Exhibit 99.1
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CAPITAL I INC.,
DEPOSITOR,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CREDIT CORPORATION,
SERVICER AND MORTGAGE LOAN SELLER,
and
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
TRUSTEE
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 2003
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CAPITAL I INC.
Mortgage Pass-Through Certificates, Series 2003-HYB1
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Table of Contents
Page
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Article I
DEFINITIONS
Section 1.01. Definitions...................................................1
Section 1.02. Interest Calculations........................................32
Article II
CONVEYANCE OF MORTGAGE LOANS; TRUST FUND
Section 2.01. Conveyance of Mortgage Loans.................................33
Section 2.02. Acceptance by Trustee........................................34
Section 2.03. Sale and Conveyance of the Subsequent Mortgage Loans.........36
Section 2.04. Trust Fund; Authentication of Certificates...................39
Section 2.05. REMIC Elections..............................................39
Section 2.06. REMIC Tax Accounting Matters.................................42
Section 2.07. REMIC Certificate Maturity Date..............................43
Article III
REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR, THE SERVICER AND
THE MORTGAGE LOAN SELLER; REPURCHASE OF MORTGAGE LOANS
Section 3.01. Representations and Warranties of the Depositor..............44
Section 3.02. Representations, Warranties and Covenants of the Mortgage
Loan Seller and the Servicer.................................44
Section 3.03. Option to Substitute.........................................49
Article IV
THE CERTIFICATES
Section 4.01. The Certificates.............................................51
Section 4.02. Registration of Transfer and Exchange of Certificates........51
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates............56
Section 4.04. Persons Deemed Owners........................................56
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Article V
ADMINISTRATIVE AND SERVICING OF THE TRUST FUND
Section 5.01. Servicer to Act as Servicer; Administration of the
Trust Fund..................................................57
Section 5.02. Collection of Certain Mortgage Loan Payments................59
Section 5.03. Establishment of and Deposits to Escrow Account.............59
Section 5.04. Permitted Withdrawals From Escrow Account...................60
Section 5.05. Establishment of and Deposits to Collection Account.........61
Section 5.06. Permitted Withdrawals From Collection Account...............62
Section 5.07. Protection of Accounts; Eligible Investments................62
Section 5.08. Maintenance of Omission and Fidelity Coverage...............63
Section 5.09. [Reserved]..................................................63
Section 5.10. Maintenance of Primary Hazard Insurance.....................63
Section 5.11. Enforcement of Due-On-Sale Clauses; Assumption Agreements...64
Section 5.12. Realization Upon Defaulted Mortgage Loans...................65
Section 5.13. [Reserved]..................................................67
Section 5.14. Trustee to Cooperate; Release of Mortgage Files.............67
Section 5.15. Servicing Compensation......................................68
Section 5.16. Establishment of Pre-Funding Account; Permitted Withdrawals.68
Section 5.17. Annual Statement as to Compliance...........................69
Section 5.18. Reports by Independent Public Accountants...................69
Section 5.19. Access to Certain Documentation.............................69
Section 5.20. Title, Conservation and Disposition of REO Property.........69
Section 5.21. [Reserved]..................................................70
Section 5.22. Subservicing Agreements Between Servicer and Subservicers...70
Section 5.23. Successor Subservicers......................................71
Section 5.24. Liability of the Servicer...................................71
Section 5.25. No Contractual Relationship Between Subservicers and
Trust Fund..................................................72
Section 5.26. Assumption or Termination of Subservicing Agreements by
Successor Servicer..........................................72
Section 5.27. Subservicing Accounts.......................................72
Section 5.28. Distribution Reports by the Servicer........................73
Article VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01. Distributions...............................................74
Section 6.02. Statements to the Certificateholders........................76
Section 6.03. Monthly Advances by the Servicer............................78
Section 6.04. Reserve Fund................................................79
Section 6.05. Reports to the Securities and Exchange Commission...........79
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Article VII
THE DEPOSITOR THE MORTGAGE LOAN SELLER AND THE SERVICER
Section 7.01. Respective Liabilities of the Depositor and the
Mortgage Loan Seller and the Servicer.......................82
Section 7.02. Limitation on Liability of the Depositor, the Mortgage
Loan Seller and Others......................................82
Section 7.03. Servicer Indemnity..........................................82
Section 7.04. "One-Action" Rule...........................................83
Article VIII
DEFAULT
Section 8.01. Events of Default...........................................84
Section 8.02. Waiver of Defaults..........................................86
Section 8.03. Trustee to Act; Appointment of Successor....................86
Section 8.04. Notification to Certificateholders..........................87
Article IX
CONCERNING THE TRUSTEE
Section 9.01. Duties of Trustee...........................................88
Section 9.02. Certain Matters Affecting the Trustee.......................89
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.......90
Section 9.04. Trustee May Own Certificates................................90
Section 9.05. Trustee's Compensation and Reimbursement....................90
Section 9.06. Eligibility Requirements for Trustee........................90
Section 9.07. Resignation and Removal of the Trustee......................91
Section 9.08. Successor Trustee...........................................92
Section 9.09. Merger or Consolidation of Trustee..........................92
Section 9.10. Appointment of Co-Trustee or Separate Trustee...............92
Section 9.11. Appointment of Office or Agency.............................93
Article X
TERMINATION
Section 10.01.Termination.................................................94
Section 10.02.Additional Termination Requirements.........................96
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Article XI
MISCELLANEOUS PROVISIONS
Section 11.01.Severability of Provisions..................................97
Section 11.02.Limitation on Rights of Certificateholders..................97
Section 11.03.Amendment...................................................97
Section 11.04.Recordation of Agreement; Counterparts......................99
Section 11.05.Duration of Agreement.......................................99
Section 11.06.Governing Law...............................................99
Section 11.07.Notices.....................................................99
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EXHIBITS
A. Hybrid Mortgage Loan Schedule ...................................A-1
B. Contents of Mortgage File........................................B-1
C. Form of Class A Certificates.....................................C-1
D. Form of Class B Certificates.....................................D-1
E. Form of Class A-X Certificates...................................E-1
F. [Reserved].......................................................F-1
G. Form of Class A-R Certificates...................................G-1
H. Form of Initial Certification....................................H-1
I. Form of Final Certification......................................I-1
J. Distribution Account Certification...............................J-1
K. Form of Subsequent Transfer Agreement............................K-1
L. Form of Investment Letter........................................L-1
M. Form of Transfer Affidavit ......................................M-1
N. ERISA Representation Letter......................................N-1
O. Mortgage Loan Seller's Representations and Warranties
with Respect to Mortgage Loans...................................O-1
P. Mortgage Loan Purchase Agreement.................................P-1
Q. Form of Certification to be provided by Servicer with Form 10-K..Q-1
R. Form of Certification to be provided to Servicer by Trustee......R-1
S. Form of Request for Release......................................S-1
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This Pooling and Servicing Agreement, dated as of February 1, 2003, is
executed among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CAPITAL I INC., as depositor
(together with its permitted successors and assigns, the "Depositor"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CREDIT CORPORATION, as servicer (together with its
permitted successors and assigns, the "Servicer") and as mortgage loan seller
(together with its permitted successors and assigns, the "Mortgage Loan
Seller") and ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee
(together with its permitted successors and assigns, the "Trustee").
In consideration of the premises and the mutual agreements hereinafter
set forth, the Depositor, the Servicer, the Mortgage Loan Seller and the
Trustee agree as follows:
Article I
DEFINITIONS
Section 1.01. Definitions. Whenever used herein, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
ACCRUED CERTIFICATE INTEREST: With respect to each Distribution Date
and each Class of Certificates, interest accrued during the related Interest
Accrual Period at the related Pass-Through Rate on the Certificate Principal
Balance thereof immediately prior to such Distribution Date. With respect to
each Distribution Date and each Subsidiary REMIC Regular Interest, interest
accrued during the preceding Interest Accrual Period at the related
Pass-Through Rate on the principal balance thereof, as described in Section
2.05. Accrued Certificate Interest on each Class of Certificates and
corresponding Subsidiary REMIC Regular Interest shall accrue on the basis of a
360-day year consisting of twelve 30-day months.
ADDITION NOTICE: With respect to the transfer of Subsequent Mortgage
Loans to the Trustee pursuant to Section 2.03 hereof and the related
Subsequent Transfer Agreement, a notice, which the Servicer shall give to the
Trustee not later than five Business Days prior to the related Subsequent
Transfer Date, of (a) the Depositor's designation of Subsequent Mortgage Loans
to be conveyed to the Trustee, on behalf of and for inclusion in the Trust
Fund, and (b) the aggregate principal balance of such Subsequent Mortgage
Loans as of the related Subsequent Cut-off Date.
ADDITIONAL COLLATERAL: With respect to any Additional Collateral
Mortgage Loan, the marketable securities subject to a security interest
pursuant to the related pledge agreement between the Mortgage Loan Seller and
the related pledgor.
ADDITIONAL COLLATERAL MORTGAGE LOAN: Each Mortgage Loan that is
originated pursuant to the Flex Source(TM) Program which is secured by
additional collateral in the form of a security interest in marketable
securities.
ADDITIONAL COLLATERAL MORTGAGE LOAN LIQUIDATION SHORTFALL: As of the
Determination Date for any Distribution Date, the amount, if any, by which the
then outstanding principal balance of an Additional Collateral Mortgage Loan
which is a Liquidated Mortgage Loan exceeds the Liquidation Proceeds
(including those from the related Additional Collateral) allocable to
principal realized with respect to such Mortgage Loan.
ADJUSTMENT AMOUNT: With respect to each anniversary of the Cut-Off
Date, the amount, if any, by which the Special Hazard Loss Coverage Amount on
the Closing Date exceeds the greatest of (x) the product of 1% and the
outstanding principal balance of the Mortgage Loans on the Distribution Date
immediately preceding such anniversary, (y) the outstanding principal balance
of the Mortgage Loans secured by Mortgaged Properties in the highest
California zip code concentration on the Distribution Date immediately
preceding such anniversary, and (z) twice the outstanding principal balance of
the Mortgage Loan which has the largest outstanding principal balance on the
Distribution Date immediately preceding such anniversary.
ADJUSTMENT DATE: With respect to each Mortgage Loan, the date on which
adjustments to the mortgage interest rate are made thereon. The first
Adjustment Date for each Mortgage Loan will occur on the fifth anniversary of
the first due date for that Mortgage Loan, and subsequent Adjustment Dates for
each Mortgage Loan will occur every six months thereafter.
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.
AGGREGATE NET PRINCIPAL LIQUIDATION LOSSES: With respect to each
Distribution Date, the amount, if any, by which (a) the aggregate of the
outstanding Stated Principal Balances of those Mortgage Loans that became
Liquidated Mortgage Loans during the month ending prior to the month of such
Distribution Date exceeds (b) the aggregate Net Liquidation Proceeds for such
Mortgage Loans that are allocable to principal in accordance with the terms
thereof.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and exhibits and supplements hereto.
ALLOCABLE SHARE: With respect to any Class of Subordinate Certificates
on any Distribution Date, such Class's pro rata share (based on the
Certificate Principal Balance of each such Class of Subordinate Certificates)
of the Subordinate Optimal Principal Amount described in the definition of
Subordinate Optimal Principal Payment; provided, that no Class of such
Subordinate Certificates will be entitled on any Distribution Date to receive
distributions pursuant to clauses (5) and (6) of the definition of Subordinate
Optimal Principal Amount unless the Class Prepayment Distribution Trigger for
that Class is satisfied for that Distribution Date. The amount that is
restricted from being distributed to any Class of Subordinate Certificates
pursuant to this definition will be distributable to the other Classes of
Subordinate Certificates that are not otherwise restricted from receiving
distributions by this definition, pro rata, based on the Certificate Principal
Balance of each Class that is not so restricted; provided, that if the Class
Prepayment Distribution Trigger is not satisfied for any outstanding Class of
Subordinate Certificates, it shall be deemed to be satisfied for the most
senior Class of Subordinate Certificates then outstanding, whether or not the
Class Prepayment Distribution Trigger is satisfied for that most senior Class
of such Subordinate Certificates.
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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 Servicer at such time.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction where the related Mortgaged Property is located to
reflect of record the sale and assignment of the Mortgage Loan to the Trustee,
which assignment, notice of transfer or equivalent instrument may, if
permitted by law, be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county.
AVAILABLE FUNDS: With respect to any Distribution Date, an amount
equal to the sum of the following amounts net of fees, expenses, indemnities
and other amounts reimbursable or payable to the Servicer and the Trustee on
deposit in the Collection Account immediately prior to the remittance of
Available Funds by the Servicer to the Trustee on the related Determination
Date with respect to the mortgage loans:
(A) All amounts on deposit in the Collection Account immediately
prior to the remittance of Available Funds by the Servicer to the Trustee on
the Determination Date, including:
(1) all payments on account of principal of the mortgage loans,
including unscheduled principal prepayments on the mortgage loans;
(2) all payments on account of interest on the mortgage loans
adjusted to the Net Mortgage Rate;
(3) all net insurance proceeds and net proceeds from the
liquidation of mortgage loans, including condemnation proceeds, to the extent
those proceeds are not to be applied to the restoration or repair of the
related Mortgaged Property or released to the related borrower in accordance
with the Servicer's normal servicing procedures;
(4) any amounts deposited in the Collection Account by the Servicer
in connection with any losses on the investments made with the funds received
from Mortgage Loans permitted pursuant to Section 5.02(b) hereof;
(5) any amounts in connection with a deductible clause in any
blanket hazard insurance policy in respect of the mortgage loans;
(6) the net monthly rental income from the REO Properties in
respect of the mortgage loans; plus
(B) Advance amounts in respect of the mortgage loans; plus
(C) any amounts payable in connection with the purchase of any
Mortgage Loan and any Substitution Adjustment Amounts in respect of such
Mortgage Loans; plus
(D) Compensating Interest in respect of the mortgage loans payments;
less
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(E) amounts required to be held in the Collection Account in
respect of future Distribution Dates in respect of the mortgage loans.
BANKRUPTCY LOSS COVERAGE AMOUNT: With respect to any Distribution
Date, an amount equal to approximately $100,000, minus the aggregate amount of
previous Deficient Valuations and Debt Service Reductions with respect to the
mortgage loans. As of any Distribution Date on or after the related Cross-Over
Date, the Bankruptcy Loss Coverage Amount will be zero. The Bankruptcy Loss
Coverage Amount may be reduced or modified upon written confirmation from
Standard & Poor's and ▇▇▇▇▇'▇ that the reduction or modification will not
adversely affect the then current ratings of the Senior Certificates by
Standard & Poor's and ▇▇▇▇▇'▇. Such reduction may adversely affect the
coverage provided by subordination with respect to Deficient Valuations and
Debt Service Reductions.
BOOK-ENTRY CERTIFICATE: Any Class of Certificates registered in the
name of the Depository or its nominee 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). On the Closing Date the Class A
Certificates, the Class A-X Certificates and each Class of Public Subordinate
Certificates shall be Book-Entry Certificates.
BUSINESS DAY: Any day other than (a) a Saturday or Sunday, or (b) a
legal holiday in the States of Minnesota, Maryland or New York, or (c) a day
on which banking or savings and loan institutions in the State of New York or
the State in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to be closed.
CAPITALIZED INTEREST: As defined in Section 5.16(a).
CAPITALIZED INTEREST REQUIREMENT: With respect to any Distribution
Date during the Pre-Funding Period, (A) the product of (a) a fraction, the
numerator of which is the related Pre-Funded Amount on the Closing Date less
the Stated Principal Balance of any Subsequent Mortgage Loan transferred to
the Trust Fund during the related Due Period or a prior Due Period that has a
Monthly Payment due during such Due Period and the denominator of which is the
sum of the related Pre-Funded Amount on the Closing Date and the aggregate
Stated Principal Balances on the Closing Date and (b) the Interest
Distribution Amount for the related Interest Accrual Period, minus (B) any
related Pre-Funding Earnings for such Due Period.
CERTIFICATE: Any Class A, Class A-X, Class B or Class A-R Certificate.
CERTIFICATE PRINCIPAL BALANCE: With respect to any Class of
Certificates other than the Class A-X Certificates and any Distribution Date,
the principal balance of that Class on the date of the initial issuance of the
Certificates as reduced, but not below zero, by:
(1) all amounts distributed on previous Distribution Dates on that
Class on account of principal; and
(2) a principal portion of all Realized Losses allocated to that
Class on previous Distribution Dates.
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CERTIFICATEHOLDER or HOLDER: The person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purposes
of giving any consent, waiver, request or demand pursuant to this Agreement,
any Certificate registered in the name of the Mortgage Loan Seller, the
Depositor, the Servicer, any Sub-Servicer, or any of their respective
Affiliates shall be deemed not to be outstanding and the undivided 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, waiver, request or demand has been obtained, unless such Person
owns the entire Class of which such Certificate is a part. The Trustee shall
be provided with an Officer's Certificate by the Mortgage Loan Seller, the
Depositor, the Servicer or any Sub-Servicer if any Certificate is owned by any
Affiliate thereof and shall be entitled to conclusively rely upon the
certificate of the Mortgage Loan Seller, the Depositor or the Servicer or any
Sub-Servicer as to the determination of the aggregate Percentage Interests
evidenced by Certificates registered to the Mortgage Loan Seller, the
Depositor, the Servicer, any Sub-Servicer or their Affiliates.
CERTIFICATE OWNER: With respect to a Certificate that is a Book-Entry
Certificate, the person who is the beneficial owner of such Book-Entry
Certificate.
CERTIFICATE REGISTER: The register maintained pursuant to Section 4.02.
CLASS: All Certificates bearing the same class designation.
CLASS A CERTIFICATES: Any one of the Class A-1, Class A-2, Class A-3
and Class A-4 Certificates.
CLASS A-1 CERTIFICATE: Any one of the Certificates designated as a
Class A-1 Certificate substantially in the form set forth in Exhibit C-1
hereto and executed and authenticated by the Trustee.
CLASS A-1 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
Date and the Class A-1 Certificates, an amount equal to the sum of (a)
interest for the related Interest Accrual Period at the related Pass-Through
Rate on the related Class Principal Balance as of such Distribution Date
(before giving effect to the distribution on such Distribution Date), net of
the Net Interest Shortfall, if any, allocated to such Class pursuant to
Section 6.01 in respect of such Distribution Date, (b) any Class A-1 Unpaid
Interest Shortfall for such Distribution Date, and (c) any Pass-Through
Shortfall Carryforward Amount allocated to such Class pursuant to Section 6.04
in respect of such Distribution Date.
CLASS A-1 INTEREST SHORTFALL: As to any Distribution Date and the
Class of Class A-1 Certificates, the amount equal to (a) the Class A-1
Interest Formula Distribution Amount for such Distribution Date (exclusive of
any Pass-Through Shortfall Carryforward Amount allocated thereto on such
Distribution Date), less (b) the amount of interest distributed to the related
Certificateholders on such Distribution Date.
CLASS A-1 PASS-THROUGH RATE: As to any Distribution Date to and
including the Distribution Date in June 2007, a per annum rate equal to 3.70%.
From the Distribution Date in July 2007 to and including the Distribution Date
in December 2007, a per annum rate equal to the lesser of 3.70% and the
Weighted Average Net Mortgage Rate for the Mortgage Loans. As
5
to any Distribution Date after the December 2007 Distribution Date,
the Weighted Average Net Mortgage Rate for the Mortgage Loans.
CLASS A-1 UNPAID INTEREST SHORTFALL: As to any Distribution Date and
the Class A-1 Certificates, the amount of the Class A-1 Interest Shortfall for
the immediately preceding Distribution Date.
CLASS A-2 CERTIFICATE: Any one of the Certificates designated as a
Class A-2 Certificate substantially in the form set forth in Exhibit C-1
hereto and executed and authenticated by the Trustee.
CLASS A-2 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
Date and the Class A-2 Certificates, an amount equal to the sum of (a)
interest for the related Interest Accrual Period at the related Pass-Through
Rate on the related Class Principal Balance as of such Distribution Date
(before giving effect to the distribution on such Distribution Date), net of
the Net Interest Shortfall, if any, allocated to such Class pursuant to
Section 6.01 in respect of such Distribution Date, (b) any Class A-2 Unpaid
Interest Shortfall for such Distribution Date, and (c) any Pass-Through
Shortfall Carryforward Amount allocated to such Class pursuant to Section 6.04
in respect of such Distribution Date.
CLASS A-2 INTEREST SHORTFALL: As to any Distribution Date and the
Class of Class A-2 Certificates, the amount equal to (a) the Class A-2
Interest Formula Distribution Amount for such Distribution Date (exclusive of
any Pass-Through Shortfall Carryforward Amount allocated thereto on such
Distribution Date), less (b) the amount of interest distributed to the related
Certificateholders on such Distribution Date.
CLASS A-2 PASS-THROUGH RATE: As to any Distribution Date to and
including the Distribution Date in June 2007, a per annum rate equal to 4.30%.
From the Distribution Date in July 2007 to and including the Distribution Date
in December 2007, a per annum rate equal to the lesser of 4.30% and the
Weighted Average Net Mortgage Rate for the Mortgage Loans. As to any
Distribution Date after the December 2007 Distribution Date, the Weighted
Average Net Mortgage Rate for the Mortgage Loans.
CLASS A-2 UNPAID INTEREST SHORTFALL: As to any Distribution Date and
the Class A-2 Certificates, the amount of the Class A-2 Interest Shortfall for
the immediately preceding Distribution Date.
CLASS A-3 CERTIFICATE: Any one of the Certificates designated as a
Class A-3 Certificate substantially in the form set forth in Exhibit C-1
hereto and executed and authenticated by the Trustee.
CLASS A-3 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
Date and the Class A-3 Certificates, an amount equal to the sum of (a)
interest for the related Interest Accrual Period at the related Pass-Through
Rate on the related Class Principal Balance as of such Distribution Date
(before giving effect to the distribution on such Distribution Date), net of
the Net Interest Shortfall, if any, allocated to such Class pursuant to
Section 6.01 in respect of such Distribution Date, (b) any Class A-3 Unpaid
Interest Shortfall for such
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Distribution Date, and (c) any Pass-Through Shortfall Carryforward
Amount allocated to such Class pursuant to Section 6.04 in respect of such
Distribution Date.
CLASS A-3 INTEREST SHORTFALL: As to any Distribution Date and the
Class of Class A-3 Certificates, the amount equal to (a) the Class A-3
Interest Formula Distribution Amount for such Distribution Date (exclusive of
any Pass-Through Shortfall Carryforward Amount allocated thereto on such
Distribution Date), less (b) the amount of interest distributed to the related
Certificateholders on such Distribution Date.
CLASS A-3 PASS-THROUGH RATE: As to any Distribution Date to and
including the Distribution Date in June 2007, a per annum rate equal to 4.60%.
From the Distribution Date in July 2007 to and including the Distribution Date
in December 2007, a per annum rate equal to the lesser of 4.60% and the
Weighted Average Net Mortgage Rate for the Mortgage Loans. As to any
Distribution Date after the December 2007 Distribution Date, the Weighted
Average Net Mortgage Rate for the Mortgage Loans.
CLASS A-3 UNPAID INTEREST SHORTFALL: As to any Distribution Date and
the Class A-3 Certificates, the amount of the Class A-3 Interest Shortfall for
the immediately preceding Distribution Date.
CLASS A-4 CERTIFICATE: Any one of the Certificates designated as a
Class A-4 Certificate substantially in the form set forth in Exhibit C-1
hereto and executed and authenticated by the Trustee.
CLASS A-4 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
Date and the Class A-4 Certificates, an amount equal to the sum of (a)
interest for the related Interest Accrual Period at the related Pass-Through
Rate on the related Class Principal Balance as of such Distribution Date
(before giving effect to the distribution on such Distribution Date), net of
the Net Interest Shortfall, if any, allocated to such Class pursuant to
Section 6.01 in respect of such Distribution Date, (b) any Class A-4 Unpaid
Interest Shortfall for such Distribution Date, and (c) any Pass-Through
Shortfall Carryforward Amount allocated to such Class pursuant to Section 6.04
in respect of such Distribution Date.
CLASS A-4 INTEREST SHORTFALL: As to any Distribution Date and the
Class of Class A-4 Certificates, the amount equal to (a) the Class A-4
Interest Formula Distribution Amount for such Distribution Date (exclusive of
any Pass-Through Shortfall Carryforward Amount allocated thereto on such
Distribution Date), less (b) the amount of interest distributed to the related
Certificateholders on such Distribution Date.
CLASS A-4 PASS-THROUGH RATE: As to any Distribution Date to and
including the Distribution Date in June 2007, a per annum rate equal to 4.20%.
From the Distribution Date in July 2007 to and including the Distribution Date
in December 2007, a per annum rate equal to the lesser of 4.20% and the
Weighted Average Net Mortgage Rate for the Mortgage Loans. As to any
Distribution Date after the December 2007 Distribution Date, the Weighted
Average Net Mortgage Rate for the Mortgage Loans.
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CLASS A-4 UNPAID INTEREST SHORTFALL: As to any Distribution Date and
the Class A-4 Certificates, the amount of the Class A-4 Interest Shortfall for
the immediately preceding Distribution Date.
CLASS A-X CERTIFICATES: Any one of the Certificates designated as a
Class A-X Certificate substantially in the form set forth in Exhibit E hereto
and executed and authenticated by the Trustee.
CLASS A-X INTEREST DISTRIBUTION AMOUNT: For any Distribution Date to
and including the December 2007 Distribution Date, the product of: (a) the
Pass-Through Rate in respect of the Class A-X Certificates and (b) the
notional balance of the Class A-X Certificates. For each Distribution Date
thereafter, the Class A-X Certificates will not be entitled to receive
distributions of interest.
CLASS A-X PASS-THROUGH RATE: For each Distribution Date to and
including the Distribution Date in June 2007, a per annum rate equal to 4.25%.
From the Distribution Date in July 2007 to and including the Distribution Date
in December 2007, a per annum rate equal to either (i) 4.25% so long as the
Weighted Average Net Mortgage Rate on the mortgage loans as of the related Due
Date exceeds 4.25% or (ii) 0%, if the Weighted Average Net Mortgage Rate on
the Mortgage Loans as of the related Due Date is less than or equal to 4.25%.
Commencing with the Distribution Date in January 2008, the Class A-X
Certificates will no longer be entitled to receive distributions of interest.
CLASS A-R CERTIFICATE: Any one of the Certificates designated as a
Class A-R Certificates substantially in the form set forth in Exhibit G-1
hereto executed and authenticated by the Trustee.
CLASS A-R PASS-THROUGH RATE: As to any Distribution Date to and
including the December 2007 Distribution Date, the per annum rate equal to the
lesser of (i) 4.25% and (ii) the Weighted Average Net Mortgage Rate for the
Mortgage Loans. As to any Distribution Date after the December 2007
Distribution Date, the Weighted Average Net Mortgage Rate for the Mortgage
Loans.
CLASS B CERTIFICATES: Any one of the Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 and Class B-6 Certificates.
CLASS B-1 CERTIFICATE: Any one of the Certificates designated as a
Class B-1 Certificate substantially in the form set forth in Exhibit D-1
hereto and executed and authenticated by the Trustee.
CLASS B-1 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
Date and the Class B-1 Certificates, an amount equal to the sum of (a)
interest for the related Interest Accrual Period at the related Pass-Through
Rate on the related Class Principal Balance as of such Distribution Date
(before giving effect to the distribution on such Distribution Date), net of
the Net Interest Shortfall, if any, allocated to such Class pursuant to
Section 6.01 in respect of such Distribution Date and (b) any Class B-1 Unpaid
Interest Shortfall for such Distribution Date.
8
CLASS B-1 INTEREST SHORTFALL: As to any Distribution Date and the
Class of Class B-1 Certificates, the amount equal to (a) the Class B-1
Interest Formula Distribution Amount for such Distribution Date, less (b) the
amount of interest distributed to the related Certificateholders on such
Distribution Date.
CLASS B-1 PASS-THROUGH RATE: As to any Distribution Date to and
including the December 2007 Distribution Date, the per annum rate equal to the
lesser of (i) 4.25% and (ii) the Weighted Average Net Mortgage Rate for the
Mortgage Loans. As to any Distribution Date after the December 2007
Distribution Date, the Weighted Average Net Mortgage Rate for the Mortgage
Loans.
CLASS B-1 UNPAID INTEREST SHORTFALL: As to any Distribution Date and
the Class B-1 Certificates, the amount of the Class B-1 Interest Shortfall for
the immediately preceding Distribution Date.
CLASS B-2 CERTIFICATE: Any one of the Certificates designated as a
Class B-2 Certificate substantially in the form set forth in Exhibit D-1
hereto and executed and authenticated by the Trustee.
CLASS B-2 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
Date and the Class B-2 Certificates, an amount equal to the sum of (a)
interest for the related Interest Accrual Period at the related Pass-Through
Rate on the related Class Principal Balance as of such Distribution Date
(before giving effect to the distribution on such Distribution Date), net of
the Net Interest Shortfall, if any, allocated to such Class pursuant to
Section 6.01 in respect of such Distribution Date and (b) any Class B-2 Unpaid
Interest Shortfall for such Distribution Date.
CLASS B-2 INTEREST SHORTFALL: As to any Distribution Date and the
Class of Class B-2 Certificates, the amount equal to (a) the Class B-2
Interest Formula Distribution Amount for such Distribution Date, less (b) the
amount of interest distributed to the related Certificateholders on such
Distribution Date.
CLASS B-2 PASS-THROUGH RATE: As to any Distribution Date to and
including the December 2007 Distribution Date, the per annum rate equal to the
lesser of (i) 4.25% and (ii) the Weighted Average Net Mortgage Rate for the
Mortgage Loans. As to any Distribution Date after the December 2007
Distribution Date, the Weighted Average Net Mortgage Rate for the Mortgage
Loans.
CLASS B-2 UNPAID INTEREST SHORTFALL: As to any Distribution Date and
the Class B-2 Certificates, the amount of the Class B-2 Interest Shortfall for
the immediately preceding Distribution Date.
CLASS B-3 CERTIFICATE: Any one of the Certificates designated as a
Class B-3 Certificate substantially in the form set forth in Exhibit D-1
hereto and executed and authenticated by the Trustee.
CLASS B-3 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
Date and the Class B-3 Certificates, an amount equal to the sum of (a)
interest for
9
the related Interest Accrual Period at the related Pass-Through
Rate on the related Class Principal Balance as of such Distribution Date
(before giving effect to the distribution on such Distribution Date), net of
the Net Interest Shortfall, if any, allocated to such Class pursuant to
Section 6.01 in respect of such Distribution Date and (b) any Class B-3 Unpaid
Interest Shortfall for such Distribution Date.
CLASS B-3 INTEREST SHORTFALL: As to any Distribution Date and the
Class of Class B-3 Certificates, the amount equal to (a) the Class B-3
Interest Formula Distribution Amount for such Distribution Date, less (b) the
amount of interest distributed to the related Certificateholders on such
Distribution Date.
CLASS B-3 PASS-THROUGH RATE: As to any Distribution Date to and
including the December 2007 Distribution Date, the per annum rate equal to the
lesser of (i) 4.25% and (ii) the Weighted Average Net Mortgage Rate for the
Mortgage Loans. As to any Distribution Date after the December 2007
Distribution Date, the Weighted Average Net Mortgage Rate for the Mortgage
Loans.
CLASS B-3 UNPAID INTEREST SHORTFALL: As to any Distribution Date and
the Class B-3 Certificates, the amount of the Class B-3 Interest Shortfall for
the immediately preceding Distribution Date.
CLASS B-4 CERTIFICATE: Any one of the Certificates designated as a
Class B-4 Certificate substantially in the form set forth in Exhibit D-1
hereto and executed and authenticated by the Trustee.
CLASS B-4 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
Date and the Class B-4 Certificates, an amount equal to the sum of (a)
interest for the related Interest Accrual Period at the related Pass-Through
Rate on the related Class Principal Balance as of such Distribution Date
(before giving effect to the distribution on such Distribution Date), net of
the Net Interest Shortfall, if any, allocated to such Class pursuant to
Section 6.01 in respect of such Distribution Date and (b) any Class B-4 Unpaid
Interest Shortfall for such Distribution Date.
CLASS B-4 INTEREST SHORTFALL: As to any Distribution Date and the
Class of Class B-4 Certificates, the amount equal to (a) the Class B-4
Interest Formula Distribution Amount for such Distribution Date, less (b) the
amount of interest distributed to the related Certificateholders on such
Distribution Date.
CLASS B-4 PASS-THROUGH RATE: As to any Distribution Date to and
including the December 2007 Distribution Date, the per annum rate equal to the
lesser of (i) 4.25% and (ii) the Weighted Average Net Mortgage Rate for the
Mortgage Loans. As to any Distribution Date after the December 2007
Distribution Date, the Weighted Average Net Mortgage Rate for the Mortgage
Loans.
CLASS B-4 UNPAID INTEREST SHORTFALL: As to any Distribution Date and
the Class B-4 Certificates, the amount of the Class B-4 Interest Shortfall for
the immediately preceding Distribution Date.
10
CLASS B-5 CERTIFICATE: Any one of the Certificates designated as a
Class B-5 Certificate substantially in the form set forth in Exhibit D-1
hereto and executed and authenticated by the Trustee.
CLASS B-5 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
Date and the Class B-5 Certificates, an amount equal to the sum of (a)
interest for the related Interest Accrual Period at the related Pass-Through
Rate on the related Class Principal Balance as of such Distribution Date
(before giving effect to the distribution on such Distribution Date), net of
the Net Interest Shortfall, if any, allocated to such Class pursuant to
Section 6.01 in respect of such Distribution Date and (b) any Class B-5 Unpaid
Interest Shortfall for such Distribution Date.
CLASS B-5 INTEREST SHORTFALL: As to any Distribution Date and the
Class of Class B-5 Certificates, the amount equal to (a) the Class B-5
Interest Formula Distribution Amount for such Distribution Date, less (b) the
amount of interest distributed to the related Certificateholders on such
Distribution Date.
CLASS B-5 PASS-THROUGH RATE: As to any Distribution Date to and
including the December 2007 Distribution Date, the per annum rate equal to the
lesser of (i) 4.25% and (ii) the Weighted Average Net Mortgage Rate for the
Mortgage Loans. As to any Distribution Date after the December 2007
Distribution Date, the Weighted Average Net Mortgage Rate for the Mortgage
Loans.
CLASS B-5 UNPAID INTEREST SHORTFALL: As to any Distribution Date and
the Class B-5 Certificates, the amount of the Class B-5 Interest Shortfall for
the immediately preceding Distribution Date.
CLASS B-6 CERTIFICATE: Any one of the Certificates designated as a
Class B-6 Certificate substantially in the form set forth in Exhibit D-1
hereto and executed and authenticated by the Trustee.
CLASS B-6 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Distribution
Date and the Class B-6 Certificates, an amount equal to the sum of (a)
interest for the related Interest Accrual Period at the related Pass-Through
Rate on the related Class Principal Balance as of such Distribution Date
(before giving effect to the distribution on such Distribution Date), net of
the Net Interest Shortfall, if any, allocated to such Class pursuant to
Section 6.01 in respect of such Distribution Date and (b) any Class B-6 Unpaid
Interest Shortfall for such Distribution Date.
CLASS B-6 INTEREST SHORTFALL: As to any Distribution Date and the
Class of Class B-6 Certificates, the amount equal to (a) the Class B-6
Interest Formula Distribution Amount for such Distribution Date, less (b) the
amount of interest distributed to the related Certificateholders on such
Distribution Date.
CLASS B-6 PASS-THROUGH RATE: As to any Distribution Date to and
including the December 2007 Distribution Date, the per annum rate equal to the
lesser of (i) 4.25% and (ii) the Weighted Average Net Mortgage Rate for the
Mortgage Loans. As to any Distribution Date
11
after the December 2007 Distribution Date, the Weighted Average Net
Mortgage Rate for the Mortgage Loans.
CLASS B-6 UNPAID INTEREST SHORTFALL: As to any Distribution Date and
the Class B-6 Certificates, the amount of the Class B-6 Interest Shortfall for
the immediately preceding Distribution Date.
CLASS PREPAYMENT DISTRIBUTION TRIGGER: With respect to a Class of
Subordinate Certificates and any Distribution Date, the Class Prepayment
Distribution Trigger is satisfied if either (i) the fraction (expressed as a
percentage), the numerator of which is the aggregate Certificate Principal
Balance of such Class and each Class subordinate to it, if any, and the
denominator of which is the Scheduled Principal Balance, with respect to that
Distribution Date, equals or exceeds such percentage calculated as of the date
of issuance of the Certificates, or (ii) that class of Subordinate
Certificates is the only Class of such Subordinate Certificates then
outstanding.
CLASS PRINCIPAL BALANCE: With respect to the each Class of
Certificates other than the Class A-X Certificates, at any time, the Initial
Class Principal Balance set forth in Section 2.05(c) hereof, reduced (but not
below $0) by the sum of all amounts previously distributed to such Class of
Certificateholders on account of principal pursuant to Section 6.01.
CLOSING DATE: February 27, 2003.
CODE: The Internal Revenue Code of 1986, as amended.
COLLECTION ACCOUNT: The account created and maintained pursuant to
Section 5.05.
COMPENSATING INTEREST: With respect to any Distribution Date, the
lesser of: (1) the aggregate of the Prepayment Interest Shortfalls with
respect to voluntary prepayments in full on Mortgage Loans for the related
Distribution Date and (2) the aggregate Servicing Fees due to the Servicer for
such Distribution Date.
CORPORATE TRUST OFFICE: The principal office of the Trustee at which
at any particular time its corporate business with respect to this Agreement
shall be administered, which office at the date of execution of this
instrument is located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Services, MSDWCC 2003-HYB1 and, for Certificate
transfer purposes, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Corporate Trust Services, MSDWCC 2003-HYB1.
CROSS-OVER DATE: The Distribution Date on which the aggregate
Certificate Principal Balance of the Subordinate Certificates has been reduced
to zero.
CURTAILMENTS: Any Principal Prepayment made by a Mortgagor which is
not a Principal Prepayment in full.
12
CUT-OFF DATE: With respect to each Mortgage Loan acquired by the Trust
on the Closing Date, February 1, 2003. With respect to each Subsequent
Mortgage Loan, the related Subsequent Cut-off Date.
DEBT SERVICE REDUCTION: A reduction in the amount of the monthly
payment due on a Mortgage Loan as established by a bankruptcy court in a
bankruptcy of the related borrower.
DEFICIENT VALUATION: The difference between the Outstanding Principal
Balance of a Mortgage Loan and a reduced secured debt as a result of a
bankruptcy court establishing the value of the Mortgaged Property at an amount
less than the then Outstanding Principal Balance of the Mortgage Loan in
connection with a bankruptcy of the related borrower.
DEFINITIVE CERTIFICATES: As defined in Section 4.02(l).
DELETED MORTGAGE LOAN: As defined in Section 3.03.
DELINQUENT: As used herein, a Mortgage Loan is considered to be
Delinquent when a payment due on any scheduled Due Date remains unpaid as of
the close of business on the next following monthly scheduled Due Date.
DEPOSITOR: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., a Delaware
corporation, or its successor in interest or any successor under this
Agreement appointed as herein provided.
DEPOSITORY: The initial Depository shall be The Depository Trust
Company, the nominee of which is CEDE & Co., as the registered Holder of the
Book Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(a)(5) of the Uniform Commercial Code
of the State of New York.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DETERMINATION DATE: With respect to any Distribution Date, the third
Business Day immediately preceding such Distribution Date.
DISCOUNT MORTGAGE LOAN: Any Mortgage Loan having an initial Net
Mortgage Rate less than 4.25%.
DISQUALIFIED ORGANIZATION: As defined in Section 4.02(i).
DISTRIBUTION ACCOUNT: The account created and maintained pursuant to
Section 6.01(a).
DISTRIBUTION DATE: The 25th day of any month, or if such 25th day is
not a Business Day, the first Business Day immediately following, beginning
with the First Distribution Date.
13
DUE DATE: As to any Distribution Date, the first day of the month of
such Distribution Date, which is the day on which each Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
DUE PERIOD: With respect to any Distribution Date, the period
commencing on the second preceding Determination Date and ending on the day
preceding the immediately preceding Determination Date (except that for
purposes of calculating Curtailments, the Due Period will be the preceding
calendar month).
EFFECTIVE LOAN-TO-VALUE RATIO: The fraction, expressed as a
percentage, the numerator of which is the outstanding principal amount of the
related Mortgage Loan at the time of origination thereof, less the amount of
the Original Additional Collateral Requirement, if any, and the denominator of
which is the Appraised Value of the related Mortgaged Property at such time
or, in the case of a Mortgage Loan financing the acquisition of the Mortgaged
Property, the sales price of the Mortgaged Property, if such sales price is
less than such Appraised Value.
ELIGIBLE ACCOUNT: An account that is (i) maintained with a federal or
state chartered depository institution the short-term unsecured debt
obligations of which have been rated by each Rating Agency in its highest
short-term rating category at the time of the deposit therein, or (ii) a trust
account maintained with the corporate trust department of a depository
institution, which institution is acting in its fiduciary capacity, or (iii)
an account or accounts the deposits in which are fully insured by the FDIC, or
(iv) maintained with ▇▇▇▇▇ Fargo Bank Minnesota, National Association so long
as its short-term unsecured debt obligations have been rated "P-1" by Moody's
and "A-1" by Standard & Poor's at the time of the deposit therein, or (v)
otherwise acceptable to each Rating Agency without reduction or withdrawal of
each rating of each Class of Certificates, as evidenced by a letter from each
Rating Agency.
ELIGIBLE INVESTMENTS: One or more of the following:
(a) obligations of, or guaranteed as to principal and
interest by, the United States or obligations of any agency or
instrumentality thereof when such obligations are backed by the full
faith and credit of the United States;
(b) repurchase agreements (including those in which the
purchased securities are held by a third-party custodian) on
obligations specified in clause (a) maturing not later than the day
prior to the Distribution Date on which such amounts are to be
distributed, provided that the long-term unsecured obligations of the
party agreeing to repurchase such obligations are at the time rated
by each Rating Agency in one of its two highest rating categories and
the short-term debt obligations of the party agreeing to repurchase
shall be rated "P-1" by Moody's and "A-1+" by Standard & Poor's;
(c) certificates of deposit, time deposits, demand
deposits and bankers' acceptances (which 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 United States depository institution or trust
company incorporated under the laws of the United States or any
state, provided that the long-term unsecured debt obligations of such
depository institution or trust company at the date of acquisition
14
thereof have been rated by each Rating Agency in one of its two
highest rating categories and the short-term obligations of such
depository institution or trust company shall be rated "P-1" by
Moody's and "A-1+" by Standard & Poor's;
(d) commercial paper (having original maturities of not
more than 365 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 Moody's and Standard & Poor's in its
highest short-term rating (which is "P-1" in the case of Moody's and
"A-1+" in the case of Standard & Poor's); provided that such
commercial paper shall mature no later than the day prior to the
Distribution Date on which such amounts are to be distributed;
(e) money market funds with the highest long-term rating
assigned by the Rating Agencies (including any funds for which the
Trustee or any of its affiliates acts as an advisor or manager); and
(f) other obligations or securities that are "permitted
investments" within the meaning of Section 860(G)(a)(5) of the Code,
based upon an Opinion of Counsel delivered to the Trustee and
acceptable to each Rating Agency as an Eligible Investment hereunder
and will not result in a reduction or withdrawal of the then current
rating of each Class of Certificates, as evidenced by a letter to
such effect from each Rating Agency;
provided that, except in the case of U.S. Treasury STRIPS, no
instrument shall be an Eligible Investment if such instrument evidences either
(a) a right to receive only interest payments with respect to the obligation
underlying such instrument, or (b) a right to receive both principal and
interest payments derived from obligations underlying such instrument where
the interest and principal payments with respect to such instrument provide a
yield to maturity of greater than 120% of the yield to maturity at par of such
underlying obligations.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ESCROW ACCOUNTS: The accounts established pursuant to Section 5.03.
ESCROW PAYMENT: Any payment received by the Servicer for the account
of any Mortgagor for application toward the payment of taxes, insurance
premiums, assessments and similar items in respect of the related Mortgaged
Property.
EVENT OF DEFAULT: Any event of default described in Section 8.01.
EXCESS CASH FLOW: As defined in Section 6.01(d)(iii).
EXCESS LOSS: A Deficient Valuation, Fraud Loss or Special Hazard Loss
or any part of those amounts, occurring after the Bankruptcy Loss Coverage
Amount, Fraud Loss Coverage Amount or Special Hazard Loss Coverage Amount,
respectively, has been reduced to zero.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇ (formerly the Federal National Mortgage
Association) or any successor organization.
15
FDIC: The Federal Deposit Insurance Corporation or any successor
organization.
FIRST DISTRIBUTION DATE: March 25, 2003.
FINAL RECOVERY DETERMINATION: With respect to any defaulted Mortgage
Loan, the determination made by the Servicer in accordance with this Agreement
that it has received all amounts it expects to receive in connection with the
liquidation of such Mortgage Loan, including the final disposition of an REO
Property.
FINAL SCHEDULED DISTRIBUTION DATE: March 25, 2033
FLEX SOURCE(TM) LOAN: A Mortgage Loan which is secured by additional
collateral in the form of a security interest in marketable securities having
a market value, as of the date of such loan's origination, at least equal to
the Original Additional Collateral Requirement.
FLEX SOURCE(TM) PLEDGE AGREEMENT: With respect to each Flex Source(TM)
Loan, the related pledge and security agreement between the Mortgagor under
such Flex Source(TM) Loan and the Mortgage Loan Seller, pursuant to which such
Mortgagor or pledgor granted a security interest in various investment
securities.
FRAUD LOSS: Any Realized Loss attributable to fraud in the origination
of the related Mortgage Loan.
FRAUD LOSS COVERAGE AMOUNT: The approximate amount set forth in the
following table for the indicated period:
Period Fraud Loss
Initial...................................... $4,591,388
March 2003 through February 2005............. the lesser of (i) 2% of the current Pool
Balance and (ii) the Fraud Loss Coverage
Amount as of the preceding anniversary of the
Cut-off Date over the cumulative amount of
Fraud Losses incurred since the preceding
anniversary
March 2005 through February 2008............. the lesser of (i) 1% of the current Pool
Balance and (ii) the Fraud Loss Coverage
Amount as of the preceding anniversary of the
Cut-off Date over the cumulative amount of
Fraud Losses incurred since the preceding
anniversary
After the earlier to occur of March 2008
and the Cross-Over Date.................. $0
▇▇▇▇▇▇▇ MAC: ▇▇▇▇▇▇▇ Mac (formerly the Federal Home Loan Mortgage
Corporation) or any successor organization.
16
HYBRID LOANS: The Mortgage Loans designated on the Mortgage Loan
Schedule attached hereto as Exhibit A (including Subsequent Mortgage Loans).
INDEPENDENT: Of or relating to a Person which (i) is in fact
independent of the Depositor, the Mortgage Loan Seller and the Servicer, (ii)
does not have any direct financial interest or any material indirect financial
interest in the Depositor, the Mortgage Loan Seller and the Servicer if
different from the Depositor or an Affiliate thereof and (iii) is not
connected with the Depositor, the Mortgage Loan Seller or the Servicer as an
officer, employee, director or person performing similar functions.
INDEX: As to each Mortgage Loan, the London inter-bank offered rate
for six-month U.S. dollar deposits (the "Six-Month LIBOR Index"), as defined
in such Mortgage Note.
INITIAL CLASS PRINCIPAL BALANCE: For any Class of Certificates other
than the Class A-X Certificates, the amount set forth for such Class of
Certificates in Section 2.05(c) hereof.
INITIAL MORTGAGE LOANS: The Mortgage Loans listed in the Mortgage Loan
Schedule as of the Closing Date.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan, net of costs of collecting such
proceeds.
INTEREST ACCRUAL PERIOD: As to any Distribution Date, Class of
Certificates and corresponding Subsidiary REMIC Regular Interest, the period
from and including the first day of the calendar month immediately preceding
the month in which such Distribution Date occurs, commencing February 1, 2003,
to and including the last day of that month, on the basis of a 360-day year
consisting of twelve 30-day months.
INTEREST DISTRIBUTION AMOUNT: As defined in Section 6.01(d)(i).
LATE COLLECTIONS: With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments
or as Liquidation Proceeds, condemnation awards, Insurance Proceeds, or with
respect to a disposition of a Mortgaged Property which has been acquired by
foreclosure or deed in lieu of foreclosure or otherwise, any of which
represent late payments or collections of Monthly Payments that were due but
delinquent for a previous Due Date and not previously recovered and with
respect to which delinquent Monthly Payments a Monthly Advance has been made
by the Servicer.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan as to which the
related Mortgaged Property has been acquired, liquidated or disposed of and
with respect to which the Servicer has determined that all amounts which it
expects to recover from or on account of such Mortgage Loan or REO Property
have been recovered.
LIQUIDATION EXPENSES: Expenses which are incurred by the Servicer or
any Sub-Servicer in connection with the liquidation of any defaulted Mortgage
Loan or property acquired in respect thereof, including, without limitation,
legal fees and expenses, any unreimbursed amount expended by the Servicer
pursuant to Section 5.05 respecting the related Mortgage Loan
17
and any related and unreimbursed expenditures for real estate property
taxes or for property restoration or preservation.
LIQUIDATION PROCEEDS: Cash (including Insurance Proceeds) received by
the Servicer in connection with the liquidation of any defaulted Mortgage Loan
or Mortgaged Property acquired in respect thereof, whether through the sale or
assignment of such Mortgage Loan, trustee's sale, foreclosure sale or
otherwise, or the sale of the Mortgaged Property if the Mortgaged Property is
acquired in satisfaction of the Mortgage Loan other than amounts required to
be paid to the Mortgagor pursuant to law or the terms of the applicable
Mortgage Note plus, with respect to a defaulted Mortgage Loan that is also an
Additional Collateral Mortgage Loan, the amount realized on the related
Additional Collateral with respect to such Mortgage Loan in accordance with
Section 5.05.
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
numerator of which is the outstanding principal amount of the related Mortgage
Loan at the time of origination and the denominator of which is the Appraised
Value of the related Mortgaged Property at origination or at such time as an
Appraised Value shall have been determined or, in the case of a Mortgage Loan
financing the acquisition of the Mortgaged Property, the sales price of the
Mortgaged Property, if such sales price is less than such Appraised Value.
MARGIN: With respect to each Mortgage Loan, the number of basis points
which are added to or subtracted from the Index when calculating the Mortgage
Rate for the related Mortgage Note.
MASTER REMIC: As described in Section 2.05.
MAXIMUM MORTGAGE RATE: With respect to each Mortgage Loan, the maximum
rate of interest set forth as such in the related Mortgage Note.
MONTHLY ADVANCE: The aggregate of the advances made by the Servicer
with respect to a particular Distribution Date pursuant to Section 6.03.
MONTHLY PAYMENT: The minimum required monthly payment of principal and
interest due on a Mortgage Loan as specified in the Mortgage Note for any
month (before any adjustment to such scheduled amount by reason of any
bankruptcy or similar proceeding or any moratorium or similar waiver or grace
period). Monthly Payments shall be deemed due on an Outstanding Mortgage Loan
until such time as it becomes a Liquidated Mortgage Loan.
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
first lien or a first priority ownership interest in an estate in fee simple
in real property (or a leasehold that extends at least five years beyond the
maturity of the related Mortgage Loan) securing a Mortgage Note.
MORTGAGE FILE: The items referred to in Exhibit B annexed hereto
pertaining to a particular Mortgage Loan.
18
MORTGAGE LOAN: Each of the mortgage loans and all rights with respect
thereto, evidenced by a Mortgage and a Mortgage Note plus, in the case of an
Additional Collateral Mortgage Loan, including any and all guarantees related
thereto, the Flex Source(TM) Pledge Agreement, sold and assigned by the
Depositor in trust to the Trustee and which is the subject of this Agreement
and included in the Trust Fund. The Mortgage Loans originally sold and subject
to this Agreement are identified on the Mortgage Loan Schedule. The term
"Mortgage Loan" includes each Subsequent Mortgage Loan as of the Subsequent
Transfer Date applicable thereto.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase
Agreement, dated as of February 1, 2003, among the Mortgage Loan Seller and
the Depositor attached hereto as Exhibit P.
MORTGAGE LOAN SCHEDULE: The schedules of Mortgage Loans attached
hereto as Exhibit A, setting forth the following information as to each
Mortgage Loan: (i) the Mortgage Loan identifying number; (ii) a code
indicating whether the Mortgaged Property is owner-occupied; (iii) the
property type of the Mortgaged Property; (iv) the original number of months to
maturity and the number of months remaining to maturity from the Cut-off Date;
(v) the Appraised Value of the Mortgaged Property as set forth in an appraisal
which was delivered at the time of the origination of the Mortgage Loan, or,
in the event the Mortgage Loan was made in connection with the acquisition of
the Mortgaged Property by the Mortgagor, the lesser of such Appraised Value
and the purchase price of the Mortgaged Property actually paid by the
Mortgagor at the time of the origination of the Mortgage Loan; (vi) the
original Loan-to-Value Ratio; (vii) the current Mortgage Rate; (viii) the
current Margin; (ix) the amount of the current Monthly Payment; (x) the next
Adjustment Date; (xi) the original Principal Balance of the Mortgage Loan;
(xii) the Servicing Fee Rate, both before and after the first Adjustment Date;
(xiii) whether or not the Mortgage Loan is a Flex Source(TM) Loan; (xiv) the
amount of Additional Collateral and the Original Additional Collateral
Requirement, if any; and (xv) the Principal Balance of the Mortgage Loan as of
the close of business on the Cut-off Date. The Mortgage Loan Schedule shall
include each Schedule of Subsequent Mortgage Loans delivered on a Subsequent
Transfer Date.
MORTGAGE LOAN SELLER: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation, a
Delaware corporation, and its successors and assigns.
MORTGAGE NOTE: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
MORTGAGE POOL: The pool of Mortgage Loans held in the Trust Fund.
MORTGAGE RATE: With respect to each Mortgage Loan, the per annum rate
of interest for the applicable period borne by the Mortgage Loan, as
determined pursuant to the Mortgage Note.
MORTGAGED PROPERTY: The property subject to a Mortgage.
MORTGAGOR: The obligor on a Mortgage Note.
MSDWCC: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation.
19
NET INTEREST SHORTFALL: With respect to any Distribution Date, the sum
of (i) the Net Prepayment Interest Shortfall, if any, for such Distribution
Date and (ii) the Relief Act Reduction, if any, for such Distribution Date.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses.
NET MORTGAGE RATE: As to any day and Mortgage Loan, its Mortgage Rate
less the Servicing Fee Rate.
NET PREPAYMENT INTEREST SHORTFALL: As to any Distribution Date, the
aggregate of the Prepayment Interest Shortfalls incurred on the Mortgage Loans
in the related Due Period that were not made up by the application of the
Servicing Fees collected by the Servicer in respect of such related Due Period
pursuant to Section 6.03(c).
NON-DISCOUNT MORTGAGE LOAN: Any Mortgage Loan having a Net Mortgage
Rate in excess of 4.25%.
NON-EXCESS REALIZED LOSS: Any Realized Loss other than an Excess Loss.
NONRECOVERABLE ADVANCE: Any advance previously made or proposed to be
made in respect of a Mortgage Loan by the Servicer pursuant to Section 6.03
which, in the good faith judgment of the Servicer, will not be ultimately
recoverable by the Servicer from Late Collections, Liquidation Proceeds or
otherwise. The determination by the Servicer that it has made, or would be
making, a Nonrecoverable Advance shall be evidenced by a certificate of a
Servicing Officer of the Servicer delivered to the Trustee, the Mortgage Loan
Seller and the Depositor and detailing the reasons for such determination.
NON-U.S. PERSON: A Person other than a citizen or resident of the
United States, a corporation, partnership or other entity treated as a
corporation or partnership (or any other entity treated as a corporation or
partnership for federal income tax purposes) for federal income tax purposes,
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia or an estate that is subject to U.S.
federal income tax (regardless of the source of its income) or a trust if (a)
a court within the United States is able to exercise primary supervision over
the administration of the trust and (b) one or more United States trustees
have authority to control all substantial decisions of trust.
NOTIONAL AMOUNT: With respect to the Class A-X Certificates and each
Distribution Date to and including the Distribution Date in December 2007, the
Notional Amount of the Class A-X Certificates will be equal to the product of
(a) each Non-Discount Mortgage Loan multiplied by (b) a fraction, the
numerator of which is equal to (1) the weighted average of the Net Mortgage
Rates of the Non-Discount Mortgage Loans minus (2) 4.25%, and the denominator
of which is equal to 4.25%. The Class A-X Notional Amount as of the Closing
Date is $5,340,377. Commencing with the January 2008 Distribution Date, the
Notional Amount of the Class A-X Certificates will be zero. For federal income
tax purposes, the Notional Amount of the Class A-X Certificates for any
Distribution Date to and including the December 2007 Distribution Date is an
amount equal to the aggregate Stated Principal Balance
20
of the Mortgage Loans as of the related Due Date, plus the amount on
deposit in the Pre-Funding Account.
OFFICERS' CERTIFICATE: A certificate signed by any one of the Chairmen
of the Board, Vice Chairman of the Board, the President, a Senior Vice
President, a Vice President, an Assistant Vice President, the Treasurer, an
Assistant Treasurer, the Secretary, an Assistant Secretary or any other duly
authorized officer of the Depositor, the Servicer or the Mortgage Loan Seller,
as the case may be, and delivered to the Trustee.
OPINION OF COUNSEL: A written opinion of counsel, who may be counsel
for the Depositor, the Servicer or the Mortgage Loan Seller and who is
reasonably acceptable to the Trustee; provided, however that the Trustee shall
receive an opinion of Independent counsel with respect to any opinion
submitted regarding the REMIC elections of the Trust Fund or compliance with
any of the REMIC Provisions.
ORIGINAL ADDITIONAL COLLATERAL REQUIREMENT: With respect to any
Additional Collateral Mortgage Loan, an amount equal to the Additional
Collateral required by MSDWCC at the time of the origination of such
Additional Collateral Mortgage Loan in order to achieve an Effective
Loan-to-Value Ratio for such Additional Collateral Mortgage Loan, generally
equal to seventy percent (70%).
ORIGINAL POOL PRINCIPAL BALANCE: The Stated Principal Balance of the
Mortgage Loans as of February 1, 2003 plus the Pre-Funded Amount.
ORIGINAL SUBORDINATE PRINCIPAL BALANCE: The aggregate Certificate
Principal Balances of the Subordinate Certificates as of the date of issuance
thereof.
ORIGINATE or ORIGINATION: When used with respect to a Mortgage Loan
(whether or not used as a capitalized term), the closing and funding of such
Mortgage Loan.
OUTSTANDING MORTGAGE LOAN: As to any Due Date, a Mortgage Loan which
was not the subject of a Principal Prepayment in full prior to such Due Date,
which did not become a Liquidated Mortgage Loan prior to such Due Date and
which was not repurchased or substituted under Sections 2.01, 2.02, 3.01 or
3.02 or the Mortgage Loan Purchase Agreement prior to such Due Date.
PASS-THROUGH RATE: With respect to each Class of Certificates, the
Pass-Through Rate related thereto, and, with respect to the corresponding
Subsidiary REMIC Regular Interests, the Interest Rate therefor specified in
Section 2.05.
PASS-THROUGH SHORTFALL CARRY-FORWARD AMOUNT: As to any Distribution
Date from the July 2007 Distribution Date to and including the Distribution
Date in December 2007 on which the Pass-Through Rate of any Class of Class A
Certificates is calculated based solely on the Weighted Average Net Mortgage
Rate for the Mortgage Loans, the excess of:
21
(1) the excess, if any, of the related Accrued Certificate Interest
calculated without regard to the Weighted Average Net Mortgage Rate, over the
related Accrued Certificate Interest for that Distribution Date; and
(2) any Pass-Through Shortfall remaining unpaid from prior
Distribution Dates and not previously reimbursed from amounts withdrawn from
the Reserve Fund.
PERCENTAGE INTEREST: As to any Class of Certificates other than the
Class A-R Certificates, the percentage interest evidenced thereby in
distributions required to be made hereunder, such percentage interest being
equal to the percentage obtained by dividing the denomination of such
Certificate by the aggregate of the denominations of all the Certificates of
such Class; and as to the Class A-R Certificates, the Percentage Interest
specified on the face thereof.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, entity
or government or any agency or political subdivision thereof.
PRE-FUNDED AMOUNT: With respect to any date, the amount on deposit in
the Pre-Funding Account, exclusive of any Pre-Funding Earnings or Capitalized
Interest therein.
PRE-FUNDING ACCOUNT: The trust account created and maintained by the
Trustee pursuant to Section 5.16. The Pre-Funding Account shall be an Eligible
Account.
PRE-FUNDING DISTRIBUTION DATE: Each Distribution Date occurring during
the Pre-Funding Period, and the Distribution Date occurring in the month (i)
following the month in which the Pre-Funding Period ends, if such period ends
on or after the Distribution Date in such month or (ii) in which the
Pre-Funding Period ends, if such period ends prior to the Distribution Date in
such month.
PRE-FUNDING EARNINGS: As to any Pre-Funding Distribution Date, the
amount of actual net investment earnings realized or accrued, if applicable,
on amounts on deposit in the Pre-Funding Account during the period beginning
on the Distribution Date in the month preceding such Pre-Funding Distribution
Date (or in the case of the first Pre-Funding Distribution Date, beginning on
the Closing Date) and ending on the Business Day before such Pre-Funding
Distribution Date.
PRE-FUNDING PERIOD: The period commencing on the Closing Date and
ending on the earliest to occur of (i) the date on which the aggregate amount
on deposit in the Pre-Funding Account (exclusive of any investment earnings)
is less than $100,000 and (ii) May 28, 2003.
PREPAYMENT INTEREST SHORTFALL: As to any Distribution Date, for each
Mortgage Loan that was the subject of a partial Principal Prepayment or a
Principal Prepayment in full during the related Due Period (other than a
Principal Prepayment in full resulting from the purchase of a Mortgage Loan
pursuant to Sections 2.01, 2.02, 3.01 or 10.01 hereof), the amount by which
interest paid by the Mortgagor in connection with such Principal Prepayment of
such Mortgage Loan is less than 30 days' interest at the related Mortgage Rate
on the amount paid.
22
PREPAYMENT PERIOD: With respect to any voluntary prepayment of a
Mortgage Loan and any Distribution Date, the calendar month preceding the
month in which such Distribution Date occurs.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan (other than Liquidation Proceeds) made by a Mortgagor which is
received in advance of its scheduled Due Date, and which is not accompanied by
an amount of interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment.
PUBLIC SUBORDINATE CERTIFICATES: The Class B-1, Class B-2 and Class
B-3 Certificates.
PURCHASE PRICE: With respect to any Mortgage Loan required to be
purchased on any date pursuant to Sections 2.01, 2.02, 3.01 or 3.02 or the
Mortgage Loan Purchase Agreement, an amount equal to the sum of (a) 100% of
the Stated Principal Balance thereof plus any unreimbursed Monthly Advances or
Servicing Advances with respect thereto and (b) unpaid accrued interest at the
Mortgage Rate thereon from the Due Date to which interest was last paid by the
Mortgagor through the end of the related Due Period.
RATING AGENCY: Standard & Poor's and Moody's. References herein to the
highest long-term debt rating category of a Rating Agency shall mean "AAA" in
the case of Standard & Poor's and "Aaa" in the case of Moody's, and references
to the second highest long-term rating category of a Rating Agency shall mean
"AA" in the case of Standard & Poor's and "Aa1", "Aa2" or "Aa3" in the case of
Moody's.
REALIZED LOSS: As to any Liquidated Mortgage Loan, the unpaid
principal balance of that Mortgage Loan plus accrued and unpaid interest on
that principal balance at the Net Mortgage Rate through the last day of the
month of liquidation, less the net proceeds from the liquidation of, and any
insurance proceeds from, the Mortgage Loan and the related Mortgaged Property;
and as to any Mortgage Loan, a Deficient Valuation.
RECORD DATE: As to each Distribution Date, the last day of the
Calendar Month immediately preceding such Distribution Date.
RELIEF ACT: means the Soldier's and Sailors' Civil Relief Act of 1940,
as amended, or any comparable state statute (including the comparable
provisions under the California Military and Veterans Code), each as amended.
RELIEF ACT REDUCTION: With respect to any Distribution Date, the
aggregate amount of reductions, if any, in the amount of interest due on the
Mortgage Loans on the related Due Date on account of the Relief Act.
REMIC: A "real estate mortgage investment conduit," as such term is
defined in the Code.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of
23
Chapter 1 of the Code, and related provisions, and regulations promulgated
thereunder, as the foregoing may be in effect from time to time.
REO PROCEEDS: Proceeds, net of expenses, received in respect of any
REO Property (including, without limitation, proceeds from the rental of the
related Mortgaged Property) which proceeds are required to be deposited into
the custodial account only upon the related disposition.
REO PROPERTY: A Mortgaged Property acquired by the Servicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
REPURCHASE PROCEEDS: All proceeds of any Mortgage Loan or property
acquired in respect thereof repurchased by the Mortgage Loan Seller or MSDWCC
pursuant to Sections 2.01, 2.02, 3.01, 3.02 or 10.01, as applicable or the
Mortgage Loan Purchase Agreement.
REQUEST FOR RELEASE: A Request for Release substantially in the form
of Exhibit S attached hereto signed by a Servicing Officer (or in a mutually
agreeable electronic format that, in lieu of a signature on its face,
originates from a Servicing Officer).
RESERVE FUND: The account created and initially maintained by the
Trustee pursuant to Section 6.04. Amounts on deposit in the Reserve Fund shall
be held in trust for the Class A Certificateholders for the uses and purposes
set forth in this Agreement.
RESERVE FUND DEPOSIT: On the Closing Date, $10,000. As to any
Distribution Date from and including the Distribution Date in June 2007 to and
including the Distribution Date in December 2007, the portion of Available
Funds payable into the Reserve Fund pursuant to Section 6.01(d)(ii). As to any
Distribution Date after the Distribution Date in December 2007, the amount of
the Reserve Fund Deposit shall be zero.
RESPONSIBLE OFFICER: When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman
or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any Vice President, any Assistant Vice President, the Secretary, any
Assistant Secretary, the Treasurer, any Assistant Treasurer, the Controller
and any Assistant Controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and, with respect to a particular matter related to this Agreement,
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
SCHEDULE OF SUBSEQUENT MORTGAGE LOANS: The schedule attached to each
Subsequent Transfer Agreement listing the Subsequent Mortgage Loans being
conveyed to the Trustee on behalf of the Trust Fund pursuant thereto. Each
such schedule shall include the same categories of information set forth in
the definition of the Mortgage Loan Schedule substituting, where appropriate,
information as of the applicable Subsequent Cut-off Date rather than the
Cut-off Date.
24
SCHEDULED PAYMENTS: For any Distribution Date, the amount referred to
in clauses (1) through (4) of the definition of Senior Optimal Principal
Amount, without giving effect to the application of the Senior Percentage
thereon.
SCHEDULED PRINCIPAL BALANCE: As to any Mortgage Loan and any
Distribution Date, the unpaid principal balance of such Mortgage Loan as of
that Due Date in the month preceding the month in which that Distribution Date
occurs, as specified in the amortization schedule at the time relating to that
Mortgage Loan (before any adjustment to such amortization schedule by reason
of any moratorium or similar waiver or grace period) after giving effect to
any previous partial principal prepayments and liquidation proceeds and
insurance proceeds allocable to principal received during the Prepayment
Period for the immediately preceding Distribution Date and to the payment of
principal due on that due date and irrespective of any delinquency in payment
by the related borrower.
SENIOR CERTIFICATES: Any of the Class A, Class A-X and Class A-R
Certificates.
SENIOR FINAL DISTRIBUTION DATE: The Distribution Date on which the
respective Certificate Principal Balances of the Senior Certificates (other
than the Class A-X Certificates) have each been reduced to zero.
SENIOR OPTIMAL PRINCIPAL AMOUNT: For any Distribution Date, the sum of:
(1) the Senior Percentage of all scheduled monthly payments of
principal due on each Mortgage Loan on the related Due Date without giving
effect to any Deficient Valuation or Debt Service Reduction that occurred
prior to the reduction of the Bankruptcy Loss Coverage Amount to zero;
(2) the Senior Percentage of the principal portion of the Purchase
Price of each Mortgage Loan that was repurchased by the Mortgage Loan Seller
or another person as of that Distribution Date;
(3) the Senior Percentage of any Substitution Adjustment Amounts in
respect of a Mortgage Loan received with respect to that Distribution Date;
(4) the Senior Percentage of the amount of net insurance proceeds
or net liquidation proceeds allocable to principal and interest received in
the prior calendar month with respect to a Mortgage Loan that is not a
Liquidated Mortgage Loan;
(5) with respect to each Mortgage Loan that became a Liquidated
Mortgage Loan during the prior calendar month, the lesser of:
(a) the Senior Percentage of the Scheduled Principal Balance of that
Mortgage Loan; and
(b) either (A) the Senior Prepayment Percentage or (B) if an Excess
Loss was sustained with respect to any Liquidated Mortgage Loan during the
preceding calendar month, the Senior Percentage, of the amount of the net
insurance proceeds or net liquidation proceeds
25
allocable to principal received with respect to that Mortgage Loan during the
prior calendar month; and
(6) the Senior Prepayment Percentage of:
(a) principal prepayments in full in respect of a Mortgage Loan
received during the related Prepayment Period; and
(b) partial principal prepayments in respect of a Mortgage Loan
applied during the related Prepayment Period;
provided, however, that if a Deficient Valuation or Debt Service Reduction is
sustained with respect to a Mortgage Loan that is not a Liquidated Mortgage
Loan after the Bankruptcy Loss Coverage Amount has been reduced to zero, the
Senior Optimal Principal Amount will be reduced on the related Distribution
Date by the Senior Percentage of the principal portion of such Deficient
Valuation or Debt Service Reduction.
SENIOR PERCENTAGE: With respect to any Distribution Date, the lesser
of 100% and the percentage obtained by dividing the aggregate Certificate
Principal Balances of all the Senior Certificates (other than the Class A-X
Certificates) immediately preceding that Distribution Date by the principal
balance of the Mortgage Loans immediately preceding that Distribution Date.
The initial Senior Percentage is 96.95%.
SENIOR PREPAYMENT PERCENTAGE: With respect to any Distribution Date,
the percentage (not exceeding 100%) set forth in the following table:
DISTRIBUTION DATE OCCURRING SENIOR PREPAYMENT PERCENTAGE
March 2003 through February 2010 100%
March 2010 through February 2011 Senior Percentage plus 70% of
the Subordinate Percentage
March 2011 through February 2012 Senior Percentage plus 60% of
the Subordinate Percentage
March 2012 through February 2013 Senior Percentage plus 40% of
the Subordinate Percentage
March 2013 through February 2014 Senior Percentage plus 20% of
the Subordinate Percentage
after February 2014 Senior Percentage
There are important exceptions to the calculations of the Senior
Prepayment Percentage described in the above paragraph. On any Distribution
Date, (i) if the Senior Percentage for that Distribution Date exceeds the
initial Senior Percentage as of the Closing Date, then the Senior Prepayment
Percentage for that Distribution Date will equal 100%, (ii) if on or before
the Distribution Date in February 2006, the Subordinate Percentage for that
Distribution Date is greater than or equal to twice that percentage as of the
Closing Date, then the Senior Prepayment
26
Percentage for that Distribution Date will equal the Senior Percentage
plus 50% of the Subordinate Percentage for that Distribution Date, and (iii)
if after the Distribution Date in February 2006, the Subordinate Percentage
for that Distribution Date is greater than or equal to twice that percentage
as of the Closing Date, then the Senior Prepayment Percentage for that
Distribution Date will equal the Senior Percentage.
The reductions in the Senior Prepayment Percentage described above
will not occur, unless, as of the last day of the month preceding the
Distribution Date:
(1) the aggregate Scheduled Principal Balance of Mortgage
Loans delinquent 60 days or more (including for this purpose any
Mortgage Loans in foreclosure and Mortgage Loans with respect to which
the related Mortgaged Property has been acquired by the trust) does
not exceed 50% of the aggregate Certificate Principal Balances of the
Subordinate Certificates as of that date; and
(2) cumulative Realized Losses do not exceed:
(a) 30% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including
March 2010 and February 2011;
(b) 35% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including
March 2011 and February 2012;
(c) 40% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including
March 2012 and August 2013;
(d) 45% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including
March 2013 and February 2014; and
(e) 50% of the Original Subordinate Principal
Balance if such Distribution Date occurs after February 2014.
Additionally, the reductions in the Senior Prepayment Percentage
described in clause (ii) and (iii) in the paragraph immediately following the
table above will not occur, unless, as of the last day of the month preceding
the Distribution Date:
(1) the aggregate Scheduled Principal Balance of Mortgage
Loans delinquent 60 days or more (including for this purpose any
Mortgage Loans in foreclosure and Mortgage Loans with respect to which
the related Mortgaged Property has been acquired by the trust) does
not exceed 50% of the aggregate Certificate Principal Balances of the
Subordinate Certificates as of that date; and
(2) cumulative Realized Losses do not exceed:
(a) 20% of the Original Subordinate Principal
Balance if such Distribution Date occurs on or before the
Distribution Date in February 2006; and
27
(b) 30% of the Original Subordinate Principal
Balance if such Distribution Date occurs after the Distribution
Date in February 2006.
SERVICER: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation, a Delaware
corporation, or its successor in interest or any successor under this
Agreement as herein provided.
SERVICING ADVANCES: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage, (iv) ground rents, taxes,
assessments, water rates and other charges which are or may become a lien upon
the Mortgaged Property and (v) compliance with the Servicer's obligations to
maintain standard hazard insurance coverage on the Mortgaged Property,
including deductible amounts on such coverage.
SERVICING FEE: With respect to each Mortgage Loan, the amount of the
monthly fee paid for the servicing of such Mortgage Loan, equal to 1/12 of the
Servicing Fee Rate multiplied by the Stated Principal Balance of such Mortgage
Loan. The right to receive the Servicing Fee is limited to, and the Servicing
Fee is payable solely from, the interest portion of such Monthly Payments
collected by the Servicer.
SERVICING FEE RATE: With respect to Mortgage Loan and as of any date
of determination, the per annum percentage specified on the Mortgage Loan
Schedule.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished
to the Trustee by the Servicer, as such list may from time to time be amended.
SERVICING TRANSFER COSTS: All reasonable costs and expenses incurred
by the Trustee or other successor Servicer in connection with the transfer of
servicing from a predecessor Servicer, including, without limitation, any
reasonable costs or expenses associated with the complete transfer of all
servicing data and the completion, correction or manipulation of such
servicing data as may be required by the Trustee or other successor Servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Trustee or other successor Servicer to assume the servicing of the
Mortgage Loans properly and effectively.
SPECIAL HAZARD LOSS: A Realized Loss, as reported by the Servicer,
attributable to damage or a direct physical loss suffered by a Mortgaged
Property-including any Realized Loss due to the presence or suspected presence
of hazardous wastes or substances on a Mortgaged Property-other than any such
damage or loss covered by a hazard policy or a flood insurance policy required
to be maintained in respect of the Mortgaged Property pursuant to Section 5.10
hereof or any loss due to normal wear and tear or certain other causes.
SPECIAL HAZARD LOSS COVERAGE AMOUNT: $4,000,000 less, on each
Distribution Date, the greater of (1) the aggregate amount of Special Hazard
Losses incurred
28
since the Closing Date and (2) the Adjustment Amount. As of any
Distribution Date on or after the Cross-Over Date, the Special Hazard Loss
Coverage Amount will be zero.
STANDARD & POOR'S: Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or its successor in interest.
STATED PRINCIPAL BALANCE: With respect to any Mortgage Loan or related
REO Property, at any given time, (i) the principal balance of the Mortgage
Loan as of the Cut-off Date or the Subsequent Cut-off Date, as applicable,
minus (ii) the sum of (a) the principal portion of the Monthly Payments due
with respect to such Mortgage Loan or REO Property during each Due Period
ending prior to the most recent Distribution Date which were received or with
respect to which an Advance was made, and (b) all Principal Prepayments with
respect to such Mortgage Loan or REO Property, and all Insurance Proceeds,
Liquidation Proceeds and REO Proceeds, to the extent applied by the Servicer
as recoveries of principal in accordance with Section 5.12 with respect to
such Mortgage Loan or REO Property, in each case which were distributed
pursuant to Section 6.01 on any previous Distribution Date.
SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As of any Distribution Date,
the amount by which:
(i) the sum of the Certificate Principal Balances of the
Certificates, after giving effect to the distribution of principal and the
allocation of Realized Losses in reduction of the Certificate Principal
Balances of such Certificates on that Distribution Date, exceeds
(ii) the Pool Balance less any Deficient Valuations occurring before
the Bankruptcy Loss Coverage Amount has been reduced to zero.
SUBORDINATE CERTIFICATES: The Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates.
SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: For any Distribution Date, the
sum of:
(1) the Subordinate Percentage of the sum of all scheduled monthly
payments of principal due on each Mortgage Loan on the related due date
without giving effect to any Deficient Valuation or Debt Service Reduction
that occurred prior to the reduction of the Bankruptcy Loss Coverage Amount to
zero;
(2) the Subordinate Percentage of the sum of the principal portion
of the Purchase Price of each Mortgage Loan that was repurchased by the
Mortgage Loan Seller or another person as of that Distribution Date;
(3) the Subordinate Percentage of any Substitution Adjustment
Amounts in respect of a mortgage loan received with respect to that
Distribution Date;
(4) the Subordinate Percentage of the amount of net insurance
proceeds or net liquidation proceeds allocable to principal and interest
received in the prior calendar month with respect to a mortgage loan that is
not a Liquidated Mortgage Loan;
29
(5) with respect to each Mortgage Loan that became a Liquidated
Mortgage Loan during the prior calendar month, the portion of the amount of
the net insurance proceeds or net liquidation proceeds allocable to principal
received with respect to that Mortgage Loan during the prior calendar month
that was not included in clause (5) of the Senior Optimal Principal Amount for
that Distribution Date; and
(6) the Subordinate Prepayment Percentage of:
(a) principal prepayments in full in respect of a mortgage loan
received during the related Prepayment Period; and
(b) partial principal prepayments in respect of a mortgage loan
applied during the related Prepayment Period;
provided, however, that if a Deficient Valuation or Debt Service
Reduction is sustained with respect to a mortgage loan that is not a
Liquidated Mortgage Loan after the Bankruptcy Loss Coverage Amount has been
reduced to zero, the Subordinate Optimal Principal Amount will be reduced on
the related Distribution Date by the Subordinate Percentage of the principal
portion of such Deficient Valuation or Debt Service Reduction.
SUBORDINATE PERCENTAGE: With respect to any Distribution Date, 100%
minus the Senior Percentage . The initial Subordinate Percentage is expected
to be approximately 3.05%.
SUBORDINATE PREPAYMENT PERCENTAGE: With respect to any Distribution
Date, 100% minus the Senior Prepayment Percentage, except that on any
Distribution Date after the Senior Final Distribution Date, the Subordinate
Prepayment Percentage will equal 100%.
SUBSEQUENT CUT-OFF DATE: As to those Subsequent Mortgage Loans which
are transferred and assigned to the Trustee on behalf of the Trust Fund
pursuant to a Subsequent Transfer Agreement, the first day of the month in
which the related Subsequent Transfer Date occurs.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans sold to the Trust Fund
pursuant to Section 2.03 and the related Subsequent Transfer Agreement, which
shall be listed on the Schedule of Subsequent Mortgage Loans attached to such
Subsequent Transfer Agreement.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee and the
Depositor substantially in the form of Exhibit K herein, pursuant to which
Subsequent Mortgage Loans are sold and assigned to the Trustee.
SUBSEQUENT TRANSFER DATE: The date specified in each Subsequent
Transfer Agreement on which the related Subsequent Mortgage Loans are sold to
the Trust Fund.
SUBSERVICER: Any Person with whom the Servicer enters into a
Sub-Servicing Agreement.
30
SUBSERVICING AGREEMENT: Any written contract between the Servicer and
any Sub-Servicer, relating to servicing or administration of certain Mortgage
Loans, in such form as has been approved by the Trustee.
SUBSIDIARY REMIC: As described in Section 2.05 hereof.
SUBSIDIARY REMIC DISTRIBUTION AMOUNT: For any Distribution Date, the
aggregate amount of interest and principal payable on the Certificates
pursuant to Section 2.05.
SUBSIDIARY REMIC REGULAR INTERESTS: The interests in Subsidiary REMIC
designated as such in Section 2.05.
TRANSFER: A direct or indirect transfer or other assignment of record
or beneficial interest in a Class A-R Certificate.
TRUST FUND: The trust created by this Agreement, to the extent
described herein, and entitled "▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1
Trust," the corpus of which consists of (i) the Mortgage Loans (including the
Mortgage Files), (ii) such assets as shall from time to time be identified as
deposited in the Collection Account, Distribution Account, the Pre-Funding
Account (including the funds therein and Pre-Funding Earnings) and the Reserve
Fund, (iii) property which secured a Mortgage Loan and which has been acquired
by foreclosure or deed in lieu of foreclosure, (iv) each standard hazard
insurance policy (or replacement therefor), and the proceeds thereof, with
respect to the Mortgage Loans (v) all right, title and interest of the
Depositor in and to the Mortgage Loan Purchase Agreement and each Flex
Source(TM) Pledge Agreement and (vi) all proceeds of the conversion, voluntary
or involuntary, of any of the foregoing into cash or other liquid assets,
including, without limitation, all Insurance Proceeds, Liquidation Proceeds
and condemnation awards. The Flex Source(TM) Pledge Agreements, the Pre-Funding
Account (including the funds therein and Pre-Funding Earnings) and the Reserve
Fund (including the funds therein) shall not be part of any of the REMICs
created by this Agreement.
TRUSTEE: ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as trustee,
or its successor in interest or any successor or co-trustee under this
Agreement appointed as herein provided.
UNPAID PASS-THROUGH CARRYFORWARD AMOUNT: As to any Distribution Date
and Class of Class A Certificates, the amount, if any, equal to (a) the
aggregate Pass-Through Shortfall Carryforward Amount distributable on such
Class of Class A Certificates for such Distribution Date, minus (b) the
aggregate Pass-Through Shortfall Carryforward Amount distributed to the
related Certificateholders on such Distribution Date.
UNSCHEDULED PAYMENTS: For any Distribution Date, the amounts referred
to in clauses (5) and (6) of the definition of "Senior Optimal Principal
Amount," without giving effect to the application of the Senior Percentage or
the Senior Prepayment Percentage thereon.
WEIGHTED AVERAGE NET MORTGAGE RATE: As to any Distribution Date and
Mortgage Loan, the product of 1/12 and the weighted average of the Net
Mortgage Rates of all Mortgage Loans applicable as of the Due Date of the
month preceding the month of such
31
Distribution Date, weighted on the basis of their outstanding Stated Principal
Balances (after giving effect to the Monthly Payments due on or before such
Due Date and the principal portion of unscheduled collections received on or
before such Due Date) at such time.
Section 1.02. Interest Calculations. Interest on each Class of
Certificates and the corresponding Subsidiary REMIC Regular Interests shall be
calculated on the basis of a 360-day year consisting of twelve 30 day months.
[End of Article I]
32
Article II
CONVEYANCE OF MORTGAGE LOANS; TRUST FUND
Section 2.01. Conveyance of Mortgage Loans. The Depositor,
concurrently with the execution and delivery hereof, hereby sells, transfers,
assigns, sets over and otherwise conveys in trust to the Trustee (for
inclusion in the Trust Fund), without recourse (except as provided herein),
all of the Depositor's right, title and interest in and to the Initial
Mortgage Loans, including, without limitations, the related Mortgage File and
all rights to payment thereunder, including interest and principal, received
or receivable by the Depositor with respect to the Initial Mortgage Loans
after the Cut-off Date and all interest and principal payments on the Initial
Mortgage Loans received prior to the Cut-off Date in respect of installments
of interest and principal due thereafter, but not including payments of
interest and principal due and payable on the Initial Mortgage Loans on or
before the Cut-off Date, and all other proceeds received in respect of such
Initial Mortgage Loans, and any security interest thereunder (whether in real
or personal property and whether tangible or intangible) in favor of the
Depositor, and all reserve accounts, lockbox accounts, escrow accounts and
other accounts with respect to the Initial Mortgage Loans and the Depositor's
rights under the Mortgage Loan Purchase Agreement.
In addition to the conveyance of the Initial Mortgage Loans, the
Depositor does hereby sell, transfer, convey, assign and set over to the
Trustee all of its right, title and interest in that portion of the Trust Fund
described in items (ii) through (viii) of the definition thereof.
In connection with the foregoing conveyance of the Initial Mortgage
Loans, on or prior to the Closing Date, the Depositor (or the Mortgage Loan
Seller at the direction of the Depositor) shall deliver to, and deposit with,
the Trustee the Mortgage File with respect to each Mortgage Loan so assigned.
By way of clarification, the remainder of this Section applies to
Subsequent Mortgage Loans and their related Subsequent Transfer Date as well
as the Initial Mortgage Loans and the Closing Date.
In the event the Mortgage Loan Seller, as directed by the Depositor,
cannot deliver any original document so required at the time of the Closing
Date (or the Subsequent Transfer Date in the case of the Subsequent Mortgage
Loans) by reason of the fact that such document has not been returned by the
appropriate public recording office, the Mortgage Loan Seller shall deliver
such original document to the Trustee as promptly as possible upon receipt
thereof from the appropriate public recording office. In the case where a
public recording office retains the original recorded Mortgage or in the case
where a Mortgage is lost after recordation in a public recording office, the
Mortgage Loan Seller, as directed by the Depositor, shall deliver to the
Trustee a copy of such Mortgage certified by such public recording office to
be a true and complete copy of the original recorded Mortgage. Upon receipt
from the Servicer from time to time of any additional original documents
evidencing an assumption or modification of a Mortgage Loan, the Mortgage Loan
Seller shall forward or cause to be forwarded to the Trustee such original
documents.
33
The Mortgage Loan Seller shall cause the Assignments of Mortgage with
respect to each Mortgage Loan to be prepared and completed in blank and be
delivered to the Trustee no later than the 45th day following the Closing
Date. If (a) the short-term senior unsecured debt rating of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ by
Standard & Poor's is reduced below "A-1" or (b) the long-term senior unsecured
debt obligations of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co. are downgraded below a
rating of "A3" by ▇▇▇▇▇'▇ or "A-" by Standard & Poor's, the Mortgage Loan
Seller shall notify the Trustee and cause the Assignments of Mortgage as so
completed to be delivered for recording in the appropriate public office for
real property records within 60 days of the occurrence of such event, except
that the Mortgage Loan Seller need not cause to be recorded any Assignment of
Mortgage which relates to a Mortgage Loan in any jurisdiction under the laws
of which, the recordation of such assignment is not necessary to protect the
Trustee's and the Certificateholders' interest in the related Mortgage Loan.
The Trustee shall have no duty to monitor the ratings specified in (a) and (b)
above.
In the case of Mortgage Loans that have been prepaid in full as of the
Closing Date, the Depositor, in lieu of delivering the above documents to the
Trustee, will deposit in the Collection Account the portion of such payment
that is required to be deposited in the Collection Account pursuant to Section
5.05.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to
this Agreement shall constitute a purchase and sale and not a loan. If the
conveyance of the Mortgage Loans from the Mortgage Loan Seller to the
Depositor and from the Depositor to the Trustee is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee, in addition to the Trust Fund, all of the Depositor's right, title
and interest in, to and under the obligation deemed to be secured by said
pledge; and it is the intention of this Agreement that the Mortgage Loan
Seller and the Depositor shall also be deemed to have granted to the Trustee a
first priority security interest in all of the Mortgage Loan Seller's and the
Depositor's right, title, and interest in, to, and under the obligation deemed
to be secured by said pledge and that the Trustee shall be deemed to be an
independent custodian for purposes of perfection of such security interest. If
the conveyance of the Mortgage Loans from the Depositor to the Trustee is
characterized as a pledge, it is the intention of this Agreement that this
Agreement shall constitute a security agreement under applicable law, and that
the Mortgage Loan Seller and the Depositor shall be deemed to have granted to
the Trustee a first priority security interest in all of Mortgage Loan
Seller's and the Depositor's right, title and interest in, to and under the
Mortgage Loans, all payments of principal of or interest on such Mortgage
Loans, all other rights relating to and payments made in respect of the Trust
Fund, and all proceeds of any thereof. If the trust created by this Agreement
terminates prior to the satisfaction of the claims of any Person in any
Certificates, the security interest created hereby shall continue in full
force and effect and the Trustee shall be deemed to be the collateral agent
for the benefit of such Person.
Section 2.02. Acceptance by Trustee. The Trustee acknowledges the
assignment to it of the documents referred to in clause A(i) of Exhibit B and
shall acknowledge in an Initial Certification substantially in the form
attached hereto as Exhibit H (with any applicable exceptions noted thereon)
that it confirms that such documents are included in the related Mortgage File
and that such documents appear regular on their face and relate to such
Mortgage Loan; provided that the Trustee shall be under no duty or obligation
to determine that said
34
documents, instruments, certificates or other papers are genuine,
enforceable or appropriate for the represented purpose or that they have
actually been recorded in the real estate records or that they are other than
what they purport to be on their face. The Trustee will hold such documents
and any other documents constituting a part of the Mortgage Files delivered to
it (and such other assets as are included in the Trust Fund) in trust for the
use and benefit of all present and future Certificateholders. The Trustee will
maintain possession of the Mortgage Notes in the State of Minnesota, unless
otherwise permitted by the Trustee.
During the period any Mortgage Loan is subject to this Agreement, if
the Trustee discovers any defect with respect to the Mortgage File, the
Trustee shall give written specification of such defect to the Mortgage Loan
Seller and the Depositor. On the 90th day after the Closing Date, the Trustee
shall deliver to the Depositor and the Mortgage Loan Seller a Final
Certification substantially the form attached hereto as Exhibit I, with any
applicable exceptions noted thereon.
The determination by the Trustee that any document in a Mortgage File
is defective shall be absolute and final, and the Mortgage Loan Seller shall
fully comply with such determination and shall correct or cure such defect (or
substitute for or purchase the related Mortgage Loan) as provided below unless
the Mortgage Loan Seller provides, at its expense, to the Trustee an Opinion
of Counsel concluding that such defect will not adversely affect the interests
of the Trustee or any Certificateholder.
With respect to any exceptions listed in the initial or final trust
receipts (given in connection with the Initial or Final Certification) or any
notice of defect delivered by the Trustee during the term of this Agreement,
the Mortgage Loan Seller shall promptly correct or cure such defect within 90
days from the date it was so notified of such defect and, if the Mortgage Loan
Seller does not correct or cure such defect within such period, the Mortgage
Loan Seller shall either (a) substitute for the related Mortgage Loan one or
more new Mortgage Loans, which substitution shall be accomplished in the
manner and subject to the conditions set forth in Section 3.03(i) through (x),
or (b) purchase such Mortgage Loan from the Trustee within 90 days from the
date the Mortgage Loan Seller was notified of such defect in writing at the
Purchase Price of such Mortgage Loan. The Purchase Price for any such Mortgage
Loan purchased pursuant to clause (b) shall be deposited by the Mortgage Loan
Seller in the Distribution Account prior to the second Business Day preceding
the Distribution Date following the Due Period in which the Mortgage Loan
Seller became obligated hereunder to purchase or replace such Mortgage Loan,
but in any event within the 90 days prescribed above in the paragraph and,
upon receipt by the Trustee of such deposit and two copies of a Request for
Release, the Trustee shall release the related Mortgage File to the Mortgage
Loan Seller and execute and deliver at the Mortgage Loan Seller's request such
instruments of transfer or assignment prepared by the Mortgage Loan Seller or
the Trustee, in each case without recourse, as shall be necessary to vest in
the Mortgage Loan Seller, or its designee, the Depositor's and the Trustee's
interest in any Mortgage Loan released pursuant hereto.
The Depositor or the Mortgage Loan Seller shall promptly deliver to
the Trustee, upon the execution or receipt thereof, the originals of such
other documents or instruments constituting the Mortgage File as come into the
possession of the Depositor or the Mortgage Loan Seller from time to time.
35
It is understood and agreed that the obligation of the Mortgage Loan
Seller to purchase or substitute for any Mortgage Loan as to which a material
defect in or omission of a constituent document exists shall constitute the
sole remedy respecting such defect or omission available to the Trustee on
behalf of Certificateholders.
Section 2.03. Sale and Conveyance of the Subsequent Mortgage Loans.
(a) Subject to the conditions set forth in Sections 2.03 (b), (c), (d)
and (e) below, in consideration of the delivery on the related Subsequent
Transfer Dates to or upon the order of the Depositor of all or a portion of
the balance of funds in the Pre-Funding Account, the Depositor shall on any
Subsequent Transfer Date sell, transfer, assign, set over and convey in trust
to the Trustee (for inclusion into the Trust Fund), without recourse (but
subject to the obligations set forth herein) all right, title and interest of
the Depositor in and to each Subsequent Mortgage Loan listed on the Schedule
of Subsequent Mortgage Loans delivered to the Trustee on such Subsequent
Transfer Date, including its principal balance as of the Subsequent Cut-off
Date and all collections of such principal and all payments of interest in
respect of such Subsequent Mortgage Loans to the extent such collections
represent interest accrued from and including the related Subsequent Cut-Off
Date due after the related Subsequent Cut-Off Date and each related Flex
Source(TM) Pledge Agreement. MSDWCC is authorized to correct any error in any
Flex Source(TM) Pledge Agreement and to terminate any such agreement and
release the related collateral in accordance with the terms thereof. If it is
discovered that any of the conditions set forth in Section 2.03 (b), (c), (d)
and (e) has not been satisfied with respect to a Subsequent Mortgage Loan,
then such failure to satisfy such condition shall be deemed to be a breach of
a representation and warranty in Section 3.01(b) and, if such breach
materially and adversely affects the value of such Subsequent Mortgage Loan or
the interests of the Certificateholders, the Mortgage Loan Seller shall be
obligated to repurchase or substitute for such Subsequent Mortgage Loan in
accordance with and subject to the limitations in Sections 3.01(b) and 3.02,
as applicable. If such deemed breach relates to Mortgage Loans or Subsequent
Mortgage Loans in the aggregate, then the Mortgage Loan Seller shall select
such of the Subsequent Mortgage Loans for purchase or substitution as will
result in the satisfaction of such conditions.
The amount released from the Pre-Funding Account shall be equal to one
hundred percent (100%) of the aggregate principal balances as of the
applicable Subsequent Cut-off Date of the Subsequent Mortgage Loans so
transferred.
(b) Each of the following conditions shall be satisfied as confirmed
by an Officer's Certificate delivered by the Mortgage Loan Seller to the
Trustee on or prior to the related Subsequent Transfer Date:
(i) the Servicer shall have provided the Trustee with a timely
Addition Notice and shall have provided any information reasonably
requested by either of the foregoing with respect to the Subsequent
Mortgage Loans;
(ii) the Depositor shall have executed and delivered a Subsequent
Transfer Agreement with all required schedules and exhibits;
36
(iii) the Servicer shall have deposited or cause to be deposited in
the Collection Account all collections of principal in respect of the
Subsequent Mortgage Loans received after the related Subsequent
Cut-off Date and all collections of principal scheduled and interest
accruing after the related Subsequent Cut-off Date;
(iv) as of each Subsequent Transfer Date, neither the Depositor nor
the Servicer is insolvent and neither will become insolvent by such
transfer and neither the Depositor nor the Servicer is aware of any
pending insolvency;
(v) such purchase and sale of Subsequent Mortgage Loans will not
result in a material adverse federal income tax consequence to the
Trust Fund or the Holders of the Certificates;
(vi) the Pre-Funding Period shall not have terminated;
(vii) the execution and delivery of such Subsequent Transfer
Agreement or conveyance of the related Subsequent Mortgage Loans does
not result in a reduction or withdrawal of any ratings assigned to the
Certificates by the Rating Agencies;
(viii) the Subsequent Mortgage Loans conveyed on such Subsequent
Transfer Date were selected in a manner reasonably believed not to be
adverse to the interests of the holders of Certificate; and
(ix) the Depositor shall have delivered to the Rating Agencies and
the Trustee Opinions of Counsel with respect to the transfer of the
Subsequent Mortgage Loans substantially in the form of the Opinions of
Counsel delivered to the Rating Agencies and the Trustee on the
Closing Date.
(c) In connection with the transfer and assignment of the Subsequent
Mortgage Loans, the Mortgage Loan Seller shall take the actions set forth in
Section 2.01 and the Trustee shall take the actions applicable to it specified
in Section 2.02 and the Servicer shall be deemed to have made the
representations and warranties set forth in Section 3.01(b), in each case with
respect to the Subsequent Mortgage Loans delivered on a Subsequent Transfer
Date, except that references in said sections to Mortgage Loans, the Closing
Date and the Cut-off Date shall refer to the applicable Subsequent Mortgage
Loans, Subsequent Transfer Date and Subsequent Cut-off Date, respectively. In
connection with such assignment and transfer, the Mortgage Loan Seller, on
behalf of the Depositor, shall deliver to, and deposit with, the Trustee the
documents or instruments required to be delivered pursuant to Section 2.01
except that references therein to the Closing Date shall refer to the
Subsequent Transfer Date.
(d) As of its Subsequent Cut-off Date, such Subsequent Mortgage Loans
shall satisfy (as confirmed in an Officer's Certificate delivered by the
Mortgage Loan Seller to the Trustee) the following criteria:
(i) such Subsequent Mortgage Loan shall not be 30 or more days
contractually delinquent as of a Subsequent Cut-Off Date;
37
(ii) the original term to maturity of such Subsequent Mortgage Loan
shall not exceed 360 months;
(iii) such Subsequent Mortgage Loan shall have a Net Mortgage Rate
of at least 4.25%;
(iv) the outstanding principal balance as of the Subsequent Cut-off
Date of any such Subsequent Mortgage Loan shall not exceed $2,000,000;
(v) no such Subsequent Mortgage Loan shall have a Loan-to-Value
Ratio as of the Subsequent Cut-off Date of more than 100.00%; and
(vi) each Subsequent Mortgage Loan will be treated as a "qualified
mortgage" within the meaning of section 860G(a)(3) of the Code.
(e) Following the purchase of any Subsequent Mortgage Loan by the
Trust Fund, the Mortgage Loans (including the Subsequent Mortgage Loans) shall
meet the following conditions (as confirmed in an Officer's Certificate
delivered by the Mortgage Loan Seller to the Trustee):
(i) no more than 13.00% of the Mortgage Loans (by Stated Principal
Balance as of the Subsequent Cut-off Date) shall be secured by
condominium properties, 2 to 4 family properties, or townhouse
properties;
(ii) no more than 89.00% of the Mortgage Loans (by Stated Principal
Balance as of the Subsequent Cut-off Date) shall be made to
non-purchase borrowers;
(iii) no more than 5.00% of the Mortgage Loans (by Stated Principal
Balance as of the Subsequent Cut-off Date) shall be secured by
Mortgaged Properties within a single zip code;
(iv) no more than 39.00% of the Mortgage Loans (by Stated Principal
Balance as of the Subsequent Cut-off Date) shall be secured by
Mortgaged Properties in the state of California;
(v) no more than 14.00% of the mortgagors related to the Mortgage
Loans (by Stated Principal Balance as of the Subsequent Cut-off Date)
shall have a credit score less than 650;
(vi) the mortgagors related to the Mortgage Loans shall have a
weighted average credit score (excluding zero) of not less than 715;
(vii) [reserved];
(viii) the Mortgage Loans shall have a weighted average Margin of not
less than 2.00%;
(ix) the Mortgage Loans shall have a weighted average Loan-to-Value
Ratio as of the Subsequent Cut-off Date of not more than 71.00%, and a
weighted average
38
Effective Loan-to-Value Ratio as of the Subsequent Cut-off Date of not
more than 68.00%; and
(x) all of the Mortgage Loans will be treated as "qualified
mortgages" within the meaning of section 860G(a)(3) of the Code.
Section 2.04. Trust Fund; Authentication of Certificates. Subject to
the provisions of Section 2.01, the Trustee acknowledges and accepts the
assignment to it of the Trust Fund created pursuant to this Agreement in trust
for the use and benefit of all present and future Certificateholders. The
Trustee acknowledges the assignment to it of the Mortgage Loans, the Flex
Source(TM) Pledge Agreements and has caused to be authenticated and delivered to
or upon the order of the Depositor, in exchange therefor, Certificates duly
authenticated by the Trustee in authorized denominations evidencing ownership
of the entire Trust Fund.
Section 2.05. REMIC Elections.
The Depositor hereby directs the Trustee to sign two initial tax
returns which shall cause the Trust Fund (exclusive of the Flex Source(TM)
Pledge Agreements, the Pre-Funding Account (including the funds therein and
Pre-Funding Earnings) and the Reserve Fund to be treated for federal income
tax purposes as two separate REMICs.
The Subsidiary REMIC will consist of all of the assets of the Trust
Fund (exclusive of the Flex Source(TM) Pledge Agreements, the Pre-Funding
Account (including the funds therein and PreFunding Earnings), the Subsidiary
REMIC Regular Interests and the Reserve Fund (including the funds therein))
and will be evidenced by the Subsidiary REMIC Regular Interests, which will be
uncertificated and will represent the "regular interests" in Subsidiary REMIC
and the Class A-R Interest as the single "residual interest" in the Subsidiary
REMIC. The Trustee will hold the Subsidiary REMIC Regular Interests. The
Master REMIC will consist of the Subsidiary REMIC Regular Interests and will
be evidenced by the Regular Certificates (which will represent the "regular
interests" in the Master REMIC) as the single "residual interest" in the
Master REMIC. The Class A-R Certificates will represent the beneficial
ownership of the Class A-R Interests.
The following table sets forth characteristics of the Certificates,
each of which, except for the Class A-R Certificates, is hereby designated as
a "regular interest" in the Master REMIC:
___________
Initial
Principal Pass-Through
Certificates Balance Rate
Class A-1 $40,121,667 Variable (1)
Class A-2 $206,338,000 Variable (2)
Class A-3 $35,000,000 Variable (3)
Class A-4 $10,000,000 Variable (4)
Class B-1 $3,307,000 Variable (5)
Class B-2 $2,405,000 Variable (5)
Class B-3 $1,653,000 Variable (5)
Class A-X (6) Variable (7)
39
Class A-R $100 Variable (5)
Class B-4 $601,000 Variable (5)
Class B-5 $301,000 Variable (5)
Class B-6 $902,524 Variable (5)
(1) For each distribution date to and including the
distribution date in June 2007, interest will accrue on the
Class A-1 Certificates at a per annum rate equal to 3.70%. From
the distribution date in July 2007 to and including the
distribution date in December 2007, interest will accrue on the
Class A-1 Certificates at a per annum rate equal to the lesser
of 3.70% and the Weighted Average Net Mortgage Rate. Commencing
with the distribution date in January 2008, interest will
accrue on the Class A-1 Certificates at a per annum rate equal
to the Weighted Average Net Mortgage Rate.
(2) For each distribution date to and including the
distribution date in June 2007, interest will accrue on the
Class A-2 Certificates at a per annum rate equal to 4.30%. From
the distribution date in July 2007 to and including the
distribution date in December 2007, interest will accrue on the
Class A-2 Certificates at a per annum rate equal to the lesser
of 4.30% and the Weighted Average Net Mortgage Rate. Commencing
with the distribution date in January 2008, interest will
accrue on the Class A-2 Certificates at a per annum rate equal
to the Weighted Average Net Mortgage Rate.
(3) For each distribution date to and including the
distribution date in June 2007, interest will accrue on the
Class A-3 Certificates at a per annum rate equal to 4.60%. From
the distribution date in July 2007 to and including the
distribution date in December 2007, interest will accrue on the
Class A-3 Certificates at a per annum rate equal to the lesser
of 4.60% and the Weighted Average Net Mortgage Rate. Commencing
with the distribution date in January 2008, interest will
accrue on the Class A-3 Certificates at a per annum rate equal
to the Weighted Average Net Mortgage Rate.
(4) For each distribution date to and including the
distribution date in June 2007, interest will accrue on the
Class A-4 Certificates at a per annum rate equal to 4.20%. From
the distribution date in July 2007 to and including the
distribution date in December 2007, interest will accrue on the
Class A-4 Certificates at a per annum rate equal to the lesser
of 4.20% and the Weighted Average Net Mortgage Rate. Commencing
with the distribution date in January 2008, interest will
accrue on the Class A-4 Certificates at a per annum rate equal
to the Weighted Average Net Mortgage Rate.
(5) For each distribution date to and including the
distribution date in June 2007, interest will accrue on the
Class A-R Certificates and each class of subordinate
certificates at a per annum rate equal to 4.25%. From the
distribution date in July 2007 to and including the
distribution date in December 2007, interest will accrue on the
Class A-R Certificates and each class of subordinate
certificates at a per annum rate equal to the lesser of 4.25%
and the Weighted Average Net Mortgage
40
Rate. Commencing with the distribution date in January 2008,
interest will accrue on the Class A-R Certificates and each
class of subordinate certificates at a per annum rate equal to
the Weighted Average Net Mortgage Rate.
(6) The Class A-X Certificates are interest-only certificates,
will not be entitled to distributions in respect of principal
and will bear interest on the Class A-X notional amount. On
each distribution date to and including the distribution date
in December 2007, the notional amount of the Class A-X
Certificates will be equal to the product of (a) the aggregate
principal balance of the outstanding mortgage loans multiplied
by (b) a fraction, the numerator of which is equal to (1) the
excess of weighted average of the Net Mortgage Interest Rates
of the Mortgage Loans over (2) 4.25%, and the denominator of
which is equal to 4.25%. The Class A-X notional amount as of
the Closing Date is expected to be approximately $5,340,377.
Commencing with the January 2008 distribution date, the
notional amount of the Class A-X Certificates will be zero.
(7) For each distribution date to and including the
distribution date in June 2007, interest will accrue on the
Class A-X Certificates at a per annum rate equal to 4.25%. From
the distribution date in July 2007 to and including the
distribution date in December 2007, interest will accrue on the
Class A-X Certificates at a per annum rate equal to 4.25% so
long as the Weighted Average Net Mortgage Rate as of the
related Due Date exceeds 4.25%. If the Weighted Average Net
Mortgage Rate on the Mortgage Loans as of the related Due Date
is less than or equal to 4.25%, the pass-through rate on the
Class A-X Certificates will equal zero. Commencing with the
distribution date in January 2008, the Class A-X Certificates
will no longer be entitled to receive distributions of
interest.
The Subsidiary REMIC Regular Interests shall have the following
principal balances, pass-through rates and Corresponding Classes of
Certificates in the manner set forth in the following table:
_________
Uncertificated Principal Uncertificated Lower
Class Balance REMIC Pass-Through Rate Corresponding Certificate Class
Class SA-1 (1) (2) Class A-1
Class SA-2 (1) (2) Class A-2
Class SA-3 (1) (2) Class A-3
Class SA-4 (1) (2) Class A-4
Class SB-1 (1) (2) Class B-1
Class SB-2 (1) (2) Class B-2
41
Class SB-3 (1) (2) Class B-3
Class SB-4 (1) (2) Class B-4
Class SB-5 (1) (2) Class B-5
Class SB-6 (1) (2) Class B-6
Class S-$100 (1) (2) Class A-R
Class S-R (3) (3) N/A
______
(1) On each Distribution Date, following the allocation of scheduled
principal, prepayments, interest distributed as principal, and
Realized Losses, the Class SA-1 Interest, Class SA-2 Interest, Class
SA-3 Interest, Class SA-4 Interest, Class SB-1 Interest, Class SB-2
Interest, Class SB-3 Interest, Class SB-4 Interest, Class SB-5
Interest, Class SB-6 Interest, Class S-$100 Interest each will have a
principal balance that is equal to that of its corresponding
Certificate Class issued by the Upper Tier REMIC.
(2) The Weighted Average Net Mortgage Rate.
(3) The Class S-R Interest is the sole class of residual interest in
the Lower Tier REMIC. It does not have an interest rate or a principal
balance.
On each Distribution Date interest shall be distributed with
respect to each of the Lower Tier Interests based on the above-described
pass-through rates.
All Realized Losses (including any related interest shortfalls)
and payments of principal and interest will be allocated to each Subsidiary
REMIC Regular Interest in an amount equal to the allocations made to their
respective corresponding Master REMIC Certificate.
The Closing Date is hereby designated as the "startup day" of
each REMIC created hereunder within the meaning of Section 860G(a)(9) of the
Code. The Trustee will apply for an Employee Identification Number for the
Master REMIC and for the Subsidiary REMIC from the Internal Revenue Service on
Form SS-4 or any other acceptable method for all tax entities.
The Trustee shall treat the Reserve Fund as an outside reserve
fund within the meaning of Treasury Regulation 1.860G-2(h) that is owned by
the Depositor and that is not an asset of any REMIC created hereunder. The
Trustee shall treat Pass-Through Shortfall Carryforward Amounts paid to the
Class A Certificateholders as paid first by the Master REMIC to the Class A-X
Certificateholders, deposited by the Class A-X Certificateholders into the
Reserve Fund, and then paid to the Class A Certificateholders pursuant to an
interest rate cap contract written by the Class A-X Certificateholder in favor
of the Class A Certificateholders. Thus, the Class A Certificates shall be
treated as representing ownership of not only regular interests in the Master
REMIC, but also ownership of an interest in an interest rate cap contract. For
purposes of determining the issue price of the regular interests in the Master
REMIC, the Trustee shall assume that the interest rate cap contract has a
value of $10,000.
Section 2.06. REMIC Tax Accounting Matters. The tax year of each REMIC
created hereunder shall be the calendar year, and the Trust Fund shall use the
accrual method of reporting income and loss.
42
Section 2.07. REMIC Certificate Maturity Date. All regular interests
in each REMIC created hereunder will be retired on or before the Final
Scheduled Distribution Date.
[End of Article II]
43
Article III
REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR,
THE SERVICER AND THE MORTGAGE LOAN SELLER;
REPURCHASE OF MORTGAGE LOANS
Section 3.01. Representations and Warranties of the Depositor.
(a) The Depositor hereby represents, warrants and agrees that:
(i) the Depositor has entered into the Mortgage Loan Purchase
Agreement with the Mortgage Loan Seller pursuant to which it acquired
the Mortgage Loans;
(ii) the Mortgage Loan Purchase Agreement contains such
representations and warranties of the Mortgage Loan Seller with
respect to the Mortgage Loans as are set forth in Exhibit O attached
hereto; and
(iii) the Depositor has transferred to the Trustee (for inclusion
in the Trust Fund) each Mortgage Loan 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.
(b) The Depositor hereby assigns, transfers and conveys in trust to
the Trustee its rights under the Mortgage Loan Purchase Agreement and each
Subsequent Transfer Agreement including, without limitation, the
representations and warranties of the Mortgage Loan Seller contained therein,
together with all rights of the Depositor to require the Mortgage Loan Seller
to cure any breach thereof or to repurchase or substitute for any affected
Mortgage Loan in accordance with the Mortgage Loan Purchase Agreement. Except
as specifically set forth above, the Depositor makes no representations or
warranties with respect to the Mortgage Loans and has no obligation to
repurchase or substitute for Mortgage Loans on account of deficient
documentation, a breach of the representations and warranties set forth in
Exhibit O attached hereto or any other reason.
Section 3.02. Representations, Warranties and Covenants of the
Mortgage Loan Seller and the Servicer.
(a) The Mortgage Loan Seller hereby represents, warrants and agrees
that:
(i) the representations and warranties of the Mortgage Loan
Seller with respect to the Mortgage Loans (contained in Exhibit O
attached hereto), and by this reference incorporated herein, are true
and correct as of the Closing Date, or if so specified therein, as of
the Cut-off Date;
(ii) each of the Mortgage Loans is a "qualified mortgage" within
the meaning of Section 860G(a)(3) of the Code;
(iii) the execution, delivery and performance of this Agreement
by it are within its powers and have been duly authorized by all
necessary action on its part;
44
(iv) the execution, delivery and performance of this Agreement
will not violate or conflict with (i) its charter or bylaws, (ii) any
resolution or other corporate action by it, (iii) to the Mortgage Loan
Seller's knowledge, any decisions, statutes, ordinances, rulings,
directions, rules, regulations, orders, writs, decrees, injunctions,
permits, certificates or other requirements of any court or other
governmental or public authority, and (iv) will not result in or
require the creation, except as provided or contemplated by this
Agreement, of any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind upon the Mortgage Loans; and
(v) this Agreement has been duly executed by it and is its
legally valid and binding obligation, enforceable against it in
accordance with this Agreement's terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by general
principles of equity.
(vi) The Mortgage Loan Seller is duly qualified, licensed,
registered and otherwise authorized under all applicable federal,
state and local laws, and regulations and is in good standing to
enforce, originate, sell mortgage loans to, and service mortgage loans
in the jurisdiction wherein the Mortgaged Properties are located for
either ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac, and no event has occurred, including
but not limited to a change in insurance coverage, which would make
the Mortgage Loan Seller unable to comply with either ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac eligibility requirements or which would require
notification to ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac;
(vii) The Mortgage Loan Seller does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement or the Mortgage Loan Purchase
Agreement; the Mortgage Loan Seller is solvent;
(viii) No consent, approval, authorization or order of, or
registration or filing with, or notice to any court or governmental
agency or body including HUD, the FHA or the VA is required for the
execution, delivery and performance by the Mortgage Loan Seller of or
compliance by the Mortgage Loan Seller with this Agreement or the sale
of the Mortgage Loans or the consummation of the transactions
contemplated by this Agreement, or if required, such approval has been
obtained prior to the Closing Date;
(ix) The Mortgage Note, the Mortgage, the assignment of mortgage
and any other documents required to be delivered with respect to each
Mortgage Loan pursuant to this Agreement shall be delivered to the
Trustee all in compliance with the specific requirements of this
Agreement. With respect to each Mortgage Loan, the Trustee will be in
possession of a complete Mortgage File;
(x) Neither this Agreement nor any statement, report, form, or
other document furnished or to be furnished pursuant to this Agreement
or in connection with the transactions contemplated hereby contains or
will contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make the
45
statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading; and
(xi) The Mortgage Loan Seller has not dealt with any broker,
investment banker, agent or other person that may be entitled to any
commission or compensation in connection with the sale of the Mortgage
Loans.
The Mortgage Loan Seller acknowledges and agrees that the Depositor
has assigned, transferred and conveyed in trust to the Trustee all of the
Depositor's rights under the Mortgage Loan Purchase Agreement including,
without limitation, the representations and warranties of the Mortgage Loan
Seller with respect to the Mortgage Loans contained therein (a copy of which
representations and warranties is attached hereto as Exhibit O). The Mortgage
Loan Seller further acknowledges and agrees that the Trustee, as assignee of
all of the Depositor's rights under the Mortgage Loan Purchase Agreement, may
enforce all the covenants of the Mortgage Loan Seller therein contained and
all remedies for deficient documentation and breaches of the representations
and warranties contained therein (and also in Exhibit O hereof) directly
against the Mortgage Loan Seller. It is understood and agreed that the
representations and warranties of the Mortgage Loan Seller with respect to the
Mortgage Loans set forth in the Mortgage Loan Purchase Agreement (and also
contained in Exhibit O hereof) shall survive delivery of the respective
Mortgage Files to the Trustee.
Upon discovery by any of the parties hereto of a breach of a
representation or warranty described in this Section 3.02 that materially and
adversely affects the value of any Mortgage Loan or the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach
shall give prompt notice thereof to the other parties. The Mortgage Loan
Seller hereby covenants that within 90 days of the earlier of its discovery or
its receipt of written notice from any party of a breach of any representation
or warranty (without regard to any limitation regarding the knowledge of the
Mortgage Loan Seller contained therein) made pursuant to this Section 3.02
which materially and adversely affects the value of any Mortgage Loan or the
interests of the Certificateholders, in any Mortgage Loan, it shall cure such
breach in all material respects, and if such breach is not so cured, shall,
either (i) remove such Deleted Mortgage Loan from the Trust Fund and
substitute in its place a replacement Mortgage Loan, in the manner and subject
to the conditions set forth in this Section 3.02; or (ii) purchase the
affected Mortgage Loan or Mortgage Loans from the Trust Fund with the Trustee
releasing its lien thereon at the Purchase Price in the manner set forth
below; provided, however, that any such substitution pursuant to (i) above
shall not be effected prior to the delivery to the Trustee at the location at
which the Mortgage Files are to be held of two copies (one of which will be
returned with the Mortgage File) of the Request for Release of documents and
the Mortgage File for any such replacement Mortgage Loan. The Mortgage Loan
Seller shall promptly reimburse the Trustee for any expenses reasonably
incurred by the Trustee in respect of enforcing the remedies for such breach.
With respect to any replacement Mortgage Loan or Mortgages, the
Mortgage Loan Seller shall deliver to the Trustee, for the benefit of the
Certificateholders, the Mortgage Note, the Mortgage, the related Assignment of
Mortgage, and such other documents and agreements as are required herein with
the Mortgage Note endorsed and the Mortgage assigned as required herein.
Scheduled payments due with respect to replacement Mortgage Loans in the month
of substitution shall not be part of the Trust Fund and will be retained by
the Mortgage Loan Seller. For the Distribution Date following the month of
46
substitution, the related Available Funds will include the monthly payment due
on any Deleted Mortgage Loan on the Due Date for such Distribution Date and
thereafter the Mortgage Loan Seller shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan.
In the event that the Mortgage Loan Seller shall have repurchased a
Mortgage Loan, the Purchase Price therefor shall be deposited in the
Distribution Account before the second Business Day preceding the Distribution
Date following the Due Period during which the Mortgage Loan Seller became
obligated hereunder to purchase or replace such Mortgage Loan and upon such
deposit of the Purchase Price (but in any event within the 90-day period
prescribed above), the Trustee shall release the related Mortgage File and the
Trustee shall execute and deliver at the Mortgage Loan Seller's direction such
instruments of transfer or assignment prepared by the Mortgage Loan Seller, in
each case without recourse, as shall be necessary to transfer title from the
Trust Fund and release of the Trustee's lien thereon. It is understood and
agreed that the obligation under this Agreement of the Mortgage Loan Seller to
cure, purchase or replace any Mortgage Loan as to which a breach has occurred
and is continuing shall constitute the sole remedy against the Mortgage Loan
Seller respecting such breach available to Certificateholders or the Trustee
on behalf of Certificateholders.
(b) The Servicer hereby represents, warrants and agrees that:
(i) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and is qualified to transact business in each state in which any
Mortgaged Property is located or is not required under applicable law
to obtain such qualification and no demand for such qualification has
been made upon the Servicer by any such state. The Servicer is in
compliance with the laws of any such state to the extent necessary to
ensure the enforceability of each Mortgage Loan and the master
servicing of the Mortgage Loans by it in accordance with the terms of
this Agreement;
(ii) The Servicer has the full power and authority to service
each Mortgage Loan, to execute and deliver this Agreement, and to
enter into and consummate all transactions contemplated by this
Agreement and to conduct its business as presently conducted, has duly
authorized the execution, delivery and performance of this Agreement,
has duly executed and delivered this Agreement, and this Agreement,
assuming the due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding obligation of
the Servicer, enforceable against it 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 availability of equitable remedies; and
(iii) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement will materially conflict with or result in a material breach
of any of the terms, conditions or provisions of the Servicer's
certificate of incorporation or bylaws or any material legal
restriction or any agreement or
47
instrument to which the Servicer is now a party or by which it is
bound, or constitute a material default or result in an acceleration
under any of the foregoing, or result in the material violation of any
law, rule, regulation, order, judgment or decree to which the Servicer
or its property is subject.
(iv) The Servicer is an approved servicer of conventional
residential adjustable and fixed rate Mortgage Loans for ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac, with the facilities, procedures, and experienced
personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Servicer is duly qualified,
licensed, registered and otherwise authorized under all applicable
federal, state and local laws, and regulations and is in good standing
to enforce, originate, sell mortgage loans to, and service mortgage
loans in the jurisdiction wherein the Mortgaged Properties are located
for either ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac, and no event has occurred,
including but not limited to a change in insurance coverage, which
would make the Servicer unable to comply with either ▇▇▇▇▇▇ Mae or
▇▇▇▇▇▇▇ Mac eligibility requirements or which would require
notification to either of ▇▇▇▇▇▇ Mae or ▇▇▇▇▇▇▇ Mac;
(v) The Servicer acknowledges and agrees that the Servicing Fee,
as calculated at the Servicing Fee Rate, represents reasonable
compensation for performing such services and that the entire
Servicing Fee shall be treated by the Servicer, for accounting and tax
purposes, as compensation for the servicing and administration of the
Mortgage Loans pursuant to this Agreement;
(vi) The Servicer does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant
contained in this Agreement; the Servicer is solvent;
(vii) There is no action, suit, proceeding or investigation
pending or threatened against the Servicer which, either in any one
instance or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or
assets of the Servicer, or in any material impairment of the right or
ability of the Servicer to carry on its business substantially as now
conducted, or in any material liability on the part of the Servicer,
or which would draw into question the validity of this Agreement or
the Mortgage Loans or of any action taken or to be taken in connection
with the obligations of the Servicer contemplated herein, or which
would be likely to impair materially the ability of the Servicer to
perform under the terms of this Agreement;
(viii) No consent, approval, authorization or order of, or
registration or filing with, or notice to any court or governmental
agency or body including HUD, the FHA or the VA is required for the
execution, delivery and performance by the Servicer of or compliance
by the Servicer with this Agreement or the sale of the Mortgage Loans
or the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to
the Closing Date;
(ix) The Mortgage Note, the Mortgage, the assignment of mortgage
and any other documents required to be delivered with respect to each
Mortgage Loan pursuant to this Agreement shall be delivered to the
Trustee all in compliance with the specific
48
requirements of this Agreement. With respect to each Mortgage Loan,
the Servicer will be in possession of a complete Mortgage File, except
for such documents as will be delivered to the Trustee;
(x) Neither this Agreement nor any statement, report, form, or
other document furnished or to be furnished pursuant to this Agreement
or the Mortgage Loan Purchase Agreement or in connection with the
transactions contemplated hereby contains or will contain any untrue
statement of material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading;
and
The Servicer has not dealt with any broker, investment banker, agent
or other person that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans.
Section 3.03. Option to Substitute. If the Depositor or the Mortgage
Loan Seller is required to repurchase any Mortgage Loan pursuant to Section
2.02, 3.01 or 3.02, then within the period of time specified in each such
Section, the Mortgage Loan Seller may, at its option, but only during the
applicable specified period, remove such deficient Mortgage Loan (a "Deleted
Mortgage Loan") from the terms of this Agreement and substitute another
mortgage loan for such Deleted Mortgage Loan, in lieu of repurchasing such
deficient Mortgage Loan. Any eligible substitute Mortgage Loan shall (i) have
an outstanding principal balance, after deduction of the principal portion of
the Monthly Payment due in the month of substitution, not in excess of, and
not less than 90% of, the outstanding principal balance of the Deleted
Mortgage Loan (the amount of any shortfall to be deposited by the Mortgage
Loan Seller in the Distribution Account not later than the succeeding
Determination Date and held for distribution to the holders of the
Certificates on the related Distribution Date), (ii) have a Maximum Mortgage
Rate not less than (and not more than two percentage points greater than) the
Maximum Mortgage Rate of the Deleted Mortgage Loan, (iii) have a gross Margin
not less than that of the Deleted Mortgage Loan and, if Mortgage Loans equal
to 1% or more of the aggregate Cut-Off Date Loan Group Balance have become
Deleted Mortgage Loans, not more than two percentage points more than that of
the Deleted Mortgage Loan, (iv) have an Effective Loan-to-Value Ratio not
higher than that of the Deleted Mortgage Loan, (v) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (vi) not permit conversion of the related Mortgage Rate
to a permanent fixed Mortgage Rate, (vii) have the same or higher credit
score, (viii) have an initial Adjustment Date no earlier than five months
before, and no later than five months after, the initial Adjustment Date for
the Deleted Mortgage Loan, (ix) be a "qualified replacement mortgage" within
the meaning of Section 860G(a)(4) of the Code, and (x) be in compliance with
the representations and warranties referenced in Section 3.02 as of the date
of substitution.
If the aggregate principal balance of all such replacement Mortgage
Loans as of the date of substitution is less than the aggregate Principal
Balance of all such Deleted Mortgage Loans (after application of the scheduled
principal portion of the monthly payments due in the month of substitution),
the Mortgage Loan Seller shall deposit such differential amount in the
Distribution Account, which amount shall be deemed to be a Principal
Prepayment. Such deposit in the Distribution Account by the Mortgage Loan
Seller shall be made on or before the Determination
49
Date in the month succeeding the month during which the related
Mortgage Loan or Mortgage Loans became required to be purchased or replaced
hereunder. Notwithstanding anything in this Agreement to the contrary, the
Mortgage Loan Seller shall not substitute a mortgage loan for a Deleted
Mortgage Loan at any time after two (2) years after the Closing Date.
The Mortgage Loan Seller shall verify the eligibility of replacement
Mortgage Loans in connection with any such substitutions of Mortgage Loans.
The Servicer shall amend the Mortgage Loan Schedule to reflect the withdrawal
of the Deleted Mortgage Loan from this Agreement and the substitution of such
substitute Mortgage Loan therefor. Upon such amendment, the Mortgage Loan
Seller shall be deemed to have made as to such substitute Mortgage Loan the
representations and warranties referenced in Section 3.02 as of the date of
such substitution and to have represented and warranted that such substitute
Mortgage Loan satisfies the requirements of this Section 3.03. Upon any such
substitution and the deposit to the Distribution Account of the amount, if
any, required to be deposited therein in connection with such substitution and
the receipt of two copies (one of which will be returned with the Mortgage
File) of a Request for Release, the Trustee shall cause the release of the
Mortgage File held by the Trustee for the benefit of the Certificateholders
relating to such Deleted Mortgage Loan(s) to the Mortgage Loan Seller and
shall execute and deliver at the Mortgage Loan Seller's direction such
instruments of transfer or assignment prepared by the Mortgage Loan Seller, in
each case without recourse, as shall be necessary to vest title in the
Mortgage Loan Seller, the Depositor's and the Trustee's interest in any
Deleted Mortgage Loan(s) substituted for pursuant to this Section 3.03.
[End of Article III]
50
Article IV
THE CERTIFICATES
Section 4.01. The Certificates. The Class A Certificates, Class B
Certificates, Class A-X Certificates and Class A-R Certificates shall be
substantially in the forms annexed hereto as Exhibits C, D, E and G,
respectively, and shall, on original issue, be executed and authenticated by
the Trustee upon the assignment to the Trustee of the documents and other
components of the Trust Fund specified in Section 2.01, and delivered to or
upon the order of the Depositor. The Class A and Public Subordinate
Certificates shall be issuable in minimum original dollar denominations of
$25,000 (and integral multiples of approximately $1.00 in excess of such
amount. The Class A-X Certificates shall be issuable in minimum original
dollar denominations of $100,000 (and integral multiples of approximately
$1.00 in excess of such amount. The Class A-R Certificates shall be issuable
in a single Certificate with a $100 original dollar denomination, except that
one Class A-R Certificate representing the Tax Matters Person Certificate may
be issued in a different amount.
So long as a Class of Certificates is Book-Entry Certificates, that
Class of Certificates shall be evidenced by one or more certificates
representing such Class of Certificates in denominations acceptable to the
Depository.
The Certificates shall be signed by manual or facsimile signature on
behalf of the Trustee by an authorized signatory. Certificates bearing the
manual or facsimile signatures of individuals who were at the time of
signature proper signatories of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificate or did
not hold such offices at the date of such Certificates. No Certificate shall
be entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a manual authentication by an
authorized signatory of the Trustee and such authentication upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
The rights of the Certificateholders to receive payments with respect
to the Trust Fund in respect of the Certificates, and all ownership interests
of the Certificateholders in such payments, shall be as set forth in this
Agreement.
Section 4.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at its Corporate Trust Office,
or at the office of its designated agent, 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.
(b) Subject to Section 4.02(c), (d), (h) and (i) upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose, the Trustee shall execute, authenticate
and deliver, in the name of the designated transferee or
51
transferees, a Certificate or Certificates of a like Class and aggregate
denomination and dated the date of authentication by the Trustee.
(c) No transfer of a Class B-4, Class B-5, Class B-6 or Class A-R
Certificates shall be made unless such transfer is made pursuant to an
effective registration statement or in accordance with an exemption from the
requirements under the Securities Act of 1933, as amended (the "Act"). If such
a transfer is to be made in reliance upon an exemption from the Act, (i) the
transferee shall submit a written Opinion of Counsel addressed to the Trustee
and the Depositor that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from the Act or is
being made pursuant to the Act, which Opinion of Counsel shall not be an
expense of the Trustee, the Depositor or the Servicer, or (ii) the transferee
shall execute and submit to the Trustee a certification, substantially in the
form of Exhibit L hereto setting forth the facts surrounding such transfer;
provided that such Opinion of Counsel required pursuant to clause (i) above
shall not be required in the case of transfers by or to the Mortgage Loan
Seller or any of their wholly-owned subsidiaries. The Trustee, the Servicer
and the Depositor may, without the consent of any Certificateholder, add
provisions (which shall include a form of certificate to be attached hereto as
an exhibit that must be delivered by the proposed transferee) to this Section
4.02(c) to permit transfers pursuant to Rule 144A of the Securities and
Exchange Commission, in which case transfers pursuant to such provisions shall
not require an Opinion of Counsel.
(d) No transfer (exclusive of any transfer to a Depository or a
securitization trustee) of a Class A-R Certificate shall be made unless the
Trustee shall have received either (i) a representation (substantially in the
form attached hereto as Exhibit M) from the transferee of such Certificate,
acceptable to and in form and substance satisfactory to the Trustee, to the
effect that such transferee is not an employee benefit plan or other
retirement plan or arrangement subject to Section 406 of ERISA or Section 4975
of the Code, nor a Person acting on behalf of any such plan or arrangement or
acquiring such Certificate with funds of such a plan or arrangement (including
without limitation any insurance company using funds that may constitute "plan
assets"), which representation letter shall not be an expense of the Trustee,
the Depositor, the Mortgage Loan Seller or the Servicer, or (ii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan or other retirement plan or arrangement subject to ERISA or
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or arrangement, an Opinion of
Counsel to the effect that the purchase or holding of such Certificate is
permissible under applicable law, will not constitute or result in a
non-exempt prohibited transaction under ERISA or Section 4975 of the Code and
will not subject the Trustee, the Depositor, the Mortgage Loan Seller or the
Servicer to any obligation in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the
Depositor, the Mortgage Loan Seller or the Servicer.
No transfer (exclusive of any transfer to a Depository or a
securitization trustee) of a Class B-4, Class B-5 or Class B-6 Certificate, or
of any other Certificate (other than a Class A-R Certificate) that no longer
has a rating of BBB- or better from at least one Rating Agency shall be made
unless the Trustee shall have received either (A) a representation
(substantially in the form attached hereto as Exhibit N) from the transferee
of such Certificate, acceptable to and in form and substance satisfactory to
the Trustee, to the effect that either (i) such transferee is not
52
an employee benefit plan or other retirement plan or arrangement
subject to Section 406 of ERISA or Section 4975 of the Code, nor a Person
acting on behalf of any such plan or arrangement or acquiring such Certificate
with funds of such a plan or arrangement (including without limitation any
insurance company using funds that may constitute "plan assets"), which
representation letter shall not be an expense of the Trustee, the Depositor,
the Mortgage Loan Seller or the Servicer, or (ii) the Purchaser is an
insurance company acquiring such Certificate with funds held in an insurance
company general account (as defined in Section V(e) of Prohibited Transaction
Class Exemption ("PTCE") 95-60), and the acquisition and holding of such Class
B-4, Class B-5 or Class B-6 Certificate satisfy the requirements for exemptive
relief under Sections I and III of PTCE 95-60 or (B) in the case of any such
Certificate presented for registration in the name of an employee benefit plan
or other retirement plan or arrangement subject to ERISA or Section 4975 of
the Code (or comparable provisions of any subsequent enactments), or a trustee
of any such plan or arrangement, an Opinion of Counsel to the effect that the
purchase or holding of such Certificate is permissible under applicable law,
will not constitute or result in a non-exempt prohibited transaction under
ERISA or Section 4975 of the Code and will not subject the Trustee, the
Depositor, the Mortgage Loan Seller or the Servicer to any obligation in
addition to those undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee, the Depositor, the Mortgage Loan Seller or
the Servicer. Each Transferee of a Certificate who is required to deliver one
of the foregoing representations or Opinions of Counsel, if it does not
deliver the Opinion of Counsel described in Clause (B) above, will be deemed
to have made the representation in Clause (A) (i) or (ii) above by its
acceptance of an interest in the Certificate.
(e) At the option of the Certificateholder, a Certificate may be
exchanged for another Certificate or Certificates of authorized denominations
of a like Class and Percentage Interest, upon surrender of the Certificate to
be exchanged at the Corporate Trust Office of the Trustee. Whenever a
Certificate is so surrendered for exchange, the Trustee shall execute,
authenticate and deliver the Certificate which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for transfer or exchange shall (if so required by the Trustee) be
duly endorsed by, or be accompanied by a written instrument of transfer duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee may require payment by the
affected Certificateholders of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of the Certificate.
(g) All Certificates surrendered for transfer and exchange shall be
cancelled and retained or destroyed by the Trustee in accordance with its
standard procedures.
(h) Notwithstanding anything to the contrary contained herein, unless
and until the Trustee shall have received an Opinion of Counsel that is
Independent to the effect that the absence of the transfer restrictions
contained in this Section 4.02 would not result in the imposition of federal
income tax upon the Trust Fund or cause the Subsidiary REMIC or the Master
REMIC (exclusive of the Flex Source(TM) Pledge Agreements, the Pre-Funding
Account (including the funds therein and Pre-Funding Earnings) and the Reserve
Fund (including the funds therein)) to fail to qualify as a REMIC, no
transfer, sale or other disposition of a Class A-R
53
Certificate (including a beneficial interest therein) may be made
without compliance with this Section 4.02.
(i) Prior to the transfer, sale or other disposition of the Class A-R
Certificates, the Trustee shall require that the proposed transferee deliver
to the Trustee an affidavit stating that as of the date of such transfer (i)
such transferee is not and has no intention of becoming either (A) the United
States, any state or political subdivision thereof, any foreign government,
any international organization, or any agency or instrumentality of any of the
foregoing (other than an instrumentality that is a corporation all of whose
activities are subject to tax under the Code and, except in the case of the
▇▇▇▇▇▇▇ Mac, a majority of the board of directors of which corporation is not
selected by the United States, any state or political subdivision thereof),
(B) any organization that is exempt from any tax imposed by Chapter 1 of
Subtitle A of the Code, other than (x) a tax-exempt farmers' cooperative
within the meaning of section 521 of the Code or (y) an organization that is
subject to the tax imposed by section 511 of the Code on "unrelated business
income" or (C) a corporation operating on a cooperative basis that is engaged
in furnishing electric energy or providing telephone service to persons in
rural areas (within the meaning of section 1381(a)(2)(C) of the Code) (any
Person described in (A), (B), or (C) being referred to herein as a
"Disqualified Organization"), (ii) such transferee is not acquiring such
Certificates as an agent, broker, nominee, or middleman for a Disqualified
Organization and (iii) such transferee is not a Non-U.S. Person.
Notwithstanding any transfer, sale or other disposition of such Certificates
to a Disqualified Organization or Non-U.S. Person, such transfer, sale or
other disposition shall be deemed to be of no legal force or effect whatsoever
and such Disqualified Organization or Non-U.S. Person shall not be deemed to
be a Holder of such Certificates for any purpose hereunder, including, but not
limited to, the receipt of distributions on such Certificates. If any
purported transfer shall be in violation of the provisions of Section 4.02(h),
then the prior Holder of such Certificates shall, upon discovery that the
transfer of such Certificates was not in fact permitted in Section 4.02(h), be
restored to all rights as a Holder thereof retroactive to the date of the
purported transfer of such Certificates. The Trustee, the Depositor, the
Servicer and the Mortgage Loan Seller shall be under no liability to any
Person for any registration or transfer of a Class A-R Certificate that is not
permitted by Section 4.02(h) or for the Payment Agent making payments due on
any such Certificate to the purported Holder thereof or taking any other
action with respect to such purported Holder under the provisions of this
Agreement so long as the transfer was registered in compliance with the terms
of this Agreement. The prior Holder shall be entitled to recover from any
purported Holder of any such Certificate that was in fact not a permitted
transferee under Section 4.02(h) at the time it became a Holder all payments
made on such Certificate; provided that neither the Mortgage Loan Seller, the
Depositor, the Servicer nor the Trustee shall be responsible for such recovery
if they otherwise made a good faith effort to comply with this Section
4.02(i). Each such Certificateholder, by the acceptance of a Class A-R
Certificate, shall be deemed for all purposes to have consented to the
provisions of Section 4.02(h) and to any amendment of this Agreement deemed
necessary by counsel of the Trustee, as evidenced by an Opinion of Counsel, to
ensure that either such Certificate is not transferred to a Disqualified
Organization or Non-U.S. Person and that any transfer of such Certificate will
not cause the imposition of a tax upon the Trust Fund or cause Subsidiary
REMIC or the Master REMIC (exclusive of the Flex Source(TM) Pledge Agreements,
the Pre-Funding Account (including the funds therein and Pre-Funding Earnings)
and the Reserve Fund (including the funds therein)) to fail to qualify as a
REMIC. The restrictions on transfer of either such Certificate will cease to
apply and be void upon receipt by
54
the Trustee of the Opinion of Counsel as described in Section 4.02(h)
or shall be modified as indicated in such Opinion of Counsel. If any Person
that is not permitted to acquire any beneficial interest in a Class A-R
Certificate under this Section 4.02(i) acquires any beneficial interest in a
Class A-R Certificate in violation of the restrictions in this Section
4.02(i), then the Trustee, based on information provided to it by the Servicer
and/or the Mortgage Loan Seller, will provide to the Internal Revenue Service,
and to the Persons specified in Section 860E(e)(3) and (6) of the Code,
information needed to compute the tax imposed under Section 860E(e)(5) of the
Code on transfers of residual interests to Disqualified Organizations. The
Trustee shall be entitled to be reimbursed by such Person for the cost of
providing such information.
(j) [Reserved]
(k) Except as provided in paragraph (l) 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 these Classes
of 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
Classes of Certificates; (iii) ownership and transfers of registration of
these Classes of Certificates on the books of the Depository shall be governed
by applicable rules established by the Depository; (iv) the Depository may
collect its usual and customary fees, charges and expenses from its Depository
Participants; (v) the Trustee shall deal with the Depository, Depository
Participants and indirect participating firms as representatives of the
Certificate Owners of these Classes of 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 Book-Entry Certificate Owner.
Each Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
(l) If (x)(i) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to properly discharge
its responsibilities as Depository, and (ii) the Depositor is unable to locate
a qualified successor, (y) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository or (z) after the occurrence of an Event of Default, Certificate
Owners representing at least 50% of the principal balance of the each Class of
Certificates affected thereby advise the Trustee and the Depository through
the Depository Participants in writing that the continuation of a book-entry
system through the Depository is no longer in the best interests of such
Certificate Owners the Trustee shall notify all Certificate Owners of such
Class, through the Depository, of the occurrence of any such event and of the
availability of definitive, fully registered Certificates of such Class (the
"Definitive Certificates"), as applicable, to Certificate
55
Owners requesting the same. Upon surrender to the Trustee of the
affected Classes of Certificates by the Depository, accompanied by
registration instructions from the Depository for registration, the Trustee
shall issue the Definitive Certificates. Neither the Servicer, the Depositor
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. The Depositor shall provide the Trustee with an adequate
inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon the issuance of Definitive Certificates all
applicable references herein to obligations imposed upon or to be performed by
the Depository shall be deemed to be imposed upon and performed by the
Trustee, to the extent applicable with respect to such Definitive Certificates
and the Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder. In addition, these Classes of Certificates shall
be in the form of Definitive Certificates up to the time such Classes of
Certificates are transferred to public investors.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Trustee or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Trustee such security or
indemnity as may be required by it to save it harmless, then, in the absence
of notice to the Trustee that such Certificate has been acquired by a bona
fide purchaser, the Trustee shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Class. Upon the issuance of any new Certificate
under this Section, the Trustee may require of the Certificateholder 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 connected therewith.
Any replacement Certificate of any Class issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership of the Percentage
Interest in the distributions to which the Certificateholders of such Class
are entitled, as if originally issued, whether or not the mutilated,
destroyed, lost or stolen Certificate shall be found at any time, and such
mutilated, destroyed, lost or stolen Certificate shall be of no force or
effect under this Agreement.
Section 4.04. Persons Deemed Owners. The Depositor, the Servicer and
the Trustee shall treat the Person in whose name any Certificate is registered
as the owner of such Certificate and the Percentage Interest in the
distributions to the Certificateholders of such Class are entitled, for the
purpose of receiving remittances pursuant to Section 6.01 and for all other
purposes whatsoever, and neither the Depositor, the Servicer nor the Trustee
shall be affected by notice to the contrary.
[End of Article IV]
56
Article V
ADMINISTRATIVE AND SERVICING OF THE TRUST FUND
Section 5.01. Servicer to Act as Servicer; Administration of the Trust
Fund.
(a) The Servicer shall service and administer the Mortgage Loans,
including any Additional Collateral, on behalf of the Trust and in the best
interests of and for the benefit of the Certificateholders (as determined by
the Servicer in its good faith reasonable judgment) in accordance with
applicable law, the terms of this Agreement and the terms of the respective
Mortgage Loans and, to the extent consistent with the foregoing, in the same
manner in which it services and administers single-family mortgage loans for
its own portfolio, giving due consideration to customary and usual standards
of practice of prudent institutional mortgage lenders and loan servicers
utilized with respect to mortgage loans comparable to the Mortgage Loans, and
with a view to the maximization of timely recovery of principal and interest
on the Mortgage Notes, but without regard to: (i) any relationship that the
Servicer or any Affiliate of the Servicer may have with the related Mortgagor;
(ii) the ownership of any Certificate by the Servicer or any Affiliate of the
Servicer; (iii) the Servicer's obligation to make Monthly Advances and
Servicing Advances; and (iv) the Servicer's right to receive compensation for
its services hereunder or with respect to any particular transaction.
Subject only to the above-described servicing standards and the terms
of this Agreement and of the respective Mortgage Loans, the Servicer shall
have full power and authority, acting alone, to do or cause to be done any and
all things in connection with such servicing and administration which it may
deem necessary or desirable. Without limiting the generality of the foregoing,
the Servicer, in its own name, is hereby authorized and empowered to execute
and deliver, on behalf of the Certificateholders and the Trustee or any of
them, any and all financing statements, continuation statements and other
documents or instruments necessary to maintain the lien created by any
Mortgage or other security document in the related Mortgage File on the
related Mortgaged Property and related collateral (it being herein
acknowledged that the Servicer's obligation to file financing statements and
continuation statements is limited to those Mortgage Loans for which an
effective financing statement or continuation statement is on file in the
appropriate public filing office as determined by the Servicer based solely
upon a review of the Mortgage Files and to the related collateral covered
thereby); any and all modifications, waivers, amendments or consents to or
with respect to any documents contained in the related Mortgage File; and any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to
the Mortgage Loans and the Mortgaged Properties. Notwithstanding anything in
this Agreement to the contrary, the Servicer shall not (unless the Mortgagor
is in default with respect to the Mortgage Loan or such default is, in the
judgment of the Servicer, reasonably foreseeable) make or permit any
modification, waiver, or amendment of any term of any Mortgage Loan that would
both (i) effect an exchange or reissuance of such Mortgage Loan under Section
1001 of the Code (or final, temporary or proposed Treasury regulations
promulgated thereunder) and (ii) cause the Subsidiary REMIC of the Master
REMIC to fail to qualify as a REMIC under the Code or the imposition of any
tax on "prohibited transactions" or "contributions" after the startup date
under the REMIC Provisions. Subject to Section 5.14, the Trustee shall execute
any power of attorney (in form and substance reasonably acceptable to the
Trustee) provided to it by the Servicer as
57
well as any other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder;
provided, however, that the Trustee shall not be held liable for any
negligence with respect to, or misuse of, any such power of attorney by the
Servicer. The Servicer may at its own expense utilize agents or
attorneys-in-fact in performing any of its servicing obligations hereunder,
but no such utilization shall relieve the Servicer from any of its obligations
hereunder, and the Servicer shall remain responsible for all acts and
omissions of any such agent or attorney; provided, however, that the Trustee
shall not be deemed the attorney-in-fact of the Servicer hereunder.
(b) The Servicer shall maintain accurate records with respect to each
Mortgaged Property reflecting the status of taxes, assessments and other
similar items that are or may become a lien thereon and the status of
insurance premiums payable in respect thereof. The Servicer shall obtain, from
time to time, all bills for the payment of such items (including renewal
premiums) and shall effect payment thereof prior to the applicable penalty or
termination date, employing for such purpose Escrow Payments as allowed under
the terms of the related Mortgage Loan. To the extent that a Mortgage Loan
does not require a Mortgagor to make payments for taxes, insurance premiums
and similar items in escrow, the Servicer shall require that any such payments
be made by the Mortgagor in a timely manner so as to avoid the imposition of a
lien senior to that of the related Mortgage. The Servicer shall pay from its
own funds any penalties accrued as a result of the failure of a Mortgagor to
make such payments.
(c) In accordance with the servicing standard of this Section 5.01,
the Servicer shall advance with respect to each Mortgaged Property all such
funds as are necessary for the purpose of effecting the payment of (i) real
property taxes, assessments and other similar items that are or may become a
lien thereon and (ii) premiums on primary hazard insurance policies required
pursuant to Section 5.10, in each instance if and to the extent Escrow
Payments collected from the related Mortgagor are insufficient to pay such
item when due and the related Mortgagor has failed to pay such item on a
timely basis. All such advances shall be reimbursable in the first instance
from related collections from the Mortgagors, and further as provided in
Section 5.06. No costs incurred by the Servicer in effecting the payment of
real property taxes and assessments on the Mortgaged Properties shall, for the
purpose of calculating distributions to Certificateholders, be added to the
amount owing under the related Mortgage Loans, notwithstanding that the terms
of such Mortgage Loans so permit.
(d) The Servicer covenants and agrees that it shall not take any
action outside the scope of its duties hereunder that would result in (A) a
termination of Subsidiary REMICs or the Master REMIC's status as a REMIC under
the REMIC Provisions or (B) the imposition of any federal, state or local
income, prohibited transaction, contribution or other tax on the Trust Fund or
its assets or transactions.
(e) Notwithstanding anything in this Agreement to the contrary, the
Servicer shall pay from its own funds, without any right of reimbursement
therefor, the amount of any costs, liabilities and expenses incurred by the
Trust Fund (including, without limitation, any and all federal, state or local
taxes, including taxes imposed on "prohibited transactions" within the meaning
of the REMIC Provisions), the Certificateholders, the Depositor or the Trustee
if and to the extent that such costs, liabilities and expenses arise from a
failure of the Servicer to perform its obligations under this Agreement.
58
Section 5.02. Collection of Certain Mortgage Loan Payments.
(a) The Servicer shall make efforts (in accordance with the standards
set forth in Section 5.01) to collect all payments called for under the terms
and provisions of the Mortgage Loans, and shall, to the extent such procedures
shall be consistent with this Agreement and the terms and provisions of any
related insurance policy, follow such collection procedures as it would follow
with respect to mortgage loans comparable to the Mortgage Loans and held for
its own account. The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a
Mortgage, Mortgage Note, hazard insurance policy or otherwise or against any
public or governmental authority with respect to a taking or condemnation) if
it reasonably questions its ability to enforce the provision of the Mortgage
or other instrument pursuant to which such payment is required. Consistent
with the foregoing, the Servicer may in its sole discretion (i) waive any late
payment charge or any prepayment charge or penalty interest in connection with
the prepayment of a Mortgage Loan, and (ii) only upon determining that the
coverage of such Mortgage Loan by any applicable insurance policy will not be
affected, extend the Due Dates for the Monthly Payments due on a Mortgage Note
for a period of not greater than 180 days after the applicable Due Date, but
in no case may the Servicer extend a Due Date to a date which is later than
the Final Scheduled Distribution Date of the related Class of Certificates. In
the event of any such arrangement, the Servicer shall make timely Monthly
Advances on the related Mortgage Loan during the scheduled period in
accordance with the amortization schedule of such Mortgage Loan then in effect
without modification thereof by reason of such arrangements.
(b) All amounts collected on any Mortgage Loan in the form of payments
from Mortgagors, Insurance Proceeds or Liquidation Proceeds of the nature
described in clauses (i) and (ii) of the definition thereof shall be applied
to amounts due and owing under the related Mortgage Note and Mortgage
(including without limitation, for principal and accrued and unpaid interest)
in accordance with the express provisions of the related Mortgage Note and
Mortgage and, in the absence of such express provisions, in accordance with
the customary practice of the Servicer in respect of mortgage loans held for
its own account; provided, however, that such amounts shall not be applied to
the items constituting additional servicing compensation as described in
Section 5.15 unless and until all principal and interest then due and payable
on such Mortgage Loan has been collected.
Section 5.03. Establishment of and Deposits to Escrow Account. The
Servicer shall segregate and hold all funds collected and received pursuant to
a Mortgage Loan constituting Escrow Payments separate and apart from any of
its own funds and general assets and shall establish and maintain one or more
Escrow Accounts, in the form of demand accounts. The Escrow Accounts shall be
Eligible Accounts. Funds deposited in the Escrow Account may be drawn on by
the Servicer in accordance with Section 5.04.
The Servicer shall deposit in the Escrow Account or Accounts on a
daily basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans,
for the purpose of effecting timely payment of any such items as
required under the terms of this Agreement;
59
(ii) all amounts representing Insurance Proceeds, proceeds from
condemnation proceedings or other proceeds which are to be applied to
the restoration or repair of any Mortgaged Property;
(iii) all Liquidation Proceeds or REO Proceeds in connection with
Escrow Payments and property liquidation expenses; and
(iv) any amounts required to be deposited by the Servicer in
connection with the deductible clause in any blanket hazard insurance
policy.
The Servicer shall deposit the foregoing collections in the Escrow
Account within twenty-four (24) hours of receipt thereof.
The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 5.04. To the extent required by law, the Servicer shall pay interest
on escrowed funds to the Mortgagor notwithstanding that the Escrow Account may
be non-interest bearing or that interest paid thereon is insufficient for such
purposes.
Section 5.04. Permitted Withdrawals From Escrow Account. Withdrawals
from the Escrow Account or Accounts may be made by the Servicer only:
(i) to effect timely payments of ground rents, taxes,
assessments, water rates, mortgage insurance premiums, condominium
charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage;
(ii) to reimburse the Servicer for any Servicing Advance
relating to taxes, assessments, water rates, sewer rates and other
charges which are or may become a lien upon the Mortgaged Property,
and fire and hazard insurance coverage made by the Servicer with
respect to a related Mortgage Loan, but only from amounts received on
the related Mortgage Loan which represent late collections of Escrow
Payments thereunder;
(iii) to refund to any Mortgagor any funds found to be in excess
of the amounts required under the terms of the related Mortgage Loan
or applicable federal or state law or judicial or administrative
ruling;
(iv) to pay interest, if required to Mortgagors on balances in
the Escrow Account;
(v) for application to restoration or repair of the Mortgaged
Property in accordance with Section 5.10 hereof;
(vi) for transfer to the Collection Account of any amounts not
required to be otherwise applied pursuant to clauses (i)-(v) above.
(vii) to clear and terminate the Escrow Account on the
termination of this Agreement; and
60
(viii) to remove funds inadvertently placed in the Escrow
Account by the Servicer.
Section 5.05. Establishment of and Deposits to Collection Account. The
Servicer shall segregate and hold all funds collected and received pursuant to
the Mortgage Loans separate and apart from any of its own funds and general
assets and shall establish and maintain one or more Collection Accounts in the
name of ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as trustee for the
benefit of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust
Certificateholders, in the form of demand accounts. The Collection Account
shall be an Eligible Account. Funds deposited in the Collection Account may be
drawn on by the Servicer in accordance with Section 5.06.
The Servicer shall deposit in the related sub-account of the
Collection Account on a daily basis, and retain therein, the following
collections received by the Servicer and payments made by the Servicer after
the related Closing Date:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments in Full;
(ii) all payments on account of interest on the Mortgage Loans;
(iii) all Liquidation Proceeds and any amounts received with
respect to REO Property;
(iv) all REO Proceeds;
(v) all Insurance Proceeds;
(vi) any amount required to be deposited in the Collection
Account from any Escrow Account; and
(vii) amounts representing investment losses, as provided in
Section 5.07.
The Servicer shall deposit the foregoing collections in the Collection
Account within forty-eight (48) hours of receipt thereof.
It being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of prepayment or late payment
charges, penalty interest or assumption fees on the Mortgage Loans need not be
deposited by the Servicer in the Collection Account. In the event the Servicer
shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.
Funds in the Collection Account may only be invested in Eligible
Investments in accordance with the provisions set forth in Section 5.07. The
Servicer shall give notice in writing to the Trustee of the location of the
Collection Account and of any change thereof.
61
Section 5.06. Permitted Withdrawals From Collection Account. The
Servicer shall, from time to time, withdraw funds from the Collection Account
for the following purposes:
(i) to make payments to the Trustee in the amounts and in the
manner provided for in Sections 6.01;
(ii) to reimburse itself for advances of the Servicer's funds
made pursuant to Section 6.03, the Servicer's right to reimbursement
pursuant to this clause (ii) being limited to amounts received on the
related Mortgage Loan which represent late payments of principal
and/or interest respecting which any such advance was made;
(iii) to reimburse itself or a Servicer for unreimbursed
Servicing Advances, and any unpaid Servicing Fees, the Servicer's
right to reimbursement pursuant to this clause (iii) with respect to
any Mortgage Loan being limited to related Liquidation Proceeds,
proceeds from condemnation proceedings, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the Mortgagor
or otherwise relating to the Mortgage Loan;
(iv) to reimburse itself for any advance of principal and
interest previously made which remain unreimbursed in whole or in part
following the liquidation of the related Mortgage Loan or REO
Property;
(v) to pay itself interest on funds deposited in the Collection
Account;
(vi) to remove funds inadvertently placed in the Collection
Account by the Servicer; and
(vii) to clear and terminate the Collection Account upon the
termination of this Agreement.
The Servicer shall keep and maintain separate accounting records for
the most recent five fiscal years, on a Mortgage Loan by Mortgage Loan basis,
for the purpose of justifying deposits to and withdrawals from the Collection
Account.
Section 5.07. Protection of Accounts; Eligible Investments. Pursuant
to the last paragraph of Section 5.05, any institution maintaining the
Collection Account may at the written direction of the Servicer invest the
funds as so directed in such account in Eligible Investments, which shall
mature not later than the Business Day immediately preceding each
Determination Date next following the date of such investment (except that if
such Eligible Investment is an obligation of the institution that maintains
such account, then such Eligible Investment shall mature not later than the
related Determination Date) and shall not be sold or disposed of prior to its
maturity. All such Eligible Investments shall be registered in the name of the
Servicer (in its capacity as such) or its nominee with respect to the
Collection Account. All income and gain realized from any such investment, as
well as any interest earned on deposits, in the Collection Account, shall be
for the benefit of the Servicer and shall be withdrawn from the Collection
Account on each Determination Date. The Servicer shall deposit in the
Collection Account an amount equal to the amount of any loss incurred in
respect of any such investment immediately upon realization of such loss.
62
The Servicer may transfer the Collection Account or the Escrow Account
to a different Eligible Account from time to time. Such transfer shall be made
only upon obtaining the consent of the Trustee, which consents shall not be
unreasonably withheld.
The Servicer shall bear any expenses, losses or damages sustained by
the Trust if the Collection Account and/or the Escrow Account are not Eligible
Accounts.
Section 5.08. Maintenance of Omission and Fidelity Coverage. The
Servicer shall obtain and maintain at its own expense and keep in full force
and effect throughout the term of this Agreement a blanket fidelity bond and
an errors and omissions insurance policy covering the Servicer and its
officers and employees in connection with its activities under this Agreement.
The amount of coverage shall be at least equal to the coverage that is
required by ▇▇▇▇▇▇ Mae to be maintained by the Servicer if the Servicer were
servicing and administering the Mortgage Loans for ▇▇▇▇▇▇ ▇▇▇ under the ▇▇▇▇▇▇
Mae Guides. In the event that any such bond or policy ceases to be in effect,
the Servicer shall obtain a comparable replacement bond or policy from an
issuer or insurer, as the case may be, meeting the requirements of ▇▇▇▇▇▇ ▇▇▇
under the ▇▇▇▇▇▇ Mae Guides. Coverage of the Servicer under a policy or bond
obtained by an Affiliate of the Servicer and providing the coverage required
by this Section 5.08 shall satisfy the requirements of this Section 5.08.
Section 5.09. [Reserved].
Section 5.10. Maintenance of Primary Hazard Insurance. The Servicer
shall cause to be maintained for each Mortgage Loan with insurance companies
satisfactory to it primary hazard insurance with extended coverage on the
related Mortgaged Property in an amount which is at least equal to the lesser
of (i) the full replacement value of the improvements which are part of such
property and (ii) the outstanding principal balance of the related Mortgage
Loan, provided, that the Servicer will exercise reasonable efforts to maintain
the levels of all coverage in an amount sufficient to prevent loss due to
application of any co-insurance clause contained in the related primary hazard
insurance policy. Pursuant to Section 5.05, any amounts collected by the
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the property subject to the related Mortgage or
amounts released to the Mortgagor in accordance with the terms of the Mortgage
Note) shall be deposited in the Collection Account. Any cost incurred by the
Servicer in maintaining any such insurance shall not, for the purpose of
calculating Monthly Payments, be added to the unpaid principal balance of the
related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so
permit. Such costs shall be recoverable by the Servicer out of related late
payments by the Mortgagor or out of Insurance Proceeds and Liquidation
Proceeds to the extent permitted by Section 5.06. It is understood and agreed
that no earthquake or other additional insurance is to be required of any
Mortgagor other than pursuant to such applicable laws and regulations as shall
at any time be in force and as shall require such additional insurance. If
required by the Flood Disaster Protection Act of 1973, as amended, each
Mortgage Loan is covered by a flood insurance policy meeting the requirements
of the current guidelines of the Federal Insurance Administration in effect.
Such flood insurance shall be in an amount equal to the lesser of (i) the
unpaid principal balance of the related Mortgage Loan, (ii) the maximum amount
of such insurance available for the related Mortgaged Property under the
national flood insurance program (regardless of whether the area in which such
Mortgaged Property is located is participating in such program) and (iii) the
full
63
replacement value of the improvements which are part of such Mortgaged
Property. The Servicer shall exercise its reasonable efforts to be named as
mortgagee under any of the foregoing policies.
In the event that the Servicer shall cause to be obtained and
maintained a blanket policy insuring against hazard losses on all of the
Mortgage Loans in an amount consistent with this Section, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of this Section 5.10, it being understood and agreed that
such policy may contain a deductible clause, in which case the Servicer shall,
in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property a policy complying with the first two
sentences of this Section 5.10, and there shall have been one or more losses
which would have been covered by such policy, deposit from its own funds in
the Collection Account the amount not otherwise payable under the blanket
policy because of such deductible clause. The Servicer agrees to prepare and
present, on behalf of itself, the Trust Fund and the Certificateholders,
claims under any such blanket policy in a timely fashion in accordance with
the terms of such policy.
Section 5.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements. The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged
Property (whether by absolute conveyance or by contract of sale, and whether
or not the Mortgagor remains or is to remain liable under the Mortgage Note
and/or the Mortgage), exercise or cause to be exercised its rights to
accelerate the maturity of such Mortgage Loan under any "due-on-sale" clause
applicable thereto; provided, however, that the Servicer shall not exercise
any such rights if it reasonably believes that it is prohibited by law from
doing so or if the exercise of such rights shall constitute a "significant
modification" effecting an exchange or reissuance of such Mortgage Loan under
the Code or cause Subsidiary REMIC or the Master REMIC to fail to qualify as a
REMIC under the Code. If the Servicer is unable to enforce such "due-on-sale"
clause (as provided in the previous sentence) or if no "due-on-sale" clause is
applicable, the Servicer will enter into an assumption and modification
agreement with the Person to whom such property has been conveyed or is
proposed to be conveyed, pursuant to which such Person becomes liable under
the Mortgage Note and Mortgage and, to the extent permitted by applicable
state law, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such
Person, pursuant to which the original Mortgagor is released from liability
and such Person is substituted as the Mortgagor and becomes liable under the
Mortgage Note and the Mortgage. Any fee collected by or on behalf of the
Servicer for entering into an assumption or substitution of liability
agreement will be retained by or on behalf of the Servicer as additional
servicing compensation. In connection with any such assumption, no material
term of the Mortgage or the Mortgage Note (including but not limited to the
Mortgage Rate, the amount of the Monthly Payment, and any other term affecting
the amount or timing of payment on the Mortgage Loan) may be changed. The
Servicer shall notify the Trustee that any such substitution or assumption
agreement has been completed by forwarding to the Trustee, the original copy
of such substitution or assumption agreement, which copy shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
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Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption that the Servicer may be
restricted by law from preventing, for any reason whatsoever. For purposes of
this Section 5.11, the term "assumption" is deemed to also include a sale of a
Mortgaged Property that is not accompanied by an assumption or substitution of
liability agreement.
Nothing in this Section 5.11 shall constitute a waiver of the
Trustee's right to receive notice of any assumption of a Mortgage Loan, any
sale or other transfer of the related Mortgaged Property or the creation of
any lien or other encumbrance with respect to such Mortgaged Property.
Section 5.12. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall exercise reasonable efforts, consistent with
customary servicing practices as described in Section 5.01, to foreclose upon
or otherwise comparably convert (which may include an acquisition of REO
Property) the ownership of properties securing such of the Mortgage Loans as
come into and continue in default and as to which no satisfactory arrangements
can be made for collection of delinquent payments pursuant to Section 5.02.
The Servicer shall use reasonable efforts to realize upon such defaulted
Mortgage Loans in such manner as will maximize the receipt of principal and
interest by the Certificateholders, taking into account, among other things,
the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which Mortgaged Property shall have suffered
damage from an uninsured cause, the Servicer shall not be required to expend
its own funds toward the restoration of such property unless it shall
determine in its sole discretion (i) that such restoration will increase the
net proceeds of liquidation of the related Mortgage Loan to the Trust Fund,
after reimbursement to itself for such expenses, and (ii) that such expenses
will be recoverable by the Servicer through Insurance Proceeds or Liquidation
Proceeds from the related Mortgaged Property, as contemplated in Section 5.06.
The Servicer shall be responsible for all other costs and expenses incurred by
it in any such proceedings; provided, however, that it shall be entitled to
reimbursement thereof from the related property, as contemplated in Section
5.06.
(b) The proceeds of any liquidation, REO disposition, as well as any
recovery resulting from a partial collection of Insurance Proceeds or
Liquidation Proceeds or any income from an REO Property, will be applied in
the following order of priority: first, to reimburse the Servicer for any
related unreimbursed Servicing Advances, pursuant to Section 5.06 or 5.10;
second, to accrued and unpaid interest on the Mortgage Loan, at the Mortgage
Rate, to the date of the liquidation or REO disposition, or to the Due Date
prior to the Distribution Date on which such amounts are to be distributed if
not in connection with a liquidation or REO disposition; and third, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than a full recovery thereof, the recovered
amount will be allocated as follows: first, to unpaid Servicing Fees; and
second, as interest at the Mortgage Rate (minus the Servicing Fee Rate). The
portion of the recovery so allocated to unpaid Servicing Fees shall be
reimbursed to the Servicer pursuant to Section 5.06. The portions of the
recovery so allocated to interest at the Mortgage Rate (minus the Servicing
Fee Rate) and to principal of the Mortgage Loan shall be applied as follows:
first, to reimburse the Servicer for any related unreimbursed advances in
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accordance with Section 5.06 or 5.10, and second, to the Trustee in accordance
with the provisions of Section 6.01.
(c) Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure,
in the event the Servicer has reasonable cause to believe that a Mortgaged
Property is contaminated by hazardous or toxic substances or wastes, the
Servicer shall cause an environmental inspection or review of such Mortgaged
Property to be conducted by a qualified inspector. After reviewing the
environmental inspection report, the Servicer shall determine how to proceed
with respect to the Mortgaged Property.
(d) In the event that title to any Mortgaged Property is acquired by
any REMIC as an REO Property by foreclosure or by deed in lieu of foreclosure,
the deed or certificate of sale shall be issued to the Trustee or to its
nominee on behalf of Certificateholders. Notwithstanding any such acquisition
of title and cancellation of the related Mortgage Loan, such REO Property
shall (except as otherwise expressly provided herein) be considered to be an
Outstanding Mortgage Loan held in the REMIC until such time as the REO
Property shall be sold. Consistent with the foregoing for purposes of all
calculations hereunder so long as such REO Property shall be considered to be
an Outstanding Mortgage Loan it shall be assumed that, notwithstanding that
the indebtedness evidenced by the related Mortgage Note shall have been
discharged, such Mortgage Note and the related amortization schedule in effect
at the time of any such acquisition of title (after giving effect to any
previous Principal Prepayments in full and before any adjustment thereto by
reason of any bankruptcy or similar proceeding or any moratorium or similar
waiver or grace period) remain in effect.
(e) The Servicer shall dispose of all REO Property acquired by the
Trust within three years after its acquisition by the Trust for purposes of
Section 860G(a)(8) of the Code or, at the expense of the REMIC, request, more
than 60 days before the day on which the three-year grace period would
otherwise expire, an extension of the three-year grace period unless the
Servicer obtains for the Trustee an Opinion of Counsel, addressed to the
Trustee and the Servicer, to the effect that the holding by the REMIC of such
REO Property subsequent to such three-year period will not result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F of
the Code or cause REMIC to fail to qualify as a REMIC, in which case the REMIC
may continue to hold such REO Property (subject to any conditions contained in
such Opinion of Counsel). Notwithstanding any other provision of this
Agreement, no REO Property acquired by the REMIC shall be rented (or allowed
to continue to be rented) or otherwise used by or on behalf of the REMIC in
such a manner or pursuant to any terms that would (i) cause such REO Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or (ii) subject the REMIC to the imposition of any
federal income taxes on the income earned from such REO Property, including
any taxes imposed by reason of Section 860G(c) of the Code, unless the
Servicer has agreed to indemnify and hold harmless the REMIC with respect to
the imposition of any such taxes.
(f) The Servicer shall have the right to determine, in accordance with
its normal and usual commercial mortgage servicing procedures, the
advisability of the maintenance of an action to obtain a deficiency judgment
if the state in which the Mortgaged Property is located permits such an
action.
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(g) The Servicer shall maintain accurate records, prepared by a
Servicing Officer, of each Final Recovery Determination in respect of a
defaulted Mortgage Loan and the basis thereof. Each Final Recovery
Determination shall be evidenced by an Officer's Certificate delivered to the
Trustee no later than the third Business Day following such Final Recovery
Determination.
(h) In the event of a default on a Mortgage Loan one or more of whose
obligor is not a United States Person, in connection with any foreclosure or
acquisition of a deed in lieu of foreclosure (together, "foreclosure") in
respect of such Mortgage Loans, the Servicer will cause compliance with the
provisions of Treasury Regulation Section 1.1445-2(d)(3) (or any successor
thereto) necessary to assure that no withholding tax obligation arises with
respect to the proceeds of such foreclosure except to the extent, if any, that
proceeds of such foreclosure are required to be remitted to the obligors on
such Mortgage Loan.
Section 5.13. [Reserved]
Section 5.14. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan (including in
connection with any foreclosure), or the receipt by the Servicer of a
notification that payment in full has been escrowed in a manner customary for
such purposes, the Servicer will immediately notify the Trustee by two copies
(one of which will be returned with the Mortgage File) of a Request for
Release and shall request delivery to it of the Mortgage File. Within seven
Business Days (or within such shorter period as release can reasonably be
accomplished if the Servicer notifies the Trustee of an exigency) of receipt
of such certification and request, the Trustee shall release the related
Mortgage File to the Servicer.
(b) The Trustee, upon request of the Servicer and receipt from the
Servicer of two copies of Request for Release, shall release any Mortgage File
to the Servicer. Upon return of such Mortgage File to the Trustee, or the
delivery to the Trustee of a Request for Release stating that such Mortgage
Loan was liquidated and that all amounts received or to be received in
connection with such liquidation which are required to be deposited into the
Collection Account pursuant to Section 5.05 have been deposited, or that such
Mortgage Loan has become an REO Property, the Request for Release shall be
released by the Trustee to the Servicer.
(c) Within seven Business Days (or within such shorter period as
release can reasonably be accomplished if the Servicer notifies the Trustee of
an exigency) of the Servicer's request therefor, the Trustee shall execute and
deliver to the Servicer any court pleadings, requests for trustee's sale or
other documents necessary to the foreclosure or trustee's sale in respect of a
Mortgaged Property or to any legal action brought to obtain judgment against
any Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency
judgment, or to enforce any other remedies or rights provided by the Mortgage
Note or Mortgage or otherwise available at law or in equity. Together with
such documents or pleadings, the Servicer shall deliver to the Trustee an
Officer's Certificate requesting that such pleadings or documents be executed
by the Trustee and certifying as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee will not
invalidate or otherwise affect the lien of
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the Mortgage, except for the termination of such a lien upon completion of the
foreclosure or trustee's sale.
Section 5.15. Servicing Compensation. As compensation for its
activities hereunder, the Servicer shall be entitled to receive the amounts
described below (the "Servicing Fee") on each Distribution Date with respect
to each Mortgage Loan. As to each such Mortgage Loan, the Servicer shall be
entitled to accrue a fee at the Servicing Fee Rate and shall be computed on
the basis of Stated Principal Balance of such Mortgage Loan and the Interest
Accrual Period for such Distribution Date. The Servicing Fee with respect to
any Mortgage Loan shall cease to accrue if such Mortgage Loan becomes a
Liquidated Mortgage Loan. As to each such Mortgage Loan, the Servicing Fee
shall be payable monthly from payments of interest on such Mortgage Loan. The
Servicer shall be entitled to recover unpaid Servicing Fees in respect of any
Mortgage Loan out of related Insurance Proceeds or Liquidation Proceeds to the
extent permitted by Section 5.06.
The Servicer shall be required to pay all expenses incurred by it in
connection with its Servicing activities hereunder and shall not be entitled
to reimbursement therefor except as specifically provided herein.
Section 5.16. Establishment of Pre-Funding Account; Permitted
Withdrawals.
(a) No later than the Closing Date, the Trustee will establish and
thereafter maintain for the benefit of the Certificateholders a segregated
trust account (the "Pre-Funding Account") which shall be an Eligible Account.
On the Closing Date, the Depositor shall remit or cause to remit to the
Trustee from the proceeds of the sale of the Offered Certificates, and the
Trustee shall deposit, $71,386,883 in the Pre-Funding Account. In addition, on
the Closing Date the Depositor shall remit to the Trustee for deposit in the
Pre-Funding Account $758,486 to pay interest to the Holders of the
Certificates to the extent of the Class Principal Balance thereof in excess of
the Stated Principal Balance of the Mortgage Loans as of the Cut-Off Date
(such deposited amounts, the "Capitalized Interest"). Any investment earnings
on the Pre-Funding Account shall be payable to and taxable to the Mortgage
Loan Seller. The Pre-Funding Account (including the funds therein and
Pre-Funding Earnings) shall not be an asset of Subsidiary REMIC or the Master
REMIC. Pre-Funded Amounts may only be applied to acquire Mortgage Loans to be
included in the Mortgage Pool.
(b) On the Business Day preceding each Pre-Funding Distribution Date,
the Trustee shall withdraw from the Pre-Funding Account any Pre-Funding
Earnings on the amounts on deposit therein and pay such Pre-Funding Earnings
to the Mortgage Loan Seller. The Trustee shall invest moneys at the direction
of the Mortgage Loan Seller in the Pre-Funding Account in Eligible
Investments, which shall mature not later than the Determination Date next
following the date of such investment, except that no investment needs to
mature on or prior to the First Distribution Date, and shall not be sold or
disposed of prior to its maturity. On each Subsequent Transfer Date, the
Trustee shall withdraw from the Pre-Funding Account an amount equal to 100% of
the principal balance of each Subsequent Mortgage Loan to be assigned to the
Trustee on such Subsequent Transfer Date and pay such amount to or at the
direction of the Mortgage Loan Seller. On the Business Day immediately
preceding the last Pre-Funding Distribution Date, if any amounts remain in the
Pre-Funding Account after the withdrawals specified above, the Trustee shall
withdraw such amounts and deposit them into the Distribution Account for
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distribution on account of principal to the Class A Certificateholders with
respect to the Pre-Funded Amount remaining on the succeeding Distribution Date
and the Pre-Funding Account shall be closed. Notwithstanding the foregoing,
amounts constituting Capitalized Interest may only be used to pay interest on
the Certificates and will be remitted to the Mortgage Loan Seller at such time
as the Pre-Funding Account is to be closed.
Section 5.17. Annual Statement as to Compliance.
The Servicer shall deliver to the Trustee, with a copy to the
Depositor, on or before February 28, beginning in February 2004, and each year
thereafter, an Officer's Certificate stating, as to each signer thereof, that
(i) a review of the activities of the Servicer during the preceding calendar
year and of its performance under this Agreement has been made under such
officer's supervision, (ii) to the best of such officer's knowledge, based on
such review, the Servicer has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and (iii) the Servicer has received
no notice regarding qualification, or challenging the status, of Subsidiary
REMIC or the Master REMIC as a REMIC from the Internal Revenue Service or any
other governmental agency or body.
Section 5.18. Reports by Independent Public Accountants. On or before
February 28, 2004, and each year thereafter, the Servicer, at its expense,
shall cause a firm of nationally recognized Independent public accountants,
which is a member of the American Institute of Certified Public Accountants,
to furnish a statement to the Trustee to the effect that such firm has
examined certain documents and records relating to the servicing of the
Mortgage Loans by the Servicer pursuant to an agreement substantially similar
to this Agreement and that their examination, conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers,
disclosed no exceptions or errors in records relating to the servicing of the
Mortgage Loans pursuant to an agreement substantially similar to this
Agreement that in their opinion are material, except for such exceptions as
are set forth in their statement.
Section 5.19. Access to Certain Documentation. The Servicer shall
provide to the Trustee and any federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to any documentation regarding the Mortgage Loans which may be required
by applicable law. Such access shall be afforded without charge but only upon
reasonable prior written request and during normal business hours at the
offices of the Servicer designated by it.
Section 5.20. Title, Conservation and Disposition of REO Property. The
Servicer shall manage, conserve, protect and operate each REO Property for the
benefit of the Certificateholders solely for the purpose of its prompt
disposition and sale. The Servicer, either itself or through an agent selected
by the Servicer, shall manage, conserve, protect and operate the REO Property
in the same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. The Servicer
shall attempt to sell the same (and may temporarily rent the same for a period
not greater than one year, except as otherwise provided below) on such terms
and conditions as the Servicer deems to be in the best interest of the
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Certificateholders. The Servicer shall notify the Trustee monthly as to the
status of each REO Property.
The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage in amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The Servicer shall segregate and hold all funds collected and received
in connection with the operation of any REO Property in the Collection
Account.
The Servicer shall deposit net of reimbursement to the Servicer for
any related outstanding Servicing Advances, any related unreimbursed Monthly
Advances and unpaid Servicing Fees provided in Section 5.06 hereof, or cause
to be deposited, on a daily basis in the Collection Account all revenues
received with respect to the related REO Property and shall withdraw therefrom
funds necessary for the proper operation, management and maintenance of the
REO Property.
The Servicer, upon the liquidation of any REO Property, shall be
entitled to reimbursement for any related unreimbursed Servicing Advances and
any unreimbursed related Monthly Advances as well as any unpaid Servicing Fees
from REO Proceeds received in connection with such sale, as further provided
in Section 5.12.
Section 5.21. [Reserved]
Section 5.22. Subservicing Agreements Between Servicer and
Subservicers.
(a) The Servicer may enter into Subservicing Agreements with
Subservicers for the servicing and administration of the Mortgage Loans and
for the performance of any and all other activities of the Servicer hereunder,
but the Servicer shall remain primarily liable hereunder for Servicing the
Mortgage Loans. Each Subservicer shall be either (i) a depository institution
the accounts of which are insured by the FDIC or (ii) another entity that
engages in the business of originating, acquiring or servicing loans, and in
either case shall (a) be authorized to transact business in the state or
states where the related Mortgaged Properties it is to service are situated,
if and to the extent required by applicable law to enable the Subservicer to
perform its obligations hereunder and under the Subservicing Agreement, (b) be
a ▇▇▇▇▇▇▇ Mac, ▇▇▇▇▇▇ ▇▇▇ or a Housing and Urban Development approved mortgage
servicer, and (c) have qualifications comparable or better than those of the
Servicer. In addition, each Subservicer will obtain and preserve its
qualifications to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
or cause to be performed its duties under the related Subservicing Agreement.
Each Subservicing Agreement must impose on the Subservicer requirements
conforming to the provisions set forth in Section 5.27. With the approval of
the Servicer, a Subservicer may delegate its servicing obligations to
third-party servicers, but such Subservicer shall remain obligated under the
related Subservicing Agreement. The Servicer and the Subservicers may make
amendments to the Subservicing Agreements or
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enter into different forms of Subservicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with
and not violate the provisions of this Agreement, and that no such amendment
or different form shall be made or entered into which could be reasonably
expected to be materially adverse to the interests of the Trustee or the
Certificateholders, without their consent. Each Subservicing Agreement shall
provide that if the Servicer is terminated pursuant to Section 8.01, the
Successor Servicer shall succeed to the rights and obligations (other than
obligations incurred by the outgoing Servicer prior to termination) under the
Subservicing Agreement.
(b) As part of its servicing activities hereunder, the Servicer, for
the benefit of the Certificateholders, shall use its best efforts to enforce
the obligations of each Subservicer under the related Subservicing Agreement,
including, without limitation, any obligation to make advances in respect of
delinquent payments as required by a Subservicing Agreement, or to purchase a
Mortgage Loan on account of defective documentation or on account of a breach
of a representation or warranty. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Subservicing
Agreements and the pursuit of other appropriate remedies, shall be in such
form and carried out to such an extent and at such time as the Servicer, in
its good faith business judgment, would require were it the owner of the
related Mortgage Loans. The Servicer shall pay the cost of such enforcement at
its own expense, but shall be reimbursed therefor only (i) from a general
recovery resulting from such enforcement only to the extent, if any, that such
recovery exceeds all amounts due in respect of the related Mortgage Loans or
(ii) from a specific recovery of costs, expenses or attorneys' fees against
the party against whom such enforcement is directed.
Section 5.23. Successor Subservicers. The Servicer shall be entitled
to terminate any Subservicing Agreement and the rights and obligations of any
Subservicer pursuant to any Subservicing Agreement in accordance with the
terms and conditions of such Subservicing Agreement and without limitation by
virtue of this Agreement. In the event of termination of any Subservicer, all
servicing obligations of such Subservicer shall be assumed simultaneously by
the Servicer without any act or deed on the part of such Subservicer or the
Servicer, and the Servicer either shall service directly the related Mortgage
Loans or shall enter into a Subservicing Agreement with a successor
Subservicer which qualifies under Section 5.22. If the Servicer enters into a
Subservicing Agreement with a successor Subservicer, the Servicer shall use
reasonable efforts to have the successor Subservicer assume liability for the
representations and warranties made by the terminated Subservicer in respect
of the related Mortgage Loans.
Section 5.24. Liability of the Servicer. Notwithstanding any
Subservicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a Subservicer or reference
to actions taken through a Subservicer or otherwise, the Servicer shall remain
obligated and primarily liable to the Trustee and the Certificateholders for
the servicing and administering of the Mortgage Loans (including the making of
Monthly Advances) in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as
if the Servicer alone were servicing and administering the Mortgage Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Mortgage Loans when the Subservicer has received such payments.
The Servicer shall be
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entitled to enter into any agreement with a Subservicer for indemnification
of the Servicer by such Subservicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
Section 5.25. No Contractual Relationship Between Subservicers and
Trust Fund. Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a
Subservicer in its capacity as such and not as an originator shall be deemed
to be between the Subservicer and the Servicer alone, and none of the Trust
Fund, the Trustee or the Certificateholders shall be deemed a party thereto
and shall have no claims, rights, obligations, duties or liabilities with
respect to the Subservicer or the Subservicing Agreements except upon
assumption of the rights and obligations of the Servicer pursuant to Section
5.26.
Section 5.26. Assumption or Termination of Subservicing Agreements by
Successor Servicer. In the event the Servicer shall for any reason no longer
be the Servicer (including by reason of an event of default under Section
8.01), the Successor Servicer appointed pursuant to Section 8.03 shall
thereupon assume all of the rights and obligations of the Servicer under each
Subservicing Agreement that the Servicer may have entered into, with copies
thereof provided to the Successor Servicer prior to the Successor Servicer
assuming such rights and obligations, unless the Successor Servicer is then
permitted and elects to terminate any Subservicing Agreement in accordance
with its terms. The Successor Servicer shall be deemed to have assumed all of
the Servicer's interest therein and to have replaced the Servicer as a party
to each Subservicing Agreement to the same extent as if the Subservicing
Agreements had been assigned to the assuming party, except that the Servicer
shall not thereby be relieved of any liability or obligations under the
Subservicing Agreements, and the Servicer shall continue to be entitled to any
rights or benefits which arose prior to its termination as Servicer.
The Servicer at its expense shall, upon request of the Trustee,
deliver to the assuming party all documents and records relating to each
Subservicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
Section 5.27. Subservicing Accounts. In those cases where a
Subservicer is servicing a Mortgage Loan pursuant to a Subservicing Agreement,
the Servicer shall cause the Subservicer pursuant to the Subservicing
Agreement to establish and maintain one or more accounts (collectively, the
"Subservicing Account"). The Subservicing Account shall be a segregated
Eligible Account and shall otherwise be acceptable to the Servicer. All
amounts held in a Subservicing Account shall be held in trust for the benefit
of the Certificateholders. The Subservicer will be required to deposit into
the Subservicing Account no later than the first Business Day after receipt
all proceeds of Mortgage Loans received by the Subservicer, including the
proceeds of any Principal Prepayment in Full made by the Mortgagor and any
Insurance Proceeds or Liquidation Proceeds, less its servicing compensation
(which shall in no event exceed the Servicing Fee) and any unreimbursed
expenses and advances, to the extent permitted by the Subservicing Agreement.
On each remittance date required under the applicable Subservicing Agreement
(each a "SubDetermination Date") the Subservicer will be required to remit to
the Servicer for deposit in the Collection Account all funds held in the
Subservicing Account with respect to any Mortgage Loan as of the
SubDetermination Date, after
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deducting from such remittance an amount equal to the servicing
compensation and unreimbursed expenses and advances to which it is then
entitled pursuant to the related Subservicing Agreement, to the extent not
previously paid to or retained by it. In addition, on each SubDetermination
Date the Subservicer will be required to remit to the Servicer any amounts
required to be advanced pursuant to the related Subservicing Agreement. The
Subservicer will also be required to remit to the Servicer for deposit in the
Collection Account, within one Business Day of receipt, the proceeds of any
Principal Prepayment in full made by the Mortgagor and any Insurance Proceeds
or Liquidation Proceeds.
Any institution maintaining the Subservicing Account may at the
written direction of the Servicer invest the funds as so directed in such
account in Eligible Investments, which shall mature not later than the
Business Day immediately preceding the SubDetermination Date next following
the date of such investment (except that if such Eligible Instrument is an
obligation of the institution that maintains such account, then such Eligible
Instrument shall mature not later than such SubDetermination Date) and shall
not be sold or disposed of prior to its maturity. All such Eligible
Investments shall be registered in the name of the Servicer (in its capacity
as servicer hereunder) or its nominee with respect to the Subservicing
Account. All income and gain realized from any such investment, as well as any
interest earned on deposits, in the Subservicing Account, shall be for the
benefit of the Servicer. The Servicer shall deposit in the Subservicing
Account an amount equal to the amount of any loss incurred in respect of any
such investment immediately upon realization of such loss.
Section 5.28. Distribution Reports by the Servicer.
(a) Prior to the close of business on the 10th day of any month (or if
such day is not a Business Day, the immediately preceding Business Day) next
succeeding each Determination Date, the Servicer shall furnish a written
statement (which may be in a mutually agreeable electronic format) to the
Trustee setting forth (i) the Available Funds, (ii) the amounts required to be
withdrawn from the Collection Account and deposited into the Distribution
Account on the immediately succeeding Determination Date pursuant to clause
(iii) of Section 6.01(a), (iii) the amount of Prepayment Interest Shortfalls
and (iv) to the extent required, a report detailing, with respect to each
Mortgage Loan, the information set forth in Section 6.02. The determination by
the Servicer of such amounts shall, in the absence of obvious error, be
presumptively deemed to be correct for all purposes hereunder and the Trustee
shall be protected in relying upon the same without any independent check or
verification.
[End of Article V]
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Article VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01. Distributions.
(a) The Trustee shall establish and maintain a Distribution Account in
the name of the Trustee for the benefit of the Certificateholders which shall
be an Eligible Account, in which the Servicer shall cause to be deposited on
behalf of the Trustee on or before 12:00 noon New York time on each
Determination Date by wire transfer of immediately available funds an amount
equal to the sum of (i) any Monthly Advance for the immediately succeeding
Distribution Date, (ii) any amount required to be deposited in the
Distribution Account pursuant to Section 6.03(c), (iii) any amount required to
be paid pursuant to Section 10.01, (iv) an amount equal to the expenses of the
Trustee payable on such Distribution Date, (v) an amount equal to the
Capitalized Interest Requirement for the related Distribution Date, and (vi)
all other amounts constituting Available Funds for the immediately succeeding
Distribution Date. Any such amounts shall be distributed on the immediately
following Distribution Date as part of Available Funds.
(b) On each Distribution Date, prior to making any other distributions
referred to in this Section 6.01, the Trustee shall reimburse itself for any
expenses due it pursuant to this agreement (which additional expenses may not
exceed $100,000 per year, exclusive of Servicing Transfer Costs incurred by
the Trustee in connection with a transfer of servicing).
(c) The Trustee may invest or cause the institution maintaining the
Distribution Account to invest the funds in the Distribution Account in
Eligible Investments designated in the name of the Trustee for the benefit of
the Certificateholders, which shall mature not later than the Business Day
next preceding the Distribution Date next following the date of such
investment (except that (i) any investment managed by the institution (or any
affiliate thereof) with which the Distribution Account is maintained may
mature on such Distribution Date and (ii) any other investment may mature on
such Distribution Date if the Trustee shall advance funds on such Distribution
Date to the Distribution Account in the amount payable on such investment on
such Distribution Date, pending receipt thereof to the extent necessary to
make distributions on the Certificates) and shall not be sold or disposed of
prior to maturity. All income and gain realized from any such investment shall
be for the benefit of the Trustee 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 Distribution Account by the Trustee
out of its own funds immediately as realized.
(d) On each Distribution Date the Trustee shall distribute to each
Certificateholder of record on the next preceding Record Date (other than as
provided in Section 10.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has so notified the Trustee or, if such
Certificateholder has not so notified the Trustee by five days prior to the
Distribution Date, by check mailed to such Certificateholder at the address of
such Holder appearing in the Certificate Register such Certificateholder's
share (which share with respect to each Class of Certificates, shall be based
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on the aggregate of the Percentage Interests represented by Certificates of
the applicable Class held by such Holder of the following amounts),
sequentially, in the following order of priority, in each case to the extent
of Available Funds:
(i) concurrently, to the Class A, Class A-X and Class A-R
Certificates, pro rata, the applicable Accrued Certificate Interest
for that Distribution Date;
(ii) to the Reserve Fund, an amount equal to 1/12th of (i) the
excess, if any, of the Weighted Average Net Mortgage Rate for such
Distribution Date over the weighted average of the Pass-Through Rates
of the Class A Certificates for that Distribution Date, multiplied by
(ii) the aggregate Certificate Principal Balance of the Class A
Certificates immediately prior to that Distribution Date;
(iii) to the Classes of Senior Certificates (other than the
Class A-X Certificates) the Senior Optimal Principal Amount for that
Distribution Date shall be distributed sequentially, (x) first, to the
Class A-R Certificates, until its Certificate Principal Balance has
been reduced to zero, and then (y) concurrently, to the Class ▇-▇,
▇▇▇▇▇ ▇-▇, Class A-3 and Class A-4 Certificates, pro rata, until their
respective Certificate Balances have been reduced to zero;
(iv) to the Class B-1 Certificates in the following order: (1)
the Accrued Certificate Interest on the Class B-1 Certificates for
that Distribution Date and (2) the Class B-1 Certificates' Allocable
Share for that Distribution Date;
(v) to the Class B-2 Certificates in the following order: (1)
the Accrued Certificate Interest on the Class B-2 Certificates for
that Distribution Date and (2) the Class B-2 Certificates' Allocable
Share for that Distribution Date;
(vi) to the Class B-3 Certificates in the following order: (1)
the Accrued Certificate Interest on the Class B-3 Certificates for
that Distribution Date and (2) the Class B-3 Certificates' Allocable
Share for that Distribution Date;
(vii) to the Class B-4 Certificates in the following order: (1)
the Accrued Certificate Interest on the Class B-4 Certificates for
that Distribution Date and (2) the Class B-4 Certificates' Allocable
Share for that Distribution Date;
(viii) to the Class B-5 Certificates in the following order: (1)
the Accrued Certificate Interest on the Class B-5 Certificates for
that Distribution Date and (2) the Class B-5 Certificates' Allocable
Share for that Distribution Date;
(ix) to the Class B-6 Certificates in the following order: (1)
the Accrued Certificate Interest on the Class B-6 Certificates for
that Distribution Date and (2) the Class B-6 Certificates' Allocable
Share for that Distribution Date;
(x) to the Trustee, any additional expenses due to it pursuant
to this Agreement in excess of $100,000 per year and that have not
been remitted pursuant to Section 6.01(b); and
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(xi) to the Class A-R Certificates, any remaining portion of the
Available Funds for that Distribution Date.
(e) Each distribution with respect to a Book-Entry Certificate shall
be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of
its Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution
to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible
for disbursing funds to the Certificate Owners that it represents. None of the
Trustee, the Certificate Registrar, the Depositor or the Servicer shall have
any responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(f) Except as otherwise provided in Section 10.01, if the Servicer
anticipates that a final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Servicer shall,
no later than the Determination Date in the month of such final distribution,
notify the Trustee and the Trustee shall, no later than two (2) Business Days
after such Determination Date, mail on such date to each Holder of such Class
of Certificates a notice to the effect that: (i) the Trustee anticipates that
the final distribution with respect to such Class of Certificates will be made
on such Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trustee or as otherwise specified therein,
and (ii) no interest shall accrue on such Certificates from and after the end
of the prior calendar month. In the event that Certificateholders required to
surrender their Certificates pursuant to Section 10.01 do not surrender their
Certificates for final cancellation, the Trustee shall cause funds
distributable with respect to such Certificates to be withdrawn from the
Distribution Account and credited to a separate escrow account for the benefit
of such Certificateholders.
Section 6.02. Statements to the Certificateholders. No later than each
Distribution Date, the Trustee shall prepare, based solely on loan level
information furnished by the Servicer pursuant to Section 5.28, and shall make
available to each holder of the related Class of Certificates, each Rating
Agency a statement setting forth the following information:
(i) the amount of the distribution on the Distribution Date made
to the Holders of each Class of Certificates allocable to principal;
(ii) the amount of the distribution on the Distribution Date
made to the Holders of each Class of Certificates allocable to
interest;
(iii) any unpaid Interest Shortfalls included in such
distribution and the aggregate Interest Shortfalls remaining unpaid as
of such Distribution Date;
(iv) the Certificate Principal Balance or Notional Amount of
each Class of Certificates after giving effect to distribution of
principal on that Distribution Date;
(v) the Pool Balance for the Distribution Date;
(vi) the Senior Percentage and the Subordinate Percentage;
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(vii) the aggregate amount of Servicing Fees paid to or retained
by the Servicer with respect to the related Distribution Date;
(viii) the Pass-Through Rate of interest on each Class of
Certificates for that Distribution Date;
(ix) the aggregate amount of Advances included in the
distribution for the applicable Distribution Date and the aggregate
amount of Advances outstanding as of the Distribution Date;
(x) (a) the number and aggregate unpaid principal balance of
Mortgage Loans (exclusive of Mortgage Loans in foreclosure)
delinquent:
(i) 1 to 30 days;
(ii) 31 to 60 days;
(iii) 61 to 90 days; and
(iv) 91 or more days.
(b) the number and aggregate unpaid principal
balance of Mortgage Loans in foreclosure and delinquent;
(i) with respect to any Mortgage Loan that
became an REO Property during the preceding calendar
month, the Mortgage Loan number of the related Mortgage
Loan, the unpaid principal balance of the related
Mortgage Loan and the principal balance of the related
Mortgage Loan as of the date it became an REO Property;
(ii) the total number and cumulative principal
balance of all REO Properties as of the close of
business of the determination date;
(iii) the Senior Prepayment Percentage for the
Distribution Date;
(iv) the aggregate Realized Losses incurred
during the prior calendar month; and
(v) each Special Hazard Loss Coverage
Amount, each Fraud Loss Coverage Amount and each
Bankruptcy Loss Coverage Amount, in each case as of the
related Determination Date.
The Trustee's responsibility for distributing the above information to
the Certificateholders is limited to the availability, timeliness and accuracy
of the information received from the Servicer.
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Notwithstanding the foregoing, the Trustee may make the statements
described above available to Certificateholders by way of the Trustee's
internet website. The Trustee's internet website shall be located initially at
"▇▇▇.▇▇▇▇▇▇▇.▇▇▇". The Trustee shall provide assistance in using its website
through its customer service desk, which shall be accessible by calling (301)
815-6600. Any Certificateholder that is unable to use such website, and so
informs the Trustee's customer service desk by telephone, shall be entitled to
receive paper copies of such statements via first class mail. The Trustee
shall have the right to alter the manner in which such statements are
distributed to Certificateholders to make such distribution more convenient
and/or to improve access to such statements; provided that the Trustee shall
provide the Certificateholders with timely and adequate notification of any
such change in manner of distribution.
Section 6.03. Monthly Advances by the Servicer.
(a) On the Determination Date, the Servicer is required to deliver to
the Trustee for deposit into the Distribution Account an amount equal to all
Monthly Payments, not previously advanced by the Servicer (with interest
adjusted to the Mortgage Rate net of the Servicing Fee Rate), which were due
on a Mortgage Loan and delinquent at the close of business on the related
Determination Date. If the Servicer does not make a required Monthly Advance,
the Trustee (only if it has succeeded to the obligations of the Servicer)
shall make such Monthly Advance on the following Distribution Date. The
Trustee shall be reimbursed prior to the Servicer for any Monthly Advances
made pursuant to this Agreement.
(b) The Servicer 's obligation to make Monthly Advances as to any
Mortgage Loan shall continue through the remittance date following the earlier
to occur of (i) the repurchase of the Mortgage Loan by the Servicer, if
applicable, and (ii) the acquisition or disposition of title to the related
Mortgaged Property through foreclosure or receipt of a deed in lieu of
foreclosure; provided, however, that the Servicer shall not be required to
make a Monthly Advance if the Servicer determines, in its reasonable judgment,
that such Monthly Advance would not be recoverable from Liquidation Proceeds
and other payments or recoveries (including Insurance Proceeds or condemnation
proceeds) on the related Mortgage Loan and delivers to the Trustee an
Officer's Certificate setting forth the basis for such determination;
provided, further, that the Servicer shall not be required to make a Monthly
Advance with respect to the principal portion of the Monthly Payment for any
Mortgage Loan for which a balloon payment is due on the maturity date of such
Mortgage Loan. The Trustee may rely conclusively on any determination by the
Servicer that a Monthly Advance would not be recoverable.
(c) In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall prior to the Determination Date for a Distribution Date,
the Servicer shall be obligated, to the extent of the Servicing Fee for such
Distribution Date, to remit to the Trustee for deposit into the Distribution
Account on the related Determination Date, as a reduction of the Servicing Fee
(but not in excess thereof) for such Distribution Date, an amount equal to the
Prepayment Interest Shortfall; and in the case of such deposit, the Servicer
shall not be entitled to any recovery or reimbursement from the Depositor, the
Mortgage Loan Seller, the Trustee or the Certificateholders. Such deposited
amount shall be part of Available Funds for such Distribution Date.
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Section 6.04. Reserve Fund.
(a) On the Closing Date, the Trustee shall establish and maintain a
Reserve Fund (the "Reserve Fund") for the benefit of the Class A
Certificateholders in the name of ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as trustee for the benefit of the holders of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Capital I Trust 2003-HYB1 Class A Certificates. The Reserve Fund shall
be an Eligible Account, and funds on deposit therein shall be applied for the
benefit of the Class A Certificateholders.
(b) On each Distribution Date to and including the December 2007
Distribution Date, the Trustee shall transfer from the Distribution Account to
the Reserve Fund all amounts distributable on that Distribution Date pursuant
to Section 6.01(d)(ii).
(c) On each Distribution Date, funds on deposit or deposited on such
date to the Reserve Fund shall be applied towards the distribution of any
Pass-Through Shortfall Carryforward Amount to the Class A Certificateholders;
provided that $10,000 shall remain on deposit at all times in the Reserve Fund
to and including the December 2007 Distribution Date.
(d) The Trustee shall invest moneys in the Reserve Fund in Eligible
Investments as directed by NOVUS Receivables Financing, Inc., as designee of
the Depositor, or another entity designated by NOVUS Receivables Financing,
Inc., which investments shall mature not later than the Distribution Date
following the date of such investment and shall not be sold or disposed of
prior to its maturity. All such Eligible Investments shall be made in the name
of the Trustee. All net income and gain realized from any such investment
shall be paid to, and for the benefit of, NOVUS Receivables Financing, Inc.,
as designee of the Depositor or another entity designated by NOVUS Receivables
Financing, Inc., on each Distribution Date. To the extent that NOVUS
Receivables Financing, Inc. or another entity designated by it does not
deposit into the Reserve Fund out of its own funds immediately as realized
without reimbursement the amount of any losses incurred in respect of any such
investments (to the extent not offset by income from other such investments),
such losses may be offset from the amounts that such entity would otherwise be
entitled to received under Section 6.01(a).
(e) The Depositor shall evidence ownership for federal tax purposes in
amounts on deposit in the Reserve Fund.
(f) Upon the earlier of (i) the Distribution Date in December 2007 and
(ii) the termination of the Trust Fund, any amounts remaining in the Reserve
Fund shall be distributed to the Depositor or its designee in the same manner
as if distributed pursuant to Section 6.04(d) hereof.
Section 6.05. Reports to the Securities and Exchange Commission.
(a) The Trustee and the Servicer shall reasonably cooperate with the
Depositor in connection with the Trust's satisfying the reporting requirements
under the Securities Exchange Act of 1934, as amended. The Trustee shall
prepare and deliver to the Servicer any Forms 8-K and 10-K customary for
similar securities as required by the Exchange Act and the Rules and
Regulations of the Securities and Exchange Commission thereunder. The Servicer
shall sign, and the Trustee shall file (via the Securities and Exchange
Commission's Electronic Data Gathering
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and Retrieval System), any Form 10-K, and the Trustee shall sign and
file (via the Securities and Exchange Commission's Electronic Data Gathering
and Retrieval System) any Form 8-K.
(b) Each Form 8-K shall be filed by the Trustee within 15 days after
each Distribution Date, including a copy of the statement to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
March 30th of 2004, and each year thereafter (or such earlier date as may be
required by the Exchange Act and the Rules and Regulations of the Securities
and Exchange Commission), the Trustee shall file a Form 10-K, in substance as
required by applicable law or applicable Securities and Exchange Commission
staff's interpretations. Such Form 10-K shall include as exhibits to the
Servicer's annual statement of compliance described under Section 5.17 and the
accountant's report described under Section 5.18, in each case to the extent
they have been timely delivered to the Trustee. If they are not so timely
delivered, the Trustee shall file an amended Form 10-K including such
documents as exhibits reasonably promptly after they are delivered to the
Trustee. The Trustee shall have no liability with respect to any failure to
properly prepare or file such periodic reports resulting from or relating to
the Trustee's inability or failure to obtain any information not resulting
from its own negligence, willful misconduct or bad faith. The Form 10-K shall
also include a certification in the form attached hereto as Exhibit Q (the
"Certification"), which shall, except as described below, be signed by the
senior officer of the Servicer in charge of the servicing function of the
Servicer. On or before the fifth Business Day prior to March 30th, 2004, and
each year thereafter for which a Form 10-K is filed under this paragraph, the
Trustee shall deliver to the Servicer a certification in the form attached
hereto as Exhibit R (the "Trustee Certification"). Notwithstanding the
foregoing, if it is determined by the Servicer that the Certification may be
executed by multiple persons, the Trustee shall sign the Certification in
respect of items 1 through 3 thereof and the Servicer shall cause the senior
officer in charge of servicing at the Servicer to sign the Certification in
respect of items 4 and 5 thereof. The Trustee may rely on the Certification
signed by the Servicer to the same extent as provided in subsection (c) below.
(c) In the event that prior to the filing date of the Form 10-K in
March of each year, the Trustee or the Servicer has actual knowledge of
information material to the Certification, that party shall promptly notify
the other party. In addition, (i) the Trustee shall indemnify and hold
harmless the Servicer and its officers, directors and Affiliates from and
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses
arising out of or based upon any breach of the Trustee's obligations under
this Section 6.05 or the Trustee's negligence, bad faith or willful misconduct
in connection therewith, and (ii) the Servicer shall indemnify and hold
harmless the Trustee and its officers, directors and Affiliates from and
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses
arising out of or based upon any breach of the Servicer's obligations under
this Section 6.05 or the Servicer's negligence, bad faith or willful
misconduct in connection therewith. If the indemnification provided for herein
is unavailable or insufficient to hold harmless the indemnified party, then
(i) the Trustee agrees in connection with a breach of the Trustee's
obligations under this Section 6.05 or the Trustee's negligence, bad faith or
willful misconduct in connection therewith that it shall contribute to the
amount paid or payable by the Servicer as a result of the losses, claims,
damages or liabilities of the Servicer in such proportion as is appropriate to
reflect the relative fault of the Servicer on the one hand and the Trustee on
the other and (ii) the Servicer agrees in connection with a breach of the
Servicer's obligations under
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this Section 6.05 or the Servicer's negligence, bad faith or willful
misconduct in connection therewith that it shall contribute to the amount paid
or payable by the Trustee as a result of the losses, claims, damages or
liabilities of the Trustee in such proportion as is appropriate to reflect the
relative fault of the Trustee on the one hand and the Servicer on the other.
(d) Upon any filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any such executed
report, statement or information.
(e) Prior to January 30 of the first year in which the Trustee is able
to do so under applicable law, the Trustee shall file a Form 15 Suspension
Notification with respect to the Trust.
[End of Article VI]
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Article VII
THE DEPOSITOR THE MORTGAGE LOAN SELLER AND THE SERVICER
Section 7.01. Respective Liabilities of the Depositor and the Mortgage
Loan Seller and the Servicer. The Depositor, the Mortgage Loan Seller and the
Servicer shall each be liable in accordance herewith only to the extent of the
obligations specifically and respectively imposed upon and undertaken by them
herein.
Section 7.02. Limitation on Liability of the Depositor, the Mortgage
Loan Seller and Others. None of the Depositor, the Mortgage Loan Seller, the
Servicer or any of the directors, officers, employees or agents of the
Depositor, the Mortgage Loan Seller or the Servicer shall be under any
liability to the Certificateholders for any action taken or for refraining
from the taking of any action in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect
the Depositor, the Mortgage Loan Seller , the Servicer or any such Person
against any breach of representations or warranties made by it herein or
protect the Depositor, the Mortgage Loan Seller, the Servicer or any such
Person from any liability that would otherwise be imposed by reasons of
willful misfeasance, bad faith or negligence in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. The
Depositor, the Mortgage Loan Seller and any director, officer, employee or
agent of the Depositor or the Mortgage Loan Seller may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Depositor, the Mortgage
Loan Seller, the Servicer and any director, officer, employee or agent of the
Depositor, the Mortgage Loan Seller and the Servicer 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 Mortgage Loan or Mortgage 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 negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder. None of the Depositor,
the Mortgage Loan Seller or the Servicer shall be under any obligation to
appear in, prosecute or defend any legal action that is not incidental to its
respective duties hereunder and that in its opinion may involve it in any
expense or liability; provided, however, that the Depositor, the Mortgage Loan
Seller or the Servicer may in its discretion undertake any such action that it
may deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and interests of the Trustee and the
Certificateholders hereunder.
Section 7.03. Servicer Indemnity.
The Servicer shall indemnify the Trust Fund against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees
and expenses of counsel and expenses of litigation, arising from claims or
actions that were caused by or resulted from the failure of the Servicer to
perform its duties and to service the Mortgage Loans in accordance with the
terms of this Agreement, the Servicer's willful misfeasance, bad faith or
negligence or its negligent disregard of its obligations.
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Section 7.04. "One-Action" Rule. If the Servicer takes any action or
fails to take any action as Servicer that results in their inability to
realize a material portion of the collateral for any Mortgage Loan as a result
of the application of a "one-action" rule or similar law, the Servicer shall
be deemed to have been conclusively negligent.
[End of Article VII]
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Article VIII
DEFAULT
Section 8.01. Events of Default. If one or more of the following
Events of Default shall occur and be continuing:
(i) Any failure by the Servicer (a) to deposit in the Collection
Account any deposit required to be made under the terms of the
Agreement that continues unremedied for a period of five Business Days
or (b) to deposit in the Distribution Account any deposit required to
be made under the terms of the Agreement which continues unremedied
for a period of one Business Day after the date upon which written
notice of such failure shall have been given to the Servicer by the
Trustee; provided, however, that if the Servicer fails to make any
deposit required by this Agreement, including any Monthly Advance,
required to made by the Servicer on the Determination Date (without
regard to any grace period), the Servicer shall pay to the Trustee,
for the account of the Trustee, interest on such late remittance at
the Prime Rate from and including the Determination Date to but
excluding the Distribution Date; or
(ii) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in the Agreement, which failure, in each case,
materially and adversely affects the interests of Certificateholders
and which continues unremedied for a period of 60 days, after the date
on which written notice of such failure, requiring the same to be
remedied, and stating that such notice is a "Notice of Default"
hereunder, shall have been given to the Servicer by the Trustee; or
(iii) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership,
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 Servicer shall voluntarily go into liquidation, consent
to the appointment of a conservator, receiver, liquidator or similar
person in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Servicer
or of or relating to all or substantially all of its property, or a
decree or order of a court, agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall have been
entered against the Servicer and such decree or order shall have
remained in force undischarged, unbonded or unstayed for a period of
60 days; or the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of
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any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations;
then, and in every such case, so long as an Event of Default shall not
have been remedied by the Servicer, the Trustee may terminate all of the
rights and obligations of the Servicer under this Agreement other than its
right to receive servicing compensation and expenses for servicing the
Mortgage Loans hereunder during any period prior to the date of such
termination and the Trustee may exercise any and all other remedies available
at law or equity. Any such notice to the Servicer shall also be given to each
Rating Agency. On or after the receipt by the Servicer of such written notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Certificates or the Mortgage Loans or otherwise, shall pass to
and be vested in a successor servicer designated by the Trustee as pledgee of
the Mortgage Loans, pursuant to and under this Section 8.01; and, without
limitation, such successor servicer or the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments,
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement of each Mortgage Loan and related documents, or
otherwise; provided, that, without affecting the immediate termination of the
rights of the Servicer hereunder, it is understood and acknowledged by the
parties hereto that there will be a period of transition, not to exceed 90
days before the servicing transfer is fully effected; and provided, further,
that any failure to perform such duties or responsibilities caused by the
Servicer's failure to provide the documents and records required by Section
8.01 hereof shall not be considered a default by the Trustee as successor to
the Servicer hereunder. The Servicer agrees to cooperate with such successor
servicer or the Trustee in effecting the termination of the responsibilities
and rights of the Servicer hereunder, including, without limitation, the
transfer to such successor servicer or the Trustee for the administration by
it of all cash amounts relating to the Mortgage Loans that shall at the time
be held by the Servicer and to be deposited by it in the Collection Account,
or that have been deposited by the Servicer in the Collection Account or
thereafter received by the Servicer with respect to the Mortgage Loans. All
reasonable costs and expenses (including, but not limited to, attorneys' fees)
incurred in connection with amending this Agreement to reflect such succession
as Servicer pursuant to this Section 8.01 shall be paid by the predecessor
Servicer (or if the predecessor Servicer is the Trustee, the initial Servicer)
upon presentation of reasonable documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 8.01(i) or under Section 8.01(ii) after the applicable grace
periods specified in such Sections, shall not constitute an Event of Default
if such delay or failure could not be prevented by the exercise of reasonable
diligence by the Servicer and such delay or failure was caused by an act of
God or the public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes. The preceding sentence shall not
relieve the Servicer from using reasonable efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Trustee and the Certificateholders with
notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations. The Servicer shall immediately notify
the Trustee in writing of any Event of Default.
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Section 8.02. Waiver of Defaults. The Trustee may waive any default by
the Servicer in the performance of its obligations hereunder and its
consequences, except that a default in the making of any required distribution
on any of the Certificates may only be waived by the affected
Certificateholders. 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 contingent
thereon except to the extent expressly so waived.
Section 8.03. Trustee to Act; Appointment of Successor.
(a) Within 90 days of the time the Servicer (and the Trustee, if
notice is sent by the Holders) receives a notice of termination pursuant to
Section 8.01, the Trustee (or such other successor Servicer as is approved in
accordance with this Agreement) shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions thereof arising on and after its
succession. Notwithstanding the foregoing, the parties hereto agree that the
Trustee, in its capacity as successor Servicer, immediately will assume all of
the obligations of the Servicer to make advances. Notwithstanding the
foregoing, the Trustee, in its capacity as successor Servicer, shall not be
responsible for the lack of information and/or documents that it cannot obtain
through reasonable efforts. As compensation therefor, the Trustee (or such
other successor Servicer) shall be entitled to such compensation as the
Servicer would be entitled to hereunder if no such notice of termination had
been given. Notwithstanding the above, (i) if the Trustee is unwilling to act
as successor Servicer or (ii) if the Trustee is legally unable so to act, the
Trustee shall appoint or petition a court of competent jurisdiction to
appoint, any established housing and home finance institution, bank or other
mortgage loan or home equity loan servicer having a net worth of not less than
$50,000,000 as the successor to the Servicer hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of the Servicer
hereunder; provided, that the appointment of any such successor Servicer will
not result in the qualification, reduction or withdrawal of the ratings
assigned to the Certificates by the Rating Agencies as evidenced by a letter
to such effect from the Rating Agencies. Pending appointment of a successor to
the 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 Mortgage Loans in an
amount equal to the compensation which the Servicer would otherwise have
received pursuant to this Agreement (or such other compensation as the Trustee
and such successor shall agree). The appointment of a successor Servicer shall
not affect any liability of the predecessor Servicer which may have arisen
under this Agreement prior to its termination as Servicer to pay any
deductible under an insurance policy to indemnify the Trustee, nor shall any
successor Servicer be liable for any acts or omissions of the predecessor
Servicer or for any breach by such Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. All
Servicing Transfer Costs shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs, and if such
predecessor Servicer defaults in its obligation to pay such costs, such costs
shall be paid by the successor Servicer or the Trustee (in which case the
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successor Servicer or the Trustee, as applicable, shall be entitled to
reimbursement therefor from the assets of the Trust) pursuant to Section
6.01(b).
Section 8.04. Notification to Certificateholders.
(a) Upon any such termination pursuant to Section 8.01, the Trustee
shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register and to each Rating
Agency.
(b) Within 60 days after obtaining actual knowledge of the occurrence
of any Event of Default, the Trustee shall transmit by mail to all Holders of
Certificates notice of each such Event of Default hereunder known to the
Trustee, unless such Event of Default has been cured or waived.
[End of Article ▇▇▇▇]
▇▇
Article IX
CONCERNING THE TRUSTEE
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence
of an Event of Default and after the curing of all Events of Default which may
have occurred, undertakes to, and is empowered to, perform such duties and
only such duties as are specifically set forth in this Agreement. Any
permissive right of the Trustee as enumerated in this Agreement shall not be
construed as a duty; provided that in case an Event of Default has occurred
(which has not been cured), the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such man's 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
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform on their face 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 intentional misconduct, and, if the Trustee is acting as the
successor Servicer pursuant to Section 8.03, its own willful misconduct with
respect to its servicing obligations; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(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 Certificateholders of any Class
holding Certificates which evidence at least 25% of the Trust Fund (on
the basis of the outstanding principal balances of the Certificates)
as 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.
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Section 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 8.01:
(i) The Trustee may request and rely upon and shall be protected
in acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document 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 accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to
institute, conduct or defend 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; nothing
contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default (which has not
been cured), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's 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 hereunder and
after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the fact or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do by
Holders of Certificates of any Class evidencing at least 25% of the
Trust Fund (on the basis of the outstanding principal balances of the
Certificates); provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such expense or
liability as a condition to such proceeding. The reasonable expense of
every such examination shall be paid by the Servicer, if an Event of
Default shall have occurred and is continuing, and otherwise by the
Certificateholder requesting the investigation; and
(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.
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Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates shall be taken as the
statements of the Depositor or the Servicer, as the case may be, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations or warranties as to the validity or sufficiency of this
Agreement or of the Certificates (except that the Certificates shall be duly
and validly authenticated by it) or of any Mortgage Loan or related document.
The Trustee shall not be accountable for the use or application by the
Depositor or the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Depositor or the Servicer.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Trustee.
Section 9.05. Trustee's Compensation and Reimbursement. The Trustee
shall be entitled to receive, on each Distribution Date, the investment
earnings on the Distribution Account pursuant to Section 6.01(c) hereof, as
compensation for all services rendered by it in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee. Upon the resignation or removal of the
Trustee, the Trustee shall only be entitled to its Trustee Fees accrued up to
the time of such resignation or removal and shall thereafter not be entitled
to any additional Trustee Fees. Notwithstanding anything to the contrary in
this Agreement, the provisions of this Section shall survive the termination
or assignment of this Agreement and the resignation or removal of the Trustee
herein.
The Trust Fund agrees to indemnify the Trustee and each of its
directors, officers, employee and agents for, and to hold them harmless
against, any loss, liability or expense incurred without negligence or bad
faith on their part, arising out of, or in connection with, the acceptance or
administration of this trust, including the costs and expenses of defending
themselves against any claim in connection with the exercise or performance of
any of their powers or duties hereunder; provided, however, the Trustee shall
have the right to consent to any settlement if the amount of such settlement
is less than full indemnification or the Trustee would not be fully released
from liability with respect to such action as a result of such settlement. Any
amounts payable to the Trustee and its directors, officers, employees or
agents, in respect of indemnification provided by this paragraph, or pursuant
to any other right of reimbursement pursuant to this Agreement that the
Trustee and its agents may have hereunder in its capacity as such may be
withdrawn by the Trustee from the Distribution Account and paid to the itself,
or its agents, at any time pursuant to Section 6.01.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation or association having its
principal office in a state and city reasonably acceptable to the Depositor
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. The
Trustee shall not be an affiliate of the Mortgage Loan Seller or the
Depositor. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the
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purposes of this Section the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect
specified in Section 9.07.
Section 9.07. Resignation and Removal of the Trustee. The Trustee may
at any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Depositor, the Servicer, any Sub-Servicer, the
Mortgage Loan Seller and the Rating Agencies. Upon receiving such notice of
resignation, the Depositor and the Servicer shall promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Trustee and one copy to the successor
trustee; provided that such appointment does not result in a reduction or
withdrawal of the rating of the Certificates. The Depositor and the Servicer
shall make a good faith effort to appoint a successor within 30 days of its
receipt of such notice. The Depositor and the Servicer shall indemnify the
Trustee for any loss, liability, or expense incurred as a result of the
Depositor's and the Servicer's failure to make a good faith effort to appoint
a successor Trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 60 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06, (ii) the Depositor and the
Servicer have delivered to the Trustee a letter from any Rating Agency to the
effect that the rating of the Certificates has been or is about to be reduced
or withdrawn on account of a reduction in the long-term credit rating of the
Trustee or the parent of the Trustee and the Trustee shall fail to resign
after written request therefor by the Depositor and the Servicer, or (iii) the
Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor and the Servicer may remove the Trustee and
appoint a successor trustee 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.
The Holders of Certificates evidencing in the aggregate more than 50%
of the Trust Fund (on the basis of the outstanding principal balances of the
Certificates) may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Depositor, one complete set to the
Trustee so removed and one complete set to the successor so appointed. If the
Trustee is removed without cause, the terminating party shall be responsible
for all expenses incurred in connection with the removal of the Trustee and
the assumption of the Trustee's duties by a successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 9.08.
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Section 9.08. Successor Trustee. Any successor trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to 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 the
like effect as if originally named as trustee herein. The predecessor trustee
shall deliver to the successor trustee all Mortgage Files and related
documents and statements held by it hereunder, and the Depositor, the Servicer
and the predecessor trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers,
duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 9.06 and the Depositor shall have
received written notice from each Rating Agency that the appointment of the
successor trustee will not result in reduction of the then current rating on
the Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown
in the Certificate Register, and to each Rating Agency, the Servicer and any
Sub-Servicer. If the Depositor fails to mail such notice within 10 days after
acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Depositor.
Section 9.09. Merger or Consolidation of Trustee. Any corporation or
national banking association into which the Trustee may be merged or converted
or with which it may be consolidated or any corporation or national banking
association resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation or national banking
association succeeding to the business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation or national banking
association shall be eligible under the provisions of Section 9.06, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding.
Section 9.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, of
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity, such title to the Trust Fund, or any part thereof, and, subject to
the other provisions of this Section 9.10, such powers, duties, obligations,
rights and trusts as the Depositor and the Trustee may consider necessary or
desirable. If the Depositor shall not have joined in such appointment within
15 days after the receipt by it of a request 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 hereunder and no notice
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to Holders of Certificates of the appointment of co-trustee(s) or
separate trustee(s) shall be required under Section 9.08 hereof. No co-trustee
shall be obligated to make any Monthly Advances required pursuant to Section
6.03.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Fund or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee at the direction of the
Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article IX. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of it
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. Appointment of Office or Agency. The Trustee may appoint
an office or agency in the City of New York where Certificates may be
surrendered for registration of transfer or exchange. As of the Closing Date,
the Trustee designates its offices located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ for purposes of surrendering Certificates
for registration, transfer, exchange or termination. The Trustee will maintain
an office at the address stated in Section 11.08 hereof where notices and
demands to or upon the Trustee in respect of the Certificates may be served.
[End of Article IX]
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Article X
TERMINATION
Section 10.01. Termination. Subject to Section 10.02, the respective
obligations and responsibilities of the Depositor, the Servicer, the Mortgage
Loan Seller and the Trustee (except the duty to pay the Trustee's fees and
expenses and indemnification hereunder) created hereby with respect to the
Trust Fund shall terminate upon the earlier of (a) the purchase by the
Servicer of all Mortgage Loans (and REO Properties) remaining in the Trust
Fund as described below and (b) the later of (i) the maturity or other
liquidation (or any Monthly Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all REO Property; and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement. In no event shall the trusts
created hereby continue beyond the earlier of: (i) 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. James's, living
on the date hereof or (ii) the Final Scheduled Distribution Date.
The Servicer shall have the right to purchase all Mortgage Loans and
REO Properties in the Trust Fund on the first Distribution Date after the date
on which the Pool Principal Balance, at the time of any such repurchase, is
less than or equal to ten percent (10%) of the Original Pool Principal Balance
as of the Cut-off Date. Should the Servicer choose to exercise this option,
the Servicer will be required to effect such repurchase at the price equal to
the sum of (i) 100% of the Stated Principal Balance of Mortgage Loans (other
than in respect of REO Property) plus any unreimbursed Monthly Advances or
Servicing Advances with respect thereto and accrued and unpaid interest
thereon at the applicable weighted average Mortgage Rate (net of the related
Servicing Fee Rate) in effect for such Distribution Date to but not including
such Distribution Date; (ii) the appraised value of any REO Property (up to
the Stated Principal Balance of the related Mortgage Loan) (less the good
faith estimate of the Servicer of Servicing Advances to be incurred in
connection with its disposal thereof), such appraisal to be conducted by an
appraiser mutually agreed upon by the Servicer, the Mortgage Loan Seller and
the Trustee; and (iii) any amounts then owed to the Trustee with respect to
the Mortgage Loans under this Agreement.
If on any Determination Date, (i) the Servicer determines that there
are no Outstanding Mortgage Loans and no other funds or assets in the Trust
Fund other than the funds in the Collection Account, the Servicer shall inform
the Trustee, whereupon the Trustee shall send a final distribution notice
promptly to each Certificateholder or (ii) the Trustee determines that a Class
of Certificates shall be retired after a final distribution on such Class, the
Trustee shall notify the Certificateholders within two (2) Business Days after
such Determination Date that the final distribution in retirement of such
Class of Certificates is scheduled to be made on the immediately following
Distribution Date. Any final distribution made pursuant to the immediately
preceding sentence will be made only upon presentation and surrender of the
related Certificates at the Corporate Trust Office of the Trustee.
Notice of any final distribution due to a complete or partial
termination described in the first or second paragraph of this Section,
specifying the Distribution Date upon which all or the Certificateholders may
surrender their Certificates to the Trustee for payment and cancellation,
94
shall be given promptly by the Trustee by letter to Certificateholders and the
Rating Agencies mailed no later than the 22nd day of the month preceding the
month of such final distribution; provided, that in the event the Trustee
determines that the Trust Fund will be terminated pursuant to clause (a) of
the first paragraph of this Section 10.01, the Trustee shall notify the
Certificateholders thereof no later than the twelve (12th) day preceding such
final distribution. If the Servicer elects to terminate the Trust Fund
pursuant to the second paragraph of this Section 10.01, at least 15 days prior
to the date notice is to be mailed to the affected Certificateholders, the
Servicer shall notify the Depositor and the Trustee of the date the Servicer
intends to terminate the Trust Fund and of the applicable purchase price of
the Mortgage Loans and REO Properties. Any such notice shall specify (i) the
Distribution Date upon which final payment on 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 payment, (iii)
the location of the office or agency at which such presentation and surrender
must be made, and (iv) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of such Certificates at the office or agency of the
Trustee therein specified. After giving such notice, the Trustee shall not
register the transfer or exchange of any Certificates.
In the event notice of termination pursuant to the second paragraph of
this Section is given, the Servicer shall deliver to the Trustee for deposit
in the Distribution Account, no later than 10:00 a.m. New York time on the day
prior to the applicable Distribution Date, an amount equal to the price set
forth in the second paragraph of this Section 10.01. Following such final
deposit the Trustee shall promptly release to the Servicer the Mortgage Files
for the remaining Mortgage Loan and the Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer and
shall have no further responsibility with regard to such Mortgage Files.
Upon presentation and surrender of the Certificates then outstanding,
the Trustee shall on the final Distribution Date therefor distribute in the
following amounts and order of priority, to the extent of available funds on
deposit in the Distribution Account, (i) as to the Trustee and the Holders of
the Certificates then outstanding, the amounts otherwise distributable to the
Trustee and the Holders of such Classes of Certificates on such Distribution
Date pursuant to Section 6.01(a); (ii) as to the Trustee, any other amounts
then owed to them under this Agreement; and (iii) as to the related Class A-R
Certificates, the amount, if any, that remains on deposit in the Distribution
Account (other than the amounts retained with respect to the Mortgage Loan to
meet claims) after application pursuant to clauses (i) and (ii) above.
In the event that any affected Certificateholders shall not present
and surrender Certificates within three months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to present and surrender their
Certificates and receive the final distribution with respect thereto. If
within three months after the second notice all the applicable Certificates
shall not have been surrendered, the Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. Subject to applicable laws with respect to escheat of funds,
any money held in the Distribution Account for the benefit of the remaining
Certificateholders and remaining unclaimed for one year after the
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second notice has been given shall be discharged from the Trust Fund
and be paid to the Class A-R Certificateholder; and the remaining related
Certificateholders shall thereafter, as unsecured general creditors, look only
to the Class A-R Certificateholders for payment thereof (but only to the
extent of the amounts so paid to the related Class A-R Certificateholder), and
all liability of the Trustee with respect to such trust money shall thereafter
cease.
Section 10.02. Additional Termination Requirements.
(a) In the event the REMICs are terminated as provided in Section
10.01, each REMIC created hereunder shall be terminated in accordance with the
following additional requirements, unless the Trustee has received an Opinion
of Independent Counsel, at the expense of the Servicer, to the effect that the
failure to comply with the requirements of this Section 10.02 will not (i)
result in the imposition of taxes on "prohibited transactions" of the related
REMIC as defined in Section 860F of the Code, or (ii) cause the related REMIC
(exclusive of the Flex Source(TM) Pledge Agreements, the Pre-Funding Account
(including the funds therein and Pre-Funding Earnings) and the Reserve Fund
(including the funds therein)) to fail to qualify as a REMIC at any time that
any related Certificates are outstanding:
(i) The Mortgage Loan Seller shall establish a 90-day
liquidation period and notify the Trustee thereof, which shall in turn
specify the first day of such period in a statement attached to the
final tax returns of the Trust Fund pursuant to Treasury Regulation
ss. 1.860F-1. The Mortgage Loan Seller shall satisfy all requirements
of a qualified liquidation under Section 860F of the Code and any
regulations thereunder, as evidenced by an Independent Opinion of
Counsel obtained at the expense of the Mortgage Loan Seller;
(ii) During such 90-day liquidation period, and at or prior to
the Distribution Date for the final distribution, the Mortgage Loan
Seller as agent of the Trustee shall sell all of the assets of the
Trust Fund for cash; and
(iii) At the time of the final payment on the related
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the related Class A-R Certificateholder
all cash on hand (other than cash retained to meet claims), and the
Trust Fund shall terminate at that time.
96
Article XI
MISCELLANEOUS PROVISIONS
Section 11.01. 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.
Section 11.02. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding-up of the Trust Fund, nor
otherwise affect the rights, obligations, and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement unless such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as hereinbefore provided, and the Holders of
Certificates evidencing in the aggregate not less than 25% of the Trust Fund
(on the basis of the principal balances of the Certificates) 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 of any Class shall have any right in any
manner whatever by virtue of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of such
Certificates of such Class or any other Class, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the common
benefit of Certificateholders of such Class or all Classes, as the case may
be. For the protection and enforcement of the provisions of this Section, each
and every Certificateholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.
Section 11.03. Amendment. This Agreement may be amended from time to
time by the Depositor, the Mortgage Loan Seller, the Servicer and the Trustee
without the consent of any of
97
the Certificateholders, (i) to cure or correct any ambiguity, mistake
or error, (ii) to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein or with the Prospectus
Supplement or Prospectus pursuant to which the Class A and Public Subordinate
Certificates were offered, (iii) to obtain a rating by a nationally recognized
rating agency or to maintain or improve the rating of any Class of
Certificates then given by a rating agency (it being understood that, after
obtaining the rating of such Class of Certificates at the Closing Date, none
of the Trustee, the Depositor, the Mortgage Loan Seller or the Servicer is
obligated to obtain, maintain or improve any rating of any Class of
Certificates), or (iv) to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be materially
inconsistent with the provisions of this Agreement, including without
limitation provisions relating to the issuance of Definitive Certificates to
Certificate Owners if book-entry registration of any Class of Certificates
that is a Class of Book-Entry Certificates as of the Closing Date is no longer
permitted; provided that, in the case of clause (iv), such action shall not,
as evidenced by an Opinion of Independent Counsel, adversely affect in any
material respect the interests of any Certificateholder.
This Agreement may also be amended from time to time by the Depositor,
the Mortgage Loan Seller, the Servicer and the Trustee, with the consent of
the Holders of Certificates of each Class affected thereby, evidencing, as to
each such Class, Percentage Interests aggregating not less than 66%, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the
rights of the Holders of Certificates of such Class; provided, however, that
no such amendment shall (i) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate or (ii) reduce the aforesaid percentage of Certificates of any
class the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding.
The Depositor, the Mortgage Loan Seller, the Servicer and the Trustee,
may from time to time amend this Agreement without the consent of any of the
Certificateholders to modify, eliminate or add to any of the provisions hereof
to the extent necessary to maintain the qualification of each of the
Subsidiary REMIC and the Master REMIC (exclusive of the Flex Source(TM) Pledge
Agreements, the Pre-Funding Account (including the funds therein and
Pre-Funding Earnings) and the Reserve Fund (including the funds therein)) as a
REMIC or to avoid the imposition of any material tax liability thereon at all
times that any Certificate is outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish written notification of such amendment to each Certificateholder and
the Rating Agencies.
It shall not be necessary for the consent of Certificateholders under
this Section 11.03 to approve the particular form of any proposed amendment
but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
Notwithstanding any provisions of this Agreement, the Trustee shall
not consent to any amendment to this Agreement unless it shall first receive
an Opinion of Counsel to the effect that
98
such amendment will not result in the imposition of a tax on the Trust
Fund or cause any of Subsidiary REMIC or the Master REMIC (exclusive of the
Flex Source(TM) Pledge Agreements, the Pre-Funding Account (including the funds
therein and Pre-Funding Earnings) and the Reserve Fund (including the funds
therein)) fail to qualify as a REMIC at any time that any Certificates are
outstanding. In no event shall any Opinion of Counsel provided pursuant to
this Section 11.03 be an expense of the Trustee.
Section 11.04. Recordation of Agreement; Counterparts. To the extent
permitted by applicable law, this Agreement is subject to recordation in all
appropriate public offices for real property records in all the counties or
other comparable jurisdictions in which any or all of the properties subject
to the Mortgages are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Mortgage Loan
Seller at the Mortgage Loan Seller's expense on direction of the Trustee
accompanied by an Opinion of Counsel (which shall not be an expense of the
Trustee) to the effect that such recordation materially and beneficially
affects the interests of the Certificateholders or is necessary for the
administration or servicing of the Mortgage Loans.
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 11.05. Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 11.06. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Section 11.07. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Depositor, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Capital I Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust, (ii) in the case of the
Servicer, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, (iii) in the
case of the Mortgage Loan Seller, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit
Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, (iv) in the case of the Trustee, at the
Corporate Trust Office, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I, Mortgage Pass-Through
Certificates, Series 2003-HYB1, with a copy to ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ or, with respect to custodial matters, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital
2003-HYB1 Trust, Mortgage Pass-Through Certificates, Series 2003-HYB1, (v) in
the case of ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Structured Finance Surveillance, (vi) in the case of
Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Mortgage Surveillance Group, or (vii) in the case of any of the foregoing
persons, such other addresses as may hereafter be furnished by any such
persons to the other parties to this Agreement. Notice to a Certificateholder
shall be sent
99
U.S. mail first class postage prepaid and shall be deemed given
when mailed addressed to the address shown in the Certificate Register, by
facsimile or by electronic mail.
[End of Article XI]
100
IN WITNESS WHEREOF, the Depositor, the Servicer, the Mortgage Loan
Seller and the Trustee have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first
above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
CAPITAL I, INC., as Depositor
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
CREDIT CORPORATION,
as Servicer and Mortgage Loan Seller
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ Fargo Bank Minnesota,
National Association,
as Trustee
By /s/ ▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Vice President
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 25th day of
February, 2003, by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as Vice President of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ Capital I, Inc., a Delaware corporation, on behalf of the
corporation. He/She/They
( X) is/are personally known to me; or
( ) produced a ________ driver's license as identification; or
( ) produced _________________ as identification.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇, Notary
----------------------------
Public, State of New York
My commission expires: 6/5/2003
Serial No.01BR6023627
(Notarial Seal)
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 26th day of
February, 2003, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Vice President of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ Credit Corp., a Delaware corporation, on behalf of the corporation.
He/She/They
(X ) is/are personally known to me; or
( ) produced a ________ driver's license as identification; or
( ) produced _________________ as identification.
▇▇▇▇▇ ▇▇▇▇▇▇▇,
--------------------------------
Notary Public, State of New York
My commission expires: 03/03/2007
Serial No. 01C06088262
(Notarial Seal)
STATE OF MARYLAND )
) ss.:
COUNTY OF ▇▇▇▇▇▇ )
On the 27th day of February 2003, before me, a notary public in and
for said State, personally appeared ▇▇▇ ▇▇▇▇▇, known to me to be an
Vice President of ▇▇▇▇▇ Fargo Bank Minnesota, National Association, that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said banking association, and acknowledged to me that
such banking association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first written.
/s/ ▇▇▇▇ ▇▇▇▇
--------------------------
Notary Public
[Notarial Seal]
My Commission expires: October 17, 2005
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[On File With The Trustee]
A-1
EXHIBIT B
[CONTENTS OF MORTGAGE FILE]
With respect to each Mortgage Loan, the Mortgage File shall include each
of the following items:
A. With respect to Residential Mortgage Loans:
(i) the original note or other evidence of indebtedness (the
"Mortgage Note") of the obligor thereon (each such obligor, a
"Mortgagor") bearing all intervening endorsements, endorsed "Pay to the
order of ______ without recourse" and signed in the name of the last
endorsee (the "Last Endorsee") by an authorized officer (in the event
that the Mortgage Loan was acquired by the Last Endorsee in a merger, the
signature must be in the following form: "[Last Endorsee], successor by
merger to [name of predecessor]"; in the event that the Mortgage Loan was
acquired or originated by the Last Endorsee while doing business under
another name, the signature must be in the following form: "[the Last
Endorsee], formerly known as [previous name]");
(ii) the original mortgage, deed of trust or other instrument (the
"Mortgage") creating a first lien on the underlying property securing the
Mortgage Loan (the "Mortgaged Property") and bearing evidence that such
instrument has been recorded in the appropriate jurisdiction where the
Mortgaged Property is located (or, in lieu of the original of the
Mortgage, a true copy certified by the originator, or a duplicate or
conformed copy of the Mortgage, together with a certificate of either the
closing attorney or an officer of the title insurer that issued the
related title insurance policy, or a certificate of receipt from the
recording office, certifying that such copy represents a true and correct
copy of the original and that such original has been or is currently
submitted to be recorded in the appropriate governmental recording office
of the jurisdiction where the Mortgaged Property is located);
(iii) an original or copy of the assignment of the Mortgage (the
"Assignment of Mortgage"), in blank, in form and substance acceptable for
recording in the relevant jurisdiction and signed in the name of the Last
Endorsee (in the event that the Mortgage Loan was acquired by the Last
Endorsee in a merger, the signature must be in the following form: "[the
Last Endorsee], successor by merger to [name of predecessor"]; in the
event that the Mortgage Loan was acquired or originated while doing
business and under another name, the signature must be in the following
form: "[the Last Endorsee], formerly known as [previous name]");
(iv) the originals or certified copies of all intervening
assignments of the Mortgage, if any, with evidence of recording thereon,
showing a complete chain of title to the Last Endorsee, including any
warehousing assignment;
(v) any assumption, modification, written assurance, substitution,
consolidation, extension or guaranty agreement, if applicable;
B-1
(vi) the original policy of title insurance (or a true copy thereof)
with respect to any Mortgage Loan, or, if such policy has not yet been
delivered by the insurer, the title commitment or title binder to issue
same; and
(vii) if the Mortgage Note or Mortgage or any other material
document or instrument relating to the Mortgage Loan has been signed by a
person on behalf of the Mortgagor, the original power of attorney or
other instrument that authorized and empowered such person to sign
bearing evidence that such instrument has been recorded, if so required,
in the appropriate jurisdiction where the Mortgaged Property is located
(or, in lieu thereof, a duplicate or conformed copy of such instrument,
together with a certificate of receipt from the recording office,
certifying that such copy represents a true and complete copy of the
original and that such original has been or is currently submitted to be
recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located); and
(viii) copy of the original pledge documentation for any Additional
Collateral.
B. With respect to Co-op Mortgage Loans:
(i) the original note or other evidence of indebtedness (the
"Mortgage Note") of the obligor thereon (each such obligor, a
"Mortgagor") bearing all intervening endorsements, endorsed "Pay to the
order of ______ without recourse" and signed in the name of the last
endorsee (the "Last Endorsee") by an authorized officer (in the event
that the Mortgage Loan was acquired by the Last Endorsee in a merger, the
signature must be in the following form: "[Last Endorsee], successor by
merger to [name of predecessor]"; in the event that the Mortgage Loan was
acquired or originated by the Last Endorsee while doing business under
another name, the signature must be in the following form: "[the Last
Endorsee], formerly known as [previous name]");
(ii) the original loan and security agreement;
(iii) the original cooperative shares;
(iv) a stock power executed in blank by the person in whose name the
cooperative shares are issued;
(v) the proprietary lease or occupancy agreement accompanied by an
assignment in blank of such proprietary lease;
(vi) the recognition agreement executed by the cooperative
corporation, which requires the cooperative corporation to recognize the
rights of the lender and its successors in interest and assigns, under
the Co-op Mortgage Loan;
(vii) UCC-1 financing statements with recording information thereon
from the appropriate governmental recording offices if necessary to
perfect the security interest of the Co-op Mortgage Loan under the
Uniform Commercial Code in the jurisdiction in which the cooperative
project is located, accompanied by UCC-3 financing statements executed in
blank for recordation of the change in the secured party thereunder;
B-2
(viii) the original policy of title insurance or with respect to any
Mortgage Loan, if such policy has not yet been delivered by the insurer,
the title commitment or title binder to issue same; and
(ix) any guarantees, if applicable.
B-3
EXHIBIT C
FORM OF FACE OF CLASS A-[/ /] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
CLASS A-[o]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CAPITAL I 2003-HYB1 TRUST
Mortgage Pass-Through Certificates,
SERIES 2003-HYB1
NUMBER: 1 ORIGINAL DENOMINATION
DATE OF POOLING $[o]
AND SERVICING AGREEMENT:
FEBRUARY 1, 2003
CUT-OFF DATE:
FEBRUARY 1, 2003
FINAL SCHEDULED ORIGINAL CLASS A-[o] PRINCIPAL
MATURITY DATE: BALANCE: $[o]
March 25, 2033
FIRST DISTRIBUTION DATE:
MARCH 25, 2003 CUSIP [o]
C-1
evidencing a percentage interest in the distributions allocable to the
Certificates of the above referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed-to-adjustable rate conventional
mortgage loans (the "Mortgage Loans") secured by first liens on one- to
four-family residential properties.
This Certificate does not represent an obligation of or interest in
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., the Servicer, the Mortgage Loan
Seller or the Trustee referred to below or any of their Affiliates. Neither
this Certificate nor the Mortgage Loans are guaranteed or insured by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., the Servicer, the Mortgage Loan Seller,
the Trustee or by any of their Affiliates or by any governmental agency or
instrumentality.
The principal balances of the Mortgage Loans evidenced by this
Certificate ("Certificate Balance") will be reduced by a portion of the
payments on such Mortgage Loans. Accordingly, following the initial issuance
of the Certificates, the Certificate Balance of this Certificate will be
different from the original denomination shown above.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination
of this Certificate by the aggregate Initial Certificate Balances of all
Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of a
pool (the "Mortgage Pool") of the Mortgage Loans formed and sold by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement referred to below) and
certain other property held in trust for the benefit of Certificateholders
including amounts held in the Pre-Funding Account and the Reserve Fund
(collectively, the "Trust Fund"). The Mortgage Loans are serviced by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation, as servicer (the "Servicer"). The
Mortgage Loans were sold to the Depositor by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit
Corporation, as seller (the "Mortgage Loan Seller"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement") among the Depositor, the Servicer, the
Mortgage Loan Seller and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
trustee (the "Trustee"). To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust, Mortgage
Pass-Through Certificates, Series 2003-HYB1, Class A-[o] (the "Class A-[o]
Certificates") and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
All payments made under this Certificate will be made in accordance with the
terms of the Agreement.
Pursuant to the terms of the Agreement, the Trustee will distribute from
certain funds in the Distribution Account on the 25th day of each month or, if
such 25th day is not a Business Day, the first Business Day immediately
following (the "Distribution Date"), commencing on March 25, 2003, to the
Person in whose name this Certificate is registered on the related Record
Date, all amounts required to be distributed to the Holder of this Certificate
and pursuant to the Agreement.
C-2
Distributions on this Certificate will be made by the Trustee either by
check mailed to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, or, by wire transfer in
immediately available funds to the account of such Holder at a bank or other
financial or depository institution having appropriate facilities therefor, if
such Holder has so notified the Trustee in writing at least five Business Days
prior to the Record Date for such Distribution Date. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and specified in such notice of
final distribution.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the Trustee or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede
& Co. or to such other entity as is requested by an authorized representative
of DTC, any transfer, pledge or other use hereof for value or otherwise by or
to any person is wrongful inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.
Reference is hereby made to the further provisions of this Certificate
set forth, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
C-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: February , 2003
▇▇▇▇▇ Fargo Bank Minnesota,
National Association,
as Trustee
By: ______________________________________________
Authorized Signatory
FORM OF CERTIFICATE OF
AUTHENTICATION
THIS IS ONE OF THE CLASS A-[o] CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED AGREEMENT
▇▇▇▇▇ Fargo Bank Minnesota, National Association,
as Trustee
By: __________________________________________
Authorized Signatory
C-4
REVERSE OF CLASS A-[o] CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates,
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust, Mortgage
Pass-Through Certificates, Series 2003-1, and representing a beneficial
ownership interest in the Trust Fund.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer and the Trustee with the consent of
the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange therefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
The Trustee will cause to be kept at its Corporate Trust Office in
Minneapolis, Minnesota, or at the office of its designated agent, a
Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Trustee will provide for the registration of Certificates
and of transfers and exchanges of Certificates. Upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose, the Trustee will, subject to the
limitations set forth in the Agreement, authenticate and deliver, in the name
of the designated transferee or transferees, a Certificate of a like Class and
aggregate Percentage Interest and dated the date of authentication by the
Trustee.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer and the
Trustee shall treat the person in whose name any Certificate is registered as
the owner of such Certificate and the Percentage Interest in the Trust Fund
evidenced thereby for the purpose of receiving distributions pursuant to the
Agreement and for all other purposes whatsoever, and neither the Depositor,
the Servicer nor the Trustee will be affected by notice to the contrary.
The respective obligations and responsibilities of the Depositor, the
Servicer, the Mortgage Loan Seller and the Trustee under the Agreement will
terminate upon the later of the
C-5
final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan remaining in the Trust Fund or the disposition of all
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and the remittance of all funds due thereunder. The Servicer may
purchase all the Mortgage Loans on any Distribution Date which occurs in the
month following a Due Date on which the aggregate Stated Principal Balance of
all outstanding Mortgage Loans is 10% or less of the Original Pool Principal
Balance to be allocated to the purchase of Mortgage Loans in accordance with
the provisions set forth in the Agreement; 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. James's, living on
the date hereof.
C-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
___________________________
___________________________
_______________________________________________________________________
(Please Print or Typewrite Name and Address of Assignee)
_______________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does
irrevocably constitute and appoint
_____________________________________________________ Attorney
to transfer the within Certificate on the books kept for the registration
thereof, with full power of substitution in the premises.
Dated:
(Signature guaranty) _____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon
the face of the within Certificate in every
particular, without alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
C-7
EXHIBIT D
FORM OF FACE OF CLASS B-[o] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO
CERTAIN CERTIFICATES AS DESCRIBED IN THE AGREEMENT
REFERRED TO HEREIN.
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE
OR TRANSFER OF THIS CERTIFICATE WITHOUT REGISTRATION
THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION
EXEMPTED FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND
IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT
REFERRED TO HEREIN.]
[NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE
TRANSFERRED UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE
EITHER A REPRESENTATION LETTER TO THE EFFECT THAT SUCH
TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE, OR
A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF
SUCH A PLAN, OR THAT SUCH TRANSFEREE IS AN INSURANCE
D-1
COMPANY WHICH IS PURCHASING CERTIFICATES WITH FUNDS
CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" AS
SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), AND THAT
THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED
UNDER SECTION I AND III OF PTCE 95-60 OR AN OPINION OF
COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT
REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE
CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS
CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN
SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE
SHALL BE VOID AND OF NO EFFECT.]
CLASS B-[o]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CAPITAL I 2003-HYB1 TRUST
Mortgage Pass-Through Certificates,
SERIES 2003-HYB1
NUMBER: 1 ORIGINAL DENOMINATION
DATE OF POOLING $[o]
AND SERVICING AGREEMENT:
FEBRUARY 1, 2003
CUT-OFF DATE:
FEBRUARY 1, 2003
FINAL SCHEDULED ORIGINAL CLASS B-[o] PRINCIPAL
MATURITY DATE: BALANCE: $[o]
March 25, 2033
FIRST DISTRIBUTION DATE: CUSIP [o]
MARCH 25, 2003
evidencing a percentage interest in the distributions allocable to the
Certificates of the above referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed-to-adjustable rate conventional
mortgage loans (the "Mortgage Loans") secured by first liens on one- to
four-family residential properties.
This Certificate does not represent an obligation of or interest in
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., the Servicer, the Mortgage Loan
Seller or the Trustee referred to below or any of their Affiliates. Neither
this Certificate nor the Mortgage Loans are guaranteed or insured by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., the Servicer, the
D-2
Mortgage Loan Seller, the Trustee or by any of their Affiliates or by any
governmental agency or instrumentality.
THe principal balances of the Mortgage Loans evidenced by this
Certificate ("Certificate Balance") will be reduced by a portion of the
payments on such Mortgage Loans. Accordingly, following the initial issuance
of the Certificates, the Certificate Balance of this Certificate will be
different from the original denomination shown above.
This certifies that [CEDE & CO.] [NAME OF HOLDER IF PHYSICAL] is the
registered owner of the Percentage Interest evidenced by this Certificate
(obtained by dividing the denomination of this Certificate by the aggregate
Initial Certificate Balances of all Certificates of the Class to which this
Certificate belongs) in certain monthly distributions with respect to a Trust
Fund consisting primarily of a pool (the "Mortgage Pool") of the Mortgage
Loans formed and sold by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc.
(hereinafter called the "Depositor", which term includes any successor entity
under the Agreement referred to below) and certain other property held in
trust for the benefit of Certificateholders including amounts held in the
Pre-Funding Account and the Reserve Fund (collectively, the "Trust Fund"). The
Mortgage Loans are serviced by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation,
as servicer (the "Servicer"). The Mortgage Loans were sold to the Depositor by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation, as seller (the "Mortgage Loan
Seller"). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement") among
the Depositor, the Servicer, the Mortgage Loan Seller and ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned
in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust, Mortgage
Pass-Through Certificates, Series 2003-HYB1, Class B-[o] (the "Class B-[o]
Certificates") and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
All payments made under this Certificate will be made in accordance with the
terms of the Agreement.
Pursuant to the terms of the Agreement, the Trustee will distribute from
certain funds in the Distribution Account on the 25th day of each month or, if
such 25th day is not a Business Day, the first Business Day immediately
following (the "Distribution Date"), commencing on March 25, 2003, to the
Person in whose name this Certificate is registered on the related Record
Date, all amounts required to be distributed to the Holder of this Certificate
and pursuant to the Agreement.
Distributions on this Certificate will be made by the Trustee either by
check mailed to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, or, by wire transfer in
immediately available funds to the account of such Holder at a bank or other
financial or depository institution having appropriate facilities therefor, if
such Holder has so notified the Trustee in writing at least five Business Days
prior to the Record Date for such Distribution Date. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
D-3
presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and specified in such notice of
final distribution.
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the Trustee or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede
& Co. or to such other entity as is requested by an authorized representative
of DTC, any transfer, pledge or other use hereof for value or otherwise by or
to any person is wrongful inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.]
[No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act
and such laws, in order to assure compliance with the Securities Act and such
laws, the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee
in writing the facts surrounding the transfer. In the event that such a
transfer is to be made within three years from the date of the initial
issuance of Certificates pursuant hereto, there shall also be delivered
(except in the case of a transfer pursuant to Rule 144A of the Securities Act)
to the Trustee an Opinion of Counsel that such transfer may be made pursuant
to an exemption from the Securities Act and such state securities laws, which
Opinion of Counsel shall not be obtained at the expense of the Trustee, the
Mortgage Loan Seller, the Master Servicer or the Depositor. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify
the Trustee and the Depositor against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.]
[No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of or investing plan assets of any such
plan, which representation letter shall not be an expense of the Trustee or
the Master Servicer, (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of
such Certificates are covered under Sections I and III of PTCE 95-60, or (iii)
in the case of any such Certificate presented for registration in the name of
an employee benefit plan subject to ERISA or Section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan or any other person acting on behalf of any such plan, an Opinion of
Counsel satisfactory to the Trustee and the Master Servicer to the effect that
the purchase or holding of such Certificate will not result in a prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code, and will
not subject the Trustee, the Depositor, the Mortgage Loan Seller or the
Servicer to any obligation in addition to those undertaken in the Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the
Depositor, the Mortgage Loan Seller or the Servicer. Notwithstanding anything
else
D-4
to the contrary herein, any purported transfer of a Certificate of this Class
to or on behalf of an employee benefit plan subject to ERISA or to the Code
without the opinion of counsel satisfactory to the Trustee as described above
shall be void and of no effect.]
Reference is hereby made to the further provisions of this Certificate
set forth, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: February , 2003
▇▇▇▇▇ Fargo Bank Minnesota,
National Association,
as Trustee
By: ________________________________________________
Authorized Signatory
FORM OF CERTIFICATE OF
AUTHENTICATION
THIS IS ONE OF THE CLASS B-[o] CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED AGREEMENT
▇▇▇▇▇ Fargo Bank Minnesota, National Association,
as Trustee
By: _____________________________________
Authorized Signatory
D-5
REVERSE OF CLASS B-[o] CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates,
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust, Mortgage
Pass-Through Certificates, Series 2003-1, and representing a beneficial
ownership interest in the Trust Fund.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer and the Trustee with the consent of
the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange therefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
The Trustee will cause to be kept at its Corporate Trust Office in
Minneapolis, Minnesota, or at the office of its designated agent, a
Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Trustee will provide for the registration of Certificates
and of transfers and exchanges of Certificates. Upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose, the Trustee will, subject to the
limitations set forth in the Agreement, authenticate and deliver, in the name
of the designated transferee or transferees, a Certificate of a like Class and
aggregate Percentage Interest and dated the date of authentication by the
Trustee.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer and the
Trustee shall treat the person in whose name any Certificate is registered as
the owner of such Certificate and the Percentage Interest in the Trust Fund
evidenced thereby for the purpose of receiving distributions pursuant to the
Agreement and for all other purposes whatsoever, and neither the Depositor,
the Servicer nor the Trustee will be affected by notice to the contrary.
The respective obligations and responsibilities of the Depositor, the
Servicer, the Mortgage Loan Seller and the Trustee under the Agreement will
terminate upon the later of the
D-6
final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan remaining in the Trust Fund or the disposition of all
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and the remittance of all funds due thereunder. The Servicer may
purchase all the Mortgage Loans on any Distribution Date which occurs in the
month following a Due Date on which the aggregate Stated Principal Balance of
all outstanding Mortgage Loans is 10% or less of the Original Pool Principal
Balance to be allocated to the purchase of Mortgage Loans in accordance with
the provisions set forth in the Agreement; 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. James's, living on
the date hereof.
D-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
___________________________
___________________________
_______________________________________________________________
(Please Print or Typewrite Name and Address of Assignee)
_______________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
___________________________________ Attorney
to transfer the within Certificate on the books kept for the registration
thereof, with full power of substitution in the premises.
Dated:
(Signature guaranty) _________________________________________
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
D-8
EXHIBIT E
FORM OF FACE OF CLASS A-X CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE HAS NO PRINCIPAL BALANCE AND IS NOT
ENTITLED TO ANY DISTRIBUTION IN RESPECT OF PRINCIPAL.
CLASS A-X
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CAPITAL I 2003-HYB1 TRUST
Mortgage Pass-Through Certificates,
SERIES 2003-HYB1
NUMBER: 1 ORIGINAL NOTIONAL AMOUNT OF THIS
CERTIFICATE
DATE OF POOLING $[o]
AND SERVICING AGREEMENT:
FEBRUARY 1, 2003
CUT-OFF DATE:
FEBRUARY 1, 2003
FINAL SCHEDULED ORIGINAL CLASS A-X NOTIONAL
MATURITY DATE: AMOUNT: $[/ /]
March 25, 2033
E-1
FIRST DISTRIBUTION DATE: CUSIP [o]
MARCH 25, 2003
evidencing a percentage interest in the distributions allocable to the
Certificates of the above referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed-to-adjustable rate conventional
mortgage loans (the "Mortgage Loans") secured by first liens on one- to
four-family residential properties.
This Certificate does not represent an obligation of or interest in
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., the Servicer, the Mortgage Loan
Seller or the Trustee referred to below or any of their Affiliates. Neither
this Certificate nor the Mortgage Loans are guaranteed or insured by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., the Servicer, the Mortgage Loan Seller,
the Trustee or by any of their Affiliates or by any governmental agency or
instrumentality.
The Notional Amount of this Certificate will be reduced by a portion of
the payments on the Mortgage Loans. Accordingly, following the initial
issuance of the Certificates, the Notional Amount of this Certificate will be
different from the original denomination shown above.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the denomination
of this Certificate by the aggregate Initial Certificate Balances of all
Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of a
pool (the "Mortgage Pool") of the Mortgage Loans formed and sold by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement referred to below) and
certain other property held in trust for the benefit of Certificateholders
including amounts held in the Pre-Funding Account and the Reserve Fund
(collectively, the "Trust Fund"). The Mortgage Loans are serviced by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation, as servicer (the "Servicer"). The
Mortgage Loans were sold to the Depositor by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit
Corporation, as seller (the "Mortgage Loan Seller"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement") among the Depositor, the Servicer, the
Mortgage Loan Seller and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
trustee (the "Trustee"). To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust, Mortgage
Pass-Through Certificates, Series 2003-HYB1, Class A-X (the "Class A-X
Certificates") and is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
All payments made under this Certificate will be made in accordance with the
terms of the Agreement.
Pursuant to the terms of the Agreement, the Trustee will distribute from
certain funds in the Distribution Account on the 25th day of each month or, if
such 25th day is not a Business
E-2
Day, the first Business Day immediately following (the "Distribution Date"),
commencing on March 25, 2003, to the Person in whose name this Certificate is
registered on the related Record Date, all amounts required to be distributed
to the Holder of this Certificate and pursuant to the Agreement.
Distributions on this Certificate will be made by the Trustee either by
check mailed to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, or, by wire transfer in
immediately available funds to the account of such Holder at a bank or other
financial or depository institution having appropriate facilities therefor, if
such Holder has so notified the Trustee in writing at least five Business Days
prior to the Record Date for such Distribution Date. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and specified in such notice of
final distribution.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the Trustee or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede
& Co. or to such other entity as is requested by an authorized representative
of DTC, any transfer, pledge or other use hereof for value or otherwise by or
to any person is wrongful inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.
Reference is hereby made to the further provisions of this Certificate
set forth, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: February , 2003
▇▇▇▇▇ Fargo Bank Minnesota, National
Association,
as Trustee
By: _________________________________________
Authorized Signatory
FORM OF CERTIFICATE OF
AUTHENTICATION
THIS IS ONE OF THE CLASS A-X CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED AGREEMENT
E-3
▇▇▇▇▇ Fargo Bank Minnesota, National Association,
as Trustee
By: ______________________________________
Authorized Signatory
E-4
REVERSE OF CLASS A-X CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates,
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust, Mortgage
Pass-Through Certificates, Series 2003-1, and representing a beneficial
ownership interest in the Trust Fund.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer and the Trustee with the consent of
the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange therefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
The Trustee will cause to be kept at its Corporate Trust Office in
Minneapolis, Minnesota, or at the office of its designated agent, a
Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Trustee will provide for the registration of Certificates
and of transfers and exchanges of Certificates. Upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose, the Trustee will, subject to the
limitations set forth in the Agreement, authenticate and deliver, in the name
of the designated transferee or transferees, a Certificate of a like Class and
aggregate Percentage Interest and dated the date of authentication by the
Trustee.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer and the
Trustee shall treat the person in whose name any Certificate is registered as
the owner of such Certificate and the Percentage Interest in the Trust Fund
evidenced thereby for the purpose of receiving distributions pursuant to the
Agreement and for all other purposes whatsoever, and neither the Depositor,
the Servicer nor the Trustee will be affected by notice to the contrary.
The respective obligations and responsibilities of the Depositor, the
Servicer, the Mortgage Loan Seller and the Trustee under the Agreement will
terminate upon the later of the
E-5
final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan remaining in the Trust Fund or the disposition of all
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and the remittance of all funds due thereunder. The Servicer may
purchase all the Mortgage Loans on any Distribution Date which occurs in the
month following a Due Date on which the aggregate Stated Principal Balance of
all outstanding Mortgage Loans is 10% or less of the Original Pool Principal
Balance to be allocated to the purchase of Mortgage Loans in accordance with
the provisions set forth in the Agreement; 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. James's, living on
the date hereof.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
___________________________
___________________________
_______________________________________________________________________
(Please Print or Typewrite Name and Address of Assignee)
_______________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does
irrevocably constitute and appoint
_____________________________________________________ Attorney
to transfer the within Certificate on the books kept for the registration
thereof, with full power of substitution in the premises.
Dated:
(Signature guaranty) _____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon
the face of the within Certificate in every
particular, without alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
E-6
EXHIBIT G
FORM OF CLASS A-R CERTIFICATE
FORM OF FACE OF CLASS A-R CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "RESIDUAL INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE
TRANSFERRED UNLESS THE PROPOSED TRANSFEREE DELIVERS TO THE
TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE
TRANSFERRED UNLESS THE TRANSFEREE DELIVERS TO THE TRUSTEE
EITHER A REPRESENTATION LETTER TO THE EFFECT THAT SUCH
TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE, OR
A PERSON INVESTING ON BEHALF OF OR WITH PLAN ASSETS OF
SUCH A PLAN, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH
THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY
PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF
AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE
WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE
AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON
RESIDUAL INTEREST" ISSUED UNDER THE POOLING AND SERVICING
AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO
ANY PERSON EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE
TRANSFEREE OF THE DUTIES OF THE SERVICER UNDER SUCH
AGREEMENT.]
CLASS A-R
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CAPITAL I 2003-HYB1 TRUST
Mortgage Pass-Through Certificates,
SERIES 2003-HYB1
NUMBER: [o] ORIGINAL DENOMINATION
DATE OF POOLING $[o]
AND SERVICING AGREEMENT:
FEBRUARY 1, 2003
G-1
CUT-OFF DATE:
FEBRUARY 1, 2003
FINAL SCHEDULED ORIGINAL CLASS A-R PRINCIPAL
MATURITY DATE: BALANCE: $[o]
March 25, 2033
FIRST DISTRIBUTION DATE:
MARCH 25, 2003 CUSIP [o]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed-to-adjustable rate conventional
mortgage loans (the "Mortgage Loans") secured by first liens on one- to
four-family residential properties.
This Certificate does not represent an obligation of or interest in
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., the Servicer, the Mortgage Loan
Seller or the Trustee referred to below or any of their Affiliates. Neither
this Certificate nor the Mortgage Loans are guaranteed or insured by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., the Servicer, the Mortgage Loan Seller,
the Trustee or by any of their Affiliates or by any governmental agency or
instrumentality.
The principal balances of the Mortgage Loans evidenced by this
Certificate ("Certificate Balance") will be reduced by a portion of the
payments on such Mortgage Loans. Accordingly, following the initial issuance
of the Certificates, the Certificate Balance of this Certificate will be
different from the original denomination shown above.
This certifies that [NAME OF HOLDER] is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of a
pool (the "Mortgage Pool") of the Mortgage Loans formed and sold by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement referred to below) and
certain other property held in trust for the benefit of Certificateholders
including amounts held in the Pre-Funding Account and the Reserve Fund
(collectively, the "Trust Fund"). The Mortgage Loans are serviced by ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation, as servicer (the "Servicer"). The
Mortgage Loans were sold to the Depositor by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit
Corporation, as seller (the "Mortgage Loan Seller"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement") among the Depositor, the Servicer, the
Mortgage Loan Seller and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
trustee (the "Trustee"). To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust, Mortgage
Pass-Through Certificates, Series
G-2
2003-HYB1, Class A-R (the "Class A-R Certificates") and is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound. All payments made under this
Certificate will be made in accordance with the terms of the Agreement.
Pursuant to the terms of the Agreement, the Trustee will distribute from
certain funds in the Distribution Account on the 25th day of each month or, if
such 25th day is not a Business Day, the first Business Day immediately
following (the "Distribution Date"), commencing on March 25, 2003, to the
Person in whose name this Certificate is registered on the related Record
Date, all amounts required to be distributed to the Holder of this Certificate
and pursuant to the Agreement.
Distributions on this Certificate will be made by the Trustee either by
check mailed to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, or, by wire transfer in
immediately available funds to the account of such Holder at a bank or other
financial or depository institution having appropriate facilities therefor, if
such Holder has so notified the Trustee in writing at least five Business Days
prior to the Record Date for such Distribution Date. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and specified in such notice of
final distribution.
No transfer of a Class A-R Certificate shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person
acting on behalf of any such plan, which representation letter shall not be an
expense of the Trustee or the Master Servicer, or (ii) in the case of any such
Class A-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 of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee and the Master Servicer to the effect that the
purchase or holding of such Class A-R Certificate will not result in a
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code,
and will not subject the Trustee, the Depositor, the Mortgage Loan Seller or
the Servicer to any obligation in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trustee,
the Depositor, the Mortgage Loan Seller or the Servicer. Notwithstanding
anything else to the contrary herein, any purported transfer of a Class A-R
Certificate to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the opinion of counsel satisfactory to the Trustee as
described above shall be void and of no effect.
Each Holder of this Class A-R Certificate will be deemed to have agreed
to be bound by the restrictions of the Agreement, including but not limited to
the restrictions that (i) each person holding or acquiring any Ownership
Interest in this Class A-R Certificate must be a Permitted Transferee, (ii) no
Ownership Interest in this Class A-R Certificate may be transferred without
delivery to the Trustee of (a) a transfer affidavit of the proposed transferee
and (b) a transfer
G-3
certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any
Ownership Interest in this Class A-R Certificate must agree to require a
transfer affidavit and to deliver a transfer certificate to the Trustee as
required pursuant to the Agreement, (iv) each person holding or acquiring an
Ownership Interest in this Class A-R Certificate must agree not to transfer an
Ownership Interest in this Class A-R Certificate if it has actual knowledge
that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Class A-R
Certificate in violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate
set forth, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
G-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: February , 2003
▇▇▇▇▇ Fargo Bank Minnesota,
National Association,
as Trustee
By:____________________________
Authorized Signatory
FORM OF CERTIFICATE OF
AUTHENTICATION
THIS IS ONE OF THE CLASS A-R CERTIFICATES
REFERRED TO IN THE WITHIN-MENTIONED AGREEMENT
▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Trustee
By: ____________________________
Authorized Signatory
G-5
REVERSE OF CLASS A-R CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates,
designated as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust, Mortgage
Pass-Through Certificates, Series 2003-1, and representing a beneficial
ownership interest in the Trust Fund.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer and the Trustee with the consent of
the Holders of Certificates affected by such amendment evidencing the
requisite Percentage Interest, as provided in the Agreement. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and upon all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange therefor or in lieu hereof
whether or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
The Trustee will cause to be kept at its Corporate Trust Office in
Minneapolis, Minnesota, or at the office of its designated agent, a
Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Trustee will provide for the registration of Certificates
and of transfers and exchanges of Certificates. Upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose, the Trustee will, subject to the
limitations set forth in the Agreement, authenticate and deliver, in the name
of the designated transferee or transferees, a Certificate of a like Class and
aggregate Percentage Interest and dated the date of authentication by the
Trustee.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Certificate. Prior to due presentation of a
Certificate for registration of transfer, the Depositor, the Servicer and the
Trustee shall treat the person in whose name any Certificate is registered as
the owner of such Certificate and the Percentage Interest in the Trust Fund
evidenced thereby for the purpose of receiving distributions pursuant to the
Agreement and for all other purposes whatsoever, and neither the Depositor,
the Servicer nor the Trustee will be affected by notice to the contrary.
The respective obligations and responsibilities of the Depositor, the
Servicer, the Mortgage Loan Seller and the Trustee under the Agreement will
terminate upon the later of the
G-6
final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan remaining in the Trust Fund or the disposition of all
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and the remittance of all funds due thereunder. The Servicer may
purchase all the Mortgage Loans on any Distribution Date which occurs in the
month following a Due Date on which the aggregate Stated Principal Balance of
all outstanding Mortgage Loans is 10% or less of the Original Pool Principal
Balance to be allocated to the purchase of Mortgage Loans in accordance with
the provisions set forth in the Agreement; 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. James's, living on
the date hereof.
G-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
___________________________
___________________________
_______________________________________________________________________
(Please Print or Typewrite Name and Address of Assignee)
_______________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does
irrevocably constitute and appoint
_____________________________________________________ Attorney
to transfer the within Certificate on the books kept for the registration
thereof, with full power of substitution in the premises.
Dated:
(Signature guaranty) _____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon
the face of the within Certificate in every
particular, without alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
G-8
EXHIBIT H
INITIAL CERTIFICATION
February [ ], 2003
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Re: Pooling and Servicing Agreement, dated as of February 1,
2003 among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., as
depositor, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation,
as servicer and mortgage loan seller, and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A., as trustee, (the "Trustee") relating to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust
Pass-Through Certificates Series 2003-HYB1
----------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that it has
received a Mortgage File (which contains an original Mortgage Note pursuant to
section 2.02 of the Pooling and Servicing Agreement) with respect to each
Mortgage Loan listed in the Mortgage Loan Schedule, with any exceptions listed
on schedule A attached hereto.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.,
By:___________________________________
Name:
Title:
H-1
EXHIBIT I
FINAL CERTIFICATION
[date]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Re: Pooling and Servicing Agreement, dated as of February 1,
2003 among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., as
depositor, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation,
as servicer and mortgage loan seller, and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A., as trustee, (the "Trustee") relating to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust
Pass-Through Certificates Series 2003-HYB1
----------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 2.02 of the above-referenced
Pooling and Servicing Agreement, the undersigned, as Trustee, hereby certifies
that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan listed on the Schedule A
attached hereto), it has reviewed the documents delivered to it pursuant to
Section 2.02 of the Pooling and Servicing Agreement and has determined that
(i) all documents required to be delivered to it pursuant to Section 2.02 of
the above-referenced Pooling and Servicing Agreement are in its possession,
(ii) such documents have been reviewed by it and appear regular on their face
and have not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections do not constitute physical
alteration if they reasonably appear to have been initialed by the Mortgagor)
appears regular on its face and related to such Mortgage Loan and (iii) based
on its examination and only as to the foregoing documents, the information set
forth in the Mortgage Loan Schedule respecting such Mortgage Loan accurately
reflects the information set forth in items (i) and (xi) of the Mortgage Loan
Schedule.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.,
By:____________________________________
Name:
Title:
I-1
EXHIBIT J
DISTRIBUTION ACCOUNT CERTIFICATION
_________, 200_
▇▇▇▇▇ Fargo Bank Minnesota, National Association (the "Paying Agent")
hereby certifies that it has established the account described below as a
Distribution Account pursuant to Section 6.01(a) of the Pooling and Servicing
Agreement dated as of February 1, 2003 by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Capital I, Inc., as depositor, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corp., as
servicer and mortgage loan seller, and the undersigned as Trustee.
Title of Account: "▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
Trustee on behalf of the holders of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Capital I, Mortgage Pass-Through Certificates,
Series 2003-HYB1"
Account Number: ____________________________
Address of office
or branch of the
Trustee at which
Account is
maintained: ▇▇▇▇▇ Fargo Bank Minnesota, National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
as Trustee
By:__________________________
Name:
Title:
J-1
EXHIBIT K
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT, dated _______, 2003 (the "Subsequent
Transfer Date"), between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CAPITAL I, INC. (the
"Depositor") and ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee
(the "Trustee").
WITNESSETH:
WHEREAS, the Pooling and Servicing Agreement, dated February 1, 2003 (the
"Pooling Agreement"), among the Depositor, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit
Corp., as servicer and mortgage loan seller, and the Trustee contemplated the
sale of Subsequent Mortgage Loans to the Trustee for inclusion in the Trust
Fund by the Depositor;
WHEREAS, the Depositor is acquiring Subsequent Mortgage Loans from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corp. ("MSDWCC") pursuant to the Mortgage Loan
Purchase Agreement, dated _________ (the "Mortgage Loan Purchase Agreement"),
between the Depositor and MSDWCC; and
WHEREAS, the parties desire to consummate the purchase and sale of the
Subsequent Mortgage Loans identified on the Schedule of Subsequent Mortgage
Loans attached hereto;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. For the consideration set forth in Paragraph 2 below, the Depositor
does hereby sell, transfer, assign, set over and convey to the Trustee, on
behalf of the Certificateholders, without recourse (but subject to the
obligations set forth herein) all right, title and interest of the Depositor,
and the Trustee, on behalf of the Certificateholders, does hereby purchase and
acquire from the Depositor, (x) all right, title and interest of the Depositor
in and to each Subsequent Mortgage Loan listed on the Schedule of Subsequent
Mortgage Loans attached hereto, including its principal balance as of the
Subsequent Cut-off Date and all collections of such principal and all payments
of interest in respect of such Subsequent Mortgage Loans to the extent such
collections represent interest accrued from and including the related
Subsequent Cut-Off Date due after the related Subsequent Cut-off Date and each
related Flex Source(TM) Pledge Agreement and (y) all of the Depositor's
rights, but none of its obligations, under the Mortgage Loan Purchase
Agreement. The transfer by the Depositor of the Subsequent Mortgage Loans set
forth on the Schedule of Subsequent Mortgage Loans to the Trustee is absolute
and is intended by all parties hereto to be treated as a sale by the
Depositor.
2. The cash consideration for the Subsequent Mortgage Loans sold hereby
shall be $________________, representing the aggregate outstanding principal
balance of the Subsequent Mortgage Loans as of the Subsequent Cut-off Date.
K-1
3. The Depositor hereby represents that (a) it is solvent, will not be
rendered insolvent as a result of the sale of the Subsequent Mortgage Loans
sold pursuant to this Subsequent Transfer Agreement and is not aware of any
pending insolvency and (b) all of the conditions precedent to the transfer
accomplished hereby set forth in Section 2.04 of the Mortgage Loan Purchase
Agreement have been satisfied.
4. The Trustee acknowledges the assignment to it of the Subsequent
Mortgage Loans and the documents relating thereto referred to in Section 2.01
of the Pooling and Servicing Agreement and acknowledges that it will hold such
related documents and any other documents constituting a part of the related
Mortgage Files delivered to it in trust for the use and benefit and of all
present and future Certificateholders.
5. This Subsequent Transfer Agreement shall be construed in accordance
with the laws of the State of New York and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws, without giving effect to principles of conflicts of law.
6. This Subsequent Transfer Agreement may be signed in counterparts, each
of which shall be an original but all of which, taken together, shall
constitute one and the same instrument.
7. Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
K-2
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their
duly authorized officers as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CAPITAL I, INC.
By:_______________________________
Name:
Title:
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION
as Trustee
By:_______________________________
Name:
Title:
K-3
EXHIBIT L
FORM OF INVESTMENT LETTER FOR HOLDER OF THE
CLASS B-[/ /], CLASS A-R CERTIFICATES
1. The Purchaser is acquiring the [Class B-[/ /]], Class A-R Certificate
(the "Certificate") as principal for its own account for the purpose of
investment [neither the Mortgage Loan Seller nor any of its Affiliates need
represent that it is acquiring for purposes of investment] and not with a view
to or for sale in connection with any distribution thereof, subject
nevertheless to any requirement of law that the disposition of the Purchaser's
property shall at all times be and remain within its control.
2. The Purchaser has knowledge and experience in financial and business
matters and is capable of evaluating the merits and risks of its investment in
the Residual Interest and is able to bear the economic risk of such
investment. The Purchaser is an "accredited investor" within the meaning of
Rule 501(a) under the rules and regulations of the Securities and Exchange
Commission under the Securities Act of 1933, as amended. [Affiliates of the
Mortgage Loan Seller need not make this representation]. The Purchaser has
been given such information concerning the Certificate, the underlying
Mortgage Loans and the Servicer as it has requested.
3. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale by the Purchaser of
the Certificate.
4. The Purchaser understands that the Certificate has not been and will
not be registered under the Securities Act of 1933, as amended, or any state
securities laws and may be resold (which resale is not currently contemplated)
only if an exemption from registration is available, that neither the
Depositor, the Mortgage Loan Seller, the Servicer nor the Trustee is required
to register the Certificate and that any transfer must comply with Section
4.02 of the Pooling and Servicing Agreement. In connection with any resale of
the Certificate, the Purchaser shall not make any general solicitation or
advertisement.
5. The Purchaser agrees that it will obtain from any purchaser of the
Certificate from it the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 4 and in this paragraph 5.
6. The Purchaser hereby directs the Trustee to register the Certificate
acquired by the Purchaser in the name of its nominee as follows: ____________.
Very truly yours,
______________________________________
NAME OF PURCHASER
By:___________________________________
Name:_________________________________
Title:________________________________
L-1
EXHIBIT M
FORM OF TRANSFER AFFIDAVIT FOR CLASS A-R CERTIFICATE
STATE OF )
: ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _____________________ (the
"Transferee"), a corporation duly organized and existing under the laws of the
State of Delaware and on behalf of which the undersigned makes this affidavit.
2. The Transferee is acquiring a beneficial ownership interest in ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I 2003-HYB1 Trust, Mortgage Loan Asset Backed
Pass-Through Certificates, Series 2003-HYB1, Class A-R (the "Class A-R
Certificates"), issued pursuant to the Pooling and Servicing Agreement, dated
as of February 1, 2003 (the "Agreement"), by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Credit Corp., as Mortgage Loan Seller (the "Seller") and Servicer (the
"Servicer"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I, Inc., as Depositor (the
"Depositor") and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Trustee
(the "Trustee"). Capitalized terms used, but not defined herein, shall have
the meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.
3. The Transferee is not, as of the date hereof, and will not be, as of
the date of the Transfer, a Disqualified Organization. The Transferee is
acquiring the Class A-R Certificate for its own account.
4. The Transferee has been advised of, and understands that: (i) a tax
shall be imposed on any Transfer to Persons that are Disqualified
Organizations; (ii) such tax is imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman)
for Persons that are Disqualified Organizations, on the agent; and (iii) the
Person otherwise liable for the tax shall be relieved of liability for the tax
if the subsequent transferee furnished to such Person an affidavit that such
subsequent transferee is not a Disqualified Organization and, at the time of
the Transfer, such Person does not have actual knowledge that the affidavit is
false.
5. The Transferee has been advised and understands that a tax shall be
imposed on a "pass-through entity" holding Class A-R Certificates if at any
time during the taxable year of the pass-through entity a Person that is a
Disqualified Organization is the record holder of an interest in such entity.
The Transferee understands that no tax will be imposed for any period for
which the record holder furnishes to the pass-through entity an affidavit
stating that the record holder is not a Disqualified Organization and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment
M-1
company, a real estate investment trust or common trust fund, a partnership,
trust or estate, and certain cooperatives and, except as may be provided in
Treasury Regulations, persons holding interests in pass-through entities as
nominees for other Persons.)
6. The Transferee has reviewed the provisions of Section 4.02 of the
Agreement, which is incorporated herein by reference, and understands the
legal consequences of the acquisition of the Class A-R Certificates including,
without limitations, the restrictions on subsequent Transfers and the
provisions regarding voiding the Transfer and mandatory sales. The Transferee
expressly agrees to be bound by and to abide by the provisions of Section 4.02
of the Agreement. The Transferee understands and agrees that any breach of any
of the representations included herein shall render the Transfer to the
Transferee contemplated hereby null and void.
7. The Transferee does not have the intention to impede the assessment or
collection of any income tax legally required to be paid with respect to the
Class A-R Certificates and the Transferee hereby acknowledges that the Class
A-R Certificates may generate tax liabilities in excess of the cash flow
associated with the Class A-R Certificates and intends to pay such taxes
associated with the Class A-R Certificates when they become due.
8. The Transferee hereby represents to and for the benefit of the
transferor that the Transferee intends and reasonably expects to have the
ability to pay any taxes associated with the holding of the Class A-R
Certificates as they become due, fully realizing that it may incur tax
liabilities in excess of any cash flows generated by the Class A-R
Certificates. The Transferee has provided financial statements or other
financial information requested by the transferor in connection with the
transfer of the Class A-R Certificates to permit the transferor to assess the
financial capability of the Transferee to pay any such taxes.
9. The Transferee agrees to require a Transfer Affidavit from any Person
to whom the Transferee attempts to make a Transfer and in connection with any
Transfer by a Person for whom the Transferee is acting as nominee, trustee or
agent, and the Transferee will not make a Transfer or cause any Transfer to
any Person that the Transferee knows is a Disqualified Organization.
10. The Transferee hereby represents that it (i) is not a Non-U.S. Person
or (ii) is a Non-U.S. Person that holds the Class A-R Certificate in
connection with the conduct of a trade or business in the United States and
has furnished the transferor and the Trustee with an effective Internal
Revenue Service Form W-8ECI or successor form at the time and in the manner
required by the Code or (iii) is a Non-U.S. Person that has delivered to both
the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect that the transfer of the Class A-R Certificates to it is
in accordance with the requirements of the Code and the regulation promulgated
thereunder and that such transfer of the Class A-R Certificates will not be
disregarded for federal income tax purposes.
11. The Transferee is not an employee benefit plan or other retirement
plan or arrangement (a "Plan") subject to Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code") or a person
acting on behalf of such a Plan or arrangement or using the assets of such a
Plan or arrangement to acquire a Class A-R Certificate.
M-2
12. The following information as to the Transferee is true and correct:
Address:
Contact for Tax Matters:
Phone Number:
Form of Organization of Transferee:
Transferee's Federal Tax Identification Number:
Percentage of Residual Interest Acquired: __%
Price Paid for Residual Interest:
Date of Acquisition:
If security is being registered in the name of a nominee, please state
such name:
M-3
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its _________________, by its
duly authorized officer this _____ day of _____________.
[NAME OF TRANSFEREE]
By: ___________________________
Name:
Title:
M-4
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named __________, known or proved
to me to be the same person who executed the foregoing instrument and to be
the of _______________________________, and acknowledged that he executed the
same as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this _______ of ___________.
_______________________________________
NOTARY PUBLIC
My commission expires the ___
day of ________________, 200__.
M-5
EXHIBIT N
ERISA REPRESENTATION LETTER
(for Transfers of Class B-4, Class B-5 and Class B-6 Certificates)
The Purchaser hereby represents that either:
(i) the Purchaser is not an employee benefit plan or other retirement
plan or arrangement (a "Plan") subject to Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code") or a person
acting on behalf of such a Plan or using the assets of such a Plan to acquire
a Class B-4, Class B-5 and Class B-6 Certificate.
or
(ii) the Purchaser is an insurance company acquiring such Class B-4,
Class B-5 or Class B-6 Certificate with funds held in an insurance company
general account (as defined in Section V(e) of Prohibited Transaction Class
Exemption ("PTCE") 95-60), and the acquisition and holding of such Class B-4,
Class B-5 or Class B-6 Certificate satisfy the requirements for exemptive
relief under Sections I and III of PTCE 95-60.
Very truly yours,
_________________________________
NAME OF PURCHASER
By:______________________________
Name:____________________________
Title:___________________________
N-1
EXHIBIT O
MORTGAGE LOAN SELLER'S REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO MORTGAGE LOANS
The Mortgage Loan Seller represents and warrants as of the Cut-off Date,
unless otherwise specifically set forth herein, with respect to the Mortgage
Loans, or each Mortgage Loan, as the case may be:
(a) The information set forth in the Mortgage Loan Schedule (Exhibit
A) was true and correct in all material respects at the date or dates
respecting which such information is furnished as specified in the
Mortgage Loan Schedule;
(b) Immediately prior to the transfer and assignment contemplated in
the Mortgage Loan Purchase Agreement, the Mortgage Loan Seller was the
sole owner and holder of the Mortgage Loan free and clear of any and all
liens, pledges, charges or security interests of any nature and has full
right and authority to sell and assign the same and immediately following
the transfer and assignment contemplated herein, the trust will be the
sole owner and holder of the Mortgage Loan free and clear of any and all
liens, pledges, charges or security interests of any nature and has full
right and authority to sell and assign the same;
(c) The Mortgage is a valid, subsisting and enforceable first lien
on the property therein described, and the Mortgaged Property is free and
clear of all encumbrances and liens having priority over or parity with
the first lien of the Mortgage except for liens for real estate taxes and
special assessments not yet due and payable and liens or interests
arising under or as a result of any federal, state or local law,
regulation or ordinance relating to hazardous wastes or hazardous
substances, and, if the related Mortgaged Property is a condominium unit,
any lien for common charges permitted by statute or homeowners
association fees; and if the Mortgaged Property consists of shares of a
cooperative housing corporation, any lien for amounts due to the
cooperative housing corporation for unpaid assessments or charges or any
lien of any assignment of rents or maintenance expenses secured by the
real property owned by the cooperative housing corporation; and any
security agreement, chattel mortgage or equivalent document related to,
and delivered to the Trustee with, any Mortgage that establishes in the
Mortgage Loan Seller a valid and subsisting first lien on the property
described therein and which respect to which the Mortgage Loan Seller has
full right to sell and assign the same to the Trustee;
(d) Neither the Mortgage Loan Seller nor any prior holder of the
Mortgage or the related Mortgage Note has modified the Mortgage or the
related Mortgage Note in any material respect, satisfied, canceled or
subordinated the Mortgage in whole or in part, released the Mortgaged
Property in whole or in part from the lien of the Mortgage, or executed
any instrument of release, cancellation, modification or satisfaction
(except to the extent set forth in any assumption, modification,
consolidation or substitution agreement included in the related Mortgage
File), except that a Mortgage Loan may have
O-1
been modified by a written instrument which has been recorded, if
necessary to protect the interests of the owner of such Mortgage Loan,
and which has been delivered to the Trustee;
(e) With respect to those Mortgage Loans which are required to
deposit funds into an escrow account for payment of taxes, assessments,
insurance premiums and similar items as they become due, all escrow
deposits have been collected, are under the control of Mortgage Loan
Seller, and have been applied by Mortgage Loan Seller to the payment of
such items in a timely fashion, in accordance with such Mortgage. With
respect to those Mortgage Loans for which escrow deposits are not
required there are no delinquent taxes or other outstanding charges
affecting the related Mortgaged Property which constitute a lien on the
related Mortgaged Property; and the Mortgage Loan Seller has not advanced
funds, or received any advance of funds by a party other than the
Mortgagor, directly or indirectly for the payment of any amount required
by the Mortgage, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
whichever is later, to the day which precedes by thirty days the first
Due Date under the related Mortgage Note;
(f) To the best of the Mortgage Loan Seller's knowledge, the
Mortgaged Property is undamaged by water, fire, earthquake, earth
movement other than earthquake, windstorm, flood, tornado or similar
casualty, so as to affect adversely the value of the Mortgaged Property
as security for the Mortgage Loan or the use for which the premises were
intended or any such damage is covered by a hazard insurance policy in
effect with respect to such property, and there is no proceeding pending
or threatened for the total or partial condemnation of the Mortgaged
Property;
(g) The Mortgaged Property is free and clear of all mechanics' and
materialmen's liens or liens in the nature thereof; provided, however,
that this warranty shall be deemed not to have been made at the time of
the initial issuance of the Certificates if a title policy affording, in
substance, the same protection afforded by this warranty is furnished to
the Trustee by the Mortgage Loan Seller;
(h) The Mortgaged Property consists of a fee simple estate in real
property; all of the improvements which are included for the purpose of
determining the appraised value of the Mortgaged Property lie in all
material respects wholly within the boundaries and building restriction
lines of such property and no improvements on adjoining properties
encroach in any material respect upon the Mortgaged Property (unless
insured against under the related title insurance policy); and the
Mortgaged Property and all improvements thereon comply in all material
respects with all requirements of any applicable zoning and subdivision
laws and ordinances;
(i) The Mortgage Loan meets, or is exempt from, applicable state or
federal laws, regulations and other requirements, pertaining to usury,
and the Mortgage Loan is not usurious;
(j) All material inspections, licenses and certificates required to
be made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect
O-2
to the use and occupancy of the same, including, but not limited to,
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities;
(k) All payments required to be made up to the Due Date immediately
preceding the Cut-Off Date for such Mortgage Loan under the terms of the
related Mortgage Note have been made and no more than 1.0% of the
Mortgage Loans (by outstanding principal amount as of the Cut-Off Date)
had more than one delinquency in the 12 months preceding the Cut-Off
Date;
(l) The Mortgage Note, the related Mortgage and other agreements
executed in connection therewith are genuine, and each is the legal,
valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and by general equity
principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law); and all parties to the Mortgage Note and
the Mortgage had legal capacity to execute the Mortgage Note and the
Mortgage and each Mortgage Note and Mortgage has been duly and properly
executed by the Mortgagor;
(m) Any and all requirements of any federal, state or local law with
respect to the origination of the Mortgage Loans including, without
limitation, truth-in-lending, real estate settlement procedures, consumer
credit protection, equal credit opportunity or disclosure laws applicable
to the Mortgage Loans have been complied with in all material respects;
(n) The proceeds of the Mortgage Loans have been fully disbursed,
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements and
as to disbursements of any escrow funds therefor have been complied with
in all material respects (except for escrow funds for exterior items
which could not be completed due to weather); and all material costs,
fees and expenses incurred in making, closing or recording the Mortgage
Loan have been paid, except recording fees with respect to Mortgages not
recorded as of the Closing Date;
(o) The Mortgage Loan is covered by an American Land Title
Association mortgagee title insurance policy or other generally
acceptable form of policy or insurance acceptable to ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac, issued by a title insurer acceptable to ▇▇▇▇▇▇ ▇▇▇ or
▇▇▇▇▇▇▇ Mac insuring the originator, its successors and assigns, as to
the first priority lien of the Mortgage in the original principal amount
of the Mortgage Loan and subject only to (A) the lien of current real
property taxes and assessments not yet due and payable, (B) covenants,
conditions and restrictions, rights of way, easements and other matters
of public record as of the date of recording of such Mortgage acceptable
to mortgage lending institutions in the area in which the Mortgaged
Property is located or specifically referred to in the appraisal
performed in connection with the origination of the related Mortgage
Loan, (C) liens created pursuant to any federal, state or local law,
regulation or ordinance affording liens for the costs of clean-up of
hazardous substances
O-3
or hazardous wastes or for other environmental protection purposes and
(D) such other matters to which like properties are commonly subject
which do not individually, or in the aggregate, materially interfere with
the benefits of the security intended to be provided by the Mortgage; the
Mortgage Loan Seller is the sole insured of such mortgagee title
insurance policy, the assignment to the Trustee, of the Mortgage Loan
Seller's interest in such mortgagee title insurance policy does not
require any consent of or notification to the insurer which has not been
obtained or made, such mortgagee title insurance policy is in full force
and effect and will be in full force and effect and inure to the benefit
of the Trustee, no claims have been made under such mortgagee title
insurance policy, and neither the Mortgage Loan Seller nor any other
prior holder of the related Mortgage has done, by act or omission,
anything which would impair the coverage of such mortgagee title
insurance policy;
(p) The Mortgaged Property securing each Mortgage Loan is insured
against loss by fire and such hazards as are covered under a standard
extended coverage endorsement, in an amount which is not less than the
lesser of 100% of the insurable value of the Mortgaged Property and the
outstanding principal balance of the Mortgage Loan, but in no event less
than the minimum amount necessary to fully compensate for any damage or
loss on a replacement cost basis; if the Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a blanket
policy for the project; if upon origination of the Mortgage Loan, the
improvements on the Mortgaged Property were reported in the appraisal to
be in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than the
least of (A) the outstanding principal balance of the Mortgage Loan, (B)
the full insurable value of the Mortgaged Property and (C) the maximum
amount of insurance which was available under the National Flood
Insurance Act of 1968, as amended; and each Mortgage obligates the
Mortgagor thereunder to maintain all such insurance at the Mortgagor's
cost and expense;
(q) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration; the Mortgage Loan Seller has not waived any
default, breach, violation or event of acceleration and no foreclosure
action is currently threatened or has been commenced with respect to the
Mortgage Loan;
(r) No Mortgage Note or Mortgage is subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note or
Mortgage, or the exercise of any right thereunder, render the Mortgage
Note or Mortgage unenforceable, in whole or in part, or subject it to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury, and no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto;
O-4
(s) Each Mortgage Note is payable in monthly payments, resulting in
complete amortization of the Mortgage Loan over a term of not more than
360 months;
(t) Each Mortgage contains customary and enforceable provisions such
as to render the rights and remedies of the holder thereof adequate for
the realization against the Mortgaged Property of the benefits of the
security, including realization by judicial foreclosure (subject to any
limitation arising from any bankruptcy, insolvency or other law for the
relief of debtors), and there is no homestead or other exemption
available to the Mortgagor which would interfere with such right of
foreclosure;
(u) No Mortgagor is a debtor in any state or federal bankruptcy or
insolvency proceeding;
(v) Each Mortgaged Property is located in the United States and
consists of a one- to four-unit residential property, which may include a
detached home, townhouse, condominium unit or a unit in a planned unit
development;
(w) The Mortgage Loan is a "qualified mortgage" within the meaning
of Section 860G(a)(3) of the Code;
(x) With respect to each Mortgage where a lost note affidavit has
been delivered to the Trustee in place of the related Mortgage Note, the
related Mortgage Note is no longer in existence; and
(y) Each Mortgage Loan was originated by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Sections 203 and
211 of the National Housing Act, a savings and loan bank, a commercial
bank, a credit union, an insurance company, or a similar institution
which is supervised and examined by a federal or state authority.
Notwithstanding the foregoing, no representations or warranties are made
by the Mortgage Loan Seller as to the environmental condition of any Mortgaged
Property; the absence, presence or effect of hazardous wastes or hazardous
substances on any Mortgaged Property; any casualty resulting from the presence
or effect of hazardous wastes or hazardous substances on, near or emanating
from any Mortgaged Property; the impact on Certificateholders of any
environmental condition or presence of any hazardous substance on or near any
Mortgaged Property; or the compliance of any Mortgaged Property with any
environmental laws, nor is any agent, person or entity otherwise affiliated
with the Mortgage Loan Seller authorized or able to make any such
representation, warranty or assumption of liability relative to any Mortgaged
Property. In addition, no representations or warranties are made by the
Mortgage Loan Seller with respect to the absence or effect of fraud in the
origination of any Mortgage Loan.
It is understood and agreed that the representations and warranties set
forth above shall survive delivery of the respective Mortgage Files to the
Trustee and shall inure to the benefit of the Trustee, notwithstanding any
restrictive or qualified endorsement or assignment.
O-5
EXHIBIT P
Mortgage Loan Purchase Agreement
P-1
EXHIBIT Q
FORM OF CERTIFICATION TO BE
PROVIDED BY SERVICER WITH FORM 10-K
-----------------------------------
Re: The Pooling and Servicing Agreement dated as of February 1,
2003, among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., as Depositor,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit corporation, as Servicer and
Mortgage Loan Seller, and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Trustee
--------------------------------------------------------------------
I, [identify the certifying individual by name, title and
institution], certify that:
(1) I have reviewed this annual report on Form 10-K, and all reports
on Form 8-K containing distribution date reports filed in respect of
periods included in the year covered by this annual report, of the
Trust;
(2) Based on my knowledge, the information in these reports, taken
as a whole, does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were
made, not misleading as of the last day of the period covered by
this annual report;
(3) Based on my knowledge, the servicing information required to be
provided to the trustee by the servicer under the pooling and
servicing agreement for inclusion in these reports is included in
these reports;
(4) Based upon my knowledge and upon the annual compliance statement
included in the report and delivered to the trustee in accordance
with the terms of the pooling and servicing agreement, and except as
disclosed in the reports, the servicer has fulfilled its obligations
under the pooling and servicing agreement; and
(5) The reports disclose all significant deficiencies relating to
the servicer's compliance with the minimum servicing standards based
upon the report provided by an independent public accountant, after
conducting a review in compliance with the Uniform Single
Attestation Program for Mortgage Bankers that is included in these
reports.
Date: _________________________
__________________________________
[Signature]
[Name of Institution and Title]
Q-1
EXHIBIT R
FORM OF CERTIFICATION TO BE
PROVIDED TO SERVICER BY TRUSTEE
-------------------------------
Re: The Pooling and Servicing Agreement dated as of February 1,
2003, among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., as Depositor,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation, as Servicer and
Mortgage Loan Seller, and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Trustee
--------------------------------------------------------------------
I, [identify the certifying individual by name and title], certify to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit Corporation (the "Servicer") and its
officers, directors and affiliates, and with the knowledge and intent that
they will rely upon this certification, that:
(1) I have reviewed the annual report on Form 10-K for the fiscal
year [___], and all reports on Form 8-K containing distribution date
reports filed in respect of periods included in the year covered by
that annual report, of the Trust;
(2) Based upon my knowledge, the information in these distribution
reports, taken as a whole, does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading as of the last day of the
period covered by that annual report;
(3) Based upon my knowledge, the distribution information required
to be provided by the trustee under the pooling and servicing
agreement for inclusion in these reports is included in these
reports;
Date: _________________________
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
__________________________________
[Signature]
[Name of Institution and Title]
R-1
EXHIBIT S
REQUEST FOR RELEASE OF DOCUMENTS
[date]
To: ▇▇▇▇▇ Fargo Bank Minnesota, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Inventory Control
Re: The Pooling and Servicing Agreement dated as of February 1, 2003,
among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital I Inc., as Depositor, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Credit corporation, as Servicer and Mortgage Loan
Seller, and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Trustee
------------------------------------------------------------------------
In connection with the administration of the Mortgage Loans held by you,
as Trustee, pursuant to the above-captioned Pooling and Servicing Agreement,
we request the release, and hereby acknowledge receipt, of the Mortgage File
for the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
---------------------
Mortgagor Name, Address & Zip Code:
-----------------------------------
Reason for Requesting Documents (check one)
-------------------------------
_____ 1. Mortgage Paid In full
_____ 2. Foreclosure
_____ 3. Substitution
_____ 4. Other Liquidation
_____ 5. Nonliquidation Reason: _____________________
By:________________________________________
(authorized signer of [ ])
Issuer:____________________________________
Address:___________________________________
___________________________________
Date:______________________________________
Trustee
-------
▇▇▇▇▇ Fargo Bank Minnesota, National Association
Please acknowledge the execution of the above-request by your signature and
date below:
S-1
__________________________________ _______________________
Signature Date
Documents returned to Trustee:
__________________________________ _______________________
Trustee Date
S-2