreement,
dated as of the date hereof, between the Seller and the Company relating to the
sale of the Mortgage Loans to the Company.
"Principal Remittance Amount": As of any Distribution Date,
the sum, without duplication of the amounts specified in clauses (b)(ii) through
(v), (vii) and (viii) of the definition of Class A Principal Distribution
Amount.
"Qualified Mortgage": "Qualified Mortgage" shall have the
meaning set forth in the definition thereof at Section 860G(a)(3) of the Code
(or any successor statute thereto) (but without regard to the rule in Treasury
Regulation Section 1.860G-2(f)(2) that treats a defective obligation as a
qualified mortgage, or any similar provision).
"Qualified Substitute Mortgage Loan": A mortgage loan or
mortgage loans substituted for a Deleted Mortgage Loan pursuant to Section 2.04
or 3.03 hereof, which (a) has the same or greater interest rate, (b) relates or
relate to a detached one-family residence or to the same type of Residential
Dwelling as the Deleted Mortgage Loan and in each case has or have the same or a
better lien priority as the Deleted Mortgage Loan and has the same occupancy
status or is an Owner Occupied Mortgaged Property, (c) matures or mature no
later than (and not more than one year earlier than) the Deleted Mortgage Loan
(except during the first 90 days after the Cut-off Date), (d) has or have a
Loan-to-Value Ratio or Loan-to-Value Ratios (or Combined Loan-to-Value Ratio or
Combined Loan-to-Value Ratios, with respect to a Second Mortgage Loan) at the
time of such substitution no higher than the Loan-to-Value Ratio (or Combined
Loan-to-Value Ratio, with respect to a Second Mortgage Loan) of the Deleted
Mortgage Loan, (e) 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 and not more than the Principal Balance of the Deleted
Mortgage Loan as of such date, (f) satisfies or satisfy the criteria set forth
from time to time in the definition of "qualified replacement mortgage" in
Section 860G(a)(4) of the Code (or any successor statute thereto) and (g)
complies or comply as of the date of substitution with each representation and
warranty set forth in Sections 3.01 and 3.02 of the Purchase Agreement.
"Rating Agency": [S&P], [DCR], [Fitch] or [▇▇▇▇▇'▇].
"Record Date": With respect to any Distribution Date, the
close of business on the last Business Day of the month immediately preceding
the month of such Distribution Date.
"Released Mortgaged Property Proceeds": As to any Mortgage
Loan, proceeds received by the Master Servicer in connection with (a) a taking
of an entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (b) any release of part of the Mortgaged Property from the lien
of the related Mortgage, whether by partial condemnation, sale or otherwise;
which are not released to the Mortgagor in accordance with applicable law,
Accepted Servicing Practices and this Agreement.
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"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and temporary and final regulations promulgated thereunder and
published rulings, notices and announcements, as the foregoing may be in effect
from time to time.
"Reimbursement Amount": As of any Distribution Date, the sum
of (a)(i) all Insured Payments (as defined in the Certificate Insurance Policy)
previously paid by the Certificate Insurer and in each case not previously
repaid to the Certificate Insurer pursuant to Sections 6.05(b) or 6.05(c) hereof
plus (ii) interest accrued on each such Insured Payment and Preference Payments
not previously repaid calculated at the Class A Pass-Through Rate from the date
such Insured Payment or Preference Amount was made and (b)(i) any amounts then
due and owing to the Certificate Insurer under the Insurance Agreement, as
certified to the Trustee by the Certificate Insurer plus (ii) interest on such
amounts at the Late Payment Rate (as defined in the Insurance Agreement). The
Certificate Insurer shall notify the Trustee and the Company of the amount of
any Reimbursement Amount.
"REO Acquisition": The acquisition of any REO Property
pursuant to Section 5.12.
"REO Disposition": The final sale by the Master Servicer of a
Mortgaged Property acquired by the Master Servicer in foreclosure or by deed in
lieu of foreclosure.
"REO Mortgage Loan": Any Mortgage Loan which is not a
Liquidated Mortgage Loan and as to which the indebtedness evidenced by the
related Mortgage Note is discharged and the related Mortgaged Property is held
as part of the Trust Fund.
"REO Proceeds": Proceeds received in respect of any REO
Mortgage Loan (including, without limitations, proceeds from the rental of the
related Mortgaged Property).
"REO Property": As described in Section 5.12.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Certificate Register under the nominee name of
the Depository.
"Request for Release": A request for release in substantially
the form attached as Exhibit H hereto.
"Required Subordinated Amount": For each Distribution Date,
the amount determined as follows: [describe].
"Residential Dwelling": 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 which is non-mobile.
"Responsible Officer": 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 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 Seller or
the Servicer, the President or any Vice President, Assistant Vice President, or
any Secretary or Assistant Secretary.
["S&P": Standard & Poor's, or its successor in interest.]
"Second Mortgage Loan": Any Mortgage Loan secured by a second
lien on the related Mortgaged Property.
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"Security Balance": With respect to each Class of Class A
Certificates, as determined separately, as of any time of determination, the
related Original Security Balance less any amounts distributed in reduction of
the Security Balance thereof pursuant to Section 6.05 on all prior Distribution
Dates. The Class R Certificates do not have a "Security Balance".
"Seller": ________________, or its successor in interest.
"Senior Mortgage Loan": With respect to any Second Mortgage
Loan, a mortgage loan on the related Mortgaged Property that is senior to the
lien provided by such Second Mortgage Loan.
"Servicer": _______________, a _________ corporation, or any
successor appointed as herein provided.
"Servicer Remittance Amount": With respect to any Servicer
Remittance Date, an amount equal to the sum of (i) all unscheduled collections
of principal and interest on the Mortgage Loans (including Principal Prepayments
in Full and Curtailments, Net REO Proceeds and Net Liquidation Proceeds, if any)
collected by the Servicer during the prior calendar month and all scheduled
Monthly Payments due on the related Due Date and received on or prior to the
Business Day preceding such Servicer Remittance Date, (ii) all Periodic Advances
made by the Servicer with respect to payments due to be received on the Mortgage
Loans on the related Due Date and (iii) any other amounts required to be placed
in the Collection Account by the Servicer pursuant to this Agreement but
excluding the following:
(a) amounts received on particular Mortgage Loans as late
payments of principal or interest and respecting which the Servicer has
previously made an unreimbursed Periodic Advance;
(b) those portions of each payment of interest on a particular
Mortgage Loan which represent the Servicing Fee;
(c) that portion of Liquidation Proceeds and REO Proceeds
which represents any unpaid Servicing Fee;
(d) all income from Permitted Investments that is held in the
Collection Account for the account of the Servicer;
(e) all amounts in respect of late fees, assumption fees,
prepayment fees and similar fees;
(f) certain other amounts which are reimbursable to the
Servicer, as provided in this Agreement; and
(g) Net Foreclosure Profits.
"Servicer Remittance Date": With respect to any Distribution
Date, the 18th of the month in which such Distribution Date occurs, or if such
18th day is not a Business Day, the Business Day preceding such 18th day.
"Servicing Account": The account created and maintained
pursuant to Section 5.09.
"Servicing Advances": All reasonable and customary
"out-of-pocket" costs and expenses relating to a borrower default or delinquency
or other unanticipated event incurred by the Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (a) the
preservation, restoration and protection of the Mortgaged Property including,
without limitation, taxes and insurance costs, (b) any enforcement or judicial
proceedings, including foreclosures, (c) the management and liquidation of the
REO Property, including reasonable fees paid to any independent contractor in
connection therewith, (d) compliance with the obligations under Sections 5.02
(limited solely to the reasonable and customary out-of-pocket expenses of the
subservicer), 5.05, 5.07, 5.09 or 5.10, all of which reasonable and customary
out-of-pocket costs and expenses are reimbursable to the Master Servicer to the
extent provided in Section 5.04(a) and 5.10.
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"Servicing Compensation": The Servicing Fee and other amounts
to which the Servicer is entitled pursuant to Section 5.14.
"Servicing Fee": As to each Mortgage Loan, the annual fee
payable to the Servicer and the related Subservicer, if any, as indicated on the
related Mortgage Loan Schedule. Such fee shall be ___% per annum. Such fee shall
be calculated and payable monthly only from the amounts received in respect of
interest on such Mortgage 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 Mortgage Loan is computed. The Servicing Fee includes any servicing
fees owed or payable to any Subservicer.
"Servicing Officer": Any officer of the Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee and the Certificate Insurer by the Servicer, as such list may from
time to time be amended.
"Startup Day": The day designated as such pursuant to Section
10.01(b) hereof.
"Subordinated Amount": As of any Distribution Date, the
difference, if any, between (a) the Pool Principal Balance as of the close of
business on the last day of the related Due Period and (b) the aggregate
Security Balance of the Class A Certificates as of such Distribution Date (after
taking into account the payment of the Principal Remittance Amount related to
such Distribution Date); provided, however, that such amount shall not be less
than zero.
"Subordination Deficiency Amount": With respect to any
Distribution Date, the amount, if any, by which (a) the Required Subordinated
Amount applicable to such Distribution Date exceeds (b) the Subordinated Amount
applicable to such Distribution Date prior to taking into account the payment of
any related Subordination Increase Amounts on such Distribution Date.
"Subordination Deficit": As of any Distribution Date, the
amount, if any, by which (a) the aggregate Security Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount (other than payments in respect thereof under the
Certificate Insurance Policy)) on such date exceeds (b) the Pool Principal
Balance determined as of the end of the immediately preceding Due Period.
"Subordination Increase Amount": With respect to any
Distribution Date, the lesser of (a) the Subordination Deficiency Amount as of
such Distribution Date (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date (other than clause
(viii) thereof)) and (b) the amount of Net Monthly Excess Cashflow on such
Distribution Date.
"Subordination Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess Subordinated
Amount for such Distribution Date and (b) the Principal Remittance Amount for
the prior Due Period.
"Subsequent Cut-off Date": With respect to those Subsequent
Mortgage Loans which are sold to the Trust Fund pursuant to a Subsequent
Transfer Instrument, the close of business on the day prior to the related
Subsequent Transfer Date.
"Subsequent Mortgage Loan": A Mortgage Loan sold by the
Company to the Trust Fund pursuant to Section 2.08, such Mortgage Loan being
identified on the Mortgage Loan Schedule attached to a Subsequent Transfer
Instrument.
"Subsequent Transfer Date": With respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Mortgage Loans are
sold to the Trust Fund.
"Subsequent Transfer Instrument": Each Subsequent Transfer
Instrument dated as of a Subsequent Transfer Date executed by the Trustee and
the Company substantially in the form of Exhibit N, by which Subsequent Mortgage
Loans are sold to the Trust Fund.
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"Substitution Adjustment": As to any date on which a
substitution occurs pursuant to Sections 2.04 or 3.03, 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
Mortgage Loans as of the date of substitution), are less than the aggregate of
the Principal Balances of the related Deleted Mortgage Loans.
"Tax Matters Person": The Person or Persons appointed pursuant
to Section 10.01(c) from time to time to act as the "tax matters person" (within
the meaning of the REMIC Provisions) of the Trust Fund.
"Tax Return": The federal income tax return on Internal
Revenue Service Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income
Tax Return," including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification as a REMIC
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 in
connection with the Trust Fund.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transfer Affidavit And Agreement": As defined in Section
4.02(j).
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer any
Ownership Interest in a Certificate.
"Trustee": _____________, or its successor in interest, or any
successor trustee appointed as herein provided.
"Trustee Fee": As to any Distribution Date, the fee payable to
the Trustee in respect of its services as Trustee that accrues at a monthly rate
equal to 1/12 of ___% of the sum of the Principal Balance of each Mortgage Loan
and the Pre-Funded Amount as of the immediately preceding Due Date.
"Trustee Remittance Report": As defined in Section 6.07.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the trust created hereby and to be administered hereunder,
consisting of: (a) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto and all collections
thereon and proceeds thereof after the Cut-off Date, (b) such assets as from
time to time are identified as deposited in the Certificate Accounts (including
the Special Deposit), (c) such assets as from time to time are identified as REO
Property and collections thereon and proceeds thereof, assets that are deposited
in the Accounts, including amounts on deposit in the Accounts and invested in
Permitted Investments, (d) the Trustee's rights with respect to the Mortgage
Loans under all insurance policies required to be maintained pursuant to this
Agreement (including the Certificate Insurance Policy) and any Insurance
Proceeds (and any proceeds of the Certificate Insurance Policy), (e) Liquidation
Proceeds, (f) Released Mortgaged Property Proceeds, (g) the representations and
warranties of the Seller pursuant to the Purchase Agreement and (h) amounts on
deposit in the Capitalized Interest Account and the Pre-Funding Accounts.
"UCC": The Uniform Commercial Code in effect in the applicable
jurisdiction.
"UCC Financing Statement": A financing statement executed and
filed pursuant to the UCC.
"Underwriting Guidelines": The underwriting guidelines of the
Seller.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate whose income is subject to United States federal income tax regardless of
its source, or a trust if a court
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within the United States is able to exercise primary jurisdiction over the
administration of such trust and one or more United States Persons have the
power to control all substantial decisions of such trust.
"Unpaid REO Amortization": As to any REO Mortgage Loan and any
month, the aggregate of the installments of principal and accrued interest
(adjusted to the related Net Mortgage Interest Rate) deemed to be due in such
month and in any prior months that remain unpaid, calculated in accordance with
Section 5.12.
Section 1.02 PROVISIONS OF GENERAL APPLICATION. (a) All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
(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 (other than with respect to
the Mortgage Loans, or as otherwise specifically set forth herein) provided for
herein shall be made on the basis of a 360-day year consisting of twelve 30-day
months. All calculations of interest with respect to any Mortgage Loan provided
for herein shall be made in accordance with the terms of the related Mortgage
Note and Mortgage.
(f) Any Mortgage 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 Mortgage 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 Mortgage Loan on which interest accrues.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 CONVEYANCE OF MORTGAGE LOANS; SPECIAL DEPOSIT;
PRIORITY AND SUBORDINATION OF OWNERSHIP INTERESTS. (a) The Company does hereby
sell, transfer, assign, set over and convey to the Trustee without recourse but
subject to the provisions in this Section 2.01 and the other terms and
provisions of this Agreement, all of the right, title and interest of the
Company in and to the Mortgage Loans (other than interest due thereon before the
Cut-off Date), and all other assets included or to be included in the Trust Fund
for the benefit of the Certificateholders and the Certificate Insurer. In
connection with such transfer and assignment, and pursuant to Section ____ of
the Purchase Agreement, the Company does hereby also irrevocably transfer,
assign, set over and otherwise convey to the Trustee all of its rights under the
Purchase Agreement including, without limitation, its right to exercise the
remedies created by Sections ____ and ____ of the Purchase Agreement for
breaches of representations and warranties, agreements and covenants of the
Seller contained in Sections ____ and ____ of the Purchase Agreement.
(b) The rights of the Certificateholders to receive payments
with respect to the Mortgage Loans in respect of the Certificates, and all
ownership interests of the Certificateholders in such payments, 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
Certificateholders to receive payments in respect of the Class A Certificates
and to the Certificate Insurer's rights to be reimbursed for Insured Payments
together with interest thereon at the rate specified herein or in the Insurance
Agreement. In accordance with the foregoing, the ownership interest of the Class
R Certificateholders in amounts deposited in the Certificate Account from time
to time shall not vest unless and until such amounts are distributed in respect
of the Class R Certificates in accordance with the terms of this Agreement.
(c) It is intended that the conveyance of the Mortgage Loans
by the Company to the Trustee as provided in this Section be, and be construed
as, a sale of the Mortgage Loans by the Company to the Trustee for the benefit
of the Certificateholders. It is, further, not intended that such conveyance be
deemed a pledge of the Mortgage Loans by the Company to the Trustee to secure a
debt or other obligation of the Company. However, in the event that the Mortgage
Loans are held to be property of the Company, or if for any reason this
Agreement is held or deemed to create a security interest in the Mortgage Loans,
then it is intended that, (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction; (b) the conveyance provided for in this Section shall be deemed to
be (1) a grant by the Company to the Trustee of a security interest in all of
the Company's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to (A) the Mortgage
Loans, including the Mortgage Notes, the Mortgages, any related insurance
policies and all other documents in the related Mortgage Files, (B) all amounts
payable to the holders of the Mortgage Loans in accordance with the terms
thereof and (C) all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including
without limitation all amounts from time to time held or invested in the
Certificate Account or the Collection Account, whether in the form of cash,
instruments, securities or other property and (2) an assignment by the Company
to the Trustee of any security interest in any and all of the Seller's right
(including the power to convey title thereto), title and interest, whether now
owned or hereafter acquired, in and to the property described in the foregoing
clauses (1)(A) through (C) granted by the Seller to the Company pursuant to the
Purchase Agreement; (c) the possession by the Trustee or its agent of Mortgage
Notes and such other items of property as constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" or possession by a purchaser or a person designated by such
secured party, for purposes of perfecting the security interest pursuant to the
New York Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction (including, without limitation, Sections 9-305, 8-313 or
8-321 thereof); and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law. The
Company and, at the Company's direction, the Seller and the Trustee shall, to
the extent consistent with this Agreement, take such reasonable actions as may
be necessary to ensure that, if this
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Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Agreement.
Section 2.02 POSSESSION OF MORTGAGE FILES; ACCESS TO MORTGAGE
FILES. (a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the Mortgage File related to each Initial
Mortgage Loan is vested in the Trustee for the benefit of the Certificateholders
and the Certificate Insurer.
(b) Pursuant to Section ____ of the Purchase Agreement, the
Company has delivered or caused to be delivered the Mortgage File related to
each Initial Mortgage Loan to the Trustee.
(c) The Trustee may enter into a custodial agreement pursuant
to which the Trustee will appoint a custodian (a "Custodian") to hold the
Mortgage Files in trust for the benefit of all present and future
Certificateholders and the Certificate Insurer; provided, however, that the
custodian so appointed shall in no event be the Company or the Servicer or any
Person known to a Responsible Officer of the Trustee to be an Affiliate of the
Company or the Servicer. The Trustee hereby appoints ___________________ as the
initial Custodian.
(d) The Custodian shall afford the Company, the Certificate
Insurer and the Servicer reasonable access to all records and documentation
regarding the Mortgage 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 Custodian.
Section 2.03 DELIVERY OF MORTGAGE LOAN DOCUMENTS AND
CERTIFICATE INSURANCE POLICY. (a) In connection with each conveyance pursuant to
Section 2.01 hereof, the Company has delivered or does hereby agree to deliver
or cause to be delivered to the Trustee on or before the Closing Date, the
Certificate Insurance Policy, the Mortgage Loan Schedule and each of the
following documents for each Mortgage Loan sold by the Seller to the Company and
sold by the Company to the Trust Fund:
(i) The original Mortgage Note bearing all intervening
endorsements showing a complete chain of endorsements from the
originator of such Mortgage Loan to the Seller, endorsed by the Seller
without recourse in the following form: "Pay to the order of , without
recourse" and signed in the name of the Seller by an authorized
officer;
(ii) The original Mortgage with evidence of recording
indicated thereon;
(iii) An original assignment of the original Mortgage, in
suitable form for recordation in the jurisdiction in which the related
Mortgaged Property is located, such assignment to be in blank and
signed in the name of the Seller by an authorized officer;
(iv) The originals of all intervening assignments of the
Mortgage (with evidence of recording thereon) showing a complete chain
of assignments from the originator of such Mortgage Loan to the Seller;
(v) Any assumption, modification (with evidence of
recording thereon), consolidation or extension agreements;
(vi) The original policy of title insurance (or a commitment
for title insurance, if the policy is being held by the title insurance
company pending recordation of the Mortgage); and
(vii) The certificate of primary mortgage guaranty
insurance, if any, issued with respect to such Mortgage Loan;
PROVIDED, 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 Seller in time to permit their
delivery hereunder at the time of such transfer, in lieu of delivering such
original documents, the Company shall deliver to the Trustee a true copy thereof
with a certification by the Seller on the face of such copy
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substantially as follows: "certified true and correct copy of original which has
been transmitted for recordation". The Seller will deliver such original
documents, together with any related policy of title insurance not previously
delivered, on behalf of the Company to the Trustee promptly after they are
received, but in any event no later than 120 days after the Closing Date. The
Company agrees, at its own expense, to record (or to provide the Trustee with
evidence of recordation thereof) each assignment referred to in clause (iii)
above promptly after the Closing Date in the appropriate public office for real
property records, provided that such assignments are redelivered by the Trustee
to the Seller upon the Seller's written request and at the Seller's expense,
unless the Seller (at its expense) furnishes to the Trustee, the Certificate
Insurer and the Rating Agencies an unqualified Opinion of Counsel reasonably
acceptable to the Trustee to the effect that recordation of such assignment is
not necessary under applicable state law to preserve the Trustee's interest in
the related Mortgage Loan against the claim of any subsequent transferee of such
Mortgage Loan or any successor to, or creditor of, the Seller.
Within a period of 14 days from the Closing Date, the Trustee
shall complete the endorsement of each Mortgage Note such that the final
endorsement appears in the following form:
"Pay to the order of ___________ as Trustee under that certain
Pooling and Servicing Agreement dated as of ________, 199_,
for NationsBanc Asset Securities, Inc., Asset Backed
Certificates, Series 199_-_, without recourse."
Within a period of 14 days from the Closing Date, the Trustee
shall also complete the endorsement of each Assignment of Mortgage and
Assignment of Leases, if any, such that the final Assignment of Mortgage appears
in the following form:
__________________, as Trustee under that certain Pooling and
Servicing Agreement dated as of _______, 199_, for
_______________, NationsBanc Asset Securities, Inc., Asset
Backed Certificates, Series 199_-_."
(b) In the event that any such original document is required
pursuant to the terms of this Section 2.03 to be a part of a Mortgage File, such
document shall be delivered promptly by the Company 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
Mortgage Loans or the Mortgage Files.
Section 2.04 ACCEPTANCE BY TRUSTEE OF THE TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE. (a) The Trustee agrees to execute and
deliver to the Company, the Certificate Insurer, the Servicer and the Seller on
or prior to the Closing Date an acknowledgment of receipt of the Certificate
Insurance Policy and, with respect to each Mortgage Loan, on or prior to the
Closing Date, an acknowledgment of receipt of the original Mortgage Note (with
any exceptions noted), in the form attached as Exhibit E 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. The Trustee agrees, for the benefit of the
Certificateholders and the Certificate Insurer, to review (or cause to be
reviewed) each Mortgage File within 45 Business Days after the Closing Date
(with respect to the Mortgage Loans), and to deliver to the Seller, the
Servicer, the Company and the Certificate Insurer a certification in the form
attached hereto as Exhibit F to the effect that, as to each Mortgage Loan listed
in the related Mortgage Loan Schedule (other than any Mortgage Loan paid in full
or any Mortgage Loan specifically identified in such certification as not
covered by such certification), (i) all documents required to be delivered to it
pursuant to Section 2.03 are in its possession, (ii) each such document has been
reviewed by it 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 Mortgagor), appears regular on its face
and relates to such Mortgage Loan, and (iii) based on its examination and only
as to the foregoing documents, the information set forth on the Mortgage Loan
Schedule as to the information set forth in (i), (ii), (v), (vi), (x), (xi),
(xiii), (xiv), (xv), (xx) and (xxii) of the definition of "Mortgage Loan
Schedule" set forth herein accurately reflects the information set forth in the
Mortgage File delivered on such date. The Trustee makes no representations as to
and shall not be responsible to verify (i) the validity, legality,
enforceability, sufficiency, due authorization, recordability or genuineness of
any of the documents contained in each Mortgage File or of any of the Mortgage
Loans or (ii) the collectability, insurability, effectiveness or suitability of
any such Mortgage Loan.
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By _________, 199_, the Trustee shall deliver (or cause to be
delivered) to the Servicer, the Seller, the Company and the Certificate Insurer
a final certification in the form attached hereto as Exhibit G to the effect
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
such certification as not covered by such certification), (i) all documents
required to be delivered to it pursuant to Section 2.03 are in its possession,
(ii) each such document has been reviewed by it 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
Mortgagor), appears regular on its face and relates to such Mortgage Loan, and
(iii) based on its examination and only as to the foregoing documents, the
information set forth in (i), (ii), (v), (vi), (x), (xi), (xiii), (xiv), (xv),
(xx) and (xxii) of the definition of "Mortgage Loan Schedule" set forth herein
accurately reflects the information set forth in the Mortgage File delivered on
such date.
(b) If the Certificate Insurer or the Trustee during the
process of reviewing the Mortgage Files finds any document constituting a part
of a Mortgage File which is not executed, has not been received, is unrelated to
the Mortgage Loan identified in the related Mortgage Loan Schedule, or does not
conform to the requirements of Section 2.03 or the description thereof as set
forth in the related Mortgage Loan Schedule, the Trustee or the Certificate
Insurer, as applicable, shall promptly so notify the Servicer, the Seller, the
Certificate Insurer and the Trustee. In performing any such review, the Trustee
may conclusively rely on the Seller 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 Mortgage Files is limited solely to confirming that the
documents listed in Section 2.03 have been executed and received and relate to
the Mortgage Files identified in the related Mortgage Loan Schedule and such
documents conform to the standard set forth in clause (ii) of the paragraph
directly above. The Trustee shall request that the Seller cure any such defect
within 60 days from the date on which the Seller was notified of such defect,
and if the Seller does not cure such defect in all material respects during such
period, request that the Seller (i) substitute in lieu of such Mortgage Loan a
Qualified Substitute Mortgage Loan in the manner and subject to the conditions
set forth in Section 3.03 or (ii) purchase such Mortgage Loan on the next
succeeding Servicer Remittance Date (but not later than 90 days after the
discovery of such defect) at a purchase price equal to the actual stated
principal balance of such Mortgage Loan as of the date of purchase, plus all
accrued and unpaid interest on such principal balance computed at the Mortgage
Interest Rate, plus the amount of any unpaid Servicing Fees, unreimbursed
Periodic Advances and unreimbursed Servicing Advances made by the Servicer with
respect to such Mortgage Loan, which purchase price shall be deposited in the
Collection Account on the same Business Day, after deducting therefrom any
amounts received in respect of such repurchased Mortgage 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 Mortgage Loan
(the "Loan Repurchase Price"). It is understood and agreed that the obligation
of the Seller to so cure or purchase any Mortgage Loan as to which a material
defect in or omission of a constituent document exists shall constitute the sole
remedy respecting such defect or omission available to Certificateholders or the
Trustee on behalf of Certificateholders. In addition, it is understood and
agreed that the Company has assigned to the Trustee all of its rights under the
Purchase Agreement and the right to enforce any remedy against the Seller as
provided in Section 2.05 of the Purchase Agreement. For purposes of calculating
the amount the Servicer is required to remit on the Servicer Remittance Date
following such repurchase or substitution, any Loan Repurchase Price or
Substitution Adjustment that is paid and deposited in the related Collection
Account as provided above shall be deemed to have been deposited in the related
Collection Account in the Due Period preceding such Servicer Remittance Date.
(c) 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 Mortgage File, and the deposit of the
amounts described above in the Collection Account (which certification shall be
in the form of Exhibit H hereto), the Trustee shall release to the Servicer for
release to the Seller the related Mortgage File and shall execute, without
recourse, and deliver such instruments of transfer furnished by the Seller as
may be necessary to transfer such Mortgage Loan to the Seller. The Trustee shall
notify the Certificate Insurer if the Seller fails to repurchase or substitute
for a Mortgage Loan in accordance with the foregoing.
Section 2.05 EXECUTION OF CERTIFICATES. The Trustee
acknowledges the assignment to it of the Mortgage Loans and the delivery of the
Mortgage Files relating thereto to it and, concurrently with such delivery, has
executed, authenticated and delivered to or upon the order of the Company, in
exchange for the Mortgage Loans, the Mortgage Files and the other assets
included in the definition of Trust Fund, Certificates duly authenticated by the
Trustee in Authorized Denominations evidencing the entire ownership of the Trust
Fund.
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Section 2.06 FURTHER ACTION EVIDENCING ASSIGNMENTS. (a) The
Company agrees that, from time to time, at the Seller's expense, the Company
shall cause the Seller 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 Company 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) The Company hereby grants to the Servicer and the Trustee
powers of attorney to execute all documents on its behalf under this Agreement
and the Purchase Agreement as may be necessary or desirable to effectuate the
foregoing.
Section 2.07[RESERVED].
Section 2.08CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS.
(a) Subject to the conditions set forth in paragraph (b) below
in consideration of the Trustee's delivery on the related Subsequent Transfer
Dates to or upon the order of the Company of all or a portion of the balance of
funds in the Pre-Funding Account, the Company shall on any Subsequent Transfer
Date sell, transfer, assign, set over and convey without recourse to the Trust
Fund but subject to the other terms and provisions of this Agreement all of the
right, title and interest of the Company in and to (i) the Subsequent Mortgage
Loans identified on the Mortgage Loan Schedule attached to the related
Subsequent Transfer Instrument delivered by the Company on such Subsequent
Transfer Date, (ii) principal due and interest accruing on the Subsequent
Mortgage Loans after the related Subsequent Cut-off Date and (iii) all items
with respect to such Subsequent Mortgage Loans to be delivered pursuant to
Section 2.03 above and the other items in the related Mortgage Files; provided,
however, that the Company reserves and retains all right, title and interest in
and to principal received and interest accruing on the Subsequent Mortgage Loans
prior to the related Subsequent Cut-off Date. The transfer to the Trustee by the
Company of the Subsequent Mortgage Loans identified on the Mortgage Loan
Schedule shall be absolute and is intended by the Company, the Servicer, the
Trustee and the Certificateholders to constitute and to be treated as a sale of
the Subsequent Mortgage Loans by the Company to the Trust Fund. The related
Mortgage File for each Subsequent Mortgage Loan shall be delivered to the
Trustee two Business Days prior to the Subsequent Transfer Date.
The purchase price paid by the Trustee from amounts released
from the Pre-Funding Account shall be one-hundred percent (100%) of the
aggregate principal balances of the Subsequent Mortgage Loans so transferred.
This Agreement shall constitute a fixed-price purchase contract in accordance
with Section 860G(a)(3)(A)(ii) of the Code.
(b) The Company shall transfer to the Trustee the Subsequent
Mortgage Loans and the other property and rights related thereto described in
Section 2.08 (a) above, and the Trustee shall release funds from the related
Pre-Funding Account, only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Company shall have provided the Trustee and the
Certificate Insurer with a timely Addition Notice and shall have
provided any information reasonably requested by the Trustee or the
Certificate Insurer with respect to the Subsequent Mortgage Loans;
(ii) the Company shall have delivered to the Trustee a duly
executed Subsequent Transfer Instrument, which shall include a Mortgage
Loan Schedule, listing the Subsequent Mortgage Loans;
(iii) as of each Subsequent Transfer Date, the Company shall
not be insolvent nor shall it have been made insolvent by such transfer
nor shall it be aware of any pending insolvency;
(iv) such sale and transfer shall not result in a material
adverse tax consequence to the Trust Fund or the Certificateholders;
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(v) the Pre-Funding Period shall not have terminated;
(vi) the Company shall have delivered to the Trustee an
Officer's Certificate, substantially in the form of Exhibit N,
confirming the satisfaction of each condition precedent and
representations specified in this Section 2.08(b) and Section 2.08(c)
following and in the related Subsequent Transfer Instrument;
(vii) the Certificate Insurer shall have delivered to the
Trustee an Officer's Certificate confirming that the Subsequent
Mortgage Loans conform to the representations and warranties of Section
5.07 of the Insurance Agreement;
(viii) the Company shall have delivered to the Trustee
Opinions of Counsel addressed to the Certificate Insurer, the Rating
Agencies and the Trustee with respect to the transfer of the Subsequent
Mortgage Loans substantially in the form of the Opinions of Counsel
delivered to the Certificate Insurer and the Trustee on the Closing
Date regarding certain bankruptcy, corporate and tax matters; and
(ix) the Trustee shall have delivered to the Certificate
Insurer and the Company an Opinion of Counsel addressed to the Company,
the Rating Agencies and the Certificate Insurer with respect to the
Subsequent Transfer Instrument substantially in the form of the Opinion
of Counsel delivered to the Certificate Insurer and the Company on the
Closing Date regarding certain corporate matters relating to the
Trustee.
(c) The obligation of the Trust Fund to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
representations and warranties of the Company with respect to such Subsequent
Mortgage Loan being satisfied: (i) such Subsequent Mortgage Loan may not be 30
or more days contractually delinquent as of the related Subsequent Cut-off Date;
(ii) the stated term to maturity of such Subsequent Mortgage Loan will not
exceed 360 months; (iii) such Subsequent Mortgage Loan may not provide for
negative amortization; (iv) such Subsequent Mortgage Loan will be underwritten
in accordance with the Underwriting Guidelines; (v) such Subsequent Mortgage
Loan will not have a Loan-to-Value Ratio (or Combined Loan-to-Value Ratio in the
case of second lien Mortgage Loans) greater than 90%; (vi) such Subsequent
Mortgage Loans will have as of the end of the Pre-Funding Period, a weighted
average term since origination not in excess of six months; (vii) no such
Subsequent Mortgage Loan shall have a rate less than ___%. In addition,
following the purchase of any Subsequent Mortgage Loans by the Trust Fund, the
Mortgage Loans (including the related Subsequent Mortgage Loans) as of the end
of the related Pre-Funding Period will (a) have a weighted average original term
to stated maturity of not more than 360 months; (b) have a weighted average
Loan-to-Value Ratio (or weighted average Combined Loan-to-Value Ratio in the
case of second lien Mortgage Loans) of not more than ____%, each by aggregate
principal balance of the related Mortgage Loans; (c) have no Mortgage Loan with
a principal balance in excess of $______; and (d) not have a concentration of
second lien Mortgage Loans in excess of ____%, by aggregate principal balance of
the related Mortgage Loans. In the sole discretion of the Certificate Insurer,
Subsequent Mortgage Loans with characteristics varying from those set forth
above may be purchased by the Trust Fund; provided, however, that the addition
of such Mortgage Loans will not materially affect the aggregate characteristics
of the Mortgage Loans.
(d) Within five Business Days after the end of the Pre-Funding
Period, the Company shall deliver to each Rating Agency a copy of the updated
Mortgage Loan Schedule including the Subsequent Mortgage Loans in electronic
format.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS OF THE SERVICER. The Servicer
hereby represents and warrants to the Trustee, the Company, the Certificate
Insurer and the Certificateholders as of the Closing Date:
(a) The Servicer is a ________ corporation duly organized,
validly existing and in good standing under the laws of the state of
its incorporation and is in compliance with the laws of each state in
which any Mortgaged Property is located to the extent necessary to
enable it to perform its obligations under the terms of this Agreement;
the Servicer has the full corporate power and authority to execute and
deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement by the Servicer
and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid,
binding and enforceable obligation of the Servicer; and all requisite
corporate action has been taken by the Servicer to make this Agreement
valid and binding upon the Servicer in accordance with its terms;
(b) Neither the execution and delivery of this Agreement, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the
terms, conditions or provisions of the Servicer's charter or by-laws or
any legal restriction or any agreement or instrument to which the
Servicer is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment
or decree to which the Servicer or its property is subject, or impair
the ability of the Trustee (or the Servicer as the agent of the
Trustee) to realize on the Mortgage Loans, or impair the value of the
Mortgage Loans;
(c) The Servicer is an approved seller/servicer of
conventional residential mortgage loans for FNMA and FHLMC;
(d) There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Servicer, threatened against the
Servicer which, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations,
financial condition, properties or assets of the Servicer, or in any
material impairment of the right or ability of the Servicer to carry on
its business substantially as now conducted, or of any action taken or
to be taken in connection with the obligations of the Servicer
contemplated herein, or which would materially impair the ability of
the Servicer to perform under the terms of this Agreement;
(e) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Servicer of or compliance by the Servicer with
this Agreement or the Mortgage Loans or the consummation of the
transactions contemplated by this Agreement, or if required, such
approval has been obtained prior to the Closing Date; and
(f) Neither this Agreement nor any statement, report or other
document furnished by the Servicer pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any
untrue statement of material fact regarding the Servicer or omits to
state a material fact necessary to make the statements regarding the
Servicer contained herein or therein not misleading.
It is understood and agreed that the representations and
warranties set forth in this Section 3.01 shall survive the delivery of the
respective Mortgage Files to the Trustee or to a custodian, as the case may be,
and inure to the benefit of the Trustee, the Certificateholders and the
Certificate Insurer.
Section 3.02 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY. The Company hereby represents, warrants and covenants to the Trustee,
the Certificateholders and the Certificate Insurer that as of the date of this
Agreement or as of such date specifically provided herein:
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(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Company has the corporate power and authority to
convey the Mortgage 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 Company, 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 Company,
enforceable against the Company 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 Company with this Agreement or the consummation by
the Company of any of the transactions contemplated hereby, except as
have been made 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, (i) 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 (A) the charter or
bylaws of the Company, or (B) of any term, condition or provision of
any material indenture, deed of trust, contract or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which it or any of its subsidiaries is bound; (ii) results or
will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Company of any court or
governmental authority having jurisdiction over the Company or its
subsidiaries; or (iii) results in the creation or imposition of any
lien, charge or encumbrance which would have a material adverse effect
upon the Mortgage Loans or any documents or instruments evidencing or
securing the Mortgage Loans; (f) There are no actions, suits or
proceedings before or against or investigations of, the Company
pending, or to the knowledge of the Company, threatened, before any
court, administrative agency or other tribunal, and no notice of any
such action, which, in the Company's reasonable judgment, might
materially and adversely affect the performance by the Company of its
obligations under this Agreement, or the validity or enforceability of
this Agreement; and
(g) The Company 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 3.02 shall survive delivery
of the respective Mortgage Files to the Trustee or to a custodian, as the case
may be, and shall inure to the benefit of the Trustee, the Certificateholders
and the Certificate Insurer.
Section 3.03 PURCHASE AND SUBSTITUTION. (a) It is understood
and agreed that the representations and warranties set forth in Sections ____
and ____ of the Purchase Agreement shall survive delivery of the Certificates to
the Certificateholders. Pursuant to the Purchase Agreement, with respect to any
representation or warranty contained in Sections ____ and ____ of the Purchase
Agreement that is made to the best of the Seller'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 Mortgage Loan, then notwithstanding the
Seller'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 the Seller, the
Servicer, the Trustee or the Certificate Insurer of a breach of any of such
representations and warranties which materially and adversely affects the value
of the Mortgage Loans or the interest of the
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Certificateholders or the Certificate Insurer, or which materially and adversely
affects the interests of the Certificate Insurer or the Certificateholders in
the related Mortgage Loan in the case of a representation and warranty relating
to a particular Mortgage Loan (notwithstanding that such representation and
warranty was made to the Seller's best knowledge), the party discovering such
breach shall give prompt written notice to the others. Subject to the last
paragraph of this Section 3.03, within 60 days of the earlier of its discovery
or its receipt of notice of any breach of a representation or warranty, pursuant
to the Purchase Agreement, the Seller shall be required to (a) promptly cure
such breach in all material respects, or (b) purchase such Mortgage Loan on the
next succeeding Servicer Remittance Date, in the manner and at the price
specified in Section 2.04(b), or (c) remove such Mortgage Loan from the Trust
Fund (in which case it shall become a Deleted Mortgage Loan) and substitute one
or more Qualified Substitute Mortgage Loans; provided, that, such substitution
is effected not later than the date which is two years after the Startup Day or
at such later date, if the Trustee and the Certificate Insurer receive an
Opinion of Counsel to the effect set forth below in this Section. Pursuant to
the Purchase Agreement, any such substitution shall be accompanied by payment by
the Seller of the Substitution Adjustment, if any, to be deposited in the
Collection Account.
(b) As to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Seller shall be
required pursuant to the Purchase Agreement to effect such substitution by
delivering to the Trustee a certification in the form attached hereto as Exhibit
H, executed by a Servicing Officer and the documents described in Sections
2.03(a)(i)-(vi) for such Qualified Substitute Mortgage Loan or Loans.
(c) The Servicer shall deposit in the Collection Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loans on or before the date of
substitution will be retained by the Seller. The Trust Fund will own all
payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. The Servicer
shall give written notice to the Trustee and the Certificate Insurer that such
substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan. Upon
such substitution, such Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects.
(d) It is understood and agreed that the obligations of the
Seller set forth in Sections ____ and ____ of the Purchase Agreement to cure,
purchase or substitute for a defective Mortgage Loan as provided in Sections
____ and ____ constitute the sole remedies of the Trustee, the Certificate
Insurer and the Certificateholders respecting a breach of the representations
and warranties of the Seller set forth in Sections ____ and ____ of the Purchase
Agreement. In addition, it is understood and agreed that the Company has
assigned to the Trustee all of its rights under the Purchase Agreement and the
right to enforce any remedy against the Seller as provided in Section 3.04 of
the Purchase Agreement. The Trustee shall give prompt written notice to the
Certificate Insurer and the Rating Agencies of any repurchase or substitution
made pursuant to this Section 3.03 or Section 2.04(b).
(e) Upon discovery by the Servicer, the Trustee, the
Certificate Insurer or any Certificateholder that any Mortgage Loan does not
constitute a Qualified Mortgage, the party discovering such fact shall promptly
(and in any event within five days of the discovery) give written notice thereof
to the other parties. In connection therewith, pursuant to the Purchase
Agreement, the Seller shall be required to repurchase or substitute a Qualified
Substitute Mortgage Loan for the affected Mortgage Loan within 90 days of the
earlier of such discovery by any of the foregoing parties, or the Trustee's or
the Seller's receipt of notice, in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section ____ or ____ of
the Purchase Agreement. The Trustee shall reconvey to the Seller the Mortgage
Loan to be released pursuant hereto in the same manner, and on the same terms
and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section ____ or ____ of the Purchase
Agreement.
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ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES. The Certificates shall be
substantially in the forms annexed hereto as Exhibits B-1 and B-2. The
Certificates shall be issued in Authorized Denominations only. 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. Certificates bearing the signatures of individuals who
were at the time of the execution of the Certificates 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.
Section 4.02 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 Certificates and transfers of
Certificates as herein provided. The Certificate Insurer shall be entitled to
inspect and verify the Certificate Register and the records of the Trustee
relating to the Certificates during normal business hours upon reasonable
notice.
(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 Fund 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 thereof or his attorney duly authorized in writing.
(d) No service charge shall be made to a 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 transfer or
exchange shall be an expense of the Trust Fund.
(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. Each Class of Class A Certificates shall, except as otherwise
provided in the next paragraph, be initially issued in the form of a single
fully registered Class A Certificate of such Class with a denomination equal to
the Original Security Balance of 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 Company 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 Company, the Seller, 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 Certificates from time to time as a Depository. Without
limiting the immediately preceding sentence, the Company, the Seller, the
Servicer, the Trustee and the Certificate Insurer shall have no responsibility
or obligation with respect to (i) the accuracy of the records of the Depository,
Cede & Co., or any Direct or Indirect Participant with respect to any Ownership
Interest, (ii) 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 Certificates or (iii) 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 Certificates. No Person
other than a Certificateholder shall receive a certificate evidencing such Class
A 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.
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(f) In the event that (i) the Depository or the Company
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 Certificates and the Company or the Depository is unable
to locate a qualified successor or (ii) the Company at its sole option elects to
terminate the book-entry system through the Depository, the Class A 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 Company may determine that the Class A 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 Company, or such
depository's agent or designee but, if the Company does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names Certificateholders transferring Class A
Certificates shall designate, in accordance with the provisions hereof;
provided, however, that any such reregistration shall be at the expense of the
Company.
(g) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Class A Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates as the case may be and all notices with
respect to such Class A Certificates as the case may be shall be made and given,
respectively, in the manner provided in the Representation Letter.
(h) Except as provided in Section 4.02(i), no transfer, sale,
pledge or other disposition of a Class R Certificate shall be made unless such
transfer, sale, pledge or other disposition is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), and any
applicable state securities laws or is made in accordance with said Act and
laws. In the event that a transfer of a Class R Certificate is to be made under
this Section 4.02(h), (i) the Company may direct the Trustee to require an
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Trustee and the Company that such transfer shall be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from said
Act and laws or is being made pursuant to said Act and laws, which Opinion of
Counsel shall not be an expense of the Trustee, the Company or the Servicer,
provided that such Opinion of Counsel will not be required in connection with
the initial transfer of any such Certificate by the Company or any affiliate
thereof, to a non-affiliate of the Company and (ii) the Trustee shall require
the transferee to execute a representation letter, substantially in the form of
Exhibit O hereto, and the Trustee shall require the transferor to execute a
representation letter, substantially in the form of Exhibit P hereto, each
acceptable to and in form and substance satisfactory to the Company and the
Trustee certifying to the Company and the Trustee the facts surrounding such
transfer, which representation letters shall not be an expense of the Trustee,
the Company or the Servicer, provided that such representation letter will not
be required in connection with any transfer of any such Certificate by the
Company to an affiliate of the Company. Any such Certificateholder desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee, the
Company and the Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such applicable federal and
state laws.
(i) Transfers of Certificates may be made in accordance with
this Section 4.02(i) if the prospective transferee of a Certificate provides the
Trustee and the Company with an investment letter substantially in the form of
Exhibit Q attached hereto, which investment letter shall not be an expense of
the Trustee, the Company or the Servicer, and which investment letter states
that, among other things, such transferee is a "qualified institutional buyer"
as defined under Rule 144A. Such transfers shall be deemed to have complied with
the requirements of Section 4.02(h) hereof; provided, however, that no Transfer
of any of the Certificates may be made pursuant to this Section 4.02(i) by the
Company. Any such Certificateholder desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Company and the Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such applicable federal and state laws.
(j) 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 Company or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (8)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in a Class R Certificate are expressly subject
to the following provisions:
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(1) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall be a Permitted Transferee and shall promptly notify
the Trustee of any change or impending change in its status as a Permitted
Transferee.
(2) 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 I from the proposed Transferee, in form and substance
satisfactory to the Trustee, representing and warranting, among other things,
that such Transferee is a Permitted Transferee, that it is not acquiring its
Ownership Interest in the 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 4.02(j) and agrees to be bound by
them.
(3) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (2) above, if 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.
(4) 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
J) to the Trustee stating that, among other things, it has no actual knowledge
that such other Person is not a Permitted Transferee.
(5) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and Agreement
and all of such other documents as shall have been reasonably required by the
Trustee as a condition to such registration. In addition, no Transfer of a Class
R Certificate shall be made unless the Trustee shall have received a
representation letter from the Transferee of such Certificate to the effect that
such Transferee is not a Disqualified Non-United States Person and is not a
Disqualified Organization. Transfers of the Class R Certificates to Disqualified
Non-United States Persons and Disqualified Organizations are prohibited.
(6) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of this Section
4.02 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 4.02, 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 Company 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 4.02. 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
4.02 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.
(k) The Trustee shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions, all information
necessary to compute any tax imposed (A) as a result of the transfer of an
ownership interest in a Class R Certificate to any Person who is a Disqualified
Organization, including the information regarding "excess inclusions" of such
Class R Certificates required to be provided to the Internal Revenue Service and
certain Persons as described in Treasury Regulations Sections 1.860D-1(b)(5) and
1.860E- 2(a)(5), and (B) as a result of any regulated investment company, real
estate investment trust, common trust fund,
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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 any time any Person who is a Disqualified Organization. The
Trustee may charge and shall be entitled to reasonable compensation for
providing such information as may be required from those Persons which may have
had a tax imposed upon them as specified in clauses (A) and (B) of this
paragraph for providing such information.
(l) No transfer of a Class R Certificate or any interest
therein shall be made to any employee benefit plan or other retirement
arrangement, including individual retirement accounts and annuities, ▇▇▇▇▇ plans
and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the Code (each,
a "Plan"), unless the prospective transferee of such Class R Certificate
provides the Servicer and the Trustee with a certification of facts and, at the
prospective transferee's expense, an Opinion of Counsel which establish to the
satisfaction of the Servicer and the Trustee that such transfer will not result
in a violation of Section 406 of ERISA or Section 4975 of the Code or cause the
Servicer or the Trustee to be deemed a fiduciary of such Plan or result in the
imposition of an excise tax under Section 4975 of the Code. In the absence of
their having received the certification of facts or Opinion of Counsel
contemplated by the preceding sentence, the Trustee and the Servicer shall
require the prospective transferee of any Class R Certificate to certify in the
form of Exhibit O or Exhibit Q that (A) it is neither (i) a Plan nor (ii) a
Person who is directly or indirectly purchasing a Class R Certificate on behalf
of, as named fiduciary of, as trustee of, or with assets, of a Plan and (B) all
funds used by such transferee to purchase such Certificates will be funds held
by it in its general account which it reasonably believes do not constitute
"plan assets" of any Plan.
(m) Subject to the restrictions set forth in this Agreement,
upon surrender for registration of transfer of any Certificate at the office or
agency of the Trustee located in New York, New York, the Trustee shall execute,
authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest 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 Percentage 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 cancelled by the Trustee.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN
CERTIFICATES. If (a) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (b) there is delivered to the Trustee such
security or indemnity as may reasonably be required by each of them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Percentage Interest, but bearing a number not contemporaneously
outstanding. Upon the issuance of any new Certificate under this Section 4.03,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and their fees
and expenses connected therewith. Any duplicate Certificate issued pursuant to
this Section 4.03 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 4.04 PERSONS DEEMED OWNERS. Prior to due presentation
of a Certificate for registration of transfer and subject to the provisions of
Section 4.02 and Article X, the Servicer, the Company, the Seller, 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 6.05 and for all other purposes
whatsoever, and the Servicer, the Company, the Seller, the Certificate Insurer
and the Trustee shall not be affected by notice to the contrary.
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ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 APPOINTMENT OF THE SERVICER. (a) ________ 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 Mortgage
Loans on behalf of the Trustee 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 may,
and is hereby authorized and empowered by the Trustee to, execute and deliver,
on behalf of itself, the Certificateholders and the Trustee or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, with respect to the
Mortgage Loans, the insurance policies and accounts related thereto and the
properties subject to the Mortgages. Upon the execution and delivery of this
Agreement, and from time to time as may be required thereafter, the Trustee
shall execute for the Servicer any powers of attorney and such other documents
as may be necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
In servicing and administering the Mortgage 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 Mortgage Note and
foreclosure costs may be added by the Servicer to the amount owing under such
Mortgage Note where the terms of such Mortgage Note so permit; provided,
however, that the addition of any such cost shall not be taken into account for
purposes of calculating the principal amount of the Mortgage Note and Mortgage
Loan, the Monthly Payments on the Mortgage Note and Mortgage Loan or
distributions to be made to Certificateholders. Such costs shall be recoverable
by the Servicer pursuant to Section 5.04.
(c) Subject to Section 5.12, 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 Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Servicer, 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.
(d) 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 5.24, after receipt by the Trustee and the Certificate Insurer of the
Opinion of Counsel required pursuant to Section 5.24, the Trustee or its
designee approved by the Certificate Insurer (which approval shall not be
unreasonably withheld) shall assume all of the rights and obligations of the
Servicer, subject to Section 7.02 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 Mortgage 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.
(e) If the Mortgage relating to a Mortgage Loan did not have a
lien senior on the related Mortgaged Property as of the Cut-Off Date, then the
Servicer, in such capacity, may not consent to the placing of a lien senior to
that of the Mortgage on the related Mortgaged Property. If the Mortgage relating
to a Mortgage Loan had a lien senior to the Mortgage Loan on the related
Mortgaged Property as of the Cut-Off Date, then the Servicer, in such capacity,
may consent to the refinancing of such senior lien; provided that (i) the
resulting Combined Loan-to-Value Ratio of such Mortgage Loan is no higher than
the Combined Loan-to-Value Ratio prior to such refinancing and (ii) the interest
rate for the loan evidencing the refinanced senior lien on the date of such
refinancing is no higher than the interest rate on the loan evidencing the
existing senior lien immediately prior to the date of such refinancing.
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(f) The Servicer shall deliver a list of Servicing Officers to
the Trustee and the Certificate Insurer by the Closing Date.
Section 5.02 [Reserved]
Section 5.03 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS;
COLLECTION ACCOUNT. (a) The Servicer shall make reasonable efforts to collect
all payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this Agreement
and any applicable primary mortgage insurance policy, follow such collection
procedures as shall constitute Accepted Servicing Practices. Consistent with the
foregoing, the Servicer may in its discretion (i) waive any prepayment charge,
assumption fee, late payment charge or other charge in connection with a
Mortgage Loan, and (ii) 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. Any provision of this agreement to the contrary
notwithstanding, the Servicer shall not agree to the modification or waiver of
any provision of a Mortgage Loan at a time when such Mortgage Loan is not in
default or such default is not reasonably foreseeable, if such modification or
waiver would be treated as a taxable exchange under Section 1001 of the Code,
unless such exchange would not be considered a "prohibited transaction" under
the REMIC Provisions.
The Servicer shall establish and maintain in the name of the
Trustee the Collection Account, in trust for the benefit of the
Certificateholders and the Certificate Insurer. The Collection Account shall be
established and maintained as an Eligible Account.
The Servicer shall deposit in the Collection Account (i) any
amounts representing Monthly Payments on the Mortgage Loans due or to be applied
as of a date after the Cut-off Date, with respect to the Initial Mortgage Loans,
or Subsequent Cut-off Date, with respect to the Subsequent Mortgage Loans, (ii)
any amounts representing Monthly Payments on the Initial Mortgage Loans due or
to be applied as of a date on or before the Cut-off Date (except for any
interest accrued prior to the Cut-off Date and except for any principal received
by the Company prior to the Cut-off Date the receipt of which is reflected on
the Mortgage Loan Schedule) and (iii) thereafter, on a daily basis within two
Business Days of receipt (except as otherwise permitted herein), the following
payments and collections received or made by it (other than any amounts in
respect of principal of or interest on the Mortgage Loans which, under clauses
(i) and (ii) above, are not required to be deposited in the Collection Account):
(i) all payments received after the Cut-off Date or
Subsequent Cut-off Date, as applicable on account of principal on the
Mortgage Loans and all Principal Prepayments in Full, Curtailments and
all Net REO Proceeds collected after the Cut-off Date or Subsequent
Cut-off Date, as applicable;
(ii) all payments received after the Cut-off Date or
Subsequent Cut-off Date, as applicable on account of interest on the
Mortgage Loans (other than payments of interest that accrued on each
Mortgage Loan up to and including the Cut-off Date or Subsequent
Cut-off Date, as applicable);
(iii) all Net Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase
of any Mortgage Loan and the amount of any Substitution Adjustment
pursuant to Sections 2.04 and 3.03; and
(vii) any amount expressly required to be deposited in the
Collection Account in accordance with certain provisions of this
Agreement, including, without limitation Sections 2.04(b), 2.04(c),
3.03(a), 3.03(c), 5.06, 5.07 and 5.18 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
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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 Master Servicer in
respect of a Mortgage Loan (whether paid by the Mortgagor or received as
Liquidation Proceeds, Insurance Proceeds or otherwise) which is less than the
full amount of interest then due with respect to such Mortgage 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 Mortgage Interest Rate borne by such Mortgage Loan shall be allocated to
the Servicing Fee with respect to such Mortgage Loan. All other amounts shall be
deposited in the Collection Account not later than the second Business Day
following the day of receipt and posting by the Servicer.
The Servicer may invest the funds in the Collection Account
only in Permitted Investments. No Permitted Investment shall be sold or disposed
of at a gain prior to maturity unless the Servicer has obtained an Opinion of
Counsel (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 Section 860F(a)(1) of the Code, otherwise subject the Trust Fund to
tax or cause the Trust Fund 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.
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. If the Servicer deposits in
the Collection Account any amount not required to be deposited therein, it may
at any time withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding. All funds deposited by the Servicer in
the Collection Account shall be held in the Collection Account for the account
of the Trustee in trust for the Certificateholders until disbursed in accordance
with Section 6.01 or withdrawn in accordance with Section 5.04.
(b) 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.
(c) The Collection Account may, upon written notice by the
Trustee to the Certificate Insurer, be transferred to a different depository so
long as such transfer is to an Eligible Account.
Section 5.04 PERMITTED WITHDRAWALS FROM THE COLLECTION
ACCOUNT. The Servicer may, from time to time, make withdrawals from the
Collection Account for the following purposes:
(a) to reimburse itself for any accrued unpaid Servicing Fees
and for unreimbursed Periodic Advances and Servicing Advances. The Servicer's
right to reimbursement for unpaid Servicing Fees and unreimbursed Servicing
Advances shall be limited to late collections on the related Mortgage Loan,
including Liquidation Proceeds, Released Mortgaged Property Proceeds, Insurance
Proceeds and such other amounts as may be collected by the Master Servicer from
the related Mortgagor or otherwise relating to the Mortgage 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 Mortgage Loan and to Liquidation Proceeds and Insurance Proceeds
on related Mortgage Loans;
(b) to reimburse itself for any Periodic Advances or Servicing
Advances determined in good faith to have become Nonrecoverable Advances, such
reimbursement to be made from any funds in the Collection Account;
(c) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
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(d) to withdraw any funds deposited in the Collection Account
that were not required to be deposited therein;
(e) to pay itself Servicing Compensation pursuant to Section
5.14 hereof to the extent not retained or paid pursuant to Section 5.03, 5.04 or
5.14;
(f) to pay to the Seller with respect to each Mortgage Loan or
property acquired in respect thereof that has been repurchased or replaced
pursuant to Section 2.04 or 3.03 or to pay to itself with respect to each
Mortgage Loan or property acquired in respect thereof that has been purchased
pursuant to Section 8.01 all amounts received thereon and not required to be
distributed as of the date on which the related repurchase or purchase price or
Principal Balance, as the case may be, was determined;
(g) to pay to the Seller with respect to each Mortgage Loan
the amount of interest accrued and unpaid on such Mortgage Loan on the Cut-off
Date (with respect to the Initial Mortgage Loans) or Subsequent Cut-off Date
(with respect to the Subsequent Mortgage Loans);
(h) to make deposits to the Certificate Accounts (which shall
include the Trustee Fee) in the amounts and in the manner provided for herein;
(i) to pay itself any interest earned on or investment income
earned with respect to funds in the Collection Account;
(j) to reimburse itself or the Company pursuant to Section
11.01; and
(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 Mortgage Loan for the purpose of accounting for withdrawals from the
Collection Account pursuant to subclause (a).
Section 5.05 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES.
With respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting casualty insurance coverage.
With respect to each Mortgage Loan as to which the Servicer
maintains escrow accounts, 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 Mortgaged 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 Mortgagor 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 Mortgagor.
Section 5.06 MAINTENANCE OF CASUALTY INSURANCE. The Servicer
shall cause to be maintained for each Mortgage Loan (at the expense of the
borrower or, if required by the terms of the Mortgage Loan and not paid for by
the borrower, at the expense of the Trust Fund) a casualty insurance policy with
extended coverage issued by a generally acceptable insurer in an amount which is
not less than the full insurable value of the Mortgaged Property securing such
Mortgage Loan or the unpaid principal balance of such Mortgage Loan, whichever
is less; provided, however, that such insurance may not be less than the minimum
amount required to fully compensate for any loss or damage on a replacement cost
basis. If, upon origination of the Mortgage Loan, the improvements on the
Mortgaged Property were in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) the Servicer will cause to be
maintained (at the expense of the borrower or, if required by the terms of the
Mortgage Loan and not paid for by the borrower, at the expense of the Trust
Fund) 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 Mortgage Loan, (ii) the full insurable
value and (iii) the maximum amount of insurance
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which was available under the Flood Disaster Protection Act of 1973. The
Servicer shall also maintain similar fire insurance coverage and, if applicable,
flood insurance on property acquired upon foreclosure, or by deed in lieu of
foreclosure, of any Mortgage Loan 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 Mortgage Loan at the
time of such foreclosure or grant of deed in lieu of foreclosure; provided,
however, that such insurance may not 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 Mortgagor, other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance.
Pursuant to Section 5.03, any amounts collected by the Servicer under any
insurance policies maintained pursuant to this Section 5.06 (other than amounts
to be applied to the restoration or repair of the related Mortgaged Property or
released to the Mortgagor in accordance with Accepted Servicing Practices) shall
be deposited into the Collection Account, subject to withdrawal pursuant to
Section 5.04 unless such insurance was not required by the terms of the Mortgage
Loan. Any cost incurred by the Servicer in maintaining any such insurance shall
be added to the amount owing under the Mortgage Loan where the terms of the
Mortgage Loan so permit; provided, however, that the addition of any such cost
shall not be taken into account for purposes of calculating the principal amount
of the Mortgage Note or Mortgage Loan, the Monthly Payments on the Mortgage Note
or the distributions to be made to the Certificateholders. Such costs shall be
recoverable by the Servicer pursuant to Section 5.04. 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
Mortgage Loans, it shall conclusively be deemed to have satisfied its obligation
as set forth in the first sentence of this Section 5.06, 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 5.06 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 5.07 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE
POLICY. In the event that the Servicer shall obtain and maintain a blanket
policy (the "Mortgage Impairment Insurance Policy") with an insurer either (i)
having a General Policy rating of A:VIII or better in Best's Key Rating Guide or
(ii) approved in writing by the Certificate Insurer, such approval not to be
unreasonably withheld, insuring against fire and hazards of extended coverage on
all of the Mortgage Loans, then, to the extent such policy names the Servicer as
loss payee and provides coverage in an amount equal to the aggregate unpaid
principal balance on the Mortgage Loans without co-insurance, and otherwise
complies with the requirements of Section 5.06, the Servicer shall be deemed
conclusively to have satisfied its obligations with respect to fire and hazard
insurance coverage under Section 5.06, it being understood and agreed that such
blanket policy may contain a deductible clause, in which case the Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with Section 5.06, and there shall have
been a loss which would have been covered by such policy, deposit in the
Collection Account the difference, if any, between the amount that would have
been payable under a policy complying with Section 5.06 and the amount paid
under such blanket policy. Upon the request of the Certificate Insurer, the
Trustee or any Certificateholder, the Servicer shall cause to be delivered to
the Certificate Insurer, the Trustee or such Certificateholder, as the case may
be, a certified true copy of such policy. The Servicer agrees to prepare and
present, on behalf of itself, the Trustee, the Certificate Insurer and
Certificateholders, claims under any such policy in a timely fashion in
accordance with the terms of such policy.
Section 5.08 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 FHLMC or, if _______is the Servicer or if the Trustee is
the successor Servicer, in an amount generally maintained by prudent mortgage
loan servicers having servicing portfolios of a similar size.
(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.
Any such Fidelity Bond and Errors and Omissions Policy shall not be cancelled or
modified in a materially adverse manner without 10 days prior written notice to
the Certificate Insurer.
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Section 5.09 COLLECTION OF TAXES, ASSESSMENTS AND OTHER ITEMS;
SERVICING ACCOUNT. In addition to the Collection Account, the Servicer shall
establish and maintain a Servicing Account, which shall be an Eligible Account,
and shall deposit therein all payments by Mortgagors for taxes, assessments,
primary mortgage or hazard insurance premiums or comparable items. Withdrawals
from the Servicing Account 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 Mortgagors any sums determined to be
overages, or to pay any interest owed to Mortgagors on such account to the
extent required by law or to clear and terminate the Servicing Account at the
termination of this Agreement upon the termination of the Trust Fund. The
Servicer shall advance the payments referred to in the first sentence of this
Section 5.09 that are not timely paid by the Mortgagors 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,
in the good faith judgment of the Servicer, will be recoverable by the Servicer
pursuant to Section 5.04 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 any and all reports, statements and
information respecting the Trust Fund and/or the Certificates required to be
filed, 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, as amended. The Company 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 Trustee in connection with the foregoing shall be reimbursed pursuant to
Section 9.05 and shall not be paid by the Trust Fund.
The Servicer and the Company each agree to promptly furnish to
the Trustee, from time to time upon request, such further information, reports
and financial statements within their control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Securities and Exchange Commission.
Section 5.11 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION
AGREEMENTS. In any case in which a Mortgaged Property is about to be conveyed by
the Mortgagor (whether by absolute conveyance or by contract of sale, and
whether or not the Mortgagor remains liable thereon) and the Servicer has
knowledge of such prospective conveyance, the Servicer shall effect assumptions
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 Mortgage 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 Mortgagor, or such conveyance is in connection
with a permitted assumption of the related Mortgage 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 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 Mortgagor remains liable
thereon. The Servicer is also authorized, to release the original Mortgagor from
liability upon the Mortgage Loan and substitute the new Mortgagor 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 Mortgage 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
Mortgage File and shall, for all purposes, be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any such assumption or substitution agreement,
the Mortgage Interest Rate of the related Mortgage Note, the payment terms and
other material 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.
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Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any conveyance by
the Mortgagor of the property subject to the Mortgage or any assumption of a
Mortgage 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 Mortgagor.
Section 5.12 REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) Except as provided in the last two paragraphs of this
Section 5.12(a), the Servicer shall foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 5.03. 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 Mortgage 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 have priority for
purposes of withdrawal from the Collection Account pursuant to Section 5.04) or
otherwise. 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 5.04.
The Servicer may foreclose against the Mortgaged Property
securing a defaulted Mortgage Loan either by foreclosure, by sale or by strict
foreclosure, and in the event a deficiency judgment is available against the
Mortgagor or any other person, may proceed for the deficiency.
In the event that title to any Mortgaged 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 Servicer on behalf of the Trustee
in the name of the Trustee on behalf of the Certificateholders. The Servicer
shall administer the REO Property so that it qualifies at all times as
"foreclosure property," within the meaning of Section 860G(a)(8) of the Code,
and shall not permit any income to be earned with respect thereto that is "net
income from foreclosure property" within the meaning of Section 860G(d) of the
Code or "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code. Notwithstanding any such acquisition of title and
cancellation of the related Mortgage Loan, such Mortgage Loan shall be
considered to be a Mortgage Loan held in the Trust Fund until such time as the
related Mortgaged Property shall be sold and such Mortgage Loan becomes a
Liquidated Mortgage Loan. Consistent with the foregoing, for purposes of all
calculations hereunder, so long as such Mortgage Loan shall be considered to be
an Outstanding Mortgage Loan:
(i) It shall be assumed that, 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) 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.
(ii) Net REO Proceeds 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 such Mortgage Loan became an REO
Mortgage Loan, 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 received in
any month shall be applied to the payment of installments of principal
and accrued interest on such Mortgage 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 Mortgage Loan.
(iii) Only that portion of Net REO Proceeds allocable to
interest that bears the same relationship to the total amount of Net
REO Proceeds allocable to interest as the rate of the Servicing Fee
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bears to the Mortgage Interest Rate borne by such Mortgage Loan shall
be allocated to the Servicing Fee with respect thereto.
In the event that the Trust Fund acquires any Mortgaged
Property as aforesaid or otherwise in connection with a default or reasonably
foreseeable default on a Mortgage Loan, such Mortgaged Property shall be
disposed of by or on behalf of the Trust Fund within three years after its
acquisition by the Trust Fund unless (a) the Servicer shall have provided to the
Trustee an Opinion of Counsel (at the expense of the Trust Fund) to the effect
that the holding by the Trust Fund of such Mortgaged Property subsequent to
three years after its acquisition (and specifying the period beyond such
three-year period for which the Mortgaged Property may be held) will not cause
the Trust Fund to be subject to the tax on prohibited transactions imposed by
Section 860F(a)(1) of the Code, otherwise subject the Trust Fund to tax or cause
the Trust Fund to fail to qualify as a REMIC at any time that any Certificates
are outstanding, or (b) the Servicer (at the Trust Fund's expense) shall have
applied for, at least 60 days prior to the expiration of such three-year period,
an extension of such three-year period in the manner contemplated by Section
856(e)(3) of the Code, in which case the three-year period shall be extended by
the applicable period. The Servicer shall further ensure that the Mortgaged
Property is administered so that it constitutes "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code at all times, that the sale of
such property does not result in the receipt by the Trust Fund of any income
from non-permitted assets as described in Section 860F(a)(2)(B) of the Code, and
that the Trust Fund does not derive any "net income from foreclosure property"
within the meaning of Section 860G(c)(2) of the Code with respect to such
property.
Any REO Disposition shall be for cash only (unless changes in
the REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
In lieu of foreclosing upon any defaulted Mortgage Loan, the
Servicer may, in its discretion, permit the assumption of such Mortgage 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 Mortgage 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 agreement will be retained by the Servicer as servicing compensation.
Alternatively, the Servicer may encourage the refinancing of any defaulted
Mortgage Loan by the Mortgagor.
Notwithstanding the foregoing, prior to instituting
foreclosure proceedings or accepting a deed-in-lieu of foreclosure with respect
to any Mortgaged Property, the Servicer shall make, or cause to be made,
inspection of the Mortgaged Property in accordance with the Accepted Servicing
Practices and, with respect to environmental hazards, such procedures are as
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 Mortgaged 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 each Class A Certificateholder. The Servicer shall not
commence foreclosure proceedings or accept a deed-in-lieu of foreclosure for
Mortgaged Property with respect to this paragraph without obtaining the written
consent of the Certificate Insurer.
(b) Promptly after the Closing Date, the Servicer shall, with
respect to each Mortgage Loan for which the Mortgage provides a second lien on
the related Mortgaged Property, cause to be recorded in the appropriate public
office for real property records, where permitted by applicable law and where
applicable law does not require that a second mortgagee be named as a party
defendant in foreclosure or comparable proceedings in order to foreclose or
otherwise preempt such mortgagee's equity of redemption, a request for notice of
any action by or on behalf of any mortgagee under a Senior Mortgage Loan. The
Servicer also shall promptly provide written notice to each mortgagee under a
Senior Mortgage Loan of the existence of the related Mortgage Loan and request
notification of any action taken or to be taken against the related Mortgagor or
Mortgaged Property by or on behalf of such mortgagee in respect of such Senior
Mortgage Loan.
(c) Upon becoming aware that a Senior Mortgage Loan has come
into default or of any action that the related mortgagee has taken or may take
in respect thereof, the Servicer shall, consistent with the REMIC Provisions,
take such actions as it shall deem necessary or advisable, as shall be normal
and usual in its general mortgage servicing activities and as shall be required
or permitted by Accepted Servicing Practices. The Servicer,
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however, shall not be required to expend its own funds in connection therewith
unless it shall determine that such expense will be recoverable to it. All such
expenses shall be included as Liquidation Expenses pursuant to the definition
thereof, and shall be reimbursable from the related Liquidation Proceeds in
accordance with Section 5.04.
Section 5.13 TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES.
Upon the payment in full of any Mortgage Loan, or the receipt by the Servicer of
a notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer shall immediately notify the Trustee in the form of
a Request for Release in the form attached hereto as Exhibit H (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 5.03 have been or shall be so deposited) of a Servicing
Officer and shall request delivery to it of the Mortgage File. Upon receipt of
such Request for Release, the Trustee, or the Custodian on its behalf, shall
promptly release the related Mortgage 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 Mortgage 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 5.01(c). From time to time and as appropriate for the servicing or
foreclosure of any Mortgage 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 Mortgage 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 Mortgage File to the Trustee when the need therefor by the Servicer no
longer exists unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of a certificate of a Servicing Officer similar to the Request for
Release hereinabove specified, the Mortgage File shall be delivered by the to
the Servicer.
Section 5.14 SERVICING FEE; SERVICING COMPENSATION. The
Servicer shall be entitled, at its election, either (a) to pay itself the
Servicing Fee out of any Mortgagor payment on account of interest or Net REO
Proceeds prior to the deposit of such payment in the Collection Account or (b)
to withdraw from the Collection Account such Servicing Fee pursuant to Section
5.04. The Servicer shall also be entitled, at its election, either (a) to pay
itself the Servicing Fee in respect of each delinquent Mortgage Loan out of
Liquidation Proceeds in respect of such Mortgage Loan or other recoveries with
respect thereto to the extent permitted in Section 5.03(a) to withdraw from the
Collection Account the Servicing Fee in respect of each such Mortgage Loan to
the extent of such Liquidation Proceeds or other recoveries, to the extent
permitted by Section 5.04(a).
Servicing compensation in the form of Net Foreclosure Profits,
prepayment penalties, assumption fees, late payment charges, tax service fees,
fees for statement of account or payoff of the Mortgage 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. The aggregate
Servicing Fee is reserved for the administration of the Trust Fund and, in the
event of replacement of the Master Servicer as servicer of the Mortgage Loans,
for the payment of other expenses related to such replacement. The aggregate
Servicing Fee shall be offset as provided in Section 5.20. 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 5.05) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
Section 5.15 REPORTS TO THE TRUSTEE AND THE COMPANY;
COLLECTION ACCOUNT STATEMENTS. Not later than 15 days after each Distribution
Date, the Servicer shall provide to the Trustee and the Company a statement,
certified by a Servicing Officer, setting forth the status of the Collection
Account as of the close of business on the last day of the immediately preceding
calendar month, 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 period covered by such statement, the aggregate of
deposits into and withdrawals from the Collection Account for each category of
deposit specified in Section 5.03 and each category of withdrawal
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specified in Section 5.04 and the aggregate of deposits into the Certificate
Accounts as specified in Section 6.01(c). Such statement shall also state the
aggregate unpaid principal balance of all the Mortgage 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 and the Rating Agencies on
or before ________ each year, beginning with _____, 199_, 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. 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. On or before _________ of every year, beginning with _______, 199_, the
Servicer, at its expense, shall cause a firm of nationally recognized
independent public accountants to furnish a statement to the Trustee, the
Certificate Insurer and the Rating Agencies 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, 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 this
Agreement. 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 mortgage pass-through certificates offered by the
Company (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.
Section 5.18 OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.
Any Affiliate of the Seller, in its sole discretion, shall have the right to
elect (by written notice sent to the Servicer, the Trustee and the Certificate
Insurer), but shall not be obligated, to purchase for its own account from the
Trust Fund any Mortgage Loan which is 90 days or more Delinquent in the manner
and at the price specified in Section 2.04(b). The purchase price for any
Mortgage Loan purchased hereunder shall be deposited in the Collection Account
and the Trustee, upon receipt of such deposit, shall release or cause to be
released to the purchaser of such Mortgage Loan the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the purchaser of such Mortgage Loan, in each case without recourse, as shall be
necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
released pursuant hereto and the purchaser of such Mortgage Loan shall succeed
to all the Trustee's right, title and interest in and to such Mortgage Loan and
all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage Loan
shall thereupon own such Mortgage Loan, and all security and documents, free of
any further obligation to the Trustee or the Certificateholders with respect
thereto.
Section 5.19 REPORTS TO BE PROVIDED BY THE SERVICER. The
Servicer agrees to make available on a reasonable basis to the Certificate
Insurer 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 to inspect the Servicer's servicing facilities during normal
business hours for the purpose of satisfying the Certificate Insurer that the
Servicer has the ability to service the Mortgage Loans in accordance with this
Agreement.
Section 5.20 ADJUSTMENT OF SERVICING COMPENSATION IN RESPECT
OF PREPAID MORTGAGE LOANS. The aggregate amount of the Servicing Fees that the
Servicer shall be entitled to receive with respect to all of the Mortgage 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
Mortgage Loans which were subjects of Principal Prepayments in Full or
Curtailments during the month preceding the month of such Distribution Date. The
amount of any offset against the aggregate Servicing Fee with respect to any
Distribution
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Date under this Section 5.20 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 month of such Distribution Date received by the
Servicer prior to the Servicer Remittance Date, and (ii) Principal Prepayments
in Full, Curtailments and Liquidation Proceeds received in the month preceding
the month in which such Distribution Date occurs, and the rights of the
Certificateholders to the offset of the aggregate Prepayment Interest Shortfalls
shall not be cumulative.
Section 5.21 PERIODIC ADVANCES. If, on any Servicer Remittance
Date, the Servicer determines that any Monthly Payments due on the Due Date
immediately preceding such Servicer Remittance Date have not been received as of
the close of business on the Business Day preceding such Servicer Remittance
Date, the Servicer shall determine the amount of any Periodic Advance required
to be made with respect to the related Distribution Date. The Servicer shall, on
the Servicer Remittance Date, deliver in a computer-readable form (including
electronic transmission) to the Trustee indicating the payment status of each
Mortgage Loan as of the Business Day prior to such Servicer Remittance Date. The
Servicer shall include in the amount to be deposited in the related Certificate
Account on such Servicer Remittance Date an amount equal to the Periodic
Advance, if any, 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 in the related Certificate Account on
or before the Business Day preceding any such future Servicer Remittance Date to
the extent that funds in the related Certificate Account on such Servicer
Remittance Date shall be less than payments to Certificateholders required to be
made on such date.
The Servicer shall designate on its records the specific
Mortgage Loans and related installments (or portions thereof) as to which such
Periodic Advance shall be deemed to have been made, such determination being
conclusive for purposes of withdrawals from the Collection Account pursuant to
Section 5.04.
Section 5.22 THIRD PARTY CLAIMS. The Trustee shall reimburse
the Seller from amounts otherwise distributable on the Class R Certificates for
all amounts advanced by the Seller pursuant to the second sentence of Section
4.03(a)(ii) of the Purchase Agreement except when the relevant claim relates
directly to the failure of the Seller to perform its duties in compliance with
the terms of the Purchase Agreement.
Section 5.23 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 Mortgage 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 3.01 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 Master 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 $15,000,000, 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 5.24 ASSIGNMENT OF AGREEMENT BY SERVICER; SERVICER NOT
TO RESIGN. The Servicer shall not assign this Agreement or resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Certificate Insurer 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 incurring, in the
reasonable judgment of the Certificate Insurer, 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 (who may be counsel for the Servicer)
to such effect delivered to the Trustee, the Seller, the Company and the
Certificate Insurer. No such resignation shall become effective until the
Trustee or a successor appointed in accordance with the terms of this Agreement
has assumed the Servicer's responsibilities and obligations hereunder in
accordance
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with Section 7.02. The Servicer shall provide the Trustee, the Rating Agencies
and the Certificate Insurer with 30 days prior written notice of its intention
to resign pursuant to this Section 5.24.
Section 5.25 INFORMATION REPORTS TO BE FILED BY THE SERVICER.
The Servicer shall file information returns with respect to the receipt of
mortgage interest received in a trade or business, reports of foreclosures and
abandonments of any Mortgaged Property and cancellation of indebtedness income
with respect to any Mortgaged Property as required by Sections 6050H, 6050J and
6050P of the Code, respectively.
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ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNTS; DEPOSITS
TO THE CERTIFICATE ACCOUNTS. (a) The Trustee shall establish and maintain a
Certificate Account which shall be titled "Certificate Account, _______________,
as trustee for the registered holders of NationsBanc Asset Securities, Inc.,
Asset-Backed Certificates, Series 199_-_, Class A-1, Class A-2, Class A-3, Class
A-4, and Class R" which shall be an Eligible Account.
(b) The Servicer may direct the Trustee in writing to invest
the funds in the Certificate Account only in Permitted Investments. No Permitted
Investment shall be sold or disposed of at a gain prior to maturity unless the
Servicer has delivered to the Trustee an Opinion of Counsel (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 Section
860F(a)(1) of the Code, otherwise subject the Trust Fund to tax or cause the
Trust Fund 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 related Certificate Account by
the Servicer 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.
Section 6.02 PERMITTED WITHDRAWALS FROM THE CERTIFICATE
ACCOUNT. The Trustee shall withdraw or cause to be withdrawn funds from the
Certificate Account for the following purposes:
(a) to effect the distributions described in Section 6.05;
(b) to pay to the Seller with respect to each Mortgage Loan or
property acquired in respect thereof that has been repurchased or replaced
pursuant to Section 2.04 or 3.03 or to pay to the Servicer with respect to each
Mortgage Loan or property acquired in respect thereof that has been purchased
all amounts received thereon and not required to be distributed as of the date
on which the related repurchase or purchase price or Principal Balance was
determined;
(c) to pay the Servicer any interest earned on or investment
income earned with respect to funds in the Certificate Accounts;
(d) to return to the Collection Account any amount deposited
in the Certificate Account that was not required to be deposited therein;
(e) to make reimbursements to itself in accordance with
Section 9.05; and
(f) to clear and terminate the Certificate Accounts upon
termination of any 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 (f) listed above.
Section 6.03 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 (a) all payments due on the Mortgage Loans in
accordance with the respective terms and conditions of such Mortgage Loans and
required to be paid over to the Trustee by the Servicer and (b) Insured
Payments. 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.
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Section 6.04 THE CERTIFICATE INSURANCE POLICY. (a) Within two
Business Days after each Servicer Remittance Date the Trustee shall determine
with respect to the immediately following Distribution Date the amount to be on
deposit in the Certificate Account on such Distribution Date as a result of the
Servicer's remittance of the Servicer Remittance Amount on the related Servicer
Remittance Date plus the amount of any amounts deposited into the Certificate
Account from the Pre-Funding Account pursuant to Section 6.12 and any
Capitalized Interest Amount to be deposited pursuant to Section 6.13 for such
Distribution Date less the amounts described in clauses (i) through (ii) of
Section 6.05(b) or (c) for the related Distribution Date, and not including the
amount of any Insured Payment which is required to be deposited in the
Certificate Account for such Distribution Date. The amounts described in the
preceding sentence, with respect to each Distribution Date are the "Available
Funds" for such Distribution Date.
(b) If on any Distribution Date there is an Available Funds
Shortfall, the Trustee shall complete a Notice in the form of Exhibit A to the
related Certificate Insurance Policy and submit such notice to the Certificate
Insurer no later than 12:00 noon New York City time on the second Policy
Business Day preceding such Distribution Date as a claim for an Insured Payment
in an amount equal to such Available Funds Shortfall.
(c) The Trustee shall establish a separate Eligible Account
for the benefit of Holders of the Certificates and the Certificate Insurer
referred to herein as the "Certificate Insurance Payments Account" over which
the Trustee shall have exclusive control and sole right of withdrawal. The
Trustee shall deposit upon receipt any amount paid under the Certificate
Insurance Policy in the Certificate Insurance Payments Account and distribute
such amount only for purposes of payment to Certificateholders of the Insured
Distribution Amount for which a claim was made and such amount may not be
applied to satisfy any costs, expenses or liabilities of the Servicer, the
Trustee or the Trust Fund. Amounts paid under the Certificate Insurance Policy,
to the extent needed to pay the Insured Distribution Amount shall be transferred
by the Trustee from the Certificate Insurance Payments Account to the
Certificate Account on the related Distribution Date and disbursed by the
Trustee to Certificateholders in accordance with Section 6.05. It shall not be
necessary for payments made under the Certificate Insurance Policy to be made by
checks or wire transfers separate from other amounts distributed pursuant to
Section 6.05. However, the amount of any payment of principal or of interest on
the Certificates to be paid from funds transferred from the Certificate
Insurance Payments Account shall be noted as provided in paragraph (d) below.
Funds held in the Certificate Insurance Payments Account shall not be invested.
Any funds remaining in the Certificate Insurance Payments Account on the first
Policy Business Day following a Distribution Date shall be returned to the
Certificate Insurer pursuant to the written instructions of the Certificate
Insurer by the end of such Policy Business Day.
(d) The Trustee Remittance Report shall indicate the amount of
interest and principal paid in respect of the Class A Certificates from moneys
received under the Certificate Insurance Policy.
(e) In the event that the Trustee has received a certified
copy of an order of the appropriate court that any 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 Insured Payment, 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 Insured Payment 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.
(f) 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 Certificateholder, by its purchase of 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, (i) the direction of any
appeal of any order relating to such Preference Claim and (ii) the posting of
any surety, supersedeas or performance bond pending any
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such appeal. In addition and without limitation of the foregoing, the
Certificate Insurer shall be 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 the Servicer, the Trustee
and each 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 6.05 DISTRIBUTIONS. (a) No later than 12:00 noon New
York time on each Servicer Remittance Date, the Servicer shall deliver to the
Trustee a report in computer-readable form (including electronic transmission,
provided that a portion of such report relating to certain delinquency
information may be delivered in hard copy form rather than computer-readable
form) containing such information as to each Mortgage Loan as of such date and
such other information as the Trustee shall reasonably require.
(b) With respect to funds deposited in the Certificate
Account, on each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers in the following order of priority, and
each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations, transfers and disbursements have
occurred:
(i) to the Certificate Insurer, the Premium Amount;
(ii) to the Trustee, an amount equal to the Trustee's Fees;
(iii) to the Certificate Insurer the lesser of (x) an amount
equal to (i) the amount then on deposit in the Certificate Account
remaining after the foregoing distributions minus (ii) the Insured
Distribution Amount for such Distribution Date and (y) the outstanding
Reimbursement Amounts, if any, as of such Distribution Date;
(iv) from amounts then on deposit in the Certificate Account
(including any Insured Payments), to the Class A Certificateholders an
amount equal to the Class A Interest Distribution Amount;
(v) from amounts then on deposit in the Certificate Account
(including any Insured Payments), to the Class A Certificateholders an
amount equal to the lesser of (a) the Class A Principal Distribution
Amount and (b) the amount remaining in the Certificate Account after
distributions pursuant to clauses (i) through (iv) above; and;
(vi) from amounts then on deposit in the Certificate Account,
to the Holders of the Class R Certificates, the amount remaining on
such Distribution Date, if any.
Notwithstanding clause (v) above, the aggregate amounts
distributed on all Distribution Dates to the Holders of the Class A Certificates
on account of the Class A Principal Distribution Amount shall not exceed the
aggregate Original Security Balance for the Class A Certificates.
Distributions of the Class A Principal Distribution Amount
shall be allocated as follows: [describe distribution priority among Class A
Certificates].
Section 6.06 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 Account (other than the
Certificate Insurance Payments Account) held by the Trustee shall be invested
and reinvested by the Trustee, as directed in writing by the Servicer (with
respect to the Certificate Accounts) or the Company (with respect to the
Pre-Funding Account and the Interest Coverage Accounts) in one or more Permitted
Investments bearing interest or sold at a discount. If an Event of Default shall
have occurred and be continuing or if the Servicer does not provide investment
directions, the Trustee shall invest all Accounts in Permitted Investments
described in paragraph (d) of the definition of Permitted Investments. No such
investment in any Account shall mature later than the Business Day immediately
preceding the next Distribution Date (except that if such Permitted Investment
is an obligation of the Trustee, then such Permitted Investment shall mature not
later than such Distribution Date).
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(b) Subject to Section 9.01 hereof, the Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any investment loss on any Permitted Investment included
therein (except to the extent that the Trustee is the obligor and has defaulted
thereon or as provided in subsection (b) of this Section 6.06).
(c) 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 Account (excluding the Pre-Funding Account
and the Capitalized Interest Account) shall be for the benefit of the Servicer
as servicing compensation (in addition to the Servicing Fee). The Servicer shall
deposit in each Account (excluding the Pre-Funding Account and the Capitalized
Interest Account) and the Company shall deposit in each Pre-Funding Account and
Capitalized Interest 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 6.07 REPORTS BY TRUSTEE. (a) On each Distribution Date
the Trustee shall provide to each Holder, to the Servicer, to the Certificate
Insurer, to the Underwriters, to the Company and to the Rating Agencies a
written report (the "Trustee Remittance Report"), setting forth information
including, without limitation, the following information:
(i) the amount of the distribution with respect to each
Class of the Class A Certificates and Class R Certificates;
(ii) the amount of such distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments in Full and Curtailments or other unscheduled recoveries
of principal included therein and separately identifying any
Subordination Increase Amounts;
(iii) the amount of such distributions allocable to interest
and the calculation thereof;
(iv) the Security Balance of each Class of the Class A
Certificates as of such Distribution Date after giving effect to any
payment of principal on such Distribution Date;
(v) the amount of any Insured Payment included in the
amounts distributed to the Class A Certificateholders on such
Distribution Date;
(vi) the Required Subordinated Amount and the Subordinated
Amount as of such Distribution Date;
(vii) the total of any Substitution Adjustments and any Loan
Repurchase Price amounts included in such distribution;
(viii) the amounts, if any, of any Liquidation Loan Losses
for the related Due Period and the cumulative amount of Liquidated
Loan Losses from the Closing Date;
(ix) the number of Mortgage Loans and the aggregate Stated
Principal Balance of Mortgage Loans purchased pursuant to Section 5.18
for the related Distribution Date and since the closing date the
cumulative number and Stated Principal Balance of Mortgage Loans
purchased pursuant to Section 5.18.
(x) the number of Mortgage Loans and the aggregate
Principal Balance of Mortgage Loans purchased or substituted
for pursuant to Sections 3.03 and 2.04 for the related Distribution
Date and, since the Closing Date, the cumulative number and Principal
Balance of Mortgage Loans purchased or substituted for pursuant to
Sections 3.03 and 2.04;
(xi) the Class A Pass-Through Rate for such Distribution
Date;
(xii) the amount on deposit in the Pre-Funding Account and
the Capitalized Interest Account;
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(xiii) for the Distribution Date occurring in ________ 199_,
the balance of the Pre-Funded Amount that has not been used to purchase
Subsequent Mortgage Loans and that is being distributed to the Class A
Certificateholders as a mandatory prepayment of principal, if any, on
such Distribution Date; and
(xii) the amount, if any, of the Capitalized Interest Amount
included in such distribution.
Items (i), (ii) and (iii) above shall, with respect to the
Class A Certificates, be presented on the basis of a Certificate having a $1,000
denomination. In addition, by January 31 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. Such
information shall be deemed to have been furnished if provided pursuant to the
requirements of the Code from time to time in force.
(b) All distributions made to each Class of Class A
Certificate and the Class R Certificate on each Distribution Date will be made
on a pro rata basis among the Certificateholders of such Class on the next
preceding Record Date based on the Percentage Interest 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 by 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 Servicer, to the
Company and to the Rating Agencies, together with the information described in
subsection (a) preceding, the following information with respect to the Mortgage
Loans as of the close of business on the last Business Day of the prior calendar
month, which is hereby required to be prepared by the Servicer and furnished to
the Trustee for such purpose on or prior to the related Servicer Remittance
Date:
(i) the total number of Mortgage Loans and the aggregate
Principal Balances thereof, together with the number and aggregate
principal balances of such Mortgage Loans and the percentage (based on
the aggregate Principal Balances of the Mortgage Loans) of the
aggregate Principal Balances of such Mortgage Loans to the aggregate
Principal Balance of all Mortgage Loans (A) 30-59 days Delinquent, (B)
60-89 days Delinquent and (C) 90 or more days Delinquent;
(ii) the number and aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of the aggregate Principal Balances of
such Mortgage Loans to the aggregate Principal Balance of all Mortgage
Loans in foreclosure proceedings and the number and aggregate Principal
Balances of all Mortgage Loans and percentage (based on the aggregate
Principal Balances of the Mortgage Loans) of any such Mortgage Loans
which are also included in any of the statistics described in the
foregoing clauses (i)(A), (i)(B) and (i)(C);
(iii) the number and aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of the aggregate Principal Balances of
such Mortgage Loans to the aggregate Principal Balance of all Mortgage
Loans relating to Mortgagors in bankruptcy proceedings and the number
and aggregate Principal Balances of all Mortgage Loans and percentage
(based on the aggregate Principal Balances of the Mortgage Loans) of
any such Mortgage Loans which are also included in any of the
statistics described in the foregoing clauses (i)(A), (i)(B) and
(i)(C);
(iv) the number and aggregate Principal Balances of all
Mortgage Loans and percentage (based on the aggregate Principal
Balances of the Mortgage Loans) of the aggregate Principal Balances of
such Mortgage Loans to the aggregate Principal Balance of all Mortgage
Loans relating to REO Properties and the number and aggregate Principal
Balances of all Mortgage Loans and percentage (based on the aggregate
Principal Balances of the Mortgage Loans) of any such Mortgage Loans
which are also included in any of the statistics described in the
foregoing clause (i)(A), (i)(B) and (i)(C);
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(v) the weighted average Mortgage Interest Rate as of the
Due Date occurring in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated maturity
of all Mortgage Loans;
(vii) the book value of any REO Property; and
(viii) the number and aggregate Principal Balance of all
Subsequent Mortgage Loans added during the preceding Due Period.
Section 6.08 ADDITIONAL REPORTS BY TRUSTEE. (a) The Trustee
shall report to the Company, the Servicer and the Certificate Insurer with
respect to the amount then held in each Account (including investment earnings
accrued or scheduled to accrue) held by the Trustee and the identity of the
investments included therein, as the Company, 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 its
actual knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth in
the Purchase Agreement or in Section 3.01 or 3.02 hereof.
Section 6.09 COMPENSATING INTEREST. Not later than the close
of business on the third Business Day prior to the Distribution Date, the
Servicer shall remit to the Trustee (without right or reimbursement therefor)
for deposit into the related Certificate Account an amount equal to the lesser
of (a) the aggregate of the Prepayment Interest Shortfalls for the related
Distribution Date resulting from Principal Prepayments in Full and Curtailments
during the related Due Period and (b) its aggregate Servicing Fees payable in
the related Due Period and shall not have the right to reimbursement therefor
(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 Class A 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 Fund. The
Company, 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 Company, the Servicer, the Trustee
or the Certificate Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Class A 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 Class A Certificates, and (b) 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.
Section 6.11 ALLOCATION OF LIQUIDATED LOAN LOSSES. Prior to
each Distribution Date the Servicer shall determine the total amount of related
Liquidated Loan Losses, if any, that occurred during the related Due Period with
respect to the Loans. The amount of such Liquidated Loan Losses shall be
evidenced by an Officer's Certificate to be delivered to the Trustee not later
than the Servicer Remittance Date. On each Distribution Date, the principal
portion of all Liquidated Loan Losses on the Mortgage Loans shall increase the
Subordination Deficit in the manner described in this Agreement.
Section 6.12 PRE-FUNDING ACCOUNT.
(a) No later than the Closing Date, the Trustee shall
establish and maintain with itself one or more segregated trust accounts that
are Eligible Accounts, which shall be titled "Pre-Funding Account,
____________________ as trustee for the registered holders of NationsBanc Asset
Securities, Inc., Asset Backed
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Certificates, Series 199__-__" (the "Pre-Funding Account"). The Trustee shall,
promptly upon receipt, deposit in the Pre-Funding Account and retain therein the
Original Pre-Funded Amount remitted on the Closing Date to the Trustee by the
Company. Funds deposited in the Pre-Funding Account shall be held in trust by
the Trustee for the Holders of the Class A Certificates and the Certificate
Insurer for the uses and purposes set forth herein. If the Trustee shall not
have received an investment direction from the Company, the Trustee will invest
funds deposited in the Pre-Funding Account in Permitted Investments of the kind
described in clause (d) of the definition of Permitted Investments with a
maturity date no later than the second Business Day preceding each Distribution
Date. For federal income tax purposes, the Company shall be the owner of the
Pre-Funding Account and shall report all items of income, deduction, gain or
loss arising therefrom. All income and gain realized from investment of funds
deposited in the Pre-Funding Account shall be transferred to the Interest
Coverage Account on the Business Day immediately preceding each Distribution
Date. The Company shall deposit in the related Pre-Funding Account the amount of
any net loss incurred in respect of any such Permitted Investment immediately
upon realization of such loss without any right of reimbursement therefor.
(b) Amounts on deposit in the Pre-Funding Account shall be
withdrawn by the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee shall
withdraw from the Pre-Funding Account and deposit into the Certificate
Account an amount equal to 100% of the Principal Balances of the
Subsequent Mortgage Loans transferred and assigned to the Trustee on
such Subsequent Transfer Date and pay such amount to or upon the order
of the Company upon satisfaction of the conditions set forth in Section
2.08(b) with respect to such transfer and assignment; and
(ii) If the Pre-Funded Amount has not been reduced to zero
during the Pre-Funding Period, on the Servicer Remittance Date
immediately prior to the Distribution Date occurring in _______ 199__,
the Trustee shall deposit into the Certificate Account any amounts
remaining in the Pre-Funding Account.
Section 6.13 CAPITALIZED INTEREST ACCOUNT.
(a) No later than the Closing Date, the Trustee shall
establish and maintain with itself a separate, segregated trust account, which
shall be an Eligible Account, titled "Capitalized Interest Account,
_______________________________, as trustee for the registered holders of
NationsBanc Asset Securities, Inc. Asset Backed Certificates, Series 199__-__"
(the "Capitalized Interest Account"). The Trustee shall, promptly upon receipt,
deposit in the Capitalized Interest Account and retain therein the Initial
Capitalized Interest Amount remitted on the Closing Date to the Trustee by the
Company. In addition, the Trustee shall deposit into the Capitalized Interest
Account all income and gain on investments in the Pre-Funding Account pursuant
to Section 6.12. Funds deposited in the Capitalized Interest Account shall be
held in trust by the Trustee for the Holders of the Class A Certificates and the
Certificate Insurer for the uses and purposes set forth herein. For federal
income tax purposes, the Company shall be the owner of the Capitalized Interest
Account and shall report all items of income, deduction, gain or loss arising
therefrom. The Company shall deposit in the Capitalized Interest Account the
amount of any net loss incurred in respect of any such Permitted Investment
immediately upon realization of such loss without any right of reimbursement
therefor.
(b) On each of the first ____ Distribution Dates, the Trustee
shall (a) withdraw from the Capitalized Interest Account and deposit in the
Certificate Account the Capitalized Interest Amount.
On each Distribution Date following the conveyance of a
Subsequent Mortgage Loan to the Trustee, funds on deposit in the Capitalized
Interest Account in an amount equal to 1/360 of the product of (i) the Principal
Balance of such Subsequent Mortgage Loan and (ii) the sum of (A) the weighted
average Class A Pass-Through Rate for such Distribution Date minus % (B) %, and
(iii) the number of days, up to a maximum of 30 per calendar month, from the
Subsequent Cut-off Date to ___________, 199__, shall be remitted, without
notice, immediately upon receipt thereof to the Company.
Upon the earliest of (i) the reduction of the Security Balance
of the Class A-4 Certificates to zero, (ii) the termination of the Trust Fund in
accordance with Section 8.01 and (iii) the first Business Day following the
first Distribution Date following the conveyance of the last Subsequent Mortgage
Loan to the Trustee, any amount remaining on deposit in the Capitalized Interest
Account after distributions pursuant to Sections 6.13(b) above shall be
withdrawn by the Trustee and paid to the Company.
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ARTICLE VII
DEFAULT
Section 7.01 EVENTS OF DEFAULT. (a)"Event of Default",
wherever used herein, means any one of the following events:
(i) any failure by the Servicer to remit to the Trustee any
payment, other than a Servicing Advance, required to be made by the
Servicer under the terms of this Agreement which continues unremedied
for five Business Days after the date upon which such payment was
required to be made;
(ii) the failure by the Servicer to make any required
Servicing Advance which failure continues unremedied for a period of 30
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Servicer by the
Trustee or to the Servicer and the Trustee by any Certificateholder or
the Certificate Insurer;
(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 failure of any representation and warranty made pursuant to Section
3.01 to be true and correct which continues unremedied for a period of
30 days (or 15 days in the case of a failure to pay the premium for any
insurance policy which is required to be maintained under this
Agreement) after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the
Servicer, as the case may be, by the Company 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, marshaling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and such decree
or order shall have remained in force, undischarged or unstayed for a
period of 60 days; or
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings of
or relating to the Servicer or of or relating to all or substantially
all of 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.
(b) If an Event of Default described in this Section shall
occur, then, and in each and every such case, so long as such Event of Default
shall not have been remedied the Trustee shall, but only at the direction of the
Certificate Insurer or the Majority Certificateholders and with the prior
written consent of the Certificate Insurer, by notice in writing to the Servicer
and a Responsible Officer of the Trustee, and in addition to whatever rights
such Certificateholders may have at law or equity to damages, including
injunctive relief and specific performance, terminate all the rights and
obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof, as servicer. Upon receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall,
subject to Section 7.02, 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 Mortgage 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
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which shall at the time be credited by the Servicer to the Collection Account or
thereafter received with respect to the Mortgage Loans. The Trustee shall
promptly notify the Certificate Insurer and the Rating Agencies of the
occurrence of an Event of Default.
Section 7.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) On
and after the time the Servicer receives a notice of termination pursuant to
Section 7.01, or the Trustee receives the resignation of the Servicer evidenced
by an Opinion of Counsel pursuant to Section 5.24, or the Servicer is removed as
Servicer pursuant to Article VII, in which event the Trustee shall promptly
notify the Rating Agencies, except as otherwise provided in Section 7.01, the
Trustee 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; 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 2.04 and 3.03. The Trustee, as successor
servicer, or any other successor servicer shall be obligated to pay Compensating
Interest pursuant to Section 6.09 in any event and to make advances pursuant to
Section 5.21 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 5.04(b), 5.04(g) or 5.04(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, appoint, pursuant to
the provisions set forth in paragraph (c) below, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution acceptable to the Certificate Insurer that has a net worth of not
less than $15,000,000 as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer hereunder.
(c) In the event the Trustee is the successor servicer, it
shall be entitled to Servicing Compensation (including the Servicing Fee as
adjusted pursuant to the definition thereof) and other funds pursuant to Section
5.14 hereof as the Servicer. In the event the Trustee is unable or unwilling to
act as successor servicer, the Trustee shall solicit, by public announcement,
bids from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor servicer shall be entitled to the
full amount of the aggregate Servicing Fees hereunder as servicing compensation,
together with the other Servicing Compensation. Within thirty days after any
such public announcement, the Trustee shall negotiate and effect the sale,
transfer and assignment of the servicing rights and responsibilities hereunder
to the qualified party submitting the highest qualifying bid. The Trustee shall
deduct from any sum received by the Trustee from the successor to the Master
Servicer in respect of such sale, transfer and assignment all costs and expenses
of any public announcement and of any sale, transfer and assignment of the
servicing rights and responsibilities hereunder and the amount of any
unreimbursed Servicing Advances and Periodic Advances owed to the Trustee. After
such deductions, the remainder of such sum shall be paid by the Trustee to the
Master Servicer at the time of such sale, transfer and assignment to the
Servicer's successor.
(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 Mortgage 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 (i) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) 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 in writing
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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.
(e) Pending appointment of a successor to the Servicer
hereunder, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
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 7.03 WAIVER OF DEFAULTS. 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 the Rating Agencies.
Section 7.04 MORTGAGE LOANS, TRUST FUND AND ACCOUNTS HELD FOR
BENEFIT OF THE CERTIFICATE INSURER. (a) The Trustee shall hold the Trust Fund
and the Mortgage 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 Mortgage 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.
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ARTICLE VIII
TERMINATION
Section 8.01 TERMINATION. (a) Subject to Section 8.02, this
Agreement shall terminate upon notice to the Trustee of either: (i) the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due hereunder and the payment of all amounts due and
payable to the Certificate Insurer and the Trustee or (ii) mutual consent of the
Servicer, the Certificate Insurer and all Certificateholders in writing;
provided, however, that in no event shall the Trust Fund established by this
Agreement terminate later than twenty-one years after the death of the last
surviving lineal descendant of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, late Ambassador of the United
States to the Court of St. ▇▇▇▇▇, alive as of the date hereof.
(b) In addition, subject to Section 8.02, the Servicer may, at
its option and at its sole cost and expense, terminate this Agreement on any
date on which the related Pool Principal Balance is less than 10% of the sum of
(x) the aggregate of the Principal Balances of the Mortgage Loans on the Cut-off
Date plus (y) the aggregate of the Principal Balances of the Subsequent Mortgage
Loans on their respective Subsequent Cut-off Dates, by purchasing, on the next
succeeding Distribution Date, all of the outstanding Mortgage Loans and REO
Properties at a price (the "Termination Price") equal to the sum of (i) 100% of
the Principal Balance of each such outstanding Mortgage Loan and each REO
Property, (ii) the aggregate amount of accrued and unpaid interest on such
Mortgage Loans through the related due period and 30 days' interest on such
Mortgage Loans at a rate equal to the related Mortgage Interest Rate (net of the
Servicing Fee) with respect to such Mortgage Loan, (iii) any unreimbursed
amounts due to the Certificate Insurer under this Agreement or the Insurance
Agreement, (iv) the amount of any unreimbursed Servicing Advances made by the
Servicer with respect to the related Mortgage Loans and (v) any excess of the
actual stated principal balance of each such Mortgage Loan and REO Property over
the Principal Balance thereof, the aggregate amount of accrued and unpaid
interest on such excess through the related due period and 30 days' interest on
such excess at a rate equal to the related Mortgage Interest Rate with respect
to each related Mortgage Loan. Any such purchase shall be accomplished by
deposit into the Certificate Account of the Termination Price. From the
Termination Price so deposited, the Trustee shall reimburse the Servicer for the
amount of any unpaid Servicing Fees, unreimbursed Periodic Advances and
unreimbursed Servicing Advances made by the Servicer with respect to the related
Mortgage Loans. 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. ▇▇.▇▇. 101 et seq., as amended.
(c) If on any Distribution Date, the Servicer determines that
there are no outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than funds in the related Certificate Account, the Servicer
shall send a final distribution notice promptly to the related
Certificateholders in accordance with paragraph (d) below.
(d) Notice of any termination, specifying the Distribution
Date upon which the Trust Fund will terminate and that the Certificateholders
shall surrender their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Servicer by letter
to the Certificateholders mailed during the month of such final distribution
before the Master Servicer Remittance Date in such month, specifying (i) the
Distribution Date upon which final payment of the Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) 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 Servicer shall give such notice
to the Trustee therein specified. The Servicer shall give such notice to the
Trustee at the time such notice is given to the 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 Mortgage Loans and REO Properties in the Trust Fund as set forth above and
when the aggregate Security Balance of the Certificates has been reduced to
zero.
(e) In the event that all Certificateholders do 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
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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 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
Certificates shall not have been surrendered for cancellation, 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 such Class R Certificateholders for payment. Such funds shall
remain uninvested.
Section 8.02 ADDITIONAL TERMINATION REQUIREMENTS. (a) In the
event that the Servicer exercises its purchase option with respect to the Trust
Fund as provided in Section 8.01, the Trust Fund shall be terminated in
accordance with the following additional requirements, unless the Trustee has
been furnished with an Opinion of Counsel to the effect that the failure of the
Trust Fund to comply with the requirements of this Section 8.02 will not (i)
result in the imposition of taxes on "prohibited transactions" of the Trust Fund
as defined in Section 860F of the Code or (ii) cause the Trust Fund to fail to
qualify as a REMIC at any time that any Class A Certificates are outstanding:
(i) The Trustee shall establish a 90-day liquidation period
for the Trust Fund and specify the first day of such period in a
statement attached to the Trust Fund's final Tax Return pursuant to
Treasury Regulation Section 1.860F-1. The Trustee shall satisfy all the
requirements of a qualified liquidation under Section 860F of the Code
and any regulations thereunder;
(ii) During such 90-day liquidation period, and at or prior
to the time of making of the final payment on the Certificates, the
Trustee shall sell all of the assets of the Trust Fund for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Class R Certificates all
cash on hand in the Trust Fund (other than cash retained to meet
claims), and the REMIC shall terminate at that time.
(b) By their acceptance of the Class R Certificates, the
Holders thereof hereby agree to authorize the Trustee to specify the 90-day
liquidation period for the Trust Fund, which authorization shall be binding upon
all successor Class R Certificateholders.
Section 8.03 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 of the Mortgage Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders 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 Mortgage 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 Mortgage 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.
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ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01 DUTIES OF TRUSTEE. 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 occurs
and is continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs. Any permissive right of the Trustee
enumerated in this Agreement shall not be construed as a duty.
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 Master Servicer or the Seller hereunder. If any such
instrument is found not to conform to the requirements of this Agreement in a
material manner, the Trustee shall take action as it deems appropriate to have
the instrument corrected and will provide notice thereof to the Certificate
Insurer.
The Trustee shall sign on behalf of the Trust Fund any tax
return that the Trustee is required to sign pursuant to applicable federal,
state or local tax laws.
The Trustee covenants and agrees that it shall perform its
obligations hereunder in a manner so as to maintain the status of the Trust Fund
as a REMIC under the REMIC Provisions and to prevent the imposition of any
federal, state or local income, prohibited transaction, contribution or other
tax on the Trust Fund to the extent that maintaining such status and avoiding
such taxes are reasonably within the control of the Trustee and are reasonably
within the scope of its duties under this Agreement.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and
after the curing of all such Events of Default which may have
occurrer, 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 Responsible
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
relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement.
Section 9.02 CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 9.01:
(a) The Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officers' Certificate, Opinion of Counsel, certificate of auditors or
any other
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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;
(b) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance therewith;
(c) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders or the Certificate
Insurer, pursuant to the provisions of this Agreement, unless such
Certificateholders or the Certificate Insurer, as the case may be,
shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve
the Trustee of the obligation, upon the occurrence of an Event of
Default (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of
care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own
affairs;
(d) 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;
(e) 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 by at least a 25% Percentage Interest of
any Class of Class A Certificates; 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 such Certificateholders, the Trustee may require
reasonable indemnity against such expense, or liability from such
Certificateholders as a condition to taking any such action;
(f) 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;
(g) 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; and
(h) 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.
Section 9.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE
LOANS. The recitals contained herein and in the Certificates, other than the
signature of the Trustee on the Certificates and the certificate of
authentication, shall be taken as the statements of the Company or the Servicer,
as the case may be, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement or of the Certificates or of any
Mortgage Loan or related document, other than the signature of the Trustee on
the Certificates and the Certificate of Authentication. The Trustee shall not be
accountable for the use or application by the Company or the Servicer of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Seller in respect of the Mortgage Loans or
deposited in or withdrawn from the Custodial Account or the Certificate Accounts
or any other account by or on behalf of the Company or the Servicer, other than
any funds held by or on behalf of the Trustee in accordance with Section 6.01.
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Section 9.04 TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee.
Section 9.05 PAYMENT OF TRUSTEE'S FEES. The Trustee shall
withdraw from the Certificate Account on each Distribution Date and pay to
itself the Trustee's Fee. Except as otherwise provided in this Agreement, the
Trustee and any director, officer, employee or agent of the Trustee shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
"unanticipated" out-of-pocket expense incurred or paid to third parties (which
expenses shall not include salaries paid to employees, or allocable overhead, of
the Trustee) in connection with the acceptance or administration of its trusts
hereunder or the Certificates, or its performance under the Insurance Agreement,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
under the Insurance Agreement or by reason of reckless disregard of obligations
and duties hereunder or under the Insurance Agreement. All such amounts shall be
payable from funds in the Certificate Accounts as provided in Section 6.02(e).
The provisions of this Section 9.05 shall survive the termination of this
Agreement and the removal or resignation of the Trustee.
The Servicer covenants and agrees to indemnify the Trustee and
any director, officer, employee or agent of the Trustee against any losses,
liabilities, damages, claims or expenses (including reasonable legal fees and
such related expenses) that may be sustained by the Trustee in connection with
this Agreement related to the willful misfeasance, bad faith or negligence in
the performance of the Servicer's duties hereunder.
Section 9.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee
hereunder shall at all times be a corporation or a national banking association
organized and doing business under the laws of any state or the United States of
America or the District of Columbia, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. In addition, the Trustee shall at all times be acceptable to the
Rating Agencies rating the Certificates. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. 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 9.07.
The corporation or national banking association serving as Trustee may have
normal banking and trust relationships with the Seller and their affiliates or
the Servicer and its affiliates; provided, however, that such corporation cannot
be an affiliate of the Servicer other than the Trustee in its role as successor
to the Servicer.
Section 9.07 RESIGNATION AND REMOVAL OF THE TRUSTEE. The
Trustee may at any time resign and be discharged from the trusts hereby created
by giving notice thereof to the Company, the Certificate Insurer, the Servicer
and to all Certificateholders; provided, that such resignation shall not be
effective until a successor trustee is appointed and accepts appointment in
accordance with the following provisions. Upon receiving such notice of
resignation, the Servicer shall, with the written consent of the Certificate
Insurer, promptly appoint a successor trustee who meets the eligibility
requirements of Section 9.06 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 Certificateholders,
the Certificate Insurer and the Servicer by the Company. If no successor trustee
shall have been so appointed and have accepted appointment within 60 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;
provided, however, that the resigning Trustee shall not resign and be discharged
from the trusts hereby created until such time as the Rating Agency rating the
Certificates approves the successor trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the 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, or if the rating of the long-term debt obligations of the Trustee
is not acceptable to the Rating Agencies in respect of mortgage pass-through
certificates having a rating equal to the then current rating on the
Certificates, then the Servicer, with the written
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consent of the Certificate Insurer, may remove the Trustee and appoint a
successor trustee who meets the eligibility requirements of Section 9.06 by
written instrument, in duplicate, which instrument shall be delivered to the
Trustee so removed and to the successor trustee. A copy of such instrument shall
be delivered to the Certificateholders, the Certificate Insurer and the Company
by the Servicer.
The Majority Certificateholders, with the written consent of
the Certificate Insurer, may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
the Certificate Insurer or 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 so appointed. A copy of such instrument shall be delivered to the
Certificateholders, the Certificate Insurer and the Company by the Servicer.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 9.08.
Section 9.08 SUCCESSOR TRUSTEE. Any successor trustee
appointed as provided in Section 9.07 shall execute, acknowledge and deliver to
the Servicer, the Certificate Insurer 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 of the Mortgage
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 9.06.
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 the Certificate Insurer and all Holders of
Certificates at their addresses as shown in the Certificate Register provided
that the Servicer has received such Certificate Register. If the Servicer fails
to mail such notice within ten 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.
Notwithstanding anything to the contrary contained herein, so
long as no Certificate Insurer Default exists, the appointment of any successor
trustee pursuant to any provision of this Agreement will be subject to the prior
written consent of the Certificate Insurer.
Section 9.09 MERGER OR CONSOLIDATION OF TRUSTEE. Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be eligible under the provisions of
Section 9.06, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 9.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions 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 Company
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 Company and the
Trustee may consider necessary or desirable. If the Company 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
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shall have the power to make such appointment. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 9.06 hereunder and no notice to Holders of Certificates of
the appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 9.08 hereof.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 9.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Master Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to 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.
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.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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ARTICLE X
REMIC PROVISIONS
Section 10.01 REMIC ADMINISTRATION.
(a) The Trustee shall make an election to treat the Trust Fund
(exclusive of the Capitalized Interest Account and the Pre-Funding Account) as a
REMIC under the Code, and if necessary, under applicable state law. Such
election will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued. For
purposes of the REMIC election in respect of the Trust Fund, (i) each Class of
Class A Certificates shall be designated as the "regular interests" and the
Class R Certificates shall be designated as the sole Class of "residual
interest" in the REMIC. The Trustee shall not permit the creation of any
"interests" in the Trust Fund (within the meaning of Section 860G of the Code)
other than the REMIC regular interests and the interests represented by the
Certificates.
(b) The Closing Date is hereby designated as the Startup Day
of the Trust Fund within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay out of its own funds, without any
right of reimbursement, any and all expenses relating to any tax audit of the
Trust Fund (including, but not limited to, any professional fees or any
administrative or judicial proceedings with respect thereto that involved the
Internal Revenue Service or state tax authorities), other than the expense of
obtaining any tax related Opinion of Counsel not obtained in connection with
such an audit and other than taxes, in either case except as specified herein;
provided, however, that if such audit resulted from the negligence of the
Servicer or the Company, then the Servicer or the Company, as the case may be,
shall pay such expenses. The Trustee, as agent for the tax matters person, shall
(i) act on behalf of the Trust Fund in relation to any tax matter or controversy
involving the Trust Fund and (ii) represent the Trust Fund in any administrative
or judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The Holder of the largest Percentage
Interest in the Class R Certificates from time to time is hereby designated as
Tax Matters Person with respect to the Trust Fund and hereby irrevocably
appoints and authorizes the Trustee to act its agent to perform the duties of
the Tax Matters Person with respect to the Trust Fund. To the extent authorized
under the Code and the regulations promulgated thereunder, each Holder of a
Class R Certificate hereby irrevocably appoints and authorizes the Trustee to be
its attorney-in-fact for purposes of signing any Tax Returns required to be
filed on behalf of the Trust Fund.
(d) The Trustee shall prepare or cause to be prepared, sign
and file all of the Tax Returns in respect of the Trust Fund created hereunder,
other than Tax Returns required to be filed by the Servicer pursuant to Section
5.25. The expenses of preparing and filing such returns shall be borne by the
Trustee without any right of reimbursement therefor.
(e) The Trustee shall perform on behalf of the Trust Fund all
reporting and other tax compliance duties that are the responsibility of the
Trust Fund under the Code, REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or other such
compliance guidance, the Trustee shall provide (i) to any Transferor of a Class
R Certificate and to the Internal Revenue Service such information as is
necessary for the application of any tax relating to the transfer of a Class R
Certificate to any Person who is not a Disqualified Organization, (ii) to
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who will
serve as the representative of the Trust Fund. In addition, the Company shall
provide or cause to be provided to the Trustee, within ten (10) days after the
Closing Date, all information or data that the Trustee reasonably determines to
be relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) The Trustee shall take such action and shall cause the
Trust Fund created hereunder to take such action as shall be necessary to create
or maintain the status thereof as a REMIC under the REMIC Provisions
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(and the Master Servicer shall assist it, to the extent reasonably requested by
it). The Trustee shall not take any action, cause the Trust Fund to take any
action or fail to take (or fail to cause to be taken) any action that, under the
REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger
the status of the Trust Fund as a REMIC or (ii) result in the imposition of a
tax upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless the Trustee received an Opinion of
Counsel (at the expense of the party seeking to take such action but in no event
shall such Opinion of Counsel be an expense of the Trustee) to the effect that
the contemplated action will not, with respect to the Trust Fund created
hereunder, endanger such status or result in the imposition of such a tax. The
Servicer shall not take or fail to take any action (whether or not authorized
hereunder) as to which the Trustee has advised it in writing that it has
received an Opinion of Counsel (which such Opinion of Counsel shall not be an
expense of the Trustee) to the effect that an Adverse REMIC Event could occur
with respect to such action. In addition, prior to taking any action with
respect to the Trust Fund or its assets, or causing the Trust Fund to take any
action which is not expressly permitted under the terms of this Agreement, the
Servicer will consult with the Trustee or its designee, in writing, with respect
to whether such action could cause an Adverse REMIC Event to occur with respect
to the Trust Fund, and the Servicer shall not take any such action or cause the
Trust Fund to take any such action as to which the Trustee has advised it in
writing that an Adverse REMIC Event could occur. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement (but in no
event shall such cost be an expense of the Trustee). At all times as may be
required by the Code, the Trustee will ensure that substantially all of the
assets of the Trust Fund will consist of "qualified mortgages" as defined in
Section 860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited
transactions" of the Trust Fund created hereunder as defined in Section
860F(a)(2) of the Code on "net income from foreclosure property" of the Trust
Fund as defined in Section 860G(c) of the Code, on any contributions to the
Trust Fund after the Startup Day therefor pursuant to Section 860G(d) of the
Code, or any other tax is imposed by the Code or any applicable provisions of
state or local tax laws, such tax shall be charged (i) to the Trustee pursuant
to Section 10.03 hereof, if such tax arises out of or results from a breach by
the Trustee of any of its obligations under this Article X, (ii) to the Master
Servicer pursuant to Section 10.03 hereof, if such tax arises out of or results
from a breach by the Master Servicer of any of its obligations under Article V
or this Article X, or otherwise (iii) against amounts on deposit in the related
Certificate Account and shall be paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing
April 15, 1997, the Trustee shall deliver to the Servicer and each Rating Agency
a Certificate from a Responsible Officer of the Trustee stating the Trustee's
compliance with this Article X.
(i) The Servicer and the Trustee shall, for federal income tax
purposes, maintain books and records with respect to the Trust Fund on a
calendar year and on an accrual basis.
(j) The Trustee shall not accept any contributions of assets
to the Trust Fund unless it shall have received an Opinion of Counsel (which
such Opinion of Counsel shall not be an expense of the Trustee) to the effect
that the inclusion of such assets in the Trust Fund will not cause the Trust
Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding or subject the Trust Fund to any tax under the REMIC Provisions or
other applicable provisions of federal, state and local law or ordinances.
(k) Neither the Trustee nor the Servicer shall enter into any
arrangement by which the Trust Fund will receive a fee or other compensation for
services nor permit the Trust Fund to receive any income from assets other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.
(l) Solely for purposes of satisfying Section
1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest possible maturity
date" of the Class A Certificates is ___________ 25, 20__.
(m) Upon filing with the Internal Revenue Service, the Trustee
shall furnish to the Holders of the Class R Certificates the Form 1066 and each
Form 1066Q.
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Section 10.02 PROHIBITED TRANSACTIONS AND ACTIVITIES.
Neither the Company, the Servicer nor the Trustee shall sell,
dispose of or substitute for any of the Mortgage Loans, except in connection
with (i) the foreclosure of a Mortgage Loan, including but not limited to, the
acquisition or sale of a Mortgaged Property acquired by deed in lieu of
foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the termination of the
Trust Fund pursuant to Article VIII of this Agreement, or (iv) a purchase of
Mortgage Loans pursuant to Article II or III of this Agreement nor acquire any
assets for the Trust Fund, nor sell or dispose of any investments in the
Certificate Accounts for gain, nor accept any contributions to the Trust Fund
after the Closing Date unless it has received an Opinion of Counsel (at the
expense of the party seeking to cause such sale, disposition, substitution or
acquisition but in no event shall such Opinion of Counsel be an expense of the
Trustee) that such sale, disposition, substitution or acquisition will not (a)
affect adversely the status of the Trust Fund as a REMIC or (b) cause the Trust
Fund to be subject to a tax on "prohibited transactions" or "contributions"
pursuant to the REMIC Provisions.
Section 10.03 SERVICER AND TRUSTEE INDEMNIFICATION.
(a) The Trustee agrees to indemnify the Trust Fund, the
Company and the Servicer for any taxes and costs including, without limitation,
any reasonable attorneys' fees imposed on or incurred by the Trust Fund, the
Company or the Master Servicer, as a result of a breach of the Trustee's
covenants set forth in this Article X.
(b) The Servicer agrees to indemnify the Trust Fund, the
Company and the Trustee for any taxes and costs (including, without limitation,
any reasonable attorneys' fees) imposed on or incurred by the Trust Fund, the
Company or the Trustee, as a result of a breach of the Servicer's covenants set
forth in this Article X or in Article V with respect to compliance with the
REMIC Provisions, including without limitation, any penalties arising from the
Trustee's execution of Tax Returns prepared by the Servicer pursuant to Section
5.25 that contain errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 LIMITATION ON LIABILITY OF THE COMPANY AND THE
SERVICER. Neither the Company, the Servicer nor any of the directors, officers,
employees or agents of the Company or the Servicer shall be under any liability
to the Certificate Insurer, the Trust Fund or the Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Company or the Servicer (but this provision
shall protect the above described persons) against any breach of warranties or
representations made herein, or against any specific liability imposed on the
Servicer or the Company pursuant to any other Section hereof; and provided
further that this provision shall not protect the Company, the Servicer or any
such person, against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Company,
the Servicer and any director, officer, employee or agent of the Company or the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Company, the Servicer and any director, officer, employee or agent of the
Company or the Master Servicer shall be indemnified and held harmless by the
Trust Fund against any loss, liability or expense incurred in connection with
any legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense related to Servicer's servicing obligations with
respect to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) or related to the Servicer's obligations under this Agreement, or any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder. Neither the Company nor
the Servicer shall be under any obligation to appear in, prosecute or defend any
legal action which is not incidental to its respective duties under this
Agreement and which in its opinion may involve it in any expense or liability;
provided, however, that the Company or the Servicer may in its sole discretion
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In the event the Company or the
Servicer take any action as described in the preceding sentence, the legal
expenses and costs of such action, if previously approved in writing by the
Certificate Insurer, which approval shall not be unreasonably withheld, and any
liability resulting therefrom will be expenses, costs and liabilities of the
Trust Fund, and the Servicer or the Company, as the case may be, will be
entitled to be reimbursed therefor out of funds in the Collection Account.
Section 11.02 ACTS OF CERTIFICATEHOLDERS. (a) Except 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.
Section 11.03 AMENDMENT. This Agreement may be amended from
time to time by the Company, the Servicer and the Trustee without the consent of
any of the Certificateholders, (i) to cure any ambiguity or mistake, (ii) to
correct, modify or supplement any provisions herein which may be inconsistent
with any other provisions herein, (iii) to make any other provisions with
respect to matters or questions arising under
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this Agreement which are not materially inconsistent with the provisions hereof
amend this Agreement in any respect subject to the provisions below, or (iv) if
such amendment, as evidenced by an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee, is reasonably necessary to
comply with any requirements imposed by the Code or any successor or amendatory
statute or any temporary or final regulation, revenue ruling, revenue procedure
or other written official announcement or interpretation relating to federal
income tax laws or any proposed such action which, if made effective, would
apply retroactively to the Trust Fund at least from the effective date of such
amendment; provided that in the case of clause (iii) such action shall not
adversely affect in any material respect the interests of any Certificateholder
(other than Certificateholders who shall consent to such amendment) or the
Certificate Insurer, as evidenced either by an Opinion of Counsel (provided by
the Person requesting such amendment) or written notification from each Rating
Agency to the effect that such amendment will not cause such Rating Agency to
lower or withdraw the then current ratings on the Certificates, delivered to the
Trustee and the Certificate Insurer.
This Agreement may also be amended from time to time by the
Company, the Servicer and the Trustee with the consent 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 of
Certificates; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate or (ii) reduce the aforesaid
percentage of Certificates the Holders of which are required to consent to any
such amendment, without the consent of the Certificate Insurer and the Holders
of all Certificates then outstanding. Notwithstanding any other provision of
this Agreement, for purposes of the giving or withholding of consents pursuant
to this Section 11.03, Certificates registered in the name of the Company or the
Servicer or any affiliate thereof shall be entitled to voting rights with
respect to matters described in (i), (ii) and (iii) of this paragraph.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust Fund pursuant to the REMIC Provisions or
cause the Trust Fund to fail to qualify as a REMIC at any time that any of the
Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee
shall furnish a statement describing the amendment to each Certificateholder,
the Certificate Insurer, and each Rating Agency.
It shall not be necessary for the consent of
Certificateholders under this Section 11.03 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
Section 11.04 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 Master Servicer at the
Certificateholders' 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 Mortgage Loans.
Section 11.05 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, _______________________________,
Attention: _____________________________, (ii) in the case of NationsBanc Asset
Securities, Inc., NationsBank Corporate Center, Charlotte, North Carolina,
Attention: ________________________________, (iii) in the case of the Trustee,
_____________________________________, Attention: _____________________, (iv) in
the case of the Certificateholders, as set forth in the Certificate Register,
(v) in the case of [Rating
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Agency], ___________________________, Attention: _________________________, and
(vi) in the case of the Certificate Insurer, _____________________, Attention:
____________________. 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 11.06 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 or of the Certificates or the rights of the Holders
thereof.
Section 11.07 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 11.08 SUCCESSORS AND ASSIGNS. This Agreement shall
inure to the benefit of and be binding upon the Servicer, the Company, the
Trustee and the Certificateholders and their respective successors and permitted
assigns.
Section 11.09 HEADINGS. The headings of the various articles
and sections of this Agreement have been inserted for convenience of reference
only and shall not be deemed to be part of this Agreement.
Section 11.10 THE CERTIFICATE INSURER DEFAULT. Any right
conferred to the Certificate Insurer, including, without limitation, the right
to receive the Premium Amount pursuant to Section 6.05(b)(i) and 6.05(c)(i),
shall be suspended during any period in which a Certificate Insurer Default
exists. At such time as the Certificates are no longer outstanding hereunder,
and no amounts owed to the Certificate Insurer hereunder remain unpaid, the
Certificate Insurer's rights hereunder shall terminate.
Section 11.11 THIRD PARTY BENEFICIARY. The parties agree that
each of the Seller and the Certificate Insurer are intended and shall have all
rights of a third-party beneficiary of this Agreement.
Section 11.12 INTENT OF THE PARTIES. It is the intent of the
Company 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. 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 11.13 NOTICE TO RATING AGENCIES AND CERTIFICATEHOLDER.
The Trustee shall use its best efforts to promptly provide
notice to the Rating Agencies and the Certificate Insurer with respect to each
of the following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not
been cured;
3. The resignation or termination of the Servicer or the
Trustee;
4. The repurchase of Mortgage Loans pursuant to Section
3.03;
5. The final payment to Certificateholders; and
6. Any change in the location of the Collection Account
or the Certificate Accounts.
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In addition, the Trustee shall promptly furnish to the Rating
Agencies copies of the following:
1. Each report to Certificateholders described in
Section 6.07; and
2. Each annual independent public accountants' servicing
report described in Section 5.17.
Any such notice pursuant to this Section 11.13 shall be in
writing and shall be deemed to have been duly given if personally delivered or
mailed by first class mail, postage prepaid, or by express delivery service
(except in the case of notice to the Certificate Insurer which notice shall be
given in accordance with Section 11.05 hereof).
Section 11.14 GOVERNING LAW. (a) THIS AGREEMENT AND THE
CERTIFICATES 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 AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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IN WITNESS WHEREOF, the Servicer, the Trustee and the Company
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
NationsBanc Asset Securities, Inc.,
as Company
By:
--------------------------------
Name:
Title:
as Servicer
By:
--------------------------------
Name:
Title:
as Trustee
By:
--------------------------------
Name:
Title:
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State of ____________ )
) ss.:
County of ___________ )
On the ____ day of ________, 199__ before me, a Notary Public
in and for the State of _______________, personally appeared
____________________, known to me to be a ___________________ of NationsBanc
Asset Securities, Inc., the corporation that executed the within instrument and
also known to me to be the person who executed it on behalf of said corporation,
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------
Notary Public
My Commission expires ________________
[Notary Page]
78
State of ___________ )
) ss.:
County of __________ )
On the ____ day of ______, 199__ before me, a Notary Public in
and for the State of ____________, personally appeared _____________________,
known to me to be ____________________ of _____________________, the corporation
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------------
Notary Public
My Commission expires ________________
[Notary Page]
79
State of ___________ )
) ss.:
County of __________ )
On the __th day of _______, 199__, before me, a Notary Public
in and for the State of ________, personally appeared _______________, known to
me to be _______________ of ____________________, the corporation that executed
the within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunder to set my hand and
affixed my official seal the day and year in this certificate first above
written.
--------------------------------------
Notary Public
My Commission expires ________________
[Notary Page]
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EXHIBIT A
Certificate Insurance Policy
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EXHIBIT B-1
FORM OF CLASS [A-1][A-2][A-3][A-4] CERTIFICATE SOLELY FOR U.S.
FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL
ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES
OF APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO
THIS CERTIFICATE. ASSUMING THAT THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE OF
PREPAYMENT, USED SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES, EQUAL TO A CONSTANT PREPAYMENT RATE OF ____% PER ANNUM (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN
$______________ OF OID PER $__________ OF SECURITY BALANCE, THE YIELD TO
MATURITY IS ______% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL
PERIOD IS NO MORE THAN $_________ PER $___________ OF SECURITY BALANCE, COMPUTED
USING THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL
PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
Certificate No. ___
____% Initial Pass-Through Rate
Date of Pooling and Servicing Agreement: Aggregate Security Balance of the
_______, 199__ Class [A-1][A-2][A-3][A-4] Certificates: $__________
First Distribution Date: ____________, 199__ Initial Security Balance of this Certificate:
$--------------
Percentage Interest: %
CUSIP:
ASSET BACKED CERTIFICATE
SERIES 199__-__
evidencing a percentage interest in the distributions
allocable to the Class [A- 1][A-2][A-3][A-4] Certificates with respect to a
Trust Fund consisting primarily of a pool of conventional ▇▇▇▇▇ four-family
fixed rate first lien and second lien residential mortgage loans sold by
NationsBanc Asset Securities, Inc.
This certifies that __________________ is the registered owner
of the Percentage Interest evidenced by this Certificate in certain
distributions with respect to a Trust Fund consisting primarily of a pool of
conventional one- to four-family fixed rate first lien and second lien mortgage
loans (the "Mortgage Loans"), sold by NationsBanc Asset Securities, Inc. (the
"Company"). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") among the Company,
______________, as servicer (the "Servicer"), and _________________, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the holder of
this Certificate by virtue of the acceptance hereof assents and by which such
holder is bound.
82
This Certificate is payable solely from the assets of the
Trust Fund and the Certificate Insurance Policy (as defined below) and does not
represent an obligation of or interest in the Company, the Servicer, the Trustee
referred to below or any of their affiliates. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by any governmental agency
or instrumentality or by the Company, the Servicer, the Trustee or any of their
affiliates. None of the Company, the Servicer, or any of their affiliates will
have any obligation with respect to any certificate or other obligation secured
by or payable from payments on the Certificates.
____________________ (the "Certificate Insurer") has issued a
certificate insurance policy (the "Certificate Insurance Policy") with respect
to the Class A Certificates, a copy of which is attached to the Agreement.
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 Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such Distribution Date (the "Record Date"),
from the Available Funds and in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount of interest and principal,
if any required to be distributed to holders of Class [A-1][A-2][A-3][A-4]
Certificates on such Distribution Date.
All distributions on this Certificate will be made or caused
to be made by the Trustee in immediately available funds either (i) by check
mailed to the address of the Person entitled thereto, as such name and address
shall appear on the Certificate Register or (ii) by wire transfer to the account
of any Person entitled thereto if such Person shall have so notified the Trustee
and such Certificateholder is the registered holder of Class
[A-1][A-2][A-3][A-4] Certificates the aggregate Security Balance of which is not
less than $5,000,000.
Notwithstanding the above, the final distribution on this
Certificate will be made after due notice of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose. The initial Security Balance
of this Certificate is set forth above. The Security Balance hereof will be
reduced by this Certificate's Percentage Interest of distributions of the Class
A Principal Distribution Amount allocated to the Class A [A-1][A-2][A-3][A-4]
Certificates.
This Certificate is one of a duly authorized issue of
Certificates issued in __________ Classes designated as Asset Backed
Certificates of the Series specified hereon (herein collectively called the
"Certificates").
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. In the event that Servicer
funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Servicer, to the extent provided in the Agreement, from
related recoveries on such Mortgage Loan or from other cash that would have been
distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Collection
Account and/or the Certificate Account created for the benefit of
Certificateholders may be made by the Servicer from time to time for purposes
other than distributions to Certificateholders, such purposes including without
limitation reimbursement to the Company and the Master Servicer of advances
made, or certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein
provided, the amendment of the Agreement and the modification of the rights and
obligations of the Company, the Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Company, the Servicer
and the Trustee with the consent of the Certificate Insurer and the Majority
Certificateholders. Any such consent by the holder of this Certificate shall be
conclusive and binding on such holder and upon all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon the Certificate. The Agreement also permits the amendment thereof in
certain circumstances without the consent of the holders of any of the
Certificates and, in certain additional circumstances, without the consent of
the holders of certain Classes of Certificates.
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83
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee in the City and
State of New York, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
in Classes and 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 authorized denominations evidencing the
same Class and 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 Company, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Company, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Servicer, the Trustee nor any such agent shall be affected by notice to the
contrary.
This Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
The obligations created by the Agreement in respect of the
Certificates and the Trust Fund created thereby shall terminate upon the payment
to Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Servicer from the
Trust Fund of all remaining Mortgage Loans, thereby effecting early retirement
of the Class [A-1][A-2][A-3][A-4] Certificates. The Agreement permits, but does
not require, the Servicer to purchase at a price determined as provided in the
Agreement all remaining Mortgage Loans; provided, that any such option may only
be exercised if the Pool Principal Balance as of the Distribution Date upon
which the proceeds of any such purchase are distributed is less than 10% of the
Original Pool Principal Balance (net of any excess of the Original Pre-Funded
Amounts over the aggregate of the Principal Balances of the Subsequent Mortgage
Loans as of their respective Subsequent Cut-off Dates).
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
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84
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: , 199
---------- --- ---------------------------------,
as Trustee
By:
-------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [A-1][A-2][A-3][A-4] Certificates
referred to in the within-mentioned Agreement.
---------------------------------,
as Certificate Registrar
By:
-------------------------------
Authorized Signatory
4
85
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within
Asset Backed Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
-----------------------------------------------
Signature by or on behalf of assignor
-----------------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise,
in immediately available funds to ______________________________________________
for the account of _____________________________________account number
_____________________________________, or, if mailed by check, to
___________________________________________________________________. Applicable
statements should be mailed to _____________________________________. This
information is provided by _______________________________________, the assignee
named above, or _____________________________, as its agent.
86
EXHIBIT B-2
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A
NON-UNITED STATES PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE
BENEFIT PLAN OR OTHER PLAN SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975
OF THE CODE, UNLESS THE TRANSFEREE PROVIDES AN OPINION OF COUNSEL SATISFACTORY
TO THE MASTER SERVICER, THE COMPANY AND THE TRUSTEE THAT THE PURCHASE OF THIS
CERTIFICATE BY, ON BEHALF OF OR WITH "PLAN ASSETS" OF SUCH PLAN IS PERMISSIBLE
UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION AND WILL NOT SUBJECT THE SERVICER, THE COMPANY OR THE TRUSTEE TO ANY
OBLIGATION IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE
MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE
MASTER SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED
STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY POSSESSION OF THE UNITED
STATES, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN AN
INSTRUMENTALITY WHICH IS A CORPORATION IF ALL OF ITS ACTIVITIES ARE SUBJECT TO
TAX AND, EXCEPT FOR THE FHLMC, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT
SELECTED BY SUCH GOVERNMENTAL UNIT), (B) A FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (C) 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), (D) RURAL ELECTRIC AND TELEPHONE COOPERATIVES DESCRIBED IN
SECTION 1381(A)(2)(C) OF THE CODE AND (E) ANY OTHER PERSON SO DESIGNATED BY THE
TRUSTEE BASED UPON AN OPINION OF COUNSEL THAT THE HOLDING OF AN OWNERSHIP
INTEREST IN A CLASS [R] CERTIFICATE BY SUCH PERSON MAY CAUSE THE TRUST FUND OR
ANY PERSON HAVING AN OWNERSHIP INTEREST IN ANY CLASS OF CERTIFICATES (OTHER THAN
SUCH PERSON) TO INCUR 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 CLASS R CERTIFICATE TO SUCH PERSON (ANY SUCH PERSON DESCRIBED IN
THE FOREGOING CLAUSES (A), (B), (C), (D) OR (E) BEING HEREIN REFERRED TO AS A
"DISQUALIFIED ORGANIZATION") OR AN AGENT OF A DISQUALIFIED ORGANIZATION, (2) NO
PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX AND
(3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. THE TERMS "UNITED STATES,"
"STATE" AND "INTERNATIONAL ORGANIZATION" SHALL HAVE THE MEANINGS SET FORTH IN
SECTION 7701 OF THE CODE OR SUCCESSOR PROVISIONS. NOTWITHSTANDING THE
REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER
DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL
FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A
CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE
87
BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE
PROVISIONS OF THIS PARAGRAPH.
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR THE SECURITIES LAWS OF ANY
STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH IS IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
2
88
Certificate No.
------
Date of Pooling and Servicing Agreement:
_______________, 199__
First Distribution Date:
_______________, 199__
Percentage Interest:__%
ASSET BACKED CERTIFICATE,
SERIES 199__-__
evidencing a percentage interest in any distributions
allocable to the Class R Certificates with respect to a Trust
Fund consisting primarily of a pool of conventional one- to
four-family fixed rate first lien and second lien residential
mortgage loans sold by NationsBanc Asset Securities, Inc.
This certifies that ____________________________ is the
registered owner of the Percentage Interest evidenced by this Certificate in
certain distributions with respect to a Trust Fund consisting primarily of a
pool of conventional one- to four-family fixed rate first lien and second lien
residential mortgage loans (the "Mortgage Loans"), sold by NationsBanc Asset
Securities, Inc. (the "Company"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as specified above (the "Agreement") among
the Company, ___________________________, as servicer (the "Servicer") and
_____________________________, as trustee (the "Trustee"), a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
This Certificate is payable solely from the assets of the
Trust Fund and does not represent an obligation of or interest in the Company,
the Servicer, the Trustee referred to below or any of their affiliates. Neither
this Certificate nor the underlying Mortgage Loans are guaranteed or insured by
any governmental agency or instrumentality or by the Company, the Servicer, the
Trustee or any of their affiliates. None of the Company, the Servicer, or any of
their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
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 Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day immediately
preceding the month of such Distribution Date (the "Record Date"), from the
Available Funds in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount (of interest and principal, if any)
required to be distributed to Holders of Class [R] Certificates on such
Distribution Date.
Each Holder of this Certificate will be deemed to have agreed
to be bound by the restrictions set forth in the Agreement to the effect that
(i) each person holding or acquiring any Ownership Interest in this Certificate
must be a United States Person and a Permitted Transferee, (ii) the transfer of
any Ownership Interest in this Certificate will be conditioned upon the delivery
to the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) 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, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such restrictions, then the Company will have the right, in its
sole discretion and without notice to the Holder of this Certificate, to sell
this Certificate
3
89
to a purchaser selected by the Company, which purchaser may be the Company, or
any affiliate of the Company, on such terms and conditions as the Company may
choose.
No transfer of any Class R Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under the
1933 Act and effective registration or qualification under applicable state
securities laws, or is made in a transaction which does not require such
registration or qualification. In the event that a transfer is to be made
without such registration or qualification, (a) the Trustee and the Company
shall require the transferee to execute an investment letter, which investment
letter shall not be an expense of the Company, the Servicer or the Trustee and
(b) in the event that such a transfer is not made pursuant to Rule 144A under
the Act, the Trustee shall require an Opinion of Counsel satisfactory to the
Trustee and the Company that such transfer may be made without such registration
or qualification, which Opinion of Counsel shall not be an expense of the
Company, the Trustee or the Servicer. Neither the Company nor the Trustee is
obligated to register or qualify any of the Class [R] Certificates under the
1933 Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Company and the Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.
Notwithstanding the above, the final distribution on this
Certificate will be made after due notice of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose. The Percentage Interest this
Certificate is set forth above. Notwithstanding the fact this Certificate has no
Certificate Principal Balance, this Certificate will remain outstanding under
the Agreement and the Holder hereof may have additional obligations with respect
to this Certificate, including tax liabilities, and may be entitled to certain
additional distributions hereon, in accordance with the terms and provisions of
the Agreement.
This Certificate is one of a duly authorized issue of
Certificates issued in ____ Classes designated as Asset Backed Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. In the event that Master
Servicer funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Master Servicer, to the extent provided in the Agreement,
from related recoveries on such Mortgage Loan or from other cash that would have
been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Collection
Account and/or the Certificate Account created for the benefit of
Certificateholders may be made by the Servicer from time to time for purposes
other than distributions to Certificateholders, such purposes including without
limitation reimbursement to the Company and the Servicer of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein
provided, the amendment of the Agreement and the modification of the rights and
obligations of the Company, the Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Company, the Servicer
and the Trustee with the consent of the Certificate Insurer and the Majority
Certificateholders. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon the Certificate. The Agreement also permits the amendment thereof in
certain circumstances without the consent of the Holders of any of the
Certificates and, in certain additional circumstances, without the consent of
the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee in the City and
State of New York, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the Holder hereof or such
Holder's attorney duly
4
90
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in Classes and 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 authorized denominations
evidencing the same Class and 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 Company, the Servicer, the Trustee and the Certificate
Registrar and any agent of the Company, the Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Master Servicer, the Trustee nor any such agent shall be affected by notice to
the contrary.
This Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
The obligations created by the Agreement in respect of the
Certificates and the Trust Fund created thereby shall terminate upon the payment
to Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by the Servicer from the
Trust Fund of all remaining Mortgage Loans, thereby effecting early retirement
of the Class R Certificates. The Agreement permits, but does not require, such
Class R Certificateholder, the Servicer or the Certificate Insurer, as
applicable, to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans; provided, that any such option may only be exercised
if the Pool Principal Balance as of the Distribution Date upon which the
proceeds of any such purchase are distributed is less than 10% of the Original
Pool Principal Balance.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
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91
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated:____, 1996
--------------------------------------------,
as Trustee
By:
------------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R] Certificates referred to in the
within-mentioned Agreement.
---------------------------------------------
as Certificate Registrar
By:
------------------------------------------
Authorized Signatory
6
92
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and
Taxpayer Identification Number of assignee)
a Percentage Interest equal to ____% evidenced by the within
Asset Backed Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
_______________________________________________________________________________.
Dated:
---------------------------------------------
Signature by or on behalf of assignor
---------------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
_____________________________________________________________for the account of
_______________________________________________________________________________
_______________________________________________account number ________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to _____________________________________.
This information is provided by _____________________, the assignee named above,
or _____________________________, as its agent.
93
EXHIBIT C
Mortgage File
With respect to each Mortgage Loan, the Mortgage File shall
include each of the following items (copies to the extent the originals have
been delivered to the Trustee pursuant to Section 2.03 of the Agreement), all of
which shall be available for inspection by the Certificateholders, to the extent
required by applicable laws:
a. The original Mortgage Note bearing all intervening
endorsements showing a complete chain of endorsement, from the
originator of such Mortgage Loan to the Seller, endorsed by
the Seller without recourse in blank and signed in the name of
the Seller by an authorized officer;
b. The original Mortgage and any related power of attorney with
evidence of recording thereon;
c. An original assignment of the original Mortgage, in suitable
form for recordation in the jurisdiction in which the
Mortgaged Property is located, such assignment to be in blank
and signed in the name of the Seller by an authorized officer;
d. The original of all intervening assignments of the Mortgage
showing a complete chain of assignments from the originator of
such Mortgage Loan to the Seller with evidence of recording
indicated thereon;
e. Any assumption, modification (with evidence of recording
thereon), consolidation or extension agreements; and
f. The original policy of title insurance (or a commitment for
title insurance is being held by the title insurance company
pending recordation of the Mortgage) and the certificate of
primary mortgage guaranty insurance, if any, issued with
respect to the Mortgage Loan.
94
EXHIBIT D
Mortgage Loan Schedule
95
EXHIBIT E
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
, 199
----------- --
NationsBanc Asset Securities, Inc.
NationsBank ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[Servicer]
[Certificate Issuer]
Re: Pooling and Servicing Agreement, dated as of _______,
199__ among NationsBanc Asset Securities Inc., as
Company, ______________________, as Servicer, and
______________________, as Trustee, Asset Backed
Certificates, Series 199__-__,
Ladies and Gentlemen:
In accordance with Section 2.04 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies: (1)
except as noted on the attachment hereto, if any (the "Loan Exception Report"),
it has received the original Mortgage Note (item (i) in Section 2.03(a)) with
respect to each Mortgage Loan listed in the Mortgage Loan Schedule and the
documents contained therein appear to bear original signatures or copies of
originals if the originals have not yet been delivered, and (2) it has received
the Certificate Insurance Policy.
The Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of the Mortgage Loans identified on the Mortgage Loan Schedule,
or (ii) the collectability, insurability, effectiveness or suitability of any
such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
-------------------------------------------
as Trustee
By:
----------------------------------------
Name:
Title:
96
EXHIBIT F
INITIAL CERTIFICATION OF TRUSTEE
______________, 199__
NationsBanc Asset Securities, Inc.
NationsBank ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[Servicer]
[Certificate Issuer]
Re: Pooling and Servicing Agreement, dated as of _______,
199__ among NationsBanc Asset Securities Inc., as
Company, ______________________, as Servicer, and
______________________, as Trustee, Asset Backed
Certificates, Series 199__-__,
Ladies and Gentlemen:
In accordance with the provisions of Section 2.04 of the
above-referenced Pooling and Servicing Agreement, the undersigned, as Trustee,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan listed
on the attachment hereto), it has reviewed the documents delivered to it
pursuant to Section 2.03 of the Pooling and Servicing Agreement and has
determined that (i) all documents required to be delivered to it pursuant to the
above-referenced Pooling and Servicing Agreement are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
have not been mutilated, damaged, torn or otherwise physically altered and
relate to such Mortgage Loan, (iii) based on its examination and only as to the
foregoing documents, the information set forth in the Mortgage Loan Schedule
(described in items (i), (ii), (v), (vi), (x), (xi) and (xiii) of the definition
of Mortgage Loan Schedule) respecting such Mortgage Loan accurately reflects the
information set forth in the Trustee's Mortgage File and (iv) each Mortgage Note
has been endorsed as provided in Section 2.03 of the Pooling and Servicing
Agreement. The Trustee has made no independent examination of such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
-------------------------------------------
as Trustee
By:
----------------------------------------
Name:
Title:
97
EXHIBIT G
FINAL CERTIFICATION OF THE TRUSTEE
______________, 199__
NationsBanc Asset Securities, Inc.
NationsBank ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[Servicer]
[Certificate Issuer]
Re: Pooling and Servicing Agreement, dated as of _______,
199__ among NationsBanc Asset Securities Inc., as
Company, ______________________, as Servicer, and
______________________, as Trustee, Asset Backed
Certificates, Series 199__-__,
Ladies and Gentlemen:
In accordance with Section 2.04 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it has reviewed the documents delivered to it pursuant to
Section 2.03 of the Pooling and Servicing Agreement and has determined that (i)
all documents required to be delivered to it pursuant to the above-referenced
Pooling and Servicing Agreement are in its possession, (ii) such documents have
been reviewed by it and appear regular on their face and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
Mortgage Loan, and (iii) based on its examination, and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule (described in
items (i), (ii), (v), (vi), (x), (xi) and (xiii) of the definition of Mortgage
Loan Schedule) respecting such Mortgage Loan accurately reflects the information
set forth in the Trustee's Mortgage File. The Trustee has made no independent
examination of such documents beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any such documents contained in each or any of the Mortgage Loans identified
on the Mortgage Loan Schedule, or (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
-------------------------------------------
as Trustee
By:
----------------------------------------
Name:
Title:
98
EXHIBIT H
REQUEST FOR RELEASE OF DOCUMENTS
______________, 199____
To: [Trustee]
Re: NationsBanc Asset Securities, Inc., Asset Backed
Certificates, series 199__-__
In connection with the administration of the pool of Mortgage
Loans held by you as Trustee for the Certificateholders, we request the release,
and acknowledge receipt, of the (Trustee's Mortgage File/[specify document]) for
the Mortgage Loan described below, for the reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
-----------------------------
MORTGAGE LOAN NUMBER:
-----------------------------
REASON FOR REQUESTING DOCUMENTS (check one)
_____ 1. Mortgage Loan Paid in Full (Servicer hereby certifies that all amounts received in
connection therewith have been credited to the Collection Account.)
_____ 2. Mortgage Loan Liquidated (Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been finally received and credited to the
Collection Account.)
_____ 3. Mortgage Loan in Foreclosure _____ 4. Mortgage Loan Repurchased Pursuant to Section
5.18 of the Pooling and Servicing Agreement.
_____ 5. Mortgage Loan Repurchased or Substituted pursuant to Article II or III of the Pooling
and Servicing Agreement (Servicer hereby certifies that the repurchase price or
Substitution Adjustment has been credited to the Certificate Account and that the
substituted mortgage loan is a Qualified Substitute Mortgage Loan.)
_____ 6. Other
(explain)_________________________________________
If box 1 or 2 above is checked, and if all or part of the
Trustee's Mortgage 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 Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our 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.
99
By:
--------------------------------------
Name:
Title:
Documents returned to Trustee:
---------------------------------------
Trustee
---------------------------------------
By:
---------------------------------------
Date:
2
100
EXHIBIT I
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
State of ___________ )
) ss.:
County of __________ )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or
beneficial owner of the Asset Backed Certificates, Series 199__-__, Class R (the
"Owner")), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of __________________] [the United States], on
behalf of which he makes this affidavit and agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) will
endeavor to remain other than a disqualified organization for so long as it
retains its ownership interest in the Class R Certificates, and (iii) is
acquiring the Class R Certificates for its own account or for the account of
another Owner from which it has received an affidavit and agreement in
substantially the same form as this affidavit and agreement. (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any agency or instrumentality of any of the foregoing
(other than an instrumentality all of the activities of which are subject to tax
and, except for the Federal Home Loan Mortgage Corporation, a majority of whose
board of directors is not selected by any such governmental entity) or any
foreign government, international organization or any agency or instrumentality
of such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such organization is subject
to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of Class R Certificates to disqualified organizations under
the Code, that applies to all transfers of Class R Certificates after March 31,
1988; (ii) that such tax would be on the transferor, or, if such transfer is
through an agent (which person includes a broker, nominee or middleman) for a
disqualified organization, on the agent; (iii) that the person otherwise liable
for the tax shall be relieved of liability for the tax if the transferee
furnishes to such person an affidavit that the transferee is not a disqualified
organization and, at the time of transfer, such person does not have actual
knowledge that the affidavit is false; and (iv) that the Class [R] Certificates
may be "noneconomic residual interests" within the meaning of Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.
4. That the Owner is aware that the Trustee will not register
the transfer of any Class R Certificates unless the transferee, or the
transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it knows
or believes that any of the representations contained in such affidavit and
agreement are false.
5. That the Owner has reviewed the restrictions set forth on
the face of the Class R Certificates and the provisions of Section 4.02(i) of
the Pooling and Servicing Agreement under which the Class R Certificates were
issued (in particular, clause (g) and (h) of Section 4.02(i) which authorize the
Trustee to deliver payments to a person other than the Owner in the event the
Owner holds such Certificates in violation of Section 4.02(i)). The Owner
expressly agrees to be bound by and to comply with such restrictions and
provisions.
6. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is not a disqualified
organization.
101
7. The Owner's Taxpayer Identification Number is ___________.
8. This affidavit and agreement relates only to the Class R
Certificates held by the Owner and not to any other holder of the Class R
Certificates. The Owner understands that the liabilities described herein relate
only to the Class R Certificates.
9. That no purpose of the Owner relating to the transfer of
any of the Class R Certificates by the Owner is or will be to impede the
assessment or collection of any tax.
10. That the Owner has no present knowledge or expectation
that it will be unable to pay any United States taxes owed by it so long as any
of the Certificates remain outstanding. In this regard, the Owner hereby
represents to and for the benefit of the person from whom it acquired the Class
R Certificate that the Owner intends to pay taxes associated with holding such
Class R Certificate as they become due, fully understanding that it may incur
tax liabilities in excess of any cash flows generated by the Class R
Certificate.
11. That the Owner has no present knowledge or expectation
that it will become insolvent or subject to a bankruptcy proceeding for so long
as any of the Class R Certificates remain outstanding.
12. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
whose income is subject to United States federal income tax regardless of its
source, or a trust if a court within the United States is able to exercise
primary jurisdiction over the administration of such trust and one or more
persons described in this Paragraph 12 controls all substantial decisions of
such trust.
2
102
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this ____ day of _______________, 199__.
[NAME OF OWNER]
By:
------------------------
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
-----------------------------
[Assistant] Secretary
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 Owner, and acknowledged to me
that he executed the same as his free act and deed and the free act and deed of
the Owner.
Subscribed and sworn before me this ____ day of
________________, 199__.
---------------------------------
NOTARY PUBLIC
COUNTY OF
------------------------
STATE OF
-------------------------
My Commission expires the
____ day of ______________, 19__.
3
103
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE
______________, 19__
NationsBanc Asset Securities, Inc.
NationsBank ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[Trustee]
Attention: NationsBanc Asset Securities, Inc. Series 199__-__
Re: ASSET BACKED CERTIFICATES, SERIES 199__-__
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _______________________________ (the "Seller") to
_______________________________ (the "Purchaser") of a ____% Percentage
Interests of Asset Backed Certificates, Series 199__-__, Class R Certificates
(the "Certificates"), pursuant to Section 4.02 of the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), dated as of __________,
199__, among NationsBanc Asset Securities, Inc., as seller (the "Company"),
______________________, as Servicer, and ______________________, as trustee (the
"Trustee"). All terms used herein and not otherwise defined shall have the
meanings set forth in the Pooling and Servicing Agreement. The Seller hereby
certifies, represents and warrants to, and covenants with, the Company and the
Trustee that:
1. No purpose of the Seller relating to the transfer of the
Certificates by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has delivered to
the Trustee and the Servicer a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit I. The Seller does
not know or believe that any representation contained therein is false.
3. The Seller has at the time of the transfer conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Seller has determined that the Purchaser has
historically paid its debts as they become due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Seller understands that the transfer of a
Class R Certificate may not be respected for United States income tax purposes
(and the Seller may continue to be liable for United States income taxes
associated therewith) unless the Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed
Purchaser is not both a United States Person and a Permitted Transferee.
Very truly yours,
--------------------------------------------
(Seller)
By:
-----------------------------------------
Name:
Title:
104
EXHIBIT K
____________, 1996
[Trustee]
Re: NationsBanc Asset Securities, Inc. Asset Backed
Certificates, Series 199__-__, Class R
This letter is delivered to you in connection with the
transfer by _______________________ (the "Seller") to __________________ (the
"Purchaser") of Asset Backed Certificates Series 199__-__, Class [R] (the
"Certificates"), pursuant to Section 4.02 of the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of _________, 199__ among
NationsBanc Asset Securities, Inc. as depositor (the "Company"),
_________________________, as Servicer, and ______________________________, as
Trustee (the "Trustee"). All terms used herein and not otherwise defined shall
have the meanings set forth in the Pooling and Servicing Agreement. The
Purchaser hereby certifies, represents and warrants to, and covenants with, the
Company and the Trustee that:
The Purchaser is not an employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or other Internal Revenue Code of 1986, as amended
(the "Code"), nor a Person acting directly on behalf of any
such plan.
Very truly yours,
----------------------------------
(Purchaser)
By:
-------------------------------
Name:
Title:
105
EXHIBIT L
[RESERVED]
106
EXHIBIT M
CERTIFICATE RE: PREPAID LOANS
I, ______________, ________________ of NationsBanc Asset
Securities, Inc., as Company, hereby certify that between the "Cut-Off Date" (as
defined in the Pooling and Servicing Agreement dated as of ___________, 199__
among NationsBanc Asset Securities, Inc., ___________________________, as
servicer and __________________________, as trustee) and the "Startup Day" the
following schedule of "Mortgage Loans" (each as defined in the Pooling and
Servicing Agreement) have been prepaid in full.
Dated:
By:
----------------------------------
107
EXHIBIT N
SUBSEQUENT TRANSFER INSTRUMENT
Pursuant to this Subsequent Transfer Instrument (the
"Instrument"), dated ___________, 199__, between NationsBanc Asset Securities,
Inc., as depositor (the "Company"), and ___________________________, as Trustee
of the NationsBanc Asset Securities, Inc. Asset Backed Certificates, Series
199__-__, as purchaser (the "Purchaser"), and pursuant to the Pooling and
Servicing Agreement, dated as of _________, 199__, among the Company,
___________________, as Servicer, and the Trustee (the "Pooling and Servicing
Agreement"), the Company and the Purchaser agree to the sale by the Company and
the purchase by the Purchaser of the Mortgage Loans listed on the attached
Schedule of Mortgage Loans (the "Subsequent Mortgage Loans").
Capitalized terms used and not defined herein have their
respective meanings as set forth in the Pooling and Servicing Agreement.
Section 1. CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS.
(a) The Company does hereby sell, transfer, assign, set over
and convey to the Purchaser, without recourse, all of its right, title and
interest in and to the Subsequent Mortgage Loans, and including all principal
received and interest accruing on the Subsequent Mortgage Loans on and after the
related Subsequent Cut-Off Date, and all items with respect to the Subsequent
Mortgage Loans to be delivered pursuant to Section 2.03 of the Pooling and
Servicing Agreement; provided, however, that the Company reserves and retains
all right, title and interest in and to principal (including Prepayments and
Curtailments) received and interest accruing on the Subsequent Mortgage Loans
prior to the related Subsequent Cut-off Date. The Company, contemporaneously
with the delivery of this Agreement, has delivered or caused to be delivered to
the Trustee each item set forth in Section 2.03 of the Pooling and Servicing
Agreement. The transfer to the Trustee by the Company of the Subsequent Mortgage
Loans identified on the Mortgage Loan Schedule shall be absolute and is intended
by the Company, the Master Servicer, the Trustee and the Certificateholders to
constitute and to be treated as a sale by the Company.
(b) The expenses and costs relating to the delivery of the
Subsequent Mortgage Loans, this Instrument and the Pooling and Servicing
Agreement shall be borne by the Company.
(c) Additional terms of the sale are set forth on Attachment A
hereto.
Section 2. REPRESENTATIONS AND WARRANTIES; CONDITIONS
PRECEDENT.
(a) The Company hereby affirms the representations and
warranties set forth in Section 3.03 of the Pooling and Servicing Agreement that
relate to the Subsequent Mortgage Loans as of the date hereof. The Company
hereby confirms that each of the conditions set forth in Section 2.08(b) of the
Pooling and Servicing Agreement are satisfied as of the date hereof.
(b) All terms and conditions of the Pooling and Servicing
Agreement are hereby ratified and confirmed; provided, however, that in the
event of any conflict the provisions of this Instrument shall control over the
conflicting provisions of the Pooling and Servicing Agreement.
Section 3. RECORDATION OF INSTRUMENT.
To the extent permitted by applicable law, this Instrument, 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 Certificateholders' expense on direction of the Majority
Certificateholders, 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 Mortgage Loans.
108
Section 4. GOVERNING LAW.
This Instrument shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to principles of conflicts of law.
Section 5. COUNTERPARTS.
This Instrument 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 instrument.
Section 6. SUCCESSORS AND ASSIGNS.
This Instrument shall inure to the benefit of and be binding
upon the Company and the Purchaser and their respective successors and assigns.
NATIONSBANC ASSET SECURITIES, INC.
By:
---------------------------------------------
Name:
Title:
NATIONSBANC ASSET SECURITIES, INC., ASSET BACKED
CERTIFICATES, SERIES 199__-__
By:
--------------------------------------------
as Trustee
By:
--------------------------------------------
Name:
Title:
ATTACHMENTS
A. Additional terms of the sale.
B. Schedule of Subsequent Mortgage Loans.
C. Opinions of Company's counsel (bankruptcy, corporate).
D. Company's Officer's certificate.
E. Trustee's Certificate.
F. Opinion of Trustee's Counsel.
2
109
NATIONSBANC ASSET SECURITIES, INC.,
ASSET BACKED CERTIFICATES, SERIES 199__-__
ATTACHMENT A TO SUBSEQUENT TRANSFER INSTRUMENT
Series 199__-__
________, 199__
A.
1. Subsequent Cut-off Date:
1. Pricing Date:
2. Subsequent Transfer Date:
3. Aggregate Principal Balance of the Subsequent Mortgage Loans
as of the Subsequent Cut-off Date:
4. Purchase Price: 100.00%
B.
As to all the Subsequent Mortgage Loans the subject of this Instrument:
1. Longest stated term to maturity: _____ months
2. Minimum Mortgage Rate: _____ %
3. Maximum Mortgage Rate: _____ %
4. WAC of all Mortgage Loans: _____ %
5. WAM of all Mortgage Loans: _____ %
6. Balloon Loans: _____ %
7. Largest Principal Balance: $______
8. Non-owner occupied Mortgaged Properties: _____ %
9. California zip code concentration: _____ %
10. Condominiums: _____ %
11. Single-family: _____ %
12. Weighted average term since origination:
13. [199__] first payment date: _____ %
110
EXHIBIT O
FORM OF INVESTOR REPRESENTATION LETTER
______________, 1996
[Trustee]
Re: NationsBanc Asset Securities, Inc. Asset Backed
Certificates, Series 199__-__
Ladies and Gentlemen:
_______________________(the "Purchaser") intends to purchase
from ____________________ (the "Seller"), a ____% Percentage Interest of Asset
Backed Certificates, Series 199__-__, Class _____ (the "Certificates"), issued
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of ____________, 199__ among NationsBanc Asset Securities,
Inc., as depositor (the "Company"), ______________________________, as servicer,
and _________________________, as trustee (the "Trustee"). All terms used herein
and not otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Purchaser hereby certifies, represents and warrants to,
and covenants with, the Company and the Trustee that:
1. The Purchaser understands that (a) the Certificates have
not been and will not be registered or qualified under the Securities
Act of 1933, as amended (the "Act") or any state securities law, (b)
the Company is not required to so register or qualify the Certificates,
(c) the Certificates may be resold only if registered and qualified
pursuant to the provisions of the Act or any state securities law, or
if an exemption from such registration and qualification is available,
(d) the Pooling and Servicing Agreement contains restrictions regarding
the transfer of the Certificates and (e) the Certificates will bear a
legend to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own
account for investment only and not with a view to or for sale in
connection with any distribution thereof in any manner that would
violate the Act or any applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters, and, in particular, in such matters
related to securities similar to the Certificates, such that it is
capable of evaluating the merits and risks of investment in the
Certificates, (b) able to bear the economic risks of such an investment
and (c) an "accredited investor" within the meaning of Rule 501(a)
promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an
opportunity to review a copy of the Pooling and Servicing Agreement and
such other information concerning the Certificates, the Mortgage Loans
and the Company as has been requested by the Purchaser from the Company
or the Seller and is relevant to the Purchaser's decision to purchase
the Certificates. The Purchaser has had any questions arising from such
review answered by the Company or the Seller to the satisfaction of the
Purchaser. If the Purchaser did not purchase the Certificates from the
Seller in connection with the initial distribution of the Certificates
and was provided with a copy of the Private Placement Memorandum (the
"Memorandum") relating to the original sale (the "Original Sale") of
the Certificates by the Company, the Purchaser acknowledges that such
Memorandum was provided to it by the Seller, that the Memorandum was
prepared by the Company solely for use in connection with the Original
Sale and the Company did not participate in or facilitate in any way
the purchase of the Certificates by the Purchaser from the Seller, and
the Purchaser agrees that it will look solely to the Seller and not to
the Company with respect to any damage, liability, claim or expense
arising out of, resulting from or in connection with (a) error or
omission, or alleged error or omission, contained in the
111
Memorandum, or (b) any information, development or event arising after
the date of the Memorandum.
5. The Purchaser has not and will not nor has it authorized or
will it authorize any person to (a) offer, pledge, sell, dispose of or
otherwise transfer any Certificate, any interest in any Certificate or
any other similar security to any person in any manner, (b) solicit any
offer to buy or to accept a pledge, disposition of other transfer of
any Certificate, any interest in any Certificate or any other similar
security from any person in any manner, (c) otherwise approach or
negotiate with respect to any Certificate, any interest in any
Certificate or any other similar security with any person in any
manner, (d) make any general solicitation by means of general
advertising or in any other manner or (e) take any other action, that
(as to any of (a) through (e) above) would constitute a distribution of
any Certificate under the Act, that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities
law, or that would require registration or qualification pursuant
thereto. The Purchaser will not sell or otherwise transfer any of the
Certificates, except in compliance with the provisions of the Pooling
and Servicing Agreement.
6. The Purchaser is not any employee benefit plan subject to
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the Internal Revenue Code of 1986, (the "Code"), nor a
Person acting, directly or indirectly, on behalf of any such plan, and
understands that registration of transfer of any Certificate to any
such employee benefit plan, or to any person acting on behalf of such
plan, will not be made unless such employee benefit plan delivers an
opinion of its counsel, addressed and satisfactory to the Trustee, the
Company and the Master Servicer, to the effect that the purchase and
holding of a Certificate by or on behalf of such employee benefit plan
would not result in the assets of the Trust Estate being deemed to be
"plan assets" and subject to the fiduciary responsibility provisions of
ERISA or the prohibited transaction provisions of the Code (or
comparable provisions of any subsequent enactments), would not
constitute or result in a prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code, and would not subject the Company,
the Servicer or the Trustee to any obligation or liability (including
liabilities under ERISA or Section 4975 of the Code) in addition to
those undertaken in the Pooling and Servicing Agreement or any other
liability. The Purchaser understands that under current law such an
opinion cannot be rendered.
Very truly yours,
By:
---------------------------------------
Name:
Title:
2
112
EXHIBIT P
Form of Transferor Representation Letter
______________, 199 ___
[Trustee]
Re: NationsBanc Asset Securities, Inc., Asset Backed
Certificates, Series 199__-__
Ladies and Gentlemen:
In connection with the sale by _____________ (the "Seller") to
__________________ (the "Purchaser") of $___________ Initial Certificate
Principal Balance of Asset Backed Certificates, Series 199__-__, Class ___ (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of __________, 199__ among
NationsBanc Asset Securities, Inc., as company (the "Company"),
_________________________, as servicer, and ______________________________, as
trustee (the "Trustee"). The Seller hereby certifies, represents and warrants
to, and covenants with, the Company and the Trustee that:
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933 (the "Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant thereto. The Seller
will not act in any manner set forth in the foregoing sentence with respect to
any Certificate. The Seller has not and will not sell or otherwise transfer any
of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
Very truly yours,
-------------------------------------
(Seller)
By:
----------------------------------
Name:
Title:
113
EXHIBIT Q
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
NationsBanc Asset Securities, Inc.
Asset Backed Certificates
Series 199__-__, Class ___, No. ___
The undersigned seller, as registered holder (the
"Transferor"), intends to transfer the Rule 144A Securities described above to
the undersigned buyer (the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the
Transferor hereby certifies the following facts: Neither the Transferor nor
anyone acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the Rule 144A Securities
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, which would constitute a
distribution of the Rule 144A Securities under the Securities Act of 1933, as
amended (the "1933 Act"), or which would render the disposition of the Rule 144A
Securities a violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Transferor has not offered the Rule 144A
Securities to any person other than the Buyer or another "qualified
institutional buyer" as defined in Rule 144A under the ▇▇▇▇ ▇▇▇.
2. The Buyer warrants and represents to, and covenants with,
the Transferor, the Trustee and the Servicer pursuant to Section 5.02 of the
Pooling and Servicing Agreement as follows:
a. The Buyer understands that the Rule 144A
Securities have not been registered under the 1933 Act or the
securities laws of any state.
b. The Buyer considers itself a substantial,
sophisticated institutional investor having such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Rule 144A
Securities.
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested from the
Transferor, the Trustee or the Servicer.
d. Neither the Buyer nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security
from, or otherwise approached or negotiated with respect to the Rule
144A Securities, any interest in the Rule 144A Securities or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the
Rule 144A Securities under the 1933 Act or that would render the
disposition of the Rule 144A Securities a violation of Section 5 of the
1933 Act or require registration pursuant thereto, nor will it act, nor
has it authorized or will it authorize any person to act, in such
manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as
that term is defined in Rule 144A under the 1933 Act. The Buyer is
aware that the sale to it is being made in reliance on Rule 144A. The
Buyer is acquiring the Rule 144A Securities for its own account or the
account of other qualified institutional buyers, understands that such
Rule 144A Securities may be resold, pledged or transferred only (i) to
a person reasonably believed to be a qualified institutional buyer that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale,
114
pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the 1933 Act.
3. The Buyer warrants and represents to, and covenants with,
the Transferor, the Servicer and the Company that either (1) the Buyer is not an
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("Plan"), or a plan
within the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986
(the "Code") (also a "Plan"), and the Buyer is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan, or (2) the Buyer's
purchase of the Rule 144A Securities will not result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code.
4. This document 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 document.
2
115
IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.
------------------------------------------------- -------------------------------------------------
Print Name of Transferor Print Name of Buyer
By: By:
---------------------------------------------- ----------------------------------------------
Name: Name:
Title Title
Taxpayer Identification: Taxpayer Identification:
No. No.
--------------------------------------------- ---------------------------------------------
Date: Date:
-------------------------------------------- --------------------------------------------
3
116
EXHIBIT R
PREMIUM EXHIBIT
For the purposes of the Pooling and Servicing Agreement dated
as of ___________, 199__ (the "Agreement") by and among NationsBanc Asset
Securities, Inc., as company, _______________________________, as servicer, and
__________________________________ as trustee, "Premium Percentage" means, with
respect to any Mortgage Loan, ____%
Terms used in this exhibit and not defined in this exhibit
have the meanings ascribed thereto in the Agreement.