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BENEFICIAL MORTGAGE SERVICES, INC.,
as Depositor,
BENEFICIAL MORTGAGE CORPORATION,
as Master Servicer,
THE CHASE MANHATTAN BANK,
as Trustee
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Co-Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1997
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HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 1997-2
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS................................................. 1
Section 1.01. Definitions................................................................. 1
Section 1.02. Interest Calculations....................................................... 26
Section 1.03. Usage of Terms.............................................................. 26
ARTICLE II
SALE OF HOME EQUITY LOANS; ORIGINAL ISSUANCE OF CERTIFICATES......................... 26
Section 2.01. Sale of Home Equity Loans................................................... 26
Section 2.02. Acceptance by Trustee; Repurchase
Obligations; Substitution of Eligible
Substitute Home Equity Loans................................................ 31
Section 2.03. Representations and Warranties Regarding
the Master Servicer......................................................... 35
Section 2.04. Representations and Warranties Regarding
the Home Equity Loans; Repurchase of
Defective Home Equity Loans................................................. 36
Section 2.05. Execution and Authentication of
Certificates; Designation of "Regular
Interests" and "Residual Interests"
under REMIC................................................................. 40
Section 2.06. Designation of Start-up Day and Final
Maturity Date............................................................... 40
Section 2.07. Certain Activities.......................................................... 40
Section 2.08. Representation and Warranty of the
Depositor................................................................... 41
ARTICLE III
ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS.............................. 41
Section 3.01. The Master Servicer......................................................... 41
Section 3.02. Collection of Certain Home Equity Loan
Payments; Home Equity Loan Payment
Record...................................................................... 44
Section 3.03. Permitted Debits to the Home Equity Loan
Payment Record.............................................................. 46
Section 3.04. Maintenance of Hazard Insurance;
Property Protection Expenses................................................ 46
Section 3.05. Assumption and Modification Agreements...................................... 48
Section 3.06. Realization upon Defaulted Home Equity
Loans....................................................................... 48
Section 3.07. Trustee to Cooperate........................................................ 49
Section 3.08. Servicing Compensation; Payment of
Certain Expenses by Master Servicer......................................... 50
Section 3.09. Annual Statement as to Compliance........................................... 50
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Page
Section 3.10. Annual Independent Public Accountants'
Servicing Report............................................................ 50
Section 3.11. Access to Certain Documentation and
Information Regarding the Home Equity
Loans....................................................................... 51
Section 3.12. Maintenance of Certain Servicing
Policies.................................................................... 51
ARTICLE IV
SERVICING CERTIFICATE; CERTIFICATE ACCOUNTS DEPOSIT............................. 51
Section 4.01. Servicing Certificate....................................................... 51
Section 4.02. Certificate Accounts........................................................ 54
Section 4.03. Servicer LOC................................................................ 54
Section 4.04. Distributions on the Uncertificated
Lower-Tier Interests........................................................ 55
ARTICLE V
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS................................ 56
Section 5.01. Distributions from Upper-Tier
Certificate Account; Writedowns............................................. 56
Section 5.02. Statements to Certificateholders............................................ 59
ARTICLE VI
THE CERTIFICATES............................................... 61
Section 6.01. The Certificates............................................................ 61
Section 6.02. Registration of Transfer and Exchange of
Certificates................................................................ 62
Section 6.03. Mutilated, Destroyed, Lost or Stolen
Certificates................................................................ 64
Section 6.04. Persons Deemed Owners....................................................... 65
Section 6.05. Appointment of Paying Agent................................................. 65
Section 6.06. Restrictions on Transfer of Class M and
Class B Certificates........................................................ 66
Section 6.07. Restrictions on Transfer of Class C and
Class R Certificates........................................................ 66
Section 6.08. Actions of Certificateholder................................................ 70
ARTICLE VII
THE MASTER SERVICER AND THE DEPOSITOR.................................... 71
Section 7.01. Liability of the Master Servicer and the
Depositor................................................................... 71
Section 7.02. Merger or Consolidation of, or
Assumption of the Obligations of, the
Master Servicer and Depositor............................................... 71
Section 7.03. Limitation on Liability of the Master
Servicer and Others......................................................... 71
Section 7.04. Master Servicer Not to Resign............................................... 72
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Page
Section 7.05. Delegation of Duties........................................................ 73
ARTICLE VIII
DEFAULT................................................... 73
Section 8.01. Events of Default........................................................... 73
Section 8.02. Trustee to Act; Appointment of
Successor................................................................... 75
Section 8.03. Notification to Certificateholders.......................................... 76
Section 8.04. Waiver of Past Events of Default............................................ 76
ARTICLE IX
THE TRUSTEE................................................. 77
Section 9.01. Duties of Trustee........................................................... 77
Section 9.02. Certain Matters Affecting the Trustee....................................... 78
Section 9.03. Trustee Not Liable for Certificates or
Home Equity Loan............................................................ 80
Section 9.04. Trustee May Own Certificates................................................ 81
Section 9.05. Master Servicer to Pay Trustee's Fees
and Expenses................................................................ 81
Section 9.06. Eligibility Requirements for Trustee........................................ 82
Section 9.07. Resignation or Removal of Trustee........................................... 82
Section 9.08. Successor Trustee........................................................... 83
Section 9.09. Merger or Consolidation of Trustee.......................................... 84
Section 9.10. Appointment of Co-Trustee or Separate
Trustee..................................................................... 84
Section 9.11. Tax Returns................................................................. 86
Section 9.12. Trustee May Enforce Claims Without
Possession of Certificates.................................................. 86
Section 9.13. Suits for Enforcement....................................................... 86
ARTICLE X
TERMINATION................................................. 86
Section 10.01. Termination Upon Purchase by the Master
Servicer or Liquidation of All Home
Equity Loans................................................................ 86
Section 10.02. Additional Termination Requirements......................................... 89
ARTICLE XI
MISCELLANEOUS PROVISIONS........................................... 90
Section 11.01. Amendment................................................................... 90
Section 11.02. Recordation of Agreement.................................................... 92
Section 11.03. Limitation on Rights of
Certificateholders.......................................................... 92
Section 11.04. GOVERNING LAW............................................................... 93
Section 11.05. Notices..................................................................... 93
Section 11.06. Severability of Provisions.................................................. 94
Section 11.07. Assignment.................................................................. 94
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Page
Section 11.08. Certificates Nonassessable and Fully
Paid........................................................................ 94
Section 11.09. Counterparts................................................................ 94
EXHIBIT A - Form of Class A Certificate EXHIBIT B - Form of Class M Certificate
EXHIBIT C - Form of Class B Certificate EXHIBIT D - Form of Class C Certificate
EXHIBIT E - Form of Class R Certificate EXHIBIT F - Form of Notice of Payment in
Full EXHIBIT G - Form of File Request
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This Pooling and Servicing Agreement, dated as of September 1, 1997,
among Beneficial Mortgage Services, Inc., as depositor (together with its
permitted successors and assigns, the "Depositor"), Beneficial Mortgage
Corporation, as master servicer (the "Master Servicer"), The Chase Manhattan
Bank, as trustee (the "Trustee") and Texas Commerce Bank National Association,
as co-trustee (the "Co-Trustee").
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Accrual Period: As to any Distribution Date (the "current Distribution
Date"), the period beginning on the preceding Distribution Date (or the Closing
Date, in the case of the first Distribution Date) and ending on the day
preceding the current Distribution Date.
Additional Balance: As to any Home Equity Loan and any day,
the Loan Balance less the Trust Balance.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise, and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Amount Available for Class A Interest: As to any Distribution Date, the
lesser of (a) the Interest Remittance Amount and (b) the Class A Interest
Requirement.
Amount Available for Lower-Tier A Interest: As to any Distribution
Date, the lesser of (a) the Interest Remittance Amount, and (b) interest accrued
during the
related Collection Period at the Weighted Average Net Loan Rate on the
Lower-Tier B Balance as of the beginning of the related Collection Period, and
(b) the excess of (i) the Interest Remittance Amount over (ii) the sum of the
Amount Available for Lower-Tier A Interest and the Amount Available for
Lower-Tier M Interest.
Amount Available for Lower-Tier M Interest: As to any Distribution
Date, the lesser of (a) interest accrued during the related Collection Period at
the Weighted Average Net Loan Rate on the Lower-Tier M Balance as of the
beginning of the related Collection Period, and (b) the excess of (i) the
Interest Remittance Amount over (ii) the Amount Available for Lower-Tier A
Interest.
Applied Liquidated Loan Loss Amount: As of any Distribution Date, the
excess of (x) the Certificate Principal Balance on such Distribution Date (after
taking into account the distribution of the Principal Distribution Amount on
such Distribution Date, but prior to the application of the Applied Liquidated
Loan Loss Amount, if any, on such Distribution Date) and (y) the Pool Balance as
of the last day of the related Collection Period.
Appraised Value: As to any Mortgaged Property and any time referred to
herein, the appraised value of such Mortgaged Property based upon the appraisal
made by or on behalf of the related Originator in connection with the
origination of the related Home Equity Loan.
Available Servicer LOC Amount: As of any Distribution Date upon which a
Servicer LOC is maintained pursuant to Section 3.02(c), the maximum amount of
coverage available thereunder in accordance with the terms thereof.
Beneficial: Beneficial Mortgage Corporation, a Delaware corporation.
BIF: The Bank Insurance Fund, as from time to time constituted or
created under the Financial Institution, Reform, Recovery and Enhancement Act of
1989, or if at any time after the execution of this instrument the Bank
Insurance Fund is not existing and performing duties now assigned to it, the
body performing such duties on such date.
Book-Entry Certificate: Any Class A, Class M or Class B Certificate
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with such Depository (directly or as an indirect
participant in accordance with the rules of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking institutions in the State of New
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York or the State of New Jersey are required or authorized by law to be closed.
Certificate: Any Class A, Class M, Class B, Class C or Class R
Certificate.
Certificate Account: The Lower-Tier Certificate Account and the
Upper-Tier Certificate Account.
Certificate Owner: With respect to any Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: The sum of the Class A Certificate
Balance, the Class M Certificate Balance and the Class B Certificate Balance.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Master Servicer or any Person actually known to a
Responsible Officer of the Trustee to be an affiliate of the Depositor or the
Master Servicer shall be deemed not to be outstanding and the Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite amount of Percentage Interests necessary to effect any
such consent has been obtained.
Class: All Certificates whose form is identical except for variations
in Percentage Interest.
Class A Certificate: Any of the Certificates signed by the Trustee and
countersigned by the Trustee or the Certificate Registrar, substantially in the
form set forth in Exhibit A hereto.
Class A Certificate Balance: As of any Distribution Date, the Original
Class A Certificate Balance less all amounts previously distributed to Holders
of the Class A Certificates on all previous Distribution Dates on account of
principal, but in no event less than zero.
Class A Interest Requirement: As to any Distribution Date, the sum of
(a) interest accrued during the related Accrual Period at the Class A
Pass-Through Rate on the Class A Certificate Balance, (b) interest accrued
during the related Accrual Period at the Class A Pass-Through Rate on any Class
A Unpaid Interest Shortfall (to the extent legally permitted) and (c) any Class
A Unpaid Interest Shortfall.
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Class A Interest Shortfall: As to any Distribution Date, the amount, if
any, by which distributions in respect of interest to Holders of the Class A
Certificates on such Distribution Date are less than the sum of (a) interest
accrued during the related Accrual Period at the Class A Pass-Through Rate on
the Class A Certificate Balance and (b) any interest due on such Distribution
Date on any Class A Unpaid Interest Shortfall (to the extent legally permitted).
Class A Pass-Through Rate: As to the initial Accrual Period, 5.77625%
per annum and, as to any Accrual Period thereafter, the lesser of (a) LIBOR plus
0.12% and (b) the Weighted Average Net Loan Rate.
Class A Principal Distribution Amount: As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the Class A Certificate Balance immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 74.75% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus
$4,000,088.
Class A Principal Factor: As to any Distribution Date, the percentage,
carried to seven places (rounded down), obtained by dividing the Class A
Certificate Balance as of such Distribution Date (after giving effect to all
payments of principal made on such Distribution Date) by the Original Class A
Certificate Balance.
Class A Unpaid Interest Shortfall: As to any Distribution Date, the
amount, if any, by which the aggregate of Class A Interest Shortfalls for prior
Distribution Dates exceeds the aggregate of amounts distributed in respect of
Class A Interest Shortfalls on prior Distribution Dates to Holders of the Class
A Certificates. For purposes of determining whether amounts distributable in
respect of Class A Unpaid Interest Shortfalls were actually distributed on any
particular Distribution Date, distributions on such Distribution Date shall be
allocated, first, to the amount specified in clause (a) of the definition "Class
A Interest Requirement," second, to any interest due on any Class A Unpaid
Interest Shortfall, and, third, to any Class A Unpaid Interest Shortfall.
Class B Applied Liquidated Loan Loss Amount: As of any Distribution
Date, the lesser of (x) the Class B Certificate Balance (after taking into
account the distribution of the related Principal Distribution Amount on such
Distribution Date, but prior to the application of the Class B Applied
Liquidated Loan Loss Amount, if any, on such Distribution Date) and (y) the
Applied Liquidated Loan Loss Amount as of such Distribution Date.
Class B Certificate: Any of the Certificates signed by the Trustee and
countersigned by the Trustee or the Certificate
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Registrar, substantially in the form set forth in Exhibit C hereto.
Class B Certificate Balance: As to any Distribution Date, the Original
Class B Certificate Balance less the sum of (x) all amounts previously
distributed to Class B Certificateholders on all previous Distribution Dates on
account of principal and (y) the aggregate, cumulative amount of the Class B
Applied Liquidated Loan Loss Amounts on all previous Distribution Dates, but in
no event less than zero.
Class B Current Interest: With respect to any Distribution Date, the
amount of interest accrued on the Class B Certificate Balance immediately prior
to such Distribution Date during the related Accrual Period at the Class B
Pass-Through Rate.
Class B Interest Shortfall: As to any Distribution Date, any amount by
which the amount of interest distributed to Class B Certificateholders on such
Distribution Date is less than the sum of (a) interest accrued during the
related Accrual Period at the Class B Pass-Through Rate on the Class B
Certificate Balance and (b) any interest due on such Distribution Date on any
Class B Unpaid Interest Shortfall (to the extent legally permitted).
Class B Liquidated Loan Loss Amortization Amount: As to the Class B
Certificates and as of any Distribution Date, the lesser of (x) the Class B
Unpaid Liquidated Loan Loss Amount as of such Distribution Date and (y) the
excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the Class
A Unpaid Interest Shortfall, the Extra Principal Distribution Amount, the Class
M Unpaid Interest Shortfall, the Class M Liquidated Loan Loss Amortization
Amount and the Class B Unpaid Interest Shortfall, in each case for such
Distribution Date.
Class B Pass-Through Rate: As to the initial Accrual Period, 6.01625%
per annum and, as to any Accrual Period thereafter, the lesser of (a) LIBOR plus
0.36% and (b) the Weighted Average Net Loan Rate.
Class B Principal Distribution Amount: As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the Class A Certificate Balance (after taking into
account any payments in respect of the Class A Principal Distribution Amount on
such Distribution Date), (ii) the Class M Certificate Balance (after taking into
account any payments in respect of the Class M Principal Distribution Amount on
such Distribution Date), and (iii) the Class B Certificate Balance immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
94.75% and (ii) the Pool Balance as of the last day of the related Collection
Period and (B) the Pool Balance as of the last day of the related Collection
Period minus $4,000,088.
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Class B Principal Factor: As to any Distribution Date, the percentage
(carried to seven places, rounded down) obtained by dividing the Class B
Certificate Balance as of such Distribution Date (after giving effect to all
payments of principal made on such Distribution Date) by the Original Class B
Certificate Balance.
Class B Unpaid Interest Shortfall: As to any Distribution Date, the
amount, if any, by which the aggregate of Class B Interest Shortfalls for prior
Distribution Dates exceeds the aggregate of the amounts distributed on prior
Distribution Dates to Holders of the Class B Certificates in respect of Class B
Interest Shortfalls. For purposes of determining whether amounts distributable
in respect of Class B Unpaid Interest Shortfalls were actually distributed on
any particular Distribution Date, the distribution on such Distribution Date
shall be allocated, first, to the amount specified in clause (a) of the
definition of "Class B Interest Requirement", second, to any interest due on any
Class B Unpaid Interest Shortfall, and, third, to any Class B Unpaid Interest
Shortfall.
Class C Certificate: Any of the Certificates signed by the Trustee and
countersigned by the Trustee or the Certificate Registrar, substantially in the
form set forth in Exhibit D hereto. The Class C Certificates shall be deemed to
consist of the Class C-1 Component, the Class C-2 Component and the Class C- 3
Component. Each of the Class C Components shall represent a class of "regular
interests" in the Upper-Tier REMIC.
Class C Component: Any of the Class C-1 Component, Class
C-2 Component or Class C-3 Component.
Class C Current Interest: With respect to any Distribution Date, the
sum of the Class C-1 Component Current Interest, the Class C-2 Component Current
Interest and the Class C-3 Component Current Interest.
Class C-1 Component Current Interest: As to any Distribution Date, the
excess of (x) interest accrued during the related Collection Period at the
Weighted Average Net Loan Rate on the Lower-Tier A Balance as of the beginning
of the related Collection Period over (y) interest accrued during the related
Accrual Period at the Class A Pass-Through Rate on the Lower-Tier A Balance as
of the end of the related Collection Period.
Class C-2 Component Current Interest: As to any Distribution Date, the
excess of (x) interest accrued during the related Collection Period at the
Weighted Average Net Loan Rate on the Lower-Tier M Balance as of the beginning
of the related Collection Period over (y) interest accrued during the related
Accrual Period at the Class M Pass-Through Rate on the Lower-Tier M Balance as
of the end of the related Collection Period.
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Class C-3 Component Current Interest: As to any Distribution Date, the
excess of (x) interest accrued during the related Collection Period at the
Weighted Average Net Loan Rate on the Lower-Tier B Balance as of the beginning
of the related Collection Period over (y) interest accrued during the related
Accrual Period at the Class B Pass-Through Rate on the Lower-Tier B Balance as
of the end of the related Collection Period.
Class C Distribution Amount: As to any Distribution Date, the sum of
(a) the Class C Current Interest and (b) any Class C Unpaid Interest Shortfall.
Class C Interest Shortfall: As to any Distribution Date, the amount, if
any, by which distributions in respect of interest to Holders of the Class C
Certificates on such Distribution Date are less than the Class C Current
Interest.
Class C Unpaid Interest Shortfall: As to any Distribution Date, the
amount, if any, by which the aggregate of Class C Interest Shortfalls for prior
Distribution Dates exceeds the aggregate of amounts distributed in respect of
Class C Interest Shortfalls on prior Distribution Dates to Holders of the Class
C Certificates. For purposes of determining whether amounts distributable in
respect of Class C Unpaid Interest Shortfalls were actually distributed on any
particular Distribution Date, distributions on such Distribution Date shall be
allocated, first, to the Class C Current Interest, and, second, to any Class C
Unpaid Interest Shortfall.
Class M Applied Liquidated Loan Loss Amount: As of any Distribution
Date, the lesser of (x) the Class M Certificate Balance (after taking into
account the distribution of the related Principal Distribution Amount on such
Distribution Date, but prior to the application of the Class M Applied
Liquidated Loan Loss Amount, if any, on such Distribution Date) and (y) the
excess, if any, of (i) the Applied Liquidated Loan Loss Amount as of such
Distribution Date over (ii) the Class B Applied Liquidated Loan Loss Amount as
of such Distribution Date.
Class M Certificate: Any of the Certificates signed by the Trustee and
countersigned by the Trustee or the Certificate Registrar, substantially in the
form set forth in Exhibit B hereto.
Class M Certificate Balance: As to any Distribution Date, the Original
Class M Certificate Balance less the sum of (x) all amounts previously
distributed to Class M Certificateholders on all previous Distribution Dates on
account of principal and (y) the aggregate, cumulative amount of the Class M
Applied Liquidated Loan Loss Amounts on all previous Distribution Dates, but in
no event less than zero.
Class M Current Interest: With respect to any Distribution Date, the
amount of interest accrued on the Class M Certificate
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Balance immediately prior to such Distribution Date during the related Accrual
Period at the Class M Pass-Through Rate.
Class M Interest Shortfall: As to any Distribution Date, any amount by
which the amount of interest distributed to Class M Certificateholders on such
Distribution Date is less than the sum of (a) interest accrued during the
related Accrual Period at the Class M Pass-Through Rate on the Class M
Certificate Balance and (b) any interest due on such Distribution Date on any
Class M Unpaid Interest Shortfall.
Class M Liquidated Loan Loss Amortization Amount: As to the Class M
Certificates and as of any Distribution Date, the lesser of (x) the Class M
Unpaid Liquidated Loan Loss Amount as of such Distribution Date and (y) the
excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the Class
A Unpaid Interest Shortfall, the Extra Principal Distribution Amount and the
Class M Unpaid Interest Shortfall, in each case for such Distribution Date.
Class M Pass-Through Rate: As to the initial Accrual Period, 5.90625%
per annum and, as to any Accrual Period thereafter, the lesser of (a) LIBOR plus
0.25% and (b) the Weighted Average Net Loan Rate.
Class M Principal Distribution Amount: As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the Class A Certificate Balance (after taking into
account any payments in respect of the Class A Principal Distribution Amount on
such Distribution Date) and (ii) the Class M Certificate Balance immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
86.0% and (ii) the Pool Balance as of the last day of the related Collection
Period and (B) the Pool Balance as of the last day of the related Collection
Period minus $4,000,088.
Class M Principal Factor: As to any Distribution Date, the percentage
(carried to seven places, rounded down) obtained by dividing the Class M
Certificate Balance as of such Distribution Date (after giving effect to all
payments of principal made on such Distribution Date) by the Original Class M
Certificate Balance.
Class M Unpaid Interest Shortfall: As to any Distribution Date, the
amount if any, by which the aggregate of Class M Interest Shortfalls for prior
Distribution Dates exceeds the aggregate of the amounts distributed on prior
Distribution Dates to Holders of the Class M Certificates in respect of Class M
Interest Shortfalls. For purposes of determining whether amounts distributable
in respect of Class M Unpaid Interest Shortfalls were actually distributed on
any particular Distribution Date, the distribution on such Distribution Date
shall be allocated, first, to the amount specified in clause (a) of the
definition of
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"Class M Interest Requirement", second, to any interest due on any Class M
Unpaid Interest Shortfall and, third, to any Class M Unpaid Interest Shortfall.
Class R Certificate: Any of the Certificates signed by the Trustee and
countersigned by the Trustee or the Certificate Registrar, substantially in the
form set forth in Exhibit E hereto. The Class R Certificates shall evidence both
the interest designated as the "residual interest" in the Lower-Tier REMIC and
the interest designated as the "residual interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions.
Class R Certificate Balance: As of any Distribution Date, the Original
Class R Certificate Balance less all distribution, on all previous Distribution
Dates in respect of the Class R Distribution Amount, but in no event less than
zero.
Closing Date: September 16, 1997.
Code: The Internal Revenue Code of 1986, as amended from
time to time.
Collection Period: As to any Home Equity Loan and any Distribution
Date, the one-month period ending on the related Cycle Date in the month
preceding the month of such Distribution Date; provided, however, that the first
such period for each Home Equity Loan shall commence on the Cut-off Date and end
on the Cycle Date for such Home Equity Loan occurring in August 1997. When used
with respect to all the Home Equity Loans and a Distribution Date, the term
"Collection Period" shall mean, collectively, the respective Collection Periods
applicable to each of the Home Equity Loans that commenced in the second
preceding calendar month (or, in the case of the first Collection Period, the
Cut-off Date) and ended in the calendar month immediately preceding the month of
such Distribution Date, and shall be referred to herein as a "preceding
Collection Period" or "related Collection Period" with reference to a
Distribution Date.
Combined Loan-to-Value Ratio: As to any Home Equity Loan as of any
date, the fraction, expressed as a percentage, the numerator of which is the sum
of (i) the Credit Limit and (ii) the greater of (x) the aggregate unpaid
principal balance of all loans secured by all senior or pari passu related deeds
of trust or mortgages, if any, as of such date and (y) the aggregate maximum
credit limit of such loans, and the denominator of which is the Appraised Value
of the related Mortgaged Property as of the date of execution of the related
Loan Agreement.
Corporate Trust Office: The principal office of the Trustee in New
York, New York, at which at any particular time its corporate business shall be
administered, which office at the date of the execution of this instrument is
located at ▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇, 10th Floor, New York, New York 10001, Attention: Global Trust
Services.
Co-Trustee: Texas Commerce Bank, or any successor co-trustee appointed
to succeed Texas Commerce Bank in accordance with this Agreement that has
accepted such appointment in accordance herewith.
Credit Limit: As to any Home Equity Loan, the maximum Loan Balance
permitted under the terms of the related Loan Agreement.
Cut-off Date: The close of business on July 31, 1997.
Cut-off Date Pool Balance: The aggregate of the Cut-off Date Trust
Balances of the Home Equity Loans.
Cut-off Date Trust Balance: As to any Home Equity Loan, the unpaid
principal balance thereof as of the close of business on the Cut-off Date.
Cycle Date: As to any Home Equity Loan, the day of the month on which
the related billing cycle for such Home Equity Loan ends.
Defective Home Equity Loan: Any Home Equity Loan with respect to which
the Depositor or the Master Servicer is required to repurchase the Trust Balance
or substitute for such Trust Balance one or more Eligible Substitute Home Equity
Loans pursuant to Section 2.02 or 2.04.
Definitive Certificates: As defined in Section 6.02(c).
Delinquency Amount: As of any date of determination, the sum of:
(a) the product of (i) the aggregate Trust Balance of all Home Equity
Loans (other than Foreclosure, Foreclosed or Liquidated Home Equity
Loans) which are between 30 and 59 days delinquent (on a contractual
basis) and (ii) 11.00%;
(b) the product of (i) the aggregate Trust Balance of all Home Equity
Loans (other than Foreclosure, Foreclosed or Liquidated Home Equity
Loans) which are delinquent between 60 and 89 days (on a contractual
basis) and (ii) 22.00%; and
(c) the product of (i) the aggregate Trust Balance of all Home Equity
Loans (other than Liquidated Home Equity Loans) delinquent 90 days or
more, and (ii) 44.00%.
Depositor: Beneficial Mortgage Services, Inc., a Delaware corporation,
and its successors in interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the
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registered Holder of Book-Entry Certificates evidencing $736,017,000 in initial
aggregate principal amount of the Class A Certificates, $36,000,000 initial
aggregate principal amount of the Class M Certificates and $28,000,000 initial
aggregate principal amount of the Class B Certificates. The Depository shall at
all times be a "clearing corporation" as defined in Section 8-102(3) of the
Uniform Commercial Code of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the fifth Business Day
preceding such Distribution Date.
Disqualified Organization: A disqualified organization as defined in
section 860E(e)(5) of the Code (or any successor statute thereto).
Distribution Date: The 28th day of each calendar month or, if such day
is not a Business Day, the next succeeding Business Day, beginning in September
1997.
Electronic Ledger: As to each Originator, the electronic master record
of home equity credit line accounts maintained by it.
Eligible Account: An account that is (a) maintained with a depository
institution the long-term deposits or the long-term unsecured debt obligations
of which have been rated by each Rating Agency in its highest rating category,
or (b) an account or accounts the deposits in which are fully insured by either
the BIF or the SAIF, or (c) a segregated trust account maintained with the
Trustee in its fiduciary capacity in its corporate trust department, or (d)
otherwise acceptable to each Rating Agency, as evidenced by a letter from such
Rating Agency to the Trustee.
Eligible Substitute Home Equity Loan: A Home Equity Loan or Loans
substituted by the Depositor or the Master Servicer for a Defective Home Equity
Loan, which must on the date of such substitution (a) have an outstanding Trust
Balance (or in the case of a substitution of more than one Home Equity Loan for
a Defective Home Equity Loan, an aggregate Trust Balance) not in excess of, and
not substantially less than, the Trust Balance of such Defective Home Equity
Loan; (b) have a Loan Rate of not less than the Loan Rate of the Defective Home
Equity Loan and not more than 1% in excess of the Loan Rate of such Defective
Home Equity Loan; (c) have a remaining term to maturity not more than six months
earlier or later than the remaining term of the Defective Home Equity Loan; (d)
comply with each representation, warranty and obligation set forth in Section
2.04 (except that each such representation and warranty shall be deemed to be
made as of the
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date of substitution); (e) have an original Combined Loan-to-Value Ratio not
greater than that of the Defective Home Equity Loan; and (f) have a Mortgage of
the same or higher level of priority as the Mortgage relating to the Defective
Home Equity Loan.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Event of Default: As defined in Section 8.01.
Extra Principal Distribution Amount: As of any Distribution Date, the
lesser of (x) the Monthly Excess Interest Amount for such Distribution Date and
(y) the Overcollateralization Deficiency for such Distribution Date.
Final Auction: As defined in Section 10.01(b).
Fitch: Fitch Investors Service, L.P. or its successor in interest.
Foreclosed Home Equity Loan: Any Home Equity Loan that is not a
Liquidated Home Equity Loan and as to which the related Mortgaged Property is
held by the Trust Fund upon the foreclosure or comparable conversion thereof.
Foreclosure Home Equity Loan: A Home Equity Loan with respect to which
the Master Servicer or a Subservicer has commenced foreclosure proceedings.
Home Equity Loan Losses: For any Distribution Date, the sum of the
aggregate of Liquidated Home Equity Loan Losses for all Home Equity Loans that
became Liquidated Home Equity Loans as of such Distribution Date.
Home Equity Loan Payment Record: With respect to the Trust Fund, the
record maintained by the Master Servicer pursuant to Section 3.02(b).
Home Equity Loan Schedule: As of any date, the schedule of Home Equity
Loans included in the Trust Fund on such date. The initial schedule of Home
Equity Loans as of the Cut-off Date is the magnetic tape delivered to the
Trustee by the Depositor on the Closing Date setting forth as to each Home
Equity Loan (a) the Cut-off Date Trust Balance, (b) the Credit Limit, (c) the
dates upon which any outstanding Loan Balance is due and payable pursuant to the
amortization schedule in effect at the Closing Date, (d) the margin over the
related index that is applicable to the setting of the Loan Rate, (e) the
applicable maximum Loan Rate and minimum Loan Rate, if any, (f) the monthly
billing cycle for such Home Equity Loan and (g) the billing name and address of
the Mortgagor.
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Home Equity Loans: Such of the home equity loans the Trust Balances of
which have been sold and assigned to the Trustee pursuant to Section 2.01 as
from time to time are held as a part of the Trust Fund, the Home Equity Loans
originally so held being identified in the Home Equity Loan Schedule. When used
in respect of any Distribution Date, the term Home Equity Loans shall mean all
Home Equity Loans (including those in respect of which the Trust Fund has
acquired the related Mortgaged Property) that (a) have not been prepaid in full
prior to the related Collection Period, (b) did not become Liquidated Home
Equity Loans prior to such related Collection Period and (c) were not
repurchased by the Master Servicer prior to such related Collection Period.
Insurance Proceeds: As to any Home Equity Loan and Collection Period,
proceeds paid by any insurer pursuant to any insurance policy covering such Home
Equity Loan (net of any component thereof covering any expenses incurred by or
on behalf of the Master Servicer) or by the Master Servicer pursuant to Section
3.04 during such Collection Period, that (a) are not Liquidation Proceeds, (b)
are not applied to the restoration or repair of the related Mortgaged Property
or released to the related Mortgagor in accordance with the normal servicing
procedures of the Master Servicer and (c) will be applied by the Master Servicer
in reduction of the Loan Balance of such Home Equity Loan.
Interest Remittance Amount: As of any Distribution Date, the sum,
without duplication, of (i) all interest collected during the related Collection
Period on the Home Equity Loans (less the Monthly Servicing Fee) and (ii) the
portion of any Substitution Adjustment Amount relating to interest.
LIBOR: As to any Accrual Period, the per annum rate established by the
Trustee with respect to such Accrual Period (a) based on the London interbank
offered rate for one-month United States dollar deposits that appears on the
Telerate Page 3750 as of 11:00 a.m., London time, on the related LIBOR
Determination Date, or (b) if on such date no such rate appears on the Telerate
Page 3750, based on the arithmetic mean (rounded upwards, if necessary, to the
nearest 1/100 of one percent) of the rates at which one-month U.S. dollar
deposits are offered at approximately 11:00 a.m., London time, on such LIBOR
Determination Date by four Reference Banks to prime banks in the London
interbank market commencing on the second LIBOR Business Day immediately
following such LIBOR Determination Date or (c) if fewer than two Reference Banks
provide such offered quotations, the greater of (i) LIBOR as determined on the
preceding LIBOR Determination Date and (ii) the Reserve Interest Rate.
LIBOR Business Day: A day on which banking institutions in The City of
New York and the City of London, England are open for dealing in foreign
currency and exchange.
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LIBOR Determination Date: With respect to any Accrual Period other than
the initial Accrual Period, the second LIBOR Business Day prior to the beginning
of such Accrual Period.
Liquidated Home Equity Loan: As to any Distribution Date, any Home
Equity Loan (other than a Defective Home Equity Loan that is purchased or
substituted pursuant to Section 2.02 or 2.04) in respect of which the Master
Servicer has determined as of the end of the calendar month preceding the month
of such Distribution Date that all Liquidation Proceeds that it expects to
recover have been recovered.
Liquidated Home Equity Loan Loss: As to any Liquidated Home Equity
Loan, the amount, if any, by which (a) the sum of (i) the Trust Balance of such
Liquidated Home Equity Loan and (ii) accrued and unpaid interest thereon at the
applicable Net Loan Rate from time to time applicable through the end of the
Collection Period ending in the month preceding the month of the Distribution
Date upon which such Home Equity Loan became a Liquidated Home Equity Loan,
exceeds (b) the Trust Liquidation Proceeds received in connection with the
liquidation thereof. For purposes hereof, a Foreclosed Home Equity Loan shall be
deemed to have continued to accrue interest at the Net Loan Rate that would have
been applicable from time to time to the accrual of interest on the related Home
Equity Loan.
Liquidated Loan Loss Amortization Amount: The Class B Liquidated Loan
Loss Amortization Amount or the Class M Liquidated Loan Loss Amortization
Amount.
Liquidation Expenses: As to any Home Equity Loan, unreimbursed expenses
that are incurred by the Master Servicer in connection with the liquidation of
such Home Equity Loan and not recovered under any insurance policy, such
expenses to include, without limitation, legal fees and expenses, any
unreimbursed amount expended by the Master Servicer pursuant to Section 3.06
(including, without limitation, amounts advanced to correct defaults under any
deed of trust or mortgage that is prior to such Home Equity Loan) in respect of
such Home Equity Loan and any related and unreimbursed expenditures for real
estate property taxes or for property restoration or preservation.
Liquidation Period: The period beginning on the date of adoption by
holders of the Class R Certificates of a plan of complete liquidation of the
Trust Fund and ending on the day that is 90 days after the date such plan is
adopted.
Liquidation Proceeds: As to any Home Equity Loan, cash (other than
Insurance Proceeds and if such Home Equity Loan is a Defective Home Equity Loan,
the Purchase Price of such Home Equity Loan) received in connection with the
liquidation of such Home Equity Loan, whether through trustee's sale,
foreclosure sale or otherwise, including without limitation rentals on acquired
Mortgaged Properties; provided, however, that in no
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event shall Liquidation Proceeds with respect to any Home Equity Loan exceed (x)
the sum described in clause (a) of the definition of "Liquidated Home Equity
Loan Loss" and (y) any related Liquidation Expenses.
Loan Agreement: As to any Home Equity Loan, the related credit line
agreement executed by the Mortgagor and the related Originator and any
amendments or modifications thereto.
Loan Balance: As to any Home Equity Loan and any day, the principal
balance of such Home Equity Loan at the close of business on such day.
Loan Rate: As to any Home Equity Loan and any day, the per annum rate
of interest applicable to the calculation of interest on the related Loan
Balance for such day as set forth in the related Loan Agreement.
Lower-Tier A Balance: As of any Distribution Date, an amount equal to
the Original Class A Certificate Balance less all amounts previously distributed
on Lower-Tier Interest A on all previous Distribution Dates from the Principal
Collected Amount, but in no event less than zero.
Lower-Tier B Balance: As of any Distribution Date, an amount equal to
the Original Class B Certificate Balance less the sum of (x) all amounts
previously distributed on Lower-Tier Interest B on all previous Distribution
Dates from the Principal Collected Amount and (y) the aggregate, cumulative
amount of the Class B Applied Liquidated Loan Loss Amounts on all previous
Distribution Dates, but in no event less than zero.
Lower-Tier Certificate Account: The custodial account or accounts
created and maintained with the Trustee pursuant to Section 4.02 and included in
the Lower-Tier REMIC.
Lower Tier Distribution Amount: As defined in Section 4.04.
Lower-Tier Interest: Any of the Lower-Tier Interest A, the Lower-Tier
Interest M, the Lower-Tier Interest B or the Lower- Tier Interest R.
Lower-Tier Interest A: An uncertificated regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper- Tier REMIC and is
entitled to monthly distributions as provided in Section 4.04.
Lower-Tier Interest B: An uncertificated regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper- Tier REMIC and is
entitled to monthly distributions as provided in Section 4.04.
Lower-Tier Interest M: An uncertificated regular interest in the
Lower-Tier REMIC which is held as an asset of the
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Upper-Tier REMIC and is entitled to monthly distributions as provided in Section
4.04.
Lower-Tier Interest R: A certificated residual interest in the
Lower-Tier REMIC evidenced by the Class R Certificates.
Lower-Tier M Balance: As of any Distribution Date, an amount equal to
the Original Class M Certificate Balance less the sum of (x) all amounts
previously distributed on Lower-Tier Interest M on all previous Distribution
Dates from the Principal Collected Amount and (y) the aggregate, cumulative
amount of the Class M Applied Liquidated Loan Loss Amounts on all previous
Distribution Dates, but in no event less than zero.
Lower-Tier REMIC: One of the two separate REMICs established pursuant
to Section 2.05, the assets of which shall consist of the segregated pool of
assets referred to as the Trust Fund, other than the Upper-Tier Certificate
Account.
Master Servicer: Beneficial Mortgage Corporation, in its capacity as
master servicer hereunder, or its successor in interest or any successor
servicer appointed as provided herein.
Monthly Excess Cashflow Amount: As to any Distribution Date, the sum of
the Monthly Excess Interest Amount and the Overcollateralization Release Amount.
Monthly Excess Interest Amount: As to any Distribution Date, the
greater of (a) the amount equal to (i) the Interest Remittance Amount less (ii)
the aggregate amount of interest required to be distributed pursuant to Section
5.01(a)(i), and (b) zero.
Monthly Servicing Fee: As to any Home Equity Loan and any date, an
amount equal to one-twelfth of the product of (a) the Servicing Fee Rate and (b)
the Trust Balance of such Home Equity Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
Mortgage: As to any Home Equity Loan, the deed of trust or other
instrument creating a first or second lien on an estate in fee simple interest
in real property securing such Home Equity Loan.
Mortgage File: As to any Home Equity Loan, the mortgage documents
listed in Section 2.01 pertaining to such Home Equity Loan and any additional
documents required to be added to the Mortgage File pursuant to this Agreement,
which documents may be physical documents or, pursuant to the terms of Section
2.01, optical images or other representations thereof.
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Mortgaged Property: As to any Home Equity Loan, the underlying
property, including real property and any improvements thereon, securing such
Home Equity Loan.
Mortgagor: The obligor or obligors under a Loan Agreement.
Net Liquidation Proceeds: As to any Liquidated Home Equity Loan,
Liquidation Proceeds net of Liquidation Expenses.
Net Loan Rate: As to any Home Equity Loan and any day, the Loan Rate
less the Servicing Fee Rate.
Officer's Certificate: A certificate signed by the President, a Senior
Vice President or a Vice President of the Depositor or the Master Servicer, as
the case may be, and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel delivered to the
Trustee, who may be counsel employed by the Master Servicer or the Depositor,
except that any opinion of counsel relating to the qualification of the Trust
Fund as a REMIC or compliance with or taxation pursuant to the REMIC Provisions
must be an opinion of independent counsel experienced in matters relating to the
subject of such opinion.
Original Class A Certificate Balance: $ 736,017,000.00
Original Class B Certificate Balance: $ 36,000,000.00
Original Class M Certificate Balance: $ 28,000,000.00
Original Class R Certificate Balance: $ 590.57
Originator: Each of the Master Servicer, Beneficial Arizona Inc.,
Beneficial California Inc., Beneficial Consumer Discount Company, Beneficial
Delaware Inc., Beneficial Discount Co. of Virginia, Beneficial Florida Inc.,
Beneficial Homeowner Service Corporation, Beneficial Illinois Inc., Beneficial
Indiana Inc., Beneficial Kentucky Inc., Beneficial Loan & Thrift Co., Beneficial
Maine Inc., Beneficial Michigan Inc., Beneficial Mississippi Inc., Beneficial
Montana Inc., Beneficial Mortgage Co. of Arizona, Beneficial Mortgage of
Colorado, Beneficial Mortgage Co. of Connecticut, Beneficial Mortgage Co. of
Georgia, Beneficial Mortgage Co. of Idaho, Beneficial Mortgage Co. of Indiana,
Beneficial Mortgage Co. of Kansas, Beneficial Mortgage Co. of Louisiana,
Beneficial Mortgage Co. of Maryland, Beneficial Mortgage Co. of Massachusetts,
Beneficial Mortgage Co. of Mississippi, Beneficial Mortgage Co. of Missouri,
Beneficial Mortgage Co. of Nevada, Beneficial Mortgage Co. of New Hampshire,
Beneficial Mortgage Co. of North Carolina, Beneficial Mortgage Co. of Oklahoma,
Beneficial Mortgage Co. of Rhode Island, Beneficial Mortgage Co. of South
Carolina, Beneficial Mortgage Co. of Utah, Beneficial Nebraska Inc., Beneficial
New Jersey Inc., Beneficial New Mexico Inc., Beneficial Ohio Inc.,
- 17 -
Beneficial Oregon Inc., Beneficial Tennessee Inc., Beneficial Washington Inc.,
Beneficial West Virginia, Inc. and Beneficial Wisconsin, Inc.
Overcollateralization Amount: As of any Distribution Date the
difference between (x) the Pool Balance as of the last day of the related
Collection Period and (y) the Certificate Principal Balance (after taking into
account all distributions of principal on such Distribution Date).
Overcollateralization Deficiency: As of any Distribution Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount for such
Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking into account the
reduction on such Distribution Date of the Certificate Principal Balance
resulting from the distribution of the Principal Distribution Amount (but not
the Extra Principal Distribution Amount) on such Distribution Date, but prior to
taking into account any related Applied Liquidated Loan Loss Amount on such
Distribution Date.
Overcollateralization Release Amount: As of any Distribution Date, the
lesser of (x) the Principal Collected Amount for such Distribution Date and (y)
the excess, if any, of (i) the Overcollateralization Amount for such
Distribution Date, assuming that 100% of the Principal Collected Amount is
applied on such Distribution Date to the payment of principal on the Class A,
Class M and Class B Certificates over (ii) the Targeted Overcollateralization
Amount for such Distribution Date.
Overdue Trust Percentage: As to any Collection Period and any payment
received in respect of a Home Equity Loan that was due in a previous Collection
Period, the percentage (carried to four places) obtained by dividing the average
daily Trust Balance for all consecutive prior Collection Periods from and
including the Collection Period in which such payment was due to and including
the Collection Period in which such payment was received in full by the average
daily Loan Balance for such consecutive prior Collection Periods. The Overdue
Trust Percentage shall only be applied to payments received in a Collection
Period that were due in a previous Collection Period or Periods.
Ownership Interest: With respect to any Class M, Class B, Class C or
Class R Certificate, any ownership or security interest therein, including any
interest therein as the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.
Paying Agent: Any Person appointed by the Trustee as permitted by
Section 6.05.
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Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made thereon, such percentage
interest being equal, in the case of a Certificate other than a Class C or Class
R Certificate, to the percentage obtained by dividing the original principal
denomination of such Certificate by the aggregate of the original principal
denominations of all Certificates of the same Class, and, in the case of a Class
C or Class R Certificate, to the percentage set forth on the face thereof.
Permitted Investments: One or more of the following:
(a) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and interest by, the
United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(b) repurchase agreements on obligations specified
in clause (a) maturing not more than three months from the date of
acquisition thereof, provided that the unsecured short-term debt
obligations of the party agreeing to repurchase such obligations are at
the time rated by each Rating Agency in its highest unsecured
short-term rating category;
(c) certificates of deposit, time deposits and
bankers' acceptances (which, if ▇▇▇▇▇'▇ is a Rating Agency, shall each
have an original maturity of not more than 90 days and, in the case of
bankers' acceptances, shall in no event have an original maturity of
more than 365 days) of any U.S. depository institution or trust company
incorporated under the laws of the United States or any State provided
that either (i) such investments are fully insured by the Federal
Deposit Insurance Corporation or (ii) the debt obligations of such
depository institution or trust company (or if Standard & Poor's is a
Rating Agency in the case of the principal depository institution in a
depository institution holding company, the unsecured short-term debt
obligations of the depository institution holding company) at the date
of acquisition thereof have been rated by each Rating Agency in its
highest unsecured short-term debt rating category;
(d) commercial paper (having original maturities of
not more than 270 days) of any corporation incorporated under the laws
of the United States or any state thereof which on the date of
acquisition has been rated by each Rating Agency in its highest
short-term rating category;
(e) money market funds rated by each Rating Agency
in its highest category;
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(f) money market mutual funds, including, without
limitation, the VISTA Money Market Funds or any other fund for which
the Trustee or an Affiliate of the Trustee serves as an investment
advisor, administrator, shareholder, servicing agent and/or custodian
or subcustodian (provided that any such fund is rated in the highest
rating category by each of Standard & Poor's and Moody's),
notwithstanding that (i) the Trustee or an Affiliate of the Trustee
charges and collects fees and expenses from such funds for services
rendered, (ii) the Trustee charges and collects fees and expenses for
services rendered pursuant to this Agreement, and (iii) services
performed for such funds and pursuant to this Agreement may converge at
any time; and
(g) other obligations or securities that are
acceptable to each Rating Agency as a Permitted Investment hereunder
and will not result in a reduction, withdrawal or suspension of the
then-current rating of any Class of Certificates, as evidenced by a
letter to such effect from such Rating Agency.
With respect to clause (f) above, the Depositor and the Master Servicer
specifically authorize the Trustee or an Affiliate of the Trustee to charge and
collect all fees and expenses from such funds for services rendered to such
funds, in addition to any fees and expenses the Trustee may charge and collect
for services rendered pursuant to this Agreement.
In no event shall an instrument be a Permitted Investment if such
instrument evidences (x) a right to receive only interest payments with respect
to the obligations underlying such instrument or (y) both principal and interest
payments derived from obligations underlying such instrument, if the interest
and principal payments with respect to such instrument provide a yield to
maturity at the date of investment of greater than 120% of the yield to maturity
at par of such underlying obligations.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Balance: As to any Distribution Date, the aggregate of the Trust
Balances of all Home Equity Loans as of the beginning of the related Collection
Period; and as to any other time of reference, the aggregate of the Trust
Balances of the Home Equity Loans as of the specified date.
Pool Purchase Price: As defined in Section 10.01(b).
Principal Collected Amount: As of any Distribution Date, the sum of (a)
the aggregate of all Trust Principal Payments received during the related
Collection Period, (b) the aggregate of all Trust Insurance Proceeds received
during the related Collection Period, (c) the aggregate of Trust Liquidation
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Proceeds received as of the end of the calendar month preceding the month of
such Distribution Date, (d) the aggregate Purchase Price of any Defective Home
Equity Loans repurchased by the Depositor or the Master Servicer since the
preceding Distribution Date and (e) the Substitution Adjustment Amount deposited
in the Collection Account during the preceding Collection Period.
Principal Distribution Amount: As of any Distribution Date, the sum of
(i) the Principal Collected Amount minus, for Distribution Dates occurring on
and after the Stepdown Date, the Overcollateralization Release Amount, if any,
and (ii) the Extra Principal Distribution Amount, if any.
Principal Payment: As to any Home Equity Loan and any Collection
Period, all amounts (excluding Insurance Proceeds and Liquidation Proceeds)
received by the Master Servicer from or on behalf of the related Mortgagor
during such Collection Period that were applied in reduction of the Loan Balance
of such Home Equity Loan.
Purchase Price: With respect to any Defective Home Equity Loan required
to be repurchased on any date pursuant to Section 2.02 or 2.04, an amount equal
to the sum of (a) the Trust Balance thereof as of the end of the Collection
Period preceding the date of repurchase and (b) accrued and unpaid interest
thereon to the end of such Collection Period at the Net Loan Rate from time to
time applicable to such Trust Balance.
Rating Agency: Any statistical credit rating agency, or its successor,
that rated any Class of Certificates at the request of the Depositor at the time
of the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Master Servicer, notice of
which designation shall be given to the Trustee. References herein to the
highest rating category of a Rating Agency shall mean AAA, AAAm, AAAm-G or A-1+,
in the case of Standard & Poor's, AAA, or F-1+, in the case of Fitch, and Aaa or
P-1 +, in the case of Moody's, and in the case of any other Rating Agency shall
mean an equivalent rating.
Record Date: As to any Book-Entry Certificate and any Distribution
Date, the day immediately preceding such Distribution Date or, if Definitive
Certificates are issued pursuant to Section 6.01, the last day of the calendar
month preceding the month in which such Distribution Date occurs. As to any
Class R Certificate and any Distribution Date, the fifth Business Day preceding
such Distribution Date.
Reference Banks: Banks designated by the Trustee (a) that are engaged
in transactions in Eurodollar deposits in the international Eurocurrency market,
(b) with an established place
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of business in London, and (c) that, to the knowledge of the Trustee, do not
control, are not controlled by, and are not under common control with the Master
Servicer or the Depositor.
REMIC: As defined in Section 3.01.
REMIC Change of Law: Any proposed, temporary or final statute,
regulation, revenue ruling, revenue procedure or other official announcement or
interpretation relating to REMICs and the REMIC Provisions issued after the
Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs, which appear at sections 860A through 860G of Subchapter M of Chapter 1
of the Code, and related provisions and regulations promulgated thereunder, as
the foregoing may be in effect from time to time.
Reserve Interest Rate: With respect to any Accrual Period, the per
annum rate that the Trustee determines to be either (a) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 1/100 of one
percent) of the one-month U.S. dollar lending rates which at least two New York
City banks selected by the Trustee are quoting on the relevant LIBOR
Determination Date to the principal London offices of leading banks in the
London interbank market or (b) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which at
least two New York City banks selected by the Trustee are quoting on such LIBOR
Determination Date.
Responsible Officer: When used with respect to the Trustee, any officer
within the Corporate Trust Office including any Vice President, Managing
Director, Assistant Vice President, Secretary, Assistant Secretary or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge and familiarity with the particular subject.
Sale Agreement: The Loan Sale Agreement, dated as of September 1, 1997,
between the Originators, as sellers, and the Depositor, as purchaser, as
amended, supplemented or otherwise modified from time to time.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing or performing
duties now assigned to it, the body performing such duties on such date.
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Securities Act: The Securities Act of 1933, as amended.
Senior Enhancement Percentage: For any Distribution Date is the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates and (ii) the
Overcollateralization Amount, in each case prior to taking into account the
distribution of the Principal Distribution Amount on such Distribution Date by
(y) the Pool Balance as of the last day of the related Collection Period. The
Class C Certificates will have no Certificate Balance.
Servicer LOC: Any letter of credit, surety or similar agreement
obtained by the Master Servicer pursuant to Section 3.02(c).
Servicer LOC Issuer: At any time as to any Servicer LOC, the
institution that is then obligated under such Servicer LOC.
Servicing Certificate: A certificate completed by and executed on
behalf of the Master Servicer in accordance with Section 4.01.
Servicing Fee Rate: 1.0% per annum.
Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Home Equity Loans whose
name appears on a list of servicing officers furnished on the Closing Date to
the Trustee by the Master Servicer, as such list may be amended from time to
time.
Standard & Poor's: Standard & Poor's Debt Ratings Group or its
successor in interest.
Stepdown Date: The later to occur of (x) the September 2000
Distribution Date and (y) the first Distribution Date on which the Senior
Enhancement Percentage is greater than or equal to 25.25%.
Subordinate Certificates: The Class M, Class B, Class C and Class R
Certificates.
Subservicer: Each Originator, in its capacity as servicer of the Home
Equity Loans originated by it and sold by the Depositor to the Trustee
hereunder, and any other subservicer appointed as such by the Master Servicer.
Substitution Adjustment Amount: As defined in the fourth sentence of
Section 2.02(b).
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Targeted Overcollateralization Amount: As of any Distribution Date, (x)
prior to the Stepdown Date, 2.10% of the Cut-off Date Pool Balance and (y) on
and after the Stepdown Date, the greater of (i) 5.25% of the Pool Balance as of
the last day of the related Collection Period and (ii) an amount equal to
$4,000,088.
Tax Matters Person Residual Interest: A 0.000001% interest in the Class
R Certificates, which shall be issued to and held by the Master Servicer
throughout the term hereof.
Telerate Page 3750: The display designated as page 3750 on the Telerate
Service (or such other page as may replace page 3750 on that service or such
other service or services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates for
U.S. dollar deposits).
Termination Date: The Distribution Date upon which the final
distribution is made to Certificateholders.
Texas Commerce Bank: Texas Commerce Bank National Association, a
national banking association, and its successors and assigns.
Total Expected Losses: As of any date of determination, the sum of (a)
the aggregate amount of Liquidated Home Equity Loan Losses occurring on or prior
to such date and (b) the Delinquency Amount.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation
or other form of assignment of any Ownership Interest in a Class M, Class B,
Class C or Class R Certificate.
Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Class M, Class B, Class C or Class R Certificate.
Trigger Event: Has occurred with respect to any Distribution Date if
the percentage obtained by dividing (x) the aggregate Trust Balance of 60 plus
day delinquent Home Equity Loans, including any Foreclosure Home Equity Loans or
Foreclosed Home Equity Loans, by (y) the Pool Balance as of the last day of the
related Collection Period, equals or exceeds one-half of the Senior Enhancement
Percentage for such Distribution Date.
Trust Balance: As to any Home Equity Loan and any day, the Cut-off Date
Trust Balance less (a) all Trust Principal Payments received and credited
against the Trust Balance since the Cutoff Date and (b) any Trust Insurance
Proceeds received since the Cut-off Date in respect of such Home Equity Loan.
For purposes hereof, a Foreclosed Home Equity Loan shall be deemed to have a
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Trust Balance equal to the Trust Balance of the related Home Equity Loan
immediately prior to the foreclosure or comparable conversion, and a Liquidated
Home Equity Loan shall be deemed to have a Trust Balance equal to the Trust
Balance of the related Home Equity Loan immediately prior to the final recovery
of the related Liquidation Proceeds.
Trust Fund: The corpus of the trust created by this Agreement,
consisting of, to the extent described herein, the Trust Balance of each Home
Equity Loan, such assets as shall from time to time be identified as credited to
the Home Equity Loan Payment Record or deposited in the Certificate Accounts in
accordance with this Agreement, any Insurance Proceeds, any Servicer LOC, and
any property that secured a Home Equity Loan and that has been acquired by
foreclosure or deed in lieu of foreclosure.
Trust Insurance Proceeds: As to any Home Equity Loan and any Collection
Period, the product of (a) the Trust Percentage and (b) Insurance Proceeds with
respect to such Home Equity Loan received during such Collection Period.
Trust Interest: As to any payment on a Home Equity Loan made by or on
behalf of the related Mortgagor that is due (a) in the Collection Period in
which it is received, the product of (i) the portion of such payment allocable
to interest at the Net Loan Rate for the related Collection Period and (ii) the
Trust Percentage for the related Collection Period, or (b) in a Collection
Period prior to the Collection Period in which it was received, the product of
(i) the portion of such payment allocable to interest at the Net Loan Rate at
the beginning of the initial Collection Period in which such payment was due and
(ii) the Overdue Trust Percentage for the Collection Period in which such
payment is received.
Trust Liquidation Proceeds: As to any Liquidated Home Equity Loan, the
product of the Trust Percentage and Net Liquidation Proceeds.
Trust Percentage: As to any Home Equity Loan and any Collection Period,
the percentage (carried to four places) obtained by dividing the average daily
Trust Balance for the second preceding Collection Period by the average daily
Loan Balance for such second preceding Collection Period; provided, that for any
Foreclosed Home Equity Loan, the Trust Percentage shall be the Trust Percentage
in effect for the Collection Period in which such Home Equity Loan became a
Foreclosed Home Equity Loan. As of the Cut-off Date, the Trust Percentage of
each Home Equity Loan shall be 100%.
Trust Principal Payment: As to any payment made on a Home Equity Loan
by or on behalf of the related Mortgagor (other than
- 25 -
Trust Insurance Proceeds), (a) that is either a prepayment or was due in the
Collection Period in which it was received, the product of (i) the portion of
such payment applicable to the reduction of the Loan Balance of such Home Equity
Loan and (ii) the Trust Percentage for the related Collection Period, or (b)
that was due in a Collection Period prior to the Collection Period in which it
was received, the product of (x) the portion of such payment applicable to the
reduction of the Loan Balance of such Home Equity Loan and (y) the Overdue Trust
Percentage for the Collection Period in which such payment was received;
provided, however, that such amount shall not exceed the amount necessary to
reduce the related Trust Balance to zero.
Trustee: The Chase Manhattan Bank, or any successor trustee appointed
in accordance with this Agreement that has accepted such appointment in
accordance herewith.
Unpaid Liquidated Loan Loss Amount: For the Class M or Class B
Certificates, as applicable, and as to any Distribution Date, the excess of (x)
the aggregate, cumulative amount of related Applied Liquidated Loan Loss Amounts
with respect to such Class for all prior Distribution Dates over (y) the
aggregate, cumulative amount of related Liquidated Loan Loss Amortization
Amounts with respect to such Class for all prior Distribution Dates.
Upper-Tier Certificate Account: The custodial account or accounts
created and maintained with the Trustee pursuant to Section 4.02 and included in
the Upper-Tier REMIC.
Upper-Tier REMIC: One of the two separate REMICs established pursuant
to Section 2.05, the assets of which shall consist of the Lower-Tier Interests,
the right to receive distributions thereon and the Upper-Tier Certificate
Account.
Weighted Average Net Loan Rate: As to any Distribution Date, the
average of the Net Loan Rates of all the Home Equity Loans in effect during the
applicable monthly billing cycles ending in the calendar month preceding such
Distribution Date (adjusted to an effective rate reflecting accrued interest
calculated on the basis of the actual number of days in the related Accrual
Period and a year assumed to consist of 360 days, and weighted by the respective
Trust Balances thereof).
Section 1.02. Interest Calculations. All calculations of interest
hereunder shall be made on the basis of the actual number of days in the Accrual
Period and a year assumed to consist of 360 days. The establishment of LIBOR on
each LIBOR Determination Date by the Trustee and the Trustee's calculation of
the rate of interest applicable to the Certificates for the related Accrual
Period shall (in the absence of manifest error) be final and binding.
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Section 1.03. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
typing, lithography, facsimile and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation".
ARTICLE II
SALE OF HOME EQUITY LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Sale of Home Equity Loans. The Depositor, concurrently
with the execution and delivery of this Agreement, does hereby sell, assign, set
over and otherwise convey (a) to the Trustee, without recourse (except as
provided herein) all of its right, title and interest in and to the Trust
Balance of each Home Equity Loan secured by a lien on property located in
California and New Jersey, including the Trust Percentage or Overdue Trust
Percentage, as applicable, of all interest and principal received by the
Depositor or any Originator on or with respect to each such Home Equity Loan
after the Cut-off Date (other than any payment of principal and interest
allocable to any Additional Balance related thereto as herein provided, any
premium accompanying the prepayment of all or a portion of a related Loan
Balance, and any related fees, charges or amounts held for the account of
Mortgagors as described in Section 3.02(b)), together with all of its right,
title and interest in and to the proceeds of any related insurance policies (to
the extent of the related Trust Balances) and its rights with respect to each
such Home Equity Loan under the Sale Agreement and (b) to the Co-Trustee,
without recourse (except as provided herein) all of its right, title and
interest in and to the Trust Balance of each Home Equity Loan secured by a lien
on property located outside of California and New Jersey, including the Trust
Percentage or Overdue Trust Percentage, as applicable, of all interest and
principal received by the Depositor or any Originator on or with respect to each
such Home Equity Loan after the Cut-off Date (other than any payment of
principal and interest allocable to any Additional Balance related thereto as
herein provided, any premium accompanying the prepayment of all or a portion of
a related Loan Balance, and any related fees, charges or amounts held for the
account of Mortgagors as described in Section 3.02(b)), together with all of its
right, title and interest in and to the proceeds of any related insurance
policies (to the extent of the related Trust Balances) and its rights with
respect to each such Home Equity Loan under the Sale Agreement. In connection
with such conveyances, the
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Master Servicer does hereby agree to enter into the Home Equity Loan Payment
Record on the Closing Date the initial deposit to the Lower-Tier Certificate
Account described in Section 4.02(a) and thereafter to effect the deposit to the
Lower-Tier Certificate Account required pursuant to such Section.
In connection with such sale and assignment, the Depositor will as
promptly as practicable, but in no event later than 90 days following the
Closing Date, file in the appropriate office in the State in which its principal
place of business is located UCC-1 financing statements executed by the
Depositor as debtor, naming the Trustee or the Co-Trustee , as applicable, as
secured party and listing as collateral the respective Home Equity Loans the
Trust Balances of which are conveyed by the Depositor hereunder. The
characterization of the Depositor as debtor and the Trustee or the Co-Trustee,
as applicable, as secured party in any such financing statement is solely for
protective purposes and shall in no way be construed as being contrary to the
intent of the parties that this transaction be treated as a sale to the Trustee
or the Co-Trustee, as applicable, of the Depositor's entire right, title and
interest in the Trust Balances of the Home Equity Loans. In connection with such
filing, the Master Servicer agrees that it shall cause to be filed all necessary
continuation statements and to take or cause to be taken such actions and to
execute such documents as are necessary to perfect and protect the
Certificateholders' interests in the Trust Balance of each such Home Equity Loan
and the proceeds thereof allocable thereto. In the event a Servicer LOC is
obtained pursuant to Section 3.02(c), the Master Servicer promptly shall deliver
to the Trustee such Servicer LOC.
In connection with such sale and assignment by the Depositor, the
Master Servicer acknowledges that it is holding (or that it will cause the
related Originators to hold on the Master Servicer's behalf) as custodian for
the Trustee and the Co-Trustee the following documents or instruments with
respect to each Home Equity Loan the Trust Balance of which is being so sold and
assigned:
(i) The related Loan Agreement (including any
related assumption, modification and substitution agreements), and any
evidence of indebtedness executed by the related Mortgagor in
connection therewith;
(ii) any related amendments to the Loan Agreement or
Mortgage, any related modification or assumption agreement and any
related previous assignments of the Home Equity Loan;
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(iii) the related Mortgage with evidence of recording
indicated thereon; and
(iv) with respect to each Home Equity Loan the
original Credit Limit of which was $10,000 or more, evidence of title
insurance or foreclosure impairment insurance, as the case may be;
provided, however, that as to any Home Equity Loan in respect of which, as
evidenced by an Opinion of Counsel delivered to and in form and substance
satisfactory to the Trustee, (x) an optical image or other representation of the
related documents specified in clauses (i) through (iii) above are enforceable
in the relevant jurisdiction to the same extent as the original of such document
and (y) such optical image or other representation does not impair the ability
of an owner of such Home Equity Loan to transfer its interest in such Home
Equity Loan, such optical image or other representation may be held by the
Master Servicer (or by the related Originator acting on behalf of the Master
Servicer) as custodian in lieu of the physical documents specified above.
Except as hereinafter provided, the Master Servicer (or any Originator
acting on behalf of the Master Servicer) as custodian of the Mortgage Files,
shall be entitled to maintain possession of all of the foregoing documents and
instruments and shall not be required to deliver any of them to the Trustee or
the Co- Trustee.
The right of Beneficial, as Master Servicer, or any Originator acting
on behalf of the Master Servicer to maintain possession of the documents
enumerated above shall continue so long as (x) Beneficial (or such Originator)
remains an affiliate of Beneficial Corporation and the long-term unsecured debt
of Beneficial Corporation is assigned ratings of at least A- by Standard &
Poor's and Fitch and A3 by Moody's or (y) Beneficial has not been removed as
Master Servicer following the occurrence of an Event of Default. The Master
Servicer shall notify in writing each Originator and the Trustee if the
long-term unsecured debt of Beneficial Corporation does not satisfy either of
such ratings. At such time, as promptly as practicable but in no event more than
90 days in the case of clause (i) below and 60 days in the case of clause (ii)
below following the occurrence of such event, Beneficial, at its own expense
shall (or shall cause the related Originator to) (i) either (x) submit for
recording an assignment of Mortgage in favor of the Trustee or the Co-Trustee,
as applicable (which may be a blanket assignment, if permitted by law in the
applicable jurisdiction as evidenced by an Opinion of Counsel delivered to the
Trustee) with respect to each of the related Home Equity Loans in the
appropriate real property or other records or (y) deliver to the Trustee the
fully executed and prepared assignment of mortgage in favor of the Trustee in
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form for recordation, together with an Opinion of Counsel to the effect that
neither the recording of an assignment nor the taking of any other action is
required to protect the Trustee's right, title and interest in and to the
related Mortgage and the related Home Equity Loan or, if a court were to
recharacterize the sale of the Home Equity Loans as a financing, to perfect a
first priority security interest in favor of the Trustee in such Mortgage and
Home Equity Loan and (ii) deliver the related Mortgage Files to the Trustee to
be held by the Trustee in trust, upon the terms herein set forth, for the use
and benefit of all present and future Certificateholders, and the Trustee shall
retain possession thereof except to the extent the Master Servicer or
Subservicers require any Mortgage Files for normal servicing as contemplated by
Section 3.07.
The Trustee and the Co-Trustee shall have no duty or obligation to
review any Mortgage File until such Mortgage File is delivered to the Trustee
pursuant to clause (ii) of the immediately preceding paragraph. Within 60 days
following the first delivery of the Mortgage Files to the Trustee pursuant to
clause (ii) of the immediately preceding paragraph, the Trustee will review each
Mortgage File delivered to it to ascertain that all required documents set forth
in this Section 2.01 have been executed and received, and that such documents
relate to the Home Equity Loans identified on the Home Equity Loan Schedule. In
so doing the Trustee may conclusively rely on the purported due execution and
genuineness of any signature thereon. If within such 60-day period the Trustee
finds any document constituting a part of a Mortgage File not to have been
executed or received or to be unrelated to the Home Equity Loans identified in
such Home Equity Loan Schedule, the Trustee shall promptly notify Beneficial,
which shall have a period of 30 days after receipt of such notice within which
to correct or cure, or to cause the related Originator to correct or cure, any
such defect. Each original recorded assignment of Mortgage shall be delivered to
the Trustee within 10 Business Days following the date on which it is returned
to Beneficial or the related Originator by the office with which such assignment
was filed for recording and within 10 days following receipt by the Trustee of
the recorded assignment or the assignment in recordable form, as the case may
be, the Trustee shall review such assignment to confirm the information
specified above with respect to the documents constituting the Mortgage File.
Upon receipt by the Trustee of the recorded assignment or the assignment in
recordable form, as the case may be, such recorded assignment or assignment in
recordable form shall become part of the Mortgage File. The Trustee shall notify
Beneficial of any defect in such assignment based on such review. Beneficial
shall have a period of 30 days following receipt of such notice to correct or
cure, or to cause the related Originator to correct or cure, such defect. In the
event that Beneficial fails to record, or to cause the related Originator to
record, an assignment of a Home Equity Loan as
- 30 -
herein provided within such 30-day period, the Trustee shall, upon written
instructions from Beneficial, prepare and, if required hereunder, file such
assignment for recordation in the appropriate real property or other records and
Beneficial shall deliver within five Business Days of the Closing Date a power
of attorney of each Originator, which shall appoint the Trustee as its
attorney-in-fact with full power and authority to act in its stead for the
purpose of such preparation, execution and filing. Any expense incurred by the
Trustee not otherwise paid for by Beneficial or the related Originator as
required hereunder in connection with the preparation and filing of such
assignments shall be reimbursed to the Trustee from amounts that would otherwise
be distributable to holders of the Class R Certificates.
The Trustee shall have no responsibility for reviewing any Mortgage
File except as expressly provided in this Section 2.01. In reviewing any
Mortgage File pursuant to this Section, the Trustee shall have no responsibility
for determining whether any document is valid and binding, whether the text of
any assignment or endorsement is in proper or recordable form (except, if
applicable, to determine if the Trustee is the assignee or endorsee), whether
any document has been recorded in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction, but shall only be required to determine whether a
document appears to have been executed, that it appears to be what it purports
to be and, where applicable, that it purports to be recorded, but shall not be
required to determine whether any Person executing any document was authorized
to do so or whether any signature thereon is genuine.
The Depositor further confirms to the Trustee that each Originator have
caused the portions of their Electronic Ledgers relating to the Home Equity
Loans to be clearly and unambiguously marked to indicate that the Trust Balance
of each Home Equity Loan transferred and assigned by such Originator to the
Depositor, and thereafter by the Depositor to the Trustee and the Co-Trustee
hereunder, has been sold to the Trustee and the Co- Trustee and constitutes part
of the Trust Fund in accordance with the terms of the trust created hereunder.
The parties hereto agree that Texas Commerce Bank is appointed as the
initial Co-Trustee in accordance with Section 9.10 hereof, and Texas Commerce
Bank accepts such appointment. The sole purpose of Texas Commerce Bank as a
Co-Trustee is to hold title to the Trust Balances of Home Equity Loans secured
by liens on Mortgaged Properties that are not located in California and New
Jersey. With respect to such Trust Balances and Home Equity Loans, any reference
to the Trustee in respect thereof shall be deemed to include the Co-Trustee only
insofar as such reference relates to the holder of the title thereto. The Co-
- 31 -
Trustee has no obligations hereunder except to hold such title and follow the
instructions of the Trustee, in each case subject to the limitations and
protections set forth in Section 9.10.
Section 2.02. Acceptance by Trustee; Repurchase Obligations;
Substitution of Eligible Substitute Home Equity Loans. (a) The Trustee
acknowledges the assignment and sale of the Trust Balance of each Home Equity
Loan to it, and declares that the Trustee holds and will hold the Trust Fund in
trust, upon the terms herein set forth, for the use and benefit of all present
and future Certificateholders. If the time to cure any defect of which the
Trustee has notified the Master Servicer following the Trustee's review of the
Mortgage Files pursuant to Section 2.01 has expired or if any loss is suffered
by the Trustee, on behalf of the Certificateholders, in respect of any Home
Equity Loan as a result of (i) a material defect in any document constituting a
part of a Mortgage File or (ii) the related Originator's retention of such
Mortgage File or an assignment of a Home Equity Loan not having been recorded,
the Master Servicer shall, on the Business Day preceding the Distribution Date
in the month following the Collection Period in which the time to cure such
defect expired or such loss occurred, either (i) repurchase the Trust Balance of
the related Home Equity Loan (including any property acquired in respect thereof
and any insurance policy or insurance proceeds with respect thereto) from the
Trust Fund at a price equal to the Purchase Price, which shall be accomplished
by deposit by the Master Servicer in the Lower-Tier Certificate Account pursuant
to Section 4.02 on such preceding Business Day, or (ii) so long as such
Distribution Date occurs within two years following the Closing Date, substitute
for the Trust Balance of such Home Equity Loan one or more Eligible Substitute
Home Equity Loans and remit any Substitution Adjustment Amount in respect
thereof to the Lower-Tier Certificate Account pursuant to Section 4.02 on such
preceding Business Day. The Master Servicer may first request of the related
Originator that it effect the repurchase or substitution of any Eligible
Substitute Home Equity Loan described in the preceding sentence, but in the
event any such Originator shall not have effected such repurchase or
substitution in the time provided therefor, the Master Servicer shall be
obligated to deposit the related Purchase Price into the Lower-Tier Certificate
Account in immediately available funds not later than such Distribution Date and
thereby be deemed to have purchased the Trust Balance of such Home Equity Loan
in lieu of such Originator. Such purchase by the Master Servicer shall not
relieve the related Originator of any liability to the Master Servicer with
respect to the Trust Balance of the Home Equity Loan so purchased, and the
Master Servicer shall be entitled to require the related Originator to pay to
the Master Servicer the related Purchase Price and thereby purchase the Trust
Balance of such Home Equity Loan from the Master Servicer. Upon receipt by the
Trustee of (i) in the case of a repurchase, written
- 32 -
notification signed by a Servicing Officer to the effect that the Purchase Price
for any such Defective Home Equity Loan has been so deposited in the Lower-Tier
Certificate Account or (ii) in the case of a substitution, written notification
signed by a Servicing Officer to the effect that the Substitution Adjustment
Amount, if any, has been so deposited in the Lower-Tier Certificate Account and,
if required at such time, that the related Mortgage File has been delivered to
the Trustee and the assignment referred to in Section 2.01 has been recorded,
the Trustee shall execute and deliver such instrument of transfer or assignment
presented to it by the Master Servicer, in each case without recourse,
representation or warranty, as shall be necessary to vest in the Master Servicer
or the related Originator, as the case may be, legal and beneficial ownership of
such purchased Defective Home Equity Loan (including any property acquired in
respect thereof and proceeds of any insurance policy with respect thereto). It
is understood and agreed that the obligation of the Master Servicer to
repurchase or substitute for any Home Equity Loan as to which a material defect
in a Mortgage File or any constituent document thereof continues to exist
following the cure period as described in the preceding paragraph shall
constitute the sole remedy respecting such defect available to
Certificateholders or the Trustee on behalf of Certificateholders against the
Master Servicer, and such obligation on the part of the Master Servicer shall
survive any resignation or termination of the Master Servicer hereunder. It is
further understood and agreed that any such repurchase obligation shall be
solely that of the original Master Servicer and shall survive any resignation or
termination of such Master Servicer hereunder, and the Trustee shall in no event
be obligated to repurchase any Home Equity Loan hereunder.
Notwithstanding the foregoing, in the case of any repurchase or
substitution that would result in the realization of a gain by the Trust Fund,
the Master Servicer shall not be required to so repurchase or replace any Home
Equity Loan unless it is a Defective Home Equity Loan and the Trustee shall have
received (i) in the case of a repurchase, either an Opinion of Counsel to the
effect that such repurchase shall not be subject to tax as a result of being
deemed a "prohibited transaction" under section 860F(a)(2) of the Code or an
Officer's Certificate to the effect that such repurchase shall not give rise to
net income taxable under section 860F(a)(1) of the Code and (ii) in either case,
an Opinion of Counsel that such repurchase or substitution will not be deemed a
contribution to the REMIC after the "start-up day" that would give rise to the
tax specified under section 860G(d)(1) of the Code. Any such opinion or
certificate shall be provided solely at the expense of the Master Servicer. In
the absence of such opinion or certificate, the Master Servicer shall not be
required to repurchase or replace any Home Equity Loan unless it is a Defective
Home Equity Loan and there is an actual
- 33 -
or imminent default with respect thereto or unless such breach adversely affects
the enforceability of such Home Equity Loan.
(b) As to any Eligible Substitute Home Equity Loan, the Master Servicer
shall deliver, or cause the related Originator to deliver, to the Trustee an
acknowledgment that the Depositor (or the related Originator on behalf of the
Depositor) is holding as custodian for the Trustee such documents and
agreements, if any, as are permitted to be held by the Depositor (or the related
Originator) in accordance with Section 2.01. An assignment of Mortgage in favor
of the Trustee with respect to any such Eligible Substitute Home Equity Loan
shall be required to be recorded in the appropriate real property or other
records or delivered to the Trustee with the Opinion of Counsel referred to in
Section 2.01 under the same circumstances that all other assignments of Mortgage
are required to be recorded hereunder. For any Collection Period during which
the Master Servicer substitutes one or more Eligible Substitute Home Equity
Loans for one or more Defective Home Equity Loans, the Master Servicer shall
determine the amount, if any, by which the sum of the aggregate Trust Balances
of all such Eligible Substitute Home Equity Loans at the end of such Collection
Period is less than the aggregate Trust Balances at the end of such Collection
Period of the related Home Equity Loans being removed from the Trust Fund. The
amount of any such shortfall for a Collection Period computed by the Master
Servicer, together with any accrued and unpaid interest on the Trust Balance of
the Home Equity Loan being replaced at the related Net Loan Rate (the
"Substitution Adjustment Amount"), shall be deposited by the Master Servicer in
the Lower-Tier Certificate Account on the Business Day next preceding the
Distribution Date in the month following the Collection Period in which the
circumstances giving rise to such substitution occur. All amounts received in
respect of any Eligible Substitute Home Equity Loans during the Collection
Period in which the circumstances giving rise to a substitution occur shall not
be a part of the Trust Fund and shall not be credited to the Home Equity Loan
Payment Record or deposited by the Master Servicer in the Lower-Tier Certificate
Account. All amounts received by the Master Servicer during the Collection
Period in which the circumstances giving rise to such substitution occur in
respect of the Trust Balance of any Home Equity Loan so removed from the Trust
Fund shall be deposited by the Master Servicer in the Lower-Tier Certificate
Account. The Master Servicer shall amend the Home Equity Loan Schedule to
reflect the removal of the Trust Balances of any Home Equity Loans from the
Trust Fund and the substitution of the Trust Balances of any Eligible Substitute
Home Equity Loans. Upon such substitution, the Trust Balance of any Eligible
Substitute Home Equity Loan shall constitute a portion of the Trust Fund and
shall be subject to the terms of this Agreement in all respects, and the
Depositor shall be deemed to have made with respect to any such Eligible
Substitute Home Equity Loan, as of the date of
- 34 -
substitution, the covenants, representations, warranties and obligations set
forth in Section 2.04. The Trustee shall upon satisfaction of the conditions set
forth in Section 2.02(a) promptly effect the reconveyance of any Home Equity
Loan so removed from the Trust Fund to the Master Servicer (or, if so instructed
by the Master Servicer, to the related Originator), in the manner set forth in
Section 2.02(a). The procedures applied by the Master Servicer in selecting each
Eligible Substitute Home Equity Loan shall not be adverse to the interests of
the Trustee and the Certificateholders and shall be comparable to the selection
procedures applicable to the Home Equity Loans originally conveyed hereunder.
(c) As of the Closing Date, the Trustee certifies that (i) it acquired
the Trust Balances of the Home Equity Loans in good faith, for value, and
without notice or knowledge or any adverse claim, lien, change, encumbrance or
security interest (including without limitation, federal tax liens or liens
arising under ERISA), (ii) except as permitted herein, it has not and will not,
in any capacity, assert any claim or interest in the Home Equity Loans and (iii)
it has not encumbered or transferred its right, title or interest in the Home
Equity Loans. The representation and warranty made in clause (i) above is made
by the Trustee without any independent investigation and without recourse or
warranty, except that the Trustee believes such representation to be true.
Section 2.03. Representations and Warranties Regarding the Master
Servicer. The Master Servicer represents and warrants to the Trustee and the
Certificateholders as of the Closing Date that:
(i) The Master Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power to own its assets and to
transact the business in which it is currently engaged. The Master
Servicer is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it or the
performance of its obligations hereunder requires such qualification
and in which the failure so to qualify would have a material adverse
effect on the business, properties, assets, or condition (financial or
other) of the Master Servicer or the performance of its obligations
hereunder;
(ii) The Master Servicer has the power and authority
to make, execute, deliver and perform its obligations under this
Agreement and all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize
the execution and delivery of this Agreement and the performance by it
of its obligations
- 35 -
hereunder. When executed and delivered, this Agreement will constitute
the legal, valid and binding obligation of the Master Servicer
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies;
(iii) The Master Servicer is not required to obtain
the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except such as have been obtained or filed, as the case may
be, prior to the Closing Date; provided, however, that the Master
Servicer makes no representations or warranties with respect to any
requirements under the Blue Sky laws of any State;
(iv) The execution, delivery and performance of this
Agreement by the Master Servicer will not violate any provision of any
existing law or regulation or any order or decree of any court
applicable to the Master Servicer or any provision of the Certificate
of Incorporation or Bylaws of the Master Servicer, or constitute a
material breach of any mortgage, indenture, contract or other agreement
to which the Master Servicer is a party or by which the Master Servicer
may be bound; and
(v) No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Master Servicer threatened, against
the Master Servicer or any of its properties or with respect to this
Agreement or the Certificates which in the opinion of the Master
Servicer has a reasonable likelihood of resulting in a material adverse
effect on the transactions contemplated by this Agreement.
It is understood and agreed that the representations and warranties set forth in
this Section 2.03 shall survive the sale and assignment of the Trust Balances of
the Home Equity Loans to the Trustee. Upon discovery of a breach of any of the
foregoing representations and warranties which materially and adversely affects
the interests of the Certificateholders, the party discovering such breach shall
give prompt written notice to the other parties. Within 60 days of its discovery
or its receipt of notice of breach, the Master Servicer shall cure such breach
in all material respects.
Section 2.04. Representations and Warranties Regarding the Home Equity
Loans; Repurchase of Defective Home Equity Loans.
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The Originators, in their capacity as sellers in the Sale Agreement, made the
following representations and warranties to the Depositor, and the Depositor, as
seller of the Trust Balances of the Home Equity Loans hereunder, hereby
represents and warrants to the Trustee and the Certificateholders as of the
Closing Date (except as otherwise expressly stated) that, as to each Home Equity
Loan the Trust Balance of which is conveyed to the Trust Fund by it:
(i) The information set forth on the Home Equity
Loan Schedule was true and correct in all material respects at the date
or dates respecting which such information is furnished;
(ii) As of the Closing Date, each Mortgage is a
valid lien on the related Mortgaged Property subject only to (a) the
lien of the related first deed of trust or mortgage, if any, (b) the
lien of current real property taxes and assessments, (c) covenants,
conditions and restrictions, rights of way, easements and other matters
of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending
institutions generally in the area wherein the Mortgaged Property is
located or specifically reflected in the appraisal obtained in
connection with the origination of the related Home Equity Loan and (d)
other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to
be provided by such Mortgage;
(iii) Immediately prior to the sale and assignment by
the Originators to the Depositor, each Originator had good title to
each Home Equity Loan the Trust Balance of which was sold and assigned
by it, and the Depositor has transferred all right, title and interest
in the Trust Balance of each Home Equity Loan to the Trustee;
(iv) As of the last Cycle Date immediately preceding
the Cut-off Date, no payment of principal or interest on or in respect
of any Home Equity Loan is more than 30 days past due;
(v) The Depositor and, if applicable, the related
Originator from whom the Depositor purchased each Home Equity Loan, was
properly licensed or otherwise authorized, to the extent required by
applicable law, to originate or purchase such Home Equity Loan; each
Home Equity Loan at the time it was made complied in all material
respects with applicable state and federal laws, including, without
limitation, usury, equal credit opportunity and disclosure laws, and
the consummation of the transactions herein contemplated, including,
without limitation, the receipt of
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interest by Certificateholders, and the ownership of the Trust Balances
of the Home Equity Loans by the Trustee as trustee of the Trust Fund,
will not involve the violation of such laws;
(vi) As to each Home Equity Loan having an original
Credit Limit of $10,000 or more, a lender's title insurance policy or
binder, foreclosure impairment insurance, or other assurance of title
customary in the relevant jurisdiction therefor, was issued on or as of
the date of the recording of the related Mortgage, and each such policy
or binder is valid and remains in full force and effect;
(vii) As of the Closing Date, neither the Depositor
nor the related Originator has received a written notice of default of
any first lien loan related to a Mortgaged Property that has not been
cured by a party other than the Depositor or the related Originator;
(viii) Each Loan Agreement is in substantially the
form previously provided to the Trustee by or on behalf of the
Depositor;
(ix) Except in the case of one Home Equity Loan (the
Combined Loan-to-Value Ratio of which was not in excess of 115%), at
the date of the execution of any Loan Agreement, the Combined
Loan-to-Value Ratio for the related Home Equity Loan was not in excess
of 100%;
(x) No selection procedure reasonably believed by
the Depositor or the Originators to be adverse to the interests of the
Certificateholders was utilized in selecting the Home Equity Loans;
(xi) To the best of the Depositor's knowledge, an
independent interior and exterior appraisal in accordance with industry
standards was made in connection with the origination of each Home
Equity Loan with a Credit Limit in excess of $10,000;
(xii) The fair market value of the "interest in real
property" as defined in Treas. Reg. ss. 1.860G-2(a)(4) and Treas. Reg.
ss. 1.856-3(c) securing each Home Equity Loan reduced by the amount of
any lien on the interest in real property that is senior to such Home
Equity Loan, and further reduced by a proportionate amount of any lien
on the interest in real property that is in parity with such Home
Equity Loan, was at least equal to 80% of the adjusted issue price of
the Home Equity Loan on the date of the execution of the related Loan
Agreement (provided the Home Equity Loan has not been significantly
modified as defined in the REMIC Provisions) or on the Closing Date;
and
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(xiii) Each Home Equity Loan is a "qualified mortgage
loan" in accordance with the REMIC Provisions.
The representations and warranties set forth in this Section 2.04 shall
survive the sale and assignment of the respective Mortgage Files to the Trustee.
Upon discovery by the related Originator, the Master Servicer or a Responsible
Officer of the Trustee of a breach of any of the foregoing representations and
warranties, without regard to any limitation set forth in such representation or
warranty regarding the knowledge of the Depositor as to the facts stated
therein, which materially and adversely affects the interests of the
Certificateholders in the related Home Equity Loan, the party discovering such
breach shall give prompt written notice to the other parties. Within 60 days of
its discovery or its receipt of notice of breach, the Depositor shall use all
reasonable efforts to cure such breach in all material respects, or Beneficial
shall, not later than the Business Day next preceding the Distribution Date
applicable to the Collection Period in which any such cure period expired,
either (i) repurchase the Trust Balance of such Home Equity Loan (including any
property acquired in respect thereof and any insurance policy or insurance
proceeds with respect thereto) from the Trustee at a price equal to the Purchase
Price or (ii) following removal of such Home Equity Loan from the Trust Fund by
the Depositor, substitute in its place one or more Eligible Substitute Home
Equity Loans, in the same manner and subject to the same conditions as set forth
in Section 2.02. Any such repurchase or substitution by Beneficial shall be
accomplished in the manner set forth in Section 2.02 with respect to the
repurchase or substitution of Home Equity Loans under that Section. Upon making
any such repurchase or substitution, Beneficial shall be entitled to receive an
instrument of assignment or transfer from the Trustee to the same extent as set
forth in Section 2.02 with respect to the repurchase or substitution of Home
Equity Loans under that Section. The obligation of Beneficial to repurchase or
replace any such Home Equity Loan (or property acquired in respect thereof)
shall constitute the sole remedy respecting such breach available to
Certificateholders or the Trustee on behalf of Certificateholders and shall
survive any resignation or termination of Beneficial as Master Servicer
hereunder.
The Master Servicer shall be obligated either to repurchase or to
replace with one or more Eligible Substitute Home Equity Loans each Home Equity
Loan as to which any of the following conditions shall have existed as of the
Closing Date, which condition materially and adversely affects the interests of
the Certificateholders in the related Home Equity Loan:
(i) Any mechanics' lien or claim for work, labor or
material affecting the related Mortgaged Property that is or
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may be a lien prior to, or equal or coordinate with, the lien of the
related Mortgage;
(ii) Any delinquent tax or assessment lien against
the related Mortgaged Property;
(iii) Any valid offset, defense or counterclaim to
any Loan Agreement or Mortgage;
(iv) Any physical damage or lack of good repair with
respect to the related Mortgaged Property; or
(v) Any related first deed of trust or mortgage
containing a future advance provision.
Any such repurchase or substitution shall be effected prior to the Distribution
Date applicable to the Collection Period at the end of which any such condition
shall have been discovered and shall be accomplished in the manner set forth in
Section 2.02 with respect to the repurchase or substitution of Home Equity Loans
thereunder, and such repurchase or substitution obligation shall constitute the
sole remedy respecting any of the foregoing conditions available to
Certificateholders, or the Trustee on behalf of Certificateholders, and shall
survive any resignation or termination of Beneficial as Master Servicer
hereunder. It is understood and agreed that any such repurchase or substitution
obligation shall be solely that of Beneficial, and the Trustee shall not be
obligated to repurchase or replace any Home Equity Loan hereunder.
Section 2.05. Execution and Authentication of Certificates; Designation
of "Regular Interests" and "Residual Interests" under REMIC. (a) The Trustee has
caused to be executed (not in its individual capacity, but solely as Trustee),
countersigned and delivered to or upon the written order of the Depositor, in
exchange for the Trust Balances of the Home Equity Loans, concurrently with the
sale and assignment to the Trustee of the Trust Balances of the Home Equity
Loans, Certificates in authorized denominations evidencing the entire ownership
of the Trust Fund.
(b) Beneficial ownership in the Lower-Tier REMIC shall be represented
by interests designated as the Lower-Tier Interest A, Lower-Tier Interest M,
Lower-Tier Interest B and Lower-Tier Interest R. The Lower-Tier Interests, other
than the Lower-Tier Interest R, shall be issued as uncertificated interests. The
Depositor hereby designates Lower-Tier Interest A, Lower-Tier Interest M and
Lower-Tier Interest B as "regular interests", and the Lower-Tier Interest R
evidenced by the Class R Certificates as the single class of "residual
interests", in the Lower-Tier REMIC for purposes of the REMIC Provisions.
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(c) The Depositor hereby designates each of the Class A, Class M and
Class B Certificates and the Class C-1, Class C-2 and Class C-3 Components as
"regular interests", and the Class R Certificates as the single class of
"residual interests", in the Upper-Tier REMIC for purposes of the REMIC
Provisions.
Section 2.06. Designation of Start-up Day and Final Maturity Date. The
Closing Date is hereby designated as the "start-up day" of the Lower-Tier REMIC
and the Upper-Tier REMIC within the meaning of section 860G(a)(9) of the Code.
The "final maturity date" for federal income tax purposes of all interests
created hereby will be the September 2037 Distribution Date.
Section 2.07. Certain Activities. The Trust will not: (i) issue
securities (except for the Certificates); (ii) borrow money; (iii) make loans;
(iv) invest in securities for the purpose of exercising control; (v) underwrite
securities; (vi) except as provided in this Agreement, engage in the purchase
and sale (or turnover) of investments; (vii) offer securities in exchange for
property (except Certificates for the Trust Balances of the Home Equity Loans);
or (viii) repurchase or otherwise reacquire its securities.
Section 2.08. Representation and Warranty of the Depositor. The
Depositor represents and warrants that it has transferred all of its right,
title and interest in the Trust Balance of each Home Equity Loan transferred to
it by the Originators to the Trustee on the Closing Date free of any liens,
claims, charges or other encumbrances created by the Depositor and there has
been no other sale or assignment thereof by the Depositor.
ARTICLE III
ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS
Section 3.01. The Master Servicer. Beneficial is hereby appointed as
Master Servicer hereunder. The parties intend that the Trust Fund formed
hereunder shall constitute, and that the affairs of the Trust Fund shall be
conducted and this Agreement shall be construed so as to qualify the Trust Fund
as, a "real estate mortgage investment conduit" (a "REMIC") as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Master Servicer covenants and agrees that it shall, to the extent permitted by
applicable law, act as agent (and the Master Servicer is hereby appointed to act
as agent) on behalf of the Trust Fund and in that capacity it shall: (a)
prepare, sign and file, or cause to be prepared, signed and filed, all required
federal tax returns for each of the REMICs using a calendar year as the taxable
year for the Trust Fund when and as required by the REMIC Provisions and other
applicable federal income tax laws; (b) cause the Lower-Tier REMIC and the
Upper-Tier REMIC each to elect to be treated as a REMIC on the
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federal partnership information tax returns of the Trust Fund for its first
taxable year in accordance with the REMIC Provisions and to report all expenses
of the Trust Fund as expenses of the Lower-Tier REMIC; (c) prepare and forward,
or cause to be prepared and forwarded, to the Certificateholders all information
reports as and when required to be provided to them in accordance with the REMIC
Provisions; (d) conduct the affairs of the Trust Fund at all times that any
Certificates are outstanding so as to maintain the status of the Lower-Tier and
Upper-Tier REMICs as REMICs under the REMIC Provisions; (e) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of the Lower-Tier and Upper-Tier REMICs; (f)
serve as tax matters person pursuant to Treasury Regulations ss. 1.860F-4(d) and
Temporary Treasury regulation ss. 301.6231(a)(7)-1T for the Lower-Tier and
Upper-Tier REMICs; and (g) if not otherwise paid from amounts available to be
distributed to Holders of the Class R Certificates, pay the amount of any
federal income tax, including prohibited transaction penalty taxes, imposed on
the Trust Fund when and as the same shall be due and payable (but such
obligation shall not prevent the Master Servicer or any other appropriate Person
from contesting any such tax in appropriate proceedings and shall not prevent
the Master Servicer from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings). If the Master Servicer is not
permitted, by applicable law, to fulfill any of its duties described in this
Section 3.01 (as evidenced by an Opinion of Counsel to such effect delivered to
the Trustee), the Trustee shall, at the expense of the Master Servicer, carry
out such duties pursuant to the written instructions of the Master Servicer, in
which event the Trustee shall have no liability to Certificateholders in
connection with the carrying out of such duties other than pursuant to the
standard of care set forth in Section 9.01 with respect to acts or omissions of
the Trustee generally.
The Master Servicer shall, or shall cause the related Subservicer to,
service and administer the Home Equity Loans and shall have full power and
authority, acting alone or through such Subservicer, to do any and all things in
connection with such servicing and administration that it may deem necessary or
desirable. Any amounts received by any Subservicer in respect of a Home Equity
Loan shall be deemed to have been received by the Master Servicer whether or not
actually received by it. Without limiting the generality of the foregoing, the
Master Servicer shall continue, 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 Home Equity Loans and with respect
to the Mortgaged Properties. The Trustee shall, upon written request of a
Servicing Officer, furnish the Master Servicer with any powers
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of attorney and other documents as are reasonably necessary or appropriate to
enable the Master Servicer to carry out its servicing and administrative duties
hereunder.
In connection with the servicing and administration of the Home Equity
Loans, the Master Servicer shall not, and shall not permit any Subservicer to,
consent to an increase in the Credit Limit specified in any Loan Agreement
unless (i) the Master Servicer or such Subservicer and such Mortgagor execute a
new Loan Agreement providing for such increase and (ii) the Master Servicer, not
later than (x) the Business Day immediately preceding the Distribution Date
applicable to the Collection Period during which a new Loan Agreement was
executed or (y) in the event the Master Servicer is not entitled to retain and
commingle with its own funds amounts referred to in Section 3.02(c), not later
than the second Business Day following the date on which such new Loan Agreement
was executed, deposit in the Lower-Tier Certificate Account the amount necessary
(including any accrued and unpaid interest) to prepay in full on behalf of the
Mortgagor the Trust Balance of the related Home Equity Loan. Upon making any
such deposit the Master Servicer shall be entitled to receive an instrument of
assignment or transfer from the Trustee to the same extent as set forth in
Section 2.02. The Master Servicer and each Subservicer may consent to the
placing of a lien or liens junior to that of the Mortgage on the related
Mortgaged Property so long as the total of the principal amounts of any first
lien loan, the Credit Limit and the combined principal balances secured by any
such junior lien loan or loans does not exceed 75%, if such Mortgage is a second
deed of trust or mortgage, and 80%, if such Mortgage is a first deed of trust or
mortgage, of the Appraised Value of the Mortgaged Property as specified in an
appraisal made by or on behalf of the Master Servicer at the time of and in
connection with such consent. The Master Servicer and each Subservicer may also
consent to the placing of a lien or liens senior to that of the Mortgage on the
Mortgaged Property so long as the Combined Loan-to-Value Ratio of such Home
Equity Loan following the placement of such lien or liens is equal to or less
than the Combined Loan-to-Value Ratio of such Home Equity Loan at origination.
The Master Servicer and each Subservicer may also consent to any
modification of the terms of any Loan Agreement or Mortgage not expressly
prohibited hereby if (i) the effect of any such modification will not be to
materially and adversely affect the security afforded by the Mortgaged Property
or decrease or slow (other than as permitted by clause (ii) of Section 3.02(a))
the timing of receipt of any payments required thereunder, (ii) such
modification will not cause each of the Lower-Tier REMIC and the Upper-Tier
REMIC to fail to qualify as a REMIC under the REMIC Provisions, (iii) after such
modification for the Loan Agreement or Mortgage, the related Home Equity Loan is
a "qualified
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mortgage" as defined in the REMIC Provisions, and (iv) the modification does not
cause the Trust Fund to owe additional tax to any state or federal governmental
agency.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as servicer under this Agreement) to the Trustee under this
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent.
In the event that any tax is imposed on "prohibited transactions" (as
defined in section 860F(a)(2) of the Code) of either the Lower-Tier REMIC or the
Upper-Tier REMIC, such tax shall be charged against amounts otherwise
distributable to Holders of the Class R Certificates to the extent hereinafter
provided. In the event that any such tax shall be due and owing at a time when
amounts otherwise distributable to Holders of the Class R Certificates are not
available and the negligence of the Master Servicer caused the imposition of
such tax, the Master Servicer shall pay such tax from its own funds. In such
event, the Master Servicer is hereby authorized to retain from amounts otherwise
distributable to Holders of the Class R Certificates on any subsequent
Distribution Date sufficient funds to reimburse the Master Servicer for the
payment of such tax (to the extent that the Master Servicer has not been
previously reimbursed or indemnified therefor). The obligation of the Master
Servicer to pay any such tax from its own funds in the event amounts otherwise
distributable to Holders of the Class R Certificates are not sufficient shall be
solely that of the Master Servicer and shall survive any resignation or
termination of the Master Servicer hereunder; provided, however, that such
obligation shall be solely that of the original Master Servicer in the case of
"prohibited transactions" caused by, or stemming from any act or omission of,
such original Master Servicer, including, but not limited to, the repurchase of
a Defective Home Equity Loan, and in such case shall survive any such
resignation or termination of the original Master Servicer hereunder.
Section 3.02. Collection of Certain Home Equity Loan Payments; Home
Equity Loan Payment Record. (a) The Master Servicer and each Subservicer shall
follow such collection procedures as it follows from time to time with respect
to home equity loans in its servicing portfolio comparable to the Home Equity
Loans. Consistent with the foregoing, the Master Servicer and any such
Subservicer may in its discretion (i) waive any late payment charge or any
prepayment or other fees that may be collected in the ordinary course of
servicing such Home Equity Loans and (ii) if a Mortgagor is in default or about
to be in default under a Home Equity Loan, arrange with such Mortgagor a
schedule for the payment of interest due and unpaid; provided such arrangement
is consistent with the Master Servicer's or such
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Subservicer's policies with respect to the home equity loans it owns or
services.
(b) The Master Servicer shall establish and maintain for the Trust Fund
a Home Equity Loan Payment Record in which the following payments on and
collections in respect of each Home Equity Loan shall be credited within two
Business Days of receipt thereof by the Master Servicer for the account of the
Certificateholders:
(i) all Trust Interest;
(ii) Trust Principal Payments, including, without
limitation, Trust Principal Payments made by the Master Servicer on
behalf of Mortgagors in connection with the execution of a new Loan
Agreement providing for an increased Credit Limit;
(iii) the Purchase Price of any Trust Balance
repurchased by the Master Servicer or by an Originator pursuant to
Sections 2.02 and 2.04;
(iv) the Substitution Adjustment Amount in respect
of any Home Equity Loan replaced by an Eligible Substitute Home Equity
Loan pursuant to Section 2.02 or 2.04;
(v) all Trust Liquidation Proceeds; and
(vi) all Trust Insurance Proceeds (including, for
this purpose, any amounts required to be credited by the Master
Servicer pursuant to the penultimate sentence of Section 3.04).
The foregoing requirements respecting credits to the Home Equity Loan Payment
Record are exclusive, it being understood that, without limiting the generality
of the foregoing, the Master Servicer need not enter in the Home Equity Loan
Payment Record amounts representing fees (including annual fees), prepayment
premiums or late charge penalties payable by Mortgagors, or amounts received by
the Master Servicer for the account of Mortgagors for application towards the
payment of taxes, insurance premiums, assessments and similar items. All amounts
credited by the Master Servicer to the Home Equity Loan Payment Record shall be
held by the Master Servicer in trust for the Certificateholders until such
amounts are disbursed in accordance with Section 4.02 or debited in accordance
with this Section 3.03.
(c) Until the Business Day prior to each Distribution Date on which
amounts are required to be deposited in the Lower- Tier Certificate Account
pursuant to Section 4.02, the Master Servicer may retain and commingle such
amounts with its own funds
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so long as (i) no Event of Default shall have occurred and be continuing and
(ii) either (x) the Master Servicer remains an affiliate of Beneficial
Corporation and the short-term debt obligations of Beneficial Corporation are
rated at least A-1 by Standard & Poor's, F-1 by Fitch and P-1 by Moody's (or
such lower rating as each such organization may otherwise agree to in writing)
or (y) the Master Servicer arranges for and maintains a Servicer LOC acceptable
in form and substance to each Rating Agency (which acceptability shall be
confirmed in writing); provided, however, that amounts permitted to be retained
and commingled pursuant to this subclause (y) shall not exceed the Available
Servicer LOC Amount. In the event the Master Servicer is entitled to retain and
commingle the amounts referred to in the preceding sentence, it shall be
entitled to retain for its own account any investment income thereon, and any
such investment income shall not be subject to any claim of the Trustee or
Certificateholders. Any amounts retained and commingled by the Master Servicer
pursuant to this Section 3.02(c) shall be held by the Master Servicer in
constructive trust for the benefit of the Trust Fund. In the event that the
Master Servicer is not permitted to retain and commingle such amounts with its
own funds, it shall, any provisions herein to the contrary notwithstanding,
deposit such amounts not later than the second Business Day following receipt in
the Lower-Tier Certificate Account created and maintained pursuant to Section
4.02, subject to withdrawal to the same extent as debits to the Home Equity Loan
Payment Record are permitted pursuant to Section 3.03.
(d) The Home Equity Loan Payment Record shall be made available for
inspection during normal business hours of the Master Servicer upon request of
the Trustee, any Servicer LOC Issuer or the firm of independent accountants
acting pursuant to Section 3.10.
Section 3.03. Permitted Debits to the Home Equity Loan Payment Record.
The Master Servicer may, from time to time, make debits to the Home Equity Loan
Payment Record to reflect (i) the making of deposits into the Lower-Tier
Certificate Account pursuant to Section 4.02 and (ii) the payment to itself of
any portion of the Monthly Servicing Fee initially deposited by it in the
Lower-Tier Certificate Account and not retained by it pursuant to the first
sentence of Section 3.08. In addition, if the Master Servicer deposits in the
Certificate Accounts or credits to the Home Equity Loan Payment Record any
amount not required to be deposited therein or credited thereto or any amount in
respect of payments by Mortgagors made by checks subsequently returned for
insufficient funds or other reason for non-payment it may at any time withdraw
such amount from the Certificate Accounts or debit such amount in the Home
Equity Loan Payment Record, any provision herein to the contrary
notwithstanding.
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All funds deposited or credited by the Master Servicer in the
Certificate Accounts or the Home Equity Loan Payment Record, respectively, shall
be held by the Trustee or the Master Servicer, as the case may be, in trust for
the Certificateholders until disbursed in accordance with Section 5.01 or
withdrawn or debited in accordance with this Section 3.03.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Master Servicer shall cause to be maintained for each Mortgaged
Property hazard insurance with an appropriate endorsement in favor of the Master
Servicer or the related Subservicer and extended coverage in an amount that is
at least equal to the lesser of (i) the maximum insurable value of the
improvements securing the related Home Equity Loan from time to time or (ii) the
sum of the Loan Balance of such Home Equity Loan and the outstanding principal
balance of any mortgage loan senior to such Home Equity Loan from time to time,
but in no event shall such amount be less than is necessary to prevent the
Mortgagor from becoming a coinsurer thereunder. The Master Servicer shall also
maintain on property acquired upon foreclosure, or by deed in lieu of
foreclosure, hazard insurance with an appropriate endorsement in favor of the
Master Servicer or the related Subservicer with extended coverage in an amount
which is at least equal to the lesser of (i) the maximum insurable value from
time to time of the improvements that are a part of such property or (ii) the
sum of the Loan Balance of such Home Equity Loan and the outstanding principal
balance of any mortgage loan senior to such Home Equity Loan at the time of such
foreclosure or deed in lieu of foreclosure plus accrued interest and the
good-faith estimate of the Master Servicer of related Liquidation Expenses to be
incurred in connection therewith. Amounts collected by the Master Servicer under
any such policies shall be credited to the Home Equity Loan Payment Record and
deposited in the Lower-Tier Certificate Account in accordance with Section
3.02(b) to the extent that they constitute Trust Liquidation Proceeds or Trust
Insurance Proceeds.
In cases in which any Mortgaged Property is located in a federally
designated flood area, the hazard insurance to be maintained for such Mortgaged
Property shall include flood insurance (to the extent available). All such flood
insurance shall be in such amounts as are required under applicable guidelines
of the Federal National Mortgage Association. The Master Servicer shall be under
no obligation to require that any Mortgagor maintain earthquake or other
additional insurance and shall be under no obligation itself to maintain any
such additional insurance on property acquired in respect of a Home Equity Loan,
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. If the Master
Servicer shall obtain and maintain a blanket policy issued by an insurer
acceptable to the Rating Agencies insuring against hazard losses on all of the
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Home Equity Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first sentence of this Section 3.04, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Master Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property a policy complying with the first
sentence of this Section 3.04, and there shall have been a loss which would have
been covered by such policy, credit to the Home Equity Loan Payment Record and
deposit in the Lower-Tier Certificate Account the applicable Trust Percentage of
the amount not otherwise payable under the blanket policy because of such
deductible clause. The Trust Percentage of any amounts paid under any such
policy shall be credited to the Home Equity Loan Payment Record and deposited in
the Lower-Tier Certificate Account in accordance with Section 3.02(b).
Section 3.05. Assumption and Modification Agreements. In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Master Servicer and each Subservicer shall exercise its right to accelerate
the maturity of the related Home Equity Loan and require that the Loan Balance
thereof be paid in full on or prior to such conveyance by the Mortgagor under
any "due-on-sale" clause applicable thereto. If such "due-on-sale" clause, by
its terms, is not operable or the Master Servicer is prevented, as provided in
the following paragraph of this Section 3.05, from enforcing any such clause,
the Master Servicer is authorized to take or enter into an assumption and
modification agreement from or with the Person to whom such property has been or
is about to be conveyed, pursuant to which such Person becomes liable under the
Loan Agreement and the Mortgagor remains liable thereon. In connection with any
such agreement, the provisions for the adjustment of the Loan Rate thereon shall
not be modified to increase or decrease the Loan Rate. Any such agreement shall,
for all purposes, be considered part of the related Mortgage File. Any fee
collected by the Master Servicer for entering into any such agreement will be
retained by the Master Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph of this Section 3.05 or any
other provision of this Agreement, the Master Servicer shall not be deemed to be
in default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Home Equity Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer which the Master Servicer reasonably believes it may be restricted by
law from preventing, for any reason whatsoever.
Section 3.06. Realization upon Defaulted Home Equity Loans. The Master
Servicer shall, or shall cause the applicable Subservicer to, foreclose upon or
otherwise comparably convert to
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ownership Mortgaged Properties securing such of the Home Equity Loans as come
into and continue in default when, in the opinion of the Master Servicer, no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.02. In connection with such foreclosure or other
conversion, the Master Servicer or such Subservicer shall follow such practices
(including, in the case of any default on a related prior deed of trust, the
advancing of funds to correct such default) and procedures as it shall deem
necessary or advisable and as shall be normal and usual from time to time in its
general mortgage servicing activities. In determining whether to foreclose upon
or otherwise comparably convert the ownership of a Mortgaged Property, the
Master Servicer and each Subservicer shall take into account (and shall not be
required to foreclose or otherwise convert the ownership of such Mortgaged
Property in the case of) the existence of any hazardous substances, hazardous
wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act of 1976, or other federal, state or local environmental
legislation, on such Mortgaged Property. The foregoing is subject to the proviso
that neither the Master Servicer nor any Subservicer shall be required to expend
its own funds in connection with any foreclosure or other conversion or towards
the correction of any default on a related prior mortgage loan or restoration of
any property unless it shall determine that such foreclosure, correction or
restoration will increase Trust Liquidation Proceeds.
In the event that the Trust Fund acquires any Mortgaged Property by
foreclosure or by deed in lieu of foreclosure, such Mortgaged Property shall be
disposed of by or on behalf of the Trust Fund within two years after its
acquisition by the Trust Fund unless the Trustee shall have received an Opinion
of Counsel to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to two years after its acquisition will not result in the
imposition of taxes on "prohibited transactions" (as defined in section 860F of
the Code) of the Trust Fund or cause the Trust Fund to fail to qualify as a
REMIC at any time that any Certificates are outstanding.
Section 3.07. Trustee to Cooperate. (a) Upon the payment in full of the
Loan Balance of any Home Equity Loan, the Master Servicer will promptly notify
the Trustee by a certification substantially in the form of Exhibit E hereto of
a Servicing Officer. Such notification shall be made each month at the time that
the Master Servicer delivers the Servicing Certificate to the Trustee pursuant
to Section 4.01. Upon any such payment in full, the Master Servicer is
authorized to execute, pursuant to the authorization contained in Section 3.01,
an instrument of satisfaction regarding the related Mortgage, which instrument
of satisfaction shall be recorded by the Master Servicer if required by
applicable law and be delivered to the Person entitled
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thereto, it being understood and agreed that no expenses incurred in connection
with such instrument of satisfaction shall be reimbursed from amounts at the
time credited to the Home Equity Loan Payment Record.
(b) If the Trustee is holding the Mortgage Files, from time to time and
as appropriate for the servicing or foreclosure of any Home Equity Loan, the
Trustee shall, within three Business Days of receipt by the Trustee of a written
request substantially in the form of Exhibit G hereto, accompanied by an
Officer's Certificate certifying as to the accuracy of the facts set forth
therein, transmitted by the Master Servicer to the Trustee or made in writing
signed by a Servicing Officer and delivered to the Trustee as provided in
Section 11.05, deliver the related Mortgage File to the Master Servicer and
shall execute such documents, in the forms provided by the Master Servicer, as
shall be certified by a Servicing Officer to be necessary to the prosecution of
any such proceedings. The Master Servicer shall return the Mortgage File to the
Trustee when the need therefor by the Master Servicer no longer exists unless
the Home Equity Loan shall be liquidated, in which case the Master Servicer
shall deliver a certificate of a Servicing Officer similar to that hereinabove
specified, and the Master Servicer shall be entitled to retain the Mortgage
File.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Master Servicer. The Master Servicer shall be entitled to retain, out of each
payment that is allocable to interest on the Trust Balance of a Home Equity
Loan, as servicing compensation for the related Collection Period, the Monthly
Servicing Fee. Additional servicing compensation in the form of late payment
charges or other receipts not required to be credited to the Home Equity Loan
Payment Record (or in respect to which a debit may be made pursuant to Section
3.03) shall be retained by the Master Servicer. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder (including payment of Trustee fees, and all other fees and expenses
not expressly stated hereunder to be for the account of the Certificateholders)
and shall not be entitled to reimbursement therefor except as specifically
provided herein.
Section 3.09. Annual Statement as to Compliance. The Master Servicer
will deliver to the Trustee, on or before April 30 of each year, beginning with
April 30, 1998, an Officer's Certificate stating that (i) a review of the
activities of the Master 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
Master Servicer has fulfilled all its material obligations under this Agreement
throughout such year, or, if there has been a default in the
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fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
Section 3.10. Annual Independent Public Accountants' Servicing Report.
On or before April 30 of each year, beginning with April 30, 1998, the Master
Servicer at its expense shall cause a firm of independent public accountants
(who may also render other services to the Master Servicer) to furnish a report
to the Trustee to the effect that such firm has examined certain documents and
records relating to the servicing of home equity loans under this Agreement and
pooling and servicing agreements substantially similar to this Agreement, and
that such examination, which has been conducted substantially in compliance with
the Uniform Single Audit Program for Mortgage Bankers (to the extent that the
procedures in such audit guide are applicable to the servicing obligations set
forth in such agreements), has disclosed no items of noncompliance with the
provisions of this Agreement which, in the opinion of such firm, are material,
except for such items of noncompliance as shall be set forth in such report.
Section 3.11. Access to Certain Documentation and Information Regarding
the Home Equity Loans. (a) The Master Servicer or the Trustee, as applicable,
shall provide to Certificateholders that are federally insured savings
associations, the Office of Thrift Supervision, the Federal Deposit Insurance
Corporation and the supervisory agents and examiners of such office and such
corporation access to the documentation regarding the Home Equity Loans required
by applicable regulations of the Office of Thrift Supervision, such access being
afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Master Servicer. Nothing in this Section
3.11 shall derogate from the obligation of the Master Servicer or the Trustee to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Master Servicer or the Trustee to provide
access as provided in this Section 3.11 as a result of such obligation shall not
constitute a breach of this Section 3.11.
(b) The Master Servicer shall supply such supplemental information, in
such form as the Trustee shall reasonably request, to the Paying Agent and the
Trustee, on or before the start of the third Business Day preceding the related
Distribution Date, as is required in the Trustee's reasonable judgment to enable
the Paying Agent or the Trustee, as the case may be, to make required
distributions and to furnish the required reports to Certificateholders.
Section 3.12. Maintenance of Certain Servicing Policies. The Master
Servicer shall during the term of its service as master servicer maintain in
force (i) a policy or policies of
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insurance covering errors and omissions in the performance of its obligations as
master servicer hereunder and (ii) a fidelity bond in respect of its officers,
employees or agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of the Federal National Mortgage
Association for Persons performing servicing for mortgage loans purchased by
such Association.
ARTICLE IV
SERVICING CERTIFICATE; CERTIFICATE ACCOUNTS DEPOSIT
Section 4.01. Servicing Certificate. Not later than each Determination
Date, the Master Servicer shall deliver to the Trustee, ▇▇▇▇▇'▇, Fitch and
Standard & Poor's a Servicing Certificate identifying the related Collection
Period, the Certificates, the date of this Agreement, and the following
information (in the case of information furnished pursuant to clauses (viii) and
(ix) below, the amounts will be expressed as a dollar amount per Certificate
with a $1,000 denomination) with respect to the following Distribution Date:
(i) the aggregate of all Trust Interest received
during the related Collection Period;
(ii) the aggregate of all Trust Principal Payments
received during the related Collection Period;
(iii) the aggregate of all Trust Insurance Proceeds
received during the related Collection Period;
(iv) the aggregate of the Trust Liquidation Proceeds
received during the calendar month preceding the month of such
Determination Date;
(v) the number and aggregate Trust Balance of any
Home Equity Loans that were identified as Defective Home Equity Loans
pursuant to Section 2.02 or Section 2.04 during the related Collection
Period and (A) the aggregate Purchase Price of any such Defective Home
Equity Loans that will be repurchased by the related Originator or the
Master Servicer prior to the following Distribution Date and (B) the
Substitution Adjustment Amount, if any, to be deposited in the
Collection Account prior to such Distribution Date in respect of any
such Defective Home Equity Loans for which the related Originator or
the Master Servicer substituted one or more Eligible Substitute Home
Equity Loans;
(vi) the Monthly Servicing Fee;
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(vii) the sum of the amounts specified pursuant to
clauses (i)-(v), inclusive, above, net of the amount specified in
clause (vi) above;
(viii) the amount that will be distributed to the
Class A Certificateholders, with interest and principal stated
separately; the Class A Interest Requirement; the Class A Principal
Distribution Amount; and the Class A Pass-Through Rate applicable to
such Distribution Date;
(ix) the amount that will be distributed to the
Class M and Class B Certificateholders, with interest and principal
stated separately; the Class M Principal Distribution Amount and Class
B Principal Distribution Amount; together with the Class M and Class B
Pass-Through Rates applicable to such Distribution Date; and the amount
that will be distributed to the Class C Certificateholders;
(x) the Amount Available for Class A Interest, the
Class M Current Interest and the Class B Current Interest;
(xi) the Class A Certificate Balance, Class M
Certificate Balance and Class B Certificate Balance as well as the
Class A Principal Factor, Class M Principal Factor and Class B
Principal Factor, each after giving effect to the distribution to be
made on such Distribution Date;
(xii) the amount of any Liquidated Home Equity Loan
Losses, the applicable Applied Liquidated Loan Loss Amount, the
applicable Liquidated Loan Loss Amortization Amounts and the Unpaid
Liquidated Loan Loss Amounts for such Distribution Date, including
cumulative losses up to such date;
(xiii) in the event the Servicer LOC is then in
effect, the Available Servicer LOC Amount after giving effect to all
drawings made under the Servicer LOC to and including the date of such
statement;
(xiv) the book value (within the meaning of 12 C.F.R.
ss. 571.13 or comparable provision) of the Trust Percentage of any real
estate acquired through foreclosure or grant of a deed in lieu of
foreclosure and held by the Trust Fund as of the last day of the
related Collection Period;
(xv) the number and aggregate Trust Balances of Home
Equity Loans delinquent (a) 30 to 59 days and (b) 60 days or more,
respectively, as of the end of the related Collection Period;
(xvi) the Pool Balance for the following Distribution
Date;
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(xvii) the Principal Distribution Amount, separately
stating the Extra Principal Distribution Amount, if any, for such
Distribution Date;
(xviii) the Overcollateralization Amount for such
Distribution Date;
(xix) the Overcollateralization Release Amount for
such Distribution Date;
(xx) the Monthly Excess Cashflow Amount for such
Distribution Date; and
(xxi) the Senior Enhancement Percentage for such
Distribution Date.
Section 4.02. Certificate Accounts. (a) On or before the Closing Date,
the Master Servicer shall establish, and thereafter maintain in the name of the
Trustee, two separate accounts (the "Lower-Tier Certificate Account" and the
"Upper-Tier Certificate Account"), each of which shall be an Eligible Account
held by the Trustee in trust for the benefit of the Certificateholders. The
Master Servicer shall deposit to the Lower-Tier Certificate Account in same day
funds all funds received by it constituting the Interest Remittance Amount and
Principal Collected Amount not later than 11:00 A.M. New York time on (i) the
Business Day preceding each Distribution Date, if the Master Servicer is
entitled to retain and commingle funds pursuant to Section 3.02 or (ii) the
second Business Day following receipt of such amounts in the event the Master
Servicer is not so entitled to retain and commingle funds. The amounts deposited
in the Lower-Tier Certificate Account shall be net of the Monthly Servicing Fee
and are subject to withdrawal to the same extent that debits to the Home Equity
Loan Payment Record are permitted. On each Distribution Date, the Trustee shall
transfer all funds on deposit in the Lower-Tier Certificate Account, including
the Lower-Tier Distribution Amount, from the Lower-Tier Certificate Account to
the Upper-Tier Certificate Account.
(b) The Master Servicer may cause the institution maintaining the
Lower-Tier Certificate Account to invest in the name of the Trustee any funds in
the Lower-Tier Certificate Account, which funds shall be invested in Permitted
Investments designated in writing by the Master Servicer in its discretion and
which shall mature not later than the Business Day preceding the Distribution
Date following the date of such investment (except that any investment in an
obligation of an institution with which the Lower-Tier Certificate Account is
maintained, and which institution is rated A-1+ by Standard & Poor's and Fitch
and P-1 by Moody's, may mature not later than 11:00 A.M. New York time on such
Distribution Date) and shall not be sold or disposed of prior to their maturity.
All income and gain realized from
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any such investment shall be for the benefit of the Master Servicer and shall be
subject to its withdrawal or order from time to time. The amount of any losses
incurred in respect of any such investments shall be deposited in the Lower-Tier
Certificate Account by the Master Servicer out of its own funds immediately as
realized.
Section 4.03. Servicer LOC. If at any time the Master Servicer shall be
commingling with its own funds proceeds of the Home Equity Loans pursuant to
Section 3.02(c) and shall fail to deposit in the Lower-Tier Certificate Account
on or before 11:00 A.M. New York time on the Business Day prior to a
Distribution Date funds in the amount specified in clause (vii) of the related
Servicing Certificate, the Trustee shall, pursuant to the terms of the Servicer
LOC, make a proper demand under such Servicer LOC that the Servicer LOC Issuer
pay as promptly as practicable to the Trustee for deposit in the Lower-Tier
Certificate Account an amount equal to the lesser of (i) the aggregate of all
Trust Interest, Trust Principal Payments, Trust Insurance Proceeds and Trust
Liquidation Proceeds received by the Master Servicer or any Subservicer during
the related Collection Period and (ii) any amount by which the aggregate of such
Trust Interest, Trust Principal Payments, Trust Insurance Proceeds and Trust
Liquidation Proceeds exceeds the total amount deposited by the Master Servicer
to the Lower-Tier Certificate Account with respect to such Distribution Date
(but in no event shall such amount exceed the Available Servicer LOC Amount).
Section 4.04. Distributions on the Uncertificated Lower- Tier
Interests. On each Distribution Date, each of the uncertificated Lower-Tier
Interests shall receive distributions in respect of interest and principal as
follows:
(i) First, from the Interest Remittance Amount on deposit
in the Lower-Tier Certificate Account:
(A) to the Lower-Tier Interest A, the Amount
Available for Lower-Tier A Interest;
(B) to the Lower-Tier Interest M, the Amount
Available for Lower-Tier M Interest; and
(C) to the Lower-Tier Interest B, the Amount
Available for Lower-Tier B Interest;
(ii) Second, after the distributions described above, from
amounts relating only to the Principal Collected Amount on deposit in
the Lower-Tier Certificate Account;
(A) on each Distribution Date (a) prior to the
Stepdown Date or (b) with respect to which a Trigger Event
is in effect, to the Lower-Tier
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Interest A, 100% of the Principal Collected Amount for
such Distribution Date, until the Lower-Tier Interest A is
reduced to zero; and
(B) on each Distribution Date (a) on or after the
Stepdown Date and (b) so long as a Trigger Event is not in
effect, to the Lower-Tier Interests, in the order of
priority set forth in Section 5.01(a)(ii)(B) and to the
extent of the Principal Collected Amount for such
Distribution Date.
The aggregate amount so distributed to the uncertificated Lower- Tier Interests
in respect of principal and interest for any Distribution Date is referred to
herein as the "Lower-Tier Distribution Amount."
ARTICLE V
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Distributions from Upper-Tier Certificate Account;
Writedowns. (a) On each Distribution Date, the Trustee shall, based upon the
information set forth in the Servicing Certificate relating to such Distribution
Date, distribute from the Upper-Tier Certificate Account (and only from the
Upper-Tier Certificate Account) to the Holders of the Class A, Class M, Class B,
Class C or Class R Certificates of record on the related Record Date (other than
as provided in Section 10.01 respecting the final distribution in respect of the
Certificates) by check or money order mailed to such Certificateholder at the
address appearing in the Certificate Register, or, upon written request by a
Certificateholder, by wire transfer (in the event such Certificateholder owns of
record one or more Class A, Class M or Class B Certificates having principal
denominations aggregating at least $5,000,000, or owns a Class C or Class R
Certificate and has given the Trustee, at least 10 days prior to such
distribution, written instruction for making such wire transfer), or by such
other means of payment as a Certificateholder and the Trustee shall agree, the
respective amounts set forth below and in the following order of priority:
(i) First, from the Interest Remittance Amount on deposit
in the Upper-Tier Certificate Account:
(A) to the Class A Certificateholders, the
Amount Available for Class A Interest;
(B) to the Class M Certificateholders, the Class
M Current Interest; and
(C) to the Class B Certificateholders, the Class
B Current Interest.
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(ii) Second, after the distributions described in Section
5.01(a)(i) above, from the Principal Distribution Amount on deposit in
the Upper-Tier Certificate Account:
(A) on each Distribution Date (a) prior to the
Stepdown Date or (b) with respect to which a Trigger Event
is in effect, to the Holders of the Class A Certificates,
100% of the Principal Distribution Amount for such
Distribution Date, until the Class A Certificate Balance
is reduced to zero; and
(B) on each Distribution Date (a) on or after the
Stepdown Date and (b) as long as a Trigger Event is not in
effect, to the Holders of the Class A, Class M and Class B
Certificates, in the order of priority and in the
respective amounts set forth below and to the extent of
the Principal Distribution Amount for such Distribution
Date, as follows:
First, the lesser of (x) the Principal
Distribution Amount and (y) the Class A Principal
Distribution Amount, to the holders of the Class
A Certificates, until the Class A Certificate
Balance has been reduced to zero;
Second, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the
amount distributed to the holders of the Class A
Certificates in clause First immediately above
and (y) the Class M Principal Distribution
Amount, to the holders of the Class M
Certificates, until the Class M Certificate
Balance has been reduced to zero;
Third, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum
of the amount distributed to the holders of the
Class A Certificates pursuant to clause First
immediately above and the amount distributed to
the holders of the Class M Certificates pursuant
to clause Second immediately above and (y) the
Class B Principal Distribution Amount, to the
holders of the Class B Certificates, until the
Class B Certificate Balance has been reduced to
zero; and
Fourth, any amount of the Principal Distribution
Amount remaining after making all of the
distributions in clauses First, Second and Third
immediately above shall be
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distributed as set forth in subparagraph (iii)
of this Section 5.01(a).
Notwithstanding the foregoing, (i) in the event
that the Class A Certificate Balance has been reduced to zero, all
amounts of principal that would have been distributed to such Class A
Certificates shall be distributed to the Class M Certificates and the
Class B Certificates in the order set forth in clauses Second and Third
immediately above, and (ii) in the event that the Class M Certificate
Balance has been reduced to zero, all amounts of principal that would
have been distributed to such Class M Certificates shall be distributed
to the Class B Certificates.
(iii) with respect to any Monthly Excess Cashflow
Amount:
(A) to fund the Class A Unpaid Interest Shortfall,
if any;
(B) to fund the Extra Principal Distribution Amount for
such Distribution Date;
(C) to fund the Class M Unpaid Interest Shortfall, if any;
(D) to fund the Class M Liquidated Loan Loss
Amortization Amount for such Distribution Date;
(E) to fund the Class B Unpaid Interest Shortfall, if any;
(F) to fund the Class B Liquidated Loan Loss
Amortization Amount for such Distribution Date;
(G) to fund a distribution to the Class C
Certificateholders equal to the lesser of (x) the balance
of any Monthly Excess Cashflow Amount and (y) the Class C
Distribution Amount; and
(H) to the Class R Certificateholders, the remainder.
Amounts distributed to Holders of a Class of Certificates shall be distributed
to them in accordance with the Percentage Interests evidenced by their
respective Certificates.
(b) On each Distribution Date, the Trustee shall allocate the excess of
the Certificate Principal Balance over the Pool Balance as of the last day of
the immediately preceding
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Collection Period to reduce the Class B and Class M Certificate Balances in the
following order of priority:
(i) to the Class B Certificates until the Class B
Certificate Balance is reduced to zero; and
(ii) to the Class M Certificates until the Class M
Certificate Balance is reduced to zero.
(c) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Certificates. None of the Trustee, any Paying Agent, the Certificate
Registrar, the Depositor, the Originators or the Master Servicer shall have any
responsibility therefor except as otherwise provided by applicable law.
Section 5.02. Statements to Certificateholders. On or prior to the
Business Day preceding each Distribution Date, the Master Servicer shall forward
to the Trustee for mailing by regular mail to each Holder of a Certificate, a
statement setting forth:
(i) the amount of such distribution to holders of
the Class A Certificates allocable to principal;
(ii) the amount of such distribution to holders of
the Class A Certificates allocable to interest, any Class A Unpaid
Interest Shortfall due in respect of prior Distribution Dates included
in such distribution and any such remaining Class A Unpaid Interest
Shortfall after giving effect to such distribution;
(iii) the Class A Certificate Balance and the Class A
Principal Factor, each after giving effect to the distribution of
principal on such Distribution Date;
(iv) the amount of such distribution to holders of
the Class M and Class B Certificates allocable to principal;
(v) the amount of such distribution to holders of
the Class M and Class B Certificates allocable to interest,
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any Class M or Class B Unpaid Interest Shortfall due in respect of
prior Distribution Dates included in such distribution and any such
remaining Class M or Class B Unpaid Interest Shortfall after giving
effect to such distribution;
(vi) the Class M and Class B Certificate Balances
and the Principal Factors in respect of the Class M and Class B
Certificates, each after giving effect to the distribution of principal
on such Distribution Date;
(vii) the Pool Balance for the following Distribution
Date and the number of outstanding Home Equity Loans for the following
Distribution Date;
(viii) the number and aggregate Trust Balances of Home
Equity Loans as to which no payment of interest or principal has been
received for a period of at least (a) one billing cycle and (b) two or
more billing cycles, respectively, as of the end of the month in which
the related Collection Period ends;
(ix) the amount of any Liquidated Home Equity Loan
Losses, the applicable Applied Liquidated Loan Loss Amount, the
applicable Liquidated Loan Loss Amortization Amounts and the Unpaid
Liquidated Loan Loss Amounts for such Distribution Date, including
cumulative losses up to such date;
(x) the book value (within the meaning of 12 C.F.R.
ss.571.13 or any comparable provision) of the Trust Percentage of any
real estate, and the number of Mortgaged Properties, acquired through
foreclosure or grant of a deed in lieu of foreclosure and held by the
Trust Fund as of the last day of the related Collection Period;
(xi) whether a Trigger Event has occurred;
(xii) the Senior Enhancement Percentage;
(xiii) the Overcollateralization Amount and the
Targeted Overcollateralization Amount;
(xiv) the Class A Pass-Through Rate, the Class M
Pass-Through Rate and the Class B Pass-Through Rate applicable to the
distribution on the following Distribution Date;
(xv) the Principal Distribution Amount, separately
stating the Extra Principal Distribution Amount, if any, for such
Distribution Date;
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(xvi) the Overcollateralization Amount for such
Distribution Date;
(xvii) the Overcollateralization Release Amount for
such Distribution Date;
(xviii) the Monthly Excess Cashflow Amount for such
Distribution Date; and
(xix) the Senior Enhancement Percentage for such
Distribution Date.
In the case of information furnished pursuant to clauses (i) and (ii)
above, the amounts shall be expressed as a dollar amount per Class A, Class M
and Class B Certificate, as applicable, with a $1,000 denomination. Any such
statement furnished to a Class A, Class M or Class B Certificateholder may, if
requested by the Master Servicer, omit information pertinent only to
Certificates of a Class not held by such Certificateholder.
On each Distribution Date, the Master Servicer shall forward to the
Trustee for mailing to each Holder of a Class R Certificate a copy of the
statement or statements forwarded to the Holders of Certificates on such
Distribution Date. The Master Servicer shall also forward to the Trustee for
mailing to each such Holder, and each of the Rating Agencies a statement setting
forth the amount of the distribution to each such Holder, together with such
other information as the Master Servicer deems necessary or appropriate.
Within 90 days after the end of each calendar year, the Master Servicer
shall forward to the Trustee for mailing by regular mail to each Person who at
any time during such calendar year was a Certificateholder a statement
containing the applicable distribution information provided pursuant to clauses
(i) and (ii) of this Section 5.02, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Master Servicer shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by the
Master Servicer pursuant to any requirements of the Code. The Trustee shall have
no obligation to mail to Certificateholders any statement required to be so
mailed hereunder if the Master Servicer has not provided such statement to the
Trustee.
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ARTICLE VI
THE CERTIFICATES
Section 6.01. The Certificates. The Class A Certificates shall be
substantially in the form set forth in Exhibit A, the Class M Certificates shall
be substantially in the form set forth in Exhibit B, the Class B Certificates
shall be substantially in the form set forth in Exhibit C, the Class C
Certificates shall be substantially in the form set forth in Exhibit D and the
Class R Certificates shall be substantially in the form set forth in Exhibit E.
Such Certificates shall, on original issue, be executed and delivered by the
Trustee to or upon the written order of the Depositor concurrently with the sale
and assignment to the Trustee of the Trust Fund. So long as the Class A, Class M
and Class B Certificates are Book-Entry Certificates, such Certificates shall be
evidenced by (i) in the case of the Class A Certificates, three Certificates
each representing $200,000,000 principal amount and a single Certificate
representing $136,017,000 principal amount, (ii) in the case of the Class M
Certificates, a single Certificate representing $36,000,000 principal amount,
and (iii) in the case of the Class B Certificates, a single Certificate
representing $28,000,000 principal amount, the beneficial ownership of such
Certificates to be held through Book-Entry Certificates in minimum dollar
denominations of $1,000 and integral dollar multiples in excess thereof.
The Class C and Class R Certificates have not been and will not be
registered under the Securities Act or the securities laws of any state of the
United States. Neither the Depositor, the Master Servicer nor the Trustee is
under any obligation to register or qualify the Class C or Class R Certificates
under the Securities Act or any other securities laws or to take any action not
otherwise required under this Agreement to permit the transfer of any Class C or
Class R Certificate without registration or qualification.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trust Fund by a Responsible Officer of the Trustee. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures were affixed, authorized to sign on behalf of the Trustee
shall bind the Trust Fund, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the countersigning and delivery of such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless such Certificate shall have been manually countersigned
by the Trustee substantially in the form provided for herein, and such
countersignature upon any Certificate shall be conclusive
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evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their countersignature.
Section 6.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at the Corporate Trust Office a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The Trustee shall
initially serve as Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Trustee maintained for such purpose pursuant to the
foregoing paragraph and upon satisfaction of the conditions set forth below, the
Trustee shall execute, countersign and deliver, in the name of the designated
transferee or transferees, one or more new Certificates representing the
applicable aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of a like Class in authorized denominations (in the case
of the Class A, Class M and Class B Certificates) or aggregate Percentage
Interests (in the case of the Class C or Class R Certificates), upon surrender
of the Certificates to be exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute,
countersign and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of transfer or exchange shall (if so required by the Trustee or the
Certificate Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer satisfactory to the Trustee and the Certificate Registrar
duly executed by, the Holder thereof or such Holder's attorney duly authorized
in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of the Book-Entry Certificates
may not be transferred by the Trustee except to another Depository; (ii) the
Depository shall maintain book-entry records with respect to the Certificate
Owners and with respect to ownership and transfers of such Book-Entry
Certificates; (iii) registration of ownership and transfers of the Book-Entry
Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iv) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall deal with the Depository,
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Depository Participants and indirect participating firms as representatives of
the Certificate Owners of the Book-Entry Certificates for purposes of exercising
the rights of Holders under this Agreement, and requests and directions for and
votes of such representatives shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (vi) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and Persons
shown on the books of such indirect participating firms as direct or indirect
Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(c) If (i)(A) the Master Servicer advises the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Master Servicer is unable to locate a
qualified successor, (ii) the Master Servicer at its option advises the Trustee
in writing that it elects to terminate the book-entry system through the
Depository or (iii) after the occurrence of an Event of Default, Certificate
Owners representing Percentage Interests aggregating not less than 51% of the
aggregate Percentage Interests of each outstanding Class of Book-Entry
Certificates advise the Trustee and the Depository through the Depository
Participants in writing that the continuation of a book-entry system through the
Depository is no longer desired by the Certificate Owners, the Trustee shall
notify all Certificate Owners, through the Depository, of the occurrence of any
such event and of the availability of definitive, fully registered Certificates
(the "Definitive Certificates") to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue the Definitive Certificates. Neither the Master Servicer
nor the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates the Trustee shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require
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payment of a sum by the Holders of such Certificates sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
All Certificates surrendered for registration of transfer and exchange
shall be destroyed by the Trustee.
(d) So long as Definitive Certificates have not been issued, the
Depositor, the Master Servicer and the Trustee shall not have any liability for
any aspect of the records relating to or payment on account of Certificate
Owners, for monitoring or restricting any transfer of beneficial ownership in a
Book-Entry Certificate or for maintaining, supervising or reviewing any records
relating to Certificate Owners.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Trustee or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee, the Master Servicer and
the Certificate Registrar such security or indemnity as may be required by them
to save each of them harmless, then, in the absence of written notice to the
Trustee or the Certificate Registrar that such Certificate has been acquired by
a bona fide purchaser, the Trustee shall execute, countersign and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and Percentage Interest. Upon the
issuance of any new Certificate under this Section 6.03, the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee and the Certificate Registrar) connected
therewith. Any duplicate Certificate issued pursuant to this Section 6.03 shall
constitute complete and indefeasible evidence of ownership in the Trust Fund, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Master Servicer, the Trustee, the
Certificate Registrar and any agent of the Master Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name any Certificate is
registered in the Certificate Register as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 5.01 and for all other
purposes whatsoever, and none of the Master Servicer, the Trustee, the
Certificate Registrar or any agent of any of them shall be affected by notice to
the contrary.
Section 6.05. Appointment of Paying Agent. The Trustee is empowered to
appoint a Paying Agent meeting the eligibility
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requirements set forth under Section 9.06 for the purpose of making
distributions to Certificateholders pursuant to Section 5.01; provided that
prior to any such appointment (other than the appointment of the Trustee as
Paying Agent) the Trustee shall first have received a letter from each Rating
Agency to the effect that the appointment of such Paying Agent will not result
in the reduction, suspension or withdrawal of the rating given the Class A,
Class M or Class B Certificates by such Rating Agency. The Trustee hereby
initially appoints itself as Paying Agent. In the event of any appointment by
the Trustee of a Person other than itself as Paying Agent, on or prior to the
Business Day prior to the related Distribution Date, the Master Servicer, as
agent of the Trustee, shall, to the extent received by the Master Servicer,
deposit or cause to be deposited with such Paying Agent a sum sufficient to make
the payments to Certificateholders in the amounts and in the manner provided for
in Section 5.01, such sum to be held in trust for the benefit of
Certificateholders.
The Trustee shall cause any Paying Agent other than itself to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee that such Paying Agent will hold all sums held by it for the
payment to Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders or
withheld pursuant to the Code.
Section 6.06. Restrictions on Transfer of Class M and Class B
Certificates. (a) The Class M and Class B Certificates shall be assigned or
transferred only in accordance with this Section 6.06. Each Person who has or
who acquires any Ownership Interest in a Class M or Class B Certificate that is
a Book-Entry Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have made the representation set forth in clause (b)
below and otherwise to have agreed to be bound by the provisions of this Section
6.06. Any assignment and Transfer shall be made directly to the Person that is
the principal in the transaction and not to a nominee or agent for such
principal.
(b) Each of Class M and Class B Certificates that is a Definitive
Certificate shall state that the Transferee thereof is deemed by the acceptance
or acquisition of such Certificate to represent that such Transferee is not an
employee benefit plan or a collective investment fund or insurance company
account which is treated as holding "plan assets" subject to ERISA, or section
4975 of the Code, or a trustee or any other Person acting on behalf of any such
plan.
(c) Any attempted or purported Transfer of any Ownership Interest in a
Class M or Class B Certificate in violation of the provisions of this Section
6.06 shall be absolutely null and void and shall vest no rights in the purported
Transferee. If any
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purported Transferee shall become a Holder of a Class M or Class B Certificate
in violation of the provisions of this Section 6.06, then, upon discovery by or
due notification of the Trustee that the registration of Transfer of such
Ownership Interest in a Class M or Class B Certificate was not in fact permitted
by this Section 6.06, the last preceding Holder that is a permitted Holder shall
be restored to all rights as Holder thereof retroactive to the date of
registration of Transfer of such Ownership Interest in the related Class M or
Class B Certificate. Absent negligence or willful misconduct, the Trustee shall
be under no liability to any Person for any registration of Transfer of an
Ownership Interest in a Class M or Class B Certificate that is in fact not
permitted by this Section 6.06 or for making any distributions in respect of
such Class M or Class B Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement.
Section 6.07. Restrictions on Transfer of Class C and Class R
Certificates. (a) The Class C and Class R Certificates shall be assigned or
transferred only in accordance with this Section 6.07. Such assignment and
Transfer shall be made directly to the Person that is the principal in the
transaction and not to a nominee or agent for such principal.
(b) No registration of Transfer of a Class C or Class R Certificate
shall be made unless such Transfer is exempt from the registration requirements
of the Securities Act and any applicable state securities laws or is made in
accordance with the Securities Act and such laws. In the event registration of
such a Transfer is to be made within three years from the date of the initial
issuance of Certificates pursuant hereto, (i) the Trustee or the Master Servicer
may require a written Opinion of Counsel acceptable to and in form and substance
satisfactory to the Master Servicer that such Transfer may be made pursuant to
an exemption, describing the applicable exemption and the basis therefor, from
the Securities Act and state securities laws or is being made pursuant to the
Securities Act and such laws, which Opinion of Counsel shall not be an expense
of the Trustee or the Master Servicer, and (ii) the Trustee shall require the
Transferee to execute an investment letter acceptable to and in form and
substance satisfactory to the Master Servicer certifying to the Trustee and the
Master Servicer the facts surrounding such Transfer, which investment letter
shall not be an expense of the Trustee or the Master Servicer. The Holder of a
Class C or Class R Certificate desiring to effect such registration of Transfer
shall, and does hereby agree to, indemnify the Trustee and the Master Servicer
against any liability that may result if the Transfer is not so exempt or is not
made in accordance with such federal and state laws.
(c) No registration of Transfer of a Class C or Class R Certificate
shall be made unless the Trustee shall have received
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either (i) a representation letter from the Transferee of such Class C or Class
R Certificate, acceptable to and in form and substance satisfactory to the
Master Servicer, to the effect that such Transferee is not an employee benefit
plan subject to ERISA or section 4975 of the Code, or a trustee or any other
Person acting on behalf of any such plan, which representation letter shall not
be an expense of the Trustee or the Master Servicer, or (ii) in the case of any
such Class C or Class R Certificate presented for registration in the name of an
employee benefit plan subject to ERISA or section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee or any other
Person acting on behalf of any such plan, an Opinion of Counsel satisfactory to
the Master Servicer to the effect that the purchase or holding of such Class C
or Class R Certificate will not result in the assets of the Trust Fund being
deemed to be "plan assets" and subject to the prohibited transaction provisions
as well as the fiduciary provisions of ERISA and the Code and will not subject
the Trustee or the Master Servicer to any obligation in addition to those
undertaken in this Agreement, which representation letter or Opinion of Counsel
shall not be an expense of the Trustee or the Master Servicer.
(d) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Master Servicer or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (vi)
below and to execute all instruments of Transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in a Class R Certificate are expressly subject
to the following provisions:
(i) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall not be a Disqualified
Organization and shall promptly notify the Master Servicer and the
Trustee of any change or impending change in its status.
(ii) No Ownership Interest in a Class R Certificate
may be transferred without the express written consent of the Trustee.
In connection with any proposed registration of Transfer of any
Ownership Interest in a Class R Certificate, the Trustee shall, as a
condition to such consent, require delivery to it, in form and
substance satisfactory to it, each of the following:
(A) an affidavit from the proposed Transferee to
the effect that such Transferee is not a Disqualified
Organization and that it is not acquiring its Ownership
Interest in a Class R
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Certificate that is the subject of the proposed
Transfer as a nominee, trustee or agent for any
Person who is a Disqualified Organization; and
(B) a covenant of the proposed Transferee to the
effect that the proposed Transferee agrees to be bound and
to abide by the Transfer restrictions applicable to a
Class R Certificate.
(iii) Notwithstanding the delivery of the items
described in clause (ii) above, if a Responsible Officer of the Trustee
has actual knowledge that the proposed Transferee is a Disqualified
Organization, no registration of Transfer of any Ownership Interest in
a Class R Certificate to such proposed Transferee shall be effected;
provided that the Trustee shall have no obligation to determine whether
any proposed Transferee is a Disqualified Organization.
(iv) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall agree (A) to require delivery
of the items described in clause (ii) above from any other Person to
whom such Person attempts to transfer any Ownership Interest in a Class
R Certificate and (B) not to transfer any Ownership Interest in a Class
R Certificate or to cause the Transfer of any Ownership Interest in a
Class R Certificate to any other Person if it has actual knowledge that
such Person is a Disqualified Organization.
(v) Any attempted or purported Transfer of any
Ownership Interest in a Class R Certificate in violation of the
provisions of this Section 6.07 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 6.07, then, upon discovery by or due
notification of the Trustee that the registration of Transfer of such
Ownership Interest in a Class R Certificate was not in fact permitted
by this Section 6.07, the last preceding Holder that is not a
Disqualified Organization shall be restored to all rights as Holder
thereof retroactive to the date of registration of Transfer of such
Ownership Interest in the related Class R Certificate. The Trustee
shall be under no liability to any Person for any registration of
Transfer of an Ownership Interest in a Class R Certificate that is in
fact not permitted by this Section 6.07 or for making any distributions
in respect of such Class R Certificate to the Holder thereof or taking
any other action with respect to such Holder under the provisions of
this Agreement absent negligence or willful misconduct. The Trustee
shall be entitled to recover from any Holder of a Class R Certificate
that was in fact a
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Disqualified Organization at the time it became Holder all
distributions made in respect of such Class R Certificate. Any such
distributions so recovered by the Trustee shall be distributed and
delivered by the Trustee to the last preceding Holder of such Class R
Certificate that is not a Disqualified Organization.
(vi) If any Disqualified Organization acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section 6.07, then the Master Servicer shall have
the right, without notice to the Holder of such Class R Certificate or
any other Person having an Ownership Interest therein, to sell such
Class R Certificate to a purchaser selected by the Master Servicer on
such terms as the Master Servicer may choose. Such purchaser may be the
Master Servicer itself or any affiliate of the Master Servicer that is
not a Disqualified Organization. The proceeds of such sale, net of
commissions (which may include commissions payable to the Master
Servicer or its affiliates), expenses and taxes due, if any, will be
remitted by the Trustee to the last preceding Holder of such Class R
Certificate that is not a Disqualified Organization, except that in the
event that the Trustee determines that the Holder of such Class R
Certificate may be liable for any amount due under this Section 6.07 or
any other provisions of this Agreement, the Master Servicer may
withhold a corresponding amount from such remittance as security for
such claim. The terms and conditions of any sale under this clause (vi)
shall be determined in the sole discretion of the Master Servicer, and
it shall not be liable to any Person having an Ownership Interest in
such Class R Certificate as a result of its exercise of such
discretion.
Section 6.08. Actions of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by agent duly appointed in writing; and
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
when required, to the Depositor or the Master Servicer. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee, the Depositor and the Master Servicer, if made in the manner provided
in this Section.
(b) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner that the
Trustee deems sufficient.
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(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Trustee, the Depositor or the Master Servicer in reliance thereon,
whether or not notation of such action is made upon such Certificate.
(d) The Trustee may require such additional proof of any matter
referred to in this Section 6.08 as it shall deem necessary.
ARTICLE VII
THE MASTER SERVICER AND THE DEPOSITOR
Section 7.01. Liability of the Master Servicer and the Depositor. The
Master Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Master Servicer
herein. The Depositor shall be liable hereunder only for its representation and
warranty in Section 2.08.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer and Depositor. Any corporation into which
the Master Servicer or the Depositor may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Master Servicer or the Depositor shall be a party, or any corporation succeeding
to the business of the Master Servicer or the Depositor, shall be the successor
of the Master Servicer or the Depositor, as applicable hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 7.03. Limitation on Liability of the Master Servicer and
Others. Neither the Master Servicer, the Depositor nor any of the directors or
officers or employees or agents of the Master Servicer or the Depositor shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action by the Master Servicer or
the Depositor in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Master
Servicer, the Depositor or any such Person against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties of the Master Servicer or by reason of
reckless disregard of obligations and duties of the Master Servicer hereunder.
The Master Servicer, the Depositor and any director or officer or employee or
agent of
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the Master Servicer or the Depositor 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. Subject to the second succeeding sentence, the
Master Servicer, the Depositor and any director or officer or employee or agent
of the Master Servicer or the Depositor shall be indemnified by the Trust Fund
and held harmless against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense related to any specific Home Equity Loan or Home
Equity Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and 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 Master Servicer nor the Depositor
shall be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to duties to service the Home Equity Loans in accordance
with this Agreement, and which in its opinion may involve it in any expense or
liability; provided, however, that the Master Servicer or the Depositor may in
its sole discretion undertake any such action which it may deem necessary or
desirable in respect of this Agreement, and the rights and duties of the parties
hereto and the interests of the Certificateholders hereunder. In such event, any
loss, liability or expense incurred in connection with any such action shall be
losses, liabilities and expenses of the Trust Fund and the Master Servicer or
the Depositor, as applicable, shall be entitled to be reimbursed therefor only
from amounts otherwise distributable to Holders of the Class R Certificates on
any subsequent Distribution Date (to the extent the Master Servicer has not
previously been reimbursed or indemnified therefor). The Master Servicer's right
to indemnity or reimbursement pursuant to this Section 7.03 shall survive any
resignation or termination of the Master Servicer with respect to any losses,
liabilities or expenses arising prior to such resignation or termination (or
arising from events that occurred prior to such resignation or termination).
Section 7.04. Master Servicer Not to Resign. Subject to the provisions
of Section 7.02, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Agreement or (ii) upon satisfaction of the following
conditions; (a) the Master Servicer has proposed a successor master servicer to
the Trustee
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in writing and such proposed successor servicer is reasonably acceptable to the
Trustee; (b) each Rating Agency shall have delivered a letter to the Trustee
stating that the appointment of such proposed successor master servicer as
Master Servicer hereunder will not result in the reduction or withdrawal of the
then-current rating of any rated Class of Certificates; and such proposed
successor master servicer has agreed in writing to assume the obligations of
Master Servicer hereunder and the Master Servicer has delivered to the Trustee
an Opinion of Counsel to the effect that all conditions precedent to the
resignation of the Master Servicer and the appointment of and acceptance by the
proposed successor master servicer have been satisfied; provided, however, that
in the case of clause (i) above no such resignation shall become effective until
the Trustee or a successor Master Servicer shall have assumed the Master
Servicer's responsibilities and obligations hereunder in accordance with Section
8.02. Any such resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 8.01 and 8.02 as
obligations that survive the resignation or termination of the Master Servicer.
Any such determination permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Counsel to such effect delivered to the Trustee.
Section 7.05. Delegation of Duties. In the ordinary course of business,
the Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards comparable to those with which the Master Servicer
complies pursuant to Section 3.01. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 7.04. The
Master Servicer shall provide each Rating Agency and the Trustee with written
notice prior to the delegation of any of its duties to any Person other than any
of the Master Servicer's Affiliates or their respective successors and assigns.
ARTICLE VIII
DEFAULT
Section 8.01. Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) any failure by the Master Servicer to deposit
in the Lower-Tier Certificate Account any deposit or enter any amount
to the Home Equity Loan Payment Record required to be made under the
terms of this Agreement which continues unremedied for a period of five
Business Days after the date upon which written notice of such failure
shall have been
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given to the Master Servicer by the Trustee, or to the Master Servicer
and the Trustee by Holders of Certificates of any Class affected
thereby, evidencing, as to such Class, Percentage Interests aggregating
not less than 51%; or
(ii) failure on the part of the Master Servicer duly
to observe or perform in any material respect any other covenants or
agreements of the Master Servicer set forth in the Certificates or in
this Agreement, which failure (x) materially and adversely affect the
rights of Certificateholders and (y) continues unremedied for a period
of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Master
Servicer by the Trustee, or to the Master Servicer and the Trustee by
the Holders of Certificates of any Class affected thereby, evidencing,
as to such Class, Percentage Interests aggregating not less than 51%;
or
(iii) the entry against the Master Servicer of a
decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60
consecutive days; or
(iv) the consent by the Master Servicer to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Master Servicer or of or
relating to substantially all of its property, or the Master Servicer
shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(v) Total Expected Losses exceed 7.50% of the
Cutoff Date Pool Balance on or prior to the fifth anniversary of the
Cut-off or 11.25% of the Cut-off Date Pool Balance on or prior to the
tenth anniversary of the Cut-off Date;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied by the Master Servicer, either the Trustee or the Holders of
Certificates of any Class affected thereby, evidencing, as to such Class,
Percentage Interests aggregating not less than 51%, by notice then given in
writing to the Master Servicer (and to the Trustee if given by
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the Holders of Certificates) may terminate all of the rights and obligations of
the Master Servicer as master servicer under this Agreement, on or after the
receipt by the Master Servicer of such written notice, all authority and power
of the Master Servicer under this Agreement, whether with respect to the
Certificates or the Trust Percentage of the Home Equity Loans or otherwise,
shall pass to and be vested in the Trustee pursuant to and under this Section
8.01; and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
Trust Balance of each Home Equity Loan and related documents, or otherwise. The
Master Servicer agrees to cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the Master Servicer hereunder,
including, without limitation, the transfer to the Trustee for the
administration by it of all necessary documentation and all cash amounts that
shall at the time be held by the Master Servicer and credited by it to the Home
Equity Loan Payment Record, or that have been deposited by the Master Servicer
in the Certificate Accounts or thereafter received by the Master Servicer with
respect to the Home Equity Loans. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Mortgage Files to
the successor Master Servicer and amending this Agreement to reflect such
succession as Master Servicer pursuant to this Section 8.01 shall be paid by the
predecessor Master Servicer upon presentation of reasonable documentation of
such costs and expenses.
Section 8.02. Trustee to Act; Appointment of Successor. (a) On and
after the time the Master Servicer receives a notice of termination pursuant to
Section 8.01 or gives notice of its resignation under clause (i) of Section
7.04, the Trustee shall be the successor in all respects to the Master Servicer
in its capacity as master servicer under this Agreement and the transactions set
forth or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof; provided, however, that the responsibilities and
duties of the Master Servicer pursuant to Sections 2.02 and 2.04 shall not
terminate; and, provided, further, that any liability of the Trustee in its
capacity as successor master servicer shall be limited to the extent such
liability results from an inability to fulfill its responsibilities and duties
as successor master servicer due to any failure on the part of the original
Master Servicer to deliver the documentation and cash amounts referred to in
Section 8.01 or otherwise fulfill its obligations hereunder. As compensation
therefor, the Trustee shall be entitled to such compensation as the Master
Servicer
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would have been entitled to hereunder if no such notice of termination had been
given, including, without limitation, any investment earnings on any Permitted
Investments hereunder to which the Master Servicer would have been entitled.
Notwithstanding the above, the Trustee may, if it shall be unwilling so to act,
or shall, if it is legally unable so to act, appoint, or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution that is then servicing a home equity loan portfolio and having all
licenses, permits and approvals required by applicable law, and a net worth of
not less than $10,000,000 as the successor to the Master Servicer hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Master Servicer hereunder. Pending appointment of a successor to the
Master Servicer hereunder, unless the Trustee is prohibited by law from so
acting, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the successor shall be entitled
to receive compensation out of payments on Home Equity Loans in an amount equal
to the compensation which the Master Servicer would otherwise have received
pursuant to Section 3.08 (or such lesser compensation as the Trustee and such
successor shall agree). The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The appointment of a successor Master Servicer, including the
Trustee, shall not affect any liability of a predecessor Master Servicer that
may have arisen under this Agreement prior to its termination as Master Servicer
(including, without limitation, any deductible under an insurance policy
pursuant to Section 3.04), nor shall any successor Master Servicer, including
the Trustee, be liable for any acts or omissions of any predecessor Master
Servicer or for any breach by such predecessor Master Servicer or the Depositor
of any of their representations or warranties contained herein or in any related
document or agreement.
(b) Any successor to the Master Servicer as master servicer, including
the Trustee, shall, during the term of its service as master servicer (i)
continue to service and administer the Home Equity Loans for the benefit of
Certificateholders, and, retain any amounts representing prepayment premiums,
fees or late charge penalties or for application towards taxes, insurance
premiums, assessments and similar items, and payments representing interest in
excess of interest at the Net Loan Rate, for the benefit of such successor
master servicer and (ii) maintain in force (x) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as master
servicer hereunder and (y) a fidelity bond in respect of its officers, employees
and agents to the same extent as the Master Servicer is so required pursuant to
Section 3.12.
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Section 8.03. Notification to Certificateholders. Upon any termination
or appointment of a successor to the Master Servicer pursuant to this Article
VIII or Section 7.04, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to each Rating Agency at the respective address provided to the
Trustee in writing.
Section 8.04. Waiver of Past Events of Default. The Holders of
Certificates evidencing not less than 51% of the aggregate Percentage Interests
may, on behalf of all Holders of Certificates, waive any default by the Master
Servicer in the performance of its obligations hereunder and its consequences,
except a default in making any required deposits to or payments from the
Certificate Accounts in accordance with this Agreement. Upon any such 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 thereon.
ARTICLE IX
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 has occurred
(which has not been cured) and is actually known to a Responsible Officer, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
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 to the Trustee pursuant
to any provision of this Agreement, shall examine them to determine whether they
conform to the requirements of 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
of which a Responsible Officer of the Trustee shall have actual
knowledge, and after the curing of all such Events of Default which may
have occurred, the duties and obligations
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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 liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Holders of Certificates of any
Class affected thereby, evidencing, as to such Class, Percentage
Interests aggregating not less than 51% 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; and
(iv) the Trustee shall not be charged with knowledge
of any failure by the Master Servicer to comply with the obligations of
the Master Servicer referred to in clauses (i) and (ii) of Section 8.01
unless a Responsible Officer of the Trustee at the Corporate Trust
Office obtains actual knowledge of such failure or the Trustee receives
written notice of such failure from the Master Servicer or the Holders
of Certificates of any Class affected thereby, evidencing, as to such
Class, Percentage Interests aggregating not less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
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Section 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:
(i) the Trustee may request and conclusively rely
upon, and shall be protected in acting or refraining from acting upon,
any resolution, Officer's Certificate, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in reliance thereon;
(iii) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement
(except its obligation to act as successor Master Servicer pursuant to
Section 8.02), or to institute, conduct or defend any litigation
hereunder or in relation hereto, at the request, order or direction of
any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; 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 bad faith in the
performance of any such act; nothing contained herein shall, however,
relieve the Trustee of its obligations, 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 their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs;
(iv) the Trustee shall not be liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) prior to the occurrence of an Event of Default
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 documents, unless requested in writing to do
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so by Holders of Certificates of any Class affected thereby,
evidencing, as to such Class, Percentage Interests aggregating not less
than 51%; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a
condition to such proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer or, if paid by the
Trustee, shall be reimbursed by the Master Servicer upon demand.
Nothing in this clause (v) shall derogate from the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors;
(vi) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys or a custodian; and
(vii) for purposes of this Agreement, the Trustee
shall not be deemed to have knowledge or notice of any event or fact
until such time as a Responsible Officer of the Trustee has actual
knowledge of such event or fact or the Trustee receives written notice
of such event or fact from the Master Servicer or the Holders of
Certificates of any Class affected thereby, evidencing, as to such
Class, Percentage Interests aggregating not less than 51%.
Section 9.03. Trustee Not Liable for Certificates or Home Equity Loans.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Trustee on the Certificates) shall be taken as the
statements of the Master Servicer, and the Trustee assumes no responsibility for
the correctness of the same. The Trustee makes no representations as to the
validity or sufficiency of this Agreement or of the Certificates (other than the
signature and countersignature of the Trustee on the Certificates) or of any
Home Equity Loan or related document. The Trustee shall not be accountable for
the use or application by the Master 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 Master Servicer or any Originator in respect of the Home Equity
Loans or deposited in or withdrawn from the Certificate Accounts by the Master
Servicer. The Trustee shall at no time have any responsibility or liability for
or with respect to the legality, validity and enforceability of any Mortgage or
any Home Equity Loan, or the perfection and priority of any Mortgage or the
maintenance of any such perfection or priority, or for or with respect to the
sufficiency of the Trust Fund or its ability to generate the payments to be
distributed to Certificateholders
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under this Agreement, including, without limitation, the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 8.02); the existence and content of any
Home Equity Loan on any computer or other record thereof (other than if the
Trustee shall assume the duties of the Master Servicer pursuant to Section
8.02); the validity of the assignment of any Home Equity Loan to the Trust Fund
or of any intervening assignment; the completeness of any Home Equity Loan; the
performance or enforcement of any Home Equity Loan (other than if the Trustee
shall assume the duties of the Master Servicer pursuant to Section 8.02); the
compliance by the Depositor or the Master Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; any investment of monies by or at the direction of the Master Servicer
or any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust Fund property that it may hold in its
individual capacity; the acts or omissions of the Depositor, the Master Servicer
(other than if the Trustee shall assume the duties of the Master Servicer
pursuant to Section 8.02), any Subservicer or any Mortgagor; any action of the
Master Servicer (other than if the Trustee shall assume the duties of the master
Servicer pursuant to Section 8.02), any Subservicer, or any custodian of the
Mortgage Files taken in the name of the Trustee; the failure of the Master
Servicer, any Subservicer, or any custodian of the Mortgage Files to act or
perform any duties required of it as agent of the Trustee hereunder; or any
action by the Trustee taken at the instruction of the Master Servicer (other
than if the Trustee shall assume the duties of the Master Servicer pursuant to
Section 8.02); provided, however, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this Agreement or from any
liability for its failure to so perform. The Trustee shall not be liable or
accountable for the acts, omissions, misconduct or negligence of any Originator
acting in its capacity as custodian of any Mortgage Files hereunder. The Trustee
shall have no responsibility for filing any financing or continuation statement
in any public office at any time or otherwise to perfect or maintain the
perfection of any security interest or lien granted to it hereunder (unless the
Trustee shall have become the successor Master Servicer) or to prepare or file
any Securities and Exchange Commission filing for the Trust Fund or to record
this Agreement.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
and transact banking and trust business with the Master Servicer, the
Originators and any of their
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affiliates, with the same rights as it would have if it were not
Trustee.
Section 9.05. Master Servicer to Pay Trustee's Fees and Expenses. The
Master Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of its powers and
duties hereunder, and the Master Servicer will pay or reimburse the Trustee upon
its request for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any of the provisions of this Agreement
(including the reasonable compensation and the expenses and disbursements of its
counsel, agents and of all Persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith
or which is the responsibility of Certificateholders hereunder. In addition, the
Master Servicer and the Depositor, jointly and severally, covenant and agree to
indemnify the Trustee, its officers, directors, agents and employees, from, and
hold it harmless against, any and all losses, liabilities, damages, claims or
expenses, including the costs and expenses of defending itself against any claim
or liability, arising in connection with its performance hereunder other than
those resulting from the negligence or bad faith of the Trustee. This Section
9.05 shall survive the termination of the indenture or earlier resignation or
removal of the Trustee or Co-Trustee.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a Person having its principal office in New York
or in the same state as that in which the initial Trustee under this Agreement
has its principal office and organized and doing business under the laws of such
State or the United States of America, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such Person 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 9.06, the combined capital and
surplus of such Person 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 9.06, the Trustee shall resign in the manner and with the effect
specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Master Servicer and each Rating Agency. Upon receiving
such notice of
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resignation, the Master Servicer shall promptly appoint a successor Trustee
(which successor Trustee shall be reasonably acceptable to the Depositor) by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor Trustee. If no
successor Trustee shall have been so appointed and having accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Master Servicer, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Master Servicer may remove the Trustee. If the Master Servicer removes the
Trustee under the authority of the immediately preceding sentence, the Master
Servicer shall promptly appoint a successor Trustee (which successor Trustee
shall be reasonably acceptable to the Depositor) by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.07 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 Master
Servicer, the Depositor and to its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The Master Servicer, the predecessor
Trustee and the successor Trustee shall execute and deliver such instruments and
do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Trustee all such rights, powers, duties
and obligations.
Each successor Trustee shall be entitled to receive from the Master
Servicer reasonable compensation for services rendered, and payment and
reimbursement for reasonable expenses, disbursements and advances, as more
specifically set forth in
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Section 9.05 hereof and according to the same standard as provided in Section
9.05.
No successor Trustee shall accept appointment as provided in this
Section 9.08 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 9.08, the Master Servicer shall mail notice of the succession of
such Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Master Servicer fails to mail such
notice within 10 days after acceptance of appointment by the successor Trustee,
the successor Trustee shall cause such notice to be mailed at the expense of the
Master Servicer.
Section 9.09. Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person 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 of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or any Mortgaged Property may at the time be located, the
Master Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust Fund, or any part thereof, and,
subject to the other provisions of this Section 9.10, such powers, duties,
obligations, rights and trusts as the Master Servicer and the Trustee may
consider necessary or desirable. The Master Servicer shall not unreasonably
refrain from joining with the Trustee in executing and delivering such
instruments, and if the Master Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 9.06 and no
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notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 9.08. The Trustee shall notify ▇▇▇▇▇'▇
of any appointment of a co-trustee or separate trustee hereunder. The Trustee
shall remain liable hereunder for any actions delegated to a co-trustee or
separate trustee despite such delegation. The Master Servicer shall be
responsible for the fees of any co-trustee or separate trustee appointed
hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) 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 (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular 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 singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be held personally
liable by reason of any act or omission of any other trustee hereunder;
and
(iii) the Master Servicer and the Trustee acting
jointly may at any time accept the resignation of or remove any
separate trustee or co-trustee, except that following the occurrence of
an Event of Default that has not been cured, the Trustee acting alone
may accept the resignation of or remove any co-trustee or separate
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
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protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 9.11. Tax Returns. The Trustee, upon request, will furnish the
Master Servicer with all such information as may be in the possession of the
Trustee and reasonably required in connection with the preparation of all tax
returns of the Trust Fund, and shall, if required by law, upon request, execute
such returns.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto. Any such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered.
Section 9.13. Suits for Enforcement. In case an Event of Default or
other default by the Master Servicer or the Depositor hereunder shall occur and
be continuing, the Trustee, in its discretion, may proceed to protect and
enforce its right and the rights of the Certificateholders under this Agreement
by a suit, action or proceeding in equity or at law or otherwise, whether for
the specific performance of any covenant or agreement contained in this
Agreement or in aid of the execution of any power granted in this Agreement or
for the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Trustee or the Certificateholders.
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ARTICLE X
TERMINATION
Section 10.01. Termination Upon Purchase by the Master Servicer or
Liquidation of All Home Equity Loans. (a) Subject to Section 10.02, the
respective obligations and responsibilities of the Master Servicer and the
Trustee created hereby (other than the obligation of the Trustee to make certain
payments to Certificateholders after the final Distribution Date and the
obligations of the Master Servicer under Section 9.05 and to send certain
notices as hereinafter set forth) shall terminate upon the last action required
to be taken by the Trustee on the final Distribution Date pursuant to this
Article X following the earliest of (i) the purchase by the Master Servicer of
all Home Equity Loans and all property acquired in respect of any Home Equity
Loan remaining in the Trust Fund, as described below, (ii) the sale of the
assets of the Trust Fund as described below or (iii) the final payment or other
liquidation of the last Home Equity Loan remaining in the Trust Fund or the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Home Equity Loan; provided, however, that in no event shall
the trust created hereby continue beyond the expiration of 21 years from the
death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. ▇▇▇▇▇, living on the date
hereof.
(b) The Master Servicer (i) may at its option purchase all Home Equity
Loans pursuant to clause (i) of Section 10.01(a) on any Distribution Date upon
which the Pool Balance immediately prior to such Distribution Date shall be
equal to or less than ten percent (10%) of the Cut-off Date Pool Balance and
(ii) should the Trust Balances of any Home Equity Loans remain outstanding on
the Distribution Date in September 2037 shall purchase all such Trust Balances
on such Distribution Date, in each case at a price equal to the greatest of (x)
the aggregate of the Loan Balances of the Home Equity Loans as of the first day
of the Collection Period applicable to such final Distribution Date, plus one
month's interest at the applicable Net Loan Rate on the Loan Balance of each
Home Equity Loan (including any Foreclosed Home Equity Loans), (y) the aggregate
fair market value (as determined by the Master Servicer as of the close of
business on the third Business Day next preceding the date upon which notice of
any such termination is furnished to Certificateholders pursuant to clause (c)
of this Section 10.01) of all of the assets of the Trust Fund, and (z) the sum
of (1) the Class A Certificate Balance together with any Class A Unpaid Interest
Shortfall and interest accrued during the related Accrual Period thereon at the
Class A Pass-Through Rate, (2) the Class M Certificate Balance together with any
Class M Unpaid Interest Shortfall and interest accrued during the related
Accrual Period thereon at the Class M Pass-Through Rate and (3)
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the Class B Certificate Balance together with any Class B Unpaid Interest
Shortfall and interest accrued during the related Accrual Period thereon at the
Class B Pass-Through Rate (the greatest of (x), (y) and (z) being referred to
herein as the "Pool Purchase Price"). In connection with such purchase, the
Master Servicer shall provide to the Trustee the certification required by
Section 3.07 and the Trustee shall, promptly following payment of the Pool
Purchase Price, execute proper instruments acknowledging termination and
discharge of this Agreement. Any obligation of the Master Servicer to so
purchase each Home Equity Loan as provided herein shall be solely that of the
original Master Servicer and shall survive any resignation or termination of the
original Master Servicer hereunder.
If for any reason the Master Servicer fails to make the purchase
required by clause (ii) of Section 10.01(b), then in accordance with such
procedures as the Trustee in its sole judgment shall deem appropriate, the
Trustee shall conduct an auction (the "Final Auction") of the assets of the
Trust Fund (other than amounts on deposit in the Upper-Tier and Lower-Tier
Certificate Accounts) in order to effect a termination of the Trust Fund
promptly thereafter. The Master Servicer or any Affiliate thereof may bid at
such Final Auction but shall not be required to do so. The Trustee shall sell
and transfer the assets of the Trust Fund, without recourse, to the highest
bidder therefor at the Final Auction and shall deposit the purchase price
therefor, less all expenses of the Final Auction, including all reasonable fees
and expenses of any third parties engaged by the Trustee to assist in the Final
Auction process, in the Lower- Tier Certificate Account.
(c) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee (upon receipt of written directions from the Master Servicer, if the
Master Servicer is purchasing the assets of the Trust Fund, which direction
shall be received not later than the first day of the month preceding the month
of such final distribution date) by letter to Certificateholders mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (i) the Distribution
Date upon which final distribution of the Certificates will be made upon
presentation and surrender of Certificates at the office or agency of the
Trustee therein designated, (ii) the amount of any such final distribution and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. In the
event written directions are delivered by the Master Servicer to
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the Trustee as described in the preceding sentence, the Master Servicer shall
deposit in the Lower-Tier Certificate Account on or before the Distribution Date
for such final distribution in immediately available funds an amount which, when
added to the amount on deposit in the Lower-Tier and Upper-Tier Certificate
Accounts, will be equal to the purchase price for the assets of the Trust Fund
computed as above provided. Such deposit shall be in lieu of the deposit
otherwise required to be made in respect of such Distribution Date pursuant to
Section 4.02.
(d) Upon presentation and surrender of the Certificates, the Trustee
shall, to the extent of funds available in the Lower- Tier and Upper-Tier
Certificate Accounts cause to be distributed to Certificateholders on the
Distribution Date for such final distribution in proportion to their respective
Percentage Interests an amount equal to (i) in the case of Holders of the Class
A Certificates, the Class A Certificate Balance together with any Class A Unpaid
Interest Shortfall plus interest accrued during the related Accrual Period at
the Class A Pass-Through Rate on such amounts, (ii) in the case of the Class M
Certificates, the Class M Certificate Balance together with any Class M Unpaid
Interest Shortfall plus interest accrued during the related Accrual Period at
the Class M Pass-Through Rate on such amounts, and (iii) in the case of Holders
of the Class B Certificates, the Class B Certificate Balance together with any
Class B Unpaid Interest Shortfall plus interest accrued during the related
Accrual Period at the Class B Pass-Through Rate on such amounts. Upon such
termination, any amounts remaining on deposit in the Upper-Tier Certificate
Account (other than the amounts retained to meet claims) after application
pursuant to the preceding sentence up to $25 million in the aggregate shall be
distributed to Holders of the Class C Certificates in proportion to their
respective Percentage Interests and any remainder to Holders of the Class R
Certificates in proportion to their respective Percentage Interests therein.
Prior to the distribution referred to in the immediately preceding sentence, any
amounts in the Lower-Tier Certificate Account shall be transferred to the
Upper-Tier Certificate Account. The distribution on such final Distribution Date
shall be in lieu of the distribution otherwise required to be made on such
Distribution Date in respect of each Class of Certificates.
(e) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall on such date cause all funds in the
Upper-Tier Certificate Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account (which
shall be an Eligible Account) for the benefit of such Certificateholders and the
Master Servicer (if the Master Servicer has exercised its right to repurchase
the
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assets of the Trust Fund), or the Trustee (in any other case) and shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If, within the period then specified in the escheat laws of the State
of New York after such notice, such amount remains unclaimed, the Holders of the
Class R Certificates 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 to the Holder of the Class R Certificates for payment.
Section 10.02. Additional Termination Requirements. (a) In the event of
a purchase by the Master Servicer or sale of the Home Equity Loans as provided
in Section 10.01(b), the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has received an Opinion of
Counsel to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 10.02 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 either the Lower-Tier REMIC or the Upper-Tier REMIC
to fail to qualify as a REMIC at any time that any Certificates are outstanding:
(i) within 90 days prior to the final Distribution
Date, Holders of the Class R Certificates shall adopt, as to the
Lower-Tier REMIC and the Upper-Tier REMIC, a plan of complete
liquidation; and
(ii) at or after the time of adoption of such a plan
of complete liquidation and at or prior to the final Distribution Date,
the Trustee shall sell all of the assets of the Trust Fund to the
Master Servicer for cash in an amount equal to the Pool Purchase Price;
provided, however, that in the event that a calendar quarter ends after
the time of adoption of such a plan of complete liquidation but prior
to such final Distribution Date, the Trustee shall not sell any of the
assets of the Trust Fund prior to the close of that calendar quarter.
(b) By its acceptance of a Class R Certificate, a Holder thereof hereby
agrees to adopt such a plan of complete liquidation upon the written request of
the Master Servicer and to take such other action in connection therewith as may
be reasonably requested by the Master Servicer.
ARTICLE XI
MISCELLANEOUS PROVISIONS
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Section 11.01. Amendment. This Agreement may be amended from time to
time by the Depositor, the Master Servicer and the Trustee, with the consent of
any Servicer LOC Issuer if its rights are materially and adversely affected, but
without the consent of any of the Certificateholders, to cure any ambiguity, to
correct or supplement any provisions herein or therein which may be inconsistent
with any other provisions herein or therein, as the case may be, or to add any
other provisions with respect to matters or questions arising under this
Agreement, including provisions relating to the issuance of Definitive
Certificates to Certificate Owners in the event that book-entry registration of
the Certificates is no longer permitted, which shall not be inconsistent with
the provisions of this Agreement; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Certificateholder or a letter from each Rating Agency
stating that such action will not result in a downgrading of the rating of any
rated Class of Certificates.
This Agreement may also be amended from time to time by the Depositor,
the Master Servicer and the Trustee, but without the consent of any of the
Certificateholders, to modify, eliminate or add to the provisions of this
Agreement to such extent as shall be necessary to (i) maintain the qualification
of each of the Lower-Tier REMIC and the Upper-Tier REMIC as a REMIC under the
Code or avoid, or minimize the risk of, the imposition of any tax on the Trust
Fund under the Code that would be a claim against the Trust Fund's assets,
provided that there shall have been delivered an Opinion of Counsel addressed to
the Trustee to the effect that such action is necessary or appropriate to
maintain such qualification or avoid any such tax or minimize the risk of its
imposition, or (ii) prevent the Trust Fund from entering into any "prohibited
transaction" as defined in section 860F of the Code provided that there shall
have been delivered an Opinion of Counsel addressed to the Trustee to the effect
that such action is necessary or appropriate to prevent the Trust Fund from
entering into such prohibited transaction.
This Agreement may also be amended from time to time by the Depositor,
the Master Servicer and the Trustee, with the consent of (x) any Servicer LOC
Issuer if its rights are materially and adversely affected and (y) Holders of
the Certificates of each Class affected thereby, evidencing, as to such Class,
Percentage Interests aggregating not less than 51%, 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
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, collections of payments on
Home Equity Loans or distributions which are required to be made on any
Certificate without the consent of the Holder of such Certificate or (ii) reduce
the aforesaid percentage required to
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consent to any such amendment, without the consent of the Holders of
all Certificates then outstanding.
At least three Business Days prior to the execution of any such
amendment requiring the consent of the Certificateholders, the Master Servicer
shall furnish written notification of the substance of such amendment to the
Rating Agencies. Promptly after the execution of any such amendment made with
the consent of the Certificateholders, the Master Servicer shall furnish written
notification of the substance of such amendment to each Certificateholder and
fully executed original counterparts of the instruments effecting any such
amendment to the Rating Agencies and any Servicer LOC Issuer.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment or
consent, 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 requirements as the Trustee may prescribe. The Master Servicer
is authorized to establish a record date for the purpose of identifying the
Certificateholders eligible to consent to any proposed amendment hereunder.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and conclusively rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent to the execution and delivery of
such amendment have been satisfied. The Trustee may, but shall not be obligated
to, enter into any such amendment that affects the Trustee's own rights, duties
or immunities under this Agreement.
Section 11.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Master Servicer and
at its expense if such recordation materially and beneficially affects the
interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not
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operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust Fund, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
in Sections 8.01, 9.01, 9.02, 11.01, 11.07 and this Section 11.03) 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.
No Certificateholder of any Class shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates of such Class, evidencing,
as to such Class, Percentage Interests aggregating not less than 51% shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 11.03, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 11.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
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AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.05. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) in the case of the Depositor, to Beneficial Mortgage Services, Inc. at
One ▇▇▇▇▇▇▇▇▇ Centre, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: President, with a copy to the Corporate Secretary; (b) in the case of
the Master Servicer, to Beneficial Mortgage Corporation at One ▇▇▇▇▇▇▇▇▇ Centre,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, with
a copy to the Corporate Secretary; and (c) in the case of the Trustee, at the
Corporate Trust Office, or as to each party, at such other address as shall be
designated by such party in a written notice to each other party. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register, and to each Rating Agency in the same manner at the
respective address provided to the Trustee in writing. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02 and 7.04, this Agreement
may not be assigned by the Master Servicer without the prior written consent of
Holders of Certificates of any Class affected thereby, evidencing, as to such
Class, Percentage Interests aggregating not less than 66%.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust Fund, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust Fund
or for any reason whatsoever, and that the Certificates upon execution,
countersignature and delivery thereof by the Trustee pursuant to Section 2.04
are and shall be deemed fully paid.
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Section 11.09. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
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IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers all
as of the day and year first above written.
BENEFICIAL MORTGAGE SERVICES, INC.,
as Depositor
By:
----------------------------------------
Name:
Title:
BENEFICIAL MORTGAGE CORPORATION,
as Master Servicer
By:
----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:
----------------------------------------
Name:
Title:
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION,
as Co-Trustee
By:
----------------------------------------
Name:
Title:
- 96 -
State of New York )
) ss.:
County of New York )
On the ____ day of September, 1997 before me, a notary public in and
for the state of New York, personally appeared
_________________________________________, known to me who, being by me duly
sworn, did depose and say that he is the __________________________________ of
Beneficial Mortgage Services, Inc., a corporation formed under the laws of the
State of Delaware, being among the parties that executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of such corporation.
-------------------------------------
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the ____ day of September, 1997 before me, a notary public in and
for the state of New York, personally appeared
_________________________________________, known to me who, being by me duly
sworn, did depose and say that he is the __________________________________ of
Beneficial Mortgage Corporation, a corporation formed under the laws of the
State of Delaware, being among the parties that executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of such corporation.
-------------------------------------
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the ____ day of September, 1997 before me, a notary public in and
for the state of New York, personally appeared
_________________________________________, known to me who, being by me duly
sworn, did depose and say that he is the _________________ of The Chase
Manhattan Bank, one of the parties that executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said bank.
------------------------------------
Notary Public
[Notarial Seal]
State of )
) ss.:
County of )
On the ____ day of September, 1997 before me, a notary public in and
for the state of , personally appeared
_________________________________________, known to me who, being by me duly
sworn, did depose and say that she is the _________________ of Texas Commerce
Bank National Association, one of the parties that executed the foregoing
instrument; and that she signed her name thereto by order of the Board of
Directors of said bank.
-------------------------------------
Notary Public
[Notarial Seal]
A-1
